Q4 2020 GrowGeneration Corp Earnings Call
office
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Good morning. My name is Jose and I will be your conference operator today at this time. I would like to welcome everyone to the girl generation fourth quarter 2020 earnings conference calls. All lines have been placed on me to prevent any background noise month after the speakers remarks. There will be a question-and-answer session. If you would like to ask a question during this time, simply Press Start then the number one on your telephone keypad. If you would like to withdraw your question, please press start then the number to thank you. Mr. Michael Selman, you may begin your conference.
Thank you. Good morning. My name is Michael Salomon co-founder and president growgeneration at this time. I would like to welcome everyone to the generation fourth-quarter and full-year 2028 earnings conference call with me. This morning is Darren Lampard our CEO co-founder Montiel Amaretto our CFO and Tony Sullivan our chief operating officer who all be persistent on our call this morning after our management remarks. There will be an analyst Q&A session as always we expect to make forward-looking statements this morning, but I want to caution you that our actual results could differ materially from what we say here such statements can be identified by terms such as believe expect intend to make you should not Place undue Reliance on forward-looking statements is actual results May differ materially from these forward-looking statements, and we do not undertake any obligation to update any forward-looking statements we make today dead.
For more information about factors that may cause actual results to differ materially from forward-looking statements. Please refer to the press release we issued yesterday as well as wrists Charities included in the section under the caption risk risk factors and Management's discussion and Analysis of financial condition and results of operations in our annual report on form 10-K filed with the SEC and any subsequent form 10-qs and form 8-k filed with the SEC filing prepared remarks today. We will open up the call for questions. I also remind everyone that today's call is being recorded and an archive available on our website later today.
The hydroponic industry that we serve is gone through a Monumental changes in 20, 20 20 21 legislation is opening more states to grow more planning on the national level. Oh eyes are focused on Washington as they seem to be making it easier for people to cultivate plants legally and obtain the ability to Bangkok safely a national these actions will help contribute to Statewide economies providing jobs and revenues going forward growgeneration sells products for the grower from small craft Growers the large mso's the build sustainable standardized and profitable hydroponic operations are leadership in the industry comes from our we do is focus on customer service delivering end-to-end solutions for large commercial operators. Please leave by having fully stocked hydroponic garden center home.
investments in
Supply Chain omnichannel Solutions and the employment of the largest contingent of grown Pro professionals grow James multi-national platform focus on the Acquisitions of the best-of-breed hydroponic operations, and delivering end-to-end solutions for our commercial customers. I'm working as we continue to grow our business with a Relentless focus on execution and financial discipline. I will now turn the call over to Darren who will resume our full year 2020 results Derek. Thank you Michael. Good morning and Welcome to our full year 2020 earnings call before I begin with my prepared remarks. I would like to thank each and every one of our staff and customers for their hard work dedication and loyalty.
I also would like to take this time to thank Monty La Mirada for a service hard work and dedication as our CFO who is retiring at the end of q1 2012 or the companies announced Geoffrey has Monty successor who brings many years of public Company CFO experience and both West Marine and Crocs.
Ross has had a transformational year in 2020 as we continue to outpace our guidance. We are increasing fiscal year 2021 Revenue guidance to $415 to $430 million and increasing adjusted even a guidance for $2,021 to $48 billion to $51 billion. The company is providing first quarter 2021 Chef new and adjusted ebitda guidance of 86 million and 9 million to 9:00 and 5 million respectively. The company is also increasing its guidance to reach over 60 month.
Start one over by 2023 the revenues of almost two hundred million dollars in two thousand twenty one forty 3% increase year-over-year with a 63% increase in same-store sales adjusted ebitda was Nineteen point two million for Fruitful year two thousand twenty thousand versus five point three million four full year 2019 an increase of 264% year-over-year or 44 cents per share basic for full-year 2028 versus $0.16 per share basic for the same period last year we added 14 new so forward 2022 are now 52 hydroponic garden center home across twelve States today. We have over 100,000 walk-in customers per month to our hydroponic garden centers.
Re Commerce.
Channel grew over 123% and our commercial division now over $49 million in sales grew 188% or private label initiative is now over now well over two million of you to purchase a 2012 or 2020 and it's $1,000 10% $21 of revenue from a company for purchase the business of business.
Platform a ground zero the leading agricultural portal that allows commercial Growers to manage their purchasing and Logistics in one platform.
Our best-in-class staff is now close to $600 with over 500 over team-mates experience grow Pros. We have created the largest sales team of hydroponic product specialist home country are steadfast focus on rapid strategic growth and key markets both organically and through Acquisitions has resulted in a record revenues in ebitda with a hundred thousand square feet of retail and warehouse space rojiun is building the largest super tight super hydroponic garden centers in the US that service commercial retail a craft Growers income from store operations was 32.3 Million for full-year 2020 vs 11.9 million for the same period last year an increase of 171% year-over-year income from store operations, as a percentage of Revenue was 16.7% for the full year 2020 compared wage.
14.9% for the same period last year our commercial revenues for the full year were $49 million one hundred eighty eight percent increase year-over-year Andre Commerce Revenue finish 2020 a 10.6 million an increase of 123% or online division transactions were up almost three times over $17,000.00 compared to $6,300 in 2019 and attracted over one point two million unique visitors to grow generation, We continue to focus on margin expansion strategies that include furthering the deployment of more private label products Acquisitions are proprietary products and driving more efficiency at the purchasing Life as we continue to scale and grow top-line Revenue store operating costs as a percentage of sales was 9.7% for full-year 2020 compared to 12 p.m.
