Record Revenues of $43.5
Million, Adjusted EBITDA of $4.6
Million and Net Income of $2.6
Million
- 2020 Revenue Guidance Increased to $170-$175M
- Adjusted EBITDA Guidance for 2020 is $17.0-$18.0M
- GAAP Net Income Guidance for 2020 is $7.0-$8.0M
- 2021 Revenue Guidance Set at $245-$260M
- Adjusted EBITDA Guidance for 2021 is $26.0-$28.0M
DENVER, CO, Aug. 13, 2020 /PRNewswire/ -
GrowGeneration Corp. (NASDAQ: GRWG), ("GrowGen" or the
"Company"), the largest chain of specialty hydroponic and organic
garden centers, with currently 28 locations, today reported record
revenues of $43.5 million and
adjusted EBITDA of $4.6 million for
Q2 2020. Q2 2020 was the Company's 10th consecutive
quarter of record revenues. The Company also reported record GAAP
net income of approximately $2.6
million for Q2 2020 compared to net income of $1.1 Million for Q2 2019. As we continue to
outpace guidance, we are increasing 2020 revenue guidance to
$170M-$175M and Adjusted EBITDA to $17.0M-$18.0M.
Revenue guidance for 2021 is $245M-$260M.
Adjusted EBITDA guidance for 2021 is $26M-$28M.
Financial Highlights for 2nd Quarter 2020 compared to 2nd
Quarter 2019
- Revenues up 123% to $43.5 million
for Q2 2020 vs $19.5 million for Q2
2019
- Same store sales were $25.1
million for Q2 2020 vs $16.9
million for Q2 2019, a 49% increase
- Adjusted EBITDA of $4.6 million
for Q2 2020 vs $1.7 million for Q2
2019, an increase of 166%, $.12 per
share,
basic
- Gross profit margin % for Q2 2020 was 26.7% vs 29.9% for Q2
2020
- Gross profit was $11.6 million
for Q2 2020 vs $5.8 million for Q2
2019, an increase of 99%
- Store operating costs as a percentage of sales was 9.2% for Q2
2020 vs 14% for Q2 2019, a decrease of
34%
- Income from store operations was $7.6
million for Q2 2020 vs $3.1
million for Q2 2019, an increase of 146%
- Income from store operations as a percentage of revenue was
17.5% for Q2 2020 vs 15.8% for Q2 2019
- Corp Payroll and G&A as a percentage of revenue was 7.2%
for Q2 2020 vs 7% for Q2 2019
- GAAP net income per share, basic, was $.07 for Q2 2020 vs $.04 for Q2 2019
- GAAP net income was $2.6 million
for Q2 2020 vs net income of $1.1
million for Q2 2019 2020
Working Capital and Cash
- Working capital was $35.2 million
on June 30, 2020 vs $30.6 million at December
31, 2019
- Cash on June 30, 2020 is
$14.8 million, cash on December 31, 2019 was $12.98 million, and cash as of August 12, 2020 was $59.3
million
- Proceeds from the sale of common stock and warrants was
$282,000 for Q2 2020
- On July 2, 2020, the Company
completed the offering of 8,625,000 shares of its common stock
generating $48.3 million in gross
proceeds before deducting the underwriting discounts and
commissions and other offering expenses. Oppenheimer & Co. Inc.
acted as the sole book-running manager for the Offering. Ladenburg
Thalmann & Co. Inc. and Lake Street Capital Markets, LLC acted
as co-managers for the Offering
Recent Events
- May 12, 2020, we opened our Store
Support Center in Denver, CO
- On June 16, 2020, the Company
purchased the assets of H2O Hydroponics LLC. located in
West Lansing, MI, creating a
15,000 sq. ft., $8.0 million
operation in West Lansing,
MI.
