GrowGeneration Corp (GRWG) 2022 Q4 法說會逐字稿

Hello, and welcome to GrowGeneration's Fourth Quarter and Full Year 2022 Earnings Conference Call. My name is Jaypee and I'll be coordinating your call today. Following the prepared remarks, we will open the call to questions from analysts with instructions to be given at that time.

您好，歡迎來到 GrowGeneration 的第四季度和 2022 年全年收益電話會議。我叫 Jaypee，今天我會協調你的來電。在準備好的評論之後，我們將打開分析師的問題電話，屆時將給出指示。

I will now hand the call over to Clay Crumbliss with ICR.

我現在將通過 ICR 將電話轉交給 Clay Crumbliss。

Thank you, and welcome, everyone to the GrowGeneration Fourth Quarter and Full Year 2022 Earnings Results Conference Call. Today's call is being recorded. With us today are Darren Lampert, Co-Founder & Chief Executive Officer; and Greg Sanders, Chief Financial Officer of GrowGeneration Corp.

謝謝，歡迎大家參加 GrowGeneration 第四季度和 2022 年全年收益結果電話會議。今天的通話正在錄音中。今天和我們在一起的是聯合創始人兼首席執行官 Darren Lampert；和 GrowGeneration Corp. 首席財務官 Greg Sanders。

You should have access to the company's fourth quarter earnings press release issued after the market closed today. This information is available on the Investor Relations section of GrowGeneration's website at ir.growgeneration.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.

您應該可以訪問公司在今天收市後發布的第四季度收益新聞稿。此信息可在 GrowGeneration 網站 ir.growgeneration.com 的投資者關係部分獲取。對此次電話會議的某些評論包括前瞻性陳述，這些陳述受 1995 年《私人證券訴訟改革法案》安全港條款的約束。這些前瞻性陳述基於管理層當前對未來事件的預期和信念，並受可能導致實際結果與這些前瞻性陳述中描述的結果存在重大差異的若干風險和不確定性。

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 forward-looking statements made today. During the call, we'll 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 non-GAAP financial measures to the most directly comparable GAAP measures are all available on our website.

請參閱今天的新聞稿和提交給美國證券交易委員會的其他文件，詳細討論可能導致實際結果與今天發表的任何前瞻性陳述中明示或暗示的結果存在重大差異的風險。在通話期間，我們將在描述業務績效時使用一些非 GAAP 財務指標。美國證券交易委員會的備案文件以及收益新聞稿提供了非 GAAP 財務指標與最直接可比的 GAAP 指標的對賬，這些都可以在我們的網站上找到。

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'll take them as time allows.

在我們準備好的評論之後，我們將回答研究分析師的問題。我們要求您將自己限制在一個問題和一個跟進中。如果您還有其他問題，請重新進入隊列，我們會在時間允許的情況下處理。

Now, I will turn the call over to our Co-Founder & CEO, Darren Lambert.

現在，我將把電話轉給我們的聯合創始人兼首席執行官 Darren Lambert。

Thank you, Clay. Good afternoon, everyone. Thank you for joining us today to discuss our fourth quarter and full year 2022 financial results and our full year 2023 guidance. As always, I want to thank each one of our employees across our company through a continued support of GrowGen. The last year has been extremely challenging, but I, along with the rest of the executive team, appreciate your continued hard work and dedication to our vision and strategic plan.

謝謝你，克萊。大家下午好。感謝您今天加入我們討論我們的第四季度和 2022 年全年財務業績以及我們的 2023 年全年指導。一如既往，我要通過對 GrowGen 的持續支持，感謝我們公司的每一位員工。過去的一年極具挑戰性，但我和其他執行團隊成員感謝你們為我們的願景和戰略計劃持續努力和奉獻。

Regardless of the market challenges throughout the year and really over the last 3 years since we entered the pandemic, the team has been steadfast in executing our business model. I commend our entire team for stepping up to every challenge that has come at us over this time period. We are pleased that our full year 2022 net revenue, $278 million was in line with our previously communicated guidance range. We are also encouraged with our record in 2022 to rightsize the business are starting to show in our financial results. And we are optimistic that the work we're doing is putting GrowGen in a significantly better position going into 2023.

無論全年以及自我們進入大流行以來的過去 3 年裡，無論市場挑戰如何，團隊一直堅定不移地執行我們的商業模式。我讚揚我們整個團隊在這段時間裡勇敢地迎接我們遇到的每一個挑戰。我們很高興我們 2022 年全年的淨收入 2.78 億美元符合我們之前傳達的指導範圍。我們也對我們在 2022 年的記錄感到鼓舞，以調整業務規模並開始在我們的財務業績中顯示出來。我們樂觀地認為，我們正在做的工作正在使 GrowGen 在進入 2023 年時處於明顯更好的位置。

Further, for the first time in 7 quarters, we believe GrowGen will see sequential revenue growth in Q1 2023 versus Q4 2022. In addition, we believe that gross margin will normalize in the mid- to high 20s beginning in Q1 of 2023. In 2022, we invested in our stores, product portfolio, supply chain, technology and other strategic initiatives as part of our long-term strategy to enhance profitability. In the fourth quarter, we added 3 members of senior management in the hydroponic industry in the areas of commercial sales, supply chain and product development.

此外，我們認為 GrowGen 將在 2023 年第一季度與 2022 年第四季度相比連續出現 7 個季度的收入增長。此外，我們認為毛利率將在 2023 年第一季度開始的 20 年代中高水平正常化。到 2022 年，我們投資於我們的商店、產品組合、供應鏈、技術和其他戰略計劃，作為我們提高盈利能力的長期戰略的一部分。第四季度，我們在商業銷售、供應鍊和產品開發領域增加了 3 名水培行業的高級管理人員。

We also significantly increased our volume of our private label products, driven by our Drip Hydro and to our core brands. Private label accounted for $26 million for retail and e-commerce sales in full year 2022, which is around 12% of our overall retail and e-commerce sales growing 6% year-over-year as a percent of sales. Our team also continued to make advancements in our supply chain through the expansion of our distribution centers and fulfillment hubs, which now total 8 locations.

在我們的 Drip Hydro 和我們的核心品牌的推動下，我們還顯著增加了自有品牌產品的數量。 2022 年全年，自有品牌的零售和電子商務銷售額為 2600 萬美元，占我們零售和電子商務總銷售額的 12% 左右，佔銷售額的百分比同比增長 6%。我們的團隊還通過擴大我們的配送中心和履行中心（目前共有 8 個地點）繼續在我們的供應鏈方面取得進步。

With our newest center in Columbus, Ohio, expected to be operational in the fourth quarter. With that as the backdrop, our day-to-day strategy is generally the same since we last spoke. We remain hyper focused on controlling costs and generating cash, and we made significant progress in 2022. While some of these efforts have come at the short-term expense of our gross margin, especially in the fourth quarter, we firmly believe these decisions are putting GrowGen in a better place to be stronger and more nimble than ever before. It's important to reiterate that GrowGen remains on solid financial footing. We have a strong balance sheet, we don't anticipate the need for external debt or equity issuance.

我們在俄亥俄州哥倫布市的最新中心預計將在第四季度投入運營。以此為背景，我們的日常策略與我們上次發言時大體相同。我們仍然高度專注於控製成本和產生現金，並且我們在 2022 年取得了重大進展。雖然其中一些努力是以短期犧牲我們的毛利率為代價的，尤其是在第四季度，但我們堅信這些決定正在GrowGen 在一個更好的地方變得比以往任何時候都更強大、更靈活。重要的是要重申 GrowGen 仍然擁有穩固的財務基礎。我們擁有強大的資產負債表，我們預計不需要外債或股票發行。

We ended the 2022 fiscal year with $72 million of cash and cash equivalents and marketable securities and no debt on our balance sheet, representing a sequential increase of $1 million in our net cash position since the end of the third quarter of 2022. This marks the second consecutive quarter that we have grown our cash balance despite the incredibly challenging industry conditions.

