Financial Performance - GrowGeneration reported a quarterly loss of $0.27 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.18, representing an earnings surprise of -50% [1] - The company's revenues for the quarter ended December 2024 were $37.44 million, missing the Zacks Consensus Estimate by 2.36%, and down from $49.45 million a year ago [2] - Over the last four quarters, GrowGeneration has not surpassed consensus EPS estimates, and it has topped consensus revenue estimates three times [2] Stock Performance - GrowGeneration shares have declined approximately 39.1% since the beginning of the year, contrasting with the S&P 500's decline of -4.8% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.13 on revenues of $39.96 million, and for the current fiscal year, it is -$0.36 on revenues of $182.94 million [7] Industry Outlook - The Agriculture - Products industry, to which GrowGeneration belongs, is currently ranked in the bottom 24% of over 250 Zacks industries, indicating a challenging environment [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact GrowGeneration's stock performance [5][6]

Financial Performance - Net sales for the year ended December 31, 2024, were $188.9 million, a decrease of $37.0 million, or 16.4% compared to $225.9 million in 2023[174]. - The company reported a net loss of $49.5 million for 2024, compared to a net loss of $46.5 million in 2023, marking an increase in loss of $3.0 million or 6.5%[173]. - Gross profit for 2024 was $43.7 million, representing a gross profit margin of 23.1%, down from 27.1% in 2023, reflecting a decrease of $17.5 million or 28.6%[173]. - Operating expenses for 2024 totaled $95.7 million, a decrease of $15.4 million or 13.9% compared to $111.1 million in 2023[173]. - Net sales for the year ended December 31, 2024 decreased by $0.9 million due to inventory sales discounts related to the restructuring of 12 retail locations, while same-store sales increased by approximately 0.9% driven by commercial sales growth[176]. - Gross profit fell to $43.7 million for the year ended December 31, 2024, a decrease of $17.5 million or 28.6% from $61.3 million in 2023, primarily due to a decline in sales volume[179]. - The company reported a net loss of $49.510 million for 2024, compared to a net loss of $46.496 million in 2023, indicating a worsening of 4.3%[244]. Restructuring and Cost Management - The company incurred aggregate restructuring costs of $2.4 million, with expected total restructuring costs reaching $2.7 million, aimed at improving gross profit margin and generating annualized cost savings of approximately $12.0 million[158][160]. - The restructuring plan included closing 12 underperforming retail locations, in addition to 7 locations closed in the first half of 2024[156]. - Cost of sales decreased by $19.5 million or 11.8% to $145.1 million for the year ended December 31, 2024, compared to $164.6 million in 2023[178]. - Operating expenses decreased by $15.4 million or 13.9% to $95.7 million for the year ended December 31, 2024, compared to $111.1 million in 2023[181]. Asset and Equity Changes - Total current assets decreased to $113.208 million in 2024 from $147.451 million in 2023, representing a decline of 23.2%[242]. - Stockholders' equity fell to $120.093 million in 2024, down 30.7% from $173.395 million in 2023[242]. - The company’s property and equipment, net, decreased to $15.493 million as of December 31, 2024, from $27.052 million in 2023[334]. - Total intangible assets on the balance sheet as of December 31, 2024, were $8.779 million, down from $16.180 million as of December 31, 2023[346]. Impairment Losses - Impairment loss was $6.9 million in 2024, down from $15.7 million in 2023, primarily related to goodwill and intangible assets[185]. - The Company recorded a goodwill impairment loss of $5.9 million for the year ended December 31, 2024, following a quantitative assessment of its reporting units[338]. - The recoverability assessment of long-lived assets identified impairment losses of $6.2 million and $0.7 million for the years ended December 31, 2023 and 2024, respectively[211]. - The Company recorded a total impairment loss of $127.8 million related to goodwill and intangible assets for the year ended December 31, 2022[342]. Cash Flow and Liquidity - Net cash used in operating activities was $1.8 million for the year ended December 31, 2024, compared to net cash provided of $1.4 million in 2023[197]. - Cash, cash equivalents, and marketable securities totaled $56.5 million as of December 31, 2024, with no extraordinary demands or commitments anticipated[192]. - Total cash and cash equivalents at the end of 2024 were $27.47 million, down from $29.76 million in 2023 and $40.05 million in 2022[250]. - The fair value of cash equivalents as of December 31, 2024, was $16.945 million, down from $17.300 million in 2023, reflecting changes in liquidity[303]. Internal Controls and Audit - The company identified material weaknesses in internal control over financial reporting, affecting the reliability of financial statements[228]. - The audit opinion expressed an adverse opinion on the effectiveness of internal control over financial reporting as of December 31, 2024[233]. Market and Strategic Initiatives - The company’s growth strategy focuses on consolidating assets within the fragmented hydroponics industry to leverage efficiencies and enhance profitability[162]. - The Storage Solutions segment aims to expand its customer base and penetrate new industries, including controlled environment agriculture and country clubs[164]. - Proprietary brand sales as a percentage of Cultivation and Gardening net sales increased to 24.2% for the year ended December 31, 2024, up from 18.8% in 2023, reflecting strategic initiatives to boost sales volume[176].

