Record Revenues of $55.0 Million, Adjusted EBITDA of $6.6 Million, and
Pre-Tax Net Income of $5.1
Million
- 2020 full-year revenue guidance increased to $185-$190
million
- 2020 full-year adjusted EBITDA guidance updated to
$19.0 million-$20.0 million
- 2020 full-year GAAP pre-tax net income guidance for 2020 is
$9.0 million-$11.0 million
- 2021 full-year revenue guidance updated to $280 million-$300
million
- 2021 full-year adjusted EBITDA guidance for 2021 increased
to $34.0 million-$36.0 million
DENVER, Nov. 11, 2020 /PRNewswire/
-- GrowGeneration Corp. (NASDAQ: GRWG), ("GrowGen" or the
"Company"), the largest chain of specialty hydroponic and organic
garden centers with 31 locations across 11 states, today reported
record third quarter 2020 revenues of $55.0
million, versus $21.8 million
in the same period last year. This represents the Company's
eleventh consecutive quarter of record revenues. Third quarter 2020
adjusted EBITDA of $6.6 million
compares to $2.0 million in the same
period last year. The Company also reported record third quarter
2020 GAAP pre-tax net income of approximately $5.1 million, compared to pre-tax net income of
$1.0 million, in the same period last
year. As the Company continues to outpace guidance, it is
increasing 2020 revenue guidance to $185
million-$190 million, and
adjusted EBITDA to $19.0
million-$20.0 million. Revenue
and adjusted EBITDA guidance for 2021 increases to $280 million-$300
million, and $34
million-$36 million,
respectively.
"Our steadfast focus on rapid, strategic growth in key markets,
both organically and through acquisitions, has resulted in our
eleventh consecutive quarter of record revenues and
EBITDA, said Darren Lampert,
GrowGen's co-founder and CEO. "We are building a best-in-class team
of grow professionals, a robust e-commerce platform, and an
insight-driven retail footprint targeting both established and
emerging markets. The results of the recent elections, combined
with our proven ability to scale while reducing operational costs,
will allow us to grow our revenue and expand our bottom line into
the following quarters. We have raised our guidance
accordingly."
Financial Highlights for Third Quarter 2020 Compared to Third
Quarter 2019
- Revenues rose 153% to $55.0
million, for third quarter 2020, versus $21.8 million for the same period last year
- Same-store sales were $33.4
million for third quarter 2020, versus $19.2 million for third quarter 2019, a 73%
increase year over year
- Adjusted EBITDA of $6.6 million
for third quarter 2020, versus $2.0
million for third quarter 2019, an increase of 230% year
over year, or $.14 per share basic
for third quarter 2020 versus $.06
per share basic for the same period last year
- Gross profit margin for third quarter 2020 was 26.5% compared
to 29.9% in the same quarter last year; the decrease in margin is
attributable to a larger percentage of revenue from our expanding
commercial and e-commerce business segments
- Gross profit was $14.6 million
for third quarter 2020, compared to $6.5
million for the same period last year, an increase of 124%
year over year
- Store operating costs, as a percentage of sales, was 9.0 % for
third quarter 2020, compared to 12.6% for the same period last
year, an improvement of 28% year over year
- Income from store operations was $9.6
million for third quarter 2020, versus $3.8 million for the same period last year, an
increase of 156% year over year
- Income from store operations as a percentage of revenue was
17.4% for the third quarter 2020
- Online sales increased by 112% in the third quarter when
compared to the same quarter last year
- The commercial division generated over $13.0 million in revenues, an increase of 188% in
the third quarter 2020 versus the same period last year
- GrowGen's private-label line of products surpassed $1.0 million in sales in the third quarter
- Corporate payroll and general and administrative expense,
excluding non-cash operating expenses, as a percentage of revenue,
was 5.5% for third quarter 2020 versus 8.4% for the same period
last year, an improvement of 34% year over year
- Pre-tax net income was $5.1
million for the third quarter 2020 versus $1.0 million for the same period last year
- GAAP net income was $3.3 million,
or $0.07 per share basic, for third
quarter 2020 compared to net income of $1.0
million, or $0.03 per share
basic, for same period last year, an increase of 133% year over
