GrowGeneration(GRWG) - 2024 Q4 - Annual Report

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$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$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$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$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].