GrowGeneration Corp. (GRWG) reported that its revenues for the fiscal year 2017 rose 80% to $14.4 million over last year’s $8 million. Same-store sales increased 35% to $8.6 million for the year from 2016’s $6.4 million.
This despite the fact that the company had to close its Santa Rosa store due to the California wildfires for 17 days. The company believes the fire cost them $120,000 in lost revenue and then once the store was able to reopen, revenue fell by $100,000 a month.
Gross profit for the year increased 48% to $3.3 million versus last year’s gross profit of $2.2 million. Still, the company recorded a net loss for the year of approximately $2.5 million compared to approximately $431,000 for 2016, an increase in the net loss of $2.1 million. The company said in a statement that the increase in the net loss was primarily due to an increase in non-cash shares-based compensation of approximately $636,000 and increases in other operating costs such as G&A and salaries. Additionally, costs increased due to the opening of new operations and costs related to the Seattle Hydro purchase.
Darren Lampert, Co-Founder, and CEO said, “This was a great year for sales for GrowGeneration, clearly demonstrating the demand for our products and the scalability of our business as we continue our expansion plans. We have a robust pipeline of acquisitions, that we plan to close in the first half of the year. With revenue guidance set at $37M, we anticipate continued growth into 2018 and 2019.”
Gross margins declined slightly from 28% to 23%, which the company attributed to the opening of new stores in Las Vegas, NV on January 2017, San Bernardino, CA and Seattle, WA in mid-May 2017 and Boulder CO in September 2017. GrowGeneration offered product discounts when these stores opened in order to attract new customers. Additionally, the company noted that there was “A non-cash write of inventory of approximately $463,000 in the fourth quarter of 2017 whose impact was to reduce the gross margin % by 3.4%. The inventory write-off consists of obsolete inventory as part of the purchase price of stores acquired and believes that this write-off is a one-time event.”
The adjusted EBITDA for the year ended December 31, 2017, totaled $(1,096,580) compared to adjusted EBITDA of $(45,575) for the year ended December 31, 2016. GrowGeneration had $1.2 million in cash as of December 31, 2017, and $8.0 million at March 23, 2018. The company raised $5.2 million in equity capital for the year ended December 31, 2017, through the issuance of common stock and the exercise of warrants.
The stock was lately trading at $4.38, down from it’s trading high of $9.94 in January.