Financial Performance - Net sales for Q4 2024 decreased by 20.9% to $37.3 million compared to $47.2 million in the prior year period, primarily due to a 16.8% decline in volume/mix and a 3.9% decrease in price[7] - Gross Profit for Q4 2024 was $1.8 million, or 4.9% of net sales, down from $8.4 million, or 17.9% of net sales in the prior year[8] - Adjusted Gross Profit Margin decreased to 9.6% of net sales in Q4 2024 from 24.3% in the prior year, impacted by lower sales and approximately $1.4 million in inventory reserves[8] - Net loss for Q4 2024 increased to $17.5 million, or $(3.80) per diluted share, compared to a net loss of $15.2 million, or $(3.33) per diluted share in the prior year[8] - Adjusted EBITDA for Q4 2024 was $(7.3) million, a decline from $(0.6) million in the prior year period[9] - For the full year 2024, net sales decreased to $190.3 million from $226.6 million, with a Gross Profit of $32.1 million and an Adjusted Gross Profit of $40.3 million[6] Cash Flow and Liquidity - Cash generated from operating activities in Q4 2024 was $2.7 million, with Free Cash Flow of $2.4 million, while for the full year, Free Cash Flow was $(3.2) million[10] - Free cash flow for Q4 2024 was $2.386 million, contrasting with a negative free cash flow of $(1.744) million in Q4 2023[30] - The total gross proceeds from the IGE Asset Sale were $8.7 million, contributing an estimated $3.5 million to Net cash from operating activities and Free Cash Flow for the twelve months ended December 31, 2024[32] - The Company received gross proceeds of $8.6 million from a sale-leaseback of real estate in Eugene, Oregon, classified as a Financing activity for the twelve months ended December 31, 2023[32] Expenses and Cost Management - SG&A expense decreased by 14.7% to $17.0 million in Q4 2024, while Adjusted SG&A expense decreased by 9.8% to $10.8 million[6] - Selling, general and administrative expenses for Q4 2024 were $16.958 million, a decrease of 15% from $19.872 million in Q4 2023[27] - The company aims to improve Adjusted Gross Profit Margin in 2025 through a higher proprietary brand sales mix and continued cost-saving measures[11] Future Outlook - The company expects net sales to decrease by 10-20% in 2025, with negative but improved Adjusted EBITDA and Free Cash Flow compared to 2024[12] Assets and Financial Position - Total current assets decreased to $95.212 million in 2024 from $128.066 million in 2023, primarily due to a reduction in inventories[23] - Total assets decreased to $426.104 million in 2024 from $507.643 million in 2023, reflecting a decline in both current and non-current assets[23] - The accumulated deficit increased to $557.461 million in 2024 from $490.744 million in 2023, indicating ongoing financial challenges[23] Non-GAAP Measures - Adjusted EBITDA is defined as net loss excluding various expenses, providing insight into ongoing operating performance[35] - Adjusted Gross Profit is calculated by excluding depreciation and other expenses, offering a clearer view of profitability[36] - Free Cash Flow is defined as Net cash from operating activities less capital expenditures, indicating the Company's ability to generate cash[39] - Liquidity is defined as total cash, cash equivalents, and available borrowing capacity, reflecting the Company's financial health[40] - Net Debt is calculated as total debt principal outstanding plus finance lease liabilities, less cash and cash equivalents, providing insight into the Company's leverage[40] - The Company emphasizes the importance of non-GAAP financial measures for evaluating performance and comparing metrics over time[33] - Adjusted SG&A is defined as SG&A excluding certain expenses, which aids in assessing operational efficiency[38]

Core Insights - Hydrofarm Holdings Group, Inc. reported a significant decline in net sales and profitability for the fourth quarter and fiscal year 2024, primarily due to challenging industry conditions in the cannabis sector [5][6][10]. Fourth Quarter Highlights - Net sales decreased by 20.9% to $37.3 million from $47.2 million in the prior year, attributed to a 16.8% decline in volume/mix and a 3.9% decrease in price [6][8]. - Gross profit fell to $1.8 million (4.9% of net sales) compared to $8.4 million (17.9% of net sales) in the prior year [7][8]. - Adjusted EBITDA was $(7.3) million, a decline from $(0.6) million in the previous year [10][8]. - The company experienced a net loss of $17.5 million, compared to a net loss of $15.2 million in the prior year [10][8]. Fiscal Year 2024 Highlights - Total net sales for the fiscal year decreased to $190.3 million from $226.6 million [8]. - Gross profit for the year was $32.1 million (16.9% of net sales), with an adjusted gross profit of $40.3 million (21.2% of net sales) [8]. - The net loss for the year increased to $66.7 million from $64.8 million in the previous year [10][8]. - Cash generated from operating activities was $2.7 million for the fourth quarter, while the full year saw cash used in operating activities of $0.3 million [12][8]. Cost Management and Strategic Focus - The company achieved over $9 million in adjusted SG&A expense savings in 2024, reflecting its commitment to cost management [5]. - The sales mix of higher-margin proprietary brands increased from approximately 35% in 2020 to 56% in 2024 [5]. - The company reduced its manufacturing footprint by nearly 60% since early 2023 while maintaining product quality [5]. Outlook for 2025 - Hydrofarm anticipates a net sales decrease of 10-20% for 2025, with expectations of improved adjusted EBITDA and free cash flow compared to 2024 [14]. - The company aims to enhance its proprietary brand sales mix and optimize its distribution network while implementing further cost-saving measures [5][14].

