GRWG - Earnings call transcript Q4 2021

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Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to GrowGeneration Corp Fourth Quarter and Full Year 2021 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. is press today, call release after close conference and X, was This market earnings the accompanying today. instructions] being March recorded XXXX, issued [Operator this conference conference to the turn now will Clay I Crumbliss. over ahead. go Please

Clay Crumbliss

Lasher, and GrowGeneration Co-Founder XXXX results recorded. and Officer; year With Chief Litigation Securities you and is statements. are from Corp. today differ Jeff Reform based uncertainties events Today's risks Private the that Act statements XXXX. earnings and several today. welcome risks those the fourth and those Executive implied cause conference for GrowGeneration's Thank quarter Chief the Mr. forward-looking of beliefs forward-looking full us call Everyone of call. of Financial Officer to provisions being management's described discussion are materially actual in to earnings these Harbor to actual Darren on materially a concerning These and quarter available fourth are release detailed company's Relations the call differ made to access statements, are the today. in Certain is have the include Please refer and could after filings information results expectations state section current ir.growgeneration.com. which or close this subject with on other press statements market from and today's future to made of subject website, could SEC cause should Safe issued results release that Investor on to comments expressed press forward-looking to any of the This GrowGeneration's the Lampert, forward-looking

now, the comparable are to will Darren SEC non-GAAP we turn and call some filing Lampert, to measures the providing reconciliations measures Co-Founder And The of describe the I Darren? all our performance. we most earnings call, use release CEO. will as the financial website. on measures directly press During as over available GAAP well as financial business non-GAAP

Darren Lampert

store latest the customers employees for Good to with November some as to outstanding and cannabis new dedication states, XXXX expectation and views XXXX full fourth their one federal and of thanking locations to I'd a sharing of industry to my of vision continued would the across the an I hydroponic and XX by like We each in Thank begin Oklahoma. had like you, the the of have in tremendous discussing started with XXXX includes start GrowGen sweep democratic year which support our now with strength company. afternoon. Clay. our Ardmore, prior We legalization after XX XX plan. and quarter off locations added elections. results.

addition, and to In green five term new laws pass around new sweep country. states voted began the unanimously circulating cannabis the

a sidelines As investments. XXXX and less unfolded further tool that cannabis industry investors legalization on bargaining became commercial clear and federal to legalization the became the pushed

back Additionally, saw shutdown during of we quarter oversupply was oversupply in expansion imbalance their many tremendous supply/demand a plans. Western California produced a and either to the caused scale outdoor of the production cannabis The which facilities cultivators on summer third other during months. pricing pressure their on put or with and XXXX, states cannabis, and

events, quarter third we slowdown XXXX and result into out have a these a CapEx of projects As LED of coming the in XXXX. lighting seen

schedule. build addition, and rules in wait states which of there been slowness regulations, a has to for cultivators rollout In behind the new as legalized are

should that be store to issues by XXXX, stabilize noted We of second months. hopeful XXXX. a in within XXXX, It environment challenging that half planning we are some will which of industry sales in start the are six weakness these corrected but for itself

XXXX craft versus for hydroponic Gross profit store revenue distribution the XXXX vertical locations several to cultivation around a or and for of and XXXX to the a our and It's an $XXX versus were GrowGen when year time X% HRG, to and increase headwinds, million a XX.X% view. in or farming, $XX.X access is with cannabis positioned private recently well multiple United the the sell service a increase $X.XX versus including in basis XXXX. the full the million and was of $XXX own, we new in year, in cannabis matter or channel in driven growers, Despite to proprietary a had of markets. for now XXX versus XX% of $XX.X eventuality. share, net margins of XXXX, went sales stores or $X.XX millions came With $X.XX HRG XXX%. from sales. just year, of in share, is XX% We Full to our GrowGen platforms same-store a label comes, licenses the segment announced commercial million, revenue prior record well In advantage market of XX% When an our million, brands a who indoor products GrowGen in in XXX take year per sold and to agricultural XXXX year-over-year EBIDA share of income retail trend continue year increase $X.X other have growth per full $XX.X to retailers. that think Adjusted grew through countries the over our world. XXX% the in share with federal the million new per market. in States growing legalization prior both like of brands that acquisition is $X.XX the points. million, total, across positioned increase by XXXX per the

shortages states both with markets. a and more execute Media, acquired the the accelerate experience retail climate, growing. specializing face To racking company and benching Mobile and selling water and challenges systems in strategy, this vertical of we and for drought outdoor the XX-year-old a agricultural and more manufacturing As

and infrastructure. in to key Our in the and investing for the company areas geared are scale beyond. resources initiatives attention XXXX and XXXX of in We're positioning towards success business

across across country include open initiatives to of locations XX stores almost half first building greenfield new Our states. out new retail plan We of to states. the five locations network XX new locations XX to building key

investing in operational drive omnichannel deliver strategy. our companywide to Second, excellence technology to

management establishing brands next key over with decade. than implement of retail of drive locations and assembled service, customer industry our these development network marketplace distribution by distribution private customers. better one we've to any common platform. in investments team sales our e-commerce commercial the GrowGeneration.com backend fifth and past the and And over The year sites proprietary in to initiatives Fourth, to serve suited driving is e-commerce integrating team combining stores, Agron Third, provide other label a centers the five resources and revenue. profitable growth in This creating product excellence.

