GrowGeneration Corp. Q1 2023 Earnings Call
Hello, and welcome to grow generation first quarter 2023 earnings conference call.
My name, Michelle and I'll be coordinating your call today.
Following prepared remarks, we will open the call to questions from analysts with instructions to be given at that time.
I'll now hand, the call over to clay Crum Blessed with I R.
Yeah.
And welcome everyone to the girl generation first quarter 2023 earnings results Conference call today's call is being recorded.
With us today are Darrin Lampert, co founder and Chief Executive Officer, and Greg Sanders, Chief Financial Officer, Greg Generation Corp.
You should have access to the Companys first quarter earnings press release issued after the market closed today.
Information is available on the Investor Relations section of grow generations website at IR that grow generation Dot com.
Certain comments made on this call include forward looking statements, which are subject to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
These forward looking statements are based on management's current expectations and beliefs concerning future events and are subject to several risks and uncertainties that could cause actual results to differ materially from those described in these forward looking statements.
Please refer to today's press release and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any of the forward looking statements made today.
During the call we will use some non-GAAP financial measures as we describe business performance.
The SEC filings as well as the earnings press release, which provide reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures are all available on our website.
Following our prepared remarks, we will take questions from research analysts.
We ask that you please limit yourself to one question and one follow up.
If you have additional questions. Please reenter the queue and we will take them as time allows.
Now I will turn the call over to our co founder and CEO Darin Labor Sharon.
Thanks Clay.
Good afternoon, everyone. Thank.
Thank you for joining us today to discuss our first quarter 2023 financial results and our full year 2023 guidance.
As always I want to thank each one of our employees across our company for their continued support of grow Jen.
I am grateful to our entire team for stepping up to every challenge and for being steadfast in executing our company's strategy.
So again, it's more than just the retailer we.
We are a developer of market, leading brands and private label products.
Our distributor supporting the entire hydroponics growing community.
Above all our passionate and dedicated partner to our customers.
As we mentioned last quarter, we celebrate our 10th anniversary in a year.
As we continue into the year ahead, we take great pride in our past and we are equally excited about our future.
I am pleased to report that <unk> first quarter results performed at the high end of our expectations.
Which further increases our optimism for 2023.
In the first quarter, we generated net revenue of $56 8 million at the high end of our guidance, which as expected represents a sequential improvement over the fourth quarter of 2022.
Furthermore, gross margins the first quarter of 2023.
$28, 7% above our expectations.
We generated an adjusted EBITDA loss in the first quarter of $1 8 million, which represents significant improvement versus the prior quarter, which had an adjusted EBITDA loss of $10 2 million and outperformed our previously issued first quarter guidance.
We also ended the first quarter with $72 million of cash cash equivalents and marketable securities no debt and $75 million of inventory on our balance sheet.
We spoke about it extensively in previous quarters, So I won't dwell on the challenges of the past other than to say this.
Last year was a transition year for <unk> jet.
As we detailed on our fourth quarter earnings call yearly two short months ago, we have made significant progress transforming our business be more nimble efficient and better positioned for profitable growth in 2023 and beyond.
On the Legislative side State momentum has continued with Delaware, becoming the 22nd state to legalize adult use cannabis minister.
Minnesota is another state that could legalized adult use Canada. This year with state House and Senate versions of the Bill passing last month.
Additionally, Georgia issued its first dispensary licenses in Texas, North Carolina, and Ohio could answer their medical cannabis programs with Merrill Lynch adult use sales plan to begin July <unk>.
At the federal level, the reintroduction of state back last month as renewed hope for federal reform.
As a result, I'm more excited today than I've been in a while about the opportunities that lie ahead.
We are entering a new chapter of the <unk> story.
And we're significantly focused on managing our business. Despite the ongoing challenges in the broader industry.
Those challenges do impact us, but they certainly don't define us.
While we maintain a degree of cautious optimism.
We expect to invest for growth in 2023, so we're searching out opportunities, where they exist and putting resources behind them and appropriate and disciplined manner.
What that means in practical terms is <unk>.
We will continue building and growing our private label brands.
