GrowGeneration (GRWG) Q2 2024 earnings summary

Executive summary

• Q2 2024 net revenue was $53.5 million, up sequentially but down 16.3% year-over-year due to store consolidations and closures.

• Gross margin improved to 26.9%, a 110 basis point sequential increase and slightly above the prior year.

• Net loss for Q2 2024 was $5.9 million, or $0.10 per share, compared to $5.7 million, or $0.09 per share, in Q2 2023.

• A comprehensive restructuring plan is underway, including closing up to 19 underperforming stores in 2024 and workforce reductions, targeting $12 million in annualized cost savings.

• Proprietary brand sales rose to 21.5% of Cultivation and Gardening net sales, up from 16.7% year-over-year, with a target of 35% by end of 2025.

Financial highlights

• Q2 2024 net sales were $53.5 million, up 11.7% sequentially but down 16.3% year-over-year.

• Gross profit was $14.4 million, down from $17.1 million in Q2 2023.

• Adjusted EBITDA loss was $1.1 million, a $1.7 million sequential improvement, but down from a $0.9 million profit in Q2 2023.

• Cash, cash equivalents, and marketable securities totaled $56 million at quarter end.

• Operating expenses decreased by $2.5 million year-over-year, reflecting cost control and restructuring.

Outlook and guidance

• Full-year 2024 net sales are estimated at $190 million to $195 million, reflecting the impact of store closures and restructuring.

• Adjusted EBITDA guidance for 2024 has been withdrawn due to restructuring uncertainty; updates will be provided as visibility improves.

• Gross margin is expected to be in the low to mid-20s for the remainder of 2024, with a target of high 20s to low 30s in 2025 as proprietary brands expand.

• The company expects to achieve $12 million in annualized cost savings from restructuring.

• Restructuring activities, including store closures and operational improvements, are expected to be completed by year-end 2024.