Forward-Looking Statements. This presentation contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to known and unknown risks, uncertainties and other important factors that may cause actual results to be materially different from the statements made herein. All statements other than statements of historical fact included in this presentation are forward-looking statements, including, but not limited to, the Company's financial re ...

Core Insights - Hydrofarm Holdings Group, Inc. reported a quarterly loss of $3.51 per share, which was worse than the Zacks Consensus Estimate of a loss of $3.09, and compared to a loss of $2.6 per share a year ago, indicating a significant decline in performance [1] - The company's revenues for the quarter ended September 2025 were $29.35 million, missing the Zacks Consensus Estimate by 17.85% and down from $44.01 million year-over-year, reflecting ongoing challenges in meeting revenue expectations [2] - Hydrofarm shares have decreased approximately 63% since the beginning of the year, contrasting sharply with the S&P 500's gain of 16.4%, highlighting the stock's underperformance in the market [3] Financial Performance - The company has consistently failed to surpass consensus EPS estimates over the last four quarters, indicating a trend of disappointing financial results [2] - The current consensus EPS estimate for the upcoming quarter is -$2.92, with expected revenues of $34.81 million, while for the current fiscal year, the estimate is -$12.76 on revenues of $150.31 million [7] Industry Outlook - The Agriculture - Products industry, to which Hydrofarm belongs, is currently ranked in the top 16% of over 250 Zacks industries, suggesting a relatively strong industry performance compared to others [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could influence investor sentiment and stock performance [5] Future Expectations - The company's earnings outlook will be crucial for determining the sustainability of its stock price movement, with management's commentary on the earnings call expected to provide further insights [4] - The current Zacks Rank for Hydrofarm is 3 (Hold), suggesting that the stock is expected to perform in line with the market in the near future [6]

Financial Performance - Net sales decreased by 33.3% to $29.4 million compared to $44.0 million in the prior year period, primarily due to a 32.2% decline in volume/mix of products sold [7]. - Gross Profit Margin decreased to 11.6% of net sales from 19.4% in the prior year, while Adjusted Gross Profit Margin decreased to 18.8% from 24.3% [6]. - Net loss increased to $16.4 million, or $(3.51) per diluted share, compared to a net loss of $13.1 million, or $(2.86) per diluted share in the prior year [8]. - Adjusted EBITDA decreased to $(4.4) million compared to less than $0.1 million in the prior year [9]. - The net loss for Q3 2025 was $16,390,000, compared to a net loss of $13,146,000 in Q3 2024, reflecting a 24.0% increase in losses year-over-year [19]. - Adjusted EBITDA for Q3 2025 was $(4,378,000), significantly lower than the adjusted EBITDA of $20,000 in Q3 2024 [24]. Expenses and Cost Management - SG&A expense decreased by 6.8% to $16.4 million, and Adjusted SG&A expense decreased by 7.4% to $9.9 million compared to the prior year [6]. - Selling, general and administrative expenses for Q3 2025 were $16,365,000, which is 55.8% of net sales [23]. - The company is on track to consolidate its two remaining U.S. manufacturing facilities, expected to generate an estimated $2 million in annual cost savings [4]. Cash Flow and Liquidity - Free Cash Flow improved by $5.1 million year-over-year, reaching $(0.2) million during the third quarter [10]. - Cash used in operating activities was less than $0.1 million, with $10.7 million in cash and approximately $4 million of available borrowing capacity as of September 30, 2025 [9]. - Free cash flow for the nine months ended September 30, 2025, was $(10,779,000), compared to $(5,602,000) for the same period in 2024 [24]. Assets and Liabilities - Total current assets decreased to $62,626,000 as of September 30, 2025, down from $95,212,000 at December 31, 2024 [21]. - Total liabilities as of September 30, 2025, were $191,400,000, a decrease from $202,382,000 at December 31, 2024 [21]. - The company reported an accumulated deficit of $605,097,000 as of September 30, 2025, compared to $557,461,000 at December 31, 2024 [21]. Future Outlook - The company expects an Adjusted Gross Profit Margin of approximately 20% for the full year 2025, driven by a higher proprietary brand sales mix and cost savings initiatives [10]. - The company is committed to driving diverse high-quality revenue streams and improving profit margins while strengthening its financial position [11]. Non-GAAP Measures - Adjusted EBITDA (non-GAAP) is defined as net loss (GAAP) excluding various expenses, providing insight into ongoing operating performance [28]. - Adjusted Gross Profit (non-GAAP) excludes specific costs and is used to evaluate ongoing operating performance [29]. - Adjusted Gross Profit Margin (non-GAAP) is calculated as Adjusted Gross Profit divided by net sales for the respective period [30]. - Adjusted SG&A (non-GAAP) excludes certain expenses and is used to assess ongoing operating performance [31]. - Adjusted SG&A as a percent of net sales is calculated similarly to Adjusted Gross Profit Margin [32]. - Free Cash Flow (non-GAAP) is defined as net cash from operating activities less capital expenditures, providing insight into cash generation and liquidity [33]. - Liquidity includes total cash, cash equivalents, and available borrowing capacity on the Revolving Credit Facility [34]. - Net Debt is calculated as total debt principal outstanding plus finance lease liabilities, less cash and cash equivalents [34].

