GrowGeneration(GRWG) - 2020 Q4 - Annual Report

Business Operations - GrowGeneration operates 52 retail hydroponic/gardening stores across 12 states, with plans to expand to 54 locations following recent lease signings in California[14]. - The company has identified new market opportunities in states including Ohio, Illinois, Pennsylvania, New York, New Jersey, Mississippi, and Missouri for future expansion[23]. - GrowGeneration employs approximately 590 staff members, branded as "Grow Pros," to support its operations and customer service[21]. - The company leases approximately 800,000 square feet of space across multiple states for corporate and retail operations[70]. - The company is the largest chain of hydroponic garden centers in North America, indicating a strong competitive position in a fragmented market[63]. Financial Performance - Revenue for 2020 increased by 142.5% year over year, reaching $193.4 million[125]. - Adjusted EBITDA for 2020 was approximately $19.2 million, a 265% increase from 2019[125]. - Same store revenues increased by 63% year over year, totaling $72.3 million for the year ended December 31, 2020[125]. - The Company reported net revenues of approximately $193.4 million for the year ended December 31, 2020, an increase of approximately $113.6 million or 142.5% compared to $79.7 million in 2019[145]. - Gross profit for the year ended December 31, 2020 was $51 million, representing an increase of approximately $29 million or 132% from $22 million in 2019[160]. - Net income for the year ended December 31, 2020, was approximately $5.3 million, a significant increase of $4 million from $1.3 million in 2019, driven by a 142.5% increase in revenues[166]. Acquisitions and Expansion - The company acquired Canopy Crop Management Corp. and Char Coir, both generating over $10 million in annual sales, to enhance its private label offerings[28]. - The company acquired a total of 14 stores in 2020 and 14 stores through March 12, 2021, demonstrating aggressive market expansion[42]. - The company opened a second hydroponic/gardening center in Tulsa, Oklahoma, and completed eight acquisitions adding 14 locations in 2020[119]. - The Company made several acquisitions in 2021, including Charcoir Corporation for approximately $16.3 million and 55 Hydroponics for approximately $6.1 million[139][140]. E-commerce and Sales Growth - E-commerce revenue reached approximately $10.6 million in 2020, up 123% from approximately $4.8 million in 2019, with new website visitors increasing by 152% year over year[25]. - Approximately 60% of GrowGeneration's sales in 2020 were consumables, which generate repeat orders from customers[33]. - Same-store sales for the full year 2020 included 21 stores that operated for the entire year, indicating a focus on organic growth[38]. Financial Position and Assets - Total assets increased significantly to $354.73 million in 2020 from $70.94 million in 2019, representing a growth of approximately 400%[213]. - Current assets rose to $250.23 million in 2020, up from $41.10 million in 2019, marking an increase of over 508%[213]. - Cash and cash equivalents surged to $177.91 million in 2020, compared to $12.98 million in 2019, reflecting a growth of approximately 1370%[213]. - Stockholders' equity saw a substantial increase to $316.99 million in 2020 from $52.81 million in 2019, representing a growth of around 499%[213]. Risks and Challenges - The company relies heavily on the continued services of its executive officers, including CEO Darren Lampert, President Michael Salaman, and COO Tony Sullivan, which poses a risk if any of them leave[77]. - The company may face significant litigation costs that could adversely affect its financial condition and operational results[78]. - The demand for the company's hydroponic gardening products is uncertain due to the rapidly changing laws and regulations surrounding industries like cannabis[79]. Accounting and Compliance - The Company’s financial statements for the year ended December 31, 2020, present fairly its financial position and results of operations in conformity with GAAP[200]. - The Company is classified as an "emerging growth company," allowing it to take advantage of reduced disclosure requirements[91]. - The Company has no off-balance sheet arrangements that are likely to have a material effect on its financial condition, revenue, or expenses[182].