Net Loss Improved by
Proprietary Brand Penetration Increased 500 Basis Points Year-Over-Year to 37.0% of Cultivation and Gardening Revenue
Company Reaffirms 2026 Outlook: Revenue of
First Quarter 2026 Summary
- Net sales of
$38.4 million , up 7.5% year-over-year; - Proprietary brand sales as a percentage of Cultivation and Gardening net sales increased to 37.0%, compared to 32.0% in the first quarter of 2025;
- Gross profit margin of 25.4%, compared to 27.2% for the first quarter of 2025;
- Store and other operating expenses declined approximately 27.2% to
$6.4 million , compared to$8.8 million for the same period in the prior year; - Total operating expenses decreased
$4.6 million , or 23.4%, to$15.0 million in the first quarter of 2026, compared to$19.6 million for the same period in the prior year; - Net loss was
$4.9 million compared to a net loss of$9.4 million for the same period in 2025; - Adjusted EBITDA(1) loss of
$1.6 million compared to a loss of$4.0 million for the comparable prior year period; and - Cash, cash equivalents, and marketable securities of
$41.1 million and no debt.
“We also continue to make strong progress on our strategic priorities, with proprietary brand penetration reaching 37.0% of Cultivation and Gardening revenue, positioning us well to achieve our approximately 40% year-end target. Expanding proprietary brands remains central to our margin expansion and long-term value creation strategy. With improving revenue trends, a structurally lower cost base, and over
First Quarter 2026 Consolidated Results
Net sales were
Once again, our quarterly proprietary brand sales exceeded our internal expectations, giving us further confidence in our ability to expand gross margin for the long-term. Proprietary brand sales as a percentage of Cultivation and Gardening net sales increased to 37.0%, compared to 32.0% for the same period in the prior year, largely driven by our strategic initiatives to increase sales mix of our expanded portfolio of proprietary brands.
Gross profit was
Total operating expenses, which include store operations and other operational expenses, selling, general, and administrative, estimated credit losses, and depreciation and amortization expense decreased in the first quarter of 2026 by
Store and other operating expenses in the first quarter of 2026 declined by approximately 27.2% to
Selling, general, and administrative expenses in the first quarter of 2026 were
GAAP net loss narrowed to
Non-GAAP Adjusted EBITDA(1) was a loss of
Cash, cash equivalents, and marketable securities as of
Total current liabilities, including accounts payable, accrued payroll, and other liabilities as of
Geographic Footprint
Our geographic footprint for our Cultivation and Gardening segment spans 492,000 square feet of retail and warehouse space and includes 19 retail locations across 9 states as of
2026 Outlook
For the full year 2026, the Company reaffirmed that it expects net revenue in the range of
The Company’s full year 2026 guidance assumes profitability will build progressively throughout the year, with profitable second and third quarters reflecting the outdoor cultivation and gardening season as well as continued improvements in gross margin and a lower operating expense base compared to 2025.
For the second quarter of 2026, the Company expects total consolidated net sales in the range of
| Footnotes | |
| (1) | Adjusted EBITDA represents earnings before interest, taxes, depreciation, and amortization as adjusted for certain items as set forth in the reconciliation table of |
Conference Call
The Company will host a conference call today,
About
GrowGen is one of the nation’s largest suppliers of specialty products for controlled environment agriculture (CEA), commercial cultivation, and retail garden centers. GrowGen carries and sells thousands of products, such as nutrients, additives, growing media, lighting, environmental control systems, and benching and racking, including proprietary brands such as
To be added to the
Forward Looking Statements
This press release contains predictions, estimates or other information that are considered forward-looking statements, including without limitation, statements regarding the Company’s financial outlook, guidance, and strategic expectations, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and is intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. When used herein, words such as “look forward,” “expect,” “believe,” “anticipate,” “estimate,” “guidance,” “outlook,” “projected,” “intend,” “may,” or variations of such words and similar expressions are intended to identify forward-looking statements. These forward-looking statements represent management’s current expectations and are based on assumptions and estimates that management believes are reasonable as of the date of this press release. You are cautioned not to place undue reliance on these forward-looking statements. Actual results may differ materially from those anticipated due to a number of risks and uncertainties, including but not limited to those discussed in filings made with the
Contacts:
Managing Director
T: 212-896-1233
E: GrowGen@kcsa.com
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| (Unaudited, in thousands, except shares) | |||||||
2026 | 2025 | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 21,679 | $ | 30,406 | |||
| Marketable securities | 19,440 | 15,658 | |||||
