growgeneration.com Benzinga Jan 2019 OTCQX: GRWG

Transcription

1 Benzinga Jan

2 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 advertising purposes, nor is it intended for broadcast or publication to the general public. Any such offer of the Company s securities will only be made in compliance with applicable state and federal securities laws pursuant to a prospectus or an offering memorandum and related offering documents which will be provided to qualified prospective investors upon request. This presentation may include predictions, estimates or other information that might be considered forwardlooking within the meaning of applicable securities laws. While these forward-looking statements represent our current judgments, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. When used herein, words such as "look forward," "believe," "continue," "building," or variations of such words and similar expressions are intended to identify forward-looking statements. Factors that could cause actual results to differ materially from those contemplated in any forward-looking statements made by us herein are often discussed in filings we make with the United States Securities and Exchange Commission, available at: and on our website, at: 2

3 GrowGeneration: Transforming the Hydroponic Grow Supply Distribution industry Company Highlights Projected Revenue National coast to coast wholesale distributor of hydroponic grow supplies Over 100% growth year over year with over $25m in acquisition targets in 2019 ~$4.5bn highly fragmented market Serving commercial cultivation professionals $90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $ Complementary value-add consulting and product support Over 10,000 SKUs 20 operations in 8 states HeavyGardens.com Super Store Plant Production & Harvest 18% Medium & Containers 23% Lighting 17% Climate Control 8% Hydroponic Systems 5% Nutrients & Additives 29% 3

4 GrowGeneration What We Do GrowGeneration is the Supply Chain to the Cannabis and Hemp Cultivator 20 points of distribution, service and sales Operating in 8 States, all regions of the United States Just in time inventory, touching all of the legal cannabis markets Over 100 product specialists, with strong agricultural backgrounds to service and consult with commercial grow outfits One-stop shopping for all Hydroponic equipment, lighting, nutrients and other critical products specially crafted for the Cannabis grower Corporate infrastructure across sales, operations, purchasing, technology and accounting 4

5 GrowGeneration Corporate Divisions GrowGeneration Corp. GrowGeneration Canada Corp. Commercial Management Corp. Capital Projects Hemp Corp. Supply Chain to Hemp Farmers HeavyGardens.com Omni-Channel GrowGeneration Distribution Product Exclusives 5

6 Growth Strategy: National Expansion Growth to be fueled by both new location openings and acquisitions Washington ( (1) Oregon California (6) Nevada (1) Idaho Utah Arizona Montana - Current Operations Wyoming Colorado (5) New Mexico Kansas - Targeted for Expansion in North DakotaMinnesota South Dakota Nebraska Texas Oklahoma (2) Iowa Wisconsin Missouri Arkansas Illinois Indiana Kentucky Alabama Mississippi Georgia Louisiana Michigan (3) Tennessee Ohio New York Pennsylvania W.Va Virginia North Carolina South Carolina Florida Maine (1) New Hampshire Vermont Massachusetts Rhode Island Connecticut Maryland Current operations in 20 locations across 8 states Expansion markets: CA, OR, MI, MO, OK, NJ, PA and NE 6

7 Team GrowGen Organizational Landscape 7

8 GrowGeneration Stores Oklahoma City, OK Santa Rosa, CA 8

9 GrowGeneration Commercial Locations Conifer, CO & Cañon City, CO Denver, CO Salinas, CA Livonia, MI 9

10 Marketing/Branding Out of Home Billboard Humboldt/Mckinleyville, CA In-Store Merchandising Livonia, MI Trade Shows MJBIZ CON 2018 Las Vegas Social Media Vehicle Wraps Instagram/Facebook All Locations 10

11 Omni Channel Strategy 11

12 Investment Considerations The Largest B2B Seller of Specialty Hydroponic Supplies Established market presence focused on picks and shovels of cultivation equipment & supplies, located in close proximity to commercial growers U.S. cannabis market is expected to reach $23B by 2020 (1) Strong year-over-year growth FY2018 revenue projected $30M versus $14.3M 2017 FY2018 revenue sales up over 100% y/y As of Jan 2019,$14.0M in cash to deploy for acquisitions Large acquisition pipeline in a highly fragmented industry Operational business model that is scalable and provides opportunities for margin expansion (1) Source: New Frontier Data 12