year
Nine-Month Financial Results
- Revenues rose 142% to $131.4
million for the first nine-months of 2020 compared to
$54.3 million for same period last
year
- Same-store sales increased 59% to $52.4
million for the first nine months of 2020 compared to
$33.0 million for same period last
year
- Adjusted EBITDA rose 208% to $13.4
million, or $0.32 per share,
for the first nine months of 2020 compared to $4.3 million, or $0.14 per share, for same period last year
- Gross profit for the first nine months of 2020 grew 119% to
$35 million compared to $16 million in the same period last year
- Gross profit margin for the first nine months of 2020 was
27%
- Income from store operations grew 161% to $22.6 million for the first nine months of 2020
compared to $8.6 million for the same
period last year
- Pre-tax net income was $5.8
million for the first nine months of 2020 compared to
$2.3 million for same period last
year
- GAAP net income for the first nine months of 2020 was
$3.8 million, or $0.09 per share, versus $2.3 million, or $0.07 per share, for the same period last year, a
63% increase
- Online sales increased by 140% to $7.4
million, for the first nine months of 2020 compared to
$3.1 million for the same period last
year
- The commercial division generated over $32.7 million in revenues, an increase of 200%
for the first nine months of 2020 compared to $10.9 million the same period last year
Working Capital and Cash
As previously announced 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 is using this capital from the Offering primarily to expand
its network of hydroponic garden centers through organic growth and
acquisitions, build-out new GrowGeneration hydroponic garden
centers in new markets such as New
Jersey, New York,
Pennsylvania and Ohio, and complete our national distribution
network adding Los Angeles,
Miami and New England.
- Working capital was $83 million
on September 30, 2020 compared to
$30.6 million at December 31, 2019
- Cash on September 30, 2020 was
$55.3 million, cash on December 31, 2019 was $12.98 million, and cash as of November 2, 2020 was $50.4
million
- Proceeds from the sale of common stock and warrants were
$44.9 million for third quarter
2020
M&A Activity
Our merger and acquisition pipeline is the most active it has
been since the Company's inception. As announced on November 2, 2020, the Company signed an asset
purchase agreement to acquire The GrowBiz, the nation's
third-largest chain of hydroponic garden centers. The GrowBiz is a
$50 million chain of five garden
centers and when completed, will increase the total count of
GrowGen garden centers to 36.
As we have often stated, the Company's corporate goal is to
reach 50 garden centers and 15 states in 2021, and we made
significant progress towards this goal in the third quarter.
Recent Events
- On August 10,2020, the Company
purchased the assets of Emerald City Garden, located in
Concord, California
- On October 12, 2020, the Company
purchased the assets of Hydroponics Depot, located in Phoenix, Arizona, expanding our geographic
footprint to 11 states
- On October 20, 2020, the Company
purchased the assets of The Big Green Tomato, a two-store chain in
Battle Creek and Taylor, Michigan
- On October 29, 2020, the Company
signed an asset purchase agreement to acquire the third-largest
chain of hydroponic garden centers in the US, The GrowBiz, with
five stores in California and
Oregon
COVID-19 Response
The Company continues to be mindful of the COVID-19 pandemic
that 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 the Company's first-rate preparedness, all
personnel have been working at full capacity since mid-March and
Company management has been inspired by the efforts and dedication
of GrowGen's team as they have worked tirelessly to service our
customers and communities.
Conference Call
The company will host a conference call on November 12, 2020 at 9:00AM Eastern Time. To participate in the
call, please dial (888)-664-6383 (domestic). Participants should
request the GrowGeneration Earnings Call or provide confirmation
code: 96567037. This call is being webcast and can be
accessed on the Investor Relations section of GrowGeneration
website at:
https://ir.growgeneration.com/news-events/ir-calendar.
A replay of the webcast will be available approximately two
hours after the conclusion of the call and remain available for
approximately 90 calendar days.
