GrowGeneration Corp. (OTCQX: GRWG) Reports Record 2K18 Revenues

 GrowGeneration Corp. (OTCQX: GRWG), (“GrowGen” or the “Company”) one of the leading chains of specialty hydroponic and organic garden centers, with presently 21 locations, recently stated financial results for its fiscal year finished December 31, 2K18.

2K18 Financial Highlights:

  1. Revenue of $29.0M up $14.6M or 102 percent over 2K17 revenues of $14.4M.
  2. Attained 8 stores, HeavyGardens.com and opened Oklahoma City, OK. location in 2K18.
  3. Gross profit margin percentage, exclusive of inventory valuation adjustments, was 25.2 percent for 2K18 difference to 24.2 percent for 2K17.
  4. Store operating costs, as a percentage of revenue, have declined 13 percent from 20.6 percent for 2K17 to 18 percent for 2K18
  5. Corporate overhead, salaries and general and administrative, declined from 13.4 percent of revenues for 2K17 to 11.2 percent of revenue for 2K18.
  6. Same Store Sales, in the 4th quarter raised by 12.4 percent.
  7. The Company had $14.6M in cash and cash equivalents at December 31, 2K18.
  8. As of December 31, 2K18, the Company had working capital of $21.6M difference to working capital of $5.6M at December 31, 2K17.
  9. The Company raised about $12.9M in equity capital through the issuance of common stock and the exercise of warrants and $9.0M in convertible debt financing for the year finished December 31, 2K18.
  10. Implemented an ERP computer system, with successful deployments in Colorado, Oklahoma and Maine to date.
  11. Built a national commercial administration team to secure large capital commercial projects.

 2K19 Highlights:

  1. Q-1 2K19, attained certain assets and product trademarks from the 3rd leading hydroponic distributor.
  2. Q-1 2K19, we attained 3 additional stores, in Denver, CO, Palm Springs, CA and Reno, NV.
  3. Opened stores in Brewer, ME and Tulsa, OK.

Darren Lampert, Co-Founder, and CEO, said, “This was our 5th successive year of record growth for GrowGeneration, with revenues growing over 100 percent year over year. We continue to focus on expanding our “just in time” supply chain, through new store openings and acquisitions. GrowGen is now EBITDA profitable, starting in Q-1 2K19.

With our corporate foundation now in place, the company is well positioned to continue 100 percent year over year growth for several more years. GrowGen is now in 8 states, 21 locations, and services some of the country’s leading commercial multi-state cultivation operators. In Q-1 2K19, the Company attained three additional stores and opened 2 stores, which will add an additional $14M in revenue.

Our commercial administration team closed over $2M in commercial capital projects in Q-1 and we are projecting over $10M in new capital projects revenue for the year.  Our acquisition of HeavyGardens.com is the foundation of our e-commerce strategy and our omnichannel shopping experience, connecting all of our customers to our platform. Our purchase of product trademarks, from the 3rd leading hydroponic distributor, bolsters our ability to supply branded “house” products to our customers.

2K18 Financial Results:

Net revenue for the year finished December 31, 2K18 were about $29M, difference to about $14.4M for the year finished December 31, 2K17, a boost of $14.6M, or 102 percent. The increase in revenues is because of the addition of 9 new retail stores and one e-commerce site throughout 2K18 for which there were no sales for these retail stores and e-commerce site for the year finished December 31, 2K17 and 3 stores opened throughout various times throughout 2K17 that were open for all of 2K18.

Sales in the 9 new stores, the e-commerce site and the 3 stores opened in 2K17 were about $19.8M for the year finished December 31, 2K18 difference to about $2.1M for the year finished December 31, 2K17.

The increase in the cost of goods sold was because of the 102 percent increase in revenues comparing the year finished December 31, 2K17 to 2K18 mainly because of the increase in the number of stores between 2K17 and 2K18 as noted in the previous paragraph.

Gross profit was $6.4M for the year finished December 31, 2K18, as difference to $3.3M for the year finished December 31, 2K17, a boost of about $3.1M or 97 percent. Gross profit as a percentage of sales was 22.2 percent for the year finished December 31, 2K18, difference to 22.8 percent for the year finished December 31, 2K17. The slight decrease in the gross profit percentage was mainly because of the increase in non-cash inventory valuation adjustments of about $870,000 in 2K18 difference to $201,000 in 2K17. Gross profit percent net of inventory valuation adjustments was 25.2 percent for 2K18 and 24.2 percent for 2K17.

Store operating costs as a percentage of sales were 18 percent for the year finished December 31, 2K18 difference to 20.6 percent for the year finished December 31, 2K17, a 15 percent improvement.

Non-Cash corporate overhead, consisting of salaries and general and administrative expenses, declined from 13.4 percent of revenues for 2K17 to 11.2 percent of revenues for 2K18.

Balance Sheet Summary

As of December 31, 2K18, we had working capital of about $21.6M, difference to working capital of about $5.6Mas of December 31, 2K17, a boost of about $16M. The increase in working capital from December 31, 2K17 to December 31, 2K18 was due mainly to the proceeds from the sale of Common Stock, proceeds for a convertible debt offering and exercise of warrants totaling about $21.8M. At December 31, 2K18, we had cash and cash equivalents of about $14.6M. We believe that existing cash and cash equivalents are sufficient to fund existing operations for the next twelve months.

Thomas Anderson

About Thomas Anderson

Thomas Anderson is a top contributor to The Health Post in both the GREAT IDEAS and Health section of the website. He has an MPH (MATER OF PUBLIC HEALTH) from Milken Institute School of Public Health at the George Washington University and an MD from University of Baylor.

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