GrowGeneration Corp. (NASDAQ:GRWG) Q1 2022 Earnings Conference Call May 10, 2022 5:00 PM ET Company Participants Clay Crumbliss - Managing Director Darren Lampert - Co-Founder and Chief Executive Officer Jeff Lasher - Chief Financial Officer Conference Call Participants Brian Nagel - Oppenheimer Aaron Grey - Alliance Global Partners Andrew Carter - Stifel Scott Fortune - ROTH Capital Glenn Mattson - Ladenburg Thalmann Ryan Meyers - Lake Street Capital Markets Operator Please stand by. Good day everyone and ...

Part I [Business](index=4&type=section&id=Item%201.%20Business) GrowGeneration Corp. is North America's largest hydroponic garden center chain, operating 63 stores and focusing on acquisitions and proprietary brands for growth - As of year-end 2021, the Company operates **63** specialty retail hydroponic and organic gardening stores across **13 states**, making it the largest chain of its kind in North America[17](index=17&type=chunk) - The company's growth strategy focuses on acquiring and opening new hydroponic stores across North America, acquiring **23 new locations in 2021**[18](index=18&type=chunk)[24](index=24&type=chunk) - The business is structured into three units: Retail (**62 stores**), E-Commerce (GrowGeneration.com), and Proprietary Brands (e.g., Power Si, CharCoir, Ion Lighting)[25](index=25&type=chunk) - A key supplier accounted for **28% of all purchases in 2021**, a decrease from **41% in 2020** and **51% in 2019** (two suppliers)[40](index=40&type=chunk) - The company executed a significant number of acquisitions in **2021, 2020, and 2019**, using cash and common stock to expand its market footprint and add proprietary brands[42](index=42&type=chunk)[58](index=58&type=chunk)[66](index=66&type=chunk) [Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including material weaknesses in internal controls, acquisition integration challenges, and reliance on the legally complex cannabis industry - The company and its independent auditor identified **material weaknesses in internal control over financial reporting** for fiscal year ended December 31, 2021, potentially leading to a loss of investor confidence[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) - Acquisitions, a core strategy, present risks including integration difficulties, diversion of management attention, and unforeseen liabilities[85](index=85&type=chunk)[89](index=89&type=chunk) - The business is indirectly subject to risks from the cannabis industry, which remains illegal under U.S. federal law, creating challenges in banking and insurance[134](index=134&type=chunk)[135](index=135&type=chunk)[137](index=137&type=chunk) - The company faces potential product liability lawsuits and does not maintain product liability insurance, which could result in substantial liabilities[111](index=111&type=chunk) - Operations are vulnerable to IT system failures and cyber-attacks, potentially leading to loss of confidential information and material adverse effects[115](index=115&type=chunk)[116](index=116&type=chunk) [Unresolved Staff Comments](index=22&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the Securities and Exchange Commission - None[149](index=149&type=chunk) [Properties](index=23&type=section&id=Item%202.%20Properties) The company leases approximately **900,000 square feet** of facilities, including corporate offices, warehouses, and retail stores across **13 states** Leased Property Overview as of December 31, 2021 | State | Number of Locations | | :--- | :--- | | California | 26 | | Colorado | 11 | | Michigan | 7 | | Maine | 5 | | Oklahoma | 5 | | Oregon | 4 | | Washington | 3 | | Nevada | 2 | | Florida | 2 | | Arizona | 1 | | Rhode Island | 1 | | New Mexico | 1 | | Massachusetts | 1 | - The company leases approximately **900,000 square feet** in total, comprising **7,000 sq. ft.** for corporate offices, **100,000 sq. ft.** for warehouses, and **800,000 sq. ft.** for store space[150](index=150&type=chunk) [Legal Proceedings](index=23&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in routine legal matters, notably a lawsuit with TGC Systems, LLC regarding a failed acquisition, for which no loss accrual has been recorded - The Company is a defendant in a lawsuit with TGC Systems, LLC ("Total Grow") related to a failed acquisition, believing claims are without merit and seeking to recover a **$1.5 million loan**[153](index=153&type=chunk) - No accruals have been recorded for the Total Grow lawsuit as management believes a loss is not probable or material[153](index=153&type=chunk)[154](index=154&type=chunk) [Mine Safety Disclosures](index=24&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[156](index=156&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=25&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under "GRWG", has never paid dividends, and has issued unregistered securities for compensation and acquisitions - The company's common stock trades on the Nasdaq Capital Market under the symbol **"GRWG"**[159](index=159&type=chunk) - The company has never paid cash dividends and does not expect to in the foreseeable future, retaining funds for operations and growth[162](index=162&type=chunk) - The company has issued unregistered securities in connection with its **2014 and 2018 Equity Compensation Plans** and for various asset purchase acquisitions[164](index=164&type=chunk)[167](index=167&type=chunk) [Selected Financial Data](index=26&type=section&id=Item%206.%20%5BRESERVED%5D) This item is reserved with no information provided - This item is reserved[168](index=168&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal year 2021, net revenue surged **118.5% to $422.5 million**, driven by acquisitions and same-store sales, though operating expenses outpaced revenue growth, leading to a Q4 net loss Full Year Financial Performance (2019-2021, in millions) | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Sales | $422.5 | $193.4 | $79.7 | | Gross Profit | $118.2 | $51.0 | $22.0 | | Gross Margin | 28.0% | 26.4% | 27.6% | | Net Income | $12.8 | $5.3 | $1.3 | | Adjusted EBITDA | $34.5 | $18.9 | $5.3 | Q4 Financial Performance (2020 vs 2021, in millions) | Metric | Q4 2021 | Q4 2020 | | :--- | :--- | :--- | | Sales | $90.6 | $61.9 | | Same-Store Sales Growth | -12.3% | 58.0% | | Net Income (Loss) | ($4.1) | $1.5 | | Adjusted EBITDA (Loss) | ($1.9) | $5.5 | - The **118.5% revenue growth in 2021** was driven by a **$40.1 million (24.4%) increase in same-store sales**, **$17.1 million from distributed products**, and **$36.2 million in e-commerce sales**[177](index=177&type=chunk)[178](index=178&type=chunk) - Working capital decreased by **$53.1 million**, from **$222.9 million at year-end 2020** to **$169.8 million at year-end 2021**, primarily due to **$80.8 million in cash used for