10% for the same period last year and Improvement of 24% year-over-year corporate payroll and general and administrative expenses, excluding non-cash operating expenses as a percentage of Revenue is 7% for full-year 2020 versus 8.5% for the same period last year
we expect new acquisitions and new store openings to continue through the remainder of 2021 and continue to drive throat and help us help us to achieve our plan 60 plus locations in 2021 has a tremendous team of essential employees who made a commitment to our company and customers and I cannot be any prouder. I'm inspired by their efforts Dedication that they have worked tirelessly to service our customers and communities. I will now turn the call over to Tony Sullivan our chief operating officer who will brief everyone off operating initiatives executed a full year 2020 and then to our CFO Montiel Amaretto will provide more financial details on our full-year 2020 year result of Tony. Thank you Deron. We had another successful year with record Financial results. We are very proud of our teams continued growth, Mexico.
and performance in
The full year twenty-twenty as stated by Darren. We currently operate fifty-two of our locations across twelve States. Our staff is now around 600,000 across our multiple divisions hydroponic garden centers e-commerce and Commercial. Let's take a look at some key operating initiatives will start with Acquisitions and Integrations in twenty-twenty our company purchased a total of fourteen locations, and we have already purchased 14 locations in q1 of Twenty-One. The company also completed the Acquisitions of two leading product companies can canopy crop Management in December of 2020 and March 12th of 2021. Both companies support our important private label strategies moving forward.
Rogan has developed a SWAT team approach to Acquisitions and Integrations of companies. We are purchasing we have a very sorry about a lot of approach that includes inventory valuation and Analysis onboarding personnel and point-of-service POS computer training our proven process allows us to close multiple transactions in any given month and booked revenue on the day of class at the same time. We help those companies leverage and scale to increase sales and efficiencies over time and become a part of our model. We have developed a real estate and two year growth strategy that is delivering multi-channel supply chain for direct fulfillment wage.
Transfers to any growgeneration location and infrastructure to support our growing private label business our supply chain currently spans eight hundred thousand square feet of retail and warehouse space across fifty two locations and 12 States today. We operate operate a distribution and fulfillment out of six hundred thousand square feet. Excuse me, 60,000 square-feet location in Sacramento and forty thousand square feet in Tulsa, Oklahoma on March 9th. We announced the addition of a total of 122000 square feet fifty two thousand square feet downtown, Los Angeles.
And seventy thousand square feet in Rancho Dominguez, California that will serve as distribution and fulfillment locations for the company name are in the process of building several editions additional locations that will service fulfillment centers that include twenty five thousand square feet in Phoenix, Arizona 58,000 square feet and Medley Florida, and we expect these locations to be opened by summer of 2021 omnichannel and new website.
We are currently testing buy online pickup in-store pick pack and ship and curbside pick-up Solutions as we wrap up the final development and launch of our new site in 2020 grow generation.com had 17,000 transactions versus $6,300 in 2019 and attracted over one point two million unique visitors in addition as stated earlier. We just completed the acquisition of a grand off a dedicated B2B site to better serve our rapidly growing commercial base.
Let's take a look at private label. Our newest product offerings are exceeding expectations and our expansion is well underway with customers off purchasing over ten million in private label purchases in the first quarter of 2021.
We have developed private label products that now include ion lighting son leaves powder nutrients and additive line optimal and Bulbs blueprint control. Both timers pots and containers Harvest Edge pruners trellis and other Garden accessories.
Our proprietary Brands now include power acai and a line of Premium cocoa products that will all add to our private label offerings SKU rationalization and store planogram project as a retailer both online and offline SKU rationalization and store planning remain and our constant source of focus and Improvement. We have selected one of the industry's top Partners in the space and we anticipate significant learnings and data off to improve our inventory turn optimization profitability and in-store consistency. We have 16 product departments, and we have read up on all of our major categories subcategories to ensure that we have the best analysis and visibility moving forward our mission as a company is to off
For the widest selection and the best-of-breed hydroponic products in the market. So the garage in becomes the best one stop shopping destination for all types of Growers. And at this time, I'm going to turn it over to Monty lamerato to give our financial highlights.
If you're in previously announced net revenue for the full year 2020 to 2020 was approximately $193 billion compared to approximately eighty million an increase of $543 percent. The increase in revenues is due to one the addition of fourteen new retail stores opened or acquired doing during 2024 which ravaged 31 million to 11 stores open door required at various times during 2019 that were open for all of 2020 which had an increase in revenues of $51 million three same-store sales increased 63% comparing 2020 to 2019.
And excuse me, which had an increase in revenues of $28 million and for an increase in our e-commerce sales of 5.9 million from 2019 to 2020 and then in revenues from our canopy crop recent purchased in December of 2019 of $300,000.
Gross profit was fifty 1 million for the year ended December 31st 2020 as compared to twenty two million for the year ended December Thirty One two thousand and nineteen and increase of $2,000 billion or 132% gross profit as a percentage of sales was 26.4% for the year ended December 31st, 2020 compared to 27.6% for the year ended December 31st, 2019. The slight decrease in gross profit margin percentage in 2020 was due to a a greater percentage of commercial e Commerce revenues as a percentage of total revenue, both of which have lower margins than in retail sales commercial and e-commerce represented 31% of all revenues for the year ended December thirty first two thousand twenty compared to 28% of all revenues for the year ended December 31st, 2019.