| Accounts receivable, net of allowance for credit losses of | 13,999 | 10,668 | |||||
| Notes receivable, current, net of allowance for credit losses of | 495 | 507 | |||||
| Inventory | 36,953 | 38,776 | |||||
| Prepaid income taxes | 60 | 60 | |||||
| Prepaid and other current assets | 7,062 | 7,672 | |||||
| Total current assets | 99,688 | 103,747 | |||||
| Property and equipment, net | 9,034 | 9,795 | |||||
| Operating leases right-of-use assets, net | 25,191 | 27,050 | |||||
| Intangible assets, net | 2,569 | 3,326 | |||||
| 2,080 | 2,080 | ||||||
| Other assets | 1,016 | 1,042 | |||||
| TOTAL ASSETS | $ | 139,578 | $ | 147,040 | |||
| LIABILITIES & STOCKHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 9,582 | $ | 8,775 | |||
| Accrued liabilities | 3,857 | 3,269 | |||||
| Payroll and payroll tax liabilities | 1,858 | 2,589 | |||||
| Customer deposits | 2,643 | 4,015 | |||||
| Sales tax payable | 840 | 872 | |||||
| Current maturities of operating lease liabilities | 5,831 | 6,455 | |||||
| Total current liabilities | 24,611 | 25,975 | |||||
| Operating lease liabilities, net of current maturities | 21,627 | 23,022 | |||||
| Other long-term liabilities | 508 | 544 | |||||
| Total liabilities | 46,746 | 49,541 | |||||
| Commitments and contingencies | |||||||
| Stockholders' equity: | |||||||
| Common stock; | 60 | 60 | |||||
| Additional paid-in capital | 377,383 | 377,128 | |||||
| Accumulated deficit | (284,611 | ) | (279,689 | ) | |||
| Total stockholders' equity | 92,832 | 97,499 | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 139,578 | $ | 147,040 | |||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
| (Unaudited, in thousands, except per share amounts) | |||||||
| Three Months Ended | |||||||
| 2026 | 2025 | ||||||
| Net sales | $ | 38,391 | $ | 35,703 | |||
| Cost of sales (exclusive of depreciation and amortization shown below) | 28,651 | 25,996 | |||||
| Gross profit | 9,740 | 9,707 | |||||
| Operating expenses: | |||||||
| Store operations and other operational expenses | 6,401 | 8,792 | |||||
| Selling, general, and administrative | 6,926 | 7,112 | |||||
| Estimated credit losses | 67 | 92 | |||||
| Depreciation and amortization | 1,611 | 3,585 | |||||
| Total operating expenses | 15,005 | 19,581 | |||||
| Loss from operations | (5,265 | ) | (9,874 | ) | |||
| Other income: | |||||||
| Interest income | 324 | 497 | |||||
| Total other income | 324 | 497 | |||||
| Net loss before income taxes | (4,941 | ) | (9,377 | ) | |||
| Benefit for income taxes | 19 | — | |||||
| Net loss | $ | (4,922 | ) | $ | (9,377 | ) | |
| Net loss per share, basic | $ | (0.08 | ) | $ | (0.16 | ) | |
| Net loss per share, diluted | $ | (0.08 | ) | $ | (0.16 | ) | |
| Weighted average shares outstanding, basic | 60,090,905 | 59,441,330 | |||||
| Weighted average shares outstanding, diluted | 60,090,905 | 59,441,330 | |||||
Use of Non-GAAP Financial Information
The following non-GAAP financial measures of EBITDA and Adjusted EBITDA are not in accordance with, or an alternative for, generally accepted accounting principles ("GAAP") and should be considered in addition to, and not as a substitute for, the most directly comparable GAAP financial measures. We believe these non-GAAP financial measures, when used in conjunction with their most directly comparable GAAP financial measures, net income (loss), provide meaningful supplemental information to both management and investors, facilitating the evaluation of performance across reporting periods, identify trends affecting our business, and project future performance. Management uses these non-GAAP financial measures for internal planning and reporting purposes, and we believe that these non-GAAP financial measures may be useful to investors in their assessment of our operating performance, our ability to generate cash, and valuation. In addition, these non-GAAP financial measures address questions routinely received from analysts and investors and, in order to ensure that all investors have access to the same data, we have determined that it is appropriate to make this data available to all investors. These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies.
EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA are non-GAAP financial measures commonly used in our industry and should not be construed in isolation as substitutions to net income (loss) as indicators of operating performance or as alternatives to cash flow provided by operating activities as a measure of liquidity (each as determined in accordance with GAAP).
Set forth below is a reconciliation of EBITDA and Adjusted EBITDA to net loss (in thousands):
| Three Months Ended | |||||||
| 2026 | 2025 | ||||||
| Net loss | $ | (4,922 | ) | $ | (9,377 | ) | |
| Benefit for income taxes | (19 | ) | — | ||||
| Interest income | (324 | ) | (497 | ) | |||
| Depreciation and amortization | 1,611 | 3,585 | |||||
| EBITDA | $ | (3,654 | ) | $ | (6,289 | ) | |
| Share-based compensation | 255 | 503 | |||||
| Investment income | 300 | 519 | |||||
| Restructuring plan | — | 1,141 | |||||
| Consolidation and other charges (1) | 1,515 | 96 | |||||
| Adjusted EBITDA | $ | (1,584 | ) | $ | (4,030 | ) | |
| (1) Consists primarily of expenditures related to legal settlements and contingencies, the activity of store and distribution consolidation, one-time severances outside of the restructuring plan announced | |||||||
