The Zacks Agriculture - Products industry has been bearing the brunt of lower commodity prices. High input costs and labor shortages also aggravated the pressure. Nevertheless, increasing consumer awareness regarding food ingredients and the preference for healthier alternatives will support the industry. Alternative agricultural technologies like hydroponics and vertical farming are expected to be other key catalysts, given their inherent benefits.Companies like Bunge Global S.A. (BG) , CalMaine Foods (CAL ...

Hydrofarm (HYFM) Q1 2025 Earnings Call May 13, 2025 08:30 AM ET Company Participants Anna Kate Heller - Senior Vice President, Investor RelationsB. John Lindeman - CEOKevin O’Brien - CFO Conference Call Participants Dmitry Silversteyn - Senior Research Analyst Operator Good day, ladies and gentlemen, and thank you for standing by. Welcome to the HydroPharm Holdings Group First Quarter twenty five Earnings Conference Call. At this time, all participants have been placed in a listen only mode and the lines wi ...

Financial Data and Key Metrics Changes - Net sales for Q1 2025 were $40.5 million, down 25.2% year over year, primarily due to a 22.6% decrease in volume mix and a 1.8% decline in pricing [18] - Gross profit in Q1 was $6.9 million, or 17% of net sales, compared to $10.9 million, or 20.2% of net sales in the prior year [19] - Adjusted EBITDA was a loss of $2.4 million in Q1, although it improved by $4.8 million compared to Q4 2024 [23] Business Line Data and Key Metrics Changes - Proprietary brands accounted for 55% of net sales in Q1, an improvement from 52% in Q4 2024, but still below the 56% to 58% range seen in the first three quarters of the previous year [18][30] - Consumable products represented over three-quarters of total sales, showing a small increase over 2024 [19] - Adjusted SG&A expenses were $11 million, an 11% reduction compared to $12.3 million last year, marking the eleventh consecutive quarter of significant year-over-year adjusted SG&A savings [22] Market Data and Key Metrics Changes - The company noted prolonged industry oversupply challenges and a lack of government progress on regulatory issues, which impacted year-over-year results [12] - The U.S. government clarified that Canadian peat would be tariff-free, which is expected to positively impact the peat moss business moving forward [11] Company Strategy and Development Direction - The company is focusing on higher-margin proprietary brands to drive revenue and improve profitability, with a strategic initiative to enhance sales in these areas [5][6] - A thorough review of the product portfolio and distribution network is underway to align better with estimated sales demand and support margin expansion [15] - The company is actively pursuing strategic alternatives to enhance shareholder value, including potential acquisitions or divestitures [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for regulatory changes in the cannabis market, citing recent polling data showing increased public support for rescheduling [40] - The company has withdrawn its full-year 2025 guidance for net sales, adjusted EBITDA, and free cash flow due to ongoing tariff uncertainties and prolonged industry challenges [14][43] - Despite the challenges, management remains committed to improving adjusted gross profit margins and reducing adjusted SG&A expenses for the full year [44] Other Important Information - The company ended Q1 with a cash balance of $13.7 million and total debt of approximately $127.3 million [24] - Cash used in operating activities was negative $11.8 million, yielding negative free cash flow of $12 million for the quarter [25] Q&A Session Summary Question: Follow-up on proprietary brand sales and growth outlook - Management highlighted strong performance from proprietary nutrient brands and emphasized ongoing investments in sales capabilities and marketing efforts to drive growth [31][32] Question: Impact of tariffs on product costs and demand - Management indicated that while consumable products are largely insulated from tariffs, the durable side faces challenges due to sourcing from China, and they are actively renegotiating with vendors [34][35] Question: Regulatory environment and potential changes in the cannabis market - Management expressed optimism about potential regulatory changes, noting recent momentum in rescheduling discussions and efforts to push for safer banking legislation [40][41] Question: Overall outlook for 2025 - Management stated that while Q1 performance was generally in line with previous expectations, the uncertainty surrounding tariffs and industry conditions led to a prudent decision to pause guidance for the year [43][44]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Former Name or Former Address, if changed since last report: Not Applicable (State or other jurisdiction of incorporation or organization) Delaware 81-4895761 (I.R.S. Employer Identificatio ...

