GrowGeneration Announces First Quarter Financial Results, Net Sales Decreased 9.2%
Grow Generation Corp. GRWG, the largest chain of specialty hydroponic and organic garden centers with 63 locations in 13 states, announced its financial results for the first quarter ended March 31, 2022 on Tuesday evening.
Highlights of the first quarter of 2022 compared to the prior year period
- Net sales decreased 9.2% to $81.8 million, due to weaker demand from industry.
- Comparable store sales for the quarter decreased 35.5%.
- Net loss of $5.2 million compared to a net profit of $6.1 million last year.
- Loss per share of $0.09 during the quarter.
- Adjusted EBITDA loss $0.7 million
“The GrowGen team faced significant industry disruption and we exceeded our internal expectations in the first quarter despite a very challenging macro environment. The first half of last year was exceptionally strong with in-store sales comparables up around 60% compared to the same period in 2020”, Darren Lampertco-founder and CEO of GrowGeneration said in a Press release. “In the first quarter of 2022, on a two-year basis, our same-store sales increased by 7.3% compared to the first quarter of 2020.
“We expect the revenue and gross margin headwinds in the first quarter to become more pronounced in the second quarter, with the remainder of 2022 facing more pressure than initially anticipated. We remain confident in the longer-term opportunity that exists in hydroponics.
Consolidated results for the first quarter of 2022
- Revenue decreased by $8.3 million, or 9.2%, to $81.8 million for the quarter ended March 31, 2022, compared to $90.0 million for the first quarter ended March 31, 2021.
- E-commerce revenueincluding growgeneration.com and Agron, was $5.3 million in the first quarter, compared to $6.0 million for the same period last year.
- Income from non-commercial activitiesincluding distributed brands and MMI, was $12.2 million in the first quarter of 2022, compared to $2.8 million in the same quarter last year.
- Gross profit was $22.1 million for the first quarter of 2022, compared to $25.4 million for the first quarter of 2021. Gross profit margin decreased approximately 110 basis points to 27, 1%, compared to 28.2% in the same quarter last year.
- Operating Expenses in the first quarter of 2022 were $29.4 million, compared to $17.6 million the previous year. The increase is mainly due to the addition of non-retail businesses through acquisitions.
- Net loss before tax under GAAP was $6.8 million for the first quarter of 2022, a loss of $0.09 per diluted share, compared to net income before tax of $7.7 million in the first quarter of 2021, a profit of $0.10 per diluted share.
- Non-GAAP earnings before interesttaxes, depreciation, amortization and stock-based compensation (adjusted EBITDA) was a loss of $0.7 million in the first quarter of 2022, compared to $11.1 million in the same period l last year.
- Species and short-term marketable securities as of March 31, 2022 were $66.3 million. Inventory as of March 31, 2022 was $105.9 million and prepaid inventory and other current assets were $7.0 million.
- Total current liabilitiesincluding accounts payable and accrued liabilities and other liabilities, decreased from $47.1 million as of December 31, 2021 to $36.6 million as of March 31, 2022.
Financial outlook for fiscal year 2022
Revenue guidance for 2022 is updated to be between $340 million and $400 million, down from a previously forecast range of $415 million to $445 million.
Adjusted EBITDA guidance is expected to be between zero and $10 million, down from previous expectations of $30-35 million.
The company plans to add 10 to 15 new stores this year, down from the previous target of 15 to 20 new stores.
M&A activities and expansion efforts
In January 2022, the company opened its sixth Oklahoma location in Ardmore. The company moved two retail stores into multi-channel operations that will serve as distribution centers, including a 25,000 square foot location in Phoenix, Arizona, and a 58,000 square foot location in Medley, Florida.
In February 2022, the Company acquired the assets of Horticultural Rep Group, Inc., a horticultural marketing and sales organization based in Ogden, Utah, for $13.4 million.