我們在 2022 財年結束時擁有 7200 萬美元的現金和現金等價物以及有價證券，資產負債表上沒有債務，這表明自 2022 年第三季度末以來我們的淨現金頭寸連續增加了 100 萬美元。這標誌著儘管行業環境極具挑戰性，但我們連續第二個季度增加了現金餘額。

Now, I'd like to provide a brief overview on some of our key business initiatives throughout 2022, how we see those going forward in 2023. We recognized the need early last year to focus our organization on cost control, store consolidation, inventory reductions and cash generation. In 2022, we reduced inventory by $28 million compared to the end of 2021, including a sequential $12 million reduction in the fourth quarter and the end of the third quarter. These inventory reductions have generally occurred at discounted prices, which clearly pressured our gross margins in 2022, but we believe it was the prudent thing to do as we optimize our working capital base and prioritize cash generation and balance sheet preservation.

現在，我想簡要概述一下我們在整個 2022 年的一些關鍵業務計劃，以及我們如何看待這些計劃在 2023 年的進展。我們去年年初認識到需要將我們的組織重點放在成本控制、商店整合、庫存減少上和現金產生。與 2021 年底相比，我們在 2022 年減少了 2800 萬美元的庫存，包括在第四季度和第三季度末連續減少了 1200 萬美元。這些庫存減少通常以折扣價進行，這顯然對我們 2022 年的毛利率構成壓力，但我們認為這是謹慎的做法，因為我們優化了營運資金基礎並優先考慮現金生成和資產負債表保護。

Partially offsetting the negative impact of our gross margin contraction, we made significant progress rightsizing our expense structure in 2022. We made the difficult decision to reduce our payroll base by a total of $12 million throughout 2022. In terms of our store footprint, we made considerable progress eliminating market redundancies and overlaps by closing 8 stores in total for 2022.

部分抵消了我們毛利率收縮的負面影響，我們在 2022 年的費用結構合理化方面取得了重大進展。我們做出了艱難的決定，在 2022 年將我們的工資基數總共減少 1200 萬美元。就我們的商店足跡而言，我們做出了到 2022 年總共關閉 8 家門店，在消除市場冗餘和重疊方面取得了重大進展。

We also continue to expand into markets where we see long-term value, opening 5 new stores and included 4 new states where we didn't previously have retail operations. These new locations, including Virginia and New Jersey stores branded as GrowGeneration Hydroponic and Garden Center, which we think represents an opportunity to provide a broader in-store product assortment that should allow us to increase store traffic and productivity by attracting new customers.

我們還繼續擴展到我們看到長期價值的市場，開設了 5 家新店，並包括我們以前沒有零售業務的 4 個新州。這些新地點，包括弗吉尼亞和新澤西的商店，品牌為 GrowGeneration Hydroponic and Garden Center，我們認為這代表了提供更廣泛店內產品種類的機會，這將使我們能夠通過吸引新客戶來增加商店流量和生產力。

In that, we reduced our store count by 3 stores and ended the year on December 31, with 59 locations in operation. We expect these initiatives in 2022 to continue benefiting our company well into 2023, including cost savings flow-through from store consolidation, reduced payroll expenses, improved shipping costs and declining ocean freight rates, reduced headwinds from inventory discounting on our margins and a greater percentage of private label sales. This will all have a positive impact on adjusted EBITDA dollar generation and margins.

為此，我們將門店數量減少了 3 家，並在 12 月 31 日結束了這一年，共有 59 家門店在營業。我們預計 2022 年的這些舉措將在 2023 年繼續使我們公司受益，包括商店整合帶來的成本節約、工資支出減少、運輸成本降低和海運費率下降、庫存摺扣對我們利潤率的不利影響減少以及更高的百分比自有品牌銷售。這都將對調整後的 EBITDA 美元產生和利潤率產生積極影響。

Going forward, we expect to continue speaking out acquisitions in white space markets where we think it makes sense. We will also continue product development around our key brands and private label offerings. We're focused on monetization of our 1 million square feet of retail space, including merchandising and product education with key partners and a laser focus on execution of the various business transformation initiatives centered around supply chain and enhancing our customer journey.

展望未來，我們預計將繼續在我們認為有意義的空白市場中公開收購。我們還將繼續圍繞我們的主要品牌和自有品牌產品開發產品。我們專注於將我們 100 萬平方英尺的零售空間貨幣化，包括與主要合作夥伴的商品銷售和產品教育，以及專注於執行以供應鍊為中心的各種業務轉型計劃，並改善我們的客戶旅程。

GrowGen is a unique, highly differentiated retailer. We are the leader in a large, fragmented market. Our customers have a passion for a Grow Pro lifestyle. GrowGen is more than just a retailer. We are a developer of market-leading brands and private label products. We are distributed to supporting the entire hydroponic growing community, and we are above all a passionate and dedicated partner for our customers. Deliver a mission and values and our culture defines our relationships with our customers. We'll be celebrating our 10th anniversary in a year. As we begin the new year ahead, we take great pride in our path, and we are equally excited about our future.

GrowGen 是一家獨特的、高度差異化的零售商。我們是一個龐大、分散的市場的領導者。我們的客戶對 Grow Pro 生活方式充滿熱情。 GrowGen 不僅僅是一家零售商。我們是市場領先品牌和自有品牌產品的開發商。我們分佈於支持整個水培種植社區，我們首先是我們客戶的熱情和敬業的合作夥伴。交付使命和價值觀，我們的文化定義了我們與客戶的關係。我們將在一年后慶祝成立 10 週年。當我們開始新的一年時，我們為自己的道路感到自豪，我們同樣對我們的未來感到興奮。

Turning to guidance for full year 2023. We expect net revenue in the range of $250 million to $270 million, translating into adjusted EBITDA in the range of a $4 million loss to a $1 million profit. As part of that, in the first quarter of 2023, we expect net revenue in the range of $55 million to $57 million, translating into adjusted EBITDA in the range of a $2 million loss to a $4 million loss.

轉向 2023 年全年的指導。我們預計淨收入在 2.5 億美元至 2.7 億美元之間，轉化為調整後的 EBITDA，虧損 400 萬美元至 100 萬美元。作為其中的一部分，在 2023 年第一季度，我們預計淨收入將在 5500 萬至 5700 萬美元之間，轉化為調整後的 EBITDA 將虧損 200 萬至 400 萬美元。

With that, I will turn the call over to our CFO, Greg Sanders.

有了這個，我將把電話轉給我們的首席財務官格雷格桑德斯。

Thank you, Darren, and good afternoon, everyone. First, I will address our fourth quarter and full year 2022 financial results, and then I will discuss our preliminary outlook for the 2023 fiscal year.

謝謝你，達倫，大家下午好。首先，我將介紹我們的第四季度和 2022 年全年財務業績，然後我將討論我們對 2023 財年的初步展望。

Starting with our fourth quarter results, GrowGeneration generated revenue of $54.5 million versus $90.6 million in the fourth quarter of 2021, representing a decline of approximately 40%. Our same-store sales for the fourth quarter 2022 were $34.3 million compared to prior year sales of $71.4 million, representing a 51.9% decline against the comparable year ago quarter.

從我們的第四季度業績開始，GrowGeneration 的收入為 5450 萬美元，而 2021 年第四季度為 9060 萬美元，下降了約 40%。我們 2022 年第四季度的同店銷售額為 3430 萬美元，而去年同期為 7140 萬美元，同比下降 51.9%。

Our e-commerce revenue declined on a comparable base from $7.7 million to $3 million. Our distribution and other revenue was $13.5 million for the quarter compared to $4.6 million in the year ago period, representing an improvement of 195%. Gross profit margin was 17.6% for the fourth quarter of 2022, down approximately 830 basis points sequentially from the third quarter of 2022. Gross profit dollar generation in the fourth quarter decreased 7.9% from the prior year, which includes the addition of gross profit from acquisitions of HRG, MMI and St. Louis Hydro in the trailing 12 months.

