INVESTOR PRESENTATION OTCQX: GRWG

Transcription

1 INVESTOR PRESENTATION October

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

3 GrowGeneration: Transforming the Hydroponic Grow Supply Distribution industry Company Highlights National coast to coast wholesale distributor of hydroponic grow supplies Over 100% growth year over year with over $25m in acquisitions in 2018 ~$4.5bn highly fragmented market Serving commercial cultivation professionals Complementary value-add consulting and product support Over 10,000 SKUs 19 operations in 7 states HeavyGardens.com Super Store net sales mix Medium & Containers 23% projected revenue $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 Plant Production & Harvest 18% $ Lighting 17% Climate Control 8% Hydroponic Systems 5% Nutrients & Additives 29% projected ebitda $8,000,000 $6,000,000 $4,000,000 $2,000,000 $- $(2,000,000)

4 GrowGeneration Corporate Divisions GrowGeneration Corp. GrowGeneration Canada Corp. Commercial Management Corp. Hemp Corp. HeavyGardens.com GrowGeneration Distribution 4

5 Market Overview Legalization of cannabis is driving exponential growth in the hydroponic / gardening industry ($ in billions) $5.7 $7.2 $ E 2020E Source: New Frontier Data 32% CAGR Commercial cultivation is exploding US hydroponic sales projected to exceed $4.5B by 2020 Highly fragmented retail space >1,000 existing hydroponic stores Smaller players struggling to compete as commercial market expands ~15,000 licensed commercial growers in the U.S. today 14 additional states expected to legalize cannabis cultivation in the next few years 5

6 Large Inventory and Supply Chain Selection-Service-Solutions 6

7 GrowGeneration Stores Livonia, MI Salinas, CA 7

8 GrowGeneration Stores Denver, CO Conifer, CO & Cañon City, CO 8

9 GrowGeneration Stores Oklahoma City, OK 9

10 GrowGeneration Stores Santa Rosa, CA 10

11 Growth Strategy: National Expansion Growth to be fueled by both new store openings and acquisitions Washington ( (1) Montana North Dakota Minnesota Maine Oregon California (6) Nevada (1) Idaho Utah Arizona Wyoming Colorado (6) New Mexico Wisconsin South Dakota New York Michigan (3) Iowa Pennsylvania Nebraska Illinois Indiana Ohio W.Va Kansas Missouri Virginia Kentucky North Carolina Oklahoma Tennessee Arkansas (1) South Carolina Alabama Mississippi Georgia Texas Louisiana Florida New Hampshire Vermont Massachusetts Rhode Island Connecticut Maryland Current operations in 19 stores across 7 states expansion markets: CA, OR, MI, OK and MA - Current Operations - Targeted for Expansion in

12 Growth Strategy: B2B commercial platform Expanding reach and driving increased volume with Online purchasing platform for growers to access online National team of Commercial salesman Features Custom Pricing New item requests Searchable inventory database of over 10,000 items Pick-up at a GrowGen location or drop to the grow Content-rich website designed around topics of high grower interest creates a destination for both purchasing and essential grow information 12

13 HeavyGardens.com Powered By GrowGeneration Online SuperStore Key Initiatives of HeavyGardens.com Include: HG expands the GrowGen reach to every state, including every current and future grower that uses a computer or smart device HG brings a sophisticated, data-driven digital marketing platform that has proven scalability HG adds an easy to navigate search tool to over 10,000 cultivation products HG offers customers access to 100 s of GrowGen s cultivation experts at the click of a mouse HG offers Pick-up at a GrowGen location or drop to the grow 13

14 GrowGeneration Canada Acquisition and Go Public Strategy Canada currently has 114 licensed cannabis producers and another 500 in the pipeline according to Health Canada. Facilities licensed by the Canadian government to cultivate cannabis, as of June, surpassed 11 million square feet for the first time, according to data shared by Health Canada. Four is the maximum number of homegrown marijuana plants allowed per household. Cultivation rules include micro-cultivation licenses for smaller growers who can cultivate on as little as 2000 sq. ft. of indoor, outdoor or greenhouse space. Cannabis consumption growth in Canada is expected to grow by 35%. 14

15 GrowGeneration Hemp Corp. Corporate focus on Hemp derived products and farmers Focused sales efforts targeting the 1,000's of hemp farms around the country. Today, Colorado, Kentucky, New York and Oregon have the most licensed hemp acres in production. Develop and sell products with hemp will include a line of mulch, top soils for organic pest elimination, weed suppression and soil additives. Obtaining distribution rights to equipment that delivers more automation and cost savings to process the whole hemp plant. Form supply chain relationships and deliver value add services, particularly focused on the extraction of hemp-derived oils and hemp by-products. 15