About GrowGeneration
Corp.:
GrowGen owns and operates specialty retail hydroponic and
organic gardening stores. Currently, GrowGen has 31 stores, which
include 5 locations in Colorado, 6
locations in California, 2
locations in Nevada, 1 location in
Washington, 6 locations in
Michigan, 1 location in
Rhode Island, 4 locations in
Oklahoma, 1 location in
Oregon, 3 locations in
Maine, 1 location in Florida, and 1 location in Arizona. GrowGen also operates an online
superstore for cultivators, located at
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.
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:
|
September 30,
2020
|
|
September 30,
2019
|
Net income
|
$
|
3,337,333
|
|
$
|
1,049,699
|
Income
taxes
|
|
1,775,801
|
|
|
-
|
Interest
|
|
142
|
|
|
27,067
|
Depreciation and
Amortization
|
|
443,578
|
|
|
247,715
|
EBITDA
|
|
5,556,854
|
|
|
1,324,481
|
Share based
compensation (option compensation, warrant compensation, stock
issued for services)
|
|
1,022,137
|
|
|
553,492
|
Amortization of debt
discount
|
|
-
|
|
|
114,210
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
6,578,991
|
|
$
|
1,992,183
|
|
|
|
|
|
|
Adjusted EBITDA per
share, basic
|
$
|
.14
|
|
$
|
.06
|
Adjusted EBITDA per
share, diluted
|
$
|
.13
|
|
$
|
.05
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
September 30,
2020
|
|
September 30,
2019
|
Net income
|
$
|
3,817,758
|
|
$
|
2,341,120
|
Income
taxes
|
|
1,955,113
|
|
|
-
|
Interest
|
|
19,728
|
|
|
35,757
|
Depreciation and
Amortization
|
|
1,270,398
|
|
|
538,847
|
EBITDA
|
|
7,062,997
|
|
|
2,915,724
|
Share based
compensation (option compensation, warrant compensation, stock
issued for services)
|
|
6,324,109
|
|
|
1,075,735
|
Amortization of debt
discount
|
|
-
|
|
|
356,306
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
13,387,106
|
|
$
|
4,347,765
|
|
|
|
|
|
|
Adjusted EBITDA per
share, basic
|
$
|
.32
|
|
$
|
.14
|
Adjusted EBITDA per
share, diluted
|
$
|
.30
|
|
$
|
.13
|
GROWGENERATION
CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
September 30,
2020
|
|
December 31,
2019
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
|
Cash
|
$
|
55,347,450
|
|
$
|
12,979,444
|
|
Accounts receivable
(net of allowance for credit losses of $364,262 and $291,372,
respectively)
|
|
5,246,521
|
|
|
4,455,209
|
|
Inventory,
net
|
|
37,847,421
|
|
|
22,659,357
|
|
Prepaid expenses and
other current assets
|
|
5,537,083
|
|
|
2,549,559
|
|
Total current
assets
|
|
103,978,475
|
|
|
42,643,569
|
|
|
|
|
|
|
Property and
equipment, net
|
|
4,488,922
|
|
|
3,340,616
|
Operating leases
right-of-use assets, net
|
|
8,109,184
|
|
|
7,628,591
|
Deferred income
taxes
|
|
|
|
|
-
|
Intangible assets,
net
|
|
864,219
|
|
|
233,280
|
Goodwill
|
|
21,925,084
|
|
|
17,798,932
|
Other
assets
|
|
336,149
|
|
|
377,364
|
TOTAL
ASSETS
|
$
|
139,702,033
|
|
$
|
72,022,352
|
|
|
|
|
|
|
LIABILITIES &
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
$
|
11,452,252
|
|
$
|
6,024,750
|
|
Other accrued
liabilities
|
|
119,810
|
|
|
-
|
|
Payroll and payroll
tax liabilities
|
|
1,943,328
|
|
|
1,072,142
|
|
Customer
deposits
|
|
2,469,581
|
|
|
2,503,785
|
|
Sales tax
payable
|
|
901,900
|
|
|
533,656
|
|
Income taxes
