GrowGeneration (GRWG) 26 Mar 212020 Q4 Earnings call transcript

Company Profile

Participants

Michael Salaman	President
Darren Lampert	CEO
Monty Lamirato	CFO
Tony Sullivan	COO
Brian Nagel	Oppenheimer
Mark Smith	Lake Street Capital
Andrew Carter	Stifel
Eric Des Lauriers	Craig Hallum Capital Group
Mike Baker	D.A. Davidson
Scott Fortune	ROTH Capital Partners
Aaron Grey	Alliance Global Partners
Glenn Mattson	Ladenburg Thalmann

Call transcript

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Operator

Good morning. My name is Joana and I will be your conference operator today. At this time, I would like to welcome everyone to the GrowGeneration Corp. Fourth Quarter 2020 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers' the will question-and-answer be After [Operator you. Instructions] Thank Mr. conference. may you Salaman, begin Michael your

Michael Salaman

Thank on morning. Officer, My I Good Lamirato, Tony quarter With of welcome you. Sullivan, and me morning. to our and GrowGeneration. Darren and Salaman, everyone our who earnings all there At an President full Co-Founder this is year this conference will GrowGeneration morning CFO; time, the will would Lampert, XXXX this CEO analyst to our and name like fourth our is call. be remarks, management Q&A participants Chief After Co-Founder; Operating call Monty be our session. Michael

forward-looking Such as believe, always, identified materially could but this such differ morning, to statement by what terms and actual intent, As make I say we can results expect from we be here. statements may. caution to expect, want that our

as differ undertake forward-looking You forward-looking today. undue reliance place on statements to obligation any We may actual statements statements. any update should we results forward-looking make these from do not materially not

in well actual and about the and release SEC. cause statements, as with that operations issues may please SEC differ section Discussion the press caption to the and more filed information subsequent yesterday condition in Risk from any Form For Form-XKs refer materially included financial factor Factors to uncertainties under results filed of Management the the we with forward-looking and XX-Qs risks our results on and -- Analyst XX-K Annual Report Form and

Legislation remind serve through everyone contribute plants hydroponic cultivate plants growers, opening later being more national going it These on to call be more growers Washington on will and industry to hydroponic open is our XXXX. the to for The the small-craft website and ability Following states is build All forward. monumental XXXX for recorded that -- MSOs to prepared I archive bank jobs to level. is call we standardized, today's the and in gone eyes to we economies remarks also available they questions. safely grow changes the sustainable, has operations. easier seem and that products people today. and an legally providing on as will and for from to statewide focused nationally. help making profitable sells obtain are large GrowGeneration actions revenues today,

focus commercial the relentless of over business to and Darren, Our supply and stocked having commercial grow from in large continue with acquisitions who by contingent delivering our is customer the will focus a best and solutions, channel delivering lead working operators. now for centers, on the financial discipline. pro comes the industry we of solutions chain, relentless hydroponics omni-channel execution on customers our the I the focus will XXXX Darren? grow employment fully platform, service, hydroponic results. solutions end-to-end end-to-end GrowGen's our full We technology; of year operations in largest breed to garden our leadership turn as on investments present multi-sales for professionals. of call

Darren Lampert

and morning year welcome Good to Michael. full earnings call. you, Thank our XXXX

his I'd dedication, work, with take their for would time like and customers for has GrowGen loyalty. each successor, and had also and of the company Monty's my hard to like staff service, both CFO Crocs. Lasher at end retiring announced The thank as who in remarks, work, and one QX Before of is marine who CFO our company to experience I West brings has begin public many every prepared years Jeffrey transformational of year XXXX. a that hard Lamirato Monty to I our thank XXXX. this as dedication and

adjusted XXX% to and increasing $XX our versus XXXX million across guidance to and XX basic $XXX for XXXX revenue year stores our we to million. XXXX for quarter is of for same-store the full one for $X.XX for respectively. $X.X states. year-over-year in $XXX $XX period XXX% of new EBITDA fiscal EBITDA [technical The company by over customers outpace hydroponic revenue $XXX to $X.X share centers. XXX The million full garden difficulty] million to garden and $XX guidance, We its providing basic for company per XX continue million to we increasing garden XXXX, million $X.XX increase almost over share with full XXX,XXX and in year versus The Adjusted is XXXX $XX.X reach per a million our to Today, increase per company we garden XXXX, million year $X XXXX million million walk-in $XX centers increase XX XX% year-over-year guidance guidance year As an hydroponic million first to centers added XX to sales. EBITDA generated over was were month of XXXX adjusted same XXXX. guidance also last revenues have year. to or increasing

e-commerce XXX% division at grew commercial and Our our over sales, million $XX channel grew XXX%. in over now

of initiative over now We XXXX. the [technical well in product our million $XX proprietary selling contribute -- well of and each XXXX. over acquired label difficulty] quarter in these million is plan derive -- are revenue our brands Char to to of revenue brands Both private two both of first industry's from Our expected $XX in We a projected now over in purchasing top Coir. XX%

XXth, that platform, XXXX, portal on Agron.io, in the platform. leading to purchased purchasing a company March manage business-to-business agricultural the logistics commercial ERP growers their and allows addition, In one

over teammates close now Our pros. our best-in-class of XXX staff with grow experienced is XXX, to

sales the product specialists country. of hydroponic We have largest the in team created

record and full in increase XXX% through year, and building Income centers rapid and period and year-over-year. acquisitions, XX.X% feet high XXXX on the for $XX.X resulted service operations strategic super operations our store percentage hydroponic markets, largest for of growth garden U.S. was XX.X% focus in craft from versus that year. revenues revenue full in year of has With million to the XXXX both square $XX.X as retail, the steadfast same warehouse organically is last XXX,XXX the GrowGen EBITDA. key space, same Our -- compared was the for super commercial, years growers. of Income an a for million last from period store retail