Operating expenses are comprised of store operations primarily payroll and utilities and corporate overhead store. Operating costs were approximately 18.7 million for the year ended December thirty first two thousand twenty and approximately 10.1 million for the year ended December 31st, 2019 and increase of approximately 8.6 million or 85% The increase in store operating costs was directly attributable to one the additional 14 News retail stores open door required in 2022, eleven stores open door required at various times during 2019 that were open for all of 2020 the addition of these stores as discussed above in the revenue section where the primary reason for the revenue for the increase in store operating costs.
Store operating revenues were 9.7% for the year ended December 31st, 2020 compared to 12.7% for the year ended December 31st, 2018 a 24% reduction.
Corporate overhead comprised of General administrative costs share-based compensation depreciation and amortization and corporate salaries was approximately 23.9 million month for the year ended December Thirty One 2020 compared to approximately 10.3 million for the year ended December 31st. 2019 corporate overhead was 12.4% of revenues for the year ended December thirty first two thousand twenty and 13% for the year ended December 31st, 2019 corporate overhead, excluding non-cash here based compensation depreciation amortization was 7% of revenues compared for 2020 compared to 8.5% of revenues for 2019.
net income
You're ended December 31st 2020 was approximately 5.3 million compared to net income of approximately 1.3 million for the year ended December 31st, 2019 and the increase of approximately four million net income for 2020 compared to 2019 was primarily in impacted by a 142% increase in revenues offset slightly by an increase in cost of goods sold.
Store operating costs as a percentage of revenues was 9.7% in 2020 compared to 12.7% in 2019 offsetting the increase in cost of goods sold store income as a percentage of Revenue increased from 14.9% in 2019 to 16.7% off revenues in 2020 income from store operations, increased $20 million from 11.9 million in 2019 to 32.3 million and 2028 corporate overhead, including non-cash cost increased thirteen point six million from ten point three million in 2019. In addition net income in 2020 was impacted by the provision for income taxes of approximately 3.3 million for which there was no provision for income taxes in 2019.
The company had significant operating loss carryforwards from prior years, which was used to off-set taxable income in 2019 vast resulting in no provision for income taxes.
Adjusted ebitda 19.2 million for 2020 or 44 cents per share basic compared to 5.3 million for 2019 or 16 cents per share basic as of December 31st. We have working capital of approximately $223 million the increase in working capital from December 30th 1018 to December Thirty One Two thousand twenty was probably was approximately $194 million and was primarily due to the net proceeds from the sale of common stock up $207 million and exercise of warrants totaling approximately 3.8 million on December Thirty One Two thousand twenty we had cash and cash equivalents of approximately 178 million.
I would not like to turn the call back over to Darren for some concluding remarks before the Q&A. Thank you Monty.
Pro generation recorded a record year of increased revenue and we achieved record adjusted earnings. We believe our company is now built the foundation for tremendous growth for the next several years to get a store Acquisitions a new store openings continue to drive growth as the stores. We continue to deliver double-digit same-store sales results year-over-year. We plan to own and operate over 60 locations during the year 2021. We plan to break the hundreds store Mark by 2023 today. We own and operate fifteen.
you before
Winning are two locations currently under development Pro generation is built in National scalable supply chain for the Agricultural and cannabis industry or leadership position is driven through our corporate mission statement to be the largest chains of hydroponic garden centers in North America. We continue to invest in our supply chain and Technology creating more efficient way across all departments providing our customers with the product they want when they want it and when they need it, we look forward to continuing to provide guidance as need be and we were expected to share a success is with our shareholders or management team and partners now, we would like to turn the call over to analysts for questions.
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please? Press the star followed by the one on your touchtone phone off technology your request. If you are using a speakerphone, please let the handset before pressing any keys.
First question comes from Brian Nagel timer, please. Go ahead.
Good morning.
Congratulations. Congratulations on a great retirement. Thank you. Appreciate it. I'm looking forward to it been a pleasure talk to a few questions guys. I mean first you clearly the last night released you lifted 2021 sales guidance. Exactly. And this was after several revisions hire at least fewer Vision tired lately just to understand better as you think about that guidance. Can you help us understand kind of composition between you know, I'm more optimistic View and organic growth versus versus versus acquisitions.
Hey Brian, this is this is Darren. You know we came out of last year at about a $280 billion run rate out of 2020. I mean right now we're forecasting same-store sales by teams to 20 on this year. We have successfully purchased $75 million dollars of of stores and products. And that's on a 12-year that's on a 12-month basis. So right now you're seeing us run red right now anywhere from three hundred ninety-two about four hundred million dollars So within our with
New Year the 4:15 to 4:30 includes a few more Acquisitions, you know, we still believe that we're on Pace, you know, for more than a few Acquisitions certainly a couple more product Acquisitions long as we continue to grow this business control continue to scale and continue to increase store accounts and and and build out some stores. We do believe guidance will be going higher this year. We're still taking as we always do age serve it approached until we do close Acquisitions and get these stores open and see how the integration process is going with the with the 14 stores that we've that we've added to our faith fully this year.
That's great. Very very helpful. Then the second question also also with regard to guide. So I did the math. Correct, you're the sales and adjusted ebitda Gaya supplies for 21 times applies or suggest a adjusted ebitda margin north of 11.5% So I mean recognizing you haven't given longer-term guy. It's been how should we think about you know, where that that margin could definitely go and maybe more importantly with the the key levers behind games against me the 11 and 1/2.
