GrowGen Archives - Green Market Report

Debra BorchardtAugust 12, 2021
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Serial hydroponic acquirer GrowGeneration Corp. (NASDAQ: GRWG) reported record second-quarter 2021 revenues of $125.9 million, versus $43.5 million in the same period last year. This beat the average analyst estimate from Yahoo Finance for revenues of $111 million.  GrowGen also reported second-quarter 2021 GAAP pre-tax net income of approximately $9.6 million versus pre-tax net income of $2.7 million in the same period last year. The company also raised its 2021 revenue guidance to $455 to $475 million.

Diluted earnings per share, inclusive of tax expense, were $0.11 versus last year’s $0.06. This slightly missed the estimate for earnings of $0.12. Investors weren’t pleased and sent the stock tumbling over 9% to lately sell at $39. The average price target for the stock is $59.

Non-GAAP earnings before interest, taxes, depreciation, amortization, and share-based compensation (Adjusted EBITDA) was $14.5 million, compared to $4.4 million in the same period last year, or $0.24 per share, versus $0.11 in the prior years quarter.

“The GrowGen team delivered an exceptionally strong second quarter, with revenues up 190% compared to the same period last year, with same-store sales up 60%,” said Darren Lampert, GrowGeneration’s Co-Founder and CEO. “The entire enterprise generated more revenue in the first half of 2021 than all of 2020 and adjusted EBITDA in the first half of 2021 was more than all previous periods combined.  For the year, we closed 12 acquisitions, adding 20 hydroponic retail locations, bringing our total store count to 58. Our ability to attract and purchase the “best of breed” and largest hydroponic operators in the country was again evident with our signing of HGS Hydro, the country’s third-largest hydroponic chain. The strategies implemented several quarters ago are now positively impacting margins. 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 now account for approximately 7% of our overall sales.  I am proud and encouraged with our 170 basis point increase in gross profit margin. On a per share basis, adjusted EBITDA was $0.24 for the quarter versus $0.11 last year.  These increases were accomplished despite port delays, supply chain interruptions, and increases in container costs. Due to construction and building delays, we now believe the two Southern California and the Ardmore, OK , store openings will open in the fourth quarter.  The company continues to focus on building out a world-class supply chain, with omnichannel functionality, that will allow the company to continue to deliver ” just in time” inventory for all types of growers and cultivators.”

Following a standard retail strategy of growth by acquisition, GrowGen continued its purchasing habits after the end of the quarter. In July alone, GrowGen said it was buying HGS Hydro, the nation’s third-largest chain of hydroponic garden centers, with six stores across Michigan and a seventh store slated to open in the fall of 2021. It also bought Aqua Serene, a  Southern Oregon -based hydroponic garden center with stores in Eugene and Ashland, Oregon. Before the month ended, GrowGen bought Mendocino Greenhouse and Garden Supply, a Northern California -based hydroponic garden center, located in Mendocino, California.

Expansion Efforts

Coordinating all of this expansion is requiring the company to organize and build distribution and fulfillment centers. GrowGen’s supply chain spans approximately 875,000 square feet of retail and warehouse space, across existing locations and signed leases in new locations, spanning 13 states. In April 2021, it entered into a lease for a 40,000 sq. ft. facility in Jackson, MS , the 13th state of operation. In May 2021, it announced the building of a sixth Oklahoma location in Ardmore. The company also announced the addition of 52,000 square feet in downtown Los Angeles and 70,000 square feet in Rancho Dominguez, California , which will serve as distribution and fulfillment locations. The company is in the process of building additional locations that will serve as fulfillment centers that include 25,000 square feet in Phoenix, Arizona, and 58,000 square feet in Medley, Florida. These locations are expected to be opened by the fall of 2021.


StaffJuly 28, 2021
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GrowGeneration Corp. (NASDAQ: GRWG ) is at it again and the latest acquisition is HGS Hydro, the nation’s third-largest chain of hydroponic garden centers, with six stores across Michigan and a seventh store slated to open in the fall of 2021. This transaction is expected to close before the end of the fiscal year-end 2021. Founded in 2015 by Rocky Shaeena, HGS Hydro is the largest chain of hydroponic garden centers in the state of Michigan and generated approximately $50 million in revenue in 2020.

