Hello, welcome to GrowGeneration's second quarter 2023 earnings conference call. My name is Chris. 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 Crumbliss with ICR. Clay, please go ahead. Good afternoon, and welcome everyone to the GrowGeneration second quarter 2023 earnings results conference call. Today's call is being recorded. With us today are Darren Lampert, Co-founder and Chief Executive Officer, and Greg Sanders, Chief Financial Officer of GrowGeneration Corp. You should have access to the company's second quarter earnings 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. 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 filing, 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. Following our prepared remarks, we will take questions from research analysts. We ask that you please limit yourself to 1 question and 1 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, Darren Lampert. Darren? Thanks, Clay, and good afternoon, everyone. Thank you for joining us today to discuss our second 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 GrowGen. I'm grateful to our entire team for stepping up to every challenge and for being steadfast in executing our company's strategy. I am pleased with GrowGen's second quarter results and happy to discuss the great progress we have made against some of our key initiatives to drive future growth and profitability, including the official launch of our new ERP system on July 1. In the second quarter of 2023, we generated net revenue of $63.9 million, which represents a 12% sequential improvement over the first quarter of 2023, consistent with the expectations we communicated earlier this year. Recall that historically, the second quarter is the strongest quarter of the year due to seasonality of the planting and growing cycle. I'm especially pleased that we generated positive adjusted EBITDA of $856,000 in the quarter, which represents a significant improvement versus the prior quarter's adjusted EBITDA loss of $1.8 million. As we've detailed on previous calls, we made significant progress rightsizing our cost structure over the last year, and we're encouraged that those efforts are now bearing tangible results in our P&L. We ended the 2Q with $71 million of cash, cash equivalents, and marketable securities, no debt, and $77 million of inventory on our balance sheet. Year to date, we've generated more than $7 million of operating cash flow. All this to say, despite the ongoing challenges in our industry, GrowGen remains in a strong financial position to continue investing for growth while putting profitability at the forefront. I'll reiterate that we are happy with our 2Q results. That represents the progress we've been striving to achieve. However, the broader cannabis industry continues to face headwinds, and GrowGen is not immune to these issues. With capital availability and investment at an all-time low and interest rates reaching their highest point since 2007, growers simply aren't building out capacity, which means demand for durable products has slowed beyond what we expected. In addition, the federal legislative agenda has not moved in our favor and, in fact, seems to be getting less favorable. On a positive note, we are seeing continued market acceptance of our private label brand strategy and growth in our consumable products, including our recently launched nutrients and additives line, Drip Hydro, and our coco line of products, Char Coir. What remains true is that we believe we've made significant progress transforming our business to be more nimble, efficient, and better positioned for profitable growth in 2023 and beyond. We're certainly not backing away from the priorities we outlined last quarter. We're singularly focused on managing our business despite what's happening in the cannabis industry that may continue to weigh on the balance of the year. While we maintain our cautious optimism about the next 12 months, it's fair to say we are now more on the cautious side about the back half of the year than we were last time we spoke. That said, investing for growth and searching out opportunities is what we're coming to work for every day. As we discussed last quarter, what that means in practical terms is we will continue building and growing our private label brand portfolio and expanding our distribution channels. We remain on the acquisition front with multiple acquisitions in the 2Q, and most importantly, we are 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 are very satisfied with the results of our private label products. Private label accounted for $7.6 million of retail and e-commerce sales in the second quarter of 2023, which is around 15% of our overall retail and e-commerce sales, up from 10.7% in the second quarter of 2022. In addition, GrowGen is currently working on an expansion initiative that will enhance the shopping experience for all garden enthusiasts. In 2024, we expect to add dedicated gardening sections in select retail stores to attract the home gardening consumer. This development will feature traditional gardening products alongside our private label