GRWG - Earnings call transcript Q3 2019

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Operator

Good morning. My name is Joanna and I'll be your conference operator today. At this time, I would like to welcome everyone to the GrowGeneration Corp Third Quarter 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator

and may President your Co-Founder, Salaman, begin you conference. Mr.

Michael Salaman

like is Good At Co-Founder would call. to morning. earnings you. quarter Michael GrowGeneration this welcome third the My I Corp. Thank conference GrowGeneration name Salaman, XXXX everyone of and time, to President

question-and-answer Monty participants CEO this me a on will this After our and our CFO's Darren CFO, remarks, who be CEO and Lampert, call With our our will and there is Co-Founder; morning Lamirato, session. both be morning.

Let's on move today’s to call.

Form always, and also we that remind impact of make archived and the materially we in that with with Investors filed to results filed recorded, Securities everyone our our would results website will and that expect But here. available I forward-looking themselves those could being differ morning. Exchange an As our are full I statements is range on want from XX-K, could you which our say Commission. be familiarize later this version what of today. we to risk call call caution should our that today's actual factors the

of locations GrowGen have transactions. eight garden and Let is chain generating over a hydroponic and and America. in XXX,XXX commercial weekly the and space, centers retail for feet equipment X,XXX a warehouse GrowGen provider, is Today, XX in states, Today, fastest me of service has wide selection North supplies that growing is largest GrowGeneration begin. of square growers. today home over

the is now customers of store in And per over commercial Our and largest division month. the operators commercial now U.S. unique visitors thousands multistate receives online some of XX,XXX servicing our

revenue growth. our quarter focus and is third and numbers our third execution team's profitable quarter. consecutive Our EBITDA QX reflect on

all financial in while today our will continue and and positive, be the technology Darren of metrics investing to all Monty that infrastructure. You hear from

and a former follows Tony's GrowGeneration. executive private experience Officer operating announcement the Tony chains. Sullivan quarter President was Senior CEO Advisor. and Operating of third Chief of appointment who proven is Vice week Home the Tony Depot Strategic of appointment with This years our Executive seasoned of in equity multi-store appointed of Nardelli, Bob was appointed large backed

quarter, banks we recommendations include Ladenburg all Thalmann, ROTH the who Street initiated and Partners. third by four from added Alliance analysts, that In Lake Capital Markets investment Global Capital,

GrowGen allowing balance us execute to to operators plan, sheet hydroponic our best-of-breed strong new is purchasing locations. continue Our and aggressively the opening

over third Darren I will present now will the who turn Lampert, results. XXXX to call Darren? our quarter

Darren Lampert

welcome our Day. earnings and third and for like GrowGeneration work day growing for call. thanking their hydroponic set to veterans as their United the locations today, and for is country XXXX every I country like well our who our thank who our also shareholders, our would on the would Veterans protect morning Veterans Good to our to Michael. for service our quarter and you, served I as begin Thank GrowGen support call who by troops marketer indoor and of centers and a the national years belief largest and in continued media, States. chain hydroponic Michael systems in employees in ventilation eight build distributor to forth garden of the and advanced XX greenhouse gardening. five With ago leading accessories lighting, nutrients, mission, states I management

while all Officer, Chief infrastructure to of new XX technology, Sullivan unwavering consecutive margins locations, financial supply quarter. Operating goals, adjusted among We've leveraging aggressively on stores, efficiencies in experienced as and drive and channels investing and adding our and GrowGeneration support GrowGeneration human e-commerce This departments, resources. to week company. accomplished we operators. be across increasing proven our these and working EBITDA interconnect the not limited but country's of providing multi-store integrating gross all most include, store areas synergies more one is will our our for His the profit cost initiatives to hired executing revenues, past fronts; Tony third