我們的電子商務收入在可比基礎上從 770 萬美元下降到 300 萬美元。本季度我們的分銷和其他收入為 1350 萬美元，而去年同期為 460 萬美元，增長了 195%。 2022 年第四季度的毛利率為 17.6%，比 2022 年第三季度下降約 830 個基點。第四季度美元產生的毛利潤同比下降 7.9%，其中包括來自在過去 12 個月內收購了 HRG、MMI 和 St. Louis Hydro。

The company sold over $12 million of overstock and aged inventory in Q4 clearance events that we estimate resulted in a total gross margin degradation of 332 basis points. Further, the company increased its inventory reserves by over $2 million in the quarter, which had a 379 basis point impact. The combination of these 2 strategic initiatives resulted in a onetime margin reduction of 7.1%. Our Q4 strategic initiatives to further rightsize the inventory of the business are largely complete as of December 31, 2022, and better position the company as we move into 2023.

該公司在第四季度清倉活動中出售了超過 1200 萬美元的積壓庫存和陳舊庫存，我們估計這導致總毛利率下降 332 個基點。此外，該公司在本季度將庫存儲備增加了超過 200 萬美元，產生了 379 個基點的影響。這兩項戰略舉措的結合導致一次性利潤率下降了 7.1%。截至 2022 年 12 月 31 日，我們第四季度進一步調整業務庫存的戰略舉措已基本完成，並在我們進入 2023 年時更好地定位公司。

Store operating costs and other operational expenses declined sequentially from the third quarter. Overall, store operating expense declined from $14.5 million in Q1 to $13.8 million in Q2 to $13.6 million in Q3 finally to $12.8 million in Q4. The savings recognized throughout 2022 were primarily attributed to payroll reductions. We anticipate further cost decreases to continue into 2023, resulting from the execution of store consolidations in the latter half of 2022.

商店運營成本和其他運營費用從第三季度開始連續下降。總體而言，商店運營費用從第一季度的 1450 萬美元下降到第二季度的 1380 萬美元，第三季度下降到 1360 萬美元，最後下降到第四季度的 1280 萬美元。整個 2022 年確認的節餘主要歸因於工資的減少。我們預計成本進一步下降將持續到 2023 年，這是由於 2022 年下半年實施的門店整合。

Selling, general and administrative or SG&A costs were $8.6 million in the fourth quarter, of which $1 million was derived from stock-based compensation. This compares to $8.8 million in the third quarter with $1.3 million of stock-based compensation. This represents a 2.3% improvement quarter-over-quarter to SG&A. Depreciation and amortization of intangibles was $4 million in the fourth quarter of 2022 compared to $4.1 million in the year ago period.

第四季度的銷售、一般和行政或 SG&A 成本為 860 萬美元，其中 100 萬美元來自股票薪酬。相比之下，第三季度為 880 萬美元，股票薪酬為 130 萬美元。這表示 SG&A 環比增長 2.3%。 2022 年第四季度無形資產的折舊和攤銷為 400 萬美元，而去年同期為 410 萬美元。

Compared to the fourth quarter last year, SG&A expense decreased $2.8 million in the same period of 2022 with overall savings driven from payroll reductions and increased cost controls over a broad range of categories. Income tax in the fourth quarter was a benefit of $248,000 for tax purposes, but with a full valuation allowance, we did not observe a significant income tax provision benefit or expense in the period.

與去年第四季度相比，SG&A 費用在 2022 年同期減少了 280 萬美元，這是由於工資減少和對廣泛類別的成本控制增加所推動的總體節省。第四季度的所得稅為稅收目的帶來了 248,000 美元的收益，但在全額估值津貼的情況下，我們在此期間沒有觀察到重大的所得稅撥備收益或支出。

Net loss for the fourth quarter was $15 million or negative $0.25 per share compared to a net loss of $4.1 million or negative $0.07 per share for the comparable year-ago quarter. Adjusted EBITDA, which excludes interest, taxes, depreciation, amortization and share-based compensation, was a loss of $10.2 million for the fourth quarter of 2022 compared to a loss of $1.7 million in the fourth quarter of 2021.

第四季度淨虧損為 1500 萬美元或每股負 0.25 美元，而去年同期淨虧損為 410 萬美元或每股負 0.07 美元。調整後的 EBITDA（不包括利息、稅項、折舊、攤銷和基於股份的薪酬）在 2022 年第四季度虧損 1020 萬美元，而 2021 年第四季度虧損 170 萬美元。

We estimate this quarter's adjusted EBITDA loss includes roughly $1 million in expense associated with the closure and consolidation of our Las Vegas, Compton and Cotati locations and nearly $4 million associated with the inventory cleanup measures taken in the fourth quarter. These areas of execution were strategic initiatives taken to position the company for 2023. Cash generated from operations in the quarter was $2.6 million, primarily attributed to the reduction in inventory and additional measures taking to strengthen the balance sheet.

我們估計本季度調整後的 EBITDA 損失包括大約 100 萬美元與關閉和合併我們的拉斯維加斯、康普頓和科塔蒂地點相關的費用，以及與第四季度採取的庫存清理措施相關的近 400 萬美元。這些執行領域是為公司 2023 年定位而採取的戰略舉措。本季度運營產生的現金為 260 萬美元，這主要歸因於庫存減少以及為加強資產負債表而採取的其他措施。

Now, I will provide a quick overview of our results for the full year 2022. Net sales were down $144 million or 34% to $278 million and $422 million in the full year 2021. Gross profit for the full year 2022 decreased by $48 million to $70.2 million and gross profit margin was 25.3% in 2022 compared to 28% in the full year 2021.

現在，我將簡要概述我們 2022 年全年的業績。2021 年全年淨銷售額分別下降 1.44 億美元或 34% 至 2.78 億美元和 4.22 億美元。2022 年全年毛利下降 4800 萬美元至7020 萬美元，2022 年毛利率為 25.3%，而 2021 年全年為 28%。

As Darren mentioned earlier, we have taken a number of steps throughout the year to rightsize operating expenses and reduce our selling, general and administrative expenses based by roughly $20.7 million through operational rationalization, workforce reduction and tighter day-to-day expense controls. Related to the balance sheet, as of December 31, 2022, the company had total cash, cash equivalents and marketable securities of $71.9 million. Within working capital, the company reduced inventory by $28.4 million, partially offset by a $2.6 million increase in high creditworthy accounts receivables.

正如 Darren 之前提到的，我們在全年採取了一系列措施來合理調整運營費用，並通過運營合理化、裁員和更嚴格的日常費用控制將我們的銷售、一般和管理費用減少了大約 2070 萬美元。與資產負債表相關，截至 2022 年 12 月 31 日，公司現金、現金等價物和有價證券總額為 7190 萬美元。在營運資金方面，公司庫存減少了 2840 萬美元，部分被高信譽應收賬款增加 260 萬美元所抵消。

We also invested approximately $9 million for payments associated with technology and distribution investments. On a full year basis, the company generated $12.5 million in cash from operating activities, primarily driven by the reduction of inventory and prepaid accounts payable.

我們還投資了大約 900 萬美元用於與技術和分銷投資相關的付款。在全年基礎上，公司從經營活動中產生了 1250 萬美元的現金，主要是由於庫存和預付應付賬款的減少。

I will now discuss our guidance for the full year 2023. We expect full year 2023 revenue to be between $250 million and $270 million and full year adjusted EBITDA to be in the range of a $4 million loss to a positive $1 million profit. Our updated guidance assumes quarter-over-quarter improvements in Q1 of 2023 and further revenue and profitability improvements continuing into the second and third quarters of 2023. The improvement in adjusted EBITDA expectations is primarily driven from the execution of our 2022 reductions to payroll, our 8 store closures and our inventory optimization efforts.

