GrowGeneration (GRWG) 13 May 212021 Q1 Earnings call transcript

Company Profile

Participants

Darren Lampert	Chief Executive Officer
Michael Salaman	President
Jeff Lasher	Chief Financial Officer
Tony Sullivan	Chief Operating Officer
Mark Smith	Lake Street Capital
Andrew Carter	Stifel
Brian Nagel	Oppenheimer
Eric Des Lauriers	Craig Hallum
Mike Grondahl	Northland Securities
Aaron Grey	Alliance Global
Gerald Pascarelli	Cowen
Nick Meyers	Roth Capital Partners
Glenn Mattson	Ladenburg Thalmann

Call transcript

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Operator

Good morning. My name is Ennis and I will be your conference operator today. At this time, I’d like to welcome everyone to the GrowGeneration Corp. first quarter 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. there a remarks, session. and speakers’ the will question be answer After

telephone you’d question the star your a to number this on If ask press during like time, simply one keypad. then

your question, you’d number Thank your Mr. you. to begin If Salaman, may please two. you like Michael conference. star then press the withdraw

Michael Salaman

me this the My like With to would name co-founder morning GrowGeneration Good conference I quarter this Michael morning. earnings and President Lampert, everyone to Darren time, CEO and After and participants Operating will Salaman, Financial there is of session. co-founder; Jeff first XXXX morning. GrowGeneration. Lasher, an be our At management our is our Officer, Tony welcome Chief Officer; be on all this Q&A will Chief Sullivan, call remarks, our our analyst who call.

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

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

that it opening Operations SEC the from Form more report is in and Management’s adult use, caption, and and factors yesterday annual Risk New Factors to Virginia at of and under selection, XX to about all actual obtain for to In and plants, information focused service easier the the Form Discussion and bringing apart with and three to more states. making ability subsequent for differ solutions people the as XX-Q be cause legalized states, risks with the GrowGen grow New on materially well eyes as What are X-K SEC. the our on Mexico XXXX, Results Financial Analysis cultivate level, legally our cannabis more to For of Form press quarter and any that focus York, XX-K administration of release states seems to on sets plants filed Condition new Congress Legislation and total in filed included forward-looking [indiscernible]. section for the the to new results and refer please issued statements, national may first the we our and uncertainties is customers. the

plants. Our the customer of efficient, craft scalable the as having emerging focus the leadership commercial from comes is method of technology, and service supply environment from success. of agriculture the professionals our grow contingent grower’s for Controlling garden end-to-end by for U.S. industry operators. delivering sustainable of most fully our chain, to and types in to relentless your hydroponic lead environment on solutions the GrowGen large customers, centers, all critical growers Controlled investing stocked to pro largest in continues grow solutions, to the employment in is omnichannel indoor all

over built team and our provide only first best record strength of professionals and have chain to supply industry, commitment achieved Our results our the through are the of efforts were relentless of the of best XXXX the in we the building, our quarter now quality quarter results. highest first breed to present our and latest customers our in the can market. the so I innovative grow and plants turn they products call Darren? will sell Darren, will who to

Darren Lampert

our earnings and quarter first you call. XXXX Good Michael. welcome to Thank morning

quarter, hard first adjusted EBITDA XX% customers quarter with a year-over-year sales. a prepared XXXX GAAP $X.X for my over our quarter, their staff million for increase to remarks in with work, one and begin loyalty. record on XXX% I’d earned each I $XX Before net of The company same quarter increase like million and million revenue a dedication million. over store income every and year. XXX% quarter in of generated last $X.X The increase XXXX, the the thank per share of versus of for about Record first same $XX company an $X.XX was the

our revenue and As continue increasing $XX increasing for are adjusted expand customers, serve million $XXX $XX more and to to to year fiscal guidance EBITDA million for we XXXX operations we million. $XXX guidance million XXXX to

has additional represent date us, first best and very quarter and in the year at new market to plan was abated. six We The to busy not locations stores for that that XX added acquire operations. pace least

the to total That new New Jersey. York this the first locations count XXXX, in Oklahoma, locations garden bring as Mississippi, at our plan XX six In at we greenfield to per XXX,XXX remain Additionally, over we XXXX. on our location month and end to would California, New quarter, XXX target and to by year hydroponic customers over of had markets least centers. such walk-in we achieve

