- GrowGeneration continues to target cannabis growers with asset acquisition
- U.S. cannabis market projected to reach $23 billion by 2020
- GrowGeneration now operates from 21 locations in eight states
- Plans in place to open additional locations in California, Michigan, Missouri, Nebraska, New Jersey, Oklahoma, Oregon and Pennsylvania
With its acquisition of certain assets of BWGS, LLC (“BWGS”), a large domestic wholesaler of indoor, hydroponic, and organic horticultural supplies, GrowGeneration Corp. (OTCQX: GRWG) advances its “roll-up” consolidation strategy in the national hydroponic grow supply industry. GrowGeneration, one of the largest chains of specialty hydroponic and organic garden centers, with 21 locations serving both commercial and home growers, recently announced that it had purchased certain assets of BWGS, including inventory and branded products (http://nnw.fm/4TBjS). GrowGeneration maintains its robust track record of acquisition and its position as the largest B2B seller of specialty hydroponic supplies in the nation.
In a news release, GrowGeneration CEO Darren Lampert stated, “This transaction bolsters our ability to supply branded ‘house’ products to our customers. From trellis netting, to plastic pots, to organic nutrients, GrowGeneration will now have a complete line of private label products to offer our customers at great prices. Further, the transaction is expected to have a positive impact on margins and profitability in the near term.”
BWGS has been operating in the B2B horticultural supply business for over 20 years. The company has a reputation for helping retailers meet the demands of an evolving marketplace through its focus on innovative, reliable, effective products for residential, greenhouse and commercial cultivation. Since 1995 – when its first warehouse began operation – the company has been adding hubs, and it now has depots in Charlotte, North Carolina; Denver, Colorado; Portland, Oregon; and Visalia and Sacramento in California that shorten delivery times and support a growing client list. At time of asset acquisition, the BWGS product portfolio ranged across 18 family brands, including DuraBreeze, Elemental Solutions, Sunleaves, ION, OptiLUME and Blueprint Controllers, providing a comprehensive selection of unique and innovative indoor gardening products.
GrowGeneration continues to expand its footprint by consolidating horizontally in the highly fragmented $4.5 billion indoor, hydroponic and organic horticultural supply market. Its aim is nothing less than to be a one-stop shop for all hydroponic equipment, lighting, nutrients and other critical products for specialty growers, including growers of cannabis.
At the end of Q3 2018, GrowGeneration had closed approximately $25 million in acquisitions. Its in-house M&A team already has another $25 million in the works for 2019. So far, acquisitions have proven to be accretive, presenting significant profit growth. Accretive acquisitions are those that increase earnings per share (“EPS”). The accretion in earnings has been partly driven by economies of scale resulting from the integration in corporate infrastructure across sales, operations, purchasing, technology and accounting. GrowGeneration’s operational business model is highly scalable and provides opportunities for margin expansion.
Naturally, GrowGeneration’s roll-up strategy is also pushing up the top line, with year-over-year revenue growth exceeding 100 percent. FY2018 revenue is projected at $30 million, compared to $14.3 million in FY2017.
GrowGeneration currently operates 23 specialty retail hydroponic and organic gardening stores in eight states across America, including seven in California; six in Colorado; three in Michigan; two in Oklahoma; two in Nevada; and one each in Maine, Rhode Island and Washington. In 2019, GrowGeneration intends to add outlets in California, Oregon, Michigan, Missouri, Oklahoma, New Jersey, Pennsylvania and Nebraska by advancing an extensive acquisition pipeline.
GrowGeneration also operates an online superstore for cultivators, which is located at HeavyGardens.com. The company’s inventory includes thousands of products, such as organic nutrients and soils, advanced lighting technology and state-of-the-art hydroponic equipment to be used indoors and outdoors by commercial and home growers. The company’s mission is to own and operate GrowGeneration-branded stores in all the major legalized cannabis states in the U.S., targeting a market that is projected to reach $23 billion by 2020.
For more information, visit the company’s website at www.GrowGeneration.com
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