我現在將討論我們對 2023 年全年的指導。我們預計 2023 年全年收入將在 2.5 億美元至 2.7 億美元之間，全年調整後的 EBITDA 將在虧損 400 萬美元至盈利 100 萬美元之間。我們更新後的指引假設 2023 年第一季度的環比改善以及收入和盈利能力的進一步改善將持續到 2023 年第二和第三季度。調整後的 EBITDA 預期的改善主要是由於我們執行了 2022 年工資削減，我們的8 家商店關閉和我們的庫存優化工作。

We expect gross margins to normalize into the mid- to high 20s in the first quarter of 2023. On a comparative basis to the fourth quarter, management expects modest improvements in revenue in Q1 of 2023, which would be the first quarter-over-quarter improvement to revenue since the second quarter of 2021. We expect operating expenses to be controlled and sequentially down in the first quarter as we recognized additional cost improvements from our strategic initiatives. We are positioning the company and executing our business strategy to focus on cash from operations and EBITDA improvement.

我們預計毛利率將在 2023 年第一季度正常化至 20 多歲的中高水平。與第四季度相比，管理層預計 2023 年第一季度的收入將適度改善，這將是第一個季度環比自 2021 年第二季度以來收入有所改善。我們預計第一季度的運營費用將得到控制並連續下降，因為我們認識到我們的戰略舉措會帶來額外的成本改善。我們正在定位公司並執行我們的業務戰略，以專注於運營現金和 EBITDA 改善。

As we mentioned earlier, we expect that our headcount reductions are largely complete and the heavy lifting to correct our inventory position was mostly concluded in the last 2 quarters of 2022.

正如我們之前提到的，我們預計我們的裁員工作已基本完成，糾正庫存狀況的繁重工作大部分已在 2022 年最後兩個季度完成。

With that, I will turn the call back over to Darren for closing remarks.

有了這個，我將把電話轉回達倫以作結束語。

Thank you, Greg. Before we open the line for your questions, I want to reiterate that while 2022 was a challenging year for everyone in the cannabis value chain, GrowGen remains focused on the areas of the business that we can control.

謝謝你，格雷格。在我們開始提問之前，我想重申，雖然 2022 年對大麻價值鏈中的每個人來說都是充滿挑戰的一年，但 GrowGen 仍然專注於我們可以控制的業務領域。

We continue to make strong gains against our priorities: drive cost control, consolidate stores, reduce inventories and improve profitability while preparing to capture the many growth opportunities that lie ahead, all of which we expect to drive incremental benefits in 2023. We remain committed to the expansion of our proprietary and distributed brands. We are very satisfied with our results of our private label products, including Char Coir and Drip Hydro.

我們繼續在我們的優先事項上取得強勁進展：推動成本控制、整合商店、減少庫存和提高盈利能力，同時準備抓住未來的許多增長機會，我們預計所有這些都將在 2023 年推動增量收益。我們仍然致力於擴大我們的專有和分銷品牌。我們對自有品牌產品的結果非常滿意，包括 Char Coir 和 Drip Hydro。

The addition of MMI strengthens our position to gain indoor vertical cultivation projects with their leading benching and racking systems. Controlled environmental agriculture and sustainable ag are only in the development stage, and we believe that more companies will invest in sustainable indoor vertical farms for local production of leafy greens, tomatoes, fruits and other food products.

MMI 的加入鞏固了我們的地位，以其領先的長凳和貨架系統獲得室內垂直栽培項目。受控環境農業和可持續農業僅處於發展階段，我們相信會有更多公司投資可持續室內垂直農場，用於本地生產綠葉蔬菜、西紅柿、水果和其他食品。

To close, while we expect a degree of continued uncertainty in 2023, and we are not planning for an imminent turn in the cannabis cycle. We remain nimble and well prepared for a turnaround when it happens. Thanks to proactive management of the business in 2022, we believe GrowGen is on solid financial footing with a solid balance sheet, healthy liquidity and a solid cash position. Thank you for your time today, and thank you for your interest in GrowGeneration.

關閉，雖然我們預計 2023 年將存在一定程度的持續不確定性，但我們不打算在大麻週期中出現即將發生的轉變。當它發生時，我們保持靈活並做好充分準備。由於在 2022 年對業務進行了積極的管理，我們相信 GrowGen 擁有穩固的財務基礎，擁有穩健的資產負債表、健康的流動性和穩固的現金狀況。感謝您今天抽出時間，感謝您對 GrowGeneration 的關注。

We will now take your questions. Operator?

我們現在將回答您的問題。操作員？

(Operator Instructions) Your first question comes from the line of Mark Smith from Lake Street Capital.

（操作員說明）您的第一個問題來自 Lake Street Capital 的 Mark Smith。

First question is really around inventory. You did a good job getting those levels down, but it sounds like had to clear some stuff out to kind of get there. Can you just talk about your comfort with inventory levels today? And do you still have any inventory that you think still needs to maybe be cleared out here in 2023?

第一個問題實際上是關於庫存的。你在降低這些水平方面做得很好，但聽起來好像必須清除一些東西才能到達那裡。您能談談您對今天的庫存水平感到滿意嗎？您是否還有您認為可能仍需要在 2023 年在這裡清理的庫存？

Hey Mark, this is Greg. We reduced inventory $28 million in the year, $22 million in the last 2 quarters of the year. At this point in time, we're carrying $77 million in inventory as we concluded the year. We believe that the volume of inventory that we have is appropriate for the business on a forward-looking basis. Our inventory isn't completely perfect, but we think it's in a very good position at this point with all of the efforts that we've taken primarily over the last 2 quarters. We don't expect any major changes in our inventory volume as we move forward.

嘿馬克，這是格雷格。我們在這一年減少了 2800 萬美元的存貨，在今年最後兩個季度減少了 2200 萬美元。在這個時間點，我們在年底時持有 7700 萬美元的庫存。我們認為，從前瞻性的角度來看，我們擁有的庫存量適合該業務。我們的庫存並不完全完美，但我們認為在過去 2 個季度中我們所做的所有努力使其在這一點上處於非常有利的位置。隨著我們的前進，我們預計我們的庫存量不會有任何重大變化。

And then just following up on that, can you talk a little bit about kind of the mix of consumables versus more kind of capital equipment? And Darren, at the end, you talked a little bit about we're maybe not seeing improvement yet in the industry, but are you seeing signs of that and your guidance for the year, does that include the beginning of more build-outs of kind of new Grow facilities?

然後就此跟進，你能談談消耗品與更多資本設備的混合嗎？達倫，最後，你談到了我們可能還沒有看到這個行業的改善，但你是否看到了這種跡像以及你今年的指導，這是否包括開始更多的擴建種新的 Grow 設施？

Yes, Mark, I'll start at the beginning. When you look at the mix of our inventory right now, we've moved through a tremendous amount of nonconsumable inventory in 2022. So when you look at the tremendous reduction, you're really looking at the lighting side, the DU side and the products that we use in build-outs. And we've kept our inventory up on the consumables side. Those are products that our customers need on a weekly, daily basis. So we've kept that to a point where we're very comfortable.

是的，馬克，我將從頭開始。當您查看我們現在的庫存組合時，我們會在 2022 年處理大量非消耗品庫存。因此，當您查看大幅減少時，您實際上是在查看照明方面、DU 方面和我們在擴建中使用的產品。我們在消耗品方面保持庫存。這些是我們的客戶每週、每天都需要的產品。因此，我們將其保持在一個讓我們感到非常舒服的程度。

When you unpack the second part of the question, we have been grinding around the bottom for the last -- probably for the last 3 to 4 months. And March is the first month that we are starting to see some upticks. We're starting to see more bidding out there on commercial products back east, and we are seeing stabilization. We have consolidated some of our stores around the country. We consolidated (inaudible) of our stores. And we feel that we're in a very good position right now going into 2023. We're seeing stabilization on pricing on cannabis out in California as we're hearing from our customers. We're also hearing out in the California markets that you are starting to see the large amounts of supply starting to dwindle.