We are back on the acquisition front.
As you have seen from our recent press releases and three we're putting profitability at the forefront focusing on margin expansion and profitable growth.
Briefly on each of these.
First we remain committed to the expansion of our proprietary and distributed brands.
And we're very satisfied with the results of our private label products.
Private label accounted for $6 9 million of retail and ecommerce sales in the first quarter of 2023.
Is it around 16, 1% of our overall retail and ecommerce sales up.
Up from 10, 8% in the first quarter of 2022.
Second frozen.
<unk> will continue actively seeking accretive acquisitions, where we believe they are complementary to our current business. We believe we're one of the few companies that is well positioned and well capitalized enough to take advantage of the attractive valuation now hydroponics and Garden Center space. So.
For this year, we acquired a store and travelers Michigan in January .
We entered our 17th state with the acquisition of a store in Bozeman, Montana and in early April .
And most recently, we required a retail store in Jackson, Michigan, a few weeks ago.
As part of these efforts we continue to analyze the performance of our current stores with respect to redundancies in the footprint.
We don't expect many additional store closures this year, which was a major focus for us last year.
We're focused on monetization of our nearly 1 million square feet of retail space, which includes merchandising product education with key partners and are laser focused on execution of the various business transformation initiatives centered around technology and.
In supply chain.
We are pleased to announce that our third distribution center approximately 100000 square feet located in Columbus, Ohio is now operational and serving our Midwest and East coast customers.
Third we are prioritizing profitable growth, which we believe will attain through our continued efforts to expand revenue and execute our margin expansion strategies.
We think we're past the vast majority of our cost cutting initiatives the benefit of which will continue to flow through our margins in 2023.
In addition, we feel our inventory is in a much better position today as reflected in our first quarter gross margin.
That expanded 1100 basis points over the fourth quarter margin and we don't see the need for significant inventory discounting going forward.
Turning to guidance for full year 2023, we're maintaining our net revenue in the range of 250 million to 270 million translating into adjusted EBITDA in the range of a $4 million loss between $1 million profit.
We are seeing incremental signs of stabilization in our business and we expect sequential quarter over quarter improvement in net revenue and adjusted EBITDA to continue through the second quarter.
With that I will turn the call over to our CFO Greg Sanders.
Thank you Darren and good afternoon, everyone.
First I will address our first quarter 2023 financial results and then I will discuss our full year 2023 guidance.
For the first quarter grow generation generated revenue of $56 8 million versus $81 8 million in the first quarter of 2022, representing a decline of approximately 31%.
Our same store sales for the first quarter 2023 were $37 7 million compared to prior year sales of $59 5 million, representing a 36, 6% decline against the comparable year ago quarter.
Our ecommerce revenue declined on a comparable basis from $5 3 million to $3 3 million, representing a decline of 37, 7%.
Our distribution and other revenue was $14 2 million for the quarter compared to $12 2 million in the year ago period, representing an improvement of 17%.
Gross margin was 28, 7% for the first quarter of 2023 up approximately 1110 basis points sequentially from the fourth quarter of 2020 to.
Gross profit percent in the first quarter increased 160 basis points from the comparable year ago quarter.
The improvements in gross margin in the first quarter of 2023 are largely attributed to the completion of our 2022 inventory rationalization initiatives in the retail segment.
And a healthy margin contribution from our distribution and other segment.
Store operating costs and other operational expenses declined from $14 5 million in the first quarter of 2022 to $12 9 million in the first quarter of 2023, representing an 11% reduction.
The savings year over year were primarily attributed to payroll reductions further we expect that the reductions executed over the prior year are sustainable as we move forward into future reporting periods selling general and administered.
Our SG&A costs were $6 8 million in the first quarter of which 600000 were derived from stock based compensation.
This compares to $8 6 million in the fourth quarter with $1 million of stock based compensation.
This represents a 20% improvement quarter over quarter to SG&A.
Compared to the first quarter last year SG&A expense decreased $2 8 million in 2023 with overall savings driven from payroll reductions and increased cost controls over a broad range of categories dip.