brands. Second, GrowGen is 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 valuations in the hydroponics and garden center space. Our track record of execution with prudent balance sheet management and controlling expenses allows us the flexibility. So far this year, we acquired a store in Traverse, Michigan, in January. We entered our 17th state with the acquisition of a store in Bozeman, Montana, in early April. We acquired a retail store in Jackson, Michigan, in April, and entered our 18th state with the acquisition of two retail locations in Alaska and Maine. Third, we are prioritizing profitable growth, which we believe we will attain through our continued efforts to expand revenue and execute our margin expansion strategies. We are constantly analyzing the business for additional optimization and cost-cutting opportunities, and expect to continue benefit to flow through our margins through the remainder of 2023 and 2024. As part of these efforts, we are constantly assessing the performance of our stores with respect to redundancies in the footprint. Separately and importantly, I'm pleased to announce that we have fully rolled out and implemented our new ERP system with Oracle NetSuite and point of sale and warehouse management systems with Manhattan Associates during the second quarter. This represents a tremendous milestone for GrowGen and our supply chain management capabilities, and will directly benefit our company in terms of better freight and logistic rates, optimized order timing and filling, and ultimately improved customer service and relationships. Like many other ERP rollouts, ours has not been without its challenges and will take time before benefits fully materialize. We are confident in our internal team and their ability to manage through the transition. Encouragingly, most of the issues we've encountered have been relatively minor, and we are pleased with the progress that has been made to date. We are continuing to work through solutions to some of the more disruptive situations that we expect to have some impact on our third quarter results. This early in the quarter, we are not prepared to quantify those potential impacts, if any, on today's call. Despite that, we are happy where we are in the process, and we look forward to updating you on our progress during our third quarter call in November. Turning to guidance for full year 2023, we are updating our guidance to reflect our view of the broader industry today, given our expectation of softer than expected demand in the third and fourth quarters of this year. We now expect net revenue in the range of $220 million-$225 million, and adjusted EBITDA loss in the range of -$4 million to -$6 million. 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 second quarter 2023 financial results, and then I will discuss our updated full year 2023 guidance. For the second quarter, GrowGeneration generated revenue of $63.9 million versus $71 million in the second quarter of 2022, representing a decline of approximately 10.1%. Our same-store sales for the second quarter 2023 were $44.7 million, compared to prior year sales of $52.6 million, representing a 15.1% decline against the comparable year-ago quarter. The decline in same-store sales in the second quarter represents a significant sequential improvement over prior quarters. Specifically, we observed a 21.5% sequential improvement in the second quarter compared to the first quarter, year-over-year same-store sales percentage. Our e-commerce revenue showed a nine basis point increase year-over-year and remained normalized at $3.7 million. Our distribution and other revenue was $13.3 million for the quarter, compared to $12 million in the year-ago period, representing an improvement of 10%. Gross profit margin was 26.8% for the second quarter of 2023, down approximately 185 basis points from the first quarter of 2023. The decrease in gross margin in the second quarter of 2023 was largely attributed to a 133 basis point impact from shrink and obsolescence expense, primarily driven from the restructuring of our distribution facilities, as well as a 32 basis point impact from margin pressure on lighting, primarily driven from vendor price reductions. The restructuring was a one-time event and related to the closure of our Ogden distribution facility and set up costs associated to pre-opening of our Columbus, Ohio, distribution facility. Store operating costs and other operational expenses declined from $13.8 million in the second quarter of 2022 to $12.3 million in the second quarter of 2023, representing a 10.9% reduction. The savings year-over-year were primarily attributed to rationalization of store count as well as payroll reductions. We believe that the expense reductions to date are sustainable, and we expect to execute upon further reductions in the back half of 2023. Selling, general, and administrative, or SG&A costs, were $7.5 million in the second quarter, of which $947,000 was derived from stock-based compensation. This compares to $6.8 million in the first quarter, with $567,000 of stock-based compensation. This represents a 