GrowGeneration(US:GRWG)2025-11-06 21:54Business Operations - GrowGeneration Corp. operates two major business segments: Cultivation and Gardening, and Storage Solutions, with a focus on hydroponic and organic gardening products [106]. - The Storage Solutions segment aims to penetrate new markets, including controlled environment agriculture and industrial sectors [121]. - The company continues to evaluate acquisition opportunities to enhance its market position and product offerings in the hydroponics industry [120]. Retail Locations - As of September 30, 2025, GrowGeneration has 24 retail locations across 11 states, having closed five and seven locations during the three and nine months ending September 30, 2025, respectively [112]. - The Cultivation and Gardening segment reported net sales of $38.4 million for the three months ended September 30, 2025, down from $41.4 million in 2024, primarily due to the closure of 19 retail locations [129]. - The Cultivation and Gardening segment's net sales for the nine months ended September 30, 2025 were $102.1 million, down from $130.6 million in 2024, attributed to retail location closures and reduced consumer confidence [142]. Financial Performance - Net sales for the three months ended September 30, 2025 were $47.3 million, a decrease of $2.8 million or 5.5% compared to $50.0 million for the same period in 2024 [128]. - For the nine months ended September 30, 2025, net sales were $123.9 million, a decrease of $27.5 million or 18.2% compared to $151.4 million in 2024 [141]. - Net loss for the three months ended September 30, 2025 was $2.4 million, an improvement of $9.0 million or 78.7% compared to a net loss of $11.4 million in 2024 [127]. Cost Management - The company incurred approximately $3.5 million in restructuring costs, with expected annualized cost savings of about $12.0 million from these activities [116]. - Cost increases from U.S. trade policy changes affect less than 10% of total cost of goods sold, which the company is mitigating through improved purchasing leverage and sourcing from lower-tariff regions [107]. - Operating expenses decreased by $7.2 million or 31.5% to $15.7 million for the three months ended September 30, 2025, down from $22.9 million in 2024 [135]. Profitability - Gross profit margin is influenced by the product mix, with proprietary products typically yielding higher margins compared to non-proprietary products [125]. - Gross profit increased to $12.9 million for the three months ended September 30, 2025, an increase of $2.0 million or 18.9% compared to $10.8 million in 2024 [132]. - The gross profit margin improved to 27.2% for the three months ended September 30, 2025, up 560 basis points from 21.6% in 2024 [134]. Cash Flow and Working Capital - Cash, cash equivalents, and marketable securities totaled $48.3 million as of September 30, 2025, with no known extraordinary demands that would materially reduce working capital [156]. - Net cash used in operating activities was $7.2 million for the nine months ended September 30, 2025, compared to $2.9 million in the same period of 2024, driven by changes in gross profit and operating expenses [160]. - Net cash provided by investing activities was $7.2 million for the nine months ended September 30, 2025, compared to $6.7 million in the same period of 2024, primarily from investments in marketable securities and the Viagrow acquisition [161]. Acquisitions - The acquisition of Hydro Generation Inc. (Viagrow) on June 6, 2025, diversifies GrowGeneration's product offerings and expands its customer base through major retailers and e-commerce platforms [108]. - The company acquired substantially all assets of Viagrow for $1.2 million on June 6, 2025, including $1.0 million in cash and $0.1 million in common stock [157].