當你解開問題的第二部分時，我們一直在摸底——可能是過去 3 到 4 個月。 3 月是我們開始看到一些增長的第一個月。我們開始看到更多關於東部商業產品的競標，而且我們看到了穩定。我們已經整合了我們在全國各地的一些商店。我們合併了（聽不清）我們的商店。而且我們認為，進入 2023 年，我們現在處於非常有利的位置。我們從客戶那裡聽到的消息表明，加利福尼亞州的大麻定價趨於穩定。我們還聽說在加利福尼亞市場，您開始看到大量供應開始減少。

So we're keeping an eye on the outdoor season right now that's coming up in April, but we have seen a little stabilization in our business.

因此，我們現在正在密切關註四月份即將到來的戶外季節，但我們已經看到我們的業務有所穩定。

Your next question comes from the line of Brian Nagel from Oppenheimer.

您的下一個問題來自 Oppenheimer 的 Brian Nagel。

So I want to -- my first question and just to basically follow up on that -- the question, the prior question, just with respect to the overall industry. So Darren, you're saying you're seeing we've been kind of grinding along the bottom, maybe seeing some signs of stabilization here. So as you look at, I know this -- we've been talking about the factors that weighed upon the industry now for a while, over supply even slower licensing.

所以我想 - 我的第一個問題，只是基本上跟進 - 這個問題，之前的問題，只是關於整個行業。所以達倫，你是說你看到我們一直在底部磨礪，也許在這裡看到一些穩定的跡象。所以當你看的時候，我知道這一點——我們一直在討論影響該行業的因素，供應過剩甚至更慢的許可。

As you look at the business now and you look at some of the stabilization, is it becoming clearer whether those factors we discussed were more transitory in nature? Or has there been a sort of say, a reset lower on the underlying growth potential from an industry perspective within the space?

當您現在審視業務並審視一些穩定性時，我們討論的那些因素是否在本質上更短暫，是否變得更加清晰？或者是否有某種說法，從該領域的行業角度來看，潛在增長潛力的重置較低？

Yes, Brian, my belief is that on a go-forward basis, you will see much slower growth in the hydroponic and cannabis industries. I think the hyper growth to 20% year-over-year compounded growth that people are expecting through the 20s, I don't believe that to be true any longer. I think what you're seeing right now is an industry that has tremendous potential. But I do believe that you will see slower growth in this industry. You'll see tremendous consolidation in this industry. And I do believe that what you've seen over the last 20 months, there was many reasons for it coming out of COVID. There was a tremendous amount of capital coming into the cannabis industry. That has slowed in the last 20 months.

是的，布賴恩，我相信在向前發展的基礎上，你會看到水培和大麻行業的增長要慢得多。我認為人們期望到 20 多歲的複合增長率達到 20% 的高速增長，我認為這不再是真的了。我認為您現在看到的是一個具有巨大潛力的行業。但我確實相信你會看到這個行業的增長放緩。你會看到這個行業的巨大整合。而且我確實相信你在過去 20 個月裡看到的，有很多原因導致它從 COVID 中脫穎而出。大量資金湧入大麻產業。在過去的 20 個月裡，這種情況有所放緩。

And like most industries in the early stages, you do run into these issues. And I think what you're seeing right now is inventories coming down, both on the cannabis side of it, but also more importantly, on the hydroponics side of it. There was a tremendous amount of hydroponic equipment that was brought into this market to fuel the build-outs and the feverish build-out that you've seen, and that has flowed to a much more normalized base. And forecasting is going to become much easier for GrowGen as we build out our distribution centers.

和大多數處於早期階段的行業一樣，你確實會遇到這些問題。而且我認為你現在看到的是庫存下降，無論是在大麻方面，而且更重要的是，在它的水培方面。有大量的水培設備被引入這個市場，為你所看到的擴建和狂熱的擴建提供燃料，並且這些設備已經流向了一個更加規範化的基地。隨著我們建立配送中心，GrowGen 的預測將變得更加容易。

So we believe that you will see growth in this industry. But I think the hyper growth that people thought, you will not see in the future.

所以我們相信你會看到這個行業的增長。但我認為人們認為的高速增長，你將來不會看到。

. And then, I guess a follow-up on that. As you look at some of the new markets, where you've seen -- I guess, legalization and then subsequent licensing to cannabis. How would you characterize that initial build-out in those markets versus what you saw in some like the Michigan and Oklahoma's?

.然後，我猜這是一個後續行動。當你看一些新市場時，你已經看到了——我猜是大麻合法化，然後是隨後的大麻許可。與您在密歇根州和俄克拉荷馬州等市場看到的情況相比，您如何描述這些市場的初始建設？

You're seeing a much slower ramp back east in Virginia markets. It's taken an enormous amount of time to get regulations passed, but it's also taken an enormous amount of time to get properties built. And one of the issues that you're seeing, Brian, is with the slowdown in the Oklahoma markets and the Michigan markets and the California markets, the capital has dried up. And with the dry up of capital, you're seeing much less building and you're seeing -- you're not seeing the race to the start, what you've seen years ago. So you're seeing a much more controlled build-out environment. And I do believe that that's what you will see in the future.

你會看到弗吉尼亞市場向東的回升速度要慢得多。通過法規需要花費大量時間，但建造房產也需要花費大量時間。布賴恩，你看到的問題之一是俄克拉荷馬州市場、密歇根州市場和加利福尼亞州市場放緩，首都已經枯竭。隨著資本的枯竭，你看到的建築越來越少，而且你看到的是——你沒有看到多年前看到的比賽。所以你會看到一個更加可控的構建環境。我相信這就是您將來會看到的。

And we're seeing that in the stores that we've opened. We opened 5 new stores in 4 states last year, Virginia, New Jersey, Missouri and Mississippi. And we were seeing stores go profitable first month into builds, and we're not seeing that right now. Albeit, we are seeing ramps in all our stores that we've built, but not the ramps that we've seen back in '18, '19 and '20.

我們在我們開設的商店中看到了這一點。去年我們在弗吉尼亞州、新澤西州、密蘇里州和密西西比州這 4 個州開了 5 家新店。我們看到商店在建設的第一個月就開始盈利，但我們現在還沒有看到。儘管如此，我們在我們建造的所有商店中都看到了斜坡，但不是我們在 18 年、19 年和 20 年看到的斜坡。

And then just one more if I could slip it back, more specific to your business. So you closed a number of stores. As you look at the base now, is it -- would there be additional closures or is it basically cleaned out and poised to grow here? And then a follow-up to that. And the stores you closed, I assume that those were acquired stores, not stores that GrowGen opened organically, correct?

如果我可以把它放回去，再多一個，更具體地針對您的業務。所以你關閉了一些商店。當你現在看基地時，它是 - 會不會有額外的關閉，或者它是否基本上被清理乾淨並準備在這裡生長？然後是後續行動。你關閉的商店，我假設那些是收購的商店，而不是 GrowGen 有機開設的商店，對嗎？

That is correct, Brian. On the other side of that, we still do believe you will see a few more store closures from GrowGen this year, but not anywhere near the pace last year. We're targeting anywhere from 1 to 4 store closures this year. And just so you do know, most of our store closures come when leases are up and we're not renewing leases. So the costs have been pretty tame for store closings. And we have kept a good portion of business, but not as much as we would have liked from these store closures.

沒錯，布賴恩。另一方面，我們仍然相信你會看到今年 GrowGen 關閉了更多的商店，但與去年的步伐相去甚遠。今年我們的目標是關閉 1 到 4 家商店。眾所周知，我們的大部分商店關閉都是在租約到期且我們不續租時發生的。因此，關閉商店的成本相當低。我們保留了很大一部分業務，但沒有我們希望從這些商店關閉中得到的那麼多。

Your next question comes from the line of Chris Carey from Wells Fargo.

你的下一個問題來自 Wells Fargo 的 Chris Carey。

Why do you expect revenue to increase quarter-over-quarter? Are you seeing something -- can you expand on March? I think you highlighted that. Secondly, this acquisition did -- is that material?