Financial Performance - Net sales decreased by 25.2% to $40.5 million compared to $54.2 million in the prior year period, primarily due to a 22.6% decline in volume/mix of products sold and a 1.8% decrease in price [5]. - Gross profit decreased to $6.9 million, representing 17.0% of net sales, down from $10.9 million or 20.2% of net sales in the prior year [6]. - Adjusted gross profit decreased to $8.5 million, or 21.0% of net sales, compared to $12.7 million, or 23.4% of net sales in the prior year [6]. - Net loss increased to $14.4 million, or $(3.12) per diluted share, compared to a net loss of $12.6 million, or $(2.75) per diluted share in the prior year [9]. - Adjusted EBITDA decreased to $(2.4) million compared to $0.3 million in the prior year period [10]. Cash Flow and Operating Activities - Cash used in operating activities was $(11.8) million, with free cash flow of $(12.0) million during the first quarter [11]. - Free Cash Flow (Non-GAAP) for Q1 2025 was $(12,007) million, compared to $(3,739) million in Q1 2024, indicating a worsening cash flow situation [26]. Expenses - Selling, general and administrative (SG&A) expense decreased by 9.0% to $17.9 million, while adjusted SG&A expense decreased by 11.0% to $11.0 million [7]. - Selling, general and administrative expenses (GAAP) for Q1 2025 were $17,863 million, down from $19,621 million in Q1 2024, a decrease of 9.0% [25]. - Adjusted SG&A (Non-GAAP) for Q1 2025 was $10,980 million, compared to $12,336 million in Q1 2024, a decline of 10.9% [25]. Strategic Outlook - The company is withdrawing its full year 2025 outlook for net sales, adjusted EBITDA, and free cash flow due to macroeconomic uncertainty and prolonged industry headwinds [11]. - The company remains committed to strategic priorities including driving diverse high-quality revenue streams and improving profit margins [12]. Asset and Liability Changes - Total assets decreased from $426,104 million as of December 31, 2024, to $410,557 million as of March 31, 2025, a decline of approximately 3.9% [23]. - Total current liabilities increased from $34,987 million in December 2024 to $39,941 million in March 2025, an increase of approximately 14.0% [23]. Profit Margin - The proprietary brand sales mix increased to 55% compared to 52% in the fourth quarter of 2024, contributing to improvements in gross profit margin [4]. - Gross Profit (GAAP) for Q1 2025 was $6,877 million, down 37.3% from $10,925 million in Q1 2024 [25]. - Adjusted Gross Profit (Non-GAAP) decreased to $8,532 million in Q1 2025, compared to $12,665 million in Q1 2024, reflecting a decline of 32.4% [25]. - Net loss (GAAP) for Q1 2025 was $(14,385) million, compared to $(12,608) million in Q1 2024, representing an increase in loss of 14.1% [26]. - Adjusted EBITDA (Non-GAAP) for Q1 2025 was $(2,448) million, a significant decrease from $329 million in Q1 2024 [26]. - The company reported a Gross Profit Margin (GAAP) of 17.0% for Q1 2025, down from 20.2% in Q1 2024 [25].

SHOEMAKERSVILLE, Pa., May 05, 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 host a conference call to review first quarter 2025 results on Tuesday, May 13, 2025 at 8:30 AM ET. A press release containing first quarter 2025 results will be issued before market open that same day. Th ...

