GrowGeneration Reports Record Fourth Quarter and Full-Year 2020 Financial Results and Raises Full-Year 2021 Guidance

Record Revenues of $193.0 Million, Adjusted EBITDA of $19.2 Million, and Pre-Tax Net Income of $8.6 Million

  • 2021 full-year revenue guidance increased to $415-$430 million
  • 2021 full-year adjusted EBITDA guidance updated to $48.0 million-$51.0 million
  • First Quarter 2021 Revenue Guidance $86.0-$88.0 million
  • First Quarter 2021 Adjusted EBITDA Guidance $9.0-$9.5 million
  • The Company expects to reach over 60 Hydroponic garden centers and 15 states in 2021 and over 100 by 2023

GrowGeneration Corp. (NASDAQ: GRWG), (“GrowGen” or the “Company”), the largest chain of specialty hydroponic and organic garden centers, with 52 locations across 12 states, today reported record full-year 2020 revenues of $193.0 million, versus $79.7 million in the same period last year, an increase of 143%. Full-year 2020 adjusted EBITDA of $19.2 million compares to $5.3 million in the same period last year. The Company also reported a record full-year 2020 GAAP pre-tax net income of approximately $8.6 million, compared to pre-tax net income of $1.3 million, in the same period last year. Revenue and adjusted EBITDA guidance for 2021 increases to $415-$430 million, and $48-$51 million, respectively. The Company is providing First Quarter 2021 Revenue and Adjusted EBITDA guidance of $86.0 million – $88.0 million and $9.0 million – $9.5 million, respectively.

In addition, the company today announced the appointment of Jeffrey Lasher as Chief Financial Officer (CFO), following the retirement of Monty Lamirato at the end of the first quarter. Mr. Lasher, a seasoned public company CFO at West Marine (formerly Nasdaq: WMAR) and Crocs (NASDAQ: CROX), will begin his tenure as CFO on April 15, 2021.

“GrowGen had a transformational year in 2020. The Company generated record revenues of $193 million, a 143% increase year over year, with a 63% increase in our same store sales. Our steadfast focus on rapid, strategic growth in key markets, both organically and through acquisitions, has resulted in our record revenues and EBITDA,” said Darren Lampert, GrowGen’s co-founder and CEO. “We added 14 new locations to make 52 hydroponic garden centers across 12 states, grew our e-commerce channel and commercial division by over 123% and 188% respectively, and acquired Agron.io, a B2B portal for commercial growers to plan and optimize their operations with real-time online ordering and fulfillment.”

“Our proven ability to scale our business, by successfully integrating acquired operations, while reducing operational costs, has allowed us to grow our revenue and expand our EBITDA in 2021 and beyond. The Company is increasing its guidance to reach over 60 garden centers and 15 states in 2021, and to reach over 100 by 2023. We’ve made significant progress towards this goal in the first quarter of 2021.”

“On a personal note, I also would like to take this time to thank Monty Lamirato for his service, hard work and dedication as our CFO who is retiring at the end of the first quarter of 2021,” continued Lampert. “We’ve announced Jeffrey Lasher as Monty’s successor, who brings many years of public company CFO experience, scaling businesses, building teams, and collaborating across large organizations.”

Full-Year 2020 Financial Highlights

  • Revenues rose 143% to $193.0 million, for full-year 2020, versus $79.7 million for the same period last year. 
  • Same-store sales rose 63% to $72.3 million for full-year 2020, versus $44.3 million for the full-year 2019. 
  • Adjusted EBITDA of $19.2 million for full-year 2020, versus $5.3 million for full-year 2019, an increase of 264% year-over-year, or $0.44 per share basic for full-year 2020 versus $0.16 per share basic in full-year 2019. 
  • Gross profit margin for full-year 2020 was 26.4%, compared to 27.6% in the same period 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 $51.0 million for full-year 2020, compared to $22.0 million for the same period last year, an increase of 132% year-over-year. 
  • Store operating costs, as a percentage of sales, was 9.7 % for full-year 2020, compared to 12.7% for the same period last year, an improvement of 24%, year-over-year. 
  • Income from store operations was $32.3 million for full-year 2020, versus $11.9 million for the same period last year, an increase of 171% year-over-year. 
  • Income from store operations as a percentage of revenue was 16.7% for the full-year 2020 compared to 14.9% for the same period last year. 
  • Ecommerce sales increased 123% to $10.6 million, compared to the same period last year. 
  • The commercial division grew 188% to over $49.0 million in revenues in the full-year 2020 versus the same period last year. 
  • Corporate payroll and general and administrative expenses, excluding non-cash operating expenses, as a percentage of revenue, was 7% for full-year 2020 versus 8.5% for the same period last year, an improvement of 17% year-over-year. 
  • Pre-tax net income was approximately $8.6 million for the full-year 2020, versus $1.3 million for the same period last year. 
  • GAAP net income was $5.3 million, or $0.12 per share basic, for full-year 2020 compared to net income of $1.3 million, or $0.04 per share basic, for same period last year, an increase of 308% year-over-year.

