Growgeneration Corp. · NASDAQ:GRWG
Growgeneration — Oppenheimer Presentation May 2020
33 slides from Growgeneration's conference presentation, May 12, 2020
Slide 1: Oppenheimer Presentation May 2020
OPPENHEIMER PRESENTATION May 2020
Slide 2: Safe Harbor Statement
WHERE THE PROS GO TO GROW SAFE HARBOR STATEMENT This presentation is being provided for information purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase any of the Company’s securities. This presentation is not intended, nor should it be distributed, for a
Slide 3: Table of Contents
WHERE THE PROS GO TO GROW TABLE OF CONTENTS growgeneration.com 3 1) Company and Market Overview 2) Business Overview 3) Growth Strategy 4) Financials and Milestones
Slide 4: Company and Market Overview
WHERE THE PROS GO TO GROW growgeneration.com 4 1) Company and Market Overview
Slide 5: GrowGeneration at a Glance
WHERE THE PROS GO TO GROW GROWGENERATION AT A GLANCE growgeneration.com 5 • Headquartered in Denver, CO • Founded in 2014 • Largest hydroponic and organic product / solutions provider • National footprint with 27 sales / service centers in 10 states • Full - service product and solution offering for
Slide 6: Seasoned Management Team & Board of Directors
WHERE THE PROS GO TO GROW SEASONED MANAGEMENT TEAM & BOARD OF DIRECTORS growgeneration.com Darren Lampert CEO, Director • Founding member of law firm Lampert & Lampert (1986 - 2000) • Former portfolio manager and proprietary trader (2000 - 2014) Michael Salaman President, Director • VP at National M
Slide 7: GrowGeneration Highlights
WHERE THE PROS GO TO GROW growgeneration.com 7 • Largest retailer of hydroponic products in the US – Hydroponics: specialized method of growing plants using mineral nutrient solutions in a water solvent, as opposed to soil • Serves commercial and home cultivators growing specialty crops in the large
Slide 8: Strategically Located Stores
WHERE THE PROS GO TO GROW growgeneration.com 8 27 STORES 10 STATES HI AL AZ AR CA CO FL GA ID IL IN IA KS KY LA ME MI MN MI MO MT NE NV NM NY NC ND OH OK OR PA SC SD TN TX UT VA WA WV WI WY MD NJ CT VT NH MA DE RI AK • Targeted New Markets – 6 states targeted for new markets: Missouri, Illinois, Ari
Slide 9: U.S. Hydroponic Market Size & Landscape
WHERE THE PROS GO TO GROW growgeneration.com 9 Hydroponic Market Size 1 Market Commentary • Hydroponic – Over 1,000 hydroponic stores in the U.S. – Market is highly fragmented • Cannabis 2 – U.S. cannabis sales are projected to reach $17.0 billion in 2020 and $29.7 billion by 2025 (for the legal adu
Slide 10: Business Overview
WHERE THE PROS GO TO GROW growgeneration.com 10 2) Business Overview
Slide 11: The GrowGeneration Store Unit
WHERE THE PROS GO TO GROW THE GROWGENERATION STORE UNIT growgeneration.com 11 Store Overview Store Metrics • 6,911 Average SQF per retail location for all stores operating from Jan. 2019 to Dec. 2019 • $441 Sales / Average SQF for all stores operating from Jan. 2019 to Dec. 2019 • 2,617 Average SKUs
Slide 12: Diverse Product Base
WHERE THE PROS GO TO GROW growgeneration.com 12 Diverse Product Base 28% 21% 19% 14% 6% • Over 10,000+ SKUs available, sold by knowledgeable sales staff • Extremely diversified product offering • ~60% of revenues are from consumable products, driving repeat purchases and foot traffic • Non - consuma
Slide 13: Commercial Products and Consumable Products
WHERE THE PROS GO TO GROW growgeneration.com 13 Commercial Products Capital Projects ($50 per sq. ft.) Consumable Products • Total recurring sales of approximately 60% of overall revenue 1 • Become dependable supplier for growers & cultivators Lighting (Lighting) Rolling Benches, Trays and Reservoir
Slide 14: Big Opportunity in Private Label Products
WHERE THE PROS GO TO GROW growgeneration.com 14 • The private label program, under the Sunleaves brand, began to be stocked on shelves and online in Q4 2019 • Initial private label lineup includes a one - part micro and macro nutrient+ Cal mag powder line, for both cannabis and hemp farmers, a silic
Slide 15: Customer Engagement
WHERE THE PROS GO TO GROW growgeneration.com 15 • GrowGeneration employs a knowledge base of expert growers and cultivators (“GrowPro’s”) • Stores feature experiential shopping and product demos • ERP implementation completed to help lower costs, integrate online and store sales and supply channels,
Slide 16: GrowPro Omnichannel Offering
WHERE THE PROS GO TO GROW growgeneration.com 16 • Acquired an e - commerce operation, HeavyGarden.com, and rebranded as GrowGen.Pro, to serve as the basis for an omnichannel strategy – E - commerce site is purpose - built to appeal to professional growers – Online orders have increased 132% year - o
Slide 17: Marketing & Branding
