GrowGeneration, Inc. (NASDAQ: GRWG) is the owner and operator of specialty hydronic and organic gardening centers across the United States. The company currently operates 58 stores across the U.S., including 22 locations in California. In addition, GrowGeneration operates an e-commerce business through its website, growgeneration.com. Shares of the hydroponic supplies company are rallying 29% through early trading on Tuesday, November 8, 2022. Over the past three months, GrowGeneration has seen average daily volume of 1.28 million shares. However, volume of 10.52 million shares or dollar volume of around $47.87 million, has already exchanged hands through early trading.
Shares of GrowGeneration are gaining after the company released third quarter 2022 financial results. During the quarter ended September 30, 2022, the hydroponics and organic gardening company reported net sales of $70.9 million, which represents a year-over-year decline of 39% due to softer demand across the industry. Comparable store sales for Q3 2022 plunged 58.1%. Overall, the company reported a net loss of $7.2 million or -$0.12 per share, compared to net income of $4 million during the same time frame last year. Adjusted EBITDA loss came in at $2.6 million.
Although it was a tough quarter for GrowGeneration, CEO Darren Lampert, says he is “cautiously optimistic” after seeing signs of stabilization within the industry. The company has continued to focus on cost-cutting this year and in Q3, including reducing headcount. GrowGeneration has also reduced inventory by $10 million compared to the end of Q2 2022 and continues to hold zero debt.
In a bright spot for investors, management raised its revenue and adjusted EBITDA guidance for full-year 2022. The new revenue range given by the company is between $270 million and $280 million. This compares to the old revenue guidance range of $250 million to $275 million. On an adjusted EBITDA basis, the new guidance range is between -$10 million to $13 million. The old adjusted EBITDA range was -$12 million to $15 million.
Darren Lampert, GrowGeneration’s Co-Founder and Chief Executive Officer: “I am proud of how resilient our team has been throughout this year as GrowGen – and the entire hydroponics category – has faced significant industry and economic headwinds. In the third quarter of 2022, net sales of $70.9 million outpaced our internal expectations, bolstered primarily by stronger-than-expected demand within our distribution and private label business. During the quarter we generated $8.3 million of positive cash flow from operations as working capital management remains a top priority across the business, and we ended the third quarter with $71.1 million of cash on our balance sheet with zero debt. On the expense side, we have reduced the payroll by an incremental $1.7 million in the quarter and $11.7 million year to date. We reduced inventory quarter-over-quarter by $10 million compared to the end of the second quarter 2022, which amounts to an aggregate reduction in our retail business of more than $24.1 million in inventory year-to-date since December 31, 2021.”
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