16 Proj. Rev and Revenue Run Rates / Adjusted EBITDA (Revenue and EBITDA in millions) $90,000,000 $84.6M $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $37M $60M 165% y/y rev. growth GPM 27% Net income 10-12% $20,000,000 $10,000,000 $- $(10,000,000) $14.3M $7.5M $4.5M $(1.2M) $(.5M)

17 Capital Structure 19 operations across 7 markets, CO, CA, MI, NV, WA, OK and RI capital raised to date has driven exponential revenue growth and strong balance sheet $9M in Invested Capital Drove $28.5M in Revenue for ($ in millions) Capital Structure Stock Price 1 $3.41 Shares Outstanding M Warrants Outstanding 1 3.2M Stock Options Outstanding 1 1.8M Equity Market Cap 1 $93M Revenue Capital Funded Debt 1 Cash 1 Enterprise Value 1 $4.0M $14.0M $105.5M 1 as of October 25,

18 Analysts Coverage Zacks Report Issued October 18

19 Proven Robust Track Record of Acquisitions Pueblo Organics and Hydroponics - Pueblo, CO Happy Grow Lucky - Conifer, CO Mad Max and Sonoma Hydro - Santa Rosa, CA SeaAle Hydro Spot - SeaAle, WA East Coast Hydroponics - Warwick, RI Humboldt Depot - Arcata, CA Central Coast Garden & Supply - Salinas, CA Superior Growers Supply - Livonia/Lansing, MI Santa Rosa Hydroponics - Santa Rosa, CA Annualized sales $2,100,000 $470,000 $3,113,000 $25,000,000 # stores added Locations 4 Colorado 1 Colorado 2 California & Washington 8 California, Michigan & Rhode Island $25m in acquisitions completed to date Our pipeline is deep and expanding GrowGen is the leading company in industry consolidation M and A team and strategy in place to execute acquisitions Acquisitions are accretive and present significant profit growth 19

20 2018 Highlights Current New and Acquired Store Openings 2018 Added Additional $25M+ in annual Rev month revenue increased 74% y/y, 100% projected growth YOY Raised $19.0M in equity capital(includes $9m raise in Jan 2018) Humboldt Depot, Arcata, CA, 2 stores, closed 1 st Q 2018 $4.0M in Rev., $400k in net income East Coast Hydroponics, Warwick, R.I., largest hydro store on the East Coast $5.0M in Rev.,$750k in net income, closed 1 st Q 2018 Additional acquisition target markets include SoCal, NorCal, OR, MI, and MA Superior Growers Supply, Lansing and Livonia, 3 stores, closed in Q $4.0M in Rev. Central Coast Garden and Farm Supply, Salinas, CA, closed in Q $2M in Rev. Santa Rosa Hydro, largest hydroponic store in Nor. Ca., closed in July, 2018 $8M in Rev. Open Oklahoma store Oct 2018 Acquire HeavyGardens.com $3M Rev, over 100,000 page views 20

21 Investment Considerations The largest Retailer of Specialty Hydroponic Supplies Established market presence focused on picks and shovels of cultivation equipment & supplies, located in close proximity to commercial growers U.S. cannabis market is expected to reach $23B by 2020 (1) Strong year-over-year growth FY2018 revenue projected $30M versus $14.3M 2017 FY2018 revenue sales up 74% y/y Guidance $42.0M revenue run rate coming out of Q As of October, 2018,$14.0M in cash to deploy for acquisitions Large acquisition pipeline in a highly fragmented industry Operational business model that is scalable and provides opportunities for margin expansion (1) Source: New Frontier Data 21

22 Leadership and Strategic Investors Board of Directors and Executive Management Darren Lampert CEO Director Founding member of law firm Lampert & Lampert ( ) Former portfolio manager and proprietary trader ( ) Monty Lamirato CFO CFO, Strategic Environmental & Energy Resources, Inc. ( ) Independent consultant ( ) CFO/Treasurer, ARC Group Worldwide, Inc. ( ) Michael Salaman President Director VP at National Media Corp. ( ) Founder of American Interactive Media Founder ( ) / Chairman, Skinny Nutritional ( ) Steven Aiello Director Sean Stiefel Director Partner at Jones & Co. ( ) Partner at Asset Management ( ) Partner at Montgomery Securities ( ) Founder of Navy Capital LLC in 2014, an equity focused cannabis focused fund Analyst with various equity funds Joseph Prizivalli COO Inventory Manager at Way to Grow ( ) where he oversaw movement and integrity of all inventories Distribution Center Manager ( ) Peter Rosenberg Director 28 years of experience in the financial services industry Duff & Phelps,Managing Director in the Consumer and Retail Merger and Acquisitions Group Managing Director with Wells Fargo Securities Managed the San Francisco office for Barrington Associates Director at Salomon Smith Barney Strategic Investors Merida Capital Partners Gotham Green Partners Navy Capital 22

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