Fourth Quarter 2020 Financial Highlights

  • Revenues increased to $62.0 million, an increase of 144%. Primarily the result of the addition of 14 stores in 2020, and an increase in same store sales of 58%. 
  • Fourth quarter 2020 margins were 25.8%, versus 23.6%, in the same period last year, due to lower write offs from physical inventories. 
  • Fourth quarter 2020 store operating costs were 10% of revenues compared to 10.8% for the same period last year. 
  • Fourth quarter 2020 corporate overhead was 11.5% of revenues compared to 17.1% for the same period last year, a decrease of 33%, as a percentage of revenue in this period. 
  • Pre-Tax net income was 4.5% of revenue for fourth quarter 2020, compared to -4%, for the same period last year. 
  • Adjusted EBITDA was $5.6 million for the fourth quarter of 2020, compared to $0.91 million, for the same period last year, an increase of 515%.

Working Capital and Cash

On December 11, 2020, the Company consummated an underwritten public offering of 5,750,000 shares of its common stock (the “Shares”), which included the exercise in full of the underwriters’ option to purchase an additional 750,000 shares of common stock to cover over-allotments. The Shares were sold at a public offering price of $30 per share, generating gross proceeds of $172.5 million, before deducting the underwriting discounts and commissions and other offering expenses. Net proceeds from the sales of common stock, net of all offering costs and expenses was approximately $162.5 million.

On July 2, 2020, the Company consummated an underwritten public offering of 8,625,000 shares of its common stock (the “Shares”), which included the exercise in full of the underwriters’ option to purchase an additional 1,125,000 shares of common stock to cover over-allotments. The Shares were sold at a public offering price of $5.60 per share, generating gross proceeds of $48.3 million, before deducting the underwriting discounts and commissions and other offering expenses. Net proceeds from the sales of common stock, net of all offering costs and expenses was approximately $44.6 million.

  • Working capital was $223 million on December 31, 2020, compared to $29 million on December 31, 2019, an increase of 668%. 
  • Cash on December 31, 2020 was $178 million, cash on December 31, 2019 was $13 million, and cash as of March 24, 2021 was $132 million. 
  • Shareholder Equity was $317 million on December 31, 2020 versus $58 million on December 31, 2019.

Recent Events

  • On January 25, 2021, the Company purchased the assets of Indoor Garden & Lighting, Inc., a two-store chain of hydroponic and equipment and indoor gardening supply stores serving the Seattle and Tacoma, Washington area. 
  • On February 15, 2021, the Company purchased the assets of Grow Warehouse LLC, a four-store chain of hydroponic and organic garden stores in Colorado (3) and Oklahoma (1). 
  • On February 22, 2021, the Company purchased the assets of San Diego Hydroponics & Organics, a four-store chain of hydroponic and organic garden stores in San Diego, CA. 
  • On February 1, 2021, the Company purchased the assets of J.A.R.B., Inc., d/b/a Grow Depot Maine, a two-store chain in Auburn and Augusta, Maine. 
  • On March 12, 2021, the Company purchased the assets of Char Coir, an RHP-certified growing medium made from the highest-grade coconut fiber available. Established in 2014, Char Coir is recognized as the best coco coir on the market. Char Coir’s portfolio of products are 100 percent biodegradable, a sustainable alternative to rockwool. 
  • On March 15, 2021, the Company purchased the assets of 55 Hydroponics, a hydroponic and organic fertilizer superstore located in Santa Ana, California. 
  • On March 15, 2021, the Company purchased the assets of Aquarius Hydroponics, an indoor-outdoor garden supply center specializing in hydroponics systems, lighting and nutrients. 
  • On March 19, 2021, the Company purchased the assets of Agron.io, a leading wholesale agricultural business-to-business enterprise resource planning (ERP) platform that allows commercial growers to manage their purchasing and logistics in one platform. Powered by proprietary ERP technology, Agron.io offers commercial pricing, real-time inventory, and the largest product catalog in the industry, with over 10,000 products in over 60 categories, including greenhouses, vertical benching, HVAC, controlled environmental systems, extraction, and industrial equipment.

Conference Call

The company will host a conference call on March 25, 2021 at 9:00AM Eastern Time. To participate in the call, please dial (888)-664-6383 (domestic) or 416-764-8650 (international). Participants should request the GrowGeneration Earnings Call or provide confirmation code: 61305331. 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.

Support us by becoming a Patreon supporter! Become a Patron!

Leave a Reply

Your email address will not be published. Required fields are marked *