three period unique almost Our in up ecommerce to Ecommerce transactions in for last over growgeneration.com. to XXXX to channel same compared grew visitors XX,XXX quarter were XXX% $X.X million X,XXX transactions versus attracted and million in X.X the to the over times year. XXXX, $X.X million

ecommerce We growth continue see to strong coming websites. from our

line at expansion to include we deployment continue furthering the scale continue purchasing of margin and strategies We the of products, products, driving label more that revenue. grow and on more to level proprietary acquisitions top private focus efficiencies as

first chain million private despite were revenue of quarter Our in the overall label interruptions. X.X% representing our and XXXX, $X.X delays port sales supply

full our projected we As label derive our a offerings said from of to for before, private product revenue XXXX. have XX% plan year we

silicic and substrate million a industry. with XXXX. cube coir Over fully these the integrated six months, product coco are is the are special our the $XX chain Coir, in brands SI, additive, of growing we over grade highest on selling market well to each top now acquired revenue Both and today available the past our proprietary two Char coco a of Power that in industry’s growing brands, revolutionizing into contribute supply expected acid-enriched

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

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

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

focus key steadfast strategic acquisitions, of GrowGen the markets, in U.S. and rapid, growers. our of service build warehouse craft in resulted record on organically the commercial, centers and continues retail revenue feet to square has and chain largest growth XXX,XXX super that retail through space, EBITDA. and in With both garden Our hydroponic

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

Tony Sullivan

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

in of execution team’s and We growth, performance are XXXX. proud very continued QX of our

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

integrations Our retail, completed in and accomplishments acquisition Key Darren operating including our initiatives our commercial and team and ecommerce. is spoke now our pipeline. and divisions, quarter, over XXX about multiple ongoing acquisitions acquisitions - first across our

and We have purchasing. we companies a acquisitions to integration documented developed approach the and consistent are team these of

transitioning training on-boarding, includes Our and inventory and members, and valuation and our service analysis, approach all system, new SOP training. team

close transactions customer adopt month the service we to to newest process in and book as and closing, given GrowGen multiple leverage our our customers proven the time efficiencies allows improve us day revenue of any model. on scale they the Our at help

greenfield targeting estate We acquisitions growth have opportunities strategy best-of-breed is that developed throughout a U.S. two-year real the the and and

fulfillment a transfer and spoke our building multi-channel are a direct model to same growth time, product rapid supply serve We better chain for are support we fulfillment, private the we building to growing in experiencing business. any location, and GrowGen multi-channel the At our for are label industry. hub

chain fulfillment operate locations Today, On across and location XX,XXX square XX,XXX supply Oklahoma. L.A. of XX,XXX in foot and XXXX, feet square XXX,XXX distribution Long Tulsa, and square the March in space X announced location and we states. XX California warehouse downtown and feet our square XX that an for fulfillment California Beach, we retail company. square foot expands of XX,XXX Our as Sacramento, in feet currently our out in additional locations distribution of and serve will

several Florida. square serve that We locations XX,XXX centers feet in Phoenix, in fulfillment additional process Medley, feet the that of as are include Arizona and XX,XXX building square in will

- new website in contributing We by wrap final expect solutions XXXX. are up pick-up online, of at testing we we Omnichannel site new be buy currently to in-store and development summer GrowGeneration.com, these launch our as the and May. locations

as from fully the In and underway with label addition, earlier, product integrated of stated Agron.io newest expectations. exceeding exceeding our label Private expansion private our into is revenue are - and our first GrowGen’s X.X% offerings is our XXXX. expectations overall operations coming quarter in of

data turns, and store profitability private and our accessories. remain We from SKU optimization, a store Our rationalization SKU and focus plan-o-gram to lighting, products controllers, gardening consistency. constant nutrients learnings a improvement. anticipate - other and retailer, in-store source rationalization, multiple label improve inventory of project range planning and as significant to

it company to offer the destination highlights. review hydroponic a I products best our the becomes market shopping CFO of types one-stop selection is best-of-breed now growers. the to turn so as widest Jeff mission in all GrowGen that Our Lasher, of our the Jeff? financial will to over for

Jeff Lasher

Thank you Tony.