Core Viewpoint - The market anticipates GrowGeneration (GRWG) to report flat earnings with a quarterly loss of $0.18 per share and revenues of $38.34 million, reflecting a 22.5% decline year-over-year [1][3][12] Earnings Expectations - The earnings report is scheduled for March 13, 2025, and could influence stock movement based on whether actual results exceed or fall short of expectations [2] - The consensus EPS estimate has been revised down by 18.18% over the last 30 days, indicating a bearish sentiment among analysts [4] Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate for GrowGeneration is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -2.86% [10][11] - A positive Earnings ESP is generally a strong predictor of an earnings beat, especially when combined with a favorable Zacks Rank [8] Historical Performance - GrowGeneration has not been able to meet consensus EPS estimates in the last four quarters, with a significant surprise of -72.73% in the most recent quarter [12][13] - The company is currently rated with a Zacks Rank of 3, which complicates the prediction of an earnings beat [11] Conclusion - Overall, GrowGeneration does not appear to be a strong candidate for an earnings beat, and investors should consider additional factors before making investment decisions [16]

Financial Results - GrowGeneration Corp. announced preliminary financial results for the fiscal year ended December 31, 2024[5]. - The press release detailing these results was issued on February 6, 2025[6]. - The report does not include specific financial figures or performance metrics in the provided content[7]. - No specific guidance or future outlook was provided in the available content[7]. Company Information - The company is listed on the NASDAQ under the trading symbol GRWG[4]. - The company is not classified as an emerging growth company[4]. - The report was signed by CEO Darren Lampert[12]. Documentation - The press release is attached as Exhibit 99.1 to the Current Report on Form 8-K[8]. - The financial statements and exhibits are not deemed "filed" under the Securities Exchange Act[7]. Product and Market Activity - There are no mentions of new products, technologies, market expansion, or acquisitions in the provided documents[7].

Industry Overview - Marijuana stock investors experienced a slight increase in trading this week, driven by potential changes in the cannabis industry and a push for better regulations for legal operators [1] - The performance of cannabis companies has not always aligned with their trading success, indicating volatility in the market [2] - There is potential for short-term trading opportunities as the industry has been in a downtrend, and any chance to take profits is seen as a win [3] Companies to Watch - **GrowGeneration Corp.** operates retail hydroponic and organic gardening stores in the U.S. and recently launched three new premium product lines in grow lighting, essential accessories, and mediums for indoor growing and greenhouse hydroponics [4][5] - **The Scotts Miracle-Gro Company** manufactures and markets products for lawn, garden care, and indoor gardening, reporting Q1 2025 sales of $416.8 million, a slight increase from $410.4 million in the prior year [8][11] - **Jushi Holdings Inc.** is a vertically integrated cannabis company involved in cultivation, processing, retail, and distribution for medical and adult-use markets, with Q3 2024 financial highlights showing total revenue of $61.6 million and a net loss of $16.0 million [12][15]

Investment Group Overview - Alan has been running the investing group 420 Investor since 2013, focusing on publicly-traded cannabis stocks [1] - The group moved to Seeking Alpha in 2023 and closely covers 23 stocks [1] - Features include 2 model portfolios, 10 weekly videos with chart analysis, 3 weekly summary pieces, a monthly newsletter, and a chat for questions [1] - A sub-service called The Big Picture helps investors stay updated on the cannabis sector [1] Professional Background - Alan Brochstein, CFA, is one of the first investment professionals to focus exclusively on the cannabis industry [2] - He started his career in the securities industry in 1986 and managed investments in institutional environments [2] - Founded AB Analytical Services in 2007 to provide independent consulting to registered investment advisors [2] - Managing partner of New Cannabis Ventures, a leading provider of financial information in the cannabis industry since 2015 [2]

Industry Overview - The cannabis industry is experiencing growth, with increasing interest in investment opportunities despite challenges in achieving consistent profits due to political factors and market momentum [1][2] - Long-term strategies are being adopted by investors, with hopes for better cannabis reform to stabilize trading momentum [2] - Innovation within the cannabis sector is seen as a key driver for future investment potential, with ongoing progress being made [3] Company Highlights - **GrowGeneration Corp. (NASDAQ:GRWG)**: The company operates retail hydroponic and organic gardening stores in the U.S. and is launching new product lines to enhance profitability and meet customer demands [4][7] - **Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM)**: The company reported Q3 2024 earnings with net sales of $44.0 million, a decrease from $54.2 million the previous year. However, gross profit margin improved to 19.4% from 6.1%, and net loss decreased to $13.1 million from $19.9 million [10] - **The Scotts Miracle-Gro Company (NYSE:SMG)**: For Q3 2024, the company reported net sales of $414.7 million, an 11% increase from $374.5 million a year ago, although the Hawthorne segment saw a significant sales decrease of 46% [12]