10% increase quarter-over-quarter to SG&A, primarily driven from share-based compensation. Compared to the second quarter last year, SG&A expense decreased $2.3 million in 2023, with overall savings driven from payroll reductions and increased cost control over a broad range of categories. Depreciation and amortization of intangibles was $3.8 million in the second quarter of 2023, compared to $4.8 million in the year ago period. In the second quarter of 2023, the company did not recognize an income tax benefit or expense. GrowGeneration is using a 0% 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 second quarter was $5.7 million, or negative $0.09 per share, compared to a net loss of $136.4 million, or negative $2.24 per share in the year ago period. Compared to the first quarter of 2023, the company improved net income from a loss of $6.1 million to a net loss of $5.7 million. Adjusted EBITDA, which excludes interest, taxes, depreciation, amortization, restructuring charges, and share-based compensation, was a $856,000 profit for the second quarter of 2023, compared to a loss of $3 million in the second quarter of 2022. Compared to the first quarter of 2023, the company improved adjusted EBITDA from a loss of $1.8 million to $856,000 profit, primarily resulting from the increased revenue as well as sustainable reductions in expense. In the second quarter, the company included $1.2 million of expenses related to store consolidations and restructuring costs of establishing a distribution center in Columbus, Ohio. Related to the balance sheet, as of June 30, 2023, the company had total cash, cash equivalents, and marketable securities of $70.6 million, which was a decrease of $1.3 million to the first quarter of 2023. The company leveraged $3.2 million of cash in the second quarter for investment of acquisitions. From a year-over-year perspective, cash and cash equivalents increased by $5 million, mainly due to inventory rationalization measures and other strategic initiatives. Within working capital, the company executed on quarter-over-quarter improvements within accounts receivable, prepaids, and accounts payable from a cash flow perspective. As such, the company generated positive cash from operations of $3.9 million in the quarter. In the second quarter, the company increased inventory by approximately $1.1 million compared to the first quarter. The increase in inventory position was largely due to stocking orders of a more seasonally active second quarter. Further, with the rollout of the new ERP at July 1, 2023, the company increased inventory to hedge potential risk on a short-term basis with regards to change management of new technology. As we contemplate the back half of 2023, the company will aim to reduce its overall inventory position while ensuring that we continue to meet the procurement needs of our customers. Now, moving to our full year 2023 outlook. As Darren mentioned, we are changing our previously communicated guidance with full year 2023 revenue to be between $220 million and $225 million, and full year adjusted EBITDA loss to be in the range of -$4 million to -$6 million. While we are pleased with our second quarter results, we have not yet seen the industry improvements in the third quarter to date that we initially expected. Within our second quarter results, we observed continued stabilization in our expense structure and believe that we achieved sufficient alignment on cost of sales. As we contemplate the back half of 2023 and a lower sales demand, we expect to execute on further opportunities for cost savings. As Darren mentioned, we expect continued industry headwinds in the latter half of 2023 and are cautiously forecasting revenue and adjusted EBITDA... slow sequentially through the balance of the year compared to our second quarter results. That said, we'll remain confident in our ability to navigate the industry, and we'll continue to stay focused on managing the balance sheet and controlling costs in our efforts to return the business to profitability while driving long-term shareholder value. Positioning the business for long-term profitability continues to be a top priority in 2023. Our approach to capital allocation remains focused on a disciplined approach to return on invested capital. We completed three M&A transactions at desirable valuation in the second quarter and will continue to execute upon the right opportunities to sustainably grow our business. We are investing in transformational technology that will help propel our company through future business cycles. Lastly, we continue to invest capital in our development of private label products and initiatives that expand our value proposition to a broader base of customers. To close, I'll reiterate that our daily mandate is executing our business strategy with a sharp focus on long-term profitability and shareholder value. With that, I will turn the call back over to Darren for closing remarks. Thank you, Greg. Before we open the line for your questions, I want to reiterate that GrowGen is on solid financial footing, with a strong balance sheet, healthy liquidity, and a solid cash position. We continue to manage our business prudently through the current industry landscape, with an emphasis on sustainable growth, margin expansion, and profitability. We are encouraged by our continued progress and remain laser-focused on controlling what we can control and ultimately emerge as a stronger, nimbler, and more profitable company. Thank you for your time today, and thank you for your interest in GrowGeneration. 