GRWG - GrowGeneration falls as outlook disappoints

2023-03-15 17:04:19 ET

Cannabis player GrowGeneration ( NASDAQ: GRWG ) shed ~7% in post-market trading Wednesday after announcing lower-than-expected guidance for Q1 and the full year 2023 amid ongoing market uncertainty.

However, the company's Q4 revenue exceeded Street expectations to reach $54.5M despite a ~40% YoY decline and ~52% drop in same-store sales.

Meanwhile, adjusted earnings fell short of forecasts, while net loss rose ~266% YoY to $15.0M. Gross margin in terms of net revenue reached ~18% from ~26% in Q4 2021, mainly due to aggressive inventory clearance and a rise in inventory reserves.

Full-year revenue slipped ~34% YoY to $278.2M, and adjusted EBITDA stood at ( $16.7M) compared to $34.2M in 2021, while cash and cash equivalents held steady at $40.0M.

"While we expect a degree of continued uncertainty in 2023, we remain focused on the areas of the business we can control," Co-Founder and Chief Executive Darren Lampert said.

"For the first time in seven quarters, we believe GrowGen will see sequential revenue growth in the first quarter of 2023," Lampert noted, referring to the company's $55M –$57M Q1 2023 net revenue forecast, which, however, falls short of $61.0M in the consensus.

GrowGeneration ( GRWG ) projects $250M – $270M in net revenue and ($4M) – $1M in adj. EBITDA for 2023. Meanwhile, Wall Street forecasts for the company's 2023 revenue stand slightly ahead at $270.7M.

Read: With a Hold rating on the stock in January, Seeking Alpha contributor Gary Bourgeault predicted that GrowGeneration ( GRWG ) "is going to be profitable, but revenue and earnings growth will be at a modest pace."

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