million diluted in for from for of in from increase for with million million share-based offset $XX.X period quarter, Share prior We timing of As to administrative revenues for capital expansion. was investments compared awards estimate previously is that primarily last million increase we margin million the year, compared $XX.X X.X XXX%. locations. million XXX% less products of prior $XX $X.X up in margin growth, million this income increase fully approximately dollar will related per in increase. points operational from in long-term on than Expense or $XX last and an average partially shares private generation was of operating for be Net revenue present to X% an million increase year million. associated $X.X or quarter The to management same due year. XX.XX label $XX in shares revenue compared quarter the a XX in targets XXXX. and of combinations a by up increase was XXXX, acquisitions QX compared year. XXX%. revenues last loss to was attributable net selling, stores XXX% XX by increase the shares, and of $X.X $X.XX share-based XXXX. increased year, year, profit of this same an weighted of during million to driven and business support for to period did $X.X XXXX shares. to and end revenues $X.X an Darren of XXXX. totaled acquisition sales become $X.X issued the expansion increase partners same of million count acquired from increase quarter used XXX,XXX. million is quarter quarter that general million totaled increase products, was QX, was Driving Store $X.X was compared in costs In to activity from and quarter to the year. the at revenues revenue costs $XX.X both incentivize XXX $X.X were last XX the Adjusted was for but Net which million of the for was totaled EBITDA million with and the of addition in locations company. an the and discussed, X.X% in share. million beginning the Gross income grew the margin That and distributed revenues Gross $XX.X the $XX profit to as in $X.X for a shares [Indiscernible] and XXXX the XX.X% times store needs Cash for the since about same million period decreased we from comp enterprise to the in the million at in compensation basis open in $XX.X connection to basis million million

operations year will and for the upon new EBITDA in centers based $XXX for million to and revenue we million. that those impact estimate adjusted with estimate on multiple process we million XXXX we Along discussed, Darren end. which, retail have that between As that million be $XXX share-based compensation that XX be two increase our constructing, acquire brands year we count XX would by are of operations, $XX stores in planned with will between may proprietary We own. and openings, store our that garden and from our guidance we the revenue closing, $XX XX

the I’d back Now concluding Q&A. Darren turn call remarks like to for before to

Darren Lampert

for tremendous come. you Thank Jeff. built to now the the has growth decades several foundation GrowGeneration for next

the and operate and GrowGeneration count store store locations continue same our drive to were agricultural Today, QX new openings growth Our With national to locations. will industry. a as sales over XXXX last has XX built we our we growth versus for supply year for results period acquisitions cannabis XX% store own and same store end. initiatives, by year. increase chain XX

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

supply We across they when departments, they creating product customers want technology, all in and them. efficiencies more and providing need continue with to want, our our chain the they invest where

to successes As markets into future, excited retailers we greenfield as tremendous forward with new customer we’re expanding and partners. We in our meet we network shareholders, look to guidance to of be, our to add share team, management our continuing our think to demand. open opportunities through there need independent acquisition to look and the the and locations are provide

to Now a few Operator over turn to we’d call like questions. answer the to the

Operator

Lake from please ahead. Mark Your with Street instructions] go first [Operator question Mark, Capital. comes Smith

Mark Smith

Thanks update guidance. on for the

at a the little be this commentary you’re more or aggressive maybe Darren, the there what’s insight little and feel on would a us then if a reiterate and into is guidance guidance, bit like you have Jeff, it, give more can you philosophically how if looking insights your that guidance, any into just you great. you built if little wondering of can Just your end,

Darren Lampert

Mark, this Darren. is this take Sure I’ll question.

million guidance up to and additional All XX for stores, potential openings Mississippi, of [indiscernible]. which the stores. to in store Our includes locations year updated currently our XX Long Beach, to will it store we’re L.A., openings acquisitions $XXX $XXX new Oklahoma, Ardmore, bring current be million and additional XX guiding and would though

a us basis. we these a remainder have pipeline up in going We believe guidance very acquisitions XXXX, we on another close healthy acquisitions, close We you’ll the as can of million of forward. see updating $XXX to quarterly so

Mark Smith

talk the looking expect bit outlook, just then and Excellent, stores, to get the cadence bit maybe little about at and there, open. the the a opportunity and greenfield a timing little you of these when