acquisitions**[203](index=203&type=chunk) - Net cash from operating activities was **$5.2 million in 2021**, a shift from **$213 thousand used in 2020**; cash used in investing activities increased significantly to **$139.3 million**, driven by **$80.8 million in acquisitions** and **$75.0 million in marketable securities purchases**[207](index=207&type=chunk)[209](index=209&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports minimal market risk exposure, with immaterial interest rate risk and strategies to mitigate inflation's impact on costs - The company has minimal exposure to interest rate risk, with less than **$0.1 million of interest-bearing debt** outstanding as of December 31, 2021[219](index=219&type=chunk)[220](index=220&type=chunk) - Inflation is identified as a risk affecting cost of sales and operating costs, with mitigation strategies including cost reduction and passing costs to customers[221](index=221&type=chunk) [Financial Statements and Supplementary Data](index=35&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited financial statements, noting the auditor's adverse opinion on internal controls due to material weaknesses, while total assets grew to **$459.3 million** and total liabilities increased to **$88.0 million** - Plante & Moran, PLLC issued an **ADVERSE opinion** on the Company's internal control over financial reporting as of December 31, 2021, due to identified material weaknesses[228](index=228&type=chunk)[237](index=237&type=chunk) - Identified material weaknesses include accounting for complex transactions, segregation of duties, inadequate IT general controls, and inadequate controls over physical inventory counts[238](index=238&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$459,338** | **$354,734** | | Cash and cash equivalents | $41,372 | $177,912 | | Inventory | $105,571 | $54,024 | | Goodwill | $125,401 | $62,951 | | **Total Liabilities** | **$88,047** | **$37,737** | | **Total Stockholders' Equity** | **$371,291** | **$316,997** | Consolidated Statement of Operations Highlights (in thousands) | Account | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Sales | $422,489 | $193,365 | $79,734 | | Gross Profit | $118,241 | $51,048 | $22,005 | | Income from Operations | $15,002 | $8,437 | $1,583 | | Net Income | $12,786 | $5,328 | $1,322 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=73&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company refers to a Form 8-K filed on March 27, 2020, regarding a change in accountants, with no disagreements noted in this report - The company directs readers to a Form 8-K filed on **March 27, 2020**, concerning a change in accountants[411](index=411&type=chunk) [Controls and Procedures](index=73&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of December 31, 2021, due to material weaknesses in internal control, with ongoing remediation efforts - Management concluded that disclosure controls and procedures were **not effective** as of December 31, 2021, due to material weaknesses in internal control[413](index=413&type=chunk)[416](index=416&type=chunk) - Identified material weaknesses include insufficient resources for complex accounting, inadequate segregation of duties, deficient IT general controls, and poor controls over physical inventory counts[418](index=418&type=chunk) - Remediation efforts in 2021 included hiring additional accounting resources, implementing new controls, and redesigning inventory procedures, with remediation ongoing[420](index=420&type=chunk)[421](index=421&type=chunk) - Management's assessment of internal controls excluded recent 2021 acquisitions (Charcoir, Agron, MMI), which collectively accounted for **10% of total assets** and **5% of total revenues**[415](index=415&type=chunk) [Other Information](index=75&type=section&id=Item%209B.%20Other%20Information) The company reports no other information under this item - None[426](index=426&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=76&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section provides information on the company's executive officers and six directors, with detailed governance information incorporated by reference from the 2022 Proxy Statement - The company's key executive officers are **Darren Lampert (CEO)**, **Michael Salaman (President)**, and **Jeff Lasher (CFO)**[430](index=430&type=chunk)[431](index=431&type=chunk)[432](index=432&type=chunk) - The Board of Directors includes **Darren Lampert, Michael Salaman, Eula Adams, Stephen Aiello, Paul Ciasullo, and Sean Stiefel**[430](index=430&type=chunk) - Detailed corporate governance information, including director qualifications and committees, is incorporated by reference from the **2022 Definitive Proxy Statement**[428](index=428&type=chunk) [Executive Compensation](index=77&type=section&id=Item%2011.%20Executive%20Compensation) Information concerning executive compensation is incorporated by reference from the company's **2022 Definitive Proxy Statement** - All information required by **Item 402 of Regulation S-K** is incorporated by reference from the **2022 Definitive Proxy Statement**[439](index=439&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=78&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information concerning security ownership is incorporated by reference from the company's **2022 Definitive Proxy Statement** - All information required by **Item 201(d) and Item 403 of Regulation S-K** is incorporated by reference from the **2022 Definitive Proxy Statement**[440](index=440&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=78&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information concerning related party transactions and director independence is incorporated by reference from the company's **2022 Definitive Proxy Statement** - All information required by **Items 404 and 407(a) of Regulation S-K** is incorporated by reference from the **2022 Definitive Proxy Statement**[441](index=441&type=chunk) [Principal Accountant Fees and Services](index=78&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information concerning principal accountant fees and services is incorporated by reference from the company's **2022 Definitive Proxy Statement** - All information required by **Item 9(e) of Schedule 14A** is incorporated by reference from the **2022 Definitive Proxy Statement**[442](index=442&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=79&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists exhibits filed as part of the Form 10-K report, including corporate governance documents, material contracts, and required certifications - The report includes a list of exhibits such as corporate governance documents, material agreements, and required certifications[446](index=446&type=chunk)[447](index=447&type=chunk)

