GrowGeneration(GRWG) - 2021 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION This section presents GrowGeneration Corporation's unaudited interim consolidated financial statements and management's analysis Item 1. Unaudited Interim Condensed Consolidated Financial Statements This section presents GrowGeneration Corporation's unaudited condensed consolidated financial statements, covering balance sheets, operations, equity, cash flows, and detailed notes Condensed Consolidated Balance Sheets This section provides a snapshot of the company's assets, liabilities, and equity at specific dates | ASSETS (in thousands) | March 31, 2021 (Unaudited) | December 31, 2020 | | :-------------------- | :------------------------- | :------------------ | | Cash and cash equivalents | $92,042 | $177,912 | | Marketable securities | $41,077 | $- | | Inventory, net | $77,862 | $54,024 | | Total current assets | $239,500 | $250,229 | | TOTAL ASSETS | $407,513 | $354,734 | | LIABILITIES & STOCKHOLDERS' EQUITY (in thousands) | March 31, 2021 (Unaudited) | December 31, 2020 | | Total current liabilities | $45,685 | $27,350 | | Total liabilities | $57,774 | $37,737 | | Total stockholders' equity | $349,739 | $316,997 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $407,513 | $354,734 | - Cash and cash equivalents decreased significantly from $177.9 million at December 31, 2020, to $92.0 million at March 31, 2021[10] - Total assets increased by approximately $52.8 million, from $354.7 million to $407.5 million, primarily driven by increases in marketable securities, inventory, intangible assets, and goodwill[10] Condensed Consolidated Statements of Operations This section details the company's revenues, expenses, and net income over specific periods | Metric (in thousands, except per share) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change ($) | Change (%) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Sales | $90,022 | $32,982 | $57,040 | 172.9% | | Gross profit | $25,377 | $8,946 | $16,431 | 183.7% | | Net income (loss) from operations | $7,736 | $(2,117) | $9,853 | 465.4% | | Net income (loss) | $6,147 | $(2,094) | $8,241 | 393.6% | | Net income per share, basic | $0.11 | $(0.06) | $0.17 | - | | Net income per share, diluted | $0.10 | $(0.06) | $0.16 | - | - Sales increased by 172.9% year-over-year, reaching $90.0 million for Q1 2021, compared to $33.0 million in Q1 2020[12][106] - The company achieved a net income of $6.1 million in Q1 2021, a significant turnaround from a net loss of $2.1 million in Q1 2020[12][113] Condensed Consolidated Statements of Shareholders' Equity This section outlines changes in the company's equity, including common stock and retained earnings | Stockholders' Equity (in thousands) | December 31, 2020 | March 31, 2021 | | :---------------------------------- | :---------------- | :------------- | | Total Stockholders' Equity | $316,997 | $349,739 | | Common stock issued in connection with business combinations | - | $29,249 | | Share based compensation | - | $1,187 | | Net income | - | $6,147 | - Total stockholders' equity increased from $317.0 million at December 31, 2020, to $349.7 million at March 31, 2021[15] - Significant increases in additional paid-in capital were primarily due to common stock issued in connection with business combinations ($29.2 million) and share-based compensation ($1.2 million)[15] Condensed Consolidated Statements of Cash Flows This section details the cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $742 | $752 | | Net cash used in investing activities | $(82,774) | $(2,761) | | Net cash used in financing activities | $(3,868) | $471 | | Net decrease in cash | $(85,870) | $(1,538) | | Cash at the end of period | $92,042 | $11,441 | - Net cash used in investing activities dramatically increased to $82.8 million in Q1 2021, primarily due to $39.3 million for store acquisitions and $41.1 million for marketable securities purchases[18][115] - Cash at the end of the period decreased to $92.0 million from $177.9 million at the beginning of the period, largely driven by investing activities[18] Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures for the financial statements 1. GENERAL This note provides an overview of GrowGeneration's business and its operational context - GrowGeneration is the largest chain of hydroponic garden centers in North America, operating 53 retail stores across 12 states, an e-commerce platform, and proprietary businesses[21] - The company has been deemed an 'essential' business during the COVID-19 pandemic, experiencing minimal business interruption and only temporary supply chain delays[25] 2. Fair Value Measures This note details the classification and measurement of financial assets and liabilities at fair value - Financial assets and liabilities are classified into Level 1, 2, or 3 based on the observability of inputs used in fair value measurement[27][30] | Asset (in thousands) | Level | March 31, 2021 | December 31, 2020 | | :------------------- | :---- | :------------- | :---------------- | | Cash equivalents | 2 | $110,414 | $163,418 | | Marketable securities | 2 | $41,077 | $- | | Notes receivable | 2 | $4,786 | $2,937 | | Notes receivable impaired | 3 | $- | $875 | 3. RECENT ACCOUNTING PRONOUNCEMENTS This note discusses the impact of recently adopted accounting standards on the financial statements - The adoption of ASU 2018-13 (Fair Value Measurement) and ASU 2019-12 (Simplifying the Accounting for Income Taxes) effective January 1, 2020, and December 15, 2020, respectively, did not have a material impact on the company's financial statements[34][35] 4. REVENUE RECOGNITION This note outlines the company's policies for recognizing revenue from various sources | Revenue Source (in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :---------------------------- | :-------------------------------- | :-------------------------------- | | Sales at company owned stores | $82,790 | $31,037 | | Distribution | $2,835 | $- | | E-commerce sales | $4,3