2020 Revenue Guidance Increased to $135-$140
Million
Adjusted EBITDA Guidance for 2020 is $12.0 Million-$14.0
Million
GAAP Pre-Tax Net Income Guidance set $5.5-$7.5
Million
DENVER, May 14, 2020 /PRNewswire/
- GrowGeneration Corp. (NASDAQ:GRWG), ("GrowGen" or the
"Company"), the largest chain of specialty hydroponic and organic
garden centers, with currently 27 locations, today reported record
revenue of $33.0 million for the Q1
2020 and record adjusted EBITDA of $2.7
million. Q1 2020 was the company's 10th
consecutive quarter of record revenue. On a GAAP basis the Company
shows a GAAP net loss of approximately $2.1
million for Q1 2020 compared to net income of $229,000 for Q1 2019, which is primarily
attributable to $4.1 million in
non-cash share-based compensation(Shares and Options) for the
quarter ended March 31, 2020. The
increase in non-cash share-based compensation was primarily the
result of several new executive employment agreements which became
effective January 1, 2020 that had
some accelerated vesting. The non-cash share-based compensation for
the remainder of 2020 is projected to be substantially less than
the amount recorded in the first quarter of 2020 and based on
current awards outstanding is estimated to be approximately
$2.4 million for the remainder of
2020. Had the new executive shared based awards been level vested
and not front-end vested, the Company would have Q1 2020 net income
of approximately $332,000 on a GAAP
basis. As we continue to outpace guidance, we are increasing 2020
revenue guidance to $135M-$140M and
Adjusted EBITDA to $12.0M-$14.0M.
Revenue guidance for Q2 2020 is $36.0M-$37.0M.
Guidance for Q2 2020 adjusted EBITDA is $3.6M and GAAP pre-tax net income is $2.1M.
Q1 2020 Financial Highlights:
- Revenues up 152% to $33.0 million
for Q1 2020 vs $13.1 million for Q1
2019
- Adjusted EBITDA of $2.7 million
for Q1 2020 compared to $0.6 million
for Q1 2019, $.07 per share, basic
for Q1 2020
- Net income from store operations was approximately $5.3 million for the quarter ended March 31, 2020, compared to approximately
$1.7 million for the quarter ended
March 31, 2019, an increase of
207%
- Gross profit margin percentage of 27.1% for Q1 2020 compared to
28.2 % for Q1 2019
- Same store sales contributed revenue of $15.2 million for the quarter ended March 31, 2020 compared to revenues of
$9.6 million for the quarter ended
March 31, 2019, a 58% increase
- Store operating costs as a percentage of sales was 11% for Q1
2020 vs 15% for Q1 2019, a 27% reduction
- Corp Payroll and G&A, which excludes share-based
compensation, as a percentage of revenue was 8.9% for Q1 2020 vs
8.8% for Q1 2019
- GAAP Net Income loss of ($2.1)
million for Q1 2020 compared to Net Income of $229,000 for Q1 2019
- GAAP Net income (loss) per share, basic, was $(.055) for Q1 2020 vs $.01 for Q1 2019
- Cash at December 31, 2019 was
$13.0 million, Cash at May 11, 2020 is $12.9
million
- Working capital was $31.7 million
at March 31, 2020 vs $30.6 million at December
31, 2019
- Proceeds from the sale of common stock and exercise of warrants
were $0.5 million for Q1 2020
- On February 26, 2020, the Company
purchased the assets of Health & Harvest LLC located in
Miami, FL
- On March 6, 2020, the Company
opened its 4th location in Tulsa, OK, a 40,000 sq. ft. super garden
center and distribution center
Darren Lampert, Co-Founder and
CEO, said, "the Company's Q1 2020 record financial results reflect
our continued focus on revenue growth and EBITDA expansion.Q1 2020
is the company's 10th consecutive record revenue
quarter. Revenue was up 152% for Q1 2020. Adjusted EBITDA was
$2.7 million for Q1 2020 compared to
$615,509 for Q1 2019, or $.07 per share. Our same store sales were up 58%
Q1 2020 over Q1 2019. Our online business is being integrated as
part of our omni- channel strategy with all our stores locations,
"Order online and pickup in store". We generated over $1.0 million in online sales in one month for the
first time in the history of the Company in April 2020. Our commercial division is
approaching $30 million in expected
annual sales, with today over 500 active commercial customers. The
Company completed the rollout of its new ERP platform and all of
our store operations are on our ERP platform. The GrowGen ERP
platform is now fully deployed, providing business intelligence to
lower costs, improve departmental productivity, integrate our
online and store sales and supply channels and provides forecasting
and reporting tools.
The Company successfully integrated both GrowGen Miami, on
February 26, 2020 and GrowGen
Portland, on December 18, 2019
into its portfolio, with both operations now contributing revenue
and EBITDA to the overall Company. On March
7, 2020, we opened the largest hydroponic garden center in
the US, a 40,000 sq. ft commercial and online fulfillment center,
located in Tulsa, OK. This
super-hydroponic center had sales of $770,000, in April, its first full month of
business.