Core Insights - Hydrofarm Holdings Group, Inc. announced a CEO transition and reported financial results for Q3 2025, highlighting a significant decrease in net sales and ongoing restructuring efforts to improve profitability [1][4][5]. Financial Performance - Net sales for Q3 2025 decreased by 33.3% to $29.4 million from $44.0 million in the prior year, primarily due to a 32.2% decline in volume/mix of products sold and a 1.1% decrease in price [5][6]. - Gross profit fell to $3.4 million, representing 11.6% of net sales, compared to $8.5 million or 19.4% of net sales in the prior year [6][9]. - Adjusted gross profit decreased to $5.5 million, or 18.8% of net sales, down from $10.7 million or 24.3% in the prior year [6][10]. - The company reported a net loss of $16.4 million, or $(3.51) per diluted share, compared to a net loss of $13.1 million, or $(2.86) per diluted share in the prior year [9][21]. - Adjusted EBITDA for the quarter was $(4.4) million, a decrease from less than $0.1 million in the prior year [10][21]. Cost Management and Restructuring - The company achieved a 7.4% reduction in Adjusted SG&A expenses, marking the 13th consecutive quarter of year-over-year expense reductions [3][8]. - Actions are being taken to consolidate U.S. manufacturing facilities, expected to generate an additional $2 million in annual cost savings, on top of the previously announced $3 million [3][5]. - The company is on track with its restructuring plan, evidenced by significant inventory and SKU reductions completed in Q3 2025 [3][14]. Cash Flow and Liquidity - Free cash flow improved by $5.1 million year-over-year, reflecting better working capital management, including a reduction in inventory [3][12]. - As of September 30, 2025, the company had $10.7 million in cash and approximately $4 million of available borrowing capacity on its Revolving Credit Facility [11][12]. Future Expectations - The company expects an Adjusted Gross Profit Margin of approximately 20% for the full year 2025, driven by a higher proprietary brand sales mix and continued cost savings from restructuring initiatives [13][14]. - Hydrofarm remains committed to driving diverse high-quality revenue streams, improving profit margins, and strengthening its financial position [14].