Group 1 - Alan Brochstein is a pioneer in the cannabis investment sector, starting his career in the securities industry in 1986 and founding AB Analytical Services in 2007 to provide consulting for investment advisors [1] - He has been managing the investing group 420 Investor since 2013, which focuses on publicly-traded cannabis stocks and moved to Seeking Alpha in 2023 [2] - The 420 Investor group covers 23 stocks, providing investment news, earnings report previews, and post-report analyses, along with model portfolios, weekly videos, summaries, and a monthly newsletter [2] Group 2 - The Big Picture is a sub-service of 420 Investor designed to keep investors updated on the cannabis sector [2]

Core Insights - GrowGeneration Corp. reported a loss per share of 19 cents in Q3 2024, which is wider than the Zacks Consensus Estimate of a loss of 11 cents and compared to a loss of 12 cents in Q3 2023 [1] - The company generated revenues of $50 million in Q3 2024, a decline of 10.1% year over year due to 25 fewer retail locations, but exceeded the consensus estimate of $48.9 million [1] - Comparable store sales improved by 12.5% year over year in the quarter [1] Financial Performance - Cost of sales decreased by 0.5% year over year to $39 million, while gross profit fell by 32.9% to $11 million, resulting in a gross margin of 21.6%, down from 29.1% in the prior year [3] - Selling, general and administrative expenses declined by 2.4% to $7.4 million, and total operating expenses fell by 5.4% year over year to $23 million [4] - Adjusted EBITDA was negative $2.4 million in Q3 2024, compared to negative $0.9 million in the prior year [4] Cash Position - At the end of Q3 2024, the company had cash and cash equivalents of $27 million, down from $30 million at the end of 2023 [5] - Inventory stood at $48 million, with prepaid inventory and other current assets totaling $7.7 million [5] - Total current liabilities were $24.5 million at the quarter's end [5] Guidance - The company expects revenues to be between $190 million and $195 million for the full year 2024 [6] Stock Performance - Over the past year, GrowGeneration shares have decreased by 20.8%, while the industry has seen a growth of 2.9% [7]

Financial Data and Key Metrics Changes - The company reported net revenue of $50 million for Q3 2024, down from $55.7 million in the same period last year, representing a decline of 10.2% primarily due to 25 store closures in the trailing 12 months [20] - Same-store sales grew by 12.5%, marking the first quarter of positive same-store sales in three years [13][20] - Gross profit margin decreased to 21.6% from 29.1% year-over-year, impacted by inventory costs and store liquidation sales [22] Business Line Data and Key Metrics Changes - Proprietary brand sales increased to 23.8% of cultivation and gardening sales, up from 19.4% in the previous year, driven by new product launches [14][21] - Net sales of commercial fixtures within the storage solutions segment increased by 12.9% to $8.6 million compared to $7.6 million in the prior year [22] Market Data and Key Metrics Changes - The company observed continued improvements in its business within Michigan, Oregon, and California markets, while facing challenges in Oklahoma [21] - The percentage of consumable product net sales in the cultivation and gardening segment remained stable at 73% compared to the prior year [22] Company Strategy and Development Direction - The company is focused on operational efficiency, enhancing product offerings, and positioning for sustainable growth towards 2025, with an emphasis on high-margin proprietary brands and digital expansion [8][9] - The restructuring plan includes closing 19 stores to prioritize best-performing locations and aims to add approximately 50 new proprietary products over the next 12 months [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the industry, noting challenges in raising capital and legislative hurdles, but remains committed to long-term profitability and growth [54][56] - The company reiterated its full-year 2024 revenue guidance of $190 million to $195 million and expects to provide guidance for 2025 in the next earnings call [17][26] Other Important Information - The company has a solid cash position of $55.2 million with no debt as of September 30, 2024, and repurchased $1.8 million of stock during the quarter [16][26] - The B2B e-commerce portal is set to launch in Q4 2024, aimed at enhancing customer experience and operational efficiency [15][46] Q&A Session Summary Question: Store rationalization and future closures - The company currently operates 31 stores, down from about 65, and may close a few more stores next year as it builds out distribution and B2B networks [32] Question: Performance of new proprietary brands - The company has seen both customer adoption of new products and sales into distribution, with proprietary brands expected to drive higher margins [34] Question: Building out the commercial business - There is significant opportunity in the commercial sector, with the company providing a range of services to make it easier for customers to shop and manage their operations [37][39] Question: Drivers of proprietary brand sales growth - Growth is driven by both new products and existing SKUs, with expectations to reach 35% of sales from proprietary brands in 2025 [41] Question: B2B portal's impact on margins - The B2B portal is expected to enhance margins through cost savings and improved inventory management, with proprietary brands contributing to higher margins [49]