為什麼您預計收入會環比增長？你看到了什麼——你能在三月擴大嗎？我想你強調了這一點。其次，這次收購確實——那是重要的嗎？

The acquisition that we've done in March was not material. They're very small acquisitions, but we are seeing a little pickup in business in March over fourth quarter of last year, and we are going into our seasonally strongest period, which is the second and third quarters. And what we're hearing from our commercial team, our store team and our customers is that business is starting to pick up, and we're starting to see it in our consumables side of it, and we are starting to see much more quoting on the commercial side of it back east and in new markets.

我們在三月份進行的收購併不重要。它們是非常小的收購，但我們看到 3 月份的業務比去年第四季度略有回升，我們將進入季節性最強的時期，即第二和第三季度。我們從我們的商業團隊、我們的商店團隊和我們的客戶那裡聽到的是，業務開始好轉，我們開始在我們的消耗品方面看到它，我們開始看到更多的報價在它的商業方面回到東部和新市場。

So this is what you're seeing, not necessarily what you're projecting? Please confirm.

所以這就是您所看到的，不一定是您所預測的？請確認。

It's what we are --

這就是我們——

(inaudible) But you're seeing this currently is the point.

（聽不清）但是你現在看到的是重點。

Yes, Chris, and I'll jump in as well here. One of the key reports that we use on a daily basis is our daily sales report. And we've seen revenue pick up across the country in Q1 on a comparative basis in our retail markets. And that's part of the optimism that we have around the Q1 numbers and an improvement in the first quarter sales in comparison to Q4.

是的，克里斯，我也會在這裡加入。我們每天使用的主要報告之一是我們的每日銷售報告。我們已經看到第一季度全國零售市場的收入在比較基礎上有所回升。這是我們對第一季度數據以及與第四季度相比第一季度銷售額有所改善的樂觀情緒的一部分。

Just on the daily sales comment that you just made, are you seeing daily sales stabilize and start to pick back up? Is that what you're kind of referring to with the daily sales on a comparative basis?

就您剛剛發表的每日銷售評論而言，您是否看到每日銷售穩定並開始回升？這就是你所說的比較基礎上的每日銷售額嗎？

Yes, exactly. We are seeing improvement in Q1 versus last quarter.

對，就是這樣。我們看到第一季度與上一季度相比有所改善。

And then just the final question is, if you could put it all together, why you think this is happening? Is it just because at some point, the market has to bottom and stabilize? You highlighted pricing seems to be normalizing. Inventory seems to be normalizing. And it's just like do you have any theories about why it's happening just in aggregate (inaudible).

然後最後一個問題是，如果你能把它們放在一起，為什麼你認為會發生這種情況？是否只是因為在某個時候，市場必須觸底企穩？您強調定價似乎正在正常化。庫存似乎正在正常化。就像您是否有關於為什麼它會整體發生的任何理論（聽不清）。

Chris, we're 20 months into a downturn into a market that we still do believe like many has tremendous potential. 20 months is a long downturn for any cycle. And we are starting to see a pickup in business in March and as we saw in the last couple of months. So we're starting to feel a little better about the industry. When you start taking a look and talking with our customers, and we have thousands of them, they're starting to see price stability in the California markets to increasing pricing. They're starting to see some of the -- some of the illegal growers have gone out of business. And we're hearing up to 15% of the market in California has closed.

克里斯，我們已經進入低迷市場 20 個月，我們仍然相信像許多市場一樣具有巨大的潛力。 20 個月是任何週期的長期低迷期。正如我們在過去幾個月所看到的那樣，我們在 3 月份開始看到業務回升。所以我們開始對這個行業感覺好一點了。當您開始查看並與我們的客戶交談時，我們有成千上萬的客戶，他們開始看到加州市場的價格穩定到價格上漲。他們開始看到一些 - 一些非法種植者已經倒閉。我們聽說加州多達 15% 的市場已經關閉。

So you're seeing a smaller base of growers out there, which brings down as you probably know, supply on the cannabis side of it. So we are starting to see that. We've also seen the same in Michigan. We've seen closures in Michigan. So with that, you're going to see strengthening from the individuals that are still in business. But one thing that we haven't seen as of yet, you're not seeing money come back into the markets. And we have been extremely diligent on lending money to customers ours as we continue to keep our balance sheet in tremendously good condition.

所以你看到那裡的種植者基數較小，正如你可能知道的那樣，這會減少大麻方面的供應。所以我們開始看到這一點。我們在密歇根也看到了同樣的情況。我們已經看到密歇根州關閉了。因此，您將看到仍在營業的個人的力量得到加強。但有一件事我們還沒有看到，你沒有看到資金回到市場。隨著我們繼續保持資產負債表的良好狀態，我們一直非常努力地向我們的客戶借錢。

But we do see right now as our side of the industry consolidates, we see tremendous acquisitions out there, and we do believe that you will see some in GrowGen this year. We don't think there'll be any material acquisitions this year. There'll be some smaller ones, filling white space around the country. But we will keep Wall Street new posted on those.

但我們現在確實看到，隨著我們這邊的行業整合，我們看到了巨大的收購，我們相信今年你會在 GrowGen 中看到一些。我們認為今年不會有任何重大收購。會有一些較小的，填補全國各地的空白。但我們將在華爾街發布最新消息。

Your next question comes from the line of Eric D. Lauriers from Craig-Hallum Capital Group.

你的下一個問題來自 Craig-Hallum Capital Group 的 Eric D. Lauriers。

Congrats on the strong balance sheet management here pretty impressive. My color -- my question is kind of following up on some of these trends that you're seeing. And if I'm understanding correctly, you're seeing sort of continued weakness in the more durable CapEx products in your business, but seeing overall, I guess, consumable stabilization or maybe even quarter-over-quarter growth in consumables in Q1.

祝賀這裡強大的資產負債表管理令人印象深刻。我的顏色——我的問題是跟進你所看到的一些趨勢。如果我理解正確的話，你會看到你的企業中更耐用的資本支出產品持續疲軟，但我想總體上看，消耗品在第一季度穩定，甚至可能出現季度環比增長。

My question is what -- in terms of same-store sales growth, your guidance assumes, I guess, mostly with respect to consumables. I mean, are you expecting to see sort of year-over-year growth kind of starting sometime midpoint in the year? I guess if you could just sort of flesh out what your guidance implies from a same-store sales perspective? And then I guess maybe any color between durables and consumables within that would be great.

我的問題是 - 就同店銷售增長而言，我猜你的指導假設主要與消耗品有關。我的意思是，您是否期望在今年的某個中點開始出現某種同比增長？我想你是否可以從同店銷售的角度充實你的指導意味著什麼？然後我想也許耐用品和消耗品之間的任何顏色都會很棒。

To start with Eric, we don't break down the future of both consumables and nonconsumables. Consumables is our everyday business. That's what we guide to. We also do guide to some nonconsumable build-out projects, which we saw very little of in 2022. So when you look at guidance right now for 2023, that embeds 3 different divisions of GrowGen, we do believe we will see growth in our online division this year versus last year. We also do believe you'll see growth in our commercial division year-over-year. And we do believe you'll see growth in our underlying stores starting in the second quarter of this year.

從埃里克開始，我們不會分解消耗品和非消耗品的未來。耗材是我們的日常業務。這就是我們的指導。我們還為一些非消耗性擴建項目提供指南，我們在 2022 年很少看到這些項目。因此，當您現在查看 2023 年的指南時，其中包含 GrowGen 的 3 個不同部門，我們相信我們會看到在線增長今年與去年的劃分。我們也確實相信您會看到我們的商業部門逐年增長。我們相信您會從今年第二季度開始看到我們基礎商店的增長。

We're still going against some decent comps out of January out of the first part of last year, which really slows down going into the second quarter of 2022. So we do believe you'll see a steady rise in decreasing same-store sales. And we still do hope that you will see a positive same-store sales number from GrowGen going into the latter part of this year. But at this point, it's just too early to forecast that.