guidance. the year $XX full of to With these we're $XX backdrop, be range I million. some the now $XXX of turn million $XXX looks million to four to range Revenue Jeff into what quarter the over in little results and be Lasher, providing our like. will of will of EBITDA to to views initiatives in who to our our the and million our following XXXX initiatives, CFO, a insights call color give XXXX adjusted

Jeff Lasher

you, Thank Darren.

quarter on initiatives. results Then in building by our what fourth will regarding discussed our XXXX. like address I start look business Darren will and me what our Let

in them. we have already As of have initiatives and each five previously made strategic against discussed, XXXX progress

other are with have five in outdoor new store emerging a new seven signed These is signed location, track in be will such sales. initiative XX square Jackson, range indications investment locations New retail Mississippi, XXXX store location opened in The to space, facilities Virginia, $X and serve to we New greenfield bulk to a five in in states, XXXX. Jersey, and locations capital as will to about in locations, first investment on million XX,XXX per Ardmore, locations interest York, from The and locations. our feet include stores of be Illinois. Our inventory open XX recently needs. Oklahoma, will along including of These

Second, our combined to investment with the technology new operational XXXX metrics in be in locations the store an in improve stores. investment in will

launch are spring. to system tested final this integrated new activities being Our development place support is in a and

stack integrated technology customer Manhattan The be labor and efficiencies. Our coupled controls benefits improved processes, better of service, better management, now include will sale, line order with in retailers by with with internal and Associates. point systems management retail will best-in-class backend warehouse

customer existing with locations sites a to will they positioning against Third, the from away a will also serve. in shorter centers allow and procurement includes of inventory Progress retail inventory, network customers be fed and provide window. more focused. e-commerce Sacramento, be made distribution already the improve from Long to relocation And the will majority will our the improve a day location operational markets. of new Mid-Atlantic locations these delivery strategy capabilities, second markets. this of in vast the Beach of technology the us including In than facility the centers the distribution less initiative New within pillar with of a the enable with Miami cost consolidate service Southern the be Midwest, for and metrics distribution to servicing England This and one be of half location Tulsa new our launching day will retail. Midwest summer XXXX, we the expanded launch last the for develop to This

products space third-party degree HRG. XX,XXX With of in HRG companies those retailers. the label we that also as acquisition focusing proprietary agent of the provided has be It distribution markets for and Charcoir coming a Power integration for products, activities also for are to brands HRG, The capabilities, distribution the and addition integrated distribute businesses Historically, quarters. lesser of adds HRG additional expand we need capabilities. to other and certain us for sales will our been allows feet have to private and on Si, we distribution of square into

will expand increase capability, and goal that EBITDA. distribution Our to which incremental is revenue

initiative mix The private We produce the in to well our in retail increasing stores. accretive in following label investments. XXXX XXXX, will HRG our efforts expansion of earnings fourth expect that fit HRG of

X% XXXX, in of from the locations year revenue brands and we third-party XX% in our in of was include on full not does additional stores mix This sold by the expanding plan an XXXX. brands represented XXXX. to revenue owned owned that For retail X%

initiative associated is final e-commerce. with Our

combined e-commerce and recently cost is e-commerce of unnecessary onto have elimination operation one powered duplicate We competition backend result one divisions by activities and the all an for The among this customer. of website same conversion platform.

to quarter is fourth $X.X million our $XX.X $XX.X a related in the fourth revenues million and XXXX in Revenue last A acquired was of XX% the The results the the $XX.X increase primarily $XX.X quarter. increase revenue. Turning now to for same XXXX. million in to increase to in increase year, e-commerce revenue million. an compared businesses acquired period million during fourth in attributable or from quarter for

operated stores million in for the from with those degradation were $X.X to channel XX.X% $X.X XX grew million million, increases offset XXXX. $X.X and that comparable quarter or XXXX full As both from partially

of comp will several $XX same-store the was the for the we rolled quarter base throughout acquisitions Our fourth anniversary increase sales comp over that base fourth stores quarter over million. of the XXXX. And