You know one thing we look at right now Brian is our private label private label will drive margin expansion. We are forecasting, you know, 10% this year, you know, like every company I'm seeing in the retail space. There's certainly congestion. It supports right. Now. We have, you know, five to ten million dollars of products sitting at the ports right now. We've had a wonderful adoption in the first quarter of our private label, but again, you know products are sitting at ports Apple products to get in we feel 100% comfortable with our guidance, which is really, you know, equating to age forty million dollars of private label products this year, you know, as we told Wall Street margins on private label products or in excess of fifty percent right now, so we do believe it will be driving a few about two hundred basis points on to margins of this year. And we do believe it's grow Jim continues to scale private label. It will continue to scale margins.
I appreciate all the car. Congratulations best of luck here. I'll turn over. Thank you Brian.
Next question comes from Mark Smith at Lake Street Capital, please. Go ahead.
Hey guys. I wanted to talk a little bit about the the recent acquisition of the agribusiness can walk us through your expectations on on gross profit margins within that business month. I'm going to turn this over to Michael. Yeah, I agree on was it was an acquisition Mark. So basically provide the commercial customer portal optimized they're planning purchasing a month casting for their supply chain. We realized very early on the commercial customer needs a different generation of product. They need to be handled, you know at a much higher level from a customer service perspective. It's different sizes of products different types of products from you know, what we said in our release is that we expect this year for a grand to contribute about twenty million in additional accretive Revenue, but it's going to bring so much more to the company. It's a technology platform. It's in an Erp platform. It's giving more transparency to our commercial wage.
Customers on their purchases tracking history of of what they're buying accounting invoicing so it's a real e r p platform that has been a you know, successfully deployed for many years and we think under grow Jen's management and strategies that we've already employed in the integration of this technology with our tremendous growth in our commercial division is going to be you know, really powerful. So we see we saw this as a strategic acquisition in addition to the across this of the revenue that I I run brings to the company.
Okay, and then as we we look at growth you guys have done a great job on on Acquisitions here in the in the first quarter. You talked about organic store openings in 2021. Maybe what Thursday from leases signed right now or or how many stores maybe you expect to open this year currently right now, we're working on building out to distribution hubs wage retail stores commercial fulfillment in La one is Downtown LA which is about fifty five thousand square feet. And the other one is up in Long Beach, which is seventy thousand square feet. We look for these operations to be these two Warehouse operations to be operational summertime. We also building out right now, Miami, Arizona and also Brewer Maine, these are existing locations that we are moving into larger headquarters. We will be signing leases in the next few months in the New Jersey area and also in the Mississippi area dead.
And also in Illinois, so that's really what we're targeting this year. We're still waiting on clarification from New York is everyone has been reading New York is you know on the you know on the verge of going at abused. But once again when States go I don't use there is an extremely long lead time before licenses are issued before the laws are written you're seeing that New Jersey right now. You're seeing it in South Dakota, Mississippi. When was change it could be up to two years before you see plants in the ground and and and building starting. So the one thing for us when we take an extremely conservative approach, we will not build stores until we understand the licensing within the given states of the amount of Licensing that are that are given out whether it's crap licensing Welcome Home Road Rules, so we will know much more in the next ninety days. We do believe in New Jersey and New Jersey right now has twelve licenses on the on the medical side. There's no
Looking right now in additional 24 licences with craft licensing but still looking for a little more clarification than some ink on the you know on the on the bill. That's that that's that's going to end up into law. Okay, great. And then then the last one for me. I just wanted to clarify on private label sales kind of your are you expecting 10% kind of private life a mix of this year.
We are and and we do believe that's going to be the bottom number of it the exciting part for Trojan right now. Our private label sales. We will be our second largest distributor this year manufacturer. So we do believe that grow jensales. We will be the second leading, you know product Suite that we sell this year. So as our as our Reliance upon upon some of our Distributors and manufacturers lesson, we were at 51% 2019. We dropped a 41% MM twenty and we see that we see that mixed dropping into the low-to-mid 30s this year. So we're quite excited about that. We think it's a huge move in the right direction for garage in becoming more Reliant upon religion than the distribution of manufacturing sector's out there.
excellent
Sounds great. Thank you guys.
Thank you, Mark.
Next question comes from Andrew Carter at stifel, please. Go ahead.
Hey, thanks. Good morning. I wanted to start off and kind of circle in on you mentioned the post reports kind of a pretty honest input cost inflation environment. You got a good position in the value change of absorb it but I don't know how you're thinking about that person as a headwind. I don't know if manufacturers are trying to pass along pricing. Is it an opportunity for private label? And and do you see any risk of potentially not be able to fulfill the man whether it be getting both out of China or just scared straight here in the US and you're one of the things we work destruction and supply chain option has been a positive for garage in in certain ways. We have such a first leader position in this industry that we have gained a tremendous amount of customers during during the port congestion and COVID-19 because grow Jen has approximately eighty million dollars of inventory that's warehouses. We can ship anywhere in the country. We have distribution around the country. So it's starting to happen right now. Is this as this industry evolves dead?
