GrowGeneration Corp. (NASDAQ:GRWG) released financial results for the second quarter ended June 30, 2022, revealing that net sales declined 44% to $71.1 million.
Q2 2022 Financial Highlights
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Net loss of $136.4 million inclusive of $127.8 million impairment expense for goodwill and other intangibles compared to net income of $6.7 million in the Q2 2021.
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Adjusted EBITDA was a loss of $2.9 million in the second quarter of 2022, compared to a profit of $14.5 million in the same period last year.
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Gross profit was $20.2 million for the second quarter of 2022, compared to $35.7 million for the second quarter of 2021. Gross profit margin was 28.5%, flat to the same quarter last year.
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Cash and short-term marketable securities as of June 30, 2022, were $65.6 million. Inventory as of June 30, 2022, was $99.1 million and prepaid inventory and other current assets were $9.2 million.
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Total current liabilities, including accounts payable and accrued payroll and other liabilities, decreased from $47.1 million at December 31, 2021 to $39.5 million at June 30, 2022.
Darren Lampert, GrowGeneration’s co-founder and CEO stated, “The GrowGen team faced significant industry headwinds in the second quarter resulting in disappointing results for the quarter. The first half of last year was exceptionally strong with second quarter same-store sales up approximately 60% compared to the same period in 2020. In the second quarter of 2022 sales declined 43.5% and we had a $127.8 million impairment of goodwill and intangibles. However, we generated $3.8 million of positive cash flow from operations as we managed inventory levels during the quarter ended June 30, 2022. In addition, we are on track to reduce our annualized cost base by $13 million compared to year-end 2021 levels.”
Expansion Efforts
The company’s supply chain spans approximately 958,000 square feet of retail and warehouse space, across existing locations and signed leases in new locations, spanning 14 states. In July 2022, the company opened its first location in Mississippi. The company has closed two under-performing locations in July and expects to close 3 to 5 additional locations before year-end 2022. The company expects to add 3 to 4 additional new stores before the end of 2022, primarily in states where the company does not currently operate.
Fiscal Year 2022 Financial Outlook
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Revenue guidance for 2022 updated to be between $250 to $275 million, down from a range of $340 million to $400 million previously
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Adjusted EBITDA loss guidance expected to be $12 million to $15 million, down from previous expectations of $0 million to $10 million profit
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Photo by Mackenzie Marco on Unsplash
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