Company Overview - Hydrofarm Holdings Group, Inc. is a leading independent manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture (CEA) [3] - The company offers a range of products including grow lights, climate control solutions, growing media, and nutrients, along with a portfolio of innovative and proprietary branded products [3] - With over 40 years of experience, the company aims to empower growers, farmers, and cultivators by providing products that enhance quality, efficiency, consistency, and speed in their growing projects [3] Upcoming Financial Results - Hydrofarm will host a conference call to review its fourth quarter and full year 2024 results on March 5, 2025, at 8:30 AM ET [1] - A press release containing the financial results will be issued before the market opens on the same day [1] - The conference call can be accessed live via phone or webcast, with details provided for participants [2]

Core Points - Hydrofarm Holdings Group, Inc. announced a 1-for-10 reverse stock split effective February 12, 2025, to comply with Nasdaq's minimum bid price requirement of $1.00 per share [1][2] - The reverse stock split will reduce the number of shares outstanding from approximately 46,144,512 to about 4,614,451, while the total authorized shares will remain unchanged [2] - Stockholders will receive cash payments for any fractional shares resulting from the reverse stock split, based on the closing price on February 12, 2025 [2] Company Overview - Hydrofarm is a leading independent manufacturer and distributor of hydroponics equipment and supplies for controlled environment agriculture, with over 40 years of experience [5] - The company aims to empower growers with products that enhance quality, efficiency, consistency, and speed in their agricultural projects [5]

Industry Overview - The cannabis industry in the United States has evolved into a multi-billion-dollar sector, driven by increased demand for legal cannabis as societal attitudes shift [1][2] - The growth of the industry is attributed to greater access to legal cannabis, leading to higher consumer demand and revenue generation [1] Public Trading and Investment Opportunities - Several cannabis companies are publicly traded, allowing investors to buy and sell shares in the open market, providing an alternative to starting a cannabis business [2] - The sector remains volatile, presenting both risks and potential upside for investors looking for top marijuana stocks [3] Key Companies to Watch - WM Technology, Inc. (NASDAQ: MAPS) is considering a proposal from its co-founders to take the company private, with the founders currently owning approximately 32% of the outstanding shares [4][9] - Leafly Holdings, Inc. (NASDAQ: LFLY) operates a platform connecting consumers with cannabis brands and retailers, recently recognized for its strain "Super Boof" as the strain of the year for 2024 [5][6] - Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM) manufactures and distributes controlled environment agriculture equipment, reporting a decrease in net sales to $44.0 million but an increase in gross profit margin to 19.4% [12]

Financial Data and Key Metrics Changes - Net sales for Q3 2024 were $44 million, down 18.8% year-over-year, primarily due to a 13.7% decrease in volume mix and a 4.9% decline in pricing [20] - Gross profit in Q3 was $8.5 million or 19.4% of net sales, compared to $3.3 million or 6.1% in the prior year [23] - Adjusted EBITDA for year-to-date was $2.1 million, more than double compared to 2023, indicating successful restructuring and cost-saving initiatives [32] Business Line Data and Key Metrics Changes - Consumable products accounted for approximately 79% of total sales in Q3, an increase from the previous year [21] - Proprietary brands represented 56% of total net sales, up from 54% in the prior year, with a greater mix of higher-margin brands sold [22] Market Data and Key Metrics Changes - The company is experiencing a challenging environment with significant retail closures impacting sales, particularly in the independent retail sector [51] - E-commerce has emerged as a stronger channel, gaining traction as consumers become more comfortable with online ordering [55] Company Strategy and Development Direction - The company is focusing on diversifying revenue sources and reducing reliance on cannabis sales in the U.S. and Canada, with non-cannabis revenue sources increasing several hundred basis points compared to Q3 last year [12] - Strategic investments in proprietary brands and cost control measures are prioritized to enhance profitability and operational efficiency [19][39] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about future performance despite current industry challenges, citing positive indicators such as growth in cannabis users and a favorable regulatory environment [16][18] - The company reaffirms its full-year 2024 guidance for net sales, adjusted EBITDA, and free cash flow, expecting to achieve positive free cash flow for the full year [20][38] Other Important Information - The CEO will transition to Executive Chairman effective January 1, 2025, with the current CFO set to take over as CEO [41] - The company has reduced its manufacturing footprint by nearly 60% since the beginning of 2023, enhancing profitability and efficiency [14] Q&A Session Summary Question: Outlook for partner brands and cash flow impact - Management indicated that partner brands work well at scale, and while recent demand trends have posed challenges, there are promising long-term potentials with certain brands [46] Question: Stability of commercial customers amidst retail closures - Management noted that while brick-and-mortar retail has faced consolidation, commercial customers have remained stable but below previous levels, with e-commerce emerging as a strong channel [55] Question: Implications of Florida's medical market not passing - Management acknowledged the setback but remains optimistic about future growth opportunities, emphasizing that the overall market is still headed in a positive direction [60] Question: Opportunities for M&A and consolidation - