GrowGeneration Reports Record Second Quarter 2021 Financial Results
- Record Revenue increased 190% to $125.9 million;
- Net Income of $6.7 million up 161%;
- Adjusted EBITDA of $14.5 million, a 229% increase;
- 2021 Revenue Guidance Raised to $455 to $475 Million
Comparable Store Sales for the Quarter Increased 60% from Prior Year
Record Diluted Earnings of $0.11 Per Share in the Quarter
DENVER, Aug. 12, 2021 /PRNewswire/ – GrowGeneration Corp. (NASDAQ: GRWG), (“GrowGen” or the “Company”), the largest chain of specialty hydroponic and organic garden centers with 58 locations across 12 states, today reported record second quarter 2021 revenues of $125.9 million, versus $43.5 million in the same period last year.
The Company also reported record second quarter 2021 GAAP pre-tax net income of approximately $9.6 million compared to pre-tax net income of $2.7 million in the same period last year. Diluted earnings per share, inclusive of tax expense, was $0.11 compared to a $0.06 in the same period last year.
Non-GAAP earnings before interest, taxes, depreciation, amortization and share-based compensation (Adjusted EBITDA) was $14.5 million, compared to $4.4 million in the same period last year, or $0.24 per share, versus $0.11 in the prior years quarter.
The GrowGen team delivered an exceptionally strong second quarter, with revenues up 190% compared to the same period last year, with same store sales up 60%. The entire enterprise generated more revenue in the first half of 2021 than all of 2020 and adjusted EBITDA in the first half of 2021 was more than all previous periods combined.
Darren Lampert, GrowGeneration’s Co-Founder and CEO
For the year, we closed 12 acquisitions, adding 20 hydroponic retail locations, bringing our total store count to 58. Our ability to attract and purchase the “best of breed” and largest hydroponic operators in the country was again evident with our signing of HGS Hydro, the country’s third largest hydroponic chain.
He also stated, “The strategies implemented several quarters ago are now positively impacting margins. We increased our inventory positions across all key product categories to get ahead of price increases, as well as expanded more private label purchases. Our private-label and proprietary products now account for approximately 7% of our overall sales. I am proud and encouraged with our 170 basis point increase in gross profit margin. On a per share basis, adjusted EBITDA was $0.24 for the quarter versus $0.11 last year. These increases were accomplished despite port delays, supply chain interruptions, and increases in container costs. Due to construction and building delays, we now believe the two Southern California and the Ardmore, OK, store openings will open in the fourth quarter. The company continues to focus on building out a world-class supply chain, with omni-channel functionality, that will allow the company to continue to deliver ” just in time” inventory for all types of growers and cultivators.”
Financial Highlights for Second Quarter 2021 Compared to Second Quarter 2020
- Revenues rose 190% to $125.9 million for second quarter 2021, versus $43.5 million, for the same period last year.
- Same-store sales at 24 locations open for the same period in 2020 and 2021 were $62.1 million in second quarter 2021 versus $38.9 million for the same period last year, a 60% increase year over year.
- Gross profit margin for second quarter 2021 was 28.4% compared to 26.7% in the same quarter last year, an increase of 170 basis points.
- Income before tax was $9.6 million for the second quarter 2021 versus $2.7 million for the same period last year.
- Net income was $6.7 million, or $0.11 per share based on a diluted share count of 60.2 million.
- Adjusted EBITDA was $14.5 million for second quarter 2021 versus $4.4 million for the same period last year.
- Private-label sales, inclusive of Power Si and Char Coir, were 7% of revenue compared to less than 1% for the same period last year.
- Ecommerce revenue was $12 million compared to $3.3 million for the same period last year, including Agron.io and all of our e-commerce sites.
- Cash and short-term securities as of June 30, 2021 was $124.5 million.
Financial Highlights for Six Months 2021 compared to the same period 2020
- Net revenue for the six months ended June 30,2021, was $215.9 million, compared to $76.4 million for the six months ended June 30, 2020, an increase of $139.5 million or 182%.
- Gross profit margin was 28.3% for the six months ended June 30, 2021 compared to 26.9% for the six months ended June 30, 2020.
- Net income for the six months ended June 30, 2021 was $12.9 million, compared to net income of $0.5 million for the six months ended June 30,2020.
M&A Activity
The company acquired the following hydroponic equipment and organic garden centers in the second quarter of 2021:
- In April 2021, the Company acquired Downriver Hydroponics, a Michigan-based indoor garden center in Wayne County.
- In May 2021, the Company acquired The Harvest Company, a Northern California-based garden center with operations in Redding and Hayfork, CA.
Expansion Efforts
The Company’s supply chain spans approximately 875,000 square feet of retail and warehouse space, across existing locations and signed leases in new locations, spanning 13 states.
- In April 2021, the Company entered into a lease for a 40,000 sq. ft. facility in Jackson, MS, the 13th state of operation.
- In May 2021, the Company announced the building of a sixth Oklahoma location in Ardmore.
- The Company announced the addition of 52,000 square feet in downtown Los Angeles and 70,000 square feet in Rancho Dominguez, California, that will serve as distribution and fulfillment locations for the Company.
- The Company is in the process of building additional locations that will serve as fulfillment centers that include 25,000 square feet in Phoenix, Arizona and 58,000 square feet in Medley, Florida. These locations are expected to be opened by fall of 2021.
Subsequent Events
- In July 2021, the Company entered into an asset purchase agreement to acquire HGS Hydro, the nation’s third largest chain of hydroponic garden centers, with six stores across Michigan and a seventh store slated to open in the fall of 2021.
- In July 2021, the Company acquired Aqua Serene, a southern Oregon-based hydroponic garden center with stores in Eugene and Ashland, Oregon.
- In July 2021, the Company acquired Mendocino Greenhouse and Garden Supply, a Northern California-based hydroponic garden center, located in Mendocino, California.
Conference Call
The company will host a conference call August 12, 2021 at 9:00AM Eastern Time. To participate in the call, please dial 888-390-0546 (domestic); 416-764-8688 (International). Participants should request the GrowGeneration Earnings Call or provide confirmation code: 94991680. 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 centers. Currently, GrowGen has 58 stores, which include 21 locations in California, 8 locations in Colorado, 7 locations in Michigan, 5 locations in Maine, 5 locations in Oklahoma, 2 locations in Nevada, 2 locations in Washington, 4 locations in Oregon, 1 location in Arizona, 1 location in Rhode Island,1 location in Florida, and 1 location in Massachusetts. GrowGen also operates an online superstore for cultivators at growgeneration.com and B2B ERP platform, agron.io. 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.
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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):