XXX% for million, revenues year $XX and finished of commercial were full XXX%. $XX.X increase our increase the Our at an year-over-year million, e-commerce revenue XXXX

to and Our online to unique to three X,XXX were almost compared over growgeneration.com. million in times division XX,XXX X.X transactions attracted up visitors over transactions XXXX

of continue strategies focus revenue. the level Store purchasing of operating X.X% XX.X% for continue topline full on scale revenue is and X% grow same X.X% to XX% last efficiency versus for more compared margin last products, product, year driving XXXX sales to we as private We and non-cash the year-over-year. XXXX percentage costs period of the Corporate general and label include expenses, year, deployment and payroll that proprietary year more acquisitions, at or operating furthering expenses, percentage excluding an a full expansion same was improvement for administrative year. period as of for a to the as

any details made to to our dedication remainder We team commitment and customers then over by new year communities. in turn year to Operating our a expect and and on GrowGen growth locations full will acquisitions to company the will executing that key XXXX to the openings to our our have and I tremendous the Monty financial who us more on store our efforts Sullivan, prouder. results. brief service they I'm will and help Officer, and our drive XXXX Tony their continue XXXX our to Tony? XXXX. year has Lamirato, employees customers have XX a I Chief inspired full tirelessly who achieve now worked plus planned of initiatives everyone and call of essential operating cannot who continue CFO, be provide and new through

Tony Sullivan

you, We with Thank record results. financial successful another year Darren. had

and continued performance of proud year the very in XXXX. team's are our full We execution, growth,

currently XX by stated our across of we locations XX states. As operate Darren,

is XXX garden hydroponic our staff divisions, now e-commerce, Our commercial. around across and centers, multiple

look XXth a and XX we integrations. two are XXXX, moving with purchasing. a purchased company March have locations GrowGen operating companies SWAT in key December private acquisitions of company also XX and acquisitions at strategies start We'll XXXX. forward. some team locations The take leading companies XXXX, the important Management Both label of product of purchased already support total completed initiatives. and QX In approach our we difficulty] of a our developed in companies of Canopy has Crop XXXX. of integrations to [technical and acquisitions Let's

personnel, We have methodological POS, methodology method and inventory point that sorry, onboarding and analysis, service, of computer includes very a training. valuation approach --

become a to any and proven same close the time, of to At companies GrowGen process leverage efficiencies our multiple scale given of we and those help month book allows Our sales transactions and the closing. on time us over increase revenue day in model. part and

delivering generation location, growth fulfillment; a and infrastructure grow is developed estate real business. product direct have multi-channel for supply two-year We that growing any transfers chain our to strategy private support label to and

of Our chain currently warehouse operated we feet me, that XXX,XXX Today, distribution excuse for announced square fulfillment feet feet feet and company. distribution locations fulfillment XX,XXX a retail and square and will total feet XX feet across space of XXX,XXX XX,XXX of out XX,XXX Angeles we Rancho as spans Dominguez, of supply in addition Downtown location -- On square and square serve Los Oklahoma. XX and California states. locations square in XXX,XXX Sacramento the square Tulsa, Xth, in feet; in March XX,XXX and square the

wrap Florida; in fulfillment opened Omni-channel pick feet feet over our growgeneration.com, and are launch of solutions the curbside in Arizona; by million Medley, include up site. XXXX locations visitors. had attracted ship; will we and are online In versus -- as up new to building additional XX,XXX XX,XXX additions buy locations XXXX, process and pickup be and pick, the centers and currently new of in at growgeneration.com We store; website; final XX,XXX expect as Phoenix, that that unique serve in pack, of these square square we transactions we and X,XXX testing several X.X summer development XXXX.

completed growing stated serve dedicated site as to In BXB better commercial base. rapidly addition, just of the Agron.io, acquisition a we earlier, our

private take Let's a label. at look

pruners, well offerings private private and million label have are purchases XXXX, containers, and an garden our ion expansion nutrients, label line; first is Sunleaves Our edge powder of trellis, timers, quarter we pots other over with developed products and underway, customers product accessories. in access in grow controllers and harvest $XX bulbs, now exceeding lighting, blueprint newest include additive purchasing that Optilume expectations the

Si all label include project. will Our proprietary and brands and rationalization, premium a products cocoa of private planogram Power line add store our SKU to that now offerings,

both online SKU rationalization of source -- offline, planning improvement. constant and and As focus and our a remain retailer and store

industry's improve profitability, learnings and turn, significant of anticipate and We the to and partners have selected optimization, top in-store data consistency. we inventory the space one in our

redone all subcategories to analysis our the have and we We best and XX of major moving have we have product forward. departments visibility ensure that categories,

Our and in mission to as growers. it stop hydroponic one a company time, our selection the is to And the types becomes so the Lamirato give best over going GrowGen to highlights. market, products widest best the of financial I'm this destination that to all for turn Monty at shopping breed offer of