Depreciation and amortization of intangibles were $3 9 million in the first quarter of 2023 compared to $4 5 million in the year ago period.
In the first quarter of 2023, the company did not recognize an income tax benefit or expense <unk>.
ROE generation is using a zero percent tax rate as its deferred tax assets are not expected to be realizable as such the company has established a full valuation allowance, primarily resulting from the 2022 impairment of goodwill.
Net loss for the first quarter was $6 1 million or negative <unk> <unk> per share compared to a net loss of $5 2 million or negative <unk> <unk> per share in the year ago period.
Compared to the fourth quarter of 2022.
The company improved net income from a net loss of $15 million to a net loss of $6 1 million <unk>.
Adjusted EBITDA, which excludes interest taxes, depreciation amortization restructuring charges and share based compensation was a loss of $1 8 million for the first quarter of 2023 compared to a loss of 800000 in the first quarter of 2022.
Compared to the fourth quarter of 2022, the company improved adjusted EBITDA from a loss of $10 2 million to a loss of $1 $8 million, primarily resulting from increased revenue improvements in gross margin as well as sustainable reductions in expense.
In the first quarter. The company included onetime restructuring charges for severance is in consolidation expenses and to adjusted EBITDA, which had a $278000 favorable impact.
Related to the balance sheet.
As of March 31, 2023, the company had total cash cash equivalents and marketable securities of $71 9 million, which was sequentially flat to the fourth quarter of 2022.
From a year over year perspective, cash and cash equivalents increased by $5 5 million, mainly due to inventory rationalization measures and other strategic initiatives.
Within working capital the company collected a $4 $9 million income tax receivable as well as reduce total accounts and notes receivable by $1 $7 million as such the company generated positive cash from operations of $3 $4 million in the quarter.
In the first quarter the company reduced inventory by approximately $1 5 million <unk>.
Compared to year end.
We believe that the outcome of our inventory reduction efforts in 2020 to position the company with sufficient inventory levels and product mix for 2023.
We will continue to make incremental improvements to lower inventory where needed while ensuring that we continue to meet the procurement needs of our customers just in time inventory.
Now moving onto our full 2023.
Outlook as Darren mentioned earlier, we are maintaining our previously communicated guidance with full year 2023 revenue to be between 250 and $270 million in full year adjusted EBITDA to be in the range of a $4 million loss to a positive $1 million profit.
We have observed stabilization in our expense structure and believe that we have sufficient alignment on cost of sales based on our first quarter results as.
As the company reduced its expense base by over $20 million in 2022, we are not forecasting further significant reductions in 2023, we expect that both sales and adjusted EBITDA will show incremental improvements in the second quarter compared to our first quarter results.
While we are optimistic about 2023 and remain confident in our ability to navigate the industry. We will continue to stay focused on cost controls and our efforts to return the business to profitable.
As Darren remarks indicated earlier profitability is the forefront goal of the business in 2023, our approach to capital allocation is shifting from a focus on preservation to a disciplined approach centered on return on invested capital we will execute on the right M&A opportunities that fill white space.
We will also invest capital in our deployment of private label products, where the return is appropriate.
We are positioning the company and executing our business strategy to focus on business and profitability improvement.
With that I will turn the call back over to Darrin for closing remarks.
Thank you Greg.
We open the lines to your questions I want to reiterate that <unk> is on solid financial footing with a strong balance sheet healthy liquidity and a solid cash position and.
In 2023, we're putting profitability at the forefront focusing on margin expansion.
Profitable growth Leerink.
We were encouraged and we made significant progress during a year of transition to rightsize, our business and we're ready to move forward as a stronger nimbler and more profitable company.
Thank you for your time today and thank you for your interest and grow generation, we will now take your questions operator.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone, you'll hear three Tom prop acknowledging a request newcrest your questions, we'll be holding the order. They are received should you wish to decline from the polling process. Please press star followed by the Q. If you are using a <unk>.
Speaker phone please lift the handset before pressing any keys.
Please for your first question.
Our first question comes from Brian Nagel with Oppenheimer. Please go ahead.