從去年上半年開始，我們仍然與 1 月份的一些不錯的公司作對，到 2022 年第二季度，這種情況確實放緩了。所以我們相信你會看到同店銷售額的下降穩步上升.我們仍然希望您能在今年下半年看到 GrowGen 的同店銷售數字。但在這一點上，現在預測還為時過早。

And if you look at our forecast for 2023, we're forecasting increased sales going into the second and third quarter coming off guidance, what you're seeing at that $55 million to $57 million mark in the first quarter. So you will see continued increases both on an EBITDA basis and also on a sales basis going into the second and third quarters.

而且，如果您查看我們對 2023 年的預測，我們預測第二和第三季度的銷售額將超出預期，即您在第一季度看到的 5500 萬至 5700 萬美元大關。因此，您將看到在 EBITDA 基礎上以及在第二和第三季度的銷售額基礎上持續增長。

And that actually segues nicely into my second question here. So obviously, you guys have talked about guidance kind of assuming a quarter-over-quarter increase in revenues and EBITDA. Wondering if that does extend from sort of Q3 into Q4, sort of, in other words, if you're not expecting to see the sort of normal Q4 seasonality that you have in the past? And if not, because you just kind of expand on perhaps why you don't -- why do you not expect to see that seasonality this year?

這實際上很好地解釋了我在這裡的第二個問題。很明顯，你們已經討論了假設收入和 EBITDA 環比增長的指導。想知道這是否確實從第三季度延伸到第四季度，換句話說，如果您不希望看到過去的那種正常的第四季度季節性？如果沒有，因為你只是在某種程度上擴展了你為什麼不這樣做——你為什麼不期望今年看到這種季節性？

And then I guess just kind of a final one. Does your guidance assume any contribution from this M&A that you've said is potentially likely in this year?

然後我想這只是最後一個。您的指導意見是否假設您所說的今年可能會從這次併購中做出任何貢獻？

Yes, Eric, right now, none of our guidance -- I mean, our guidance does include any M&A we're doing this year. We also will have some -- we'll have a few store closures this year. So basically, we look at that as kind of 0 out sum. If we do any material acquisitions which we are not expecting right now, that is not filtered into guidance.

是的，埃里克，現在，我們的指導都沒有——我的意思是，我們的指導確實包括我們今年正在進行的任何併購。我們也會有一些 - 今年我們會關閉一些商店。所以基本上，我們將其視為總和為 0。如果我們進行任何我們現在不期望的重大收購，那不會被過濾到指導中。

When it comes to the fourth quarter of this year, it's just too early to really forecast on that. But the one thing we feel comfortable with that our fourth quarter same-store sales and sales number will be higher than what you're seeing in the fourth quarter of 2022. We are, again, right now, a little hard to see if we'll see -- we'll see quarter-over-quarter growth in the fourth quarter versus the second and the third.

談到今年第四季度，現在就做出真正的預測還為時過早。但我們感到滿意的一件事是，我們第四季度的同店銷售額和銷售額將高於您在 2022 年第四季度看到的水平。我們現在再次有點難以判斷我們是否將會看到——我們將看到第四季度與第二和第三季度相比的環比增長。

Your next question comes from the line of Aaron Grey from Alliance Global Partners.

您的下一個問題來自 Alliance Global Partners 的 Aaron Gray。

So first one for me, I just wanted to dive a little bit deeper into California. Thanks for some of the remarks that you've had, Darren. So we've seen a number of active cultivators kind of come down meaningfully as they opted not to renew over the past 6 months or so, down about 1,200 about or so. So I want to ask if you had any insight in terms of the outlook on that. It looks like there are a lot more renewals coming up in the next 6 months. So you talked about some stabilization of pricing in the state.

所以第一個對我來說，我只是想更深入地了解加利福尼亞。達倫，感謝你的一些評論。因此，我們看到一些活躍的種植者在過去 6 個月左右選擇不續約，因此出現了有意義的下降，下降了大約 1,200 人左右。所以我想問一下你是否對此有任何看法。看起來在接下來的 6 個月內會有更多的續訂。所以你談到了該州定價的一些穩定。

Do you think there could still be some more trimming of the number of active cultivation licenses you think that has stabilized as people are seeing some more stabilization within the pricing?

您是否認為隨著人們看到定價更加穩定，您認為已經穩定的活躍種植許可證數量可能還會有所減少？

Again, it's a very difficult question, Aaron. I think a lot of it has to do with financing and really the state of some of the balance sheets of some of these California growers. I think we all know that California is the epicenter of cannabis and always will be. And I think it's that delicate balance between the legal and illegal markets that you're seeing right now. But with company's taking a very hard look at their operations right now, their balance sheets and their income statements. Some of the larger companies that aren't making money in California have made that decision right now that they'd rather look a couple of years down the road opposed to sustaining right now, just difficult margins in a difficult sales environment in California.

Aaron，這又是一個非常困難的問題。我認為這在很大程度上與融資有關，而且實際上與這些加州種植者中的一些資產負債表的狀況有關。我想我們都知道加利福尼亞是大麻的中心，而且永遠都是。我認為這是你現在看到的合法和非法市場之間的微妙平衡。但隨著公司現在非常認真地審視他們的運營、資產負債表和損益表。一些在加利福尼亞沒有賺錢的大公司現在已經做出了這個決定，他們寧願展望未來幾年，而不是現在維持下去，只是在加利福尼亞困難的銷售環境中難以獲得利潤。

We are seeing some of our California stores outperforming right now. Our downtown L.A. store has been growing, our Santa Rosa store right now is starting to grow again also. We have seen -- when you look at California, much more trouble in the outdoor markets in California. So something that we're keeping a very close eye on going into the spring this year. And we'll make some decisions after we see some of our stores that are very, very second and third quarter oriented.

我們看到我們在加州的一些商店現在表現出色。我們在洛杉磯市中心的商店一直在增長，我們的聖羅莎商店現在也開始再次增長。我們已經看到——當你看加州時，加州的戶外市場有更多的麻煩。因此，今年春季我們將密切關註一些事情。在我們看到一些非常、非常面向第二和第三季度的商店後，我們將做出一些決定。

And then second question for me is just on private label. In case I missed it, could you give me a target you might have for this year in terms of private label? And then how that might impact you guys reaching the higher low end of the mid- to high 20s gross margin guidance?

然後對我來說第二個問題只是私人標籤。萬一我錯過了，你能給我一個你今年可能在自有品牌方面的目標嗎？那麼這可能會如何影響你們達到 20 多歲中高毛利率指導的較高低端？

As we said earlier, our private label penetration in our stores online was up from 6% to 12% of sales this year. And we believe that will continue into 2023. One of the interesting parts, we launched Drip Hydro in summer of 2022. So you'll have a full year of growth on Drip Hydro, which is, we believe, one of the fastest growing, if not the fastest-growing nutrient line in the country right now. So we have extremely high hopes for that. We're also doing line extensions on Drip and Power Si. So you see some new products coming out of these brands that we're very excited about. And the same thing with Char Coir.

正如我們之前所說，今年我們在線商店的自有品牌滲透率從銷售額的 6% 上升到 12%。我們相信這將持續到 2023 年。其中一個有趣的部分是，我們在 2022 年夏天推出了 Drip Hydro。所以你將在 Drip Hydro 上獲得一整年的增長，我們相信，這是增長最快的一年，如果不是目前該國增長最快的營養系列。所以我們對此寄予厚望。我們還在 Drip 和 Power Si 上進行產品線擴展。所以你看到這些品牌推出了一些新產品，我們對此感到非常興奮。 Char Coir 也是如此。

The biggest issue we had with Char Coir a couple of years ago was really pricing coming in from India on freight. And we're seeing freight pricing come down probably 70% in the last year. So Char Coir which we believe is the premium brand in the market right now on the cocoa side is becoming much more competitive on pricing, and we're starting to see a tremendous ramp in our Char Coir brand right now. And we are coming out with new products continually right now. And we just brought in the extremely talented individual on the R&D side of it. That's going to help our private label penetration in '23 in the future.

