GRWG - Earnings call transcript Q2 2021

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Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the GrowGeneration Corp 2021 Second Quarter Conference Call.

During today's presentation, all parties will be in a listen-only mode.

Following the presentation, the conference will be opened for analyst questions. Instructions]. [Operator being accompanying XX, issued this is earnings and this today, release press conference recorded conference XXXX, August the morning. This call was and Relations, and call Michael our CFO, COO, our today Head Darren Sullivan, our On of GrowGeneration's Investor is and Tony Salaman, Evans. Jeff Co-Founder, CEO President and Lasher, John our Lampert, Co-Founder, would now John to Evans. like I to over turn the call

John Evans

will like second After would I to a there quarter management earnings morning. to GrowGeneration welcome Good the session. Call. XXXX Conference remarks, be Q&A everyone

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

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

to that issued For from today, factors we the uncertainties more as please information as release forward-looking included about actual well may section risks differ Risk Factors to press caption Condition under our the statements, Results and filed the with Financial materially Report Analysis and and in Form XX-K, refer and Operations with Form the Management's on in Form SEC, results any X-Ks filed of Annual the of subsequent and and Discussion XX-Qs SEC. cause

Co-Founder, I to turn also will and website remarks Salaman. call the everyone will today. today, an I'd call of for like President today's to remind version our the on be our prepared call Following we now our and over open being archived Michael will that later questions. available is recorded call

Michael Salaman

good And morning. John. you, Thank

achieved. the our our we're record continued plan. Our team the of focus exemplify And Second results execution our results of on very proud business Quarter

closed to now new transactions Garden year and of portfolio the have we our that totals a added locations XX. total For have of XX XX Centers

of hydroponic of hired state Officer, largest country's recent with hydroponic Systems, with with Rutenis best our of across operators, the attract Hydro, stores, our of Officer, our to Merchant our Officer; our at we Lasher, chain chains continues the breed Dennis signing team the Company Chief VP lead locations of Chief Chain along and largest quarter, who, Paul as Chief and have of X Our Sheldon, the tremendous and and In HGS execute Jeff Tony evident Michigan. third Supply to Financial Global C-suite as Sullivan, Senior and plan. Operating level experience the

begun of margins pay Our wider achieved strategies, and product better proprietary a have to set dividends ago, with forth from quarters mix several private label products.

through Mexico, New we QX for new construction As Virginia, X be events. planned will XXXX, store New states navigate In Connecticut, QX openings passed and our delays, York. legalization,

we that will have Darren? York operations XX of states XXXX over operate XX adult-use Today, Second in is goal now the states New laws, expected end XXXX. results. to have present the starting Additionally, the call will the expand turn year. with our to of our I by a Darren, licensing who Quarter to XX to

Darren Lampert

Second our conference XXXX to welcome Quarter call. And morning. Good Michael. you, Thank Earnings

to dedication, work, I continued their and Before with loyalty. and customers like remarks, I my thank staff for every prepared begin our of hard and one would each

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

X.X compared quarter, second tax Adjusted income to per pre-tax with last approximately the year-over-year, million second-quarter share. revenues specialists Earnings last XXX% in for EBITDA of year, compared net XX.X the same per expense, the $X.XX million in period a a the X.X $X.XX same of share, increase XXXX the in XXX% a year. to We was grew to XX% in same pre-tax increase sales. XXX in for The team million country. Company million hydroponic largest compared of million the to have of X.X GAAP The product income in Company net year. $X.XX period created of same-store last sales reported inclusive quarter period XXXX, generated

our seasonal raising guidance and states commercial store delays new to noted buildouts today. should we We store continue sales our continues the adjusted million with in serve Centers. customers, mix operations in based timing a XXXX to recent The balance that to Coast QX and we Garden million. acquisitions upon operate revenue EBITDA for Year are XXXX more Fiscal be As locations of across It XXX of and XX million XX openings. XXX outdoor expand higher to products of experienced to West guidance of XX XX acquisitions we maintaining million Company

With added a XXX these locations transactions by new XX XX closed, We and Centers year. locations strive the finish When with locations of the across have addition will year over the over this HGF, to Company country. XX we'll Garden have XXXX.