“We are excited to add HGS Hydro to our portfolio of stores before year-end, with its impressive leadership and commercial teams. The addition of HGS Hydro will propel Michigan to GrowGen’s second-largest state behind California. Michigan is one of the fastest-growing states for medical and recreational cannabis sales.” said Darren Lampert, GrowGen’s CEO. “We look forward to building on HGS Hydro’s experience as we continue to expand our commercial footprint. This acquisition represents our continued focus on purchasing ‘best of breed’ hydroponic operations in the U.S. and strengthening our management team with seasoned veterans from our industry.”

When completed, the transaction will also bring the total number of GrowGen hydroponic garden centers in Michigan to 14 and the total number of stores to 65. The new GrowGen locations will include Shelby TownshipSouthfieldSterling HeightsHazel ParkWalled LakeAlbion, and Imlay City, Michigan. GrowGen will announce its second-quarter results on August 12.

“The combination of HGS Hydro and GrowGeneration will further solidify GrowGen’s leadership position as the nation’s largest chain of hydroponic garden centers. As one of the pioneers of our industry, we are excited to bring our years of experience, insight, and relationships to the GrowGen team to assist in the Company’s continued growth and success,” said HGS Hydro’s CEO Rocky Shaeena.

“At HGS Hydro, my biggest priority has always been serving our loyal customers and providing an abundance of inventory at all times.  We have grown tremendously as a company in the past, and I believe merging with GrowGeneration will help us continue to grow with the best service and selection possible for our customers,” said Chris Kiryakoza, HGS Hydro’s COO.


Debra BorchardtJuly 22, 2021
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GrowGeneration Corp . (NASDAQ: GRWG ) continues to gobble up regional hydroponic stores as the chain keeps growing. This week alone, the company has announced the acquisition of a California operation and one in Oregon.

Mendocino

Today the company announced its acquisition of Mendocino Greenhouse and Garden Supply, a Northern California -based hydroponic garden center, located in Mendocino, California. It is said to be the largest cannabis-producing region in the country including MendocinoHumboldt, and Trinity counties. GrowGen said that sales are expected to surpass $8 million annually.

“As the country’s largest legal cannabis market, California continues to be a critical market for GrowGeneration,” said Darren Lampert, GrowGen’s CEO. “The Emerald Triangle continues to represent tremendous market potential. We are proud to expand our presence in the area through a highly respected and leading hydroponics store such as Mendocino Greenhouse and Garden Supply. ”

Founded by Nick Halfacre in 2005, Mendocino Greenhouse and Garden Supply has provided Northern California growers with specialty hydroponic supplies and professional horticultural consultation services. Mendocino Greenhouse and Garden Supply’s team of eight employees will join GrowGen’s team of over 600 grow professionals as part of the transaction, while Mr. Halfacre will stay on as the garden center’s General Manager.

Said Halfacre, “Mendocino Greenhouse and Garden Supply was founded by growers for growers, and that ethos is at the center of everything we do. We look forward to continuing to provide best-in-class supplies and services under the GrowGeneration name.”

Oregon

Just two days ago, GrowGen said it was buying Aqua Serene, a southern Oregon-based hydroponic garden center with stores in Eugene and Ashland, Oregon. Aqua Serene is one of Oregon’s largest indoor/outdoor garden centers, with revenue of over $14 million annually. The Aqua Serene team of 10 employees will join GrowGen’s team.

“As the country’s fourth-largest legal cannabis market, Oregon continues to be a critical market for GrowGeneration,” said Lampert. “The Oregon market, in particular, represents tremendous market potential, with over thirteen hundred recreational producer cultivation licenses in the state. GrowGen is proud to expand its presence in the area through the acquisition of highly respected and leading hydroponics stores such as Aqua Serene.”