While we take this opportunity to announce our quarterly
earnings, we are mindful of the COVID-19 plight which is besieging
society, leaving no one unaffected. We are thankful for the
dedication of health care workers and first responders, as well as
the essential workers who are keeping our communities
running.
As a result of our first-rate preparedness, all of our personnel
have been working since mid-March with complete effectiveness. I
have been inspired by the efforts and dedication of GrowGen's team
as they have worked tirelessly to service our customers and
communities.
The economic road ahead will challenge all businesses, but
GrowGen's strong Executive Team, balance sheet and amazing
employees put us on excellent footing to overcome adversity.
As we continue to monitor the COVID-19 situation, GrowGen is
considered an "essential" supplier to the agricultural industry,
suppling the nutrients and nourishment required to feed their
plants. Accordingly, we are open during this difficult time and
will remain open for the foreseeable future. We have plans and
procedures in place to ensure our customers and employees stay safe
during this time of uncertainty. All of us at GrowGeneration remain
committed to the safety and well-being of our customers and
employees and send our prayers and thoughts to all in the growing
community.
To do our part, GrowGeneration has committed to donate up to
$500,000 of free product to our loyal
customers and local communities that have been severely
affected."
Revenue guidance for 2020 increased to $135M-$140M and
Adjusted EBITDA guidance for 2020 increased to $12.0M-$14.0M. 2020
GAAP pre-tax net income guidance set at $5.5M-$7.5M.
Revenue guidance for Q2 2020 is $36.0M-$37.0M.
Adjusted EBITDA for Q2 2020 is $3.6M
and GAAP pre-tax net income is $2.1M.
About GrowGeneration
Corp.:
GrowGen owns and operates specialty retail hydroponic and
organic gardening stores. Currently, GrowGen has 27 stores, which
include 5 locations in Colorado, 5
locations in California, 2
locations in Nevada, 1 location in
Washington, 4 locations in
Michigan, 1 location in
Rhode Island, 4 locations in
Oklahoma, 1 location in
Oregon, 3 locations in
Maine and 1 location in
Florida. GrowGen also operates an
online superstore for cultivators, located at https://growgen.pro/.
GrowGen carries and sells thousands of products, including organic
nutrients and soils, advanced lighting technology and state of the
art hydroponic equipment to be used indoors and outdoors by
commercial and home growers. Our mission is to own and operate
GrowGeneration branded stores in all the major states in the US and
Canada. Management estimates that
roughly 1,000 hydroponic stores are in operation in the US. By 2025
the market is estimated to reach over $30
billion with a compound annual growth.
Forward Looking Statements:
This press release may include predictions, estimates or other
information that might be considered forward-looking within the
meaning of applicable securities laws. While these forward-looking
statements represent our current judgments, they are subject to
risks and uncertainties that could cause actual results to differ
materially. You are cautioned not to place undue reliance on these
forward-looking statements, which reflect our opinions only as of
the date of this release. Please keep in mind that we are not
obligating ourselves to revise or publicly release the results of
any revision to these forward-looking statements in light of new
information or future events. When used herein, words such as "look
forward," "believe," "continue," "building," or variations of such
words and similar expressions are intended to identify
forward-looking statements. Factors that could cause actual results
to differ materially from those contemplated in any forward-looking
statements made by us herein are often discussed in filings we make
with the United States Securities and Exchange Commission,
available at: www.sec.gov, and on our website, at:
www.growgeneration.com.
Connect:
- Website: www.GrowGeneration.com
- E-commerce: https://growgen.pro/
- Instagram: growgen
- Facebook: GrowGenerationCorp
- Twitter: @GrowGenOK
GROWGENERATION CORPORATION AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
|
March 31,
2020
|
|
December 31,
2019
|
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash
|
|
$
|
11,441,225
|
|
$
|
12,979,444
|
Accounts receivable
(net of allowance for credit losses of $291,372)
|
|
|
4,575,300
|
|
|
4,455,209
|
Inventory
|
|
|
28,671,398
|
|
|
22,659,357
|
Prepaid expenses and
other current assets
|
|
|
4,240,843
|
|
|
2,549,559
|
Total current
assets
|
|
|
48,928,766
|
|
|
42,643,569
|
|
|
|
|
|
|
|
Property and
equipment, net
|
|
|
3,711,479
|
|