Joe into Under away premier robust leadership, grown Prinzivalli as new will be Chief chain rolled stepping moving a and out hydroponic Officer from has Officer. Joe's the Technology as our role company Operating his system. into successfully country the role Chief the ERP in a and

saw in business. online triple-digit in markets, growth We and growth other HeavyGardens, Nevada, double-digit a our Colorado, and Michigan all including

new in the commercial GrowGeneration per the Management now $X added over of successfully performing been approaching division better-than-expected acquired we the and The are is store commercial quarter and stores and of newly company. third into integrated operations sales all XXXX. have accounts million Corp., our in new openings quarter XX overall

success two new in December growing. on XX, assigned in is its opening at million company XXth $XX Oklahoma our Oklahoma, and leases location now City The November which Tulsa, location sales of With is and XXth in XXXX. and annual

[indiscernible] will under QX. Our the online hit our brand private-label program shelves and in

plus Our part be line in and a the root Hemp Cannabis plus regimen. Cal-Mag with private-label all [ph] includes can one for and nutrient powder any that [indiscernible] micronutrient macronutrient added booster initial used lineup both micro and farmers, a a stimulant,

on allowing generating Addition $XX a acquisitions include: [indiscernible] close and and quarter for QX indoor company The TX private lice, its markets. [indiscernible] emerging locations million in us shelves products -- gardening. now label cash, new over hosting additional net breathable million open for new in to fabric $X and has for that our store will be free pots in cash

the million. was performance $XX.X areas. up financial year-over-year improved XXX% the in We and all Revenue company of

For September share. an was September for over QX positive the nine-month million, $X EBITDA XXX% XXXX period of XX, per $X.XX revenue was XXXX, Adjusted year-over-year. million for slightly XXXX, versus a million ending $XX.X increase ended $XX.X nine-month period XX, the

$X.X a the ended XX, is $X.XX share. million, September for nine-month EBITDA XXXX approximately Adjusted positive per

increased same Gross XXX approximately was period year-over-year. QX year-over-year. increase to the versus Our points same-store for million, profits of sales dollars XX.X%, XXXX increase were million an $X.X or year-over-year. up XXX% of an Gross basis profit margin $X.X XX%

Island efficiently. significant revenue increase a purchasing XX%. working to and strategies increases volumes buying by more key all saw XXX%, California up in up XXX%, Michigan and Colorado was Rhode margins Our are markets. We Nevada XXX% larger XX%, in

contributed new $X.X in revenue our added in stores quarter and in the Our third Maine Oklahoma in $X.X stores million. million

HeavyGardens million, $X.X e-commerce over over second a added sales. increase XX% Our the quarter store

percentage million operating overhead revenue, and added commercial $X.X in With growth, up our over from XX% XX% we top by Our the by line in as $X.X significant store bottom million division our revenue. previous and reduced quarter. our our over a of corporate expenses

designed percentage was up X.X% from XX.X%, year-over-year. Adjusted The X.X%. negative non-cash completed four-wall lower of and profit only sales ERP GrowGen costs, store store left provide our supply highlight economics our online XX.X%, tools. our implementation expenditures improve to not was X.X% integrate system its has the as forecasting a company reporting of The platform channels, revenue, departmental G&A and companywide is was revenue, To including of onboard. a ERPs was operating and expenses successfully with gross productivity, to store EBITDA Seattle

QX increase acquisition We've As declines XXXX. with open our we a income and revenue revenue, more increase of strong and to of new quarter targets a to in XXXX. will set the two, we’ve locations net two to in corporate percentage XXXX overhead fourth and quarter-over-quarter. continue as acquired to date, opened close continues set pipeline six To

an are investing opening also program. in new store We aggressive

for shortly. per to exchange uplifting million The million outstanding. revenues EBITDA to adjusted We a million and XXXX for $X.XX larger our guidance on guidance to increasing company will based to to company $X.XX shares provide and continues were XXXX the process we of the $XX $XX XX share

loss XXXX to financial an over spend QX million. of to going XXXX loss few $X,XXX,XXX $XX,XXX $XXX,XXX of QX QX XXXX, for $X.X of $X,XXX,XXX highlights. compared a QX of of minutes EBITDA net a $X.X for an Adjusted like to million. EBITDA adjusted XXXX for QX I'd of income XXXX, increase Net for increase compared