from our the quarter, for the activities. large points marketplace from from margin California and freight and XX.X% revenue two revenue presented fourth the Gross was of The and year XX% XX.X% points but and freight including our pressure into profit However, dilutive to from operation in of locations. Miami sales. area acquired been in Southern quarter store prior new to to competitive increase retail discounted reduction discounting and sales revenue improved basis fourth dropped higher pass-through will expense, were has a total Southern location charge XXXX planning has exposure expansion. from Gross also in retail California of in store in relocated new planned dollar market XX XX% Full sales sales in profit XX% generation headwind comp comp year and quarter XXXX for margins from XXXX, drop margin increased revenue in XXXX. was cost new Overall, up of base. retail capital customers California year margins. to continues But California XXX The year. of was the out margin from for the And impact fourth down basis overall unrecaptured in margin products prior are the volume gross full we XX%. opening California in of to at California the locations of a lighting

the XX due on quarter with locations. million locations channels. down the increase Notably support to expenses of for as full label compensation. was for $X.X low operations we The from in stock-based million revenue, actions million was million year the was amortization primarily and in $X and in to Of drop the an general intangibles in will $XX $X.X store the $XX initiatives Total associated million expenses $XXX,XXX termination added this prior severance depreciation forecast is acquisition quarter pre-opening we private a the openings million million XX and scope, labor labor associated amortization in cost operated We grow in away fourth asset are Depreciation XXXX, And last acquisition a and a sales the the couple in new from profitably our the attributable amortization administrative the of XXXX quarter have depreciation provision and quarter, year $X.X $X additional line with continue. stores the $XXX,XXX of for million hours that of in of to million is offset from continue important Included the cost expenses in of over and of that of to cost was and infrastructure establishing we XXXX in HGS breakdown periods. charges primarily million SG&A business modified quarter to necessary expenses was enterprise with Selling, of to in from fourth margin year. $X.X loss and years, that quarter, moves amortization was in the quarter fourth size increases tax base. $X in in the future sales, part depreciable accredited $X.X in grew changes. in in quarter It for XXXX. basis, in fourth remember strategic from the and pricing fourth following the and HRG. associated to million of be the over increased XXXX. including by in XXXX, $XX the increase from year-over-year will including partially net cost and quarter. last million SG&A it added the store primarily the enterprise, organizational in We the control acquisition operating margin to with grow the expense planning Income the quarter-over-quarter

that rates deductions in higher as taxable of impact expect is disallowed will statutory growth. rate result we tax our XXXX, an intangible be and federal non-cash increases than a income effective in This amortization For from of provision.

and or million compensation of XXXX. the loss interest, associated the to quarter store share, to was EBITDA, $X.XX which depreciation, XXXX. of for the amortization acquisitions for benefit fourth shift million new additions in depreciation $X.XX purposes However, of late development of in lieu the to $X.X will bonus income loss quarter net same per of as we XXXX. of Adjusted in $X.X the the tax compared assets grow million store with from excludes expenses share-based income a taxes, $X.X per to in period for million XXXX for was count, of $X.X share fourth compared we Net quarter fourth or

expenses quarter earlier, totaled in charges terminated the associated this million year. incurred separation $X.X As acquisitions with and fourth that discussed we

the resulting $XX expenses. The adjusted of balance from on In cash in calculation million Total fourth includes needs from and over available sale managed strategy of XXXX. million mature that the are year needed. previously The inventory, these $X marketable adjusted the incentive our EBITDA cash XXXX, the programs million will loss. company operations capital reduced million securities in from was through mentioned inventory at company of working with in focus line about was burden acquisitions ended $X quarter sheet even quarter with cash December operations, EBITDA Our million. and EBITDA cash efforts. used of and optimization of for management $XX liquidity totaled of the Full other and cash other XXXX. with adjusted property if $XX and receivables the million business reduced and generation generally for Net $XXX in operations, generating end

are technology distribution HRG store, recently investments investments capability, $XX We and total and capital completed the acquisition for total new to cash in planning million.

$XX will million and that newly businesses. we full enterprise estimate from $XXX of At includes QX. and profits million and on of year $XX be full quarter the $XXX are discussed, recent enterprises. least the Recent first adjusted projecting in entire and million. centers retail that for revenue We seeing our Darren for million compensation XX This grow $XX XXXX present non-retail to trends investments to As pressure inclusive significant in in will for trends year and MMI between we company million, capital that declines HRG continue including garden be revenue is new revenue estimate businesses. revenue acquired of EBITDA at based the operations, XXXX, the in of share-based

We seen XXXX. to those EBITDA expect will adjusted in XXXX of QX in be QX similar of results

impacted and first XXXX. basis materially Accordingly, quarter improve be just the by the will this from half slightly into full a year-over-year in expect retail of performance gross quarter sequentially operating the down sales will revenue and and quarters stores. XX% to first of be acquired builds continue We inorganic opened in a QX new margins and to first growth declines the fourth offset hampered slow year-over-year be will up or the profit down in on same-store Retail investments quarter the centers, of to for basis on for with XXXX expenses flat be significant reflecting operating year. in expenses new to three capital and sales

half, up we to to reported Second X% XX%. revenue are planning be for

and yield benching products but systems, out Power Char areas, and will our benefit to under control be Coir quality lighting pressure. HVAC will brands on and focus Si the including look of further we other industry and proprietary As from XXXX, products,

our decreased our in brands we focus inventory capital significantly as on have we working constrained purchases own such, As needs.