|
3,340,616
|
Operating leases
right-of-use assets, net
|
|
|
7,240,673
|
|
|
7,628,591
|
Intangible assets,
net
|
|
|
564,671
|
|
|
233,280
|
Goodwill
|
|
|
19,650,370
|
|
|
17,798,932
|
Other
assets
|
|
|
363,554
|
|
|
377,364
|
TOTAL
ASSETS
|
|
$
|
80,459,513
|
|
$
|
72,022,352
|
|
|
|
|
|
|
|
LIABILITIES &
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
9,147,215
|
|
$
|
6,024,750
|
Other accrued
liabilities
|
|
|
51,287
|
|
|
-
|
Payroll and payroll
tax liabilities
|
|
|
1,779,035
|
|
|
1,072,142
|
Customer
deposits
|
|
|
3,554,469
|
|
|
2,503,785
|
Sales tax
payable
|
|
|
755,381
|
|
|
533,656
|
Current maturities of
operating leases liability
|
|
|
1,893,594
|
|
|
1,836,700
|
Current maturities of
long-term debt
|
|
|
82,876
|
|
|
110,231
|
Total current
liabilities
|
|
|
17,263,857
|
|
|
12,081,264
|
|
|
|
|
|
|
|
Operating leases
liability, net of current maturities
|
|
|
5,484,090
|
|
|
5,807,266
|
Long-term debt, net
of current maturities
|
|
|
230,820
|
|
|
242,079
|
Total
liabilities
|
|
|
22,978,767
|
|
|
18,130,609
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
Common stock; $.001
par value; 100,000,000 shares authorized;
|
|
|
|
|
|
|
38,209,300 and
36,876,305 shares issued and outstanding, respectively
|
|
|
38,209
|
|
|
36,876
|
Additional paid-in
capital
|
|
|
66,423,243
|
|
|
60,742,055
|
Accumulated
deficit
|
|
|
(8,980,706)
|
|
|
(6,887,188)
|
Total stockholders'
equity
|
|
|
57,480,746
|
|
|
53,891,743
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
$
|
80,459,513
|
|
$
|
72,022,352
|
GROWGENERATION CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENT OF
OPERATIONS
(Unaudited)
|
|
Three Months
Ended
March 31,
|
|
|
2020
|
|
2019
|
|
|
|
|
|
Sales
|
|
$
|
32,981,506
|
|
$
|
13,087,222
|
Cost of
sales
|
|
|
24,035,257
|
|
|
9,400,591
|
Gross
profit
|
|
|
8,946,249
|
|
|
3,686,631
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
Store
operations
|
|
|
3,638,685
|
|
|
1,957,790
|
General and
administrative
|
|
|
1,152,577
|
|
|
493,096
|
Share based
compensation
|
|
|
4,115,068
|
|
|
80,278
|
Depreciation and
amortization
|
|
|
359,142
|
|
|
146,624
|
Salaries and related
expenses
|
|
|
1,797,760
|
|
|
659,332
|
Total operating
expenses
|
|
|
11,063,232
|
|
|
3,337,120
|
|
|
|
|
|
|
|
(Loss) income from
operations
|
|
|
(2,116,983)
|
|
|
349,511
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
Interest
expense
|
|
|
(7,181)
|
|
|
(131,637)
|
Interest
income
|
|
|
24,842
|
|
|
18,833
|
Other income
(loss)
|
|
|
5,804
|
|
|
(7,286)
|
Total non-operating
income (expense), net
|
|
|
23,465
|
|
|
(120,090)
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(2,093,518)
|
|
$
|
229,421
|
|
|
|
|
|
|
|
Net (loss) income per
shares, basic
|
|
$
|
(.055)
|
|
$
|
.01
|
Net (loss) income per
shares, diluted
|
|
$
|
(.0.55)
|
|
$
|
.01
|
|
|
|
|
|
|
|
Weighted average
shares outstanding, basic
|
|
|
37,823,304
|
|
|
28,437,132
|
Weighted average
shares outstanding, diluted
|
|
|
37,823,304
|
|
|
34,263,302
|
Use of Non-GAAP Financial Information
The Company believes that the presentation of results excluding
certain items in "Adjusted EBITDA," such as non-cash equity
compensation charges, provides meaningful supplemental information
to both management and investors, facilitating the evaluation of
performance across reporting periods. The Company uses these
non-GAAP measures for internal planning and reporting purposes.
These non-GAAP measures are not in accordance with, or an
alternative for, generally accepted accounting principles and may
be different from non-GAAP measures used by other companies. The
presentation of this additional information is not meant to be
considered in isolation or as a substitute for net income or net
income per share prepared in accordance with generally accepted
accounting principles.
Set forth below is a reconciliation of Adjusted EBITDA to net
income (loss):
|
|
Three Months
Ended
|
|
|
March 31,
2020
|
|
March 31,
2019
|
Net income
(loss)
|
|
$
|
(2,093,518)
|
|
$
|
229,421
|
Interest
|
|
|
7,181
|
|
|
6,961
|
Depreciation and
Amortization
|
|
|
359,142
|
|
|
146,624
|
EBITDA
|
|
|
(1,727,195)
|
|
|
383,006
|
Non-cash operating
lease expense
|
|
|
121,636
|
|
|
27,275
|
Share based
compensation (option compensation, warrant compensation, stock
issued
|
|
|
|
|
|
|
for
services)
|
|
|
4,115,068
|
|
|
80,278
|
Inventory
adjustments
|
|
|
200,928
|
|
|
-
|
Amortization of debt
discount
|
|
|
-
|
|
|
124,946
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
2,710,437
|
|
$
|
615,509
|
|
|
|
|
|
|
|
Adjusted EBITDA per
share, basic
|
|
$
|
.07
|
|
|
.02
|
Adjusted EBITDA per
share, diluted
|
|
$
|
.06
|
|
|
.02
|
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SOURCE GrowGeneration