13 Proven Robust Track Record of Acquisitions Pueblo Organics and Hydroponics - Pueblo, CO Happy Grow Lucky - Conifer, CO Mad Max and Sonoma Hydro - Santa Rosa, CA Seattle Hydro Spot - Seattle, WA East Coast Hydroponics - Warwick, RI Humboldt Depot - Arcata, CA Central Coast Garden & Supply - Salinas, CA Superior Growers Supply - Livonia/Lansing, MI Santa Rosa Hydroponics - Santa Rosa, CA Annualized sales $2,100,000 $470,000 $3,113,000 $25,000,000 # stores added Locations 4 Colorado 1 Colorado 2 California & Washington 8 California, Michigan & Rhode Island $25M in acquisitions completed through Q Over $12M in new acquisition Signed for 2019 GrowGen is the leading company in industry consolidation M and A team and strategy in place to execute acquisitions Acquisitions are accretive and present significant profit growth 13

14 Key Performance Executables for 2019 Fueling Growth: Plan t0 $100M Revenue by 2020 Acquisitions to close in Q1 over $12M in revenue Green fielding 2 new stores in Q1, at least 2 more openings Margin Expansion through purchasing power of over $35M Operating profit increasing at the store level, as store operating expenses continue to decline, with same store sales increasing to less than 15% of revenue in 2019 Proprietary and Preferred Product, adding greater margins 14

15 Operating Financial Model Cash Flow, Operating Profit, Flat G and A Revenue growth YOY 100% since inception, 4 straight years Gross Profit Margin - 27% Target 28% Operating Expense - 16% Target 15% Operating Profit - 11% Target 13% G and A - 10% Target 6% Net Profit - B/E Target 7% Today, GrowGen generates over $1,000,000 per quarter of free cash flow, which is projected to increase to over $1,500,000 by Q

16 Capital Structure 20 operations across 8 markets, CO, CA, MI, NV, WA, OK, ME and RI capital raised to date has driven exponential revenue growth and strong balance sheet $9M in Invested Capital Drove $28.5M in Revenue for ($ in millions) $2.0 $0.8 $8.0 $3.5 $1.7 $1.7 $14.4 $5.2 $ Revenue Capital Funded Capital Structure Stock Price 1 $2.65 Shares Outstanding M Warrants Outstanding 1 3.2M Stock Options Outstanding 1 1.8M Equity Market Cap 1 $75M Debt 1 $4.0M Cash 1 $14.0M Enterprise Value 1 $85M 1 as of January 7,

17 Leadership and Strategic Investors Board of Directors and Executive Management Darren Lampert CEO Director Michael Salaman President Director Joseph Prizivalli COO Founding member of law firm Lampert & Lampert ( ) Former portfolio manager and proprietary trader ( ) VP at National Media Corp. ( ) Founder of American Interactive Media Founder ( ) / Chairman, Skinny Nutritional ( ) Inventory Manager at Way to Grow ( ) where he oversaw movement and integrity of all inventories Distribution Center Manager ( ) Monty Lamirato CFO Steven Aiello Director Sean Stiefel Director Peter Rosenberg Director Strategic Investors CFO, Strategic Environmental & Energy Resources, Inc. ( ) Independent consultant ( ) CFO/Treasurer, ARC Group Worldwide, Inc. ( ) Partner at Jones & Co. ( ) Partner at Asset Management ( ) Partner at Montgomery Securities ( ) Founder of Navy Capital LLC in 2014, an equity focused cannabis focused fund Analyst with various equity funds 28 years of experience in the financial services industry Duff & Phelps,Managing Director in the Consumer and Retail Merger and Acquisitions Group Managing Director with Wells Fargo Securities Managed the San Francisco office for Barrington Associates Director at Salomon Smith Barney Merida Capital Partners Gotham Green Partners Navy Capital 17

18 Contacts Company Contact Darren Lampert, Chief Executive Officer GrowGeneration Corp., Denver, CO Tel