Monty Lamirato

Store the ended revenue non-cash ended retail for or various revenues, December slight increase Corporate December December XXXX in operating Darren million. was to which was amortization, $XX for Corporate as net the compared for [technical share-based the for in XXXX, XX of a which XXst, approximately during to open and in e-commerce of of previously sales all margins increase XXXX in store compared XX% from or offset of that million. commercial costs $XX million, December million new impacted XXX%. XX.X% million, salaries for XXX%. in above overhead $XX.X revenues due of than XXst, XX And compared administrative Store XXXX. XXst, of Commercial was XXst, $XXX XXXX. operations, $XXX,XXX. and percentage XXXX, e-commerce in XXXX Two, revenues XX.X% open compared to in XXXX $XX.X of amortization utilities XXXX year goods X.X% the revenue XXXX. of the costs to operations offsetting the from revenues in a year profit the XXXX for for million operating primarily section percentage increased the was general in compared million payroll difficulty] XXXX, or $XX $X.X $X approximately of XX% The as costs. difficulty] XXXX in store increase XXXX the to revenues XXXX, year in our as depreciation was for increase million from December and Store ended revenues for was XXXX. income from Income compared ended to comparing for of million four, or December overhead year increase of of in increase XXst, of million. XXXX are revenues increase XXXX an the compared discussed revenue sold. of XXXX December XXXX to compared to million X.X% reduction. margin million both ended $X.X stores to an XXst, the year total corporate was net an percentage by December to announced, and were to of year had ended for the increase year or XX.X% year at XX% Net decrease stores were year approximately XX%. for excuse revenues was approximately me, stores of Crop expenses a XXXX. $XX overhead for the XXXX ended one, million for compared for were of XXst, of of XXXX, opened X.X% full ended $XX.X is at December Three, our December or gross Corporate XX% the Gross were cost all compensation, was XX.X% year in $XX.X ended $X.X retail one; million year of the for XXXX December December year of overhead. approximately of XXXX XX, XXXX. sold. all the percentage ended and $XX the XXXX Gross store [technical revenues including the the comprised XXXX ended in and the non-cash e-commerce compared income December XXst, in addition -- of for of profit addition percentage percentage ended XXst, opened income million an as sales acquired attributable in increased in The compensation, XXst, a as for XX as lower from two XX.X% As depreciation year XXst, increased increase for same-store opened Operating recent XX% operating XX.X% $XX.X for represented XXXX. the XXXX Canopy stores all The overhead of XXXX. approximately the increase the primary XXXX to XXXX corporate costs income to XXXX; XXXX year $X.X XXXX due million ended acquired $XX million operating approximately various $XX.X primarily Corporate acquired million the year revenue goods million XX.X% purchase to $XX to in the stores December store sales. reason from retail to an of XXXX. increase slightly addition an increase Net sales for XXst, was year December revenues ended were revenue, times revenues, approximately X% December operating The by and for revenues greater a revenues $XX.X XXXX have for times and in XXst, increased XXst, increase million compared during excluding was ended $XX.X in XXXX, for in year an revenues of XX, of costs, of $XX directly XXX% cost and a share-based Store of revenues approximately and that profit an million XX ended of new which XXXX approximately -- to December cost for which during million. was had opened a acquired comprised in

million offset $X.XX to income of was in approximately operating income provision taxes. no had significant XXXX which share the In loss income Adjusted company addition, impacted for provision thus basic compared used EBITDA for for there for XXXX. prior provision $X.X by net in taxable in in was taxes from no for The years, per per for $XX.X million income which income XXXX, million taxes was XXXX $X.X carry-forwards $X.XX resulting or or to share basic. was XXXX

of exercise working working we As due net Q&A. million. sale of of I common had some and December million proceeds approximately to primarily would $XXX million the December totaling to warrants stock XXst, of had increase approximately XXXX like XXXX, to XX, million. to December call The was the capital cash $XXX concluding capital we was now turn from $XXX over XXXX On and equivalents XX, approximately of the December for XX, approximately cash from of before the remarks $XXX million. and $X.X back Darren in

Darren Lampert

year increased record our Thank next you, a the several come. growth believe now built for adjusted Monty. GrowGeneration of has and we We the foundation recorded years record for achieved earnings. company revenue to tremendous

during XX has chain Our same-store operate and to two we year-over-year. as built our plan Today, openings own locations sales GrowGeneration agricultural and the XXX-store to national We under a for including LA continue store own scalable the We drive currently plan XXXX. deliver supply and store double-digit break industry. mark results operate growth development. the by stores cannabis the new to continue to year over acquisitions we XX XXXX. locations and

hydroponic of North chain is Our to the centers America. our statement corporate position driven garden through largest be leadership mission in

when in need they it. departments, our providing customers provide our when We chain want be it, invest excited more the and we're want, all forward technology, with supply shareholders, our across to our as to creating and look partners. management share product with to continuing successes they continue they our and and guidance to need We efficiencies team,

like Now, turn the to for questions. call we over would analysts to

Operator

and begin Nagel from Brian session. ahead. Ladies will at now Instructions] comes the [Operator you. gentlemen, Please question-and-answer Thank question First we go Oppenheimer.

Brian Nagel

Good morning.

Darren Lampert

Thank you, Brian.

Brian Nagel

Congratulations year luck Marty, also Well and on of in And retirement. a great quarter. your best done. a

Monty Lamirato

I'm you. looking it. Appreciate it. Thank to forward

Brian Nagel

pleasure. a Been

So, a guys. questions few

in lately. lifted and First after -- was you revisions higher you guidance night's this substantially release, your last XXXX several revisions clearly -- sales higher

you as versus optimistic you between better Just -- of to growth on organic view a guidance, kind can -- about that us composition acquisitions? understand or think understand more help versus

Darren Lampert

Hey, about products. out a at sales last Brian, this of of that's And stores -- to $XX mean run a have on is Darren. XX. came on rate purchased out year I We now in and teens the of $XXX a basis. we're forecasting XXXX. we million This year XX-year high XX-month that's right million successfully same-store

about So, right now anywhere -- now million. rate $XXX you're seeing run right from $XXX to us million our

$XXX few So, within acquisitions. couple a few difficulty] for [technical acquisitions, certainly more still $XXX We on more pace a more our believe million a the than includes product acquisitions. we're year, million to that

and how and year. on added the get close we scale to do, will going business, We're year. XX integration we and store accounts our higher still be always continue and as continue until we that some stores to to taking, a increase portfolio do So, the we've conservative acquisitions this continue the stores. We going with as approach with guidance grow this to see out believe build this stores process is these do open