Financial Data and Key Metrics Changes - Net sales for Q4 2024 were $37.3 million, down 20.9% year-over-year, primarily due to a 16.8% decrease in volume mix and a 3.9% decline in pricing [23] - Adjusted EBITDA was a loss of $7.3 million in Q4, attributed to lower sales and adjusted gross profit, partially offset by adjusted SG&A savings [31] - Cash balance as of December 31, 2024, was $26.1 million, up from $24.4 million at the end of Q3 [32] Business Line Data and Key Metrics Changes - Proprietary brands represented approximately 52% of total net sales in Q4, a decrease compared to the prior year [24] - Consumable products accounted for approximately three-quarters of total sales, consistent with 2023 [26] - Adjusted gross profit in Q4 was $1.8 million or 4.9% of net sales, down from $8.4 million or 17.9% in the prior year [26] Market Data and Key Metrics Changes - The cannabis industry faced persistent oversupply challenges, leading to lower sales across the supply chain [8] - E-commerce sales increased over 25% in 2024, indicating a strong channel for home-growing solutions [16] - Sales to non-cannabis and non-U.S. Canadian customers increased by nearly 200 basis points in 2024 [17] Company Strategy and Development Direction - The strategic priority is to drive sales of higher-margin proprietary brands, with a focus on improving the proprietary brand sales mix [11] - Plans for 2025 include targeted marketing investments, enhanced salesforce capabilities, and refined incentive structures to improve profitability [19] - The company is exploring strategic alternatives, including potential acquisitions or divestitures to enhance shareholder value [21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging second half of 2024, with expectations of continued sales declines early in 2025, moderating as the year progresses [44] - There is optimism about long-term industry prospects, with plans to invest in higher-margin proprietary brands and diversify revenue streams [37] - Management is focused on improving operational efficiencies and reducing costs, with expectations of further SG&A reductions in 2025 [36] Other Important Information - The company completed significant reductions to its manufacturing and distribution center footprint as part of its restructuring plan [27] - The integration of Canadian entities into the main ERP system is expected to improve operating efficiencies and drive synergies [28] Q&A Session Summary Question: Can you talk about the dynamics of the broader environment in your categories as you look forward to 2025? - Management noted that early 2024 saw optimism in the cannabis category, but expectations were reset due to political changes and market conditions [42] Question: What can we look forward to in terms of incremental benefits from cost-cutting initiatives in 2025? - Management indicated opportunities for additional savings through optimizing the distribution center network and further reducing SG&A costs [49] Question: How might tariffs and regulatory changes impact the company? - Management acknowledged the fluid situation regarding tariffs and indicated plans to pass along costs to customers while monitoring the impact on sales [56] Question: Can you elaborate on potential M&A activities? - Management expressed interest in monitoring opportunities for acquisitions that could enhance shareholder value and diversify the company's portfolio [70]

Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) Q4 2024 Results Conference Call March 5, 2025 8:30 AM ET Company Participants Anna Kate Heller - ICR John Lindeman - Chief Executive Officer Kevin O'Brien - Chief Financial Officer Bill Toler - Executive Chairman of the Board Conference Call Participants Dmitry Silversteyn - Water Tower Research Operator Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Hydrofarm Holdings Group Fourth Quarter and Fiscal Year 2024 Earnings Conference Ca ...

Core Insights - Hydrofarm Holdings Group, Inc. reported a quarterly loss of $3.80 per share, which was worse than the Zacks Consensus Estimate of a loss of $2.80, marking a 35.71% earnings surprise [1] - The company's revenues for the quarter ended December 2024 were $37.31 million, missing the Zacks Consensus Estimate by 8.99% and down from $47.18 million a year ago [2] - Hydrofarm shares have declined approximately 20.9% since the beginning of the year, contrasting with the S&P 500's decline of 1.8% [3] Financial Performance - Over the last four quarters, Hydrofarm has surpassed consensus EPS estimates only once [2] - The current consensus EPS estimate for the upcoming quarter is -$2.50 on revenues of $50 million, and for the current fiscal year, it is -$9.40 on revenues of $191 million [7] Industry Outlook - The Agriculture - Products industry, to which Hydrofarm belongs, is currently ranked in the bottom 19% of over 250 Zacks industries, indicating a challenging environment [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Hydrofarm's stock performance [5] Future Expectations - The estimate revisions trend for Hydrofarm is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] - Investors are advised to monitor changes in earnings estimates for the coming quarters and the current fiscal year, as these could influence stock performance [4][7]