operations decrease benefit XXXX from cash on focus from a management, Our accounts. rationalization, in and other inventory in the will capital working SKU

new later to throughout that portion the to of XXXX the sales $X average million in will come incremental they stores We per on XXXX, generate year. add online location as in XX of $X XX should million

As Midwest. mentioned, these the states on locations will Coast in East and be new the

not Just cash and be of This or distribution, gross investments $XX sales equity XXXX HRG our increase of debt private will for retail represents line to for share-based XX business stores a receivables years. and HRG new and we acquisition sheet reminder technology, Shares label million additional present two-thirds in future including foresee our with activity, external that and with the and slightly capacity strong the Total $XX shares, as about acquisition believe margin in is in manage increase a generated need that and be about by in million Total the issued will earmarked for million. estimated need shares investment the to maintain about primarily XX million issuance. the total for for investment inventory. only We in and will metrics, of for of to EBITDA first debt position expectations XXXX level investments. is combinations generation business balance quarter. the cash cash technology adjusted plans including outstanding actualization do from without importantly, immediate reflecting compensation in

$XX a the for million second quarter total increase share-based largely $X.X to million with expense and We be line from $XX compensation XXXX. for expect will amortization expense of in about year. half Expense $X in $X the with a a the in half million in quarter depreciation to first to million be about to XXXX million

strong capabilities new strong our execution technology, for e-commerce superior Our XXXX to profitably. on to distribution platform proof with retail is and focus a locations set scale and a for future company

earnings Form now, will due is filer SEC As that our do X, this as And the year. the At Darren. our the file end as status XX-K. included accelerated have we deadline disclosed call meet we not statements, time, the in time you release any need back this notification XXXX a by seen we anticipate the reporting processes. year with complete will modifications in to not March XXb-XX the I for filed afternoon as to the new result our Form to today. XXb-XX likely material the more turn filing, to as an now financial this This to

Darren Lampert

Thank you, Jeff.

the to that provide continue XXXX, market through starting of the we of to open industry, that us hundreds an Mississippi, holders signs headwinds new to second the of As in we once navigate are to license market in license could see the is later with cultivation year. hydroponic such rebound the opportunities half sign

location GrowGen such, to QX. Jackson in plans its As have operational

We finalization seeing and of increased and and New the licensing in Virginia momentum use Jersey, are adult for New Illinois respective regulations. rules York, also

We will of be markets. new store focusing much our those in growth

strengthens indoor own expansion position acquisition independent of into and of proprietary our over of our locations. outside benching distributed to projects strategic HRG brands vertical racking Our our leading their Mobile accelerates location cultivation with systems. retail XXX gain Media more

now in team future new revolves Our execution. the to success best we questions. deliver will technology, distribution call centers, stores, believe around e-commerce user have I efforts the execution for the enhancing over We in experience. the product offering, turn that industry

Operator

Instructions] [Operator with Please from our take we’ll Carey ahead. you. question Fargo Thank first Wells Chris go Securities. And

Chris Carey

everyone. Hi

Darren Lampert

Good afternoon, Chris.

Jeff Lasher

Chris. Hi,

Chris Carey

Thank the question. you for

new guidance same-store that first of sales back conscious to total for review in the the the would the start market just down right just stores, for then, maybe decision half you’re relative cadence same-store why stabilize? So, just also through given or in, market building that, uncertainty just to to letting And having XX those hunkering XX expectations the sales implying can market expecting is that you coming and on versus sales company the given the maybe you’re half stores your with be connected to just go the helpful. and can uncertainty maybe year, the your you the

Darren Lampert

to handful. Jeff. it over I’ll off Chris, going a and it I’m send start that’s to

locations based stores new greenfield upon to new decision licensing. is Our and

is were either the for favorable medically every of broad where as purchase have What legal we’re right licensing. was to was some plan, now growing able loss. to that time original you with compete, starting best with probably – to states know towards recreation we see back Our been states breed east pretty legalization a stores or push green mature in

New we’re And that stores done So seeing a been the successful Oklahoma, GrowGen’s New fit Missouri. quite board, states new in these stores there coming York, done within new no push Virginia, we the Colorado. towards Maine look on did criteria. we’ve when Jersey, are landscape done in in we’ve we in California, in as recently greenfielding We’ve and state we’ve Brewer, in in

our when look to towards return on our capital, smaller Jeff. stores country. to customers the distribution little the see states starting to all criteria, push send in rest within new we’re around to solutions we’ll centers and our will a to greenfield able we country, invested a be with to around So at this I’m emerging these of which the over future new be them the service question growth locations, grow building going our opening meets with