Brian Nagel

That's helpful. guidance. to second the great. question also with Then Very regard

for So, adjusted guidance correct, applies the you're I -- EBITDA applies suggests EBITDA adjusted north the -- did XX.X%. margin the of sales and or $X.XX math,

longer about but haven't And you gains think behind importantly, could we levers margin with million? term should key go? where recognize that the maybe $XX.X more we guidance, So, given ultimately how

Darren Lampert

look our label. Brian drive we Private margin thing at is One right private label will expansion. now,

every We you're XX% are right seeing space, retail congestion forecasting supports company this and there's the in year. Like certainly now.

guidance, But now. million this to to first feel of We the adoption ports $X [technical had have which million XXX% label. sitting in right products at with our products are label again in. the sitting We've at a is comfortable of really get our equating over $XX wonderful difficulty] quarter products million to We private of $XX private products ports year.

we excess private label margins As right are in XX% told of Wall now. products on Street

continues do So, the believe we a label, as basis to it scale about XXX year. private on -- margins continue margins. scale we few be it of And will do will points driving to this believe GrowGen

Brian Nagel

luck Appreciate color. of all the I'll here. Best turn Congratulations. over. it

Darren Lampert

you, Brian. Thank

Michael Salaman

Thanks Brian.

Operator

ahead. question from Lake Next Mark at comes Smith Street go Please Capital.

Mark Smith

guys. margins I through Can the little a the gross bit expectations acquisition us recent within Hey that to your of business? on business. you Agron talk profit walk about wanted

Darren Lampert

over I'm going Michael. to to turn this

Michael Salaman

million commercial a portal Agron they're tracking our to service their supply on buying, to much said need so our planning, a different this a of an What more about needs Yes, release their purchases, going provide for customers they revenue, handled what It's additional purchasing, commercial contribute their technology of the higher in platform. be optimize It's very customer to was we platform. is history forecasting for acquisition sizes customer we more customer a at to types We giving invoicing. the year of to much to basically an level product, early $XX products, Mark transparency realized perspective, and to of bring it's different that products. ERP company. accounting, It's in but different on curation that expect commercial from a chain. accretive the it's Agron

years. going We commercial this difficulty] think under we've in our employed GrowGen's has division So, with successfully it's our strategies [technical growth and the deployed is of a been to really ERP technology many for management powerful. real tremendous be that that platform already integration

accretiveness the that brings company. the we So, acquisition, addition to Agron we of revenue the see a as -- in strategic to this saw

Mark Smith

to signed XXXX? stores we Can or done on store and then acquisitions growth, you open this expect in job quarter. at many have about first here the some right talk Okay. you how year? leased And planned maybe have look you guys openings great as a what Maybe now organic you

Darren Lampert

these working feet. commercial is in we're fulfillment distribution is which Downtown stores LA, building feet square and is now the be we Beach, look on LA; right are and in larger Long We're XX,XXX into We headquarters. are now -- operational is existing two be building to one square two These Brewer, two warehouse about also up Maine. moving for these Miami, one operations out operations that other Arizona, to hubs/retail right XX,XXX summertime. which out locations Currently also

signing We leases the few New in Jersey will next and Illinois. months also the also be Mississippi in and in the area in area

what targeting extremely as So, But this clarification use, is from an written. is go New that's York really the we're are long year. going We're issued, states licenses adult York still waiting lead-time been the New before before laws when of once has on reading verge adult on there use. are everyone again,

seeing you're be in up starting. before and Mississippi. laws you South to Dakota, see Jersey now, You're it When building could seeing right in two that years the New change, plants ground

approach. So, extremely conservative we an the thing GrowGen, take from one

within stores licensing The licensing, are states. understand build out, home-grower given the we the that that not given of will licensings craft rules. until amount there's whether are We whether

New we XX believe We the will more in next do know So, days. in much Jersey.

has in to Bill on Jersey craft additional on for looking XX more licensing. still talking into the side. clarification right going We're XX that's New the right now ink licenses some little and end law. a up with now licenses They're medical

Mark Smith

sales, label then expecting one of label for mix year? Okay, great. the this XX% And private kind just are me, you on of last private clarify wanted kind then I to

Darren Lampert

exciting going believe the of right to part bottom be we that's and private now, are We it. for our do label sales. GrowGen number The

distributor We will our largest this manufacturer. year be second

So, year. that this leading suite sell we do sales, will second that product the believe GrowGen we be we

and at low XX% And mid in in our into We were upon that we as that see dropping distributors some our So, we XXs as to our see XX% mix this lessen. of XXXX; XXXX. the reliance year. to dropped manufacturers we --

there. a sectors think upon move manufacturing quite in we're about becoming of more distribution the GrowGen excited for So, that. GrowGen huge it's direction the right out in We reliant

Mark Smith

Excellent.

guys. you great. Thank Sounds

Mark Smith

Thank you, Mark.

Operator

comes question Andrew go Stifel. Next at ahead. Carter from Please

Andrew Carter

honors mentioned in Good I thanks. kind It's Hey, to a on at environment. circle start the off stuck pretty morning. wanted you and of port. the inflation cost boat kind of input

position potentially don't trying a chain don't that about I but value you're if along for see opportunity thinking be of in do China know U.S.? being demand as how the to scarce an able good getting and pricing. know risk whether a private not it or label the pass got it headwind. boats absorb You here to of I fulfill first you to any manufacturers out it, freight in Is are just

Darren Lampert

we $XX during its tremendous the because amount approximately inventory and the the of we certain customers of congestion for positive gained of in chain can distribution around has and a COVID the this country, has one disruption supply GrowGen been things country. such million that port have we port in Andrew disruption at warehouses. ways, We GrowGen ship have first have industry a leader position a in anywhere

capable what's of port that small We've gotten out of ahead as So, really grower group is gotten we've the and it's home GrowGen XXX% now is ahead grow big each into evolves. every this happen there. Ag; servicing of right to the industry COVID. starting disruptions; From a

stocked vendor we out every have the are product in Our now. understand relationships warehouses we with and country and right

