Core Insights - GrowGeneration Corp. reported a first quarter net sales of $35.7 million, a decrease from $47.9 million in the same period last year, primarily due to the closure of 19 retail locations in 2024 [4][6] - Proprietary brand sales increased to 32.0% of total Cultivation and Gardening revenue, up from 22.6% year-over-year, reflecting the strength of the company's product portfolio [5][6] - The gross profit margin improved to 27.2%, compared to 25.8% in the first quarter of 2024, indicating operational efficiency [7][9] Financial Performance - The company reported a net loss of $9.4 million for the first quarter of 2025, compared to a net loss of $8.8 million in the same quarter of 2024 [9][10] - Adjusted EBITDA loss was $4.0 million, worsening from a loss of $2.9 million in the prior year [10][26] - Cash, cash equivalents, and marketable securities totaled $52.6 million with no debt, providing financial flexibility for future growth initiatives [6][10] Operational Strategy - The company is transitioning to a regional fulfillment center model and focusing on B2B engagement, moving away from same-store sales as a key performance metric [3][12] - Store and other operating expenses decreased by approximately 17.3% to $8.8 million compared to $10.6 million in the first quarter of 2024 [8][9] - The company has withdrawn its full-year 2025 financial outlook due to macroeconomic uncertainties and is exploring strategies to mitigate risks [12] Future Outlook - For the second quarter of 2025, GrowGeneration expects total consolidated net sales to exceed $40 million [13]

Financial Data and Key Metrics Changes - Full year 2024 net revenue was $188.9 million, consistent with preliminary results reported in early February [8] - Gross profit margin for Q4 2024 was 16.4%, down from 23.5% in Q4 2023, primarily due to one-time inventory disposal costs [14][26] - Net loss for Q4 2024 was $23.3 million, an improvement from a net loss of $27.3 million in Q4 2023 [29] - Full year 2024 net loss was $49.5 million, compared to a net loss of $46.5 million in 2023 [32] Business Line Data and Key Metrics Changes - Proprietary brand sales for 2024 were $39.5 million, representing 24.2% of total net sales, up from 18.8% in 2023 [9][31] - Cultivation and Gardening net sales for Q4 2024 were $32.9 million, down from $41.7 million in Q4 2023 [25] - Storage Solutions segment revenue decreased 41% to $4.5 million in Q4 2024 compared to $7.7 million in the same period last year [26] Market Data and Key Metrics Changes - Same-store sales rose 1% year-over-year in Q4 2024, marking the second consecutive quarter of positive growth [24] - The company ended 2024 with 31 operational stores and 2 regional distribution centers [13] Company Strategy and Development Direction - The company executed a strategic transformation to become a product-driven business with a focus on B2B customers [9] - The goal for proprietary brands is to reach 35% of Cultivation and Gardening net sales by the end of 2025 [10] - A new B2B e-commerce platform was launched in Q4 2024, receiving positive customer feedback [11] Management's Comments on Operating Environment and Future Outlook - Management expects net revenue for 2025 to be in the range of $170 million to $180 million, with adjusted EBITDA ranging from a $2 million loss to a positive $2 million profit [18][35] - The company anticipates gross margins for 2025 to be between 29% and 31% [35] - Management remains optimistic about potential regulatory changes in the cannabis industry that could positively impact the business [74] Other Important Information - The company completed a $6 million share repurchase program in 2024 [15][34] - The company has no debt and a strong cash position of $56.5 million as of December 31, 2024 [14][34] Q&A Session Summary Question: Can you discuss the expected cadence of gross margin improvement? - Management expects an immediate lift in gross margin in Q1, with continued improvements throughout the year, targeting 30% for the full year [45] Question: What initiatives are being taken to transition sales to e-commerce? - The company is transferring commercial customers to the new B2B portals and focusing on operational efficiencies [48] Question: Can you elaborate on sales within different channels for proprietary brands? - Proprietary brands are seeing growth across retail, commercial, and e-commerce channels, with a focus on Amazon [55] Question: Is there any remaining inventory that needs to be cleaned up? - The heavy lifting on inventory has been completed, with continuous improvements expected moving forward [59] Question: What are the growth and demand assumptions for 2025? - Management anticipates a rebound in the MMI business and growth driven by proprietary brands and B2B customer service [66][70] Question: Any updates on the regulatory environment regarding cannabis? - Management remains optimistic about potential rescheduling and banking policy changes that could benefit the industry [74]