Financial Performance - Net sales for 2024 decreased to $190,288 thousand from $226,581 thousand in 2023, representing a decline of approximately 16%[359]. - Gross profit for 2024 was $32,133 thousand, down from $37,612 thousand in 2023, indicating a decrease of about 14.5%[359]. - The net loss for 2024 increased to $66,717 thousand compared to a net loss of $64,813 thousand in 2023, reflecting a rise of approximately 2.9%[361]. - The total comprehensive loss for 2024 was $69,131 thousand, up from $64,075 thousand in 2023, marking an increase of about 7.9%[361]. - Operating expenses in 2024 were $72,794 thousand, down from $87,314 thousand in 2023, showing a reduction of approximately 16.6%[359]. - The company reported a loss from operations of $52,181 thousand in 2024, compared to a loss of $49,702 thousand in 2023, indicating a worsening of about 5.9%[359]. - Cash and cash equivalents at the end of 2024 were $26,111 thousand, down from $30,312 thousand at the end of 2023, representing a decrease of approximately 13.5%[367]. - The accumulated deficit increased from $490.7 million in 2023 to $557.5 million in 2024, an increase of approximately 13.6%[357]. - Total stockholders' equity decreased from $290.6 million in 2023 to $223.7 million in 2024, a decline of about 23%[357]. - Total assets decreased from $507.6 million in 2023 to $426.1 million in 2024, a decline of approximately 16%[357]. Inventory and Assets - The company has $249.0 million in intangible assets, $50.6 million in inventories, and $37.5 million in property, plant, and equipment as of December 31, 2024[115]. - Inventories decreased significantly from $75.4 million in 2023 to $50.6 million in 2024, representing a reduction of about 32.9%[357]. - Total property, plant and equipment, net and operating lease right-of-use assets decreased to $80,441 million in 2024 from $101,854 million in 2023, a reduction of about 21%[379]. - The company reported a decrease in total property, plant and equipment in the United States to $50,928 million in 2024 from $68,270 million in 2023, a decline of approximately 25%[379]. - In Canada, total property, plant and equipment decreased to $29,513 million in 2024 from $33,584 million in 2023, representing a decline of about 12%[379]. Risks and Challenges - The company faces risks related to manufacturing processes, including equipment malfunctions and raw material shortages, which could lead to product defects and recalls[120]. - The company’s peat moss harvesting operation is vulnerable to climate change impacts, which could adversely affect harvest yields[121]. - Increased prices and inflation for raw materials and labor could negatively impact the company's margin performance and financial results[125]. - The company occupies many facilities under long-term non-cancellable leases, which may pose financial risks if unable to renew or sublease[126]. - The company is exposed to regulatory approval delays for new products, which could hinder product launches and market innovations[113]. - Restructuring activities may increase expenses and cash expenditures, potentially affecting financial results[110]. - The company’s ability to develop and market new products is uncertain, which could impact market share and financial performance[112]. - Tariffs and trade restrictions could increase product costs, adversely affecting competitiveness and financial results[124]. - Disruption in freight carrier operations could negatively impact net revenues and gross margin due to higher shipping costs and delays[128]. - Approximately 14% of the company's peat bog sites are currently deemed non-compliant by environmental authorities, affecting operational capabilities[135]. - The company faces potential increased costs and risks associated with international operations, including compliance with local regulations and currency fluctuations[129]. - Regulatory compliance failures could lead to fines or product recalls, adversely affecting financial condition and results of operations[130]. - Climate change may lead to increased operational costs and disruptions due to extreme weather events, impacting financial results[141]. - The company is subject to evolving ESG scrutiny, which may impose additional costs and affect reputation and access to capital[140]. - Internal control weaknesses could result in material errors in financial reporting, adversely impacting investor confidence and stock price[143]. - Supply chain optimization failures could adversely affect production capabilities and financial results[137]. - The company relies on information technology systems for operations, and failures or breaches could significantly impair business functions[151]. - The company faces risks related to acquisitions, including integration difficulties and potential liabilities from acquired companies, which could adversely impact financial results[161]. - The existing Credit Facilities impose restrictions that limit the company's operational flexibility, including limitations on incurring additional debt and paying dividends[169]. - The company is subject to ongoing tax audits, which may result in additional tax liabilities if tax authorities disagree with its determinations[157]. - The company may incur significant costs related to investigating and mitigating cyber threats, which could adversely affect its financial condition[153]. - The company is prohibited from selling products directly to cannabis growers in jurisdictions where such sales are illegal, which may limit market opportunities[171]. - The company may face increased capital needs and may not be able to obtain sufficient capital to fund future operations[165]. - Substantially all of the company's assets are pledged to secure obligations under the Credit Facilities, which may materially harm its ability to conduct business if defaults occur[173]. - Disruptions in the availability or increases in the prices of raw materials sourced by suppliers could adversely affect the company's results of operations[174]. - A significant interruption in the operation of the company's or its suppliers' facilities could impact its capacity to produce products and service customers, adversely affecting revenues and earnings[178]. - The company is subject to risks related to the cannabis industry, including the illegality of cannabis under U.S. federal law, which could negatively impact revenues and profits[182]. - The company's