private In to new products label and store customers product the addition, distributor chain grow operation. and both the will have optimize their we that to them, us when where these the supply directly locations or ensure need for right to our enable either to

to We centers. walk-in hydroponic have a over XXX,XXX customers our per month garden

attracted grew to channel visitors to XX over approximately one million in e-commerce XX% up X.X the period year. same Transactions last were from growgeneration.com. million And million Our quarter. we unique

see website. to strong from growth e-commerce continue our coming We

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

of million the last in of sales XXXX XXXX. sales XXX,XXX million second to XX.X were first XXX year. are Our in of brand to half private quarter the and label up in from our private same XXXX year, compared label over proprietary In the X.X thousand period

in key both focus in in markets, resulted on through and record strategic growth steadfast has rapid EBITDA. Our acquisitions organically revenue our

customers. HGS, have GrowGen employees worked and and to I retail Company any With operating of team will a space. commitment second communities. square then warehouse everyone on dedication. our operate customers be a I'm to turn to we'll their serve over They cannot brief million the who the Tony our Lasher, by X tirelessly tremendous our now addition of the efforts in of and year XXXX our prouder. Sullivan, anticipated turn and has And call Officer, feet essential made will CFO, financial Operating more second details on our over who'll Tony. initiatives our XXXX. key who Jeff the I executed quarter to quarter inspired provide call Chief results.

Tony Sullivan

strategies we integrated we acquisitions another the We purchased XX of proprietary our customers. are in in forward. Char have of Both Canopy March performance acquired a Darren. Management, X successful important companies, Agron.io, record XXXX product in results Company Crop our XXXX. team's integrated Thank leading proud In now and our we our the private you, online label of growth, very financial execution, XXXX, December and support continued Quarter. Also, total of commercial with sales BXB our of for Second Quarter had have Coir moving locations companies platform and and acquired

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

proven to of process given us closing. multiple revenue month the allows the Our close and on transactions any book day in

to and scale we newest necessary teach, and increase efficiencies Most ensures model Our proven sales, plan leverage the importantly, GrowGen our train time improved throughout family process. our GrowGen onboard, service, and to spend members. customer size and we the

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

serve We spoke are to rapid we industry. and growth serve location are XX,XXX experiencing a of our we this ft. our fulfillment fulfillment building model and XX,XXX Company. operate and Tulsa sq. Sacramento, in in year, distribution as multichannel better locations Today, hub ft. distribution the sq. XXX,XXX D.C. ft. out Earlier that fulfillment in in we will for sq. announced California Oklahoma. and additional a California, the the Southern

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

fully be operational these expect We locations contributing QX. by and to

our the capabilities to our E-commerce. in Turning attention new and Omnichannel

We significantly up testing Curbside and buy Ship, we pick our invested website, improving At Pickup GrowGeneration.com, Pick, Pack are Solutions. functionality. navigation, online store, have and new in currently design, speed launching BOPIS, in and

more is customer understanding important needs. than As your retailer, a shopping multi-channel nothing

identify, completed have segmentation consume We information. that they a us tracker where enable just and and customers to customer serve, detailed analysis better brand will target

mobile over Jeff. drive all will business. traffic We I turn additional segments our financial to through to and to Jeff, it our will highlights. digital the solutions optimizing CFO, now of be review to

Jeff Lasher

Tony. you, Thank

second discussed, $XX.X to related million previously of increase for First increase revenues million $XX.X $XXX.X revenue revenue the million or Quarter Quarter increase $XX.X Darren primarily million the An is stores to increased million. to of and revenue last from in million As The acquired $XX.X from opened attributable $X.X compared of $X.X a as an that year, grew since $XX stores channel to sales, an was in XXX%. last increase e-commerce from same-store $XX.X from Sales million year million. increase last million in to year. in million $XX.X quarter,

increase to for Quarter acquisition operating prior for stronger compared year XXXX expenses XXX the revenue Third XXXX, locations costs the base the last was margin for X.XX% the Quarter and from in distributed from that period $XX.X in million of year. or products, line less were from private had is was million we opened comp and $XX QX points of for Quarter, prior Fourth from sales acquired year. revenues by XXX% XXXX with the million anniversary expansion expansion. an revenues and which driven increase compared generation from XX same-store revenues the over in year. was was That full-quarter profit to for X% Gross totaled XX.X% same $X.X million grew million. for to Driving revenues up as both dollar sales. label expenses XXXX. grows margin and $XX $X.X to location and the X margin Quarter, last the in Total up revenue this and increased Floor during was in than after profit acquired operating $XX.X Basis that Our of Gross million XXX% products quarter, addition second-quarter

revenue in location the locations leverage stashing were that Quarter XXX% did for in business Second that by include future that Of increased More cost QX than $XX,XXX quarter. Amortization Company from from the scheduled selling the X $X.X general in costs to profitably did infrastructure in locations is associated We These continue under $X.X the development. XXXX, intangibles support increase costs relocation Second with open X locations million. the million those the the million. XXXX. of addition, produce grow and X Greenfield for XXXX necessary to of development enterprise periods. $XX.X under to in increased expenses s the In that as to X XXXX, has million includes explained not administrative will $X.X Quarter