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 one on your touch-tone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. Should you wish to decline from the polling process, please press star followed by two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Aaron Grey, Alliance Global Partners. Aaron, please go ahead. Hi, good evening. Thank you very much for the questions. First one for me, I want to talk about the guidance as it relates to maybe the embedded gross margin expectations. You talked about, for this quarter, 130 basis points from the shrinkage restructuring. Imagine that's more the one-time event. Just how best to think about gross margins in the back half, you get that 130 back, that lighting reduction of 32 basis points, is that going to remain within that? Just any of the gross margin expectations we should have for the back half embedded in the guidance will be very helpful. Thank you. Greg, do you want to take that? Yeah. Hey, hey, Aaron. You know, as, as far as the back half of 2023, we're anticipating gross margin to normalize, you know, in the mid to upper twenties. What does that mean for our business generally? We're looking at a, a gross margin profile in that, you know, 27-28% range, and we're continuing to focus on private label penetration as a long-term strategy to continue to expand our, our gross profit margin on a long-term perspective. Yeah, Aaron, with that, what we are seeing and we saw in the second quarter, is tremendous discounting coming out of some of the vendors in the industry to move inventory. With that, we've taken some, you know, one-time lumps on certain products that we're holding in inventory. We do believe that will alleviate, you know, through the back half of the year. On a normalized basis, we still do believe that you will see margins normalizing in the high 20s. You know, we do believe, when this all shakes out, that you will see margins at GrowGen in the low 30s, but certainly not in the back half of this year. Thanks. I really appreciate that detail. Then, you know, going more towards the top line, lowering the back half expectations, you know, despite Q2, it sounds like, came roughly in line with what you're expecting and certainly what the street was. Looking towards the back half and what you're seeing, are you seeing just, more of a shakeout maybe within the cultivators than you might have been expecting less manners or just same clients, but then they're buying less? Maybe some more color in terms of what's driving that and what you're seeing out there, and then whether or not you think that might be more protracted, being more of a shakeout, or if it's just the current customer base buying less and maybe it rebounds more in 2024. More of what you're seeing in terms of that outlook would be appreciated. Thank you. Yeah, right now, Aaron, we're just not, we're not, we're not seeing a pickup in CapEx, as most of the cultivators are managing their balance sheets and waiting out the industry downturn. I think you've heard it from most of the MSOs or single-state operators. They're not building unless they have to right now. I think the name of the game right now is just wait and see. What you're seeing is a very slow adoption in new states coming, coming aboard. In all states, a lot of the cultivators are happy with their positions right now, and they're not taking shots at adding to the positions. They're adding to dispensaries, but certainly not to cultivation right now. I think what you're going to need right now in the industry is whether it's the SAFE Act, whether, whether it's legalization, whether, whether it's something to get a shot in the arm. What you're also hearing from the cultivators around the country and, you know, the large operators, is there's just no capital coming in. I think you see that also, you know, from your vantage point. I do believe that, you know, the industry needs capital right now. There was a, there was a tremendous amount of facilities built in 2020 and 2021, and you start just seeing that people are, you know, just optimizing their facilities right now. You know, most of the, sea changes you've seen in lighting and dehu, dehumidification, came in 2020 and 2021. There will be a refresh cycle coming in the next couple of years with, you know, with the products that have been bought. We still do believe that it's going to take time. Our, you know, our business was up 12% quarter-over-quarter, which we couldn't be happier with. Right now, we're just not seeing the enthusiasm from our customers right now on the build side of it. Like anything else, they're still managing their cultivation facilities and buying