GrowGeneration Continues To Crush It In Revenues, Increases Guidance

GrowGeneration Corp. (NASDAQ:GRWG) continued to crush it with record first-quarter sales of $33 million, but then reported a net loss of $2.1 million as it paid out shares in new executive agreements. Still, GrowGeneration increased its guidance for upcoming revenue and the stock was rising over 3% in early trading to lately sell at $4.83.

The hydroponic and organic gardening chain delivered its 10th consecutive quarter of record revenue as the first quarter clocked in at $33 million versus last year’s first-quarter revenue of $2.7 million. The company beat the average revenue estimate of $31.55 million from Yahoo! Finance.

The company reported a loss per share of $0.55, which greatly missed analyst estimates of $0.03.

GrowGeneration is 2020 raising its revenue guidance to $135M$140M and the adjusted EBITDA to $12.0M$14.0M. The revenue guidance for the second quarter $36.0M$37.0M. Guidance for Q2 2020 adjusted EBITDA is $3.6M and GAAP pre-tax net income is $2.1M.

Same-store sales revenue increased 58% to $15.2 million for the quarter versus revenues of $9.6 million for the quarter ending March 31, 2019.

Executives Prove To Be Expensive

The company’s net loss of  $2.1 million was a big change from last year’s first-quarter net income of $229,000. The company blamed it on $4.1 million in non-cash share-based compensation due to several new executive employment agreements which became effective January 1, 2020, that had some accelerated vesting. In a statement, the company said, “Had the new executive shared based awards been level vested and not front-end vested, the company would have Q1 2020 net income of approximately $332,000 on a GAAP basis.” The remainder of the year is expected to be much lower for these expenses and should be roughly $2.4 million.

“Our online business is being integrated as part of our omnichannel strategy with all our store’s locations, “Order online and pickup in-store”. We generated over $1.0 million in online sales in one month for the first time in the history of the Company in April 2020,” said Darren Lampert, Co-Founder, and CEO. “Our commercial division is approaching $30 million in expected annual sales, with today over 500 active commercial customers.”

COVID-19

GrowGen benefited from the designation as an “essential” supplier to the agricultural industry, supplying the nutrients and nourishment required to feed their plants. “Accordingly, we are open during this difficult time and will remain open for the foreseeable future. We have plans and procedures in place to ensure our customers and employees stay safe during this time of uncertainty. All of us at GrowGeneration remain committed to the safety and well-being of our customers and employees and send our prayers and thoughts to all in the growing community.”

In addition to that, GrowGeneration said it has committed to donating up to $500,000 of free products to its loyal customers and local communities that have been severely affected.

Currently, GrowGen has 27 stores, which include 5 locations in Colorado, 5 locations in California, 2 locations in Nevada, 1 location in Washington, 4 locations in Michigan, 1 location in Rhode Island, 4 locations in Oklahoma, 1 location in Oregon, 3 locations in Maine and 1 location in Florida. The company just opened a 40,000 sq. ft commercial and online fulfillment center in Tulsa, OK. It is a super-hydroponic center that had sales of $770,000, in April, its first full month of business.

 

Debra Borchardt

Debra BorchardtDebra Borchardt

Debra Borchardt is the CEO, Co-Founder, and Editor-In-Chief of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Masters degree in Business Journalism from New York University.


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