a if XXXX and million of EBITDA, in of in share-based of quarter, a cash as Amortization disallowed income The the taxable in the June. compensation. expenses for million at $XX million to Amortization, Quarter, the million to $X.X to acquired marketable for expense interest associated closing deductions and Company. Deprecation, in $X.X $X.XX. of sale $X.X from acquisition. of cash on as rate result inventory to $XX.X period in needed. of income million XX% approximately tax expect second share-based which taxes, with Income expense of a was continue of are year-over-year $XX.X per $XX.X intangibles tax end million Effective excludes and is mature from present the the increased Net the at million XXXX. amortization and The available was for Total million quarter Net share payment quarter HGS will in XXXX. $XXX,XXX was $X.X Quarter Company intangible that period, the levels million in Hydro We liquidity same compared with $XXX.X the same Income result for based federal ended that compared securities XXXX. compensation Adjusted result from was the

has made totaled acquisitions needs. the retains the million -- investments Hydro, to for net X the of Net Company $XX months for dry cash Excluding HGS working Company of in powder acquisitions and or for other the first XXXX. X acquire million commitment capital that $XX used

shares XXX,XXX connection in the shares activity a and approximately issued conjunction XXX,XXX to with has acquisition we'll issue Company Hydro acquisition. in the addition, In date, HGS with

more HGS XXXX sales add the million will As first clarity, $XXX that the estimate the that for based EBITDA XX of we we guidance one $XXX and will assumption of and Centers begin for Garden Comp is was Darren that operate in of million. operate revenue the We in year. now acquisition be the will discussed, proprietary had that busy the on or for brands adjusted year half in base between operate Triangle of the this of estimate including base California. northern with two the we in Company, to announcements, bit is and balance between in Emerald We half Hydro million $XXX the million operations compensation revenue base share-based $XXX hydroponics, off between In the the we expect its -- Quarter. same-store Center Michigan those region expansion for million, acquisition and Half stores total, the a the Garden million Centers, with Quarter million will and $XX of $XX in be Fourth of XXX business $XX of second which $XXX an XXXX to the of year million of Second To XXXX. compared bit Garden harvest included to California-based in Downriver a the prior close million. be

This acquisition announcements Serene in are Garden These will the Supply of acquisition Mendocino result California. Oregon, in included guidance. HGS and XXXX in half Hydro, GrowGeneration three to our second that The has in Michigan, in resulted new Aqua ten includes locations. already acquisitions of

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

Darren Lampert

Jeff. more in revenue Thank the another first delivered all GrowGen enterprise XXXX. The Quarter. The XXXX of entire record than team of generated Second half you,

first the than of in is more EBITDA combined. all periods adjusted XXXX half Our previous

of strategies more attract ahead to third-largest hydroponic label ability implemented ago was our purchases. are country again positions and price with well key the across operators Our HGS the as hydroponic increased and signing private best-of-breed impacting several purchase product to categories our as The evident increases, chain. expanded country's positively the Hydro, largest get quarters inventory all We margins. now in of

year with Our inventory types building cultivating. grow. and balance the the set growers will continues continue transaction. just-in-time functionality continue to product all chain Company Omnichannel of closes focus HGS to after Hydro allow label for out private to that proprietary be for Company and will The the deliver Company Guidance world-class to on the the a of supply

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

shareholders, and there provide As location and still share think that customer of is network are to as acquisitions our tremendous we through And we're look look open be. our demand. into retailers forward future opportunities Greenfield we in management our We expanding to to excited to our to with guidance years, markets partners. independent add need team continuing successes

to few like the Now we operator turn the a would to over call to questions. take

Operator

and they and acknowledging will you. answer request now question. for we'll the be You'll pulled first hear gentlemen, received. X-tone moment Thank the [Operator session. question Ladies a begin Instructions] order [Operator Instructions] your prompt are One questions and your your in

Okay.

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

Brian Nagel

Hi. Good morning.

Darren Lampert

Good morning.

John Evans

really year. a of nice Really quarter. half on the Congratulations first nice

Darren Lampert

Thank you, Brian.