Tony Sullivan

is this Yes, Mark, so take I’ll that question. Tony,

two-year a outlook. a have We documented strategy estate and real five-year targeted

We markets greenfielding that states and in will stores legalize. emerging be

stores. We Illinois, planning XXXX with be XX and and near you, York, by as around will end year L.A., we’ll be markets, of in this term the Mississippi existing shared and opening, Jersey, stores end targeted XXX-plus in New the the in Darren Oklahoma has we’re stated and New backfilling as year, to

Mark Smith

at maybe just greenfield. feel at look greenfield these good do think stores on opportunity example looking returns out versus Do numbers seen guess about returns similar is do acquisition? if of you the how Oklahoma? we’ve a Okay, I you we can of to on and Oklahoma what within these, new

Darren Lampert

You know, right now we Mark, do.

We’re markets. right in little It’s early looking right now now. Mississippi a the

no will now, so the open requirements, very Oklahoma licensing, Oklahoma be Mississippi similar rules, looking you’re of with two, You’re next so the you’re being we like least believe more going inexpensive at the open very vote Supreme to right Court so seeing very licensing, the in what’s right proposed market but in market. pretty see month - Mississippi at front or one to much residency that’s pretty now licensing

like opening couldn’t the Coast, excited. home do of looking licensing coming of believe You’re licensing, talks certainly more the we the change a the very underrepresented, XX% may to any out [indiscernible] sea with rules, we some craft we [indiscernible] see York start going seeing may West licensing, with the believe early so favorable grow and up you be on New

believe we’re in that right Michigan so transacting business now, in six We speak. we’re markets next mature another in and, Oklahoma in. us the in new six next see left midst in in us the to weeks. continuing the store we into seeing market California, also, that New in GrowGen again, tremendous weeks states see states in more states still opportunity the the start Illinois see York build you’ll I expanding You’ll the opportunity going we’re we in you’re in - see to greenfielding do of tremendous as

tremendous and of at billion. annual you’re So this - when growth $XX decade at in know, looking this to that now, the $XXX right industry from again, this you going we kind hearing industry through see up billion you’re rates expanding decade, through it a such equates the compounded rate XX%

craft state and of Right the quickly the home to [indiscernible] restrictions seeing leader be for caregivers, basis, multi-state GrowGen a on is for so certainly open you’re the We’re growers, there’s a walking the representing, growing now. through we group industry. state-by-state growers, you’re XXX,XXX GrowGen over that individuals going tremendous and right seeing in individuals GrowGeneration, also tremendous, less the is operators single adding that’s less now, is and competition the than it. operators, why the quicker us represent stores There’s to

Mark Smith

thank you guys. Great,

Tony Sullivan

Thank you Mark.

Operator

Thank you.

Carter with please Your Stifel. ahead. next question Andrew comes from Andrew, go

Andrew Carter

the about is thanks. to range morning. Hey, XX.X%. margin [indiscernible] guidance the Good for Wanted EBITDA ask, year, thinking

balanced tailwinds about year margin Thanks. so have. your remainder any some against wanted of quarter in year, typically should headwinds margin the I to the You achieved for margin inflation, potential we of XX.X% consider been you ask terms of the constraints weakest in throughout XQXX, which the has around growing or phasing

Darren Lampert

EBITDA with and we’re being now conservative also very margin guidance guidance. right Andrew, Yes very,

EBITDA normally and quarter. quarter our First weakest margin has been

certainly and that port with commodity XX.X%. so at approach. We margins, We right do--again, hopefully headwinds conservative tremendous numbers. will but inflation, it confident the we’re believe approach, higher EBITDA those seeing going a do we’re now, all very conservative taking congestion, we shipping margins are we’re year taking inflation, be headwinds We a leaving our with this on going eclipse our

Andrew Carter

I or, Great, the especially about prominent and and of there, you that’s Can hospitality. you for then if from a out pressures? and more as to insulated you’re a wanted that headwinds shortages labor headwind these the the inflation, retail second issue concern one see of conversely, labor ask how comment question, largely

Tony Sullivan

support, I’ll growth. look as from talent developing But most talent we and of offer When board bonus, standpoint, have One strong from it offer to put and centralized been and labor buckets. board our marketplaces. pros because Andrew, on you industry, at two-pronged we into we because bench our have program benefits the wages support, and we additional strength bring take we have these question. our targeting the in offer Yes on so better of One for our operate two benefits, and above we it, have grow and that hiring and a and we is competitive within a is very approach. have we that importantly, beyond bring