Hey, guys good afternoon.
Good afternoon, Brian .
So I guess.
I just want to start I mean, we talk a lot about we've talked a lot lately about the backdrop for <unk> in this space.
Your comments on sales.
Yes, you gave me.
We get a little more optimistic here I guess so the question I have is like.
Maybe it's kind of an on the ground level what have you seen how has there been any meaningful changes in kind of the interaction with your customers are you seeing different trends across the across geographies that type of thing.
Yes, I think to start with Brian as you probably know we've had six sequential quarters of down revenue.
Which was certainly out of the ordinary.
At least for the first six quarters since we started back in 2014.
We're starting to see is as pickup from our customers, we're starting to see consolidation of price stabilization in mature markets.
Supply demand is normalizing out west.
These states are starting to rollout and Capex is increasing.
In New States. We're also seeing activity in the outdoor markets, which we didn't see in 2022, which would be a positive boost in sales for <unk> in both the second and third quarters.
This is really the first time, we've seen it we.
We saw back in 2018, there was about a six month downturn. This has lasted six quarters. So we're seeing stabilization Brian .
Paid off a very low number you saw same store sales, which were down in the mid fifties. During 2022, they were down 36% first quarter of 'twenty, three and we certainly look for that to be much better in the second quarter going forward.
Got it and then that's helpful. And then just on the gross margin. So I guess I'll tie together gross margins and inventory. So you did a lot of aggressive corrective action last year with your inventories you came into 'twenty three clean.
And Youre seeing that you saw the better gross margin performance here in Q1, I mean, I guess, how should we think about just that trajectory in gross margins that kind of trajectory in inventories from here.
I'm going to send it over to Greg.
So I think the impact of the last two quarters in 'twenty two as you mentioned had a significant impact on the overall gross margin in those periods, we reduced inventory by $20 million in the last two quarters of 2022, and we felt that inventory was in a much better position coming into 2023, we did make.
Improvements to inventory in the quarter, but but nothing of significance, we reduced our inventory balance by $1 $5 in the quarter I think what you saw in our results for the first quarter was a gross margin profile of 28, 7%, which we believe is in the more normalized range as we look forward at the business in the future reporting peer.
<unk>, we're still continuing to communicate that our expected.
Gross margin profile for 2023 will be in the mid to upper twenties.
On a normalized basis.
Okay, Brian with you guys I appreciate it.
Yes, Brian you also saw a bump in our private label Division has grown from 10% up into that 16% range, our private label products.
Carry a much higher margin than our normal products and we are buying better right. Now also so I think it's all factoring into what you are seeing normalization of our margins in that mid to high <unk>.
Got it I appreciate it thank you.
Your next question comes from Mark Smith with Lake Street Capital markets. Please go ahead.
Hi, guys.
First question that I have is just looking at valuations on M&A transactions, you've been you've gotten a little bit busier here the last couple months.
Just talk about what youre seeing as far as pricing as you look at some new stores.
Yes, I can see I'm going to I'm going to stay away from exact pricing with you Mark but the one thing I can tell you is when you take a hard look at <unk> balance sheet. When you look at our inventory and cash position and our asset value and fixed assets <unk> is trading with very little goodwill on our balance sheet right now and.
We're going out to market. We look at we look at the same from individuals that we're looking to buy right now so the goodwill portion.
These transactions are very minor right now.
Okay, and then you spent some time talking about private label goods seems like that certainly a push for you.
Any additional insight into kind of how you feel about the brands that you have now.
Is this something where you still want to be active and maybe acquire new things.
And what it takes to continue kind of ramping sales of these private label goods.
I feel that we have the right team in place right now to continue ramping our private label products.
Both <unk> and <unk> are performing above our expectations, we do have product extensions coming out on both lines as we speak.
So our private label products are taking hold in the industry.
We're having a wonderful results and we will continue with our private label penetration, we feel very good right now with our private label products.
The increase in sales that we're seeing from them and margins.
Okay.
And the last question similar here as we look at E Commerce sales.
With where those are sitting today is that just really a function of kind of where the cannabis industry is.