GrowGeneration Corp. (NASDAQ:GRWG) Q4 2021 Earnings Conference Call March 1, 2022 5:00 PM ET Company Participants Clay Crumbliss – Managing Director Darren Lampert – Co-Founder and Chief Executive Officer Jeff Lasher – Chief Financial Officer Conference Call Participants Chris Carey – Wells Fargo Securities Andrew Carter – Stifel Brian Nagel – Oppenheimer Aaron Grey – Alliance Global Partners Glenn Mattson – Ladenburg Thalmann Eric Des Lauriers – Craig-Hallum Capital Group Scott Fortune – ROTH Capital Part ...

GrowGeneration Corp. (NASDAQ:GRWG) Q3 2021 Earnings Conference Call November 11, 2021 9:00 AM ET Company Participants John Evans - Investor Relations Darren Lampert - Co Founder, Chairman and CEO Michael Salaman - Co Founder and President Jeff Lasher - CFO Conference Call Participants Brian Nagel - Oppenheimer Eric Des Lauriers - Craig-Hallum Capital Group Andrew Carter - Stifel Mark Smith - Lake Street Capital Markets Aaron Grey - Allianz Global Partners Mike Grondahl - Northland Securities Scott Fortune - ...

1 INVESTOR PRESENTATION August 12, 2021 growgeneration.com 2 SAFE HARBOR STATEMENT This presentation is being provided for information purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase any of the Company's securities. This presentation is not intended, nor should it be distributed, for advertising purposes, nor is it intended for broadcast or publication to the general public. Any such offer of the Company's securities will only be made in compliance with appli ...

Call Start: 09:00 January 1, 0000 9:57 AM ET GrowGeneration Corp. (NASDAQ:GRWG) Q2 2021 Earnings Conference Call August 12, 2021, 09:00 AM ET Company Participants Darren Lampert – CEO and Co-Founder John Evans – GrowGeneration's Head of Investor Relations Michael Salaman – President and Co-Founder Jeff Lasher – CFO Tony Sullivan – COO Conference Call Participants Brian Nagel – Oppenheimer Andrew Carter – Stifel Eric Des Lauriers – Greg-Hallum Capital Group Mark Smith – Lake Street Capital Owen Rickert – N ...

