GrowGeneration Reports Record Q1 2019 Revenues and Net Income

Increases Guidance to $60M - $65M and $.14 - $.18 Adjusted EBITDA

DENVER , May 7, 2019 /CNW/ - GrowGeneration Corp. (OTCQX: GRWG), ("GrowGen" or the "Company") one of the largest chains of specialty hydroponic and organic garden centers, with currently 21 locations, today reported financial results for its quarter ended March 31, 2019 .

Q1 2019 Financial Highlights:

• Adjusted EBITDA of $615,509 for Q1 2019 compared to adjusted EBITDA of $(366,945) for Q1 2018.
•  Net income of $229,421 for Q1 2019 compared to a net loss of $(953,430) for Q1 2018.
• Revenue of $13.1 million up $8.7 million or 199% over Q1 2018 revenues of $4.4 million .
• Same store sales were up 42% for Q1 2019 compared to Q1 2018.
• Acquired stores in Denver, CO , Palm Springs, CA and Reno, NV , and opened Tulsa, OK and Brewer, ME locations in 2019.
• Gross profit margin percentage was 28.2% for Q1 2019 compared to 27.1% for Q1 2018.
• Store operating costs, as a percentage of revenue, have declined 26% from 20.4% for Q1 2018 to 15% for Q1 2019.
• Corporate overhead declined 107%, from 21.8% of revenues for Q1 2018 to 10.5% of revenue for Q1 2019.
• The Company had $6.6 million in cash and cash equivalents at March 31, 2019 .
• As of March 31, 2019 , the Company had working capital of $17.4 million compared to working capital of $21.6 million at December 31, 2018 .

Darren Lampert , Co-Founder and CEO said, "the Company's first quarter financial results were transformational. We improved the financial performance of the Company in all areas. Revenue was up almost 200% year over year, and almost 50% 4th quarter 2018 over 1^st quarter 2019. Adjusted EBITDA was over $600,000 , with adjusted EPS at a positive $.02 . Our same store sales were up over 42% year over year, with margins increasing over 1 basis point. With our significant top and bottom-line growth, we were able to reduce our operating expenses by 26% and our corporate overhead by over 100 % as a percentage of our revenue. With Q2 being our traditional strongest quarter, revenue and net income are trending significantly higher than our Q1 numbers. The newly acquired stores and our new store openings are all performing better than expected. We have a strong pipeline of new acquisition targets set to close in Q2. The Company continues the process of up-listing the Company to a larger exchange. We are increasing our guidance for 2019 revenue to $60M - 65M and adjusted EBITDA to $.14 - $.18 per share for 2019."

Summary of Q1 2019 results:

Net revenue for the three months ended March 31, 2019 increased approximately $8.7 million , or 199%, to approximately $13.1 million , compared to approximately $4.4 million for the three months ended March 31, 2018 . The increase in revenues in 2019 was primarily due to the addition of 14 new stores opened or acquired after January 1, 2018 , and the new e-commerce site acquired in mid-September 2018.  The 14 new stores and the new e-commerce web site contributed $9.9 million in revenue for the quarter ended March 31, 2019 . Four new stores which we opened at various times during the quarter ended March 31, 2018 contributed sales of $1.7 million during that quarter.

Cost of goods sold for the three months ended March 31, 2019 increased approximately $6.2 million , or 195%, to approximately $9.4 million , as compared to approximately $3.2 million for the three months ended March 31, 2018 . The increase in cost of goods sold was primarily due to the 199% increase in sales comparing the three months ended March 31, 2019 to the three months ended March 31, 2018 . Gross profit was approximately $3.7 million for the three months ended March 31, 2019 , compared to approximately $1.2 million for the three months ended March 31, 2018 , an increase of approximately $2.5 million or 210%. Gross profit as a percentage of sales was 28.2% for the three months ended March 31, 2019 , compared to 27.1% for the three months ended March 31, 2018 .

Store operating costs as a percentage of sales were 15% for the three months ended March 31, 2019 , compared to 20.4% for the three months ended March 31, 2018 . Store operating costs were positively impacted by the acquisitions of new stores in 2018 and 2019 which have a lower percentage of operating costs to revenues due to their larger size and higher volume.

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