products from us every day. Really appreciate that color, and I'll drop back in the queue. Thank you. Your next question comes from Brian Nagel, Oppenheimer. Brian, please go ahead. Hi, good afternoon. Good afternoon, Brian. Just, you know, I guess to follow up on that, the question, Darren, I know we've talked a lot about the, you know, the impacts of, you know, your partners, not, you know, not as aggressively or not building out infrastructure. Are you saying as you look across the chain, you know, and I guess, as you see, some of these states are probably more legal or more rural, or have legalized more recently? Are you seeing a different trend there, or is it really across the board? I think what we're seeing is a much slower trend in new, new legalized states. You know, this late in, this late in the game, there are plenty of individuals that are still buying from the illegal markets. That's what they've done their whole lives. It's just taking time, you know, to convert them over to the legal markets. You're also seeing a lack of capital. Wall Street has not raised money for, you know, for any of the MSOs recently. What you're starting to do is see, you know, seeing sale-leasebacks here and there, but you're hearing it from the whole group. Everyone's optimizing their balance sheets and, and waiting, and waiting it out. You know, that's not necessarily bad for GrowGen. Again, we had a profitable quarter. We were up 12% quarter-over-quarter. We've made tremendous strides in our private label brands. We still do believe that you will see from GrowGen next year, is us getting into the gardening space and in garden stores around the country. My second question, you know, you mentioned, you talked more about the, the acquisitions here. You know, just given the ongoing, is, is the pricing for these, these, these targets becoming more avid? Your side of it right now, you know, we certainly are taking a cautious approach. We're happy with, with our portfolio around the country right now. There still are some states that GrowGen needs to be in. We'd like to be in Maryland, we'd like to be in Ohio right now, we'd like to be in New York. You will see stores in those states, but we don't believe right now that we need to go much deeper in the states that we're in. I appreciate all the color. Thanks, Darren. You're welcome. Thank you. Your next question comes from Andrew Carter, Stifel. Andrew, please go ahead. Hey, thanks. good, good evening. What I wanted to ask you, kind of looking in the back half guide, you're, you're applying kind of actually flat with the first half of the year. store base was 64 at the end of the quarter, if I caught that. Are you closing more stores? Are the stores that you built, that are greenfield in line with your projection? Yeah, what's the store closure target for the second half? No, I'll start with the story this year. As we said, I think in our script today and press release, we will be closing some more stores. With distribution, we are a P system. There are certain stores that are close to other locations. And with the industry, believe there is room for optimization, both on, you know, right around GrowGen and costs, and we will be working on cost structures over the next 6 months. Second question I ask about, how you mentioned discounting, you mentioned lighting in particular. Number one, how much. Mostly the lighting. There was lighting inventory that we had from some major vendors of ours that, that, that, discontinued certain models and brought pricing down, you know, up to 80% on certain of those models. GrowGen was holding inventory, and it also did bring down pricing for the rest of the industry during those sales. Most of that inventory has been moved through, so we don't see it continuing. Again, we, you know, we took our lumps in the second quarter because of it. You know, you're seeing sporadic discounting, you're seeing something else, as you've heard, you know, our private label brands are performing well, 15% of sales within, within our stores right now, and that's, that's not within our distribution channels. We're selling into 500 stores around the country. We do believe as we continue to bring out best-of-breed products, that, you know, margins will go higher and sales will go higher. We're working through a tremendously difficult time in this industry, and our team has done a tremendous job navigating the waters. Thanks. I'll pass it on. Thank you. Thank you. Your next question comes from Eric Des Lauriers, Craig-Hallum Capital Group. My question is, you know, how consumable sales are, are, are sort of trending so far this year and sort of what's embedded in the guide here? You know, you're, you're commenting on private label sales, which are, you know, mostly in the consumable area that, you know, you're considering. Greg, do you want to try to unpack that for us? Yeah. Yeah. Hey, Eric, you know, for the, for the back half of the year, we're looking at total revenue of, of somewhere in the range of $100 million-$105 million. You know, we traditionally see more strength in the third quarter, of course, than the