StaffMay 12, 2021
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GrowGeneration Corp. (NASDAQ: GRWG) reported record first-quarter 2021 revenues rose 173% to $90 million, versus $33 million in the same period last year. This beat the analyst estimate for revenues of $87 million. GrowGen said same-store sales at 22 locations open for the same period in 2020 and 2021 were $43.0 million in first-quarter 2021 versus $28.5 million for first quarter 2020, a 51% increase year over year. Net income was $6.1 million, or $0.10 per share based on a fully diluted weighted average share count of 60.3 million. This beat the Yahoo Finance analyst estimate for $0.07.

“The GrowGen team delivered an exceptionally strong start to the year, with same-store sales up 51%, demonstrating the hard work of the entire team.  For the year so far, we closed 9 acquisitions, adding 15 hydroponic retail locations, bringing our total store count to 53. The strategies implemented several quarters ago, are now positively impacting margins.  I am proud and encouraged with our 110-basis point increase in gross profit margin and 510-basis point increase in adjusted EBITDA margin. These increases were accomplished despite port delays and supply chain interruptions. In addition, we acquired Char Coir, a line of premium coco-based products, and Agron.io, a popular B2B e-commerce website. Both companies are now fully integrated and contributing to both our top and bottom-line numbers.” Darren Lampert, GrowGeneration’s co-founder and CEO stated.  “Based upon our strong performance, we are now raising the financial outlook for the year and expect 2021 revenues to be between $450 million and $470 million, more than double the Company’s sales in 2020.  Further, at these projected sales, adjusted EBITDA guidance for 2021 is now $54 million to $58 million .”

The gross profit margin for first quarter 2021 was 28.2% compared to 27.1% in the same quarter last year, an increase of 110 basis points. Income before tax was $7.7 million for the first quarter 2021 versus a loss of $2.1 million for the same period last year. Adjusted EBITDA was $11.1 million for the first quarter of 2021 versus $2.4 million for the same period last year. Private-label sales, inclusive of Power Si and Char Coir, were 6.2% of revenue compared to less than 1% for the same period last year. E-Commerce revenue was $4.4 million compared to $1.9 million for the same period in 2020, an increase of 126%. Cash and short-term securities on March 31, 2021, were $133.1 million, compared $177.9 million at year-end December 31, 2020.

 


StaffApril 20, 2021
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GrowGeneration Corp . (NASDAQ: GRWG ) is continuing to expand its universe by buying Downriver Hydroponics, a Michigan -based indoor garden supply center in Wayne County. The company did not disclose the value of the deal, however, it did say  Downriver Hydro is the area’s largest hydroponics store, with annual revenues approaching $10 million. With the acquisition of Downriver Hydro, GrowGen’s portfolio of hydroponic garden centers now includes 53 stores across 12 states, with seven of those locations in Michigan.

Michigan’s cannabis market is expected to generate $3 billion in revenue over the next three years, making it an ideal place for further investment and expansion,” said Darren Lampert, GrowGen’s CEO. “We continue to look for best-in-class hydroponics stores in mature and emerging markets, and Downriver Hydro has a strong customer base, as well as an experienced and knowledgeable staff, led by owner Scott Brownlie .”

The Downriver Hydroponics acquisition is GrowGen’s ninth this year and follows yet another quarter of record earnings. Just last month, GrowGen announced record full-year 2020 revenues of $193 million, an increase of 143% year-over-year. Same-store sales increased 63% for full-year 2020, compared to the previous year. The Company also raised its 2021 revenue guidance to $415 – $430 million and raised its 2021 adjusted EBITDA guidance to $48 – $51 million. GrowGen plans to have 60 garden center locations in 15 states by the end of 2021.

Brownlie and his team will stay on at GrowGen as part of the transaction, and operate the company’s seventh location in the state. GrowGen also operates hydroponic garden centers in Battle CreekGrand RapidsLivoniaTaylorSouth Lansing, and West Lansing.

“Downriver Hydro has proudly served Michigan’s indoor growers for over a decade with our exceptional team of cultivation experts, commitment to hydroponics education, and vast inventory of high-quality garden supplies,” said Brownlie. “We are excited to join GrowGeneration, the nation’s largest hydroponics retailer, to leverage our combined resources, expertise, and inventory to meet the state’s growing number of cultivators.”