You know from from the small home grow really into a into big act Agro Jen is the group that is that is a one hundred percent capable of servicing each and every growing up there. We've gotten ahead of of of Port disruptions. We've gotten ahead of COVID-19. Our warehouses are stopped and we understand product and we have relationships with every vendor out in the country right now. So for us even though we're seeing Port destruction on our private label products coming in we do have you know, we we got ahead of it. We have we had a tremendous amount coming in, you know at the time the start of 2021, so we're pretty confident in in our in our in our
In our product Suite right now and we are 100-percent capable of servicing each and every one of our customers as for you know, again inflation with shipping. We are seeing it and we are passing it along we are eating some of it but we feel one hundred percent with our margin guidance and guidance for 2021 right now.
And then kind of speaking to laid out kind of how should we be thinking about kind of the free cash flow for the story. I mean, there's not too many new store openings that it looks like it's off upgrades might be more maintenance. I know that working capital consistently come down for you guys. Would you've leveraged the national network? But any kind of puts and takes of how we should be thinking free cash flow for the year. Thanks God. Well, we've been I mean, we in in all of our Acquisitions so far. We've been very successful in increasing the amount of revenues that process through each store and and commercial sales have a a large component of of that in addition. We've been able to increase the margins through our purchasing power which increases every year every month as we continue to purchase more stores are purchasing power gives us better opportunities at better pricing dead.
Which of course flows right to each and every store?
Which improves our cash free class cash flow and then improves our margins which you know affects our cash flow and you're and you're starting to see as you see em, you know, same-store sales or up significantly without an increase incremental increase in store operating costs. So, you know, we're getting tremendous leverage off the revenues that are being driven through the stores without a substantial at in anyway substantial increase in the normal operating costs of a store so long, uh, you know, the the revenue the operating income from store operations as a percentage of revenues continues to improve
update
next question comes from Eric deslauriers, please. Go ahead.
All right, great. Nice taking my questions guys. So I wanted to focus in on these on the impact of these larger stores for a moment. Can you talk about how we should expect those to impact gross and Page margins, you know, obviously on the revenue side should get a nice, uh a nice lift, um, you know, just with the with the larger footprint, but wondering if you could comment on the cost side of things compared to your office portfolio.
Eric, you know, we see it to be similar, you know, we open Tulsa Oklahoma a year ago first year in Tulsa, Oklahoma did an exit 15 million dollars in business, you know really suck margins in in in the high twenties. So we see no difference from from any of our distribution hubs that we're opening certainly the cost of building. These hubs are incrementally more than building or ten thousand twenty thousand square foot up, but on the profitability side of it between distribution commercial fulfillment online fulfillment and also store operating we believe that these companies will be you know as profitable not more than our smaller stores.
Yeah, okay, great. And then go to see the progress on the continue on the on the private label front and pretty strong guide on that front as well. You mentioned mortgage calculations to come. Can you help us understand sort of how you look at expanding your portfolio any specific categories your UGG targeting or avoiding? Um, and uh any ones that that that your life do um, you know, perhaps provide a bit more they margin less than others. Thanks.
We we bought charcoal water and power as we've announced. These are great additions to our private label strategies their proprietary products. These are products that you have been in the environment the growing environment and they work their disruptive in a lot of ways in terms of their performance. The unique part of grow Jen is that we can see sales transaction before the rest of the market cat and we could use this data to make strategic Acquisitions of these products. So, you know, we're leveraging the scale of Grogan and because we're in you know, fifty two locations, you know across twelve States, you know, we see different environments we see what's working and we can take advantage of that from an acquisition strategy perspective. That's exactly what we did with power aside exactly what we did with charcoal or we saw these two products start to really grow within the portfolio of grow Jen stores and wage.
You know, these are these are very interesting Trends and we identify them as really products. That would be great additions to our private label strategy.
So we're able to leverage the data to make really great decisions on which products were going to go after from an acquisition perspective.
Thank you for next question comes from Mike Baker Davidson, please go ahead. Thanks guys. So I wanted to ask 1000 micro related question and I lost both of the same time from from the bigger picture standpoint. You talked about more licenses as an example in New Jersey. Can you just talk about what you see in terms of uh States adding not just more States adding the ability uh-hum for these products, but but actually adding more licenses to be a little bit more Equitable from a social Dynamic and and what you're seeing there and and how that impacts you and then from a company specific standpoint. I want to know about your online business, you know about 6% of sales now and I think it was actually even down represent a sales for the year, but you are making some changes to the website. How do you think about your online penetration going forward? How important do you think that will?
B or is this more of a retail concept rather than an online concept? Thanks. This is Darren. I'll start off and then I'll pass it to Michael for the for the online portion of it. You know, it's all Relief act as as you're seeing see change change in laws around the country you start looking into the more act and certainly, you know, some of the Rumblings from the governor's around the country. You know, it's James belief that you'll see more open licensing around the country as you're seeing out west as you're seeing in Oklahoma or some of the proposed laws coming out of Mississippi. We do believe you'll see much more crafts growing around the country. You'll see licensing opening up with with certainly which certainly Federal legislation, you know changes, you know, we are of a belief this year you serve or you will see the Safe Act. We certainly have fingers crossed for a little more than that, but we do believe from listening to you know from New Jersey and New York and certainly other states that you'll see more opening up of Licensing wage.