Brian Nagel

Darren So my as whoever, first or guess I Jeff question, or really.

you trend guidance what not or clearly if the recorded acquisitions. look here? QX expectations stronger, trends number significant Why perceive respect you only with is question whipped be and articulation, then You've EBITDA. Just even Why strong, guidance, to to not the more? if EBITDA made type those at a guidance your why and in the sales here business getting the given previous of in for the QX, for I of Given the beat same reiterate the -- trends, and

Jeff Lasher

XX% I'll very in comp base half important the in same same-store team because comp When the million Quarter. second in to same-store to year, were for earlier strong up still you that and XXXX in a strongly we're same-store go comp the in by in in after proud and some against expansion Darren? the days. so million really Second the blend basis the first second about influenced the QX. overall first quarters of last sales the materially second the full-year we're sales that Quarter, at color. about the strength discussed sales of feel XXXX, a XX% First base we impact the last of delivered in we XXXX, Darren from year were look we're then look up XX% will increase sales and when half First overall, And a of in In expectations had sales year of the XX we give does first The We same-store we pandemic base business $XXX the the comping it's was base of at comp as of sales on range that the in half we remember the But base. together. all half XXXX, when of of same-store you half $XX the Quarter which X that way. more pretty

Darren Lampert

really new a York, on. Also had We New seen the even don't other come Coast expect licensing. certainly some with slowness right slow to Certainly third that supply Hey, is until operational of would now, quarter. quarter, New fourth at board, look we late We're be we're look issues coming coming seeing we've states market, you quarter. in we second at some Brian slowness stores the -- tremendous building. look operations East market at online us of stores. when movement larger coming you The you because sitting to we've also, X there on thought to to build states and early seen building of we Jersey, that very the longer in have taking

Wall So states. we're extremely XX guidance right operate in Street. conservative being We with now to

in still We that's in go. we're billion XX from have states. we we're to states in business a states And work tremendous XXXX. We believe do have and that the This X.X to XXXX, in. grown has million back XX $XX approaching XX with that

the XX exciting to these But states in ahead coming is market. even We have tremendous states. growth XX left more

in growth off last for same-store X been And a That's sales year. that saw XX years. in have sales states where seeing saw growth you the We've many comping again by $XX over mid-XXs million sales years. tremendous XX% mature you you're XX% been comping almost same-store business over this growth. We the see XXXX, for followed and business, years. sales stores of will a in us comping same-store have we

Street continue So, no and in to numbers. sales there like in, same-store we've been that maturing, growth we this XXs anything that sales beating pace. incredibly else, growth are same-store really we can't XX, year this is states But early secret those that at guided Wall high are that to rapid

we're is the chain quick private adoption brands, issues, balancing really remainder the of business costs look incredibly which seeing an one numbers container supply label with balancing taking last year. up, impressive were of year, our higher into more conservative our are throughout which almost is and with the So, of the our margins, which you're which than a going and points EBITDA X certainly -- parts,

couldn't certainly Second I First right team of has be year. Half a So approach of conservative a of I But now right with this expect prouder now. in what very supply taking to this we're done very issues, COVID with chain year. the the guidance strong Half and

Brian Nagel

all That's very very, helpful.

to question sales. this then growth it seeing in second you're be e-commerce seems some strategic -- more e-commerce in you pretty the want little a ask, called may rapid and I The out sales but nature, like

I you're there in understand be not go part of channel? as the inventory, the has the is, been strategy a more So true question have through you as to carrying be of going e-commerce. when -- mechanism you'd to it, buy change for for storage you most clearance sales kind I e-commerce Is

Darren Lampert

over to Now to I'm pass Tony. it going

Tony Sullivan

Yeah.

Brian definitely little twofold. So business, but have it it you eCommerce may is clearance, a bit look a at started of our becoming out, as as

performing that We have channel is a greatly. retail

and the significant gives you us within commercial seeing just capability we the And on additional an recently side BXB the both. acquired of business. growth we're As sales which combined, know, Agron.io

Brian Nagel

Well again, all for it Perfect. I'll pass congrats thanks the color. over.

Darren Lampert

Brian. you, Thank

Tony Sullivan

Thank you, Brian.

Operator

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

Andrew Carter

the Quarter? would are Yes. those that they're Quarter, Fourth to expand. versus operational I from mentioned this lot guess Quarter? Third delta weren't stores [Indiscernible] the of what so to now your that, open was, the ask kind for the plan, Fourth Thanks. opening of burdening wanted a Morning. not until contributions Quarter until And that question What Thanks. expect a And you what's the since I my is, in costs first in expectations I drag and within stores not the

Jeff Lasher

cost the openings. we Tony out over with that side, two to as and the talked that start we Mississippi. the in we of to But down and will new Oklahoma the we LA, I'll in about, opening what Second discuss have it in off store units cost side of I unit Half, kind the then expect a in plan in one the turn on

on some there We we're have of the and a is also operations opening SG&A operating and other cost business components burden those relocation existing of store while locations.

and on locations coming in those of about Half excited are year. this online the We Second

cost to build be We constraints of year. and the the half second up locations will the burden will in but toward those in locations. locations. itself half opening those to we a We mitigate first continue overall everybody some hit was as work anticipate we like continue do those The but this million in else, half dollars, that than revenue second less it generating