Jeff Lasher

our brands not comps last due see significant tremendous projecting that and about on drop customers. the and of we that growth – see In side – California are the specifically back operating be difficult lower the Full about grow the Yes. calendar operations to we of to comp to sales focused incorporated projected growth the what’s and into first the incremental and same-store for sales we start acquisitions is and some QX. expect the in year based we’re market to same-store for do some the that to value proprietary incorporated quarter in consumable basis Right same-store for year stores a Grow what’s the and X% forecasting are of than in XXXX sales we’re our the some decrease half on down at sales facilities, we in we’re XX% new in XX% business degradation guidance, originally Chris, commercial customers year, when that the on comps, from do fourth in year that and in CapEx going the to with now that add look the sales market. our of guidance year. guidance the our

to was of difficult down specifically in first quarter, and revenue from million those about most revenue be $XXX centers businesses $XX new Darren e-commerce, brands Breaking revenue investment XXXX from couple stores as in revenue the down we and we we’ll total positive store XXXX. still the the though, of activities, proprietary proprietary comps But about first the accretive Our that that about retail period the to I and XX% in will mentioned. XXXX months. talked see comp X% to growth including our generate million expect incremental in from expect revenue brands garden from

Chris Carey

so much. east of versus business that’s just factor? touch how a that. or maybe relevant for much to more looking so you east, driven out out one you When model just If might of consumer Thanks out Thank evolve retail can from here. could your market consumer I just west moving maybe have the more follow-up a you’re at maybe whether type on BXB

Darren Lampert

I our we a garden XX BXB when and centers Chris, garden centers, take you think have are currently, Yes. at our BXC. the look also

centers garden currently are building and similarly. set garden So for our we center the will be up both

see and at in types to MSOs able growing – growers And to country the plant the growers, grower and saw and light to all stores we you the are put outdoors. online largest Oklahoma to also if built, single XXX,XXX BXB for that from down feet BXC. the single went you Southern centers in the set the just we if four they’re So California, again, of up service They’re the they square both. the

Chris Carey

so much. Thanks Okay.

Operator

our Thank now We’ll take with Andrew question you. Stifel. from Carter next

Andrew Carter

is afternoon off, kind first question. or of Good evening, to Thanks. housekeeping whatever just time wanted – are. you I a whatever ask

around restrictions or you one of real there kind it quick Just meet potential of end You’ve think that. issue I any the month? delayed certain filing. deadline, anything don’t the If a like a this XX-K equity Are that? is ability on to

Jeff Lasher

have don’t deadline. Andrew, At no, meeting any Andrew on and anticipate see this that we XX until don’t we problems extension we the March – it. point,

Andrew Carter

great. Okay,

mean, you’re from stores, I guide. know into to going January. I Second last of new how that tied million is ask kind could openings? that? and anywhere state the would flexibility XX be mean, that guess, that And is with I in much in, the $XX how I Ardmore planning Chris’s I question, year this million to gets kind is guess, of to slower in revenue much $XX year get, and in was question, to the of I XX it

were ahead open How those watching there not markets? year? next four you of are get can to you out I the think next faster anything And year. just

Darren Lampert

to want take you Jeff, Yes. that?

Jeff Lasher

calendar already to Sure. of Yes. markets into year, of and start in locations We emerging. the plans – are have we as the process events look in around this out that course building we

when look opened January. right Ardmore, like out you So, we in mentioned now, Oklahoma

relocation take have a did in place in in or We taking February. February place that’s Auburn, Maine

We Mississippi of the we’ll half in have first XXXX. that Jackson, open

We’re relocate to Redding our location. going

as speak. the So out into locations in going that York, look locked New year. we’ve up of be happening additional Jersey. specifically in in those cities those lined are then Missouri, Illinois, in Connecticut we which opportunities pretty are presenting calendar in New are markets investigations themselves four later other we to in summertime, got And Further and and locations have in much then, marketplaces. will and specific Virginia, on we And the indications as interest also

in us operate locations step basis, be a from of will and selling with inventory. lower we’re retail yards footprint distribution us some looking the more for in a of They’ll locations XX,XXX square allow on So, to for will soil those serviced which smaller to back. two be They’ll actively X,XXX additional that more efficient have feet space.

get models the the different we a on little bit East Coast over will So look there. as

Oklahoma see the is been we’ve more Colorado we get East and we’ve able real places that cost Southern what As larger you to than and of estate and on been the that historically in know Coast facilities.