Going to see more growing which is more business for grow tent one of the interesting parts right now Michael what you're seeing you're seeing a 20 billion dollar cannabis business that the proponents are stating that will be a hundred billion dollars by the end of 2030. So you're talking, you know over the next nine years. So if you equate that to grow gin, which is certainly growing much quicker than the market wage. You're going to see a really bright decade for grow Jen when you look back three years ago now coming out of 2018 graduation was at thirty Million Dollar business. Are you looking right now at the guidance this year of 4:15 to 4:30 and again with some more Acquisitions in the little more, you know little more clarity from States out there. Those numbers probably will be going up. So you're seeing almost 14 x in rev three years and this is an industry right now that certainly has a lot of rules and regulations in it. So when we go to our side of the business, we have a such a first-mover advantage over the other stores over this month.
stores out there when you're looking at the
Other side of the business that over this tremendous competition was you know law certainly take much longer to change so grouchy can get to any new state within you know, within three to six months of of was changing or something that we feel more comfortable with. So we see such tremendous growth from broken and the other part that you're starting to see right now is that that's just really strange during this is going it's just a controlled environmental act you're seeing indoor growing you're seeing Technology Solutions on your seeing that grow Jen is understands the solutions understand the the build-out facilities, you know, the days of these small hydroponic stores are going away. This is big technology solution providing. So it's two-fold one. We build the facilities health facilities in Dallas Texas the facilities, but then we service the facilities. There's changing products. There's more there's more Energy Efficiency water efficiency growing hydroponically indoors. Yep.
Getting ninety percent of water usage. So what you're seeing right now is really the emergence of new industry is controlled environmental a technology-based. So the days of looking at grow Jen is a retail gift store those days are you know, we're we're solution provider right now. We understand the industry. This is a new brief and we're excited to be the leader of and we will see we see tremendous change on the technology sites coming out as as this industry scales. We also believe it's going to scale and urban growing but you're so you've heard of life, you know app Harvest speaking the other day growing out these facilities is you know, it's not for the faint-of-heart. It's complicated and technology in the staff to do it with that. I'm hoping to Michael to get into the online side of it. We're building a brand we are the destination for hydroponic equipment and it's evidenced by birth.
The amount of traffic our website is getting retracted 1.2 million unique visitors. We transacted, you know from sixty three hundred transactions last year two seventeen thousand and that website also has influenced the amount of walk-ins, you know is Darren reported. We're now at over 100,000, you know walk ins per month to have Ro generation location. The strategy for our online is omnichannel. We're building the symbiotic relationship between the online transactions and our stores. So it's a integrated solution. It's an omnichannel solution giving our customers optionality if they want to order online, right we will drop ship it right to their growth if they want to order online and pick up at any one of our locations great. We give our customers, you know that capability as well, but it's about, you know, giving customers, you know the options on how they want to interact you know with with the Dead.
and we're you know certainly giving our
Customers, you know flexibility to transact in any way that they desire to transact with the company, you know further, we identify, you know a grand as an acquisition and because we realize that, you know large commercial, you know cultivators, you know purchased differently. It's a business-to-business platform. It's a different duration of project and they had a they had a really good, you know platform that we felt we did build upon and really enhance it with our commercial operation. So, you know, that's a separate app online strategy, which we're going to be integrating and taking that platform on and growing it, you know, from where they are today and bringing, you know, our commercial Division and integrating those two those two entities, but it's really about building a brand and giving customers, you know optionality on how they want to transact with the company.
Yeah, that makes sense. And thank you for those very complete answers. One thing. I did want to follow up with and you sort of touched on it. I think it's really interesting. So I'm more of a plate or I guess I'll try to weave it into a question, but the idea that it's not just, you know growth in the Cannabis Market, but it's hydroponic within the Cannabis Market that can help drive your total addressable market. So I guess the question to turn into a question any idea of the share of cannabis that is done through Hydroponics right now and and what that could go to overtime. Thanks.
You know Michael is so many different ways to look at it. You mean if you want to equate it to the wine and spirit markets. The one Spirits Market is almost a trillion dollar market right now still growing after prohibition. So were you know, we're in twelve States right now. We you know, we have thirty-eight states to still build out. We still have work to do an existing state. So really when you looking at grow James portfolio right now, you know four hundred a month, you know, it's twenty-five million, you know kind of kind of the midpoint of range of this year and that's in twelve States. We do believe that the East Coast will mimic the West Coast one of these days with tremendous tremendous opportunities, and we do see right now is new States for grow gender states that we will dominate and control, you know, we're right now the twelve States we're in we're in states that are maturing a states with you know, with with much we would both with competition. We're buying we're buying best of breed competition, but there's competition but new states that we move into we will be the clear leader in each and every one of those States.
But we also do believe that you know, as this industry continues to grow both from the Cannabis side of it and also the gardening side of it and the the urban gross we think will be a tremendous leader in that side of the industry, you know, also as we all know right now climate control, you know, right now, you know climates are changing growing Outdoors is becoming more difficult certain States, you know, there's water issues in California. Has it always been when you go over and look in Europe right now, they're growing much more indoors and Outdoors is greenhouses strung all over the edge Holland and everywhere else. You're not seeing that back here. But when you look at some of the weather changes, even this year it go look at Texas deer go to the fires in California. There's going to be the sustainability issues going on a go-forward basis and we do believe that when you look at this controlled environmental agricultural industry, it's just starting. This is a new industry. No one, you know, no one ever heard of this. No one home.
Industry before but building out sustainable greenhouses, you're talking, you know, airflow you're talking for the gate.
Sync system. You're you're you know, you're you're talking benching systems Lighting systems. It's it's complicated and it's and it's certainly worth solution provider. We understand it off and that's where we're hiring. That's the individuals to work at grogan's or staff right now. We're 600-strong we've had no turnover with road yet this we're building a Compaq for the future. We're investing building a scalable iconic brand right now people know grow Jack and if it's just starting people know it and people are asking for more money. We get calls on a daily basis to open stores in different states open stores in different parts of states the guys listen, I got to travel an hour and half two hours to get to a grocery store. Can you open a store? Please buy off? So when we look through this decade we believe there's going to be hundreds of grow tent stores around.