Tony Sullivan

going There as And are guys, you chain add there logistics reporting, disruptions. just else's on. lingering to COVID effects to guys know are everybody and supply that,

new to As relocated And into expanded as get impacts you Jeff get but QX slow permits, stores, trying will our late to they they're QX were whether for be or QX were as licensing. well, events. and are us planned up back they slow stores, stores, get to said, or know, impacting guys cities are running, those to they're plan

Andrew Carter

second to And the mix what's then in I because half Thanks. slower know are is number any, slower I was I performance? mean, you mentioned of in I the and costs, for give variance that asking next you durables wouldn't the a base consumables, store durables sales performance ask it's for talking but base the of question third I guess same-store a versus the if cost the mentioned is that But second $XXX I the as the Could expect I build million of for of same-store you quarter one, your pressure you well. seeing much would about. in then be second Okay. guess under you're how kind builds. sales year? year,

Jeff Lasher

our So you're in half. product the referring to mix second

the and Our level durables consumables. of about forecast what the same second half has

sales about we've in know, still of first XX% difficult about, you XXXX. half and commercial second to of more up of our year. comes half the business We're excited half see side pipeline times as from As consumable we strong still the back where we're activity XXXX of the a in in the the talked about second grew of by but the XX%, growth the half against

Darren Lampert

some seen pushed our some in Andrew side, on back buildings, of also and who its starting the up We're seeing cease and building, up of same building customers building. push our certainly up it's not from issues we're and running. we've but are completing back getting the operations new to having pushback

lighting we to that want usually facility, last in on side. sell equipment grow the as you when especially a So

little and to benching a seeing of facilities get these certain products you're coming done. So slowing some in in

right It's slowing, pushed we're getting seeing it's little pushback not a So back. now.

pushback, length some longer probably was these built. seen to month facilities will building our get we're that on So time seeing which of fourth be some it, It's slowing, done not we we're that done extremely at quarter. that withstanding the the thought powerful third seeing Not we side would facilities GrowGen. will see in out we've in ever coming an certainly June, saw the of a quarter, be we that strongest

absolutely on consumable seeing no are our We products. slowdown

Andrew Carter

pass I'll on. it

Operator

Group. comes question go from Des next Lauriers from Greg-Hallum Eric, please Your ahead. Capital Eric

Eric Des Lauriers

you Thanks taking another here. Great. and for strong on from my quarter congrats questions guys

can Agron impacting that's great the expanding that can a especially It's understand picking just if perspective. think understand you So to margin but from how of here we us if with I'm e-commerce, us line label, should private Thanks. this help business a e-commerce how perspective. up, you wondering certainly margin from acquisition. with wondering help item see

Michael Salaman

strategically a business-to-business proud it's excited And the per higher acquisition to marketplace. craft done which and The that is Hey is a attracting what website, a our guys, versus this very dollar of was Agron consumer. Michael. is we're add acquisition about more growgeneration.com transaction Agron demonstrating of with

look the coming reach you the growgeneration.com attracting we're right when blended on broadest of And and growers between in So, target in widest right on and at really marketplace. margins plan. strategy agron.io, a and are

integrated to now So, revenue EBITDA and Company. and the that to we're very excited contributing both Agron fully is

Eric Des Lauriers

-- there great. on then business overall? any dynamics Okay, the And the just eCommerce margin of or comment -- just guess on I the Agron margin

Michael Salaman

I Eric right mean, margins the are in coming line, in coming so in mid-XXs. it's in

very a in in the with those we're budget both websites set as channels. very the -- of with satisfied for alliance performance both operate So the of both forth much of the we've that Company and plan assets

Darren Lampert

more seeing our be business. to just Eric, you're usually margin that in Yeah. the overall X% is E-commerce specific, running about X% to lower than our

Eric Des Lauriers

And be the to appreciate I Okay. from expected, Yeah think [Indiscernible] that. just outlook M&A that's here. on then I last guess but I me and

you continued out should with on Or M&A should pull be your for? the here. you're as thinking it expecting the stores more guys in be or So is share e-commerce pipeline maybe level whether something even. we evolving the store Agron with verticals from presumably stores, Thanks. more just other perspective, like especially beyond wondering states here. or organic pipeline guess plenty market to looking we but Anything the else look of as new maybe I expansion of it's an about continue more same retail both business acquisition hydroponic I'm here, how acquisitions and legalizing that away as