fourth. In terms of what does that mean for CapEx or. ... you know, durables kind of bottoming out? I mean, is it reasonable to assume that, you know, consumable sales are kind of continuing to grow nicely, and you just have this, you know, that's just being, you know, kind of more than offset by, by durables here? Part of our business. When you look at the durable business, you know, sometimes it's a one-time sale of a big build-out at low margins. When you look at GrowGen, you know, we will continue to build our consumable brands, and we do believe our consumable brands have access into other parts of the industry, into the gardening space. That's really what excites us today. We believe right now that that 70/30, 75/25 mix will stay. You may have certain quarters of, of, of pockets of strength on the build side, but most of it, you know, most of it does go away. Forecasts were to go to $100 billion by 2030 on the legal side of it, and, you know, right now, I think, you know, you're still under $30 billion. The industry has slowed. I, I would tell you that dependent upon the growth of the industry from the cultivator side, from the cultivation- the other part of the business, the consumable part of the business, does pay the bills. During the heyday, was probably 60/40, and right now it's probably running 75/25, if you took a hard look at it. We do believe there'll be, you know, there'll be build, there'll be refresh cycles coming online, so you will see pockets of strength in the future. Okay, great. That's very helpful. You know, it sounds like this, you know, 70/30 slash 75/25 is kind of sustainable for the status quo, which is good to hear. My last question is just on how to think about OpEx in the second half of the year. You know, obviously, there was some commentary on continued rationalized expenses and more store closings. I just wanted to see if perhaps there will be any impact from the ERP implementation. I may have missed a comment there, just wondering if you could kind of flesh out the OpEx implication for the second half of the year. Thanks. Yeah, Eric, I, I think what you saw from us in, in the second quarter is we took down total expense, $600,000, compared to the first quarter. We did see some improvements in the second quarter itself. We believe that we'll continue to see expense improvements both in SG&A and operating expense in the, in the back half of the year. You know, we're continuing to execute on store consolidations to where we'll see improvements directly in operating expense. We have some, some improvements in SG&A that we expect as well in Q3 and Q4. You'll see continued improvement from us from a cost perspective as we get through the remainder of the year. That's important to us as we look at profitability against a lower base or, or aiming for that metric against a lower base. Thank you for taking my questions. Yep. Thank you. Your next question comes from Scott Fortune, Roth MKM. Scott, please go ahead. Yeah, good afternoon, and thanks for the questions. Just want to follow up on, I guess, a couple of your bigger markets, California, Michigan. Obviously, you've, you've seen weakness across the board, or expecting weakness across the board in the second half. Just speak to those states more, where we have higher exposure. What are you kind of seeing and kind of turnaround potentially in California or kind of we lumping all this in together here? Yeah. I think when you look at California right now, Scott, we're seeing, we're seeing more strength in the Northern California than we are in Southern California right now, even though our store is growing in downtown L.A. When you go out to the, you know, out to the coast and out to Temecula and that area, Anza and Lake Elsinore, we're seeing tremendous weakness out there. I guess it, it seems to be that it's scattered, and I think it's scattered more with the outdoor growers. You know, our Santa Rosa store is performing well. We are seeing some strength in California, and we are seeing some weakness in California. You know, we are on... You know, we do believe that we'll be closing probably another 2-3 stores in California, you know, in the third and fourth quarters. We're also seeing weakness in the San Diego area. You know, I think it's case by case, just dependent upon the, you know, where the customers are and where they feel comfortable growing right now. Some of the, you know, some of the old, very strong areas in California have become very weak, and it's mostly outdoor growing out there. Michigan right now for us is pretty steady. We're not seeing a lift in Michigan, but we're not seeing further degradation in business in Michigan right now. Back east, again, back east still remains, you know, it rema-- it, it remains fluid for us. You know, business right now, you saw same store sales were down 15% in the second quarter, and that was versus 37 in the first quarter and 50 something a year earlier. You're seeing certainly that, you know, we're, we're, we're getting to that break even on same store sales point. You know, so we've, we've definitely have seen an uptick, but not