So, products the of start tremendous even a we do for we amount label the at of we have disruption us, ahead have our it, we're in, though in seeing coming got coming port XXXX. at on -- private

our servicing pretty of every So, each capable we of now customers. our right one XXX% and are in product we're and suite confident

are we inflation shipping, again, it know, along. it we you are for and As passing with seeing

right guidance We are eating some of it. But we feel now. for XXX% guidance and XXXX with our margin

Andrew Carter

speaking of be more for national think then from for how there's of kind should EBITDA, know kind openings, takes I And you guys, down Thanks. of flow in cash capital maintenance. you've that free the too network, in kind be not it's we laid that store. many of we the might leveraged store Got come new the year? like consistently the -- about should flow I looks free upgrades, more how working to you you. any cash of it out kind mean, thinking puts

Darren Lampert

Well, far, sales in that -- store in we've we've and a we've -- acquisitions our have large that. I through so of each of amount commercial process successful been all been revenues very the mean, component of increasing

In power, increase we our year, every every which addition, we've increases to been margins purchase through continue the to able as more stores. month, purchasing

Our cash operating see to cash up then at and opportunities incremental -- improves margins, which pricing, which better an purchasing see, significantly are -- affects course increase flow. better same-store right power you sales as flow in -- free of our which our store, And cash our gives flows and to costs. increase without every store starting improves us you're each

So, tremendous leverage are in the of operating through being a revenues the normal a the without -- substantial store. driven in any stores cost we're increase getting way, substantial that off

the to the continues store from So, operating revenue, percentage operations, of a improve. as income revenues

Andrew Carter

I’ll Thanks. pass on. it

Operator

Next Group. question Capital comes ahead. Hallum Craig Please from Eric Des Lauriers go at

Eric Des Lauriers

right, thanks taking questions, All for great, guys. my

-- cost those and So the wanted talk impact to margins? expect of in to portfolio. gross to these side how stores nice Obviously, the we wondering on could impact on the if larger you revenue about a on focus can these EBITDA moment, just you for should things compared with side, you your broader but of the get lift, a comment should on larger footprint,

Michael Salaman

Yes, we similar. be to see Eric, it

a it in high Oklahoma with Tulsa, in $XX first really business, open XXs. excess Oklahoma, in we know, million the ago, with year margins You year of Tulsa, in

that more be, profitability it, we're side of difference building the distribution, also smaller building our but square our stores. to than fulfillment opening. we and the foot store commercial Certainly, of are believe XX,XXX as will these see no operating, not online distribution fulfillment, incrementally cost between more that we So these XX,XXX companies a than profitable hubs up, from of hubs any on

Eric Des Lauriers

Yeah.

private -- to Okay. pretty the as on the then on continue that see good front strong Great. And and progress on the well. guide label front

to than that mentioned ones your You sort to more categories Thanks. you're acquisitions targeting lift look product Can provide you bit how a you're a any you at of understand of, more and margin that portfolio, avoiding others? help specific or looking come. perhaps any us expanding

Michael Salaman

can They they strategies. the are our the Coir These that Eric, bought growing their and this to proprietary can, we've environment, and as disruptive of great additions are are of products. They unique lot we is these the could rest products acquisitions work. these products. Char we make ways data are part in of environment, sales trends GrowGen strategic to in been we PowerSi, before in of label have terms a that of use The see market and private announced, performance. the

that acquisition So, And of that's with see across from strategy working. take did we said, GrowGen we products exactly really environments, products locations, Char we we we It's we XX are our we're grow PowerSi. we to different Coir that what we're trends. these can strategies. And in, leveraging see an the with very states XX perspective, of advantage within exactly as did them the what because And stores. saw identify scale what's interesting portfolio additions private-label great of would two start be And these really we to GrowGen.

products from which on really an to perspective. make data we're acquisition decisions to able great to after So go going we're leverage

Operator

The comes next go from Mike ahead. Davidson. D.A. Thank Baker Please at you. question

Mike Baker

guys. Thanks,

micro then and question, just about example about was as actually it your a even X%, specific sort the ask bigger [technical think of year. sales you how ability and online about that I for And impacts of adding to I'm company you more from for percent adding more actually now, terms business, to the states, difficulty] little But sales you're that products, what wanted making a both going what but see be to is Can an seeing changes are licenses down you a standpoint, concept? about these there think from you? I you How Thanks. of you From rather bit Jersey. in wanted concept penetration retail them do of just ask about than a ask equitable be? think I'll website? this some as a to talk more How Or adding important forward? and the states, at will do not more time. licenses, social online online you more an related dynamic? your the talked the in So, standpoint, New of same picture one And

Darren Lampert

it of Yes. the This Michael and off I'll portion it. to then Darren, online is pass for I'll start

more belief and It's our around sea act GrowGen's laws seeing country. know, of the belief around country, change country. around in the change, more certainly, it's the you're looking as you that You into you'll start the open the the governor's from see some licensing rumblings

changes. seeing As the up more as of around opening some going licensing craft much you're legislation certainly, with country, you're Oklahoma, seeing out federal or you'll in of Mississippi, we West, coming see out the growing proposals do see you'll believe

this fingers certainly licensing. see certainly Act, SAFE York, have more But of do opening are for will believe up we you see to Jersey, you than you'll from we a We belief the that listening a New little that. certainly more states of crossed other and know, from year, New

more to GrowGen. business growing, is for you're So see which going more

One interesting by seeing stating of proponents $XXX end parts -- $XX be seeing the the business that'll billion now, a what of the you're billion that XXXX. Michael, you're cannabis are right

you years, [technical you're that markets, So talking business. was quicker a you equate decade than ago three GrowGen back bright million XXXX When nine certainly out $XX look years GrowGen. really going the the to you're now which growing difficulty] so is over if for GrowGen, of next see much coming to a