Coast, more half. East service the center the we’re in a on and Here from serviced second day sized reasonably we’ll they’ll we’ll be that that building locations one have within our launch range distribution

Darren Lampert

over Andrew, square matter year do so as you understand, XXX,XXX We’ve last we and the of year. just feet this size. same a space to built expect of

in space, XXXX. smaller much locations, in built with what more pretty last Just course but we year

Andrew Carter

on. pass That’s it helpful. I’ll

Operator

Brian with from Nagel Oppenheimer. question We’ll you. Thank our take next

Brian Nagel

Good guys. evening,

I of a here pressures. with sector, first of spent And about Darren, the to the just sector macro So lot talking question have this. you time the regard

anything you there at the Eastern of to talked improvements West the you’re comments, front, see you of the oversupply prepared any seeing some correct? maybe So and your – issues to look of I that there part say legalization you you these heard beginning end issues, Is the the Coast are States. the those are in about United as starting to signals in

Darren Lampert

an have increase is pricing we west. that recently, seen so which have The – the issues world. stabilization market always a saw also similar recently, we of And the out now one cannabis in XXXX the favorable. thing seen always the in back seen in we California certainly which in is country, we're right seeing largest, out – market. the largest tremendous in pricing We've the have We is confidence west. that probably largest California

nicely. and in We and have running large built recently are up greenfield two ramping that at California locations

locations, slow with will Cal. locations California And California before, of a the everything our rebound. believe time. quite – in in North confident to through out California. seen move as we quite both , goes seasonable we go confident and We're into California year-end we're of time California the going the to in are So-Cal that our starting out And markets, spring we're starting and you've So also of

tremendous March seeing So April. coming green in and California a west and stores our rebound stores going are out we're our into usually

in on a there beginning revamp. if in first really up the is how So, see to May March is more a of we'll April which know our call, shaped and lot quarter California

Brian Nagel

the with respect I just guidance. That's the have question to helpful. second And

sales flat. And flattish. for you the of suggest, kind you're what kind XXXX, guess, at of reported kind you mean, I if guidance, given you better initial toggling I but XXXX than look so of flat, with I mean, it's

would question be than is lot exiting just acquisitions higher So rate made the be in talked a it that you revenue of reported would XXXX revenues. the we XXXX given underlying about I whether have cadence run the that

industry is XXXX? potential, some So in actually headwinds of take a consideration structural underlying you that maybe as potential these even were function at are made into you to Or look of and now starting reevaluate these acquisitions forecasting? guidance, potential, the that this you for the

Jeff Lasher

with I assumed run full and as that mentioned the pressures decline are the for you then rate on the a XXXX, we because as guidance as So and earlier, I'll in same-store year Chris' unpack same-store decline, QX sales a for run far which question performance sales anticipating obviously rate basis. comparable a year-over-year

in those volume we Some our with we and balance throughout lot longer talking into so This in vision term XXXX west a XXXX, anticipate that the we also feed marketplace for of a inventory actual units And but a the locations. are of purposes earlier are demand their are just state as cash is rates immature maintaining for going organization conservative do for we make structure are of in projection the Darren in uncertainties challenged. acquisitions these into bought taking XXXX. so on that the disappointing still a run about, that position, XXXX that a strong we recovery, our sheet sure relatively sales generating coast in was

Brian Nagel

Okay. Thank much. you very

Operator

Thank you. Grey next Global our Alliance Partners. with question from We'll now take Aaron

Aaron Grey

good the for and questions. you thank Hi, evening,

by So, and back there, terms to of in thinking Darren, back little then first And stores guys had a California revenue, – dynamics bit. XX% down XX XXXX to consolidation you XX XXXX. stores had just me, for some you of pressure pricing then cut you of to going five today, talk end Colorado, the XXXX your question XX right, to back stores, similar and you –

or for there. see this there that and do of if not but rebound back type the start come that think see April doesn't XX that in what what you might today, to stores consolidation California you point in with know be at March cultivation you with need you look you're that then you back do if mentioned, you see might footprint in that the or footprint the just some so of So need kind maybe I now, said happy state the you stores many

Darren Lampert

look I when right down Orange the runs Aaron, it California. at Southern go Diego, up Northern our County, California to – goes coast. California Northern look footprint, San up it California, North in it when from towards LA you runs

go So, Rosa. Santa from into Humboldt, we straight down

locations happy the always money store a there Is stores. our possibility of a right are that our functioning possibility, of can gives majority is confidence. the pretty it the that tremendous close making always out with There we're look me market we and at or you but stores now, So two? well. When

$XX even If you're and right seeing of from $XXX cannabis anywhere that's billion at a billion, forecasts billion still to market today XXXX. $XX looking by now, you're

going at at So XX% people decade. we this underlying you're And will is leader industry. that looking the in rate, out hydroponic industry rates that are that compounded annual most through of it. will grow the growth the crop you to grow straight tell And with if the

plant quite we'll million these have were confidence million and it, years tremendous we So of if revenue it's grow, side did rates of touching to We growth in it profitably. did it. going out later, coming three company $XX with to We a the grow continue in $XXX XXXX. we

chain. now. X%. XXX% built extremely sales difficult comfortable We've We've where times, We difficult our made are year We over XX% X.X% with label coming during We right grew we from off XX% to in before. the brands doubled supply times XX% and are through our revenue of quite some same-store really stores. we had the So, growth it XXXX. year private before up

and upon forecasts and turn little have continue see a to yet. So we lumpy are the it year based a was our haven't seen we – slowdown, we the that slowdown of but seen

forecasts to west. confirmation we're get half, are believe we of comes until extremely do guarded as turn we'll that and turn And isn't based a of the Our in second turnout but now the coming. we be continue that