like we would like to. You know, we were certainly, you know, expecting much more pickup going into the third and fourth quarters. You know, one of the reasons we're bringing numbers down today is, you know, we speak to cultivators every day. Our guys are on the street. We have, you know, over 600 employees out there, and they're just not seeing, you know, they're, they're not seeing the work coming in on, on the build side right now. Again, on the other side of it, people are buying soils every day, people are buying nutrients to feed the plants every day. You know, we still have, you know, we still have, you know, 75,000 customers a month coming into GrowGen. Got it. I appreciate the color there. Then just real quick, you know, obviously, one of your peers or, or supplier, however you call them, as mentioned, and mentioned on the quarterly- ... earnings, you know, maybe it's, it's time for the hydroponic market to kind of sort of start getting more combinations together strategically. I know you can't really talk about it specifically, but how are you looking at the competitive or kind of the partnerships opportunity in the hydroponic market, kind of going forward here overall? You know, the one thing I could tell you is, you know, we built this business from, you know, from zero revenues in 2014, $30 million of revenue in 2018. Our balance sheet remains the strongest in the industry, which gives us tremendous flexibility, really to do, you know, you know, basically to build out the business model that we set forth. We're tremendously excited about bringing our products into the home and garden space. As I said earlier, we were at our first, our first garden show, and had tremendous interest from, from the independent garden arena. We're excited. We're bringing best-of-breed products to market. Does GrowGen need to consolidate? The answer is definitely not. Like always, Scott, as I say, whatever's in the best, you know, whatever's best for our shareholders, we will always entertain. We've built quite a business. We just built out our ERP system that's taken us 2 years and a tremendous amount of money. We've built out distribution. We have distribution of leading products that can go, you know, anywhere from cannabis to gardening. What this world lacks right now is really an independent gardening, you know, chain that has the knowledge of GrowGen. Got it. No, I appreciate the call though. Thanks, Darren. Thank you. Ladies and gentlemen, as a reminder, should you have a question, please press star one on your touchtone phone. Your next question comes from Mark Smith, Lake Street Capital Markets. Mark, please go ahead. Hi, guys. My question is really just, first off, around the, the comfort with the current inventory. You know, you talked about some, some tough, you know, weakness with lighting. Is there anything out there that you've got in inventory that you're a little nervous about, or how do you guys feel about it today? Yeah, Mark, I- Yeah, I mean... Go ahead, Greg, I'm sorry. Oh, no, you're good. Yeah, Mark, hey, I, I think when you look at our inventory, we, we ramped up inventory slightly in the quarter, largely due to, you know, some risk associated with the ERP launch. I think the, the ERP launch from an all, you know, practical standpoint for us, went, went pretty well at the beginning of July here. So we're working on bringing inventory back down a bit in the second half, now that we're comfortable with, with kind of where we're at on, on that initiative. You know, in, in terms of our inventory itself, we look at it from an obsolescence, lower of cost or market, overstock position, you know, frequently, every single quarter at a minimum. We feel good about our reserves and, and how we look at our inventory, but we're certainly looking to make some incremental improvements through the back half of the year, particularly as it relates to the updated sales forecast that we have. Hopefully that helps. No, that's helpful. Other question is just as, as we think about the, the store count, kind of big picture here, Darren, you know, it sounds like a couple more closures coming, probably in, in some of the more mature, bigger states for you. You know, can you talk two things, you know, which states you really like? I think you mentioned New York, Ohio, you know, where you really want to expand. Then also, you know, as, as you look at peers, you'd mentioned, you know, some peers going out of business with hurts as, as they kind of liquidate their inventory. You know, does that present a good long-term opportunity as you move into a market, you know, somebody else kind of goes out of business, and then it gives you opportunity to really take share over time? Maybe talk about, you know, where you're seeing opportunities, whether it's from closures, from peers, or, you know, states where you really want to expand? You know, it, it goes both ways. I mean, we've done that. When we moved into the Missouri market, we, we built a store out in St. Louis, and prior to opening our store in St. Louis, a competitor went out of business. We bought their inventory, took their