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
Nine-Month Financial Results
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.
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.
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.
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:
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:
|Depreciation and Amortization||443,578||247,715|
|Share based compensation (option compensation, warrant compensation, stock issued for services)||1,022,137||553,492|
|Amortization of debt discount||–||114,210|
|Adjusted EBITDA per share, basic||$||.14||$||.06|
|Adjusted EBITDA per share, diluted||$||.13||$||.05|
|Nine Months Ended|
|Depreciation and Amortization||1,270,398||538,847|
|Share based compensation (option compensation, warrant compensation, stock issued for services)||6,324,109||1,075,735|
|Amortization of debt discount||–||356,306|
|Adjusted EBITDA per share, basic||$||.32||$||.14|
|Adjusted EBITDA per share, diluted||$||.30||$||.13|
|GROWGENERATION CORPORATION AND SUBSIDIARIES|
|CONSOLIDATED BALANCE SHEETS|
|Accounts receivable (net of allowance for credit losses of $364,262 and $291,372, respectively)||5,246,521||4,455,209|
|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|
|LIABILITIES & STOCKHOLDERS’ EQUITY|
|Other accrued liabilities||119,810||–|
|Payroll and payroll tax liabilities||1,943,328||1,072,142|
|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|
|Commitments and contingencies|
|Common stock; $.001 par value; 100,000,000 shares authorized; 48,412,292 and 36,876,305 shares issued and outstanding, respectively||48,412||36,876|
|Additional paid-in capital||115,285,993||60,742,055|
|Total stockholders’ equity||112,264,975||53,891,743|
|TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY||$||139,702,033||$||72,022,352|
|GROWGENERATION CORPORATION AND SUBSIDIARIES|
|CONSOLIDATED STATEMENT OF OPERATIONS|
|Three Months Ended
|Nine Months Ended
|Cost of sales||40,436,707||15,276,906||96,338,467||38,340,670|
|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||1,27|