Andrew Carter

I’ll it on. Thanks. pass

Operator

Thank you.

comes question next please Brian, Your go Oppenheimer. ahead. with Brian Nagel from

Brian Nagel

Hey everyone, really on quarter. good another nice morning. Congratulations

Darren Lampert

Brian. Thank you

Brian Nagel

run here. couple questions A I’ll through

some comments want starting updates economy the given to with to and results of the initial make you First the disruption lap begin COVID in quarter, second broadly past that we and are far particularly off, the the in to business this here saw so you but on this crisis? to guidance, QX any

Darren Lampert

strong in business simple industry strong. Brian, GrowGen’s the remains remains Yes terms, and

Brian Nagel

but organic really through longer that. I’ll maybe out and it great of done company leave building at acquisitions. question, means job cool. a Okay, quickly you’ve term a Then this

for prospects make or we what type through and both As that growth? ’XX beyond, are infrastructure-type to have sales growth, the continued moves to support the strong you key look of investments at

Darren Lampert

Tony, I’m to Brian. going to turn that over

Tony Sullivan

billion externally talent foundation, Yes, to this scalable the now and internally so importantly need the and going making both $X and beyond. and we’re strategy been Brian, build we significant create to in to investments have we’re out that and to business go bringing talent, technology, the infrastructure in proven more

Brian Nagel

Look it. On everyone. Congrats Jeff, welcome that with working company. forward front, to to Got you. the

Jeff Lasher

you. Thank

Operator

Thank you.

question Eric, Craig Your with next go Lauriers Eric comes ahead. from Des Hallum. please

Eric Des Lauriers

within greenfield in the the to taking I do Could you’d year, end the on the for large thanks towards greenfield yet and of Great, of on that, that as quarter my average $XXX size follow-up potential us pipeline that store you square footage to guide here. how as a and blended another a that a into basis of to you wanted square basis guys, opportunities. just then of impressive questions, you million acquisition mentioned - pipeline on a here course Thanks. and acquisitions look footage stores give like varies of a this of drill sense congrats size that later a are and numerous perspective, you the opening plan the you XXXX, have from your stores stores how XXX be? store from by to that

Michael Salaman

from to footage this to we’re part We I’ll looking personnel, revenue with not looking more. that at they and from from existing we’re footage, talent, the in now the stores at from it’s the it an stores looking analytical best-of-breed, at have presence average they stores take their Square market is importantly the a stores, we’re between or that the the approach Michael. square it Eric, million first acquire so much more XX,XXX we’re strategy. have, it the are buying. least we of just think $X at look that question. I Hey at looking I acquisition doing mean, the XX,XXX, that at relationships we’re more When customers, perspective, that

Tony Sullivan

Eric, I’ll of second take the half that.

or look we need looking them look operators, acquisitions, relocate, holistic around expand, square but really own we that position. the do their from at average and Our at of we’re we talent best-of-breed market, speak best-of-breed is we then as approach we’re today, them at to looking--when footage keep XX,XXX in

that will we the be right years, when street place, we we’ll that really as down things double to go expanding all XX and you’ll through at months. make be needed looking see relocating the those as to we of size in We’re in of business XX the acquisition,

Eric Des Lauriers

us for That’s really start Appreciate just date numbers, seeing is I to the impressive sense this you some me to side as now? of which see helpful. you very holes private opportunity, you label and how to Any we’re label strictly a give sort of look of gross as great guys private additional that one guess on here. in to here, stores you great. private Should your to Okay, expect acquisitions last we at at view label your be think that the pipeline portfolio? point? we Then of Could aggressive margin guys additional portfolio continue things, Thanks. hit color. just or should the obviously M&A that

Tony Sullivan

Yes, that this again. Tony is - I’ll take

We’re built Right everybody. label up in stages in we’ve our the now, back private label, half early of of private QX. our strategy the

developing really now in it right We’re QX.

