Calloway Nursery : Quarterly Report as of Quarter Ended June 30th, 2022

Calloway's Nursery, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(amounts in thousands, except share amounts)

Assets

		June 30,
		2022	2021
Cash and cash equivalents	$15,057	$29,889
Accounts receivable	557	622
Inventories	8,938	5,447
Prepaids	555	403
Total current assets	25,107	36,361
Property and equipment, net	23,424	22,875
Assets under finance leases, net	27,020	19,358
Right-of-use assets, net	9,101	6,379
Other assets	48	49
Total assets	$84,700	$85,022
Liabilities and Shareholders' Equity
Accounts payable and accrued expenses	$11,105	$13,445
Dividends payable	--	7,726
Current portion of long-term debt	328	382
Current portion of finance lease obligations	983	471
Current portion of operating lease liabilities	1,171	1,143
Total current liabilities	13,587	23,167
Long-term debt (net of current portion and unamortized
debt issuance costs)	4,042	4,365
Obligations under finance leases, net of current portion	26,573	18,213
Operating lease liabilities, net of current portion	8,140	5,361
Deferred income taxes, net	2,533	1,157
Total liabilities	54,875	52,263
Commitments and contingencies
Shareholders' equity:
Common stock ($.01 par value; 30,000,000 shares
authorized; 7,988,346 shares issued, respectively)	80	80
Additional paid-in capital	8,604	8,604
Retained earnings	23,827	25,483
Less: treasury stock, at cost (355,888 and 261,888	32,511	34,167
shares, respectively)	(2,686)	(1,408)
Total shareholders' equity	29,825	32,759
Total liabilities and shareholders' equity	$84,700	$85,022

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Calloway's Nursery, Inc.

Condensed Consolidated Statements of Income (Unaudited)

(amounts in thousands, except share amounts)

	Six Months Ended
	June 30,
	2022	2021
Net revenue	$60,116	$67,490
Cost of goods sold	29,430	31,102
Gross profit	30,686	36,388
Selling, general and administrative expenses	16,974	14,230
Gain on sale/disposal of property	14	--
Interest expense	572	437
Income before provision for income taxes	13,154	21,721
Income tax expense (benefit)	2,830	4,651
Net income	$10,324	$17,070
Weighted average number of common shares
outstanding - basic and diluted	7,721	7,497
Net income per common share - basic and diluted	$1.34	$2.28

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Calloway's Nursery, Inc.

Condensed Consolidated Statements of Shareholders' Equity (Unaudited)

(amounts in thousands)

		Common Stock	Paid-In	Retained	Treasury
		Shares	Amount		Capital	Earnings	Stock	Total
Balance January 1, 2021	7,608	$76		$8,608	$17,976	($1,408)	$25,252
Net income	--	--		--	17,070	--	17,070
Stock conversion	380	4		(4)	--	--	--
Dividends	--	--		--	(9,563)	--	(9,563)
Balance June 30, 2021	7,988	$80		$8,604	$25,483	($1,408)	$32,759
		Common Stock	Paid-In	Retained	Treasury
		Shares	Amount	Capital	Earnings	Stock	Total
Balance January 1, 2022	7,988	$80	$8,604	$17,366	($1,408)	$24,642
Net income	--	--	--	10,324	--	10,324
Stock redemption	--	--	--	--	(1,278)	(1,278)
Dividends	--	--	--	(3,863)	--	(3,863)
Balance June 30, 2022	7,988	$80	$8,604	$23,827	($2,686)	$29,825

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Calloway's Nursery, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(amounts in thousands)

	Six Months Ended
	June 30,
	2022	2021
Cash flows from operating activities:
Net income	$10,324	$17,070
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization	1,348	735
Amortization of deferred issuance costs	2	2
Change in operating assets and liabilities:
Right-of-use assets, net	30	(10)
Inventories	(3,265)	(1,336)
Accounts payable and accrued expenses	25	5,125
Other operating assets and liabilities	1,630	(407)
Net cash flows provided by operating activities	10,094	21,179
Cash flows from investing activities:
Additions to property and equipment, net	(1,278)	(853)
Proceeds from sale of property	14	-
Net cash flows used for investing activities	(1,264)	(853)
Cash flows from financing activities:
Repayments of debt	(193)	(188)
Repayments of finance lease obligations	(391)	(291)
Payment of dividends	(3,863)	(1,837)
Net cash flows used for financing activities	(4,447)	(2,316)
Net increase (decrease) in cash and cash equivalents	4,383	18,010
Cash and cash equivalents at beginning of period	10,674	11,879
Cash and cash equivalents at end of period	$15,057	$29,889

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Calloway's Nursery, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Unaudited interim financial information

We have prepared the accompanying condensed consolidated financial statements pursuant to Accounting Standards Codification Topic 270, Interim Financial Reporting ("ASC 270"). ASC 270 provides minimum disclosure requirements for all reporting entities that prepare interim financial statements.

These condensed consolidated financial statements are unaudited, and in management's opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair statement of our consolidated balance sheets, income statements, changes in shareholders' equity and cash flows for the periods presented.

Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year ending December 31, 2022 due to seasonal and other factors.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("GAAP") have been omitted. These consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes as of and for the year ended December 31, 2021.

2. Business

The Company derives its revenues from:

• Sales of living plants and related products, pottery, home décor and seasonal merchandise (together, "Retail Merchandise") to individual consumers in its physical garden center retail stores;
• Landscape design services ("Landscape Design") to individual consumers; and
• Landscape installation services ("Landscape Installation") to individual consumers.

No single product, service, or customer accounts for a material portion of the Company's revenues. Economic, weather, and other circumstances that may exist from time-to-time in the Company's market areas can have a significant impact on the Company's results of operations.

3. Use of Estimates

The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, income taxes, commitments and contingencies, and inventory valuation. Actual results could differ materially from those estimates.

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