payable
|
|
1,927,805
|
|
|
-
|
|
Current maturities of
operating leases liability
|
|
2,037,537
|
|
|
1,836,700
|
|
Current maturities of
long-term debt
|
|
88,049
|
|
|
110,231
|
|
Total current
liabilities
|
|
20,940,262
|
|
|
12,081,264
|
|
|
|
|
|
|
Operating leases
liability, net of current maturities
|
|
6,307,463
|
|
|
5,807,266
|
Long-term debt, net
of current maturities
|
|
189,333
|
|
|
242,079
|
|
Total
liabilities
|
|
27,437,058
|
|
|
18,130,609
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
Common stock; $.001
par value; 100,000,000 shares authorized; 48,412,292 and 36,876,305
shares issued and outstanding, respectively
|
|
48,412
|
|
|
36,876
|
|
Additional paid-in
capital
|
|
115,285,993
|
|
|
60,742,055
|
|
Accumulated
deficit
|
|
(3,069,430)
|
|
|
(6,887,188)
|
|
Total stockholders'
equity
|
|
112,264,975
|
|
|
53,891,743
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
$
|
139,702,033
|
|
$
|
72,022,352
|
GROWGENERATION
CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENT OF OPERATIONS
|
(Unaudited)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$
|
55,007,475
|
|
$
|
21,778,487
|
|
$
|
131,440,820
|
|
$
|
54,349,092
|
Cost of
sales
|
|
40,436,707
|
|
|
15,276,906
|
|
|
96,338,467
|
|
|
38,340,670
|
Gross
profit
|
|
14,570,768
|
|
|
6,501,581
|
|
|
35,102,353
|
|
|
16,008,422
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Store
operations
|
|
4,972,058
|
|
|
2,744,199
|
|
|
12,523,594
|
|
|
7,360,525
|
|
General and
administrative
|
|
857,943
|
|
|
803,707
|
|
|
3,244,682
|
|
|
1,928,020
|
|
Share based
compensation
|
|
1,022,137
|
|
|
553,492
|
|
|
6,324,109
|
|
|
1,075,735
|
|
Depreciation and
amortization
|
|
443,578
|
|
|
247,715
|
|
|
1,270,398
|
|
|
538,847
|
|
Salaries and related
expenses
|
|
2,175,276
|
|
|
1,020,627
|
|
|
5,944,427
|
|
|
2,449,733
|
|
|
Total operating
expenses
|
|
9,470,992
|
|
|
5,369,740
|
|
|
29,307,210
|
|
|
13,352,860
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
5,099,776
|
|
|
1,131,841
|
|
|
5,795,143
|
|
|
2,655,562
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(142)
|
|
|
(141,277)
|
|
|
(19,728)
|
|
|
(392,063)
|
|
Interest
income
|
|
47,562
|
|
|
60,973
|
|
|
72,605
|
|
|
95,256
|
|
Other income
(loss)
|
|
(34,062)
|
|
|
(1,838)
|
|
|
(75,149)
|
|
|
(17,635)
|
|
|
Total non-operating
income (expense), net
|
|
13,358
|
|
|
(82,142)
|
|
|
(22,272)
|
|
|
(314,442)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income before
taxes
|
|
5,113,134
|
|
|
1,049,699
|
|
|
5,772,871
|
|
|
2,341,120
|
Provision for income
taxes
|
|
(1,775,801)
|
|
|
-
|
|
|
(1,955,113)
|
|
|
-
|
Net Income
|
$
|
3,337,333
|
|
$
|
1,049,699
|
|
|
3,817,758
|
|
$
|
2,341,120
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
shares, basic
|
$
|
.07
|
|
$
|
.03
|
|
|
.09
|
|
$
|
.07
|
Net income per
shares, diluted
|
$
|
.06
|
|
$
|
.03
|
|
|
.09
|
|
$
|
.07
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding, basic
|
|
47,878,011
|
|
|
35,707,788
|
|
|
41,477,438
|
|
|
31,523,679
|
Weighted average
shares outstanding, diluted
|
|
51,626,134
|
|
|
37,606,678
|
|
|
44,223,683
|
|
|
32,191,027
|
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SOURCE GrowGeneration