U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended: June 30, 2021 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 333-207889 GROWGENERATION CORPORATION (Exact name of small business issuer as specified in its charter) (State of other jurisdiction of incorporation) 5619 DTC Parkway, ...

GrowGeneration Corp. (NASDAQ:GRWG) Q1 2021 Earnings Conference Call May 13, 2020 9:00 AM ET Company Participants Darren Lampert - Chief Executive Officer Michael Salaman - President Jeff Lasher - Chief Financial Officer Tony Sullivan - Chief Operating Officer Conference Call Participants Mark Smith - Lake Street Capital Andrew Carter - Stifel Brian Nagel - Oppenheimer Eric Des Lauriers - Craig Hallum Mike Grondahl - Northland Securities Aaron Grey - Alliance Global Gerald Pascarelli - Cowen Nick Meyers - R ...

U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Under the Securities Exchange Act of 1934 For Quarter Ended: March 31, 2021 Commission File Number: 333-207889 GROWGENERATION CORPORATION (Exact name of small business issuer as specified in its charter) | Colorado | 46-5008129 | | --- | --- | | (State of other jurisdiction | (IRS Employer | | of incorporation) | ID No.) | 930 W 7th Ave, Suite A Denver, Colorado 80204 (Address of principal executive offices) (800) 935- ...

Financial Data and Key Metrics Changes - The company generated revenues of almost $200 million in 2020, representing a 143% increase year-over-year with a 63% increase in same-store sales [12][13] - Adjusted EBITDA was $19.2 million for the full year 2020, compared to $5.3 million for 2019, marking a 264% increase year-over-year [13][46] - Net income for 2020 was approximately $5.3 million, up from $1.3 million in 2019, reflecting a $4 million increase [44] Business Line Data and Key Metrics Changes - The commercial division generated over $49 million in sales, growing at 188% year-over-year [14][18] - E-commerce revenue reached $10.6 million, an increase of 123% from the previous year [14][18] - The company added 14 new stores in 2020, bringing the total to 52 hydroponic garden centers across 12 states [14][36] Market Data and Key Metrics Changes - The hydroponic industry has seen significant changes due to legislation, allowing more states to cultivate plants legally [6][7] - The company expects to reach over 60 garden centers by 2023, with plans to exceed 100 locations [12][50] Company Strategy and Development Direction - The company focuses on customer service and delivering end-to-end solutions for commercial operators, aiming to be the largest chain of hydroponic garden centers in North America [8][51] - Strategic acquisitions are a key part of the growth strategy, with the company acquiring two leading product brands expected to contribute over $10 million each in revenue in 2021 [14][19] - The company is investing in technology and supply chain efficiencies to enhance service delivery [52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the increased revenue guidance of $415 million to $430 million for 2021, driven by organic growth and acquisitions [12][60] - The company anticipates continued growth in the commercial division and e-commerce, with a focus on private label products to drive margin expansion [19][62] - Management highlighted the importance of adapting to supply chain disruptions and maintaining inventory levels to meet customer demand [81][82] Other Important Information - The company has a working capital of approximately $223 million as of December 31, 2020, primarily due to net proceeds from the sale of common stock [47] - The company plans to continue its acquisition strategy and new store openings throughout 2021 [21][50] Q&A Session Summary Question: Can you help us understand the composition between organic growth and acquisitions in the 2021 sales guidance? - Management indicated that the 2021 sales guidance reflects a combination of organic growth and successful acquisitions, with a run rate of approximately $390 million to $400 million [60] Question: What are the expectations for gross profit margins within the Agron business? - Management expects Agron to contribute about $20 million in additional revenue and enhance customer service through its ERP platform [69] Question: Can you discuss organic store openings in 2021? - Management is working on building out two distribution hubs in LA and plans to sign leases in New Jersey, Mississippi, and Illinois [70][72] Question: How do you view the impact of port disruptions and input cost inflation? - Management noted that while there are challenges, the company has maintained a strong inventory position and is confident in its margin guidance [81][84] Question: How should we think about free cash flow for the year? - Management highlighted that increased revenues and improved margins from purchasing power will positively impact free cash flow [87][89] Question: What is the strategy for expanding the private label portfolio? - Management is focused on acquiring proprietary products that show strong sales trends, leveraging data to make strategic decisions [96][98] Question: How important is the online business going forward? - Management emphasized the importance of an omni-channel strategy, integrating online and retail operations to enhance customer experience [111][114]