Are there any levers you can pull to to turn on a little more digital sales.
We are trying.
We were feeling more comfortable we'll be increasing our advertising spend on our on our online division. The one the one positive that we did see Mark is our private label I mean, our online division was up quarter over quarter. So we had a 7% bump from the fourth quarter onto the first quarter.
So that was the first positive sign we've seen in a while with our online division.
Perfect. Thank you.
Your next question comes from Andrew Carter with Stifel. Please go ahead.
Hey, Thank you good afternoon, I wanted to ask and this may be a little messy because I know stores have moved in and out of the base, but if you look at the two year same store sales comp you were.
We're down 61, 6% in <unk>, which actually was the first time you added two year improvement from <unk>. If I look at <unk> 23, and I look at <unk> being down 57, you are implying like a down low single digit kind of comp is can you expect that kind of rate of improvement or is it just too.
Lazy to think that youre going to have that much of an improvement potentially in same store sales coming here in the second quarter.
I'm going to have Greg store with that and then I'll finish it.
Yes so.
Andrew.
Talk to you here.
For us we are expecting improvement on our on our comp sales number in the second quarter in terms of guiding to what that number exactly will be whether it's single digits or not I don't think we're at a place right now that we could we could solidly make that statement, but we do expect improvement in <unk>.
Spec to better Q2 than than our first quarter. We're.
We're up against better comps in the second quarter versus the first quarter of last year as well, which is another advantage.
To help perform against that prior year number for us.
Andrew on the other side of that when you look at comps from our first.
First quarter.
We had a pretty strong first first couple months of our first quarter. We started sales deteriorating probably in that fab March and so we do feel pretty comfortable on a go forward basis with with same store sales.
So you know for US, we'll always do what's in the best Best Best interest of our shareholders, but right now with $75 million cash in the bank and $75 million of inventory.
We believe we're in a wonderful position and I still say if you were to close your eyes and look in 10 years <unk> will be the dominant force in both hydroponics indoor gardening in the country. We live in so we're 100% comfortable with the position we're in right now.
Okay. Thanks, I'll pass it on.
Your next question comes from Aaron Grey with Alliance Global Partners. Please go ahead.
Hi, good evening and thank you for the questions Glenn jump off the back of that last question first just on the M&A front. So.
It's been some store acquisition at the beginning part of this year, you know a strong balance sheet.
Are you looking at different verticals as well or what are you kind of seeing out there is it primarily the storefront and we see appealing acquisitions do you think theres something might be more odd to diversify yourself more on the vertical front either via hydroponics or indoor gardening. Just any further commentary you can give on that would be helpful. Thank you.
Yes, I think Aaron to start with growth and right now our number one the number one.
Thanks for grow Gen. Right now is getting this company back profitable and is getting back profitable on the hydro product area. The <unk> area. We do believe there is tremendous verticals out there on indoor gardening products side on the indoor gardening side, but until this company gets profitable and gets back to growth I'd be hard pressed to see.
Outsider outside our core competency right now.
And there are a lot of acquisitions that we're starting to see within the hydroponics space on the store side of it the industry as you probably know after you know after a couple of years.
Ill just disastrous growth in this industry there aren't a lot of players that want out and it's getting harder to service the customers right now.
<unk> has the skill and certainly the balance sheet to do it. We just finished building 100000 square feet of distribution in Ohio.
To basically take care of our Midwest and East coast customers. So <unk> is building out distribution.
We're launching our ERP system at the beginning of July . So we built again, we built an end to end for our customers.
And again, we may look elsewhere, but I will.
Really that Youll see that this year.
Okay, great. Thanks for that detail. That's helpful. Second question for me you talked about being a rebound in some of the outdoor states. So I just want to get some further color on California, Oh, what youre seeing there those are number of licenses that.
That will come up for renewal that were not renewed at the end of last year and there was a number that were also for renewal in the first half of this year. So just any further color in terms of what you're specifically seeing in California, and some stabilization in your outlook there. Thank you.
Yes, we are seeing stabilization in California.