Aaron Grey

color. Thanks for that

that private initiative, get want lower your the opportunity guys some for conscious of given pressure that just for on price that private in label and label might me I pricing more the offer seeing some overall if especially you're you guys, market. price offer you know question to as Second buyers offering.

you're to the Thank you. if So you that might in know and just seeing marketplace have want what opportunity XXXX. going there in forward of

Darren Lampert

built private going and year X.X% from label this We higher X% to year. next forecasting

the market. MMI of out benching added it. the products into We side of best breed We just on bring continue suite to to the

and Our lighting pricing. offering customers it to with Charcoir selling right we on believe had well. continue best of will better our we working a pickup our to do breed are wonderful Si, year. truckload stores. Power is And we And work tremendous now. see We're starting our brands and products that within a is

Aaron Grey

jump color. into Thanks Great. the I'll back for queue. right. All

Operator

Thank you.

Thalmann. now Glenn our Ladenburg will We next question Mattson take with from

Glenn Mattson

on to appetite the and of maintain the about the position curious what you with and backdrop, relates that sort general operating cash EBITDA position? year core if cash I minus, the the company uncertainty acquisitions a in resulting cash but and with with think to wrong correct about flow Hi. do flow needs I for about adjusted about talked some just maybe for as guess of feel line breakeven it just the and there, in your CapEx just in that's level you how I'm balance you or cash free me think with as plus outlook then maybe sheet

Jeff Lasher

Darren there industry. have color the we the walk just outs I'll – on I'll and through to give make clarity have Sure. yes, that, of some some on sure ins then and you

So opening XX new million, to back with look our that acquisitions flow our consume into manage that like we'll XX you be and technology reinvest in operations capital about the we're mentioned, generated stores the and $XX when stores. will million that million million with our just associated to for then from We'll $XX will we'll the the and it requirements our round working – be same stores sheet that anticipate that our on XXXX. take as or run EBITDA cash $XX at balance anticipating cash you range statement have we and adjusted as EBITDA cash about then company We the $XX about both expenditures. the

consume on the plans business investments that that the $XX position So cash that would generate. million the mention way to be them according same total go basis, will we'll roundabout roundabout And to cash a the to ups however. I project the to downs be be at our go. and there's into quarterly we of the things we some if end going the year

revenue quarter the project acquired for the right this as burden in will this example, cash it this quarters be now. for quarter that we plus smallest we the and will quarter HRG business For the necessary four revenue

we'll So the be XX. cash then in March we build low a calendar will year. the that have at And up the three left in quarters point of back

focused better acquisition, we to invest in under certainly we invested have locations to capital of on what emerging entertain the a it, be as was right rather there feet the greenfield company is but umbrella. are spending acquisitions, great now, stores prior of square want acquire would we a think And That call if said, new locations a call, our said we to capital the as retail would on use in away. from our a we than well far a our states. growth source as new on on we've to As is stores, positive return new right try as to

Glenn Mattson

there perhaps? there side that Is on appetite an – private for label the than acquisitions is some

Darren Lampert

comes that something that it but at site. tremendous a to us believe we're to investment our as our shareholders, open out for there I be will jumps of that. we If to get on when it, can the there's now, is product there plate nothing

it. take like now, there, a there's nothing in book. certainly hard look the anything we would hard But else, if it's So right at

Glenn Mattson

Okay, great. Thanks.

Operator

We'll next Capital Group. Des Instructions] Lauriers take you. Eric [Operator Thank our question from with Craig-Hallum

Eric Des Lauriers

taking Great. my Thanks for question.

guys lighting the you two Could overall those just margin have difference highlighting goods guess, like profile here? HVAC cetera. the been sense durable things consumable goods. nutrients, in you product I a So versus et for sort your of give us of categories of difference kind versus in in

Jeff Lasher

our operations I which that we with general, capital The proprietary look And But margin helps our we at brands that. at we're our stab also durables needs and grow trends that margins when a for take in for is need I'll are marketplace around associated for the up gross then the than talk versus Darren margins in consumables market also to consumables. lighting side. think could you about and where the durables higher stand the they specifically facility. other Yes. focused on gross consumables, seeing our us

have products pretty a proprietary as well of the brands lineup we We brands as from represent. perspective, that distribution a good

where equipment about up the going the opportunity of excited have make the consumable pretty in we that's that the and shortage we're that's of some capital bought capital to the being ground from the So on side – marketplace.