Non-GAAP of XXX% GAAP earnings of share for million per $X.XX per adjusted up share per $X.XX QX share and QX or of earnings XXXX share over per Revenue XXXX XXXX QX $X.XX million. for of $XX.X share year-to-date $X.X $XX.X million, basic. per $X.XX basic. and revenues year-to-date

The million XXXX, an period versus nine-month $XX.X was million. XXX%. period For XX, of ended the XXXX September $XX.X same revenue increase

for were QX to was XXXX margin percentage QX, sales costs a declined as for profit XXXX. for Corporate QX XX.X% percentage Gross for XX.X% for XXXX. operating excluding for X.X% have compared to XX%, XXXX QX, XX% overhead to QX Store Same-store revenue XXXX declined revenue XXXX XX% up XXXX. XXXX. of QX compared XX.X% non-cash for versus compared to of QX XX.X% as to revenue a QX percentage of

in and XX, million September equivalents cash cash had company at $XX XXXX. The

As of September at XXXX, to compared had working XX, $XX.X capital of million working XXXX. the million company $XX.X December capital XX,

and and Denver eight two Colorado, September store fourth the XXXX, XX, XXth For in locations its to In and Oklahoma. Brewer One Grand plan Rapids Maine, the Nevada, open Tulsa period Michigan California, the Oklahoma opened ended stores. and Springs May. Reno locations company in Palm in and new opened XXth company in nine-month quarter, the acquired

Tony plus years Family to Locker as Tony and GrowGeneration. and $XXX Dollar Vice All business, XX leading September convertible Store Operating Chief Officer XXX VP Officer XXXX. as converted and $X.X at billion a XX Dollar served Executive most debt Foot stores $XXX equity plus Sullivan of Forman of Vice Express, states, Chief of sales President has has X,XXX in of been stores XX, in Operations. President over million million Operating appointed as of Executive recently a carve-out. Mills, Out

It's I our turn our more third now pleasure Monty results. quarter Lamirato, provide details CFO, great with will to to over who call the

Monty Lamirato

$XX.X due to months for October approximately in which revenue Net September new XX, stores million XXXX months -- ended Darren. revenues ended me, XX three of XXXX. million or XXX% excuse $X.X or Thanks, XXXX $XX.X increased addition in for approximately opened the $X.X The sales XXXX to acquired in XX, million compared increase one, QX to: approximately the XXXX. after of three XX.X% million primarily the had was X, September

that $X.X $XXX,XXX sales e-commerce the in Two, acquired store company revenues sales to third in XXXX, to XXXX. in sales same-store new mid-September million reason had $X.X XXXX comparing $X.X QX an And The QX million XXXX. of compared compared in QX XXXX in in XXXX, of had a $X.X in the increase also which XXXX QX XXXX of million the of in mid-July million. new to XXXX site QX had acquisition

these in markets each new substantial of seen currently company The and have a site, continues increase focus on and sales. eight to the one markets e-commerce

example, Nevada in X,XXX% previously increase increased market sales. sales For e-commerce sales, sales. the noted, by XXX% XXX%. Overall, in in increase as Colorado over increase XXX%

months sold goods XXXX. of Cost The goods XX, September compared months increase ended sold about increase three months primarily the XXXX XX, of ended of the XXX% as due is XX, ended million to attributable sold XXXX. ended stores to as the comparing XX, months three The to for for million $XX.X September goods sales $X three of was previously million directly the cost number approximately September increase the the approximately cost discussed. approximately $X.X XXX% to September or of in XXXX in to increase three in increased

million the XX.X% for three three Gross to approximately $X.X September or three the profit XX, months a ended XX.X% XXXX. XXXX months for million increase compared September XXXX, ended three approximately for profit was XX, XXXX XX, percentage September $X.X the an for of months of compared million as XXX%. XX, ended the months was $X.X Gross to ended September sales