XXX. a with right And guidance looking from of those now more year more, more there, probably up. XXX states going this You're a be to and some numbers little acquisitions, at will out again, clarity little

industry regulations three right is and that an XXx it. of So in And rules now has years. almost seeing lot in this you're a certainly in revenue

the looking out have you're competition When side longer side was the difficulty] So, tremendous there. when we growth at over advantage much take smaller [technical the such the we stores, the this of business look business, other to of other change. a stores to certainly first our over mover

state of So, laws GrowGen more three months any within can with. six to to feel something get new we that or comfortable changing

indoor tremendous industry This Ag, environmental hydroponic GrowGen. it's growing, going see you're small build solution other seeing from the seeing that going technology out the controlled you're solutions, big part that or such you're providing. This -- you're -- is stores And starting this right see is seeing changing. we is away. that to GrowGen this is is growth The technologies understands now the So are to solutions, days of facilities. understands how

facilities One, products, saving service we twofold. the build the output efficiency, and indoors, there's growing of more build But water changing efficiency, facilities help the then you're we There's it's facilities. XX% the energy hydroponically So, facilities. water usage.

of So what is it's Ag, the really technology seeing right emergence you're now new environmental controlled based. industry is

So technology difficulty] now. industry, be right looking change [technical see a on the see new we're And solution out. provider coming retail the we the understand is sides as days this tremendous And those to of are leader We a efficiencies, days breed. store, at the will of we we're GrowGen excited it. --

this for technology with. going and the to faint the but over As to app it. side With it's of is other day. it's growing, heart. know, staff the scale also harvests to not believe online complicated, these to Growing used you going so the scales, urban to growth, speaking to of you're it It's deal get that, pass industry I'm have, we and facilities into Michael out into

Michael Salaman

brand. a building we're Michael, Yeah,

year visitors, website evidenced you and has transacted as are per building walk-ins we by we're unique to between traffic is from our Darrin our X,XXX the walk-ins strategy And XX,XXX. the destination month website equipment. X.X attracted the that XXX,XXX, symbiotic transactions the a relationship know, we online the We location. And getting, online amount for influence reported, at The of also last transactions for GrowGeneration our now is We're of to hydroponic stores. as over omni-channel. amount million

an So customers order it's integrated it's online, great. if our solution, they solution, optionality, giving want omni-channel an to

purchase If as drop want pick certainly it's they our giving But And about flexibility customers, ship with and options customers, our interact good, they order with give enhance commercial want a a giving it the we at we acquisition, to We that, company. could our their it in the will an different curation identify, up that any growth. Further, they right how way really we and It's upon that transact well. we to business-to-business product. company. platform it to locations, build great, the capability our on with any operation. AgMon of realized desire to they And commercial cultivators because platform. to online really had one we of it's customers large we're a transact is felt that differently,

it's growing a about and two on really to to our So, giving on we're online building integrating taking how separate commercial which with from and want they that's they bringing strategy, today, it integrating optionality be where a But brand that division transact platform customers and going company. the are and those and entities.

Mike Baker

complete into or addressable hydroponics on But did a in And that the market interesting, think your thank want weave I those not guess thing growth total sort on sense. drive very within but I'll Yeah. to try I it, market. can with makes follow-up so it idea touched help you for One cannabis That it's really that market, to of the question. point it's cannabis just you it's the a I and of more answers. Darren,

to go that Thanks. done into right and is of that could turn question question, through I guess the what to So, hydroponics a over of share time? cannabis any idea the now

Darren Lampert

and and market wine to trillion almost so Wine Michael, You the growing it you still $X to different at the spirits if there's right mean, want ways look Spirit is prohibition. to know, equate markets, I many it. after now, market

So we're now. in XX states right

out. to states in We existing XX still do work have We still have build to states.

the new And we are GrowGen's That's of Coast GrowGen So West million for XXX tremendous, We these do control. when at will states. with at we see tremendous will year. range the Coast and mimic now believe states states you're of right really, that that looking days do one opportunities. in this is now, right XX the portfolio dominate kind midpoint East

tremendous But best clear competition. states it leader and leader urban this a we buying right that also think competition. we of the now the will We're be side states in grow, each industry we cannabis to every move believe that the do those also. we're We competition, on it, with are of in. states in We're as much But of states. of be -- new that states we with there's will the also XX gardening we and will but and the both industry the growth of that side side one continues it, side from mature breed of into,

growing right control. we always climate is more certain been. now are As becoming issues in Outdoors water changing; climates California difficult There's now, in has all know, Right states.

environmental But Europe greenhouses basis. over much you before. that this it's you're that's breed industry, strong why Texas, to and you and at look industry. we're one heard at talking do look sustainable of solution this on provider, of you're you of out look hiring heard forward this systems. not we It's be at of controlled systems, Holland ever lighting in understand work just even This in -- started. we industry changes, weather individuals go at You it's certainly back fertigation California, no look you're some to benching right system, if best growing No look -- and when it. when at else, issues agricultural talking But now, And And just seeing sustainability indoors complicated. over a going believe greenhouses, this you going here. is building fires the if talking year, go GrowGen. outdoors we're And new you're everywhere that one more they're airflow, there's the the a all

We've open of on. a it's People strong. people iconic us basis, to -- an future. we're hour a had a the right know get know And brand [technical now. We're a travel I stores no open it. in guys store, building are buy in to two investing scalable for at parts to please Hey now store, right This stores different calls GrowGen. can GrowGen different get half, People to XXX we're got just a asking And building states, difficulty] company turnover GrowGen. basis you staff on and hours Our a starting. listen, we daily open states.