幾年前，我們與 Char Coir 遇到的最大問題實際上是來自印度的運費定價。我們看到運費價格在去年可能下降了 70%。因此，我們認為目前在可可方面市場上的優質品牌 Char Coir 在定價方面變得更具競爭力，我們現在開始看到我們的 Char Coir 品牌出現了巨大的增長。我們現在不斷推出新產品。我們剛剛在研發方面引進了非常有才華的人。這將有助於我們的自有品牌在未來 23 年的滲透。

So again, we do expect a nice bump the number we're not sure right now, but we will keep you posted on a quarter-over-quarter basis.

因此，我們確實希望我們現在不確定的數字會有一個很好的增長，但我們會按季度向您通報。

Your next question comes from the line of Scott Fortune from ROTH MKM.

您的下一個問題來自 ROTH MKM 的 Scott Fortune。

Appreciate all the color on the pricing kind of overall for the industry. But can you focus a little bit more on your ability to continue whether it being the price leader in your markets or continuing to kind of give us a little color on the pricing of the input cost that's going on? And then what's the kind of (inaudible) landscape now? I'm sure there's a lot of pressure from the competitors on your side and potential pricing pressure there. Just kind of sense for the pricing within your own stores and that ability right now.

欣賞行業整體定價類型的所有顏色。但是你能不能多關註一下你繼續成為市場價格領導者的能力，還是繼續給我們一些關於正在發生的投入成本定價的顏色？那麼現在的（聽不清）景觀是什麼樣的？我敢肯定，來自競爭對手的壓力很大，而且潛在的定價壓力也很大。只是對你自己商店內的定價和現在的能力有點感覺。

I think, Scott, what you're seeing is similar to the -- our underlying business, which is the cannabis space. There was an abundance of oversupply on the product side. And with this tremendous slowdown in our industry and when you look at GrowGeneration, our same-store sales were down 51% last year. And I think it was quite a feat when same-store sales were down 51% and you cut inventory $28 million. So we did a tremendous job moving through inventory SKU rationalization. And I think you're seeing that around the country right now.

我認為，斯科特，你所看到的與我們的基礎業務相似，即大麻空間。產品方面存在大量供過於求的情況。隨著我們行業的這種巨大放緩，當你看看 GrowGeneration 時，我們去年的同店銷售額下降了 51%。當同店銷售額下降 51% 並且庫存減少 2800 萬美元時，我認為這是一個了不起的壯舉。因此，我們在庫存 SKU 合理化方面做了大量工作。我想你現在在全國各地都看到了這種情況。

But on the other side, we're seeing many store closures out there as you're seeing on the cannabis side of it. So when industries usually hit bottom, you see consolidation, and we're starting to see that right now. And again, pricing at GrowGen has been pretty normalized this year if you were to take out a tremendous amount of discounting we did on SKU rationalization and certain SKUs that we needed to bring down. And it was really on the nonconsumable side of it that GrowGen along with many companies brought levels up when shipping was so difficult coming out of China back during COVID. And many products came in 3 to 6 months later and kind of came in at that downturn of the market.

但另一方面，我們看到許多商店關門，就像你在大麻方面看到的那樣。因此，當行業通常觸底時，你會看到整合，而我們現在就開始看到了。再一次，如果你要去掉我們在 SKU 合理化和我們需要降低的某些 SKU 上所做的大量折扣，今年 GrowGen 的定價已經相當正常化。在 COVID 期間從中國運回中國如此困難的情況下，GrowGen 和許多公司確實在非消費品方面提高了水平。許多產品是在 3 到 6 個月後推出的，而且是在市場低迷時期推出的。

I think you heard similar comments from Bill Toler over the Hydrofarm the other day, and I think you also heard it from Hawthorne. So as we all work through inventory, we believe pricing will normalize. But when you look at GrowGen, our private label products and some of our higher-margin products have been doing a tremendous job really masking the tremendous aggregation and margins that you're seeing on our sale products to bring inventory down the way we did.

我想你前幾天從 Bill Toler 那裡聽到過關於 Hydrofarm 的類似評論，我想你也從 Hawthorne 那裡聽到過類似的評論。因此，當我們都在處理庫存時，我們相信定價將會正常化。但是，當您查看 GrowGen 時，我們的自有品牌產品和我們的一些利潤率較高的產品一直在做著巨大的工作，真正掩蓋了您在我們的銷售產品上看到的巨大的聚合和利潤率，從而使庫存降低了我們的水平。

And then, Darren, you've been through a few cycles here. I mean, I understand the CapEx equipment side, right? That's been obviously down and there's very limited capital or production capacity being added here. Outside of the new states, obviously, (inaudible) will continue. But help us understand, at some point, there is going to be a refresh cycle, right, for a lot of the spend that's going on. A lot of the operators are looking to become more efficient operating on their production side of things.

然後，達倫，你在這裡經歷了幾個週期。我的意思是，我了解資本支出設備方面，對嗎？這明顯下降了，這裡增加的資本或生產能力非常有限。顯然，在新州之外，（聽不清）將繼續。但是幫助我們理解，在某些時候，對於正在進行的大量支出，將會有一個更新周期，對吧。許多運營商都希望在生產方面提高運營效率。

But how do you look at kind of the CapEx? And then what happens with -- is there an aftermarket for a lot of these equipments like light insights that you guys can see some growth from? Just kind of step us through that, the refresh cycle, probably not factoring much in there, but the potential there?

但你如何看待資本支出？然後會發生什麼 - 是否有許多這些設備的售後市場，比如你們可以從中看到一些增長的光洞察力？只是讓我們逐步了解更新周期，可能沒有考慮太多，但有潛力嗎？

We believe you will see a refresh cycle coming up maybe not this year, but maybe the following year. I mean, you still are seeing facilities that are using double-ended bulks and fixtures as opposed to LEDs. And again, it's all a matter of capital, Scott. Lawsuit has shut down. Lawsuit has shut down the cannabis space. And I do believe you will see a resurgence. You're starting to even see right now, certain comments that they may be opening up the Toronto Exchange up in Canada to get some more liquidity and capital into these companies. So there's a lot of ifs.

我們相信您會看到更新周期可能不會在今年出現，但可能會在明年出現。我的意思是，您仍然會看到使用雙端散裝和固定裝置而不是 LED 的設施。再一次，這完全是資本問題，斯科特。訴訟已經結束。訴訟關閉了大麻空間。我相信你會看到復蘇。你現在甚至開始看到，某些評論說他們可能會在加拿大開放多倫多交易所，以便為這些公司提供更多的流動性和資本。所以有很多如果。

The one thing that we do know when we look into our 2022 sales, the biggest degradation in sales that we saw was on the capital equipment side, and we've been pretty vocal about that. We feel tremendously comfortable with the other side of our business, and that's the higher margin side of the business. So where we stand right now with our private label products coming out and with Drip Hydro, Char Coir and some of the other brands that we're launching into the markets, we believe that our margin profile will be very advantageous going forward into the future.

當我們研究 2022 年的銷售額時，我們確實知道的一件事是，我們看到的最大的銷售額下降是在資本設備方面，我們對此直言不諱。我們對業務的另一面感到非常滿意，那是業務利潤率較高的一面。因此，隨著我們的自有品牌產品問世以及 Drip Hydro、Char Coir 和我們正在投放市場的其他一些品牌，我們現在所處的位置，我們相信未來我們的利潤率狀況將非常有利.

And we have stayed away from selling used equipment from GrowGen. We've stayed away from the junkyard and it's just not in our business model right now, it's much more on the lower cost illegal side of it. We're not seeing it going into these legal gross. So it's something that it's a wonderful like anything else, marketplace, but it's not something that we're going to get involved with right now.

而且我們已經遠離銷售 GrowGen 的二手設備。我們已經遠離垃圾場，它現在不在我們的商業模式中，它更多地是在它的低成本非法方面。我們沒有看到它進入這些合法的總收入。所以它和其他任何東西一樣美妙，市場，但它不是我們現在要參與的東西。

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

女士們，先生們，今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。