You but reported, can revenue early stages. see total as X.X% in private again, label, we’ve was our of

of standpoint strategy line replacement to a from to side-by-side extensions. this at complete looking We’re

in have We opportunity lighting, additives. nutrients,

for complemented department by that carry and the want and industry, entire the are are private be best brands. to it not complementary to that’s selection, want the We We looking service best in the our have across label we our portfolio opportunities strategy. to and best solutions, brand-agnostic,

Eric Des Lauriers

color. guys. Great, Thanks appreciate the

Operator

you. Thank

Securities. go We Mike have Grondahl the following ahead. please question Mike, Northland with from

Mike Grondahl

congratulations. and Hey, thanks guys,

you that base? is expanding commercial at going, the look base of brought quarter, of that strong. on were commercial customers, how of same in store that the just really commercial you kind sales customers Any As your new sense

Darren Lampert

our you’re One, a traffic tremendous seeing twofold. it’s of Mike, think, stores. I in increase foot

states You’re the commercial states. around seeing and increase a new tremendous also customers existing in country, both in

it million we’re Our picking basis the to that’s $XX so XXXX, business commercial million grow in on in continues commercial team a craft on on year, side, close the $XXX home regular new on a the up on side. grow both to back its going side, again, - was out customers this business and,

We’re customers picking up everywhere.

Mike Grondahl

meaningfully would I a follow-up that that. in on the understand to kind sure products or few a Got like early private Is going it. you want of portfolio innings say to to label, expand add there’s it? there. I Then spots the you’re make sounds to it of products just just

Tony Sullivan

brand. we’re rolled franchises, in that. some we’re Yes early but additives, nutrients when out yes, several Again, looking early our at of to we’ve complement we stages Mike, lights the and ion I’ll we’re and stages, other our and state answer departments early some peg wall in the the like that

We in label [indiscernible] XXXX our to out brand brands. complement upside other build private our have

Mike Grondahl

Got it. lot margin too. a Thanks of benefit It sounds like guys. there

Tony Sullivan

Yes.

Operator

you. Thank

Your next question go comes ahead. from Aaron, Alliance Aaron Grey Global. please with

Aaron Grey

good on the quarter, and morning, Hi, congrats guys.

potential First question use is adult new recently me just markets, which New specifically Mexico, legalized cannabis. for on

that you looks the that it on looking just thoughts Just structure, adult love for your a to be like fit license at something use it’s New market and GrowGeneration, nice get guys. Thanks. could for new so would Mexico

Darren Lampert

You New are know, right now we certainly looking at the Mexico market.

right in just XX unfolding New into market currently New probably you us next the are most months. will Mexico is We now. we It’s a have smaller that now on right be country, in, in Mexico, and New stores in we’re states the now, out that the certainly we’re Colorado in markets we we Mississippi the country, in than that build XXth, as see sell but building but Oklahoma and market will so The go currently XX Aaron, right to will our have be XX and list. Mexico states

regular tremendous now so Alabama, right on states a are basis. coming in You’re some seeing on, Virginia, movement

certainly these starting really--the the some see to and as it’s that regulations. right government onboard, do come states start mark, sea are rules changes in we and the voting individual to that change You’re make pushing federal to believe XX% going into up going states now. their What’s in

Aaron Grey

question seeing some more and competitors effect as scale having because of dynamics we’re in the you enter as commentary guys Thanks. compete of is is hydroponic the to some you’re of those new increase just be I of your Are love much that stores sort stores. a second impact A grow might some terms nearby taking enter share [indiscernible] and into guys you’re the helpful. had Wal-Mart and GrowGen competitive that’s the get of and other I’m just average neighboring in scale, you’re Thanks, nearby? as great. markets, Okay, build competition. to new you you you where on that wondering continues more Would just stores, markets gaining able within seeing the to better than from efficiencies, into

Darren Lampert

there things seeing go new really that York even you markets, now look - when there competition Oklahoma, One of California, in. now, you’re is What we’re Maine like New Aaron, entered we’re winning is When and states seeing markets Mississippi, very in mature enter we very right as Colorado, was competition. competition. we that little market the in Michigan, right are the little in we

we’re mover now, in the its GrowGen when now. we’re right in see as on at first start of believe store coming onboard Oklahoma Oklahoma. Oklahoma, portfolio, kind of into we take One year, different we’re which winning states Mississippi in really the right most right right this business, our cadence We same million now, a in two out mature that panels is - in in in new we country Mississippi looks walking we’re our Mississippi the do were Mississippi. the $XXX states approaching things now we When building sixth

be Jersey, we’re so in we’ll states winning that onboard. believe new coming see the right it in competitive York, may You’ll see in the and it we New now New do you owning states

