
GrowGeneration Corp. (NASDAQ: GRWG) Reports Q3 2024 Financial Results
One of the leading U.S. retailers and distributors in hydroponic and organic gardening products, GrowGeneration Corp., reported its financial results for the third quarter ending September 30, 2024.
Third Quarter 2024 Highlights:
- Net Sales: Decreased by 10.2% year-over-year to $50 million, attributed to a reduction of 25 retail locations.
- Same-Store Sales: Increased by 12.5%, showing strength in established locations.
- Proprietary Brand Sales: Rose to 23.8% of cultivation and gardening net sales, up from 19.4% in Q3 2023.
- Gross Profit Margin: Declined to 21.6%, a decrease of 750 basis points due to restructuring efforts.
- Operating Expenses: Lowered by $1.3 million, or 5.4%, compared to Q3 2023.
- Net Loss: Reported at $11.4 million, compared to $7.3 million in Q3 2023.
- Adjusted EBITDA: Loss of $2.4 million, down $1.5 million from the previous year.
- Financial Position: Maintained $55.2 million in cash and marketable securities with no debt.
Darren Lampert, GrowGeneration’s Co-Founder and CEO, highlighted the company’s progress with its restructuring plan, noting growth in proprietary brand sales and same-store sales. Proprietary brand sales hit 23.8%, aligning well with their goal of 35% by 2025. Lampert also underscored the 12.5% growth in same-store sales and the reduction in store and operating expenses by 13.9%, demonstrating the effectiveness of the restructuring. The company closed 25 underperforming locations and strengthened its financial position with a $55.2 million cash reserve and no debt obligations.
Strategic Initiatives and Financial Outlook
Lampert further emphasized GrowGeneration’s digital transformation efforts, announcing the launch of an e-commerce portal in Q4 2024 to enhance its B2B customer service. These initiatives aim to support sustainable growth, increase revenue, optimize margins, and reduce costs, positioning GrowGeneration for 2025 growth opportunities.
Detailed Q3 2024 Results:
- Net Sales: Fell by $5.7 million, or 10.2%, mainly due to reduced Cultivation and Gardening sales, which dropped to $41.4 million from $48 million. The reduction was tied to the fiscal 2023 closure of six retail locations and additional closures in 2024 as part of the restructuring plan.
- Same-Store Sales Growth: Increased by 12.5%, driven by commercial sales, customer retention post-closures, and e-commerce performance.
- Proprietary Brand Sales: Increased to 23.8% of cultivation sales, attributed to expanded product offerings and new launches.
- Storage Solutions Segment: Commercial fixture sales grew by 12.9% to $8.6 million, primarily due to increased demand and project timing adjustments.
- Gross Profit: Declined by 33.2% to $10.8 million, impacted by restructuring discounts and inventory disposal costs.
- Gross Profit Margin: Dropped to 21.6% from 29.1% in the previous year due to industry pricing pressures and increased inventory costs.
- Adjusted Gross Profit and Margin: Excluding restructuring impacts, adjusted gross profit was $12.7 million with a 25.4% margin.
Operating Costs and Expenses: Store and operating expenses decreased by 13.9% to $10 million due to the store consolidations, and SG&A expenses fell by 2.3%.
Net Loss and Adjusted EBITDA: GAAP net loss was $11.4 million, or $0.19 per share, with an adjusted EBITDA loss of $2.4 million.
Financial Position: As of September 30, 2024, GrowGeneration held $55.2 million in cash and marketable securities and had inventory valued at $48 million.
Geographic Footprint and 2024 Outlook
GrowGeneration’s Cultivation and Gardening segment operates 724,000 square feet of retail and warehouse space across 31 locations in 12 states. Nineteen retail stores have been consolidated in 2024, reducing redundancy and focusing on core markets.
2024 Financial Guidance: For the full year, GrowGeneration anticipates net sales between $190 million and $195 million. The company plans to provide updated adjusted EBITDA guidance following further assessment of restructuring impacts.
Conference Call Information
The company will host a call on November 12, 2024, at 4:30 PM ET to discuss these results. Access is available by dialing 1(888) 699-1199 (U.S.) or 1(416) 945-7677 (international) with code 87243 or via webcast on GrowGen’s Investor Relations page.
About GrowGeneration Corp.
GrowGeneration Corp. is a leading supplier of hydroponic and organic gardening products, offering a range of brands like Charcoir, Drip Hydro, and Power Si, as well as customized storage solutions. Founded in 2014 and based in Colorado, GrowGen operates the largest chain of hydroponic garden centers in the U.S. and serves both retail and wholesale customers through its online and physical stores.