staff, and moved it into the GrowGen store. It gives you a tremendous leg up opposed to building a store slowly. If you can, you know, again, if you can take a store that makes sense in a place you want to be, it's always easier than building right now. You know, we do look at that, and even looking at stores that could be close to ours, taking their inventory and customer lists. In this industry, it's quite fickle. You know, many customers still like to shop at their old hydroponic store from 10 years ago. They have friends that work there. We are very careful, when it comes to that, and we've turned down a lot of purchases that, you know, that just weren't, weren't, weren't where we wanted to be. And we do believe with distribution, and GrowGen private label products, you know, there are places that we have good customers that we sell to, that we rather not compete with right now. We weigh everything, and whatever's in the best interest of our company, we will do. Right now, it's not a rush to build 100 stores. That rush was a couple of years ago, three years ago, when the, when the industry was booming. Right now, you know, we're solely focused on, you know, on managing our, our footprint, managing our balance sheet, managing, you know, our private label initiatives, and distribution right now. You know, we will be adding stores much slowly than we thought, you know, and waiting really to see where this industry goes. We are focusing so, as I said, really, on, on getting distribution up and getting private label, you know, into other locations. Excellent. Thank you. Thank you. Your next question comes from Glenn Mattson, Ladenburg. Glenn, please go ahead. Yeah. The private label I saw at 15%. I know that's kind of, like, flatlined from last quarter. I think last quarter was around that same level, up big year-over-year. Can you just talk about, you know, what do you do to push that a little higher over the medium term? You've talked about it a little bit, but just some detail maybe on, like, new product innovation. I mean, you talk about the gardening space. That's interesting, but I imagine it's going to take some time to build progress there. While you're touching on that also in the garden space, could you hit on what kind of investment you need to make to go after that space, given that there's other incumbents and all that kind of thing? Thanks. Unquestionably. To start with, we have many line extensions coming out, you know, with brands that we do have. You'll see, you know, line extensions within our Drip Hydro brands, within our Char Coir brands. We continue to innovate. We have another line extension, you know, shortly, hopefully coming on the drip, on the powder side of, of, of our liquid brands. Like anything else, you know, private label is growing. It started at 0 a couple of years ago. You will have certain quarters of stagnation within it as new products come to market. Again, we're very happy with that. The gardening space right now, Glenn, we're not, you know, you know, that is, that's a work in progress at the second quarter event next year, that we're putting together a plan that we will update Wall Street on, probably in the fourth quarter. Okay. Any other comments you can make on that top line in terms of seasonality in the back half? Because I'm just going back historical, like in 2022, which was not necessarily a banner year, it was kind of flat Q2 to Q3. 2021, which is a different, environment, obviously, it was down, you know, maybe 10% or something, Q2 to Q3. Obviously, Q4 is the weakest, but can you just give us any sense of the magnitude from one quarter to the next? I think what you've also seen in prior years was us adding stores during the second and third quarter, which helped sales in, you know, in the latter part of the year. The second quarter is planting season. Third, you know, third quarter is harvest season for outdoor. We usually see the strongest, strongest part of the season is in the second quarter, and third quarter usually does remain strong. As Greg said a little earlier, as we said a little earlier, you know, we're still assessing, you know, our ERP system. The rollout was, like anything else, always challenging. We're still assessing. You know, there were certain sales lost because of it, but we do believe that, you know, it's, it's moving in the right direction. We just, we're just not seeing right now, you know, the kind of CapEx building we would like in the, in the third quarter. It's quite early. We thought it was prudent to bring numbers down. Certainly, we hope we beat them. Right now, you know, third quarter appears to be slower than the second. The fourth quarter usually is the slowest quarter of the year. Okay, great. Thanks. Thank you. There are no further questions at this time. I will now turn it back to Clay Crumbliss for closing remarks. Great. Thank you for joining our second quarter earnings call today, and thank you for your interest in GrowGeneration. That concludes the call, and we'll speak to you again in November. You may disconnect. Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.