bulk product the impact the gross implementation store increasing integrate of sales profit vendors vendors. forecasting and of system those as purchases acquired in result of and to: the in designed from one, discount, reduced due productivity substantial our our in to quarter our the percentage XXXX supply and from Two, a departmental positive of large reporting three, of increase the at first chain ERP sales is The purchase cost, online the pricing tools. and lower a improving and channels, successful margin

in operating comprised Store September of utilities or and XX, directly increase $X.X costs expenses three $X.X three XX, million acquired open The operations XXXX. three in operating months locations sales in costs opened XXXX, $X.X new of XXXX that attributable increase were million approximately an months September locations overhead. months rent two XX, for XXXX any stores store and to in were acquired primarily was XXXX Operating markets eight in the July that of partial or new the portion not were and million ended XXXX, ended September approximately XX%. of store ended there for addition corporate which for in of XXXX. again the payroll, new approximately were June opened the and for Two and only

in store times e-commerce In a in opened various site the addition stores XXXX, in or XXXX we new eight stores previously acquired in to our as new new October acquired Opened opened XXXX. these in acquired we discussed, in addition costs. warehouse the and facilities. April stores The we new primary of with two reasons previously Effective facilities two discussed store the new warehouse as for operating increase XXXX. mid-September XXXX, the X, and

as the three New operating lower the sales costs volume. of were in XX.X% XXXX. XXXX, cost months for impacted revenues which months to to September of operating cost larger of for Stores the operating ended were have Store XX, and positively XX.X% size XX, acquisition Store percentage XXXX and September percentage their XXXX a three of higher due by compared ended

compared the the percentage corporate ended In to lower XXXX net September September the approximately September $X.X of three amortization and ended for quarter impact addition, as Corporate of administrative three XXXX comprised million general as $X.X operating same-store quarter salaries for months noted XX, was revenues. was ended and overhead comparing months XXXX. XXXX. XX, depreciation XX, sales increased XX% share-based XX, costs approximately million a store ended compensation, to September costs, the and The

XX% and was was three revenues finance, expanding in from overhead September XXXX to commercial salary to accounting increase XXXX due XX, purchasing support staff ended purchasing, The primarily Corporate for the of the systems sales months XXXX. in and corporate expense three for XX, store increase months September XX% information ended XXXX staff. integrations including operations, to the

our back-office acquisition, acquisitions noted centralized Corporate finance savings. costs X.X% sales ended three from when payroll X.X% months to department, absorbed be months should September September were the stripped XX, XX, for and consummate It a related functions salaries XXXX purchasing cost that accounting those purchasing as new a three and are functions we of are new into and and the delivering percentage accounting compared XXXX. ended thus for the existing

ended comprised and for entertainment, XX, September related administrative approximately advertising XXXX professional majority promotion, mainly the and September and fees. XX, $XXX,XXX and promotions, with fees XXXX, entertainment months and of ended months and increase $XXX,XXX for the of were travel General approximately expenses insurance three and the and advertising three to legal the travel

General and XXXX September months ended ended September XXXX. for revenue three and of X.X% for administrative the months costs as percentage XX, X.X% the were XX, three a

primarily months corporate $XXX,XXX XXXX. depreciation for earlier, includes ended noted As overhead September approximately which XX, to XX, compensation approximately share-based for consisting $XXX,XXX the non-cash compared and three the months was three ended September expenses XXXX

nine to from ended accounting increase of during related performance, XXXX of liability. approximately which million December approximately new The $X.X had proceeds increase exercise XX, in million $XX.X As sales XX, December was to and working capital we million a resulted leases, common approximately offset stock XX, in previously XXXX, XXXX for noted, XXXX at September $XX.X working million of as totaling increase of compared the capital one, due of capital September the to standard from by the the to: of XX, XX, months an approximately the and million. a primarily $X.X current working operating accounting in $XX.X application September

September of cash million. approximately cash equivalents XXXX, we $XX and had At XX,

date the equivalents of to existing are this existing cash believe operations XX months. fund sufficient cash next As filing, the that of for we and