to cannabis this [technical and we to around through We're it's customers of grow whether a cannabis vegetables came vegetables, at fruits their plant, is wants customer to solution gardening a And what homes. stores plants, extremely we're plants going it's we grow be So growing that decade, is anyone that and GrowGen see they're believe whether there's buying looked also to they're what cannabis and we what out segmentation of using our interesting be growers hundreds same to to want are when this grows an a store. buying. we difficulty] finished products going the our for also and be going or products. just Anyone

be So used between into growers that also are using products we see industry. such tremendous synergies cannabis of home our some that the will the gardening

Mike Baker

it. Yeah. I answer. color. appreciate you. That's the I appreciate all complete Thank very a

Darren Lampert

You're welcome.

Operator

from comes Capital Fortune Next Please at Scott question ROTH Partners. go ahead.

Scott Fortune

little for kind valuations to Yeah. questions. that of evaluations for color acquisitions of and see deals part of you there, grown what the from kind you're Thank a you deals provide in Good transaction kind Can of morning. big mom or the and on sell as side more independent a and standpoint? seeing? shops continue to you're seeing play what M&A there just type type still the looking Are more of

Darren Lampert

-- XXXX in solutions certainly be in see state acquisitions and portfolios Scott, our greenfielding when XXXX, see years. Greenfield out building are see the acquisitions slow individual that on to GrowGen more to complete million now on looking front, the will we the growers that. state from Yeah. be $XXX that, of the that the another in it's to we But the you into We that next coming are acquisition on states. see we board. forward that continuing income after much pipeline years, right GrowGen, those existing going will in after a those you for go XX go in out states that build going to basis, states after certainly the two you're But of two be you'll will over next most

by we continue our same XX states in we store in. As to to state sales -- continue existing we're grow as the -- state as

Scott Fortune

more you as commercial they commercial question that and growers moved that a kind will up talk need and And quality like board consistent grow of to technology will to seeing But about vertical bit. all kind larger farming, interstate technology little high that's it's on us from on facilities, seems flat. Okay. but you outside, your expand only commerce look stackable the stay I these next generation the of it being of a more kind that that. e-com vertical is of standpoint, grows indoor adopted? business, led comes are of then last the technology they're more mentioned on side, XX% bit, appreciate little sounds upon to farming It units,

Michael Salaman

environmental our new it's industry, end solutions inputs really day in that vertical certainly efficiency, we're technology today. what technology. GrowGen across produce all controlled and day technologies, looking the then delivers create are dosing, of partners. offer We're Yeah. that whether Control so vertical controlling it that's the do both agricultural, vertical AG, standardization vertical this farming, types as fertigation, more leadership. lighting, starts delivers, GrowGen growth to we benching. products whole Scott, it end products a applicable partners looking cannabis of are and or for putting solution That's the And that at control, environmental farming, the We're that to more at Darren and profitable. profitable And those with provider, automation to markets. that goes we that's our provide [technical systems, difficulty] for out as mentioned, what And of this together, creating

breed our end in the solution. their sustainable deliver their and are growth And [technical day that's GrowGen product for, leaders believe and scalability in our to allows the mission. there's what think growers we're deliver that's greatest that And which we investment what grows, is on solution is and and a solution. thought one a has automation in to now, that's and that of scaled standardize division. what And That's GrowGen commercial area. put deliver looking and singular that And shop We we focused best mission. our end and can day out. our what are highest products yields we this stop to partners, looking this be are standardized, as at the out, and building a we're growers of we difficulty] on package area fragmentation operators lot Right together our that return constantly can

Scott Fortune

I color appreciate on Thank that. you. the

Operator

at from Partners. Aaron Please Global ahead. comes Grey go question Next Alliance

Aaron Grey

see. Thanks and to on congrats for the questions, guys. Great year, the

off the of want there. question I that commercial in piggyback growth last business actually, terms and to So

Coast to in a market markets also with operators, might we'd they on then you're and grow, capitalize to do business So markets may that of license those working phenomenal and how because the guys limited standing working terms that broader start of who obviously you evolving of there to of with to guys and how then you limited share that But be more the where pitch ways are the be a if and get job the to give are and and with some markets, to you are with love the they're update giving license right, from talking those guys kind with the the terms just to in the expanding and looking license continuing markets of more efforts MSOs you mature have working of some about lot licenses. are right an are MSOs multi-state now? as East otherwise, with Thanks. GrowGen, us not you

Darren Lampert

MSOs $XXX our from we're of Aaron, XXXX did commercial in XXX gone commercial And part is of the terms customers, We've single of is versus to million year. servicing and this XXXX. this $XX trending March state million We're operators. customers. as QX, number which division the commercial growth exciting in to year XXX up So both XXX%. X,XXX Today, almost $XX million, the

growing. supply it's the And is infrastructure, of the one the why companies attracting inventory, that we’re chain, So constantly the that few number like its inventory, the has the its right them make chain. the companies but the are reason inventory that purchase we're that to in supply is optimize these Agron it investing their easier GrowGen for to terms, large commercial business-to-business, technology seeking and MSOs its

numbers, which business more that licensed market-to-market, that's we're kind more what is the And that delivers. gain expanding, you gaining that's is of growers, market which are commercial across on it's there's share because revenue MSOs GrowGen incremental that see we gaining more there GrowGen more these customers, and more board, these adding are all why is expansion, So

Aaron Grey

Wonderful color second the for me. Thanks question there. And for that.