- On June 29, 2020 GrowGeneration
was added to the Russell 3000Ò Index
- On July 2,2020 Oppenheimer &
Co. Inc. acted as the sole book-running manager and closed on a
$48.3 million Offering. Ladenburg
Thalmann & Co. Inc. and Lake Street Capital Markets, LLC were
acting as co-managers for the Offering
- The Company surpassed $100
million in year-to-date revenues on August 10, 2020
- On August 10,2020, the Company
purchased the assets of Emerald City Garden, located in
Concord, CA
- On August 12, 2020, the Company
entered into a partnership with Whole Cites Foundation, committing
to donate free product to develop urban farms across the US
Darren Lampert, Co-Founder and CEO, said, "The Company's Q2 2020
record financial results reflect our continued focus on revenue
growth and EBITDA expansion. Q2 2020 is the Company's
10th consecutive quarter of record revenues. Revenues
were up 123% for Q2 2020 versus Q2 2019, to $43.5 million. Adjusted EBITDA was $4.6 million for Q2 2020 compared to $1.7 million for Q2 2019, an increase of 166% or
$.12 per share, basic. Our same store
sales were up 49% for the period Q2 2020 versus Q2 2019. Income
from store operations was $7.6
million for Q2 2020 vs $3.1
million for Q2 2019, an increase of 146%.
Our online business increased by 149%, Q2 2020 versus Q2 2019.
Our commercial division generated over $9.0
million in revenues, an increase of 142% Q2 2020 versus Q2
2019. The Company added 167 new commercial customer accounts from
Q1, 2020 to Q2 2020 and now services over 700 commercial accounts.
We continue to see strong demand for our products that include LED
lights, nutrients, additives, soils and other products that outfit
and feed grower's gardens. Our Sunleaves private-label nutrient and
additives line of product is now generating over $100,000 a month in sales. Our weekly walk-in
transactions are now 10,000, an increase of 50 %, quarter over
quarter. On June 16, the Company
successfully acquired H2O Hydroponics LLC, and consolidated it with
our West Lansing operations into a
new 15,000 sq. ft. super hydroponic garden center. The Company
believes that the combined business will generate over $8.0 million in annual revenues in 2020.
Our mergers and acquisitions pipeline is the most active it has
been since our inception. We have set a corporate goal to reach 50
stores and 15 states in 2021.
On July 2, 2020 we closed on a
$48 million upsized follow-on public
offering with Oppenheimer & Co. Inc. acting as the sole
book-running manager for the Offering. Ladenburg Thalmann & Co.
Inc. and Lake Street Capital Markets, LLC acted as co-managers
for the Offering. The Company intends to use the net proceeds from
the Offering primarily to expand its network of hydroponic/garden
centers through organic growth and acquisitions, and for general
corporate purposes.
On June 29, 2020, we were added to
the Russell 3000® Index. We believe
our Russell 3000 listing will increase long-term shareholder value
by improving awareness, liquidity and appeal to institutional
investors.
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.
GrowGeneration has partnered with Whole Cities Foundation and
has committed to donate free product to local communities and their
urban farms that have been severely affected."
Annual Guidance for 2020 and 2021
Full year 2020
- Sales $170M-$175M
- Adjusted EBITDA guidance for 2020 increased to $17.0M-$18.0M
- GAAP pre-tax net income guidance set at $7M-$8M.
Full Year 2021
- Sales $245M-$260M.
- Adjusted EBITDA for 2021 is $26.0M-$28.0M.
Conference Call
The company will host a conference call on Thursday, August 13, 2020 at 9:00AM Eastern Time.
Participant Dial-In Numbers:
Toll-Free: (+1)
888-664-6383
*Participants should request the
GrowGeneration Earnings Call or provide confirmation code:
28032517
About GrowGeneration
Corp.:
GrowGen owns and operates specialty retail hydroponic and
organic gardening stores. Currently, GrowGen has 28 stores, which
include 5 locations in Colorado, 6
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 www.growgen.pro and
www.growgeneration.com. 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 global hydroponics system market
is estimated to reach approximately $16
billion.