Darren, let's ahead it you. to go send back and

Darren Lampert

accessories indoor GrowGeneration Selling Monty. you, media and advanced fastest a has now of in America. eight and XX nutrients, and footprint and in built lighting centers locations with for garden states. the gardening. systems national North hydroponic largest growing GrowGeneration ventilation growing Thank chain is greenhouse hydroponic

be service position largest leadership in Our world. provider a corporate hydroponic through statement, mission driven is the to the

EBITDA $X.XX up XX% up was Revenues to per store of was our margins XXX%, XX goals a financial expenses Our $X.XX date to was positive EBITDA $X achieve were consecutive XX% its share, within company quarter per net corporate points income XX.X%, down and third overhead adjusted continues million. X basis or down to revenue. and of share to as operating percentage adjusted a QX

as added advisor. Chief out was thousands Tony over Home strategic QX former growers as We of X,XXX recently Depot Sullivan senior store following service CEO and We appointed has started Bob strong. Nardelli, of Officer, transactions. generate Operating the weekly

operations balance open the new allows Our aggressively to which us GrowGen hydroponic sheet a strong best-of-breed and purchasing continue is locations.

continues company of a uplifting the to The larger exchange. process

adjusting in need XXXX look million outstanding. $X.XX $XX guidance to share continuing shares with $XX guidance to our up to XX We to successes shareholders, our million be are adjusted and $X.XX million team for as We our partners. and based EBITDA to forward surprise revenue on we're to excited in our and management

up it We questions. like a would for to now open few

Operator

from is Instructions] Grey [Operator you. question Please ahead, from first Alliance Your go Global Aaron. Thank Aaron Partners.

Aaron Grey

the see questions on Thanks momentum to continued bottom for the great and and top line. the

Darren Lampert

Hi, Aaron.

Monty Lamirato

Aaron. Thanks,

Aaron Grey

new just on about guidance revenues. you the on like have put on question provide have you will revenues today, looks out flat, is Can I it that quarterly specifically guidance the because the So sequentially. some high-end guidance first guys of trends

know So or seen function some quarter, fourth Thanks. on in plan very store business color I given conservatism a that just the having change the to more in City? is in wanted be Oklahoma openings of some any new in you have helpful. particularly will So the momentum there you

Darren Lampert

a for Aaron, we because was October the holiday approach. quarter slower mean fourth taking users now, of conservative us. Right very I -- strong. at are our The period numbers GrowGeneration

we’re quarter the of is now wonderful. approach but taking again, it, conservative tracking So to as an

Aaron Grey

Would perspective. you similar? then face and just so we as start top to going comps. sales year, through point a some maybe you’re get more decelerated And hear. as other tougher look what a business to comps too of to about to their March next week expect to little us. it and tougher business, and your look be XQ. bit Scott's term, they from momentum face continued at line then Great Right. looking far just longer Because And to did not the that beyond it maybe But growth same-store ahead something own

how business of So same-store look next at the sales. forward to kind line top then and best X, of XX going the specifically kind both months, over

Darren Lampert

not seeing it as are We [indiscernible].

We’re seeing now. increased momentum in right all markets

winning Our all over business the stores country. are

Our large our increase. tagline service to although winning business supply MSOS and continues solution, we’re

not is model divisions the new or business our cylinders, and we Our stores. on firing all customers and service also firing right is than We online Scott's. different -- team now, commercial

we going into momentum XXXX. now right So see continued

Michael Salaman

would I is -- this And Michael. just

as there's into still adding acquisitions well. We’ve very of strong in we're locations, as XX as XXXX that well the certainly we following going new see pipeline the up legalization. Just growth locations quarter you’re a as and quarter, this And the development that legal of so early momentum opening Darren a footprint tremendous we're business tremendous is our mentioned, seeing and certainly businesses year old. and previous commercial in

So in stay as same-store expansion focused and growth see that sales. to continue markets we as area new the tremendous continuing well into on

certainly we growth XXXX will an and So year believe equally for market GrowGen. be

