Hydroponic and organic garden center chain GrowGeneration Corp. (OTCQX: GRWG) reported that its net revenue increased 159% to $21.8 million for the third quarter ending September 30, 2019, versus last year’s $8.4 million for the same time period. GrowGeneration also delivered a net income of $1,049,699 for Q3 2019 compared to a net loss of $(784,573) for Q3 2018, which was an increase of $1.8 million.
The company attributed the increase in revenues to the addition of 10 new stores opened or acquired after October 1, 2018, which delivered sales of $3.9 million in Q3 2019. Sales also increased as a result of the acquisition of a new store in mid-July 2018 that had sales of $2.3 million in the quarter and the new e-commerce site acquired in mid-September 2018 which had revenues of $1.4 million in the quarter.
Darren Lampert, Co-Founder and CEO, said, “The Company’s third-quarter financial results reflect our continued focus on revenue growth and EBITDA expansion. Our same-store sales were up 48% versus Q3 2018. We generated triple-digit growth in Colorado, Michigan and Nevada and double-digit growth in all other markets. Our online business rose over 1000% for the same period year over year.”
Lampert also noted that GrowGeneration Management Corp. is now approaching a $5.0 million per quarter segment of our business. Gross profit margins increased 420 basis points, to 29.9%. He added, “With our significant top and bottom-line growth, we were able to reduce our store operating expenses by 25% and our corporate overhead by over 25 % as a percentage of our revenue.” He said the company continues the rollout of its new ERP platform and is adding the California, Michigan, Maine, Oklahoma, Nevada and Rhode Island stores to the ERP system in 2019. The GrowGen ERP platform is designed to lower costs, improve departmental productivity, integrate our online and store sales and supply channels and provides forecasting and reporting tools.
GrowGeneration said it has nearly $16 million in cash, which will allow it to close new acquisitions targets expected to close in the fourth quarter of 2019 and into 2020. The company has filed for a NASDAQ application and expects to have an update shortly. “We are raising our revenue guidance for 2019 revenue to $74M-76M and non-GAAP adjusted EBITDA of $.14-$.18 per share, based on 35.7 million shares outstanding.”
Last week, the company named Tony Sullivan as Executive Vice President and Chief Operating Officer of GrowGeneration, responsible for all operating departments and divisions, including Finance, Store Operations, E-commerce, Commercial, HR, Supply Chain / Logistics, Purchasing / Merchandise Planning, IT / IT Operations, Real Estate, Lease Administration, Store Maintenance, New Store Growth & Construction, and Administration. As of today, Joe Prinzivalli will be stepping away from his current role as the Chief Operating Officer and transitioning into a new role as Chief Technology Officer, continuing to lead our successful ERP implementation.
Tony most recently served as Executive Vice President and Chief Operating Officer of Forman Mills, a $300 million Private Equity sponsored business, prior to that Senior Vice President Operations for Dollar Express, a $500 million carve-out of 330 Family Dollar stores in 36 states, Private Equity sponsored business. Prior to Dollar Express, he was employed at Anna’s Linens for 9+ years where he served in several operating roles, most recently as SVP, Chief Operating Officer. Previously Tony served for 20+ years at Foot Locker Inc. leading 2100 + stores, 3 Divisions (Foot Locker, Kids Foot Locker, and Foot Action) over $2.5B in sales as VP Store Operations.