GrowGeneration Corp Reports Mixed Financial Performance Amid Challenging Cannabis Landscape

LOS ANGELES — GrowGeneration Corp., a specialty hydroponic and organic garden center chain with 62 branches across 18 states, announced its financial performance for the second quarter ending June 30, 2023.

Key Takeaways:

• Net Sales: The company reported a 12% quarter-over-quarter increase in net sales, reaching $63.9 million. However, this shows a 10.1% decline year-over-year from $71.1 million in 2022.
• Comparable Store Sales: These witnessed a decline of 15.1% compared to the previous year.
• Profit Margin: GrowGeneration observed a gross profit margin of 26.8%, marking a 1.7% decline from the same period last year.
• Net Loss and EBITDA: The company posted a net loss of $5.7 million. On the other hand, the Adjusted EBITDA showcased a positive outcome with a gain of $0.9 million.
• Cash Reserves: As of June 30, 2023, the firm maintained cash, equivalents, and marketable securities amounting to $70.6 million.

Darren Lampert, GrowGeneration’s Co-Founder and CEO, expressed satisfaction over the quarterly results, emphasizing the 12% revenue growth from the first quarter. He highlighted the team’s consistent efforts in business optimization, aiming for profitable growth. Lampert also announced the recent rollout of a new ERP system, emphasizing its potential in enhancing customer experience and cost structures in the forthcoming quarters.

However, Lampert acknowledged the challenges faced by the cannabis industry, which indirectly impacts ancillary businesses like GrowGeneration. He noted the ongoing struggles related to capital availability, investments, and legislative efforts. As a result, the company has revised its 2023 guidance to more realistically align with the current industry outlook.

Other Financial Highlights:

• E-commerce Revenue: Remained stable at $3.7 million, identical to the previous year’s second quarter.
• Non-Retail Revenue: Achieved a revenue of $13.3 million, showing an increase from $12.0 million during the same period last year.
• Operating Expenses: GrowGeneration observed a decrease in both store and other operating expenses by 11% and selling, general, and administrative expenses by 23%.

Looking Ahead:

GrowGeneration has updated its financial outlook for fiscal year 2023. The projected revenue is expected to be between $220 million to $225 million. Furthermore, the Adjusted EBITDA is anticipated to record a loss ranging between $4 million to $6 million.

While challenges persist, GrowGeneration remains strategically poised to navigate the cannabis market’s evolving landscape, leveraging its robust financial position and commitment to growth.