growth is highly dependent on the U.S. cannabis market, and future regulations may create limitations that decrease the demand for its products[198]. - If suppliers are unable to source raw materials in sufficient quantities and at acceptable costs, the company's ability to sell products may be harmed[179]. - The company faces risks from potential disruptions in its global supply chain, which could adversely impact its financial condition and results of operations[177]. - The company's proprietary technologies may limit its ability to locate or utilize alternative inputs for certain products, potentially increasing costs and delays[175]. - The company may experience difficulties in manufacturing products on a timely basis, leading to increased delivery lead-times and costs[179]. - The company's ability to maintain supplier arrangements is critical, as disruptions could have a material adverse effect on its financial condition and cash flows[177]. - The cannabis industry remains illegal under U.S. federal law, with cannabis classified as a Schedule I substance, impacting all related activities[199]. - The legalization of cannabis in various states has positively influenced the industry, although changes in regulations could adversely affect demand for products[200]. - Evolving federal and state laws regarding cannabis cultivation and use may indirectly reduce demand for products and impact future operations[201]. - The demand for products is uncertain and dependent on the growth of emerging industries, including cannabis cultivation[202]. - Compliance with changing laws and regulations may impose substantial costs and disrupt business operations[204]. - Scientific research on cannabis benefits is in early stages, and negative findings could impact product demand[205]. - Public perception of cannabis significantly affects the industry's success, with potential adverse effects from negative publicity or scientific research[206]. - The company faces reputational risks due to its indirect involvement in the cannabis industry, which could affect business relationships[208]. - Compliance with data privacy laws is increasingly complex, with potential penalties for violations that could adversely affect the company's financial condition[214]. - Environmental regulations regarding pesticide use could result in significant costs and impact the company's reputation and operations[218]. Intellectual Property and Compliance - The company may face significant risks related to the protection and enforcement of its intellectual property rights, which are crucial for its competitive position[220]. - There is a possibility of substantial costs and resource diversion due to litigation necessary to enforce intellectual property rights against third-party claims[223]. - The company must comply with various procedural and fee requirements to maintain patent protection, and noncompliance could lead to loss of patent rights[224]. - The company may need to rely on licenses for proprietary technologies, which could be difficult or expensive to obtain, potentially harming its competitive position[225]. - If the company fails to maintain its patents, competitors could enter the market, adversely affecting its business[224]. Stock and Corporate Governance - The company has the authority to issue up to 50 million shares of preferred stock, which could dilute common stockholders' ownership interests[232]. - Provisions in the company's corporate charter and Delaware law could make it difficult for stockholders to effect a change in control or management[233]. - The company currently intends to retain future earnings for business operations and expansion, with no expected dividends in the foreseeable future[237]. - Legal and contractual restrictions may limit the company's ability to obtain cash from subsidiaries, affecting its financial obligations[235]. - The company received a notification from Nasdaq on March 14, 2024, indicating non-compliance with the minimum bid price requirement of $1.00 per share for 30 consecutive business days[238]. - On August 9, 2024, the company requested a 180-day extension to regain compliance, indicating it met all other listing requirements except the minimum bid price[239]. - Nasdaq approved the transfer of the company's listing from the Global Select Market to the Capital Market tier on September 12, 2024, along with an additional 180-day extension to regain compliance[240]. - The board approved a 1-for-10 reverse stock split on February 6, 2025, which became effective on February 12, 2025, allowing the company to regain compliance with Nasdaq listing requirements[241]. - Delisting from Nasdaq could adversely affect the company's ability to raise capital and negatively impact the liquidity and value of its common stock[242]. - The market price of the company's common stock has been volatile, influenced by factors such as operating performance, sales by stockholders, and general economic conditions[245]. - The company may issue additional equity securities in the future, which could dilute existing stockholders' ownership and negatively impact the market price of its common stock[256]. - The company faces potential litigation that could materially affect its financial condition and operating results[253]. Cash Flow and Debt - The estimated material cash requirements for 2025 include principal repayments, interest payments on long-term debt, and operating lease payments[329]. - The company had $119.3 million of Term Loan debt subject to variable interest rates as of December 31, 2024[338]. - If interest rates increase by 100 basis points, interest expense on variable rate debt would rise by an average of $1.1 million annually[338]. - The company incurred interest expenses of $15,237 thousand in 2024, slightly down from $15,442 thousand in 2023, a decrease of about 1.3%[359].