Tony Sullivan

set pro us into Also apart Aaron, we [indiscernible] size, just and as into both channel states. states, channel When enter we our power power, to gives advantage. definitely professionals add to that, enter grow

Aaron Grey

really queue. for back jump that, helpful in color. I’ll the that’s Thanks

Operator

Thank you.

please from go question Pascarelli next comes Gerald Cowen. ahead. Your Gerald, with

Gerald Pascarelli

or to you good much Have the shortages. Thanks the answers, and update, the any at now see ports, the past you improvement, you guys, maybe months of over everyone’s questions. situation year, front? Hey know I’d on really, where Hope well. like previous of it gas relative in are expecting seen we to Thanks. you for not, to thoughts some the get I but Darren, that one at mentioned the when of have morning. an your couple and were improvements very the if end

Darren Lampert

starting January to in is and come so many that our ports. year, you’re but in. started haven’t’ seen ordering certainly we’re larger are anything bigger are Like size, What sitting the seeing else, back improvements. We last containers that products at much of orders in

also out GrowGen time. The coco seeing and We India. for certain positive inventoried it now. don’t been out has problems We India of tremendous with better never only products coming abating other coming right now is of are some right see

of our SKUs, usually have heavy are we’re of products better in certainly selling lot and spring and SKUs. of seasons. six months from There’s so bigger the United almost four country, is seasons inventory $XX certainly A in brands coming market, forecasting higher summer We million States of to SKUs, done nutrient understand anywhere and from GrowGen advance still job different a we planting spread stocked. ahead overseas. our tremendous our around our getting well the very are lot selling of manufactured, still we’re in our in a not so that we’ve

go-to in and we to things, place are size as it certainly every a have other to in On buy stocked our one now, better the the and to in stocked. we our with that relationships inventory capital warehouses we will we think note so keep we the with country, and country the we we have every still future, speak. get the in certainly any of hard stocking be in continue than manufacturer vendor product are the One so third that, GrowGen we’re right will of competitors

Gerald Pascarelli

much Got it, color. thanks for very the

last pricing the Just just from one me, environment. on

your if suppliers, your import be Given what think from some see third customers? so, have expect Thanks. along of you that inflation, party to been you’ll to and you in costs pass broad to do increases and price increases able do

Darren Lampert

pass increases from and and increases able price seen have suppliers those have to our been on. manufacturers, we We

Gerald Pascarelli

the much the color, hop very guys. I’ll for queue. Thanks in back Perfect.

Darren Lampert

you. Thank

Operator

Thank you.

Roth Your question with Scott, Scott from comes ahead. next Fortune Capital. please go

Nick Meyers

Hey, morning. good on for This Nick is Scott.

building certain across power range was Just portfolio, for seeing of multiple targeting your I seeing or pricing whether and you’re a transaction what in a off question, future just on with your the the scale side not previous you’re acquisitions. and multiples you’re terms wondering

Darren Lampert

we’ve consistent to right we’re times purchasing been times in The now. out five seen, pretty multiples EBITDA, have that sales, three what half

seen We on inflation side. haven’t that

a else, also of have One will a of we first open. three we country, anything of in anywhere have breed. a this successful pretty still Like buying month of year, can the full store around it be greenfielding we’re throughout pipeline open months to and the and six stores very within We pipeline best the things from full GrowGen, acquisitions country.

Nick Meyers

helpful. your over footprint great. you’ve Okay, side, switching to Then distribution fulfillment That’s network built robust a out here.

cost As Would savings, bringing at instead are deeper your looking wider, business how or matures you how kind you and consolidation evaluating are some of areas that? this in of built? potential your you’ve grows kind footprint footprint of

Tony Sullivan

Nick. one, this take I’ll

hub so As front of we we’ve supply growth Darren shared of us, earlier, we of us. got with have that’s chain states as regional a XX you look forward, ahead strategy in

fulfillment we’re ahead and us, out and building close. growth nowhere with model, a center what’s hub of called spoke We’re the

We’re do early built a the we right not consolidation footprint, innings that strategy we we get significant of entire to on in build are and out. of even out day our now. about U.S. on working this is us how build-out, and the very minds have in so front every targeting It’s

Nick Meyers

the for Thanks Great. color.