WHERE THE PROS GO TO GROW growgeneration.com 17 Out of Home – Billboard In - Store Merchandising Trade Shows Social Media Vehicle Wraps MARKETING & BRANDING DRIVE MORE STORE TRAFFIC, COMMERCIAL SIGN - UPS, AND ONLINE PURCHA SES
Slide 18: COVID-19 Update
WHERE THE PROS GO TO GROW growgeneration.com 18 • GrowGeneration has continued operating – Deemed an “essential” supplier to the agricultural industry • Adjusted operations to ensure the safety of customers and employees – Successfully initiated curbside pickup and will - call procedures • GrowGener
Slide 19: Growth Strategy
WHERE THE PROS GO TO GROW growgeneration.com 19 3) Growth Strategy
Slide 20: Growth Milestones by Category
WHERE THE PROS GO TO GROW growgeneration.com 20 Category Milestone Strategy Stores • $30M+ revenue in M&A pipeline anticipated to close in Q2 - Q3 2020 • Open new stores in 6 new markets • Target mature markets like CA, MI,AZ • Target new emerging markets like PA, NY, NJ, IL Same Store Sales • Post
Slide 21: Financials and Milestones
WHERE THE PROS GO TO GROW growgeneration.com 21 4) Financials and Milestones
Slide 22: 2019 Revenue Growth
WHERE THE PROS GO TO GROW growgeneration.com 22 2019 REVENUE GROWTH $4.4 $7.2 $8.4 $9.1 $13.1 $19.5 $21.8 $25.4 Q1 Q2 Q3 Q4 2018 2019 2018 - 2019 Revenue Quarterly YoY Growth $29.0 $79.7 FY18 FY19 '18 - '19 Revenue Growth: 175% Total Revenue Growth 199% growth 172% growth 159% growth 180% growth ($
Slide 23: Same Store Sales
WHERE THE PROS GO TO GROW SAME STORE SALES growgeneration.com 23 • Same store sales +36% 2019 YoY • Same store sales $13.0M FY 2019 • Same store sales grew 62% in Q4 2019 • Double - digit projected 2020 same store sales growth Same Store Sales 43.0% 3.4% - 20.8% - 4.0% 21.6% - 5.1% 41.8% 22.9% 48.0%
Slide 24: Store Unit Growth
WHERE THE PROS GO TO GROW growgeneration.com 24 • Store Unit Growth – Unit growth 39% YoY – Total stores in 2019: 25 – Total stores as of May 2020: 27 – New & acquired store locations in 2019: 10 (3 opened, 7 acquired) – 3 stores consolidated into existing larger stores • New stores to be opened in
Slide 25: Proven Robust Track Record of Acquisitions
WHERE THE PROS GO TO GROW PROVEN ROBUST TRACK RECORD OF ACQUISITIONS growgeneration.com 2014 2015 2016 2017 2018 2019 2020 $30M in acquisitions completed in 2019 $12M in acquisitions completed so far in 2020 Acquisitions are Margin and Profit Accretive 25
Slide 26: Acquisitions vs. New Store Opening
WHERE THE PROS GO TO GROW growgeneration.com • 2019 revenues of $8 million • Total cost of acquisition, $2.4 million • Acquisition multiple, 2.7 times TTM EBITDA • Payback period expected to be less than 2.25 years • 10,000 sq. ft. (New OKC location) • Racking/fixtures/buildout/vehicles ~ $250K • In
Slide 27: Projected Revenue and Adjusted EBITDA
WHERE THE PROS GO TO GROW growgeneration.com 27 Projected Revenue Estimated Adjusted EBITDA 4 - Wall Economics and Adjusted EBITDA $14 $29 $80 $130 $181 2017 2018 2019 2020E 2021E $6.6 $13.5 $22.0 2019 2020E 2021E 29% 12% 17% 8% 9% 30% 12% 18% 7% 11% Gross Profit Operating Expenses Operating Income
Slide 28: Appendix
WHERE THE PROS GO TO GROW growgeneration.com 28 Appendix
Slide 29: Income Statement
WHERE THE PROS GO TO GROW growgeneration.com 29 INCOME STATEMENT ($ in m) Dec-18 Dec-19 Sales $29.0 $79.7 Cost of Goods Sold 22.6 57.2 Gross Profit $6.4 $22.6 Operating Expenses Store Operations 5.2 10.1 General and Administrative 1.6 3.2 Share Based Compensation 1.9 2.5 Depreciation and Amortizatio
Slide 30: Balance Sheet
WHERE THE PROS GO TO GROW growgeneration.com 30 1) Includes net PP&E, net operating leases, net intangibles, goodwill and other assets. 2) Includes accrued liabilities, payroll and payroll tax, customer deposits, sales tax payable, and current maturities of operating leases. BALANCE SHEET ($ in m) D
Slide 31: Cash Flows
WHERE THE PROS GO TO GROW CASH FLOWS growgeneration.com 31 ($ in m) Dec-18 Dec-19 Cash from Operating Activities Net Income (Loss) ($5.1) $1.9 Depreciation and Amortization 0.4 1.0 Change in Operating Assets and Liabilities 0.1 (9.7) Other Adjustments¹ 3.1 3.4 Total Cash from Operating Activities ($
Slide 32: Capitalization as of December 31, 2019
WHERE THE PROS GO TO GROW growgeneration.com 32 GrowGeneration Capitalization as of December 31, 2019 ($ in m) Dec-18 Dec-19 Sales $29.0 $79.7 Cost of Goods Sold 22.6 57.2 Gross Profit $6.4 $22.6 Operating Expenses Store Operations 5.2 10.1 General and Administrative 1.6 3.2 Share Based Compensation
Slide 33: Company Contact
WHERE THE PROS GO TO GROW COMPANY CONTACT growgeneration.com Contacts Michael Salaman President michael@growgeneration.com Darren Lampert Chief Executive Officer darren@growgeneration.com Denver, CO Tel: 800.935.8420 33