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://www.growgen.pro/
- Instagram: growgen
- Facebook: GrowGenerationCorp
- Twitter: @GrowGenOK
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
|
|
June 30,
2020
|
|
June 30,
2019
|
Net income
|
$
|
2,573,943
|
|
$
|
1,062,000
|
Income
taxes
|
|
156,000
|
|
|
-
|
Interest
|
|
13,240
|
|
|
3,161
|
Depreciation and
Amortization
|
|
467,677
|
|
|
150,842
|
EBITDA
|
|
3,210,860
|
|
|
1,216,003
|
Share based
compensation (option compensation, warrant compensation, stock
issued for services)
|
|
1,186,905
|
|
|
390,898
|
Bad debt reserve
allowance
|
|
194,680
|
|
|
-
|
Amortization of debt
discount
|
|
-
|
|
|
117,150
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
4,592,445
|
|
$
|
1,724,051
|
|
|
|
|
|
|
Adjusted EBITDA per
share, basic
|
$
|
.12
|
|
$
|
.06
|
Adjusted EBITDA per
share, diluted
|
$
|
.12
|
|
$
|
.05
|
|
|
|
|
|
Six Months
Ended
|
|
June 30,
2020
|
|
June 30,
2019
|
Net income
|
$
|
480,425
|
|
$
|
1,291,421
|
Income
taxes
|
|
156,000
|
|
|
-
|
Interest
|
|
20,421
|
|
|
8,690
|
Depreciation and
Amortization
|
|
826,820
|
|
|
291,132
|
EBITDA
|
|
1,483,666
|
|
|
1,591,243
|
Share based
compensation (option compensation, warrant compensation, stock
issued for services)
|
|
5,301,972
|
|
|
522,243
|
Bad debt reserve
allowance
|
|
194,680
|
|
|
-
|
Amortization of debt
discount
|
|
-
|
|
|
242,096
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
6,980,318
|
|
$
|
2,355,582
|
|
|
|
|
|
|
Adjusted EBITDA per
share, basic
|
$
|
.17
|
|
$
|
.08
|
Adjusted EBITDA per
share, diluted
|
$
|
.17
|
|
$
|
.08
|
GROWGENERATION
CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS
|
|
|
June 30,
2020
|
|
December 31
2019
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash
|
$
|
14,823,541
|
|
$
|
12,979,444
|
Accounts receivable
(net of allowance for credit losses of $465,420 and $331,372,
respectively)
|
|
3,608,966
|
|
|
4,455,209
|
Inventory,
net
|
|
30,429,958
|
|
|
22,659,357
|
Prepaid expenses and
other current assets
|
|
5,166,060
|
|
|
2,549,559
|
Total current
assets
|
|
54,028,525
|
|
|
42,643,569
|
|
|
|
|
|
|
Property and
equipment, net
|
|
4,015,982
|
|
|
3,340,616
|
Operating leases
right-of-use assets, net
|
|
7,630,644
|
|
|
7,628,591
|
Deferred income
taxes
|
|
|
|
|
-
|
Intangible assets,
net
|
|
820,507
|
|
|
233,280
|
Goodwill
|
|
21,085,084
|
|
|
17,798,932
|
Other
assets
|
|
294,718
|
|
|
377,364
|
TOTAL
ASSETS
|
$
|
87,875,460
|
|
$
|
72,022,352
|
|
|
|
|
|
|
LIABILITIES &
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
11,933,154
|
|
$
|
6,024,750
|
Other accrued
liabilities
|
|
107,568
|
|
|
-
|
Payroll and payroll
tax liabilities
|
|
1,343,696
|
|
|
1,072,142
|
Customer
deposits
|
|
2,334,861
|
|
|
2,503,785
|
Sales tax
payable
|
|
878,174
|
|
|
533,656
|
Income taxes
payable
|
|
156,000
|
|
|
-
|
Current maturities of
operating leases liability
|
|
1,959,124
|
|
|
1,836,700
|
Current maturities of
long-term debt
|
|
91,128
|
|
|
110,231