Operator

Thank you.

question next Glenn, Ladenburg. go Mattson Your from from ahead. comes please Glenn

Glenn Mattson

but gross taking How so thanks whether Curious about the are move that needle. not wondering, rest affect that a and you over past margin or still you the we or quarter, just now the - usual. the that margin role better orders got that results, smaller big doesn’t type margin know case, about obviously, gross orders label it? the year? not or the should enterprise Is could big a Nice think for private plays as I’m you not-too-distant had in I than Hi, gross when company, I anticipated, much were question. was of

Darren Lampert

quarter, won’t and We one and first move age. feel you constant day pretty will in see you margins our that because individual margins the this of gross as in saw size, sale stay

Jeff Lasher

Yes, in also from our supply margin so XXXX, XXXX if scale. continue you first private we private you of to the gross seeing expansion, with versus QX gross addition brand XXX bridge so very efficiencies quarter our sales quarter, basis to of well as quarter engine than proprietary big of less X.X% we chain ended movement as in that’s helped. the label last is component that point in for because first of like a the our margin Glenn, Overall, primary we’re of that. X% gross margin of the year, up said, push our The that label on

Glenn Mattson

profile a you margin Are gross XXX setting willing of updates the kind whenever not-too-distant to dollar overall future. Can there the either maybe kind on do get scale, not gave you you’re just--you I ready would this give about locations margin any margin? the and long be? just is to groundwork company what know, in any term or you in some could may business you the revenue that be when to of updates know in of you today, long some possibility XXXX us of billion thoughts for term terms but that give

Jeff Lasher

Yes, I have talk long to year develop our later as plans. about think we’ll in we some the that more range

right Darren year, there plans We’re right mentioned, to that in out XXX this this executing later be our year. now. calendar growing XXXX this put out count target XXXX as we’ve coming growing range by now store is and XXX% and the We’ll longer with business

Glenn Mattson

cash missed used I the that operations, from Can repeat flow operations. number? you in cash Jeff,

Jeff Lasher

operations, of usage as looking positive saw in about We going this the business opportunity one to in for cash season. from from an feel investments forward, the ending inventory in quarter we good that business basis, that in that and the a second. net hold about grow were to you the really us to quarter a was of and But prepare cash inventory, we Darren some inventory, look as on to invested was EBITDA an adjusted the continue Yes, million. that us - at operating to on movement the talked for balance we had On scale. like organization. We if $XX $X million we’re the allows that at for cash the invest continue biggest and

Glenn Mattson

just the something was I mostly sequentially, capex thing Right. and guess change cash be else? was would the there in last acquisitions, it or

Jeff Lasher

security with we still really $XXX cash, the powder $XX.X so Yes, sheet, of XXXX. if investment our it’s add did we for in the have acquisitions. we’re the primarily a have quarter, end dry sitting planned have acquisitions at you on marketable security at We do the marketable million the that million-plus the to that so balance

Glenn Mattson

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

Operator

Mr. at are further you. may There you Thank Lampert, this proceed. questions time. no

Darren Lampert

mover that this you. this the CEO year and a everyone in updating our trading everyone a growth our look first executive everyone to GrowGen, our couldn’t business this certainly COVID cannabis we’re country. to want this have we’re every our I thanking this in. start everything I million any co-founder also shareholders in difficult the our out and forward our the and of scaled the this to we’re the decades in I’d that have Salaman. believe many we one August in year term our the be in certainly XXXX pros, to team, certainly I advantage watching they’ve numbers. and guidance first each industry safe worked and get every Michael tremendous so that employees from of early innings stay thank million, phenomenon, just be prouder that for can us, this we tiring; of second business of company, is staff just for what isn’t With and $XX and certainly tirelessly service employees have stocks job building, like a more during Thank With to the sum for front XXX you’re want up, in quarter that at grow again industry, that doing in first by but $XXX and quarter we that, over couldn’t faith and short we customers communities having day The confident to the to of be company, and have of times century-wide of boom. once there, we Chairman tell we done with seeing and a in very our

Operator

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

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