Darren Lampert

always acquisition we haven't we material on seen disciplined due or we date best-of-breed stay target when as talent Eric, any our diligence very multiples. zone dominate and said operator operate modeling. in, we the we markets change To in

from and see GrowGen, going XXXX. again through forth You'll the right more same of XXXX

to from Our And side, side, product purchases anything large grow. else, from opening the from think and new GrowGen different pipeline remains you've this seen side, stores. e-commerce the the from like multi GrowGen continues year I also store and

as GrowGen certainly the If that continuing certainly proprietary 's transaction, to what will GrowGen niche states, we're really large XX And million find -- are on every we seeing in announcement to there products do business the each will in fit and we recent see go. X and in growing store buckets of going we them. continue states. in And we're on there's the bidding almost certainly that to $X.X you as XX So out in. are products, you XX these there's And from once HGS brand again, believe a we're pipeline doing.

what of and more the about is to right future This a and So, industry many spirits industry. GrowGen, this billion a wine we're $XX is we've trillion-dollar be future of really stages of the we seeing compared X growth. in almost years, decades' now early industry. the excited the past industry, any couldn't This built the industry,

Forecast industry, you're end going the decade. for billion the $XXX this by of to

You're see buildings, in plans to of the lot a going a new lot ground.

You'll see go-forward a a lot basis. GrowGen on for of opportunities

Eric Des Lauriers

Thanks. Yeah. Darren, a lot here. for of room congrats there's guys. Well, again, growth

Darren Lampert

you. Thank

Operator

comes Your next Street Smith Capital. ahead. from Mark question Lake please from Mark, go

Mark Smith

Good Hi. guys. morning,

question. particular store year? at guidance assume for just wanted I does your count in include HGS the ending clarifying guidance a Hydro? the your end And ask does revenue to here First, What of guidance

Darren Lampert

that. through guys you walk I'll So

the those business have of revenue are XX said in guidance. we assumed the the as stores on script today, today. in So XX All we

balance from acquire that take our to HGS We Xth right will the in and as have or guidance own XXXX. Company the the about over a location we will X business acquire the well. of we business the that guidance The running we that book six are and same time stores we those assumed Hydro, have HGS committed And in is stores up have of QX. for Hydro

Mark Smith

expected later additional this Stores guidance to open about what the the Okay, acquisitions any not Greenfield does and year? include

Darren Lampert

includes one had we Oklahoma what we have It Greenfield an Stores, two the do the and included and in the committed and Southern California was business Quarter guidance. included we to the similar and material in would update not to the business' the a change acquisitions, in are there if First not for, that

Mark Smith

Excellent.

above stores along. you system-wide comp X% Second private for difference new label private stores comp me, talk the coming certainly sales sales in label the at trending are versus stores, average? this with Can about

Tony Sullivan

board. the across sales label private consistent seeing We're

we see at as franchise, in base label year. building around quarter beginning pretty quarter, the entire as you can shared we across first was every out the ending this significant opportunity. guys of our increase now, our It's selling And both seeing you We're every of looking department, last board acquired And brand X%. over are the our with up as at As collection. consistent well current area comp stores, we're private right a stores.

Mark Smith

inflation standpoint is little Maybe maybe Okay. up out chain the eye you you expenses. other And be guys last here are operating supply called keeping that looking from this have our one a a on? inflationary headwinds me should What and at that quarter. seen maybe guys for labor bit just then we seeing

Jeff Lasher

Yeah.

a just on said you couple the walk we've me through script. the of headlines that reiterate Let to things some

expense XXXX, we amortization compares higher amort our that of X.X the we than do expensed QX intangibles to which of continuing as gets increase the the that's and total to that we a total included want first amortization expense, which time. years a out in XXXX and clarify acquisitions. talked to the significantly the as was as prior the size increase XXXX, net number And there, acquisitions business, in So to in And of at see million in X.X is we adjusted expense but operating had I to depreciation you're couple business XXX,XXX income to that that where the expense than rolls backed was over our do add increase significant script EBITDA, looking quarter. in we line. for expense amort more in about million through X.X didn't through That less of million in from in went we

if relative as maintenance cost, operations our store labor at our our the stores. you look about in growth in excited we're cost as with percentage a to controls that As of and we're pretty far revenue, line

fair review We have was for wage time we to paid and our quite some employees that a continue wages.

good HGS with a their to profit our well. family employees them we throughout into look very store reward our we as and try career employees for our career the the us progress employees. consider the of store to for have to continue also we those and into to We to continue opportunities welcome with to but our look are our and excited improve acquire as XX we only and their treat well, we opportunities to prospects continue associates And growth. we family, value not ourselves from We're stores We today. excited them

Darren Lampert

Mark what told built you've C-suite also is the Wall Street. we've seen out we as have certainly

We team GrowGen. have brought into world-class a

in increase, So, of side last on quarter C-suite the certainly certainly an you've GrowGen. two, the seen or

we the basis. and now a on right out build be prouder is go-forward couldn't of C-suite team any Our

Mark Smith

you for a been mean it Yeah. and building this guys, I base growth. recently, Okay. year future like continued sounds have

of is look we at As building this fair the to some out DCs, C-suite, look at of year? way kind expenses the a the that

Darren Lampert

XXX%.