Gardening store we're going to be a solution to anyone that wants to grow a plant whether it's cannabis or whether it's fruits and vegetables. We just finished it an extremely interesting customer segmentation to see what our customers want and what they're buying and what we came out of this is Art cannabis Growers are also buying products to grow plants and vegetables at their homes off anyone that grows cannabis is also growing plants and they're using the same product. So we see such tremendous synergies between some of the products that are cannabis Growers are using Bots that will also be used in to the home gardening industry.
Yeah, I appreciate all the colors. That's that's a very complete answer. I appreciate it. Thank you.
You're welcome.
Next question comes from Scott Fortune at Capital Partners, please go ahead. Yeah, good morning. Thank you for the questions. Can you provide low color on the transactions? I am kind of what type of deals you're still seeing are there more and more independent mom and shops looking to to sell and the valuations. They're just kind of continue to to see a as Acquisitions play a big part in growing forward kind of kind of evaluations or what type of deals you're seeing from that standpoint.
Scot we see the next two years, you know certainly on the acquisition front and that's certainly will slow after that. We see right now another couple hundred million dollars of Acquisitions in our pipeline that we will be looking to complete over the next two years. But after that you'll see much more Greenfield income grow Jen most of the Acquisitions that you're that you will see from grow. Jen are going to be in the existing 12 a.m. That we are in, you know, continuing to build out those portfolios in those States but on a go-forward basis when you know, when you you know, when you go into two thousand, you know, twenty-three twenty-four it's going to be Greenfield state after State Building out, you know solutions for The Growers and the individual states coming on board as we continue to you know, as we as are staying store sales continue to grow, you know, state-by-state in the existing twelve states where rent
Okay, I appreciate that. And then to kind of expand the upon the last question a little bit, you know, you know your commercial and econ's about thirty percent of businesses only moved up a little bit. It sounds like them they slap that are you seeing more vertical farming on the technology side? You mentioned that it seems as interstate commerce comes on board and these larger commercial Growers will look to grow outside, but they all need the more indoor facilities that they're more high-quality consistant grows from that standpoint. Can I talk to us on the next technology generation of vertical farming stackable units LED kind of a technology that's being adopted.
Yeah, we're putting together Scott, you know end end solutions for you know, all types of vertical farming, you know, whether it's cannabis or or produce, you know, agricultural farming the the Technologies and the products that we offer are certainly applicable across, you know, both of those vertical markets and it really starts with, you know, lighting package and it goes to Vertical, you know benching Control Systems is iron mentioned, you know, this whole new industry this technology of controlled environmental a that's a roach and delivers as a solution provider, you know, fertigation dosing environmental control controlling the the the inputs to go.
Standardization creating profitable, you know grows for for our partners. That's what Grogan delivers, you know day in and day out and we do that today and we're looking at technology. We're looking at, you know products that provide, you know, you know automation to create more efficiency so that the our partners are more profitable and that's the leader wage. We are thought leaders in that area and we're building out, you know this end end solution and we are constantly looking at the best of free products that we can package, you know, as a one-stop-shop send you a solution right now. There's a lot of fragmentation in this area. We believe and grow Jen has put together a solution on that. We think can be scaled standard package and deliver. You know what our partners our Growers are looking for which is standardized scalability and sustainable automation that allows they're grown now.
And their operators to deliver, you know return on investment and and the highest yields the deliver the greatest product and that's what grow gin is Mission. That's our mission. And that's what you know a growth Rose and our commercial Division and that's what we're you know focused on day in and day out.
I appreciate the color on that. Thank you.
Next question comes from Erin Gray at Alliance Global Partners, please go ahead.
I think for the questions in congrats on on the Year guys a great to see so actually I want to pay you back off that last question in terms of you know, the commercial business and growth there. So would love to get nothing comes of, you know, where you guys are, you know, standing with some of the business with the multi-state operators and how those efforts there are continuing to grow right? Because you guys obviously do a phenomenal job in the markets that are more mature than a lot of licenses. But just as you're talking about those East Coast markets may be evolving from limited license to the to the more broader license markets. You know, how are you looking to also capitalize on a limited license markets and expanding that market share with the mso's and then you can kind of give us, you know, some of the pitch that you guys are are given to us themselves in terms of what you start working with with gross and then who they might be working with. Otherwise if they're not working with right now. Thanks our commercial division this year did $48 million versus 17 up 189% you know, we're trending to a hundred million this year off.
The exciting part is the growth in terms of the number of commercial customers, which is both msos single state operators. We've gone from 2 to 71 and 19 to 6 91 and 2020 today as of March. We're servicing almost 1300 commercial customers. So that number constantly is growing and the reason why we're attracting the mso's is that we're one of the few companies that has the infrastructure the supply chain the inventory but it's the right inventory the inventory that these large commercial companies, you know are are seeking its terms. It's business-to-business. It's gross investing in technology like a grant to make it easier for them to purchase and optimize their supply chain. So that's what Groth delivers and that's why you see these kinds of kind of numbers wage.
Which is, you know across the board, you know more commercial customers, you know more Revenue that we're gaining more market share than we gain Market to Market and and it's expanding because there are more license Growers. There's more expansion these episodes are adding on which is all incremental business that grow gin and gaining.
