GrowGeneration Sees Same-Store Sales Drop By 12%

GrowGeneration Corp. (NASDAQ: GRWG) reported record fourth-quarter and full-year 2021 financial results. Revenues for GrowGen were $90.6 million in the fourth quarter of 2021 compared to $61.9 million in the same period last year. Same-store sales at 26 locations open for the same period in 2020 and 2021 were $40.3 million in the fourth quarter of 2021, compared to $46.0 million in the same period last year, representing a 12.3% year-over-year decline.

The company also reported a fourth-quarter 2021 GAAP net loss of $4.1 million compared to net income of $1.5 million in the same period last year. Diluted loss per share in the fourth quarter was ($0.07) compared to diluted earnings per share of $0.03 in the same period last year. Non-GAAP income before interest, taxes, depreciation, amortization and share-based compensation (Adjusted EBITDA) was a loss of $1.9 million in the fourth quarter of 2021 or ($0.03) per diluted share, compared to earnings of $5.5 million in the same period last year, $0.11 per diluted share.

For the full year, revenues were $422.5 million for the full year 2021 compared to $193.4 million for the full year 2020, an increase of 118%, including the contribution from acquisitions. GAAP net income for the twelve months ended December 31, 2021, was $12.8 million, compared to net income of $5.3 million for the twelve months ended December 31, 2020.

Darren Lampert, GrowGen’s Co-Founder and CEO stated, “The GrowGen team delivered a strong year despite the persistently difficult macro-environment that is impacting the entire cannabis industry. Same-store sales at 26 locations decreased (12.3)% in the fourth quarter of 2021 versus the prior year. Full-year 2021 same-store sales were 24.4% over last year. At present, we have 63 retail locations in operation. We increased our inventory positions across all key product categories to get ahead of price increases, as well as expanded more private label purchases. Our private label and proprietary products reached approximately 7.5% of our overall sales in the fourth quarter. Our online marketplace, including Agron, reached $36.2 million of revenue for 2021. In addition to acquired locations, we opened two greenfield locations in the Los Angeles metro area in 2021, and for next year, we are looking to open 15 to 20 locations across new and existing states.”

Outlook

For the full year, GrowGen is forecasting net revenues in the range of $415 million to $445 million, versus the 2021 base of $422.5 million. The adjusted EBITDA will be in the range of $30 million to $35 million versus the 2021 base of $34.5 million. The company said that sales and EBITDA guidance metrics are inclusive of acquisitions and store openings completed in 2021 and 2022, including MMI and HRG, but do not include unannounced acquisitions.

Mr. Lampert continued, “In order to position the company for 2022 and beyond, we have made several strategic decisions to drive margin improvements and EBITDA. As of December 31, 2021, our balance sheet remains strong with $81 million of available liquidity. Given our view of the business today and the continued challenges across the US market, we expect to generate full-year revenue of $415 to $445 million in 2022.”

Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor 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 Master's degree in Business Journalism from New York University.


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