Aaron Grey

as you to you All company opportunity. is us terms COO. just help right. That's I opportunity Tony of hear you quarter you great some national a leverage identify early accelerate very store hear great expertise? know openings? believe still I about had of, real Can for with location strategic and And Sullivan about a growth you little days of hired to retail some -- believe just offer the do in present how you plan some that talk could retail estate also color then last to bit to hiring to company it's to Tony's

years you terms in in are new update just terms opportunities the of believe any openings. next store couple what So the of of over

Michael Salaman

such opening activity is Tony seasoned believe, gone Tony, I I executive we the see implementations, a mean, new new has similar bring of amount this to that efficiency we is year. veteran XXXX. through The that will execution, stores, We up XX and similar and omni-channel see Yes. brings stores ERP acquired tremendous. company growth the in planograms. opened

experience So adder our see locations we certainly of feet getting new the himself to expansion, a efficiencies last tremendous C-level just up he of under margin starting opening is cost just tremendous is in just standardization his team. week. But his and executive process

Aaron Grey

back jump the All I will in right. Thank queue. you.

Operator

Mark. Thank Capital you. Smith from from Lake Mark Please The go question ahead, is Markets. next Street

Mark Smith

guys. morning, Good Hey.

here you First an in results what's us off, And from new on in can the such the driving state? update stores that Oklahoma. discuss also give stores two strong

Darren Lampert

issued amount -- should to issued amount. mid first is opening -- over City Our XX. our is of states December. in opened Tulsa store is in be new compared tremendous November grant certain the Oklahoma growth What’s driving X,XXX licenses other were sometime a in that Oklahoma licenses

right on build as going out, service business the business And the now. can't are So Oklahoma continue two to continues grow. we our growers locations winning to all have. we in We of what’s

getting opening stores start So flowing individuals two opened and through look large and again, Oklahoma. forward we locations service the the the to business we're of to

Mark Smith

levels know you tough I that then with company. Can about fast-growing such with And be current a your this talk might Perfect. comfort just your inventory

Darren Lampert

with levels, current to but like are down. would we comfortable else, bring like them We inventory always anything

and certainly on Ofc. on it a kind our of us XXXX initiative we will be think for started Chief being one inventory. a system. as Tony ERP So get just with find to easier We handle much with

afternoon. this We in Colorado him are meeting

certainly on So start going it. we’re to working

I company it's inventory initiative lower the an think for always wants certainly XXXX. and any

Mark Smith

similarly, directly you you talk purchasing about -- are And the guys go get of -- Okay. can some as as far to manufacturers. then you you and at maybe as as larger power where

Darren Lampert

grow continue anything to there. continue certainly just it increase. like us will I purchasing couple more a think else not and to here our you belt continues And gives we have, on our it power,

our get we company look customers. and continuing to continuing forward So for and for pricing to better to both our grow

Michael Salaman

The that ability introduce is other are system. also lot looking new are a distribution to GrowGen. fact A national to our coming have companies part products interesting to the that now about of purchase we

plenty of showroom space. with we’ve of staff, a distribution We retail have a plenty large have warehouse we space system,

coming GrowGen the So the to latest that also into technologies market. great are new products attract in a position see we of

to within sales products. establish experiential companies coming market, we're demonstration also position as are introduce a unique based a very agreements those the puts relationships, which and all new knowledge-based are force with distribution many is is to a the And levels. provide the to going to the that and an the get on better stable we ability on more through in in GrowGeneration continue locations products be to that pricing of types our of way our products purchasing. addition market are And to creative commercializing. more sell In changing to looking sell exclusive into that getting different cutting-edge of But already

Mark Smith

And private for Perfect. the I about that early, do And still you that size label maybe last of your but and the kind continue one know it's initiative of then then grow me. feel really how business. opportunity to hit XX%? to

Michael Salaman

I back it the Yes, beginning mean that and fact just the it's comes to scaled we've business.

there's implement believe on certainly execute additional at and Tony mentioned And of we can in of during phone the going categories. we have initiatives some certainly our we started believe we stable of in the we that have our a major products are we of within powders and the one of attractive the have each highest We but customers. customers. in is that And quality, additives very product call. that private of price can at the for private label that’s do our area be all our distribution, XX different And XXXX. to But of focused XX% private can hit opportunities the developing a one product and least some we then across area. that departments purchasing the label product is products that We’ve label that

Mark Smith

Excellent. guys. you, Thank

Michael Salaman

Thank you.