Asset Sales and Dispositions - The Company sold assets related to the production of Innovative Growers Equipment for $8,660, retaining proprietary brand and customer relationships[63]. - The IGE Asset Sale resulted in a loss on asset disposition of $11,520 for the three and nine months ended September 30, 2024[64]. - The net cash proceeds from the IGE Asset Sale were approximately $6,300, which were reinvested into capital expenditures and used to prepay against the Term Loan principal[66]. - The Company sold approximately 20 acres of excess land in Goshen, New York, during 2024, with a carrying value of $470, resulting in no estimated gain or loss recorded during that year[17]. Intangible Assets and Amortization - As of September 30, 2025, total intangible assets, net amounted to $358,084, with finite-lived intangible assets valued at $355,283[68]. - The estimated future amortization expense for intangible assets subject to amortization totals $228,395, with $5,932 expected for the period of October 1, 2025, to December 31, 2025[70]. Financial Performance - Basic loss per common share for the three months ended September 30, 2025, was $(3.51), compared to $(2.86) for the same period in 2024[73]. - The Company recorded income tax expense of $125 and $109 for the three and nine months ended September 30, 2025, with effective tax rates of (0.8)% and (0.2)% respectively, differing from the federal statutory rate of 21% due to full valuation allowances in U.S. and foreign jurisdictions[12]. - For the three and nine months ended September 30, 2024, the Company recorded income tax expense of $279 and $865, with effective tax rates of (2.2)% and (1.8)% respectively, also differing from the federal statutory rate of 21% due to similar valuation allowances[13]. Accounts and Inventory - Total accounts receivable, net as of September 30, 2025, was $10,008, down from $14,756 as of December 31, 2024[74]. - Total inventories as of September 30, 2025, were $38,338, a decrease from $50,633 as of December 31, 2024[74]. Lease and Debt Obligations - The Company incurred operating lease costs of $2,410 and $7,209 during the three and nine months ended September 30, 2025, respectively[75]. - Total lease assets decreased from $50,148 million as of December 31, 2024, to $46,301 million as of September 30, 2025, representing a decline of approximately 7.4%[78]. - Total lease liabilities decreased from $53,573 million as of December 31, 2024, to $50,136 million as of September 30, 2025, a reduction of about 6.4%[78]. - The total property, plant, and equipment, net decreased from $37,545 million as of December 31, 2024, to $34,751 million as of September 30, 2025, reflecting a decline of approximately 7.4%[79]. - Total debt decreased from $115,953 million as of December 31, 2024, to $111,780 million as of September 30, 2025, a reduction of approximately 3.7%[84]. - The effective interest rate for the term loan was 10.93% for the three months ended September 30, 2025, with interest expense of $3,153 million[86]. - The company made a prepayment of $4,544 million on the term loan during the second quarter of 2025, reducing the required quarterly installment amounts to zero for the remaining term[89]. - The aggregate future principal payments under long-term debt total $114,547, with $24 due in the last quarter of 2025 and $21 due in each of the years 2026 and 2027[100]. Stock-Based Compensation - The Company granted 211,618 Restricted Stock Units (RSUs) during the nine months ended September 30, 2025, with a weighted average grant date fair value of $4.68[108]. - As of September 30, 2025, there were 214,151 RSUs outstanding, with total unamortized stock-based compensation cost related to unvested RSUs amounting to $737[108]. - The Company recognized $206 and $842 of total stock-based compensation expense for RSUs for the three and nine months ended September 30, 2025, respectively[108]. - The Company had no stock options granted or exercised during the nine months ended September 30, 2025, with 32,612 stock options outstanding and exercisable as of that date[111]. Credit Facilities and Compliance - The Revolving Credit Facility's maximum commitment amount has been reduced from $100,000 to $22,000 as of May 9, 2025[92]. - As of September 30, 2025, the Company had zero borrowed under the facility and could borrow approximately $4 million before needing to comply with a minimum fixed charge coverage ratio of 1.1x[98]. - The Revolving Credit Facility includes various interest rate options, with rates using SOFR as the reference rate plus 1.95%[97]. - The Company is required to maintain a minimum fixed charge coverage ratio of 1.1x if Excess Availability is less than 20% of the Aggregate Revolving Commitment[96]. - As of September 30, 2025, the Company is in compliance with the covenants contained in the Revolving Credit Facility[96]. Other Financial Information - The fair value of cash and cash equivalents was $10,652, down from $26,111 as of December 31, 2024[19]. - The estimated fair value of finance leases was $7,952 as of September 30, 2025, compared to a carrying amount of $8,194[20]. - The Term Loan had an estimated fair value of $114,452 as of September 30, 2025, with a carrying amount of $93,851[20]. - Material cash requirements include anticipated interest payments on long-term debt, finance lease payments, and operating lease payments[167]. - The Company’s critical accounting policies involve significant judgments and assumptions, particularly regarding indefinite lived intangible assets and inventory valuation[168]. Legal and Regulatory Matters - The Company does not expect any material adverse effects from ongoing claims against it and its suppliers[16]. - The One Big Beautiful Bill Act ("OBBBA") was enacted in July 2025, making permanent key elements of the Tax Cuts and Jobs Act of 2017, but the Company does not expect a material impact on its results of operations from this legislation[14].

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SHOEMAKERSVILLE, Pa., Nov. 06, 2025 (GLOBE NEWSWIRE) -- Hydrofarm Holdings Group, Inc. (“Hydrofarm” or the “Company”) (Nasdaq: HYFM), a leading independent manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture (“CEA”), today announced that it will report third quarter 2025 results on Wednesday, November 12, 2025 before market open. About Hydrofarm Holdings Group, Inc. Hydrofarm is a leading independent manufacturer and distributor of branded hydrop ...