According to industry sources, Michigan’s cannabis market is:

  • One of the fastest-growing cannabis markets in the country, with a total of 2020 cannabis sales generating $984 million in revenue.
  • Projected to generate over $3 billion in cannabis sales within the next three years.
  • The second-largest medical marijuana market in the country, behind California.

StaffMarch 22, 2021
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Hydroponic chain store giant GrowGeneration Corp . (NASDAQ: GRWG ) is buying the leading wholesale agriculture platform Agron.io for an undisclosed amount. GrowGen said it expects Agron will contribute $20 million in revenue for this year. The stock was trading higher in early trading to lately sell at $56.94.

Agron.io offers commercial pricing, real-time inventory, and one of the largest product catalogs in the industry, with over 10,000 products in over 60 categories, including greenhouses, vertical benching, controlled environmental systems, HVAC, and industrial equipment. The platform manages real-time product updates, tier-pricing changes, case quantities, pallet quantities, profit margin projections, hazmat fees, ETL/UL listings and state chemical regulations, as well as guarantees the latest shipping quotes using API generated pallet and box shipping rates.

“As additional legal cannabis markets continue to open up across the country, we are expanding and enhancing our commercial services, from facility design and consulting to volume product pricing, to deliver best-in-class support for large growers,” said Darren Lampert , GrowGen’s CEO. “The Agron.io platform is a strategic and exciting addition to our portfolio and comes with a highly skilled team of customer service experts trained to help growers navigate the complexities of planning, growing and sustaining a commercial agriculture facility.”

The company said in a statement that Agron.io was launched in 2016 and is based in Denver, Colorado. Agron.io’s team of specialists has overseen more than 200 buildouts, managing every aspect from light layouts and photosynthetic photon flux density (PPFD) calculations, to vertical benching, irrigation and HVAC design, to fertigation and integrated pest management. They also provide financing options and manage administrative matters such as online purchasing history and order tracking.

“We developed Agron.io to provide next-level support for commercial growers, whose orders are extremely time-sensitive,” said John Dreibelbis, Agron.io’s CEO. “By joining forces with GrowGen, we can reach even more commercial growers with enhanced services, competitive pricing, and drop-shipping from the nearest GrowGen distribution center.”

With the addition of Agron.io Powered by GrowGen for commercial accounts, GrowGen said it will continue to operate its e-commerce platform GrowGeneration.com for retail and craft cannabis and organic produce growers. The GrowGeneration.com site features online ordering of over 10,000 products, ranging from organic nutrients and soils to advanced lighting technology; enhanced order tracking; buy online pick up in-store (BOPIS) capability; a virtual garden center with 16 product departments; and a GrowPro channel featuring educational and how-to content from grow specialists.

Jeff Gordon, Co-Founder, and CTO stated, “Agron.io was created to give commercial customers real-time data to manage their purchasing and logistics. Connecting our technology with the Grow Generation distribution network, and a world-class team of commercial experts, we now have a platform that is a complete game-changer for our evolving industry.”

The Agron.io acquisition is GrowGen’s eighth this year and follows yet another quarter of record earnings. In January, the Company pre-announced fourth-quarter revenues of $61.5 million, bringing full-year 2020 revenue to $192 million , up 140% from 2019. Same-store sales increased 63% for full-year 2020, compared to the previous year. The Company also raised its 2021 revenue guidance to $335 million – $350 million and raised its 2021 adjusted EBITDA guidance to $38 million – $40 million. GrowGen plans to have 55 garden center locations by the end of 2021.


StaffMarch 15, 2021
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If it’s Monday that must mean that GrowGeneration Corp . (NASDAQ: GRWG) is buying another company. This week the nation’s largest chain of specialty hydroponic and organic garden centers said it was buying Char Coir, an RHP-certified growing medium made from coconut fiber. Char Coir’s line of coco products is projected to add in excess of $15 million in revenue to GrowGen in 2021, but the company did not disclose the purchase price.

“We are pleased to add Char Coir to our growing portfolio of best-in-class products, particularly as we expand our private label offerings,” said Darren Lampert, GrowGen’s CEO. “Char Coir is the highest-grade coco coir substrate available on the market today; the company’s Coco Cube is revolutionizing the growing industry. We look forward to continued innovation and product development with the talented team of scientists at Char Coir.”