Ruffle collar there. Thanks for that and the second question for me. I just got to continue to grow and scale and also become you know, less Reliance, you know on those, you know, bigger manufacturers like you guys mentioned from 50% or 40% looking for that to go low-to-mid 30s. I think you said just how do you think about potential changes in you know, the competitive landscape? Right? So as you guys continue to grow and become less Reliant right, maybe you know, they start to feel a little bit more and maybe even might be some pricing pressure as they try and get some more market share back. So just in terms of how you think about, you know that competitive landscape and how it evolved Zachary.
Distributors continue the
innovate and sells best
Steven has to be brought us this industry right now is I spoke about earlier no control the environmental a the industry right now the Cannabis industry. There's there's a bunch of different different parts of it. One is the home grown. So the home Grow Again is certainly less demanding than you're seeing from the single state operators up to the large mso's. So, you know, there's a lot of different divisions of this in dispatch right now some of it equates much more to the again the whole markets with you know, that are not that use different products some of the large msos do in the large single state operators. You know, I only could tell you back in 2014 when I started in this industry when you walked into a growth facility plants were on the ground individuals were running around watering plants feeding plants. There was no standardization Within These grows if you walk into a grow right now, I mean, you'll be it's fascinating when you really see the complexity of what's going on in these gross the two biggest inputs right now dead.
For the large and it shows and single state operators or Manpower and electricity. And right now what you're seeing is a tremendous shift right now looking for more sustainable product grow. So for Grogan as long as best-of-breed products are on the market, we're going to continue to buy it.
All right, great. Thanks and best of luck in 2021.
Last question comes from and Glenn Mattison at Lautenberg Diamond, please go ahead.
The hi guys. Thanks for taking the question. So going back to the a grand, you know, really interesting acquisition makes a ton of sense. I'm just curious the you know, it's a big change from what you've typically acquired in terms of, you know, acquiring stores or private label products to talk about this is like a platform. There's like a service component of it. I'm just I'm just curious if I get a sense for you know, and you talked about I think twenty million in Revenue this year to grow gen. So maybe you can give us a sense of like how big that business actually is. I did not expect it to close and maybe some of the valuation metrics around it and if there's some level of service in that revenue or if that's all product and then as far as the platform is concerned, is there an ability to monetize that platform over time is that you know, or maybe they're doing it now it just more color about that be great.
It going to start with the transaction has closed it closed it closed Monday at this week. We certainly see it scalable with our commercial division. Once again, as we've said we're being we're bring best-of-breed products to our customers. We're solution provider. We look at the website as a solution provider for our commercial customers. It's giving them back and look into inventory in into purchasing to manage what they're purchasing. It's for some for the more complex individuals that with technology didn't different from our individual stores are individual management team.
right now is
Expected to $20 in additional Revenue. They have different clientele than that then then our commercial team and we we do believe that we will continue to grow this business and it will be a tremendous add on to our commercial team and I talked to our commercial customers.
It's helpful any color on the on the valuation on and how you came to that how you came to that valuation?
You know it comes with the same valuation of most most of the most of what we buy right now, you know, we're buying stuff halftime sales three to five times even up. This came in, you know one that took a little under it and we we thought it's going to be a wonderful addition to it to our group, and I think you'll see that you'll see the a grand website continue to flourish, especially with I, you know our distribution around the country a grand has in the past distributed from our suppliers and manufacturers. They will now have the option also to distribute through our warehouses and Arthur's to our distribution centers. Great. Okay. Thank you for calling. Good luck this year.
Thank you.
Thank you. No further questions. I will now turn the call back over to Darren Lambert for closing comments.
I'd like to thank our customers shareholders and each and every employee a drug in they have worked tirelessly this year through covet and again, I couldn't be any prouder of our team and what we've accomplished in 2020 what we've accomplished in the first quarter of 2021. When I look at the Cannabis space, you know a year into Canada space right now is ten years in most Industries the growth negro Jen has just been phenomenal and the question I'm always asked is how can you handle this growth and it seems to give pause to some of the investment Community we have a team that came in that works tirelessly and I couldn't be any prouder. We've handled an integrated each and every acquisition Tony Sullivan our new Chief Operating Officer who has been with us for about a year-and-half. Now I'm done a tremendous job integrating transactions and and bringing this staff up to speed on on the philosophies of grow generation. I want to also thank Montiel Amaretto wage
Have you started with us? We were to 7 million dollar run ready? He leaves us four years later at at over four hundred million dollars. He's just such a tremendous job mentoring our staff back during our team and he's going to be he's going to be missed as we move into the next error of grow Jen, but when we started, you know back in 2014, this industry was just emerging. We're in an industry right now that will be the industry of this Century. We see such a tremendous growth for so many years. We see tremendous research going into the plant and we do believe that with loosening of of legislation. You'll see much more consumption in the future much more plants being grown both on the Cannabis side of it.
Fruits and vegetables side of it. I couldn't be any prouder to be at the helm of growgeneration. It's it's been a wonderful eight years and we think this is going to be such a tremendous decade now. Let's Century for this company and I want to thank our shareholders and just let you know that we work hard everyday from this team is up early in the morning and works late at night and we look forward to sharing our successes in our first quarter with you in a couple of May. Thank you so much. Stay safe and get your COVID-19 shots.
Ladies and gentlemen, this concludes our conference call for today. We thank you.