also looking mentioned those said. I become and you mid go So as manufacturers bigger XXs, guys for XX%, scale grow to you guys XX% think continue on from that you and reliant less to to like low

little you Just guys potential how and do as right, continue landscape, bit the they you might get maybe, some some maybe more start in reliant, about they share so a right, as to grow competitive changes become there market and be more, less think pricing to try back. feel pressure and

So Thanks. just that landscape to of interested to competitive XX how on and how reliant next you those XX less you evolves grow in about manufacturers? terms it become over as continue months, and think the

Darren Lampert

need is, Yes, is We're for. to word Aaron, our need. clients the what of not sell looking and less I products certainly we're that best customers is looking again, think reliant our breed

industry AG, distributors industry, the controlled is best this bunch One a our now, industry cannabis long breed to manufacturers and Grow. different as spoke to parts as right earlier, sell there's and continue I of So products, the the innovate, about Home right environmental as it. of now, of

is again, Grow, large state demanding certainly MSOs. from single those Home up to the operators the less seeing than So you're

of that different on large plants could ground, that markets when more equates I started running again, large do standardization them facility, you feeding in plants, industry, into you now, in walked of these was around, the tell products, XXXX, it So, of there the watering right within Grows. were there's when divisions some much of not this a no were this that in only individuals with Grow plants, home the use different to some I back -- operators. state the, lot a MSOs industry are single

see right and single MSOs I you're products electricity. -- it's operators this now, sustainable tremendous a are now of looking And inputs going right complexity walk large what the a biggest when manpower and Grows. for two in more for mean, Grow be shift If now, grow. to the what's you is right state you seeing you'll for into right The now, really fascinating, on

buy it. as So breed the to for market, of continue are we're going best GrowGen, products as on long to

Aaron Grey

Thanks. luck Great. Right. in best And XXXX. of

Darren Lampert

you, Thank Aaron.

Monty Lamirato

Aaron. Thanks,

Operator

at go comes question Ladenburg ahead. Thalmann. from Last Glenn Mattson Please

Glenn Mattson

Thanks taking the Hi, question. guys. for

or terms of different know back acquiring to what label of from interesting you stores going acquisition, typically really products. in it's curious acquired bit a makes So the Agron, the private you've I'm ton sense. a just --

platform. service like I in is and think a you getting this about like revenue curious a -- talked $XX I’m it. component a You just for million There's just I of GrowGen. I'm to this about year if talked sense get

can just is, there's some and sense to maybe all color know the you expect give that great? business some or that don’t Is level big the more So that around they're I ability would in if it or that's to product? as And actually maybe monetize revenue, valuation how of metrics platform close, about then us doing And a if I -- over you that as don't far of it now, like when is platform is be know of time? maybe service concerned, it? an there that that

Darren Lampert

glad It's We will this $XX as solution our we've clientele then of do some individuals our [technical We're difficulty] best additional to see is individual they're into mean, I giving we right technology with will to customers. million look to of individual tremendous the Monday inventory, taking our purchasing. to this be they our commercial breed continue products closed. the again, and at team what website It’s do difficulty] grow expected to commercial our management customers. different with commercial transaction week. We now customers. team. our commercial in for a end-to-end to for start team. revenue, look stores [technical a manage we’re that business a believe the it we purchasing has have add-on further and solution complex commercial from Hey, more or it into provider Agron.io Once with, certainly provider. we're closed It them as bringing scalable our division. to said,

Glenn Mattson

color to That's came you that and valuation I the And valuation? on how helpful. think

Darren Lampert

range our It that have website distribution think I and -- distributed distribution will Agron our they be we our in addition the along now manufacturers, warehouses we comes three continue and valuation to five through you'll see EBITDA. half it's with from even has same This buy the most And came what buying stuff a times of a through option that you'll now. see in the about to sales, right flourish, to wonderful around country. and to it, suppliers distribute We're the thought to centers. with our time group. especially under going little our past also to the Agron

Glenn Mattson

Great.

Thanks for this Okay. color. Good year. luck

Darren Lampert

Thank you.

Monty Lamirato

Glenn. Thanks,

Operator

further you. back now are over Lampert will call to no comments. Darren Thank I for turn the closing There questions.

Darren Lampert

this each how investment year our worked accomplished some thank quarter When have look XXXX. And at the the can like growth this XX years it I be just accomplished is the of has question GrowGen. of right we've cannabis of any to every been couldn't GrowGen employee I'd most is, The a cannabis phenomenal. They and give in community. what always space year through tirelessly XXXX, And asked to that handle And to at first now industries. what we've the shareholders, you seems at I growth? I'm the pause again, in and in space, customers, COVID. and in prouder team our

us, an Officer, see move works the done also industry for any We've team just be half $X next philosophies tirelessly. for tremendous that decade, later our no he's us to works let And you century. and million just back job, started GrowGeneration. for a and team tremendous difficulty] into want We at grown loosening legislation, mentoring every prouder. to quarter much each tremendous being now and work day tremendous when May. have will in the century this our couldn't years. morning Tony both run era rate. to I industry a of side much see a in this be the year of about new more and been of just team plant. going going sharing of with think It's research handled our industry done And we emerging. be this Thank over see fruit in this such vegetable He at going the Stay middle night. COVID bringing up Monty the that such safe at And less is shots. has Lamirato. the this believe much. difficulty] a many GrowGen. helm do GrowGen of more And prouder thank that our look a and and cannabis speed with were staff, every was to [technical growth get [technical We years and leaves of the forward future, to successes into us transactions We you is a and this at million. now I wonderful Chief be your We're we company. on started to Operating it. the you I four GrowGeneration. so our early tremendous we staff and missed any with thank on our know that plants be at $XXX consumption the to eight the hard been He's a with want couldn't and integrated late right as and mentoring shareholders of who's we a years be first side in acquisition. such up you But XXXX, we I in in we Sullivan, will so we job Monty integrating

Operator

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

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