|
Total current
liabilities
|
|
18,803,705
|
|
|
12,081,264
|
|
|
|
|
|
|
Operating leases
liability, net of current maturities
|
|
5,843,739
|
|
|
5,807,266
|
Long-term debt, net
of current maturities
|
|
213,930
|
|
|
242,079
|
Total
liabilities
|
|
24,861,374
|
|
|
18,130,609
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
Common stock; $.001
par value; 100,000,000 shares authorized; 38,844,819 and 36,876,305
shares issued and outstanding, respectively
|
|
38,845
|
|
|
36,876
|
Additional paid-in
capital
|
|
69,382,004
|
|
|
60,742,055
|
Accumulated
deficit
|
|
(6,406,763)
|
|
|
(6,887,188)
|
Total stockholders'
equity
|
|
63,014,086
|
|
|
53,891,743
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
$
|
87,875,460
|
|
$
|
72,022,352
|
GROWGENERATION
CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF
OPERATIONS (Unaudited)
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
Sales
|
$
|
43,451,840
|
|
$
|
19,483,383
|
|
$
|
76,433,345
|
|
$
|
32,570,605
|
Cost of
sales
|
|
31,866,503
|
|
|
13,663,173
|
|
|
55,901,760
|
|
|
23,063,764
|
Gross
profit
|
|
11,585,337
|
|
|
5,820,210
|
|
|
20,531,585
|
|
|
9,506,841
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Store
operations
|
|
3,999,280
|
|
|
2,734,788
|
|
|
7,516,329
|
|
|
4,616,326
|
General and
administrative
|
|
1,150,435
|
|
|
549,129
|
|
|
2,424,647
|
|
|
1,124,313
|
Share based
compensation
|
|
1,186,905
|
|
|
390,898
|
|
|
5,301,972
|
|
|
522,243
|
Depreciation and
amortization
|
|
467,677
|
|
|
150,842
|
|
|
826,820
|
|
|
291,132
|
Salaries and related
expenses
|
|
1,971,391
|
|
|
820,842
|
|
|
3,769,151
|
|
|
1,429,106
|
Total operating
expenses
|
|
8,775,688
|
|
|
4,646,499
|
|
|
19,838,919
|
|
|
7,983,120
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
2,809,649
|
|
|
1,173,711
|
|
|
692,666
|
|
|
1,523,721
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(13,240)
|
|
|
(120,311)
|
|
|
(20,421)
|
|
|
(250,786)
|
Interest
income
|
|
200
|
|
|
15,433
|
|
|
25,042
|
|
|
34,283
|
Other income
(loss)
|
|
(66,666)
|
|
|
(6,833)
|
|
|
(60,862)
|
|
|
(15,797)
|
Total non-operating
income (expense), net
|
|
(79,706)
|
|
|
(111,711)
|
|
|
(56,241)
|
|
|
(232,300)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income before
taxes
|
|
2,729,943
|
|
|
1,062,000
|
|
|
636,425
|
|
|
1,291,421
|
Provision for income
taxes
|
|
(156,000)
|
|
|
-
|
|
|
(156,000)
|
|
|
-
|
Net Income
|
$
|
2,573,943
|
|
$
|
1,062,000
|
|
$
|
480,425
|
|
$
|
1,291,421
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
shares, basic
|
$
|
.07
|
|
$
|
.04
|
|
$
|
.01
|
|
$
|
.04
|
Net income per
shares, diluted
|
$
|
.06
|
|
$
|
.03
|
|
$
|
.01
|
|
$
|
.04
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding, basic
|
|
38,616,610
|
|
|
30,326,304
|
|
|
38,224,109
|
|
|
29,389,636
|
Weighted average
shares outstanding, diluted
|
|
41,016,392
|
|
|
31,426,757
|
|
|
40,241,292
|
|
|
30,455,282
|
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SOURCE GrowGeneration