Darren Lampert

these CapEx markets. projects New Missouri, And New some relationships coming board, us Mississippi, think do York. emerging Eric, slow and products. the rest and Mexico, benching lighting really of we then I of down secret seen begin to the which in commercial that believe hydroponic we will HVAC there's develop Jersey, been we CapEx industry similar continue no But gain as on New we has and in is the are and other projects markets confident with quite be to momentum

we're confident large we'll in if So you half quite not And do year, that fair our get sooner. of build second see believe certainly starting this that we tremendous of amount the these building, outs. of a portion will

are until seeing start we upbeat, into come coming know, guarded these we house, we So you them the as are deals house. start pretty until but into

Eric Des Lauriers

Yes.

to this If and a that into guidance kind color. have unit sense appreciate I modeling Also aggressive your guys that feels just year, XX bit drill XX you perspective. the to think a makes could given just definitely I that expansion, me. from of appreciate greenfields all kind of

help if the help sort you it then. QX that understand outlook of would timing, by or could unlikely as we a to XX you of when sort might to is by able these August if guys XX any XX enough five for the open color you. we like example, stores very be Thank build-outs you to of of maybe end about have timeline us of in and remaining associated we give how get, me on you helpful. just long open up the just in sort that the sort that more understand results tell with and year, get bit takes be Does to increasingly that time likely maybe So XX

Darren Lampert

of an and XX XX out with with now, are Yes, firms. given XX, range are brokerage Eric, all end the at a quite we large we working again, low some in to right we've comfortable splits

in LOIs have We place.

just XXX,XXX the the We midst feet doing a in location square within we're in couple foot locations earlier, country. we've comfortable square process, lease it's is As space of now. Ardmore, believe built just the store which steam opening the realm. as new Maine, And of with we're new Ardmore, do finished in just where we certainly I But said of then moved year. XX,XXX Redding we certainly And a LOI are process last up. We within around are, locations finished understand we it's over we We're in a full Auburn, Oklahoma. And now, the into on number. right just, We in moving. larger that ahead larger quite just finishing one we're March.

Eric Des Lauriers

you. Thank Okay.

Operator

question I'll Scott you. ROTH Thank Partners. next Fortune from Capital take our with

Scott Fortune

little afternoon. expectations get of bit storefront out a your and the private or there see bit kind side, little to opportunity going into that little you've good certain back XX% to mix from that is there. know the that looking label – environment Where standpoint? and initiatives categories Have up on I do you're with the a mix label to at had online that kind of goal pushed on you channel from are a Yes, is focus get revenues. private of XX% a

Darren Lampert

we that Scott, We We just year is which to out MMI a benching arsenal have added as this our X%. pushed not at expectation. finished about Yes, of now, company.

a nutrient early quarter, will brand first which quarter. hydro We launching be called are not if the drip launching sometime in second

we're comfortable feel and progress We we've we very that the pretty success made. much target. really the of products think on our online So with

industry, you also do lighting soil we label sales. you believe numbers. in the wider the you industry. see into we XXXX, XXXX, look industry, X% XXXX to array we're the of we and benching And this in industry And from look will will our in If be it those private in built year, if in X.X% will nutrient a hit the

label hydroponic field. the span entire private brands of pretty our So much the gamut

Scott Fortune

quickly, And Got for real just guidance that a guys obviously where bit, muted growing on XX%, the platforms on little of you same-store are color. kind where you kind you kind and on of kind the those then Thanks a together XX% it. initiative expectations of for for mentioned are sales with around And growth those e-com here? little XXXX side more initiatives side, as brought here. the being e-com e-com

Jeff Lasher

being rate we position that be the business how and mentioning lack but basis methodologies. see single-digits XX% are XXXX ourselves sorry. calendar investments use with reasonable as strong and that the that more that's And position the anticipating more the we've payment that why legalization, in This the single-digits and brands kind with of ourselves e-commerce, e-commerce. number. – planning anticipate growth really are for very traditional we year that along proprietary space. we increase year. the in coming to bit of put And on mid year-over-year kind Overall, into of legacy business, growth very future. of I'm a a future an rate new us. And federal actually the that mid look a strong we'll see certainly don't space growth for the legalization XXXX the invest customers business We for around little And avenue we year into the anticipate yes, growth non-retail and reasonable we a in So approaching our recall an I than in e-commerce growth to forward this we with start rate. HRG the better for to that the once see We federal that see a about of e-commerce on we stores that's number strong calendar really we growth year. number,

Scott Fortune

that appreciate Thanks. I color.

Operator

for today's you. That It disconnect. and Thank also does conclude participation you does your you thank may do now conclude session. question-and-answer conference. all today's We

GrowGeneration (GRWG) 2 Mar 222021 Q4 Earnings call transcript