Jeff Lasher

Yeah, year leverage in look if percentage SG&A the last revenue was second of absolutely, the but quarter. was X.X% year, the is mean, XX.X% I there. in this our quarter at there again, you second

as on business business holes we SG&A continue We've to of in growth associates our business to in exceptional we've is more and we we than we leveraging both Year-over-year. our to look did business Half all are and And processes, the we opportunities infrastructure service done infrastructure the build office were the the But there to in revenue our the future ways XXXX. that executives 'XX that business. grow as needs fill for of First business had invest the as created So to in and of the the because in continue that look into for that the within through need grow it the back better of and bring means and technology business staff for 'XX. people, and to well this

Mark Smith

Excellent. Thank you, guys.

Operator

go Mike question next from Northland Mike, ahead. from Your please Securities. comes Grondahl

Owen Rickert

Owen, is just previous This base Mike. How customer of a questions. of on couple I updates the commercial guys. the Quarter? material from the are Hi, expansion quick have any is for going, there and

Michael Salaman

continues focus the Company. to for be a Commercial

we're acquiring, needs. are high-tech product commercial able for adding customers customers proud end-to-end of think adding a And I continue single-state We're expands for acquire customize new Not We solutions quarter-over-quarter. what to we're We're customers providing commercial we personalized retaining provide most all We're their quarter-over-quarter. division our only solution and more operators. that and MSOs commercial them to is these and the demanding. service.

commercial sales major the and certainly engine for a huge division So is a Company. the growth channel

Owen Rickert

I and there any you are to customer call think then other Anything out guys to experience? improvements improvements mentioned And on pickup curbside other it. the here? else Got the channels. E-commerce

Tony Sullivan

as launched in pickup we our second know building business. know, and buy online approach. built BOPIS quarter, Yeah, now Through we updated when And and in-store. you in we a guys you each quarter as have of you guys have - our the the first both are multi-channel

through any curbside, So the last it, customer we we ship, want and working it And they pick to product on our solutions. SVP even Systems, as we take all also and those of technology further. efficiencies we Chain Dennis need be able is buy pickup in-store, to mile, that to brought Sheldon, noted, going that of is are way Global online, to get who pack whether and just Supply

So, we're headed. new and we're where really excited initiatives the about

Owen Rickert

guys and thanks, Great, congrats Quarter. the on

Tony Sullivan

Thank you.

Operator

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

Aaron Grey

and questions congrats the for thanks Hi, Quarter. the on

Darren Lampert

you. Thank

Aaron Grey

for going how on commentary conservatism want to might also against to maybe Any obviously might comp some half where going Thanks. into geographic there maybe color your you that be different know, performance base. you what specific the base. the baked some year. could geographies the So maybe against some Certainly And to would just that on, just quickly I but back I there, want color comp to know of about during helpful. a crack the appreciate outlook tougher some Quarter. be if just and talk believe

Darren Lampert

We're Michigan, business, at We and terribly the Colorado, mature and Oklahoma it when very across of the investment in less are Washington, country. still that Massachusetts than look markets different in see such Yeah, other continue our bullish Obviously, to because We're performance seeing we not state of California, is the and geographic northeast the growth of in Michigan. in the on as Oregon growth and corridor. and HGS.

East those of the acquisitions geographic on a U.S. going on we're into the we network as as build XXXX, of we west the presence about are to So building at out opportunities. focused on North in look our excited And side the for pipeline

Aaron Grey

back less than just may I last there. helpful That's label X% private you. want dive into to Thank at the X%, year. Great. say, initiative

Just improve the and customers initiative, talk in to that's to terms sale? starts the in label Thank your get have more stores how and how you stores, in talk of much terms just have to ground being know you is might open modern it, you enable with more any can able seen as to as through private that people lift up to you educated to to people that wanted of COVID, to in to color and store continue level back of, continuing assisted think come with and coming of how you. helped a

Tony Sullivan

[Indiscernible] the expect the a as on that half, our COVID equally as will strong into And come we take this two-part sales. guys I continues back as From bullish you a question. to label. side private

Darren Lampert

at but seeing the from label products a private strategy we're the the a delivering on offering and add as bringing customer would out private certainly is Aaron, seeing that acceptance is at label back Company to only product acceptance side, great the and that well our thing relationship GrowPro of And store customers. is between it's the these customers not certainly margin to in plan. I level, at the the helping high-quality price, level extremely We're only as that has on for that product our Company. the products working us our well GrowGeneration tremendous customers been