Industry Overview - The agricultural and food industries are undergoing a transformation driven by technology, sustainability, and changing consumer preferences, with innovation becoming a key competitive advantage [1] - The global population growth and climate volatility are challenging food production, necessitating advancements from farm to factory [1] Agricultural Technology (AgTech) - AgTech is central to the transition, utilizing artificial intelligence, robotics, and precision-farming systems to optimize yields while reducing resource use [2] - Companies like Deere & Company are shifting from traditional machinery to precision-agriculture platforms, integrating connected equipment, analytics, and automation [2] Food Innovation - Consumer demand for plant-based, fermented, and lab-grown proteins is increasing as health and environmental concerns rise, with Beyond Meat being a prominent player despite facing cost pressures [3] - Ongoing investments in R&D and product reformulation are helping companies maintain market relevance [3] Supply Chain Modernization - Technological integration, including blockchain and IoT, is enhancing transparency and safety in the food supply chain, while automation is reducing costs and waste [4] - These efficiencies are crucial for food companies aiming to meet sustainability goals in a high-cost environment [4] Key Players in AgTech and Food Innovation - Tyson Foods is focusing on innovation and sustainability, enhancing production systems through digital transformation, automation, and data analytics [7] - The company is investing in ag tech ventures like Future Meat Technologies and Memphis Meats to prepare for a future with cleaner food systems [8] - Tyson Foods is also evolving its product lineup with plant-based options and a $100 million modernization program in its Chicken business [9] Ingredion's Strategy - Ingredion is positioned at the intersection of agriculture and food science, focusing on clean-label and plant-based ingredients to meet consumer demand [10] - Collaborations with startups and the Ingredion Idea Labs are central to its innovation strategy, accelerating the development of healthier food solutions [12] - Sustainability and regenerative agriculture are core to Ingredion's strategy, enhancing soil health and resource efficiency while lowering environmental footprints [13] Hydrofarm's Focus - Hydrofarm is a leader in controlled environment agriculture, implementing a restructuring plan to focus on high-margin consumables [14] - The company’s product lines, such as SunBlaster LED lights, are designed for energy efficiency and support modern food resilience [15] - Hydrofarm is leveraging digital tools for operational efficiency and has diversified into various food innovation applications [16]

Industry Overview - The U.S. cannabis industry is projected to exceed $35 billion in annual sales by 2025 and over $70 billion by 2030 as legalization efforts continue [1][3] - Recent discussions in Congress regarding cannabis rescheduling and the Department of Health and Human Services' recommendation to reclassify cannabis have increased investor optimism [1] Ancillary Companies' Role - Ancillary companies provide essential products and services to cannabis cultivators, including equipment, nutrients, and hydroponic systems, allowing them to operate efficiently without direct plant handling [3][19] - These companies offer investors diversified exposure with lower regulatory risk compared to direct cannabis producers [3] Key Ancillary Stocks - **GrowGeneration Corp. (GRWG)**: Operates a large hydroponic and organic gardening supply chain in the U.S., with over 60 retail locations. Reported approximately $41 million in net sales in the latest quarter, with gross margins improving to around 28% [5][9][10] - **Hydrofarm Holdings Group Inc. (HYFM)**: Designs and distributes hydroponic products, serving commercial cultivators and greenhouses. Recent financial results showed a per-share loss of around $3.60, with revenues impacted by weaker order volumes [11][12][13] - **Scotts Miracle-Gro Company (SMG)**: A leader in gardening solutions, its Hawthorne Gardening division provides hydroponic systems and nutrients. The company reaffirmed its full-year 2025 outlook, with rising demand in the Hawthorne segment and robust free cash flow [14][17][18] Market Dynamics - The cannabis sector is experiencing renewed growth as more states move toward legalization, which is expected to drive demand for cultivation supplies and equipment [1][20] - Ancillary stocks may present strong short-term trading opportunities as the market stabilizes and cultivators increase capacity [2][21]

Core Viewpoint - Hydrofarm Holdings Group, Inc. has announced the appointment of Chris Yetter to its Board of Directors and the Compensation Committee, effective October 1, 2025, following the retirement of Susan P. Peters from the Board on the same date [1][2]. Group 1: Board Changes - Chris Yetter has been appointed to the Board and the Compensation Committee, bringing extensive investment experience, particularly in the health and wellness sector and the U.S. regulated cannabis industry [1][3]. - Susan P. Peters has resigned from the Board to spend more time with family, and her resignation was not due to any disagreements with the Company [2]. Group 2: Company Overview - Hydrofarm is a leading independent manufacturer and distributor of hydroponics equipment and supplies for controlled environment agriculture, with a mission to empower growers with products that enhance quality, efficiency, consistency, and speed in their growing projects [4]. - The Company has been in operation for over 40 years, providing a wide range of products including grow lights, climate control solutions, growing media, and nutrients [4].