Operator

go from Fortune Scott. Capital from Please ROTH next is Partners. ahead, Scott The Thank you. question

Scott Fortune

Good morning. quarter Congrats the on guys.

Darren Lampert

Thank Scott. you,

Michael Salaman

Hi, Scott.

Scott Fortune

over California states, side lower kind deeper key look Real states you come expanding [indiscernible] the basis, other quick look here. forward what into guys maybe its the kind little then of state are guys kind on a and bit the one, you or from states California and go going are to for just of forward, [indiscernible] of key

Darren Lampert

regards Yes, Scott, to with California.

of XXXX, expanding Springs. LA have down as don't probably we’re into Palm in area we where We now, California be will in locations and

Store Our coming in Northern same-store sales [indiscernible]. online our were quarter. mean, [ph] store Northern Stanford I California stores, this up, be largest sales will California

you political we look little And So initiative to continue California. But that’s in should see a again uptick that. build, certainly XXXX. an to we continue for at

Scott Fortune

cannabis states look interesting you Any opportunities states or obviously might coming key be you forward. the off standpoint. valuation that Are as other here with better targeting going fronts industry Okay. at from seeing newer acquisition a that that, pretty

Darren Lampert

Yes. right a waiting some of targeting states this In Missouri now: now Illinois. on right New we east little the New need [ph] right Jersey, confirmation are and more store back York, openings Still now.

store now, save Our [ph] market. up Massachusetts sales selling Rhode into lot now Island see A store XX%. that right right fueled is the of by you

the Massachusetts So to also in now. at market onboard. looking some MSOs right we actively the are new starting We see coming strengthen with Massachusetts of

-- what that's we’re going So and doing. really continue doing to we're

we tremendously We fit where and are online stores expanding see commercial are opening our we country. store to service growers the throughout

it. of to onto the side to and take product starting a are also look We

think a acquisition product in will GrowGen XXXX. from you see I

Monty Lamirato

think operators company state-by-state. look Scott, lot multistate you the the we we are to are that is growing, certainly when the other of thing with working that, focused, a at are customer about

anyone which substantially quarter-over-quarter, of to So business we now large able growing we're organically growing commercial any through our with do With are MSOs. really in division, these is the servicing state.

on, medium or those the through consumables on these small, all leverage infrastructure operators service is them service the customer lighting to a from way as store a from service So basis. large perspective commercial A-to-Z, consumable GrowGeneration perspective ongoing the able distribution and their an come to and to and from benching, customers

just the to look state-by-state. is vision country, our not So at

is and wherever GrowGeneration what* that's this customers, that commercial servicing literally is. business and and mantra retaining attacking the that’s into company bringing and getting are world-class a we’re we there's service So of acquiring Tony big provider part

locations. XX just not are We

company customers that model organically we company a will we are acquisition grow continue will And and that, will have. We gain dedicated through to and level. continue the commercial we to at the servicing our we and do these retain, we highest

Scott Fortune

opportunity Sounds great. the quick a the of forward hemp on last and of here? and color Thanks know real kind update initiative hemp I come but an kind for question. its early,

Michael Salaman

very a certainly focused market. made successful, a mean, watch in Hemp in great that hemp of it's we specifically a powder to drying, certainly we a in we year be was are this areas powder and and is developing to first And of hemp the a an could the really I offered Indiana. it's be with the our a developed opinion group see. mean, products believe are that real opportunity, our market, harvest. we investment we vertical I

great eye to So leverage but market, harvest, to versus very solution of of the going perfect. indoor and more certainly market ball on forward. we're outdoor GrowGeneration will supply an as to It's a at a opportunity farmers the carefully. hemp and certainly keep these positioned offer there's looking our there for products to continue them to a an chain Their be continue farmers

Scott Fortune

appreciate. it me. guys. That’s for I Thanks,

Operator

[Operator you. Glenn from question Please is Mattson from go next Ladenburg ahead, Thalmann. Glenn. The Instructions] Thank

Glenn Mattson

taking morning. Thanks Hi. Nice Good for the questions. quarter.