Aaron Grey

call. Thanks again. great. right, for All the Congrats

Operator

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

Scott Fortune

of and lot thanks been answered, them the have quick. A morning real but questions. for Good

new the that how of look get full quickly timing of store Just builds Company we level as builds as here. a these Greenfield through a and new the margins that the you customer to and us reminder, at into for take fully out timing optimized ramp bringing basis, optimization with XXXX strong

Tony Sullivan

Yeah.

into we run the XX and you anticipate grand we as take move running. We new and if have up process, the days project it big openings. So

of a takes implementation, talent thing But got the to next XX proven training, pipeline and XX grand up process with have As we've a a getting then impacted running got you customer new builds, step out and from ready-to-go. it guys we days through, ability little on do know, And as us to that a We've process a exciting our the bit opening. us you grand days. has the of COVID about openings.

Tulsa was it did and you it So ramp days through next volume, significant saw first but ramp too. it it. we'll we where by running million up And month. with you we've we the X in the We've walked a a XX before. a and But through walk XX days guys saw seen doing it

expect the to we expect that and lead-in get level takes days we to backside. to out XX the days it So XX

Scott Fortune

I it for me. the color. Perfect. That's Thanks. appreciate

Operator

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

Glenn Mattson

the would you're -- Quick. taking a line thanks Hi, is any about that be The Is is exposure -- any questions. thoughts for as really it seasonality? increased there factor? or sequentially QX, that there is possibility there top not to -- down outdoors, is

Darren Lampert

a Northern West. out recently a Again business Second purchased Quarter, and as few knows which We is in outdoor season other and everyone shops is Oregon. GrowBiz, California-centric Washington

And saw one-time parts and So in of Washington California -- strong and very in it's both planting. also we outdoor Oregon. season year this certainly

see outdoor and into fourth continuing certainly that So quarter. we the don't third

Glenn Mattson

Okay.

facilities Next sounds on for your the new -- in growth back the process you're the of on disruption some customers. of like It throttled talking putting about rate. some the in some of

that balance So -- if law between snapback and those a between X how whether a stuff, or the is some the just next take kind not just of it be the the comp that to temporary give much against year numbers and just ability like I'm large sense of at forces. like of or to that's the of of point trying it's to or get like just involved factor some

would there great. be Some color

Darren Lampert

our scheduled been strong certainly in that line which As out terms said were and could be are are pushed have for Quarter ever as Quarter. Third And to store Fourth we tell the the the you acquisitions openings going pipeline. they in are previously new of as to I

Glenn Mattson

you're expect clearly I on but and acquisition, is you to post the complete your a number plans two balance years of cash terms do HGS in comfortable next business position grow, the the is to the a it's And ability all cash enough fund with to just expand that Okay. increase that over the have acquisition continue lastly, to period? guess multi-year to that or you over

Michael Salaman

turn comments When second take together, in some The Darren with it marketable over last X Company securities. you that I'll and cash and about XX for then million those of quarter million add the to So I'll it. ended XX

Jeff Lasher

necessary. We're total securities are available and sitting at a if for $XXX us mature million of Those to liquidity. use, marketable

total a it's of So, a million $XXX of liquidity.

based expect inventory HGS levels. of We for Hydro the a cash million $XX outlay on present neighborhood the in

continue commitment, additional fund still to go the we the And that X acquisitions. additional Excluding for open Quarters options after to we next over next acquisitions $XX cash have to the million help generate of year-and-a-half. as keep over liquidity business, we our

then capital, and and a externally. communicate internally opportunity. that conversation need for have If that that about have reassess there's a We we'll

Darren Lampert

think that, We that answers Jeff.

Glenn Mattson

Yes. Well, guys. for Thanks. That's it me, that from thanks color.

Operator

at back There it time. to for I'll are questions closing turn remarks. further no Darren this

Darren Lampert

by very have Thank I'd XXX that start thanking job the in times during done for country. our plus to they you. like employees our difficult tremendous

ahead. with states our back states employees short-term and phenomenon. Even has this And for believe cannabis operates have to many every we I'd a XX hyper-growth to incredible thank ahead. GrowGen GrowGen communities build service. industry there's not we to out. serve XX worked like currently is each and exciting giving more our of The is another that tirelessly Company. customers one decades shareholders faith to in of Our potential having our

from to million. XXXX as of confident business XXXX guidance I XXX ever model. revise sales XXX scaled to in as business remain have in our for XX this million million We in

we future, numbers. stay As you. in Everyone, the everyone staff executive third-quarter co-founder the of look team, with updating CEO, prouder be the to the November be couldn't to building, I And Thank GrowGen. we're for and safe. our forward

Operator

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

GrowGeneration (GRWG) 12 Aug 212021 Q2 Earnings call transcript