You have to understand when youre seeing closures on the growth side of it you're also seeing closures on the hydroponics side of it. So we are taking business from stores that are going out of business and also from some of our some of the other stores within the California space, we are seeing a pickup in our outdoor stores in California.
We also had positive same store sales growth for a few of our California stores versus last year. So our California stores are starting to perform much better than we've expected.
So just you know any.
Kind of color on the same store sales trends with respect to durables versus consumables and since you mentioned, California, I guess I'll ask if youre seeing any.
If there are any trends to call out on.
On a geographic standpoint from same store sales as well thanks.
Right now, we're seeing about 70% on the on the consumable side, 30% on the durable side.
I used to be 60 40 during our during our crazy growths periods, but we are starting to see on the east coast build outs in New Jersey, and some other states and we are starting to see again, some refresh cycles, there's tremendous tremendous rebates going on in the LNG markets right now from the electric.
So we're starting to see pickup on led lighting right now.
So it's kind of across the board.
We did very little get buildup last year. So we're comping against a very small number right now, but the more important part of our business. We always look at that 70% of consumables. Those are repeat customers every weekend on a weekly monthly basis. So that's the more important part of our business the higher margin part of our business, but we.
We do believe that.
Pick up going through this year with new states rolling out and always that hope of legislation and you will start seeing refresh cycles on some of the legacy farms out there in Tulsa vendors that need new equipment. So it's kind of an ongoing situation, but we see it we see it as getting.
Better.
That's great to hear.
My next question.
Is on private label as well I guess, there's kind of a state of the union overall.
On the different sort of brands.
That you're seeing in different categories, I guess, what I'm getting at is if you can kind of talk about how your private label brands are performing in different categories and if there are other categories, where you're seeing significant brand turnover, where it might present, a private label opportunity versus maybe some other categories, where there just continues to be.
Sort of dominant brands there so.
Yeah, I guess, it's kind of.
And overall kind of state of the union on the different brands within categories, and then your ability to kind of.
Attack that with private label. Thanks.
Yes, I think it is.
Highly competitive in nature. Unfortunately, our private label Division, we don't usually breakdown sales per category.
For Wall Street.
But suffice it to say that our sales are up.
10% to 16%.
From 2022 to 2023.
And we will continue to bring products to our customers as they want them.
A tremendous R&D group withdrew Gen and we work with a lot of the firms out in California that do R&D for us. So again, we love, bringing new options to our customers and.
What was their choice what brands. They so choose to grow one thing with <unk> as we always say there were product or product agnostic and a lot of ways, we sell what our customers want.
And we will continue to.
Okay, Great and I guess, if I could just kind of simplify the private label question.
Should we expect grow generation to kind of just put more weight behind its existing private label brands or should we expect new brands and new categories for this year. Thanks.
You will see continued rollout of new products from grow Gen. That's what we do so again, we service our customers to the best of our ability and wonderful relationship with our vendors, but we do have a private label division that <unk> and we will continue to.
Hopefully rollout of innovative products that the that the growers want.
Thank you.
Ladies and gentlemen, as a reminder, should you have a question. Please press star followed by the one your next question comes from Scott Fortune with Roth. Please go ahead.
Good afternoon, and thanks for the question.
Darren you mentioned last quarter that you saw an uptick and then marching in giddings.
Marshall project that Keith just wanted to get sense for how that continuing to trend through here in April and kind of the new states coming on board and Becky.
Standpoint in with that in mind kind of do you expect.
Quint.
Sequential growth.
<unk> first quarter, but you can expect a little bit more of a pickup in the second half how do you look at this kind of going forward.
I think right now Scott, it's really hard to forecast this industry.
We're a month and a half into the second quarter, So second quarter becomes much easier so looking comps.
Book of April and half of May So, it's kind of easy for us to get an understanding where we are right now.
And make a call that you'll see sequential growth in the second quarter.
We much rather give it a couple of months before calling the third and fourth quarters, we've heard from certain of our sort of the other public companies in this industry. They believe that youre going to see a very strong back half of the year.
We're not.
We are not endorsing that as of yet, but we're certainly not saying it's not true.
