INVESTOR PRESENTATION May 2020
growgeneration.com 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 forward-looking 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: www.sec.gov, and on our website, at: www.growgeneration.com. 2 WHERE THE PROS GO TO GROW
growgeneration.com TABLE OF CONTENTS 1) Company and Market Overview 2) Business Overview 3) Growth Strategy 4) Financials and Milestones 3 WHERE THE PROS GO TO GROW
growgeneration.com 1) Company and Market Overview 4 WHERE THE PROS GO TO GROW
growgeneration.com GROWGENERATION AT A GLANCE NATIONAL HYDROPONIC SUPPLIER OF SCALE TO THE LARGE AND GROWING CANNABIS / HEMP AND ORGANIC MARKETS • Headquartered in Denver, CO • Founded in 2014 • Largest hydroponic and organic product / solutions provider • National footprint with 27 sales / service centers in 10 states • Full-service product and solution offering for growers and cultivators • FY 2019: $79.7M in revenue, up 175% from 2018 GrowGeneration Corp. Commercial GrowGeneration Management GrowGeneration Retail Corp. GrowGen.Pro Hemp Corp. Distribution 27 Capital Supply Chain to Product Omnichannel Stores Projects Hemp Farmers Exclusives 5 WHERE THE PROS GO TO GROW
growgeneration.com SEASONED MANAGEMENT TEAM & BOARD OF DIRECTORS Michael Salaman Monty Lamirato Tony Sullivan Darren Lampert President, Director CFO COO CEO, Director • • • • Founding member of law VP at National Media Corp. CFO, Strategic Environmental & 20+ years at Foot Locker Inc. (1986-2002) firm Lampert & Lampert (1986-2000) Energy Resources, Inc. (2013-2016) • EVP and COO of Forman Mills • • • Former portfolio manager and Founder of American Interactive Independent consultant (2009-2017) • SVP Operations for Dollar Express proprietary trader (2000-2014) Media • CFO/Treasurer, ARC Group • SVP, COO Anna’s Linens • Founder (2002-2006) / Chairman, Worldwide, Inc. (2001-2009) Skinny Nutritional (2006-2013) Sean Stiefel Steven Aiello Paul Ciasullo Bob Nardelli Director Director Director Senior Strategic Advisor • • • • Founder of Navy Capital LLC in Partner at Jones & Co. (2003-2006) Board member Leafline Former CEO of Home Depot 2014, an equity focused fund • • Partner at Asset Management (2001- President Global Sales Covenant Strong Private Equity Backing • Analyst with various equity funds 2003) Review 2014-2018 • Private Equity backed by founders of • • Partner at Montgomery Securities Managing Director Soleil Securities Cronos, Gotham Green, Navy (1987-2001) Capital, JW Asset Merida Capital Partners 6 WHERE THE PROS GO TO GROW
growgeneration.com GROWGENERATION HIGHLIGHTS GROWING PROFITABILITY WITH COMMERCIAL CUSTOMERS THROUGH STORE OPENINGS & ACQUISITIONS IN STRATEGIC MARKETS • Largest retailer of hydroponic products in the US – Hydroponics: specialized method of growing plants using mineral nutrient solutions in a water solvent, as opposed to soil • Serves commercial and home cultivators growing specialty crops in the large and growing cannabis / hemp and organic markets • Strategically opening stores in locations targeted at the cannabis / hemp and organic growers • Operating 27 stores: expansion has included new stores openings as well as store acquisitions • Diverse revenue base – management estimates that the majority of its sales come from commercial customers • 175% Sales Growth from FY18 to FY19 • Building omnichannel offering : developing e-commerce operation with online ordering and delivery and pick up options 7 WHERE THE PROS GO TO GROW
growgeneration.com STRATEGICALLY LOCATED STORES STRATEGICALLY OPENED STORES TO SERVE THE LARGE AND GROWING CANNABIS / HEMP AND ORGANIC MARKETS • Targeted New Markets WA – 6 states targeted for new markets: Missouri, ME MT ND Illinois, Arizona, Pennsylvania, New York, New VT NH Jersey MN OR • GrowGeneration Stores ID WI MA NY SD MI CT RI • Legal WY PA IA NJ • Legal for Medical Use NV NE OH MD IL IN DE • Prohibited for Any Use UT CO WV MO VA CA KS KY NC TN AZ OK AR SC NM GA AL MI LA 27 10 6 TX FL AK STORES STATES NEW STATES HI 8 WHERE THE PROS GO TO GROW
growgeneration.com U.S. HYDROPONIC MARKET SIZE & LANDSCAPE GROWGENERATION IS POISED TO EXPAND ALONGSIDE THE LARGE AND GROWING LEGALIZED CANNABIS INDUSTRY Hydroponic Market Size 1 Market Commentary ($ in b) • Hydroponic $16.0 – Over 1,000 hydroponic stores in the U.S. Market is highly fragmented – • Cannabis 2 U.S. cannabis sales are projected to reach – $8.1 $17.0 billion in 2020 and $29.7 billion by 2025 (for the legal adult-use and legal medical markets) – 33 medical and 11 adult-use states currently 2019E 2025E Source: Markets and Markets, “Hydroponics Market”, May 2019. 1) 9 WHERE THE PROS GO TO GROW 2) Source: New Frontier Data, U.S. Legal Cannabis Market Growth, September 2019.
growgeneration.com 2) Business Overview 10 WHERE THE PROS GO TO GROW
growgeneration.com THE GROWGENERATION STORE UNIT Store Overview Store Metrics • The average store can be described as a specialty garden center • 6,911 Average SQF per retail location for all stores operating from Jan. 2019 to • Each store carries and sells thousands of hydroponic products used by Dec. 2019 commercial and home growers: • $441 Sales / Average SQF for all stores operating from Jan. 2019 to Dec. – Organic nutrients and soils 2019 – Advanced lighting technology • 2,617 Average SKUs on hand by retail location / 10,000 SKUs available – Other state-of-the-art hydroponic equipment • Average $361 / Transaction 2020 YTD • Each store will also coincide with an online omnichannel shopping experience 11 WHERE THE PROS GO TO GROW
growgeneration.com PRODUCT MIX PRODUCTS ARE KEY FOR CUSTOMERS’ NEW BUILDS AS WELL AS MAINTAININ G EFFICIENT OPERATIONS (CONSUMABLES) 2019 Product Mix • Over 10,000+ SKUs available, sold by Propagation Plant Health and Safety Containers 2% 28% 3% knowledgeable sales staff 5% Environmental 6% Controls • Extremely diversified product offering 14% • ~60% of revenues are from consumable 19% products, driving repeat purchases and foot traffic Garden Tools and Nutrients and Accessories Additives • Non-consumables 5% 27% – 21% Harvest Environmental Controls 2% 14% – Portion of Lighting Hydroponic Systems – Portion of Harvest 6% – Portion of Hydroponic Systems • Lighting, ventilation, dehumidifiers and other key products are needed for new builds Growing Media Lighting 14% 21% Diverse Product Base 12 WHERE THE PROS GO TO GROW
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