Established in 2014, Char Coir is recognized as the best coco coir on the market. Char Coir said its portfolio of products are 100 percent biodegradable and compostable and a sustainable alternative to rockwool.

“At Char Coir, we are committed to delivering the highest-quality growing mediums with minimal impact on the environment,” said Michael Leone, Char Coir’s CEO. “We take great pride in the consistency and unmatched quality of our products, which have been developed with the grower’s experience and success in mind.”

Leone added, “We are pleased to partner with GrowGen, one of the most trusted names in hydroponic and organic gardening, to make our RHP-certified, nutrient-buffered products available to even more growers.”

The Char Coir acquisition follows yet another quarter of record earnings for GrowGen. In January, the Company pre-announced fourth-quarter revenues of $61.5 million, bringing full-year 2020 revenue to $192 million, up 140% from 2019. Same-store sales increased 63% for full-year 2020, compared to the previous year. The Company also raised its 2021 revenue guidance to $335 million – $350 million and raised its 2021 adjusted EBITDA guidance to $38 million – $40 million. GrowGen plans to have 55 garden center locations by the end of 2021.


Debra BorchardtNovember 2, 2020
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GrowGeneration Corp. (NASDAQ: GRWG) continues to add to its stable of hydroponic stores with the latest acquisition being The GrowBiz. GrowGen did not disclose how much it paid for the chain, which is the country’s third-largest, but did note that it is expected to deliver $50 million in annual revenues. The deal is expected to close before fiscal year-end 2020.

The GrowBiz was founded in 2010 by Ross and Ryan Haley and has five stores across California and Oregon. It brings a team of experienced executives and more than 60 full and part-time employees. Prior to founding The GrowBiz, Ross Haley served as CEO of Hawthorne Gardening Company, a division of Scotts Miracle-Gro, and General Hydroponics, two recognized leaders in the hydroponics industry. Ross Haley will become a senior strategic advisor to the Company.

“We are excited to add The GrowBiz to our portfolio before year-end, with its impressive leadership and commercial teams,” said Darren Lampert, GrowGen’s CEO. “We look forward to building on their combined experience and expanding our commercial footprint. The GrowBiz acquisition represents our continued investment in purchasing the ‘best of breed’ hydroponic operations in the U.S. and strengthening our management team with seasoned veterans from our industry.”

The acquisition will bring the total number of GrowGen hydroponic garden centers in California to ten and Oregon to two. The new GrowGen locations include RocklinCotatiSanta Cruz and San Luis Obispo, California, and Portland, Oregon.

The GrowBiz’s CEO Ross Haley said, “Hydroponics have been a staple in cannabis cultivation and as states across the country continue to legalize, hydroponics stores are an incredible resource for consumers to learn about different cultivation methods. I’ve seen first-hand over the years how our stores have helped people diversify their gardens, so they are able to cultivate and produce cannabis – it’s empowering.  GrowGeneration’s continued expansion is a testament that the stigma of cannabis prohibition is diminishing, and cannabis is indeed a legitimate business. I look forward to moving to an advisory position with GrowGeneration as I continue to build out Lbs. Distribution – a licensed cannabis distribution company in California .”

This deal comes just a few weeks after the company announced it was getting into the Arizona market with the acquisition of Hydroponics DepotPhoenix’s largest indoor and outdoor garden center. The company also did not disclose how much was paid for the company and whether the deal was stock or cash or a combination. “We’re excited to add Hydroponics Depot to our growing portfolio, with year-to-date sales in excess of $5 million and year-over-year growth at 50 percent,” said Tony Sullivan, GrowGen’s COO. “Importantly, it represents our 11th state and our first retail operation in Arizona, a key market in GrowGen’s growth plan. We see tremendous potential from both a medical and recreational standpoint.”

GrowGen currently has 31 stores, which include 5 locations in Colorado, 6 locations in California, 2 locations in Nevada, 1 location in Arizona, 1 location in Washington, 6 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.


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