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GrowGeneration Financial Results: Miss On EPS

GrowGeneration Corp. has released its financial results for the fourth quarter and full year that ended on December 31, 2022. For the fourth quarter, the company reported a decrease of approximately 40% in net revenues to $54.5 million. In addition, same-store sales decreased by 51.9% compared to the previous year. Gross profit decreased to $9.6 million, representing 17.6% of net revenues, due to aggressive inventory clearance and increased inventory reserves. The company reported a net loss of $15.0 million, compared to a net loss of $4.1 million the previous year, with an adjusted EBITDA loss of $10.2 million.

For 2022, GrowGeneration’s financial results include a decrease of approximately 34.2% in net revenue to $278.2 million, towards the high end of the company’s previous guidance range. Gross profit decreased to $70.3 million, or 25.3% of net revenues, from $118.2 million, or 28.0% of net revenues. The decrease was primarily due to a decline of $178.0 million in same-store sales, representing a 51.6% decrease. In addition, the company reported a net loss of $163.7 million, compared to a net income of $12.8 million the previous year, with an adjusted EBITDA loss of $16.7 million. Despite the downturn in the business cycle for cannabis cultivators, GrowGeneration Corp. reduced its operating expense and selling, general, and administrative expense base by approximately $20.7 million through workforce reduction, store closures, and tighter day-to-day expense controls. In addition, the company invested approximately $9.0 million for payments associated with technology, supply chain, and distribution investments. The company generated $11.9 million of operating cash on a full-year basis, primarily driven by the inventory reduction.

The company’s cash and short-term securities were $71.9 million as of December 31, 2022.

GRWG Miss On EPS For Q4 & FY 2022

GrowGeneration Corp. reported earnings per share (EPS) of -25 cents for the fourth quarter of 2022, far below the consensus estimate of -14 cents. The full-year 2022 EPS was also below the consensus of -$2.59 as it reached -$2.69. However, the quarter and full-year sales were met as the company reported sales of $54.5 million and $278.2 million, respectively, compared to a consensus of $51.8 million and $278.2 million. There were some institutional transactions with investors shorting their positions. Still, the largest institutional owners, such as D.E Shaw & Co. LP, The Vanguard Group, ETF Managers Group, and BlackRock fund advisors, all furthered their positions in the company. Wells Fargo maintained its Equal-Weight rating for the company in January.

Although the financial results reported a decrease in revenue, the company remains confident as the largest chain of specialty hydroponic and organic garden centers in the United States. GrowGeneration Corp. is optimistic about the future and will continue to invest in technology, supply chain, and distribution to maintain its market position.

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