We shall see how it goes it's just too early for us to call.
Tom.
We want to see a turn and really see that turn before I can tell you again that the year is going to continue to get stronger I certainly do believe that you will see positive same store sales going into the end of the year, we're comping against very very minimal sales. So we feel confident right now but.
Youll hear Us guide probably on our second quarter call in August .
Got it and just.
Kind of follow up on kind of.
What are you hearing as far as commercial projects that Keith and then take it kind of as you look at any new store opportunities you'll be focusing on that Midwest.
The Merrill Lynch, Connecticut, Georgia, Missouri that wont come on board right.
Your sense is building out that area geographic area, if their nuc Torres.
Again, we are quoting deals we are working on deals in Jersey and back East.
It's all incremental business to grow Gen. Because it wasn't there last year so.
With that we also get the consumable products once it once these facilities are built so we are seeing a pickup in our commercial division. It's picking up every day and we also are starting to see rebuilds. We are seeing again rebuilds in Washington, and Oregon, and California also so we are seeing business pick up.
We saw very little terrible business last year, we're seeing much more of right now.
We're seeing more month by month. So we are again, we are excited but too early to get too excited Scott.
Thanks Niccolo.
Your next question comes from Brian Nagel with Oppenheimer. Please go ahead.
Hey, guys again.
Just a follow up here.
I know we spent a lot of acuity. We spent time about talking about this recent trajectory in sales I just wanted to see if we can.
To what extent, we can solidify it.
Heard from the home from some of the others kind of in the home related categories that weather impacted sales in.
The second half of March.
Yes.
Was there a weather impact at all it grow Jan and then could you be a little more specific as to what Youre seeing here.
Either through their youre through Q1 and into Q2 as far as comp sales.
Yes, Brian the one thing I can tell you is whether only impacts the outdoor growth season, and the outgrow the outdoor grow season was pushed back probably probably multiple california areas and other areas out west.
And we are seeing a pickup again, we're seeing a pickup this month right now.
A lot of our outdoor stores, which we didn't see which we didn't see in March that we're starting to see late April and into May.
Or do you want to talk more.
I'll give more specifics on the numbers what we're seeing.
I think it's just too it's too early we don't we don't do you know again, we don't do same store sales daily data.
Daily calculations, but we are seeing a pickup in our outdoor stores.
Got you, Okay I'll leave it at that thanks.
Your next question comes from Glenn Mattson with Ladenburg. Please go ahead.
Yeah, Hi, I'm, just trying to get a sense of the.
What kind of.
Trying to model for cash the rest of the year youre not going to have the benefit of the working capital.
Production and there'll be some probably modest operating losses, and maybe you could give us a sense of.
And of what Capex is going to be and then also.
Just how aggressive you talked about making more acquisitions or getting more aggressive on that front.
But.
Just trying to understand.
How aggressive what level of cash you feel comfortable with at this time.
Greg do you want to start with that yes.
Yes, absolutely.
So quarter over quarter cash was sequentially flat and the balance sheet, we generated $3 four from operations.
We believe our cash position is very sufficient.
As we move through the year, we're investing capital, where we believe we have access right now and generating returns on investment income and interest income.
We are looking at M&A transactions to fill white space within the organization and are going to continue to execute upon the REIT transactions that come to the table. We added in Bozeman in Jackson, Michigan This quarter already.
So we will continue to look at deals on that and as far as Capex, where our dollars are going towards at this point in time are primarily investments in technology to lower the cost of doing business and to continue to automate functions as best we can as we move forward and the business's maturity.
You could model a number between two and $3 million a quarter. That's generally what we expect to spend and we will continue to be nimble in terms of our management of the balance sheet in terms of lowering inventory incrementally where possible and being tied in our management of the business.
Darren if you want to add to that.
The distribution center build out complete and can you just give us a like a funnel that is complete.
Or what what's been done there.
Unlucky.
Yes, the Ohio.
Complete.
Sorry go ahead there.
Glenn Glenn the Ohio distribution is complete.
Okay.
Great that's it for me thanks.
Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.
Okay.
Sure.
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Okay.
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