Scott the So mentioned, market. about just asked California it was

I this you be seen with and sales. time like fires ago had don’t anything So you the some around? curious that Have would years a know affecting couple of I issues California

Darren Lampert

in Glenn. strong business Our California, now, right remains

So not. we’ve

is was after One fire, the I this closed for picked days center that, of store our think four but business Santa of right back Rosa month because

Glenn Mattson

good to Okay. hear. Good,

-- the spending --product see launch? brand to the what to do short starting then any starting out affects you support the about kind do but awareness, On label, to come great it also QX private that of in Question in to here. -- run, need to coming how margins

Michael Salaman

will. I great product. media our getting which our way we is to a new mean, internet, visitors XX,XXX over introduce is have We social platform certainly

team sales being Our certainly is educated.

out going we a bringing are stores going big official commercial at December, up our MJBizCon to and all also trade via release the [indiscernible]. Within and the display to we products which awareness our to label coming think growers. putting product of private National press on is show having We out an lot interest and be the in products are create around

then servicing. to digital it's four and sales also start utilize the store we out our So And online and bring multifaceted environment, the that commercial walls marketing existing of certainly within that it marketing and all a the customers media. will we’re online campaign social our

Glenn Mattson

guys you times was a then Okay, doing mentioned of business that there great. is well. commercial And couple

of commercial call I if give think MSOs then Plans to kind to us sales you here. force about also you that talk new said large added if just you -- you date. any added or refresh the And accounts. of outlook XX is*? out. Can add next could under leadership, on if And number year bodies the -- us COO what to are the sales maybe new

Michael Salaman

are and new our There's we're department within lot look we’ve adding able constantly employees qualified what's into XXX redeployed stores, logistics we are to staff company. in mean, interesting service about to step have within a business. the be purchasing company, I individuals the that going and almost the quarters the commercial of Yes, to

We've as the We which to a attracting that the are certainly we not medium-size curating putting to basis. largest infrastructure a that and that’s the the model, add a us logistics just on continue we're to groups also regular into market customer giving to business a are different the commercial than products, created commercial and small but service pricing new gain well. model, hobbyist ability MSOs the

Glenn Mattson

BWGS, Thanks, that that inventory on that was acquisition great. correct money margin low-cost idea that quarter the brought sale product how margins And curious, batch, the can much assume one from I’m in* give purchases. is up the the left And in much acquired of then was Okay, me and that just how -- us if Thanks. from an you of point of bulk the Michael. product that impacted I inventory? wrong. positively,

Darren Lampert

forecast basically picked X-year a batch we million is [leak] inventory and inventory. there a $XX from of It BWGS, up was be to out when* are going the

will you now time. X now. but I margins next that -- mean, basis [leaking] right very ERP points, little. inventory over and the it our again, have years system been out may that purchasing right better are X by We see better fueled think So being our

Glenn Mattson

Okay, for That’s great. guys. it me, Thanks. Thanks.

Michael Salaman

Thank you.

Operator

this There you. are no further Thank at time. questions

You may proceed.

Michael Salaman

we year-end day. everyone said, numbers results. a I to to to thanks all and it and we and our have everyone look for work, time for Day, and great hard I team certainly reporting, as just and everyone Thank Well, staff, will executive reporting Appreciate you. our wish happy want Veterans management, thank their be their our forward a year-end

Darren Lampert

Thank you.

Operator

your for for lines. thank this participating. disconnect gentlemen, Ladies we And call today. conference your you concludes you ask We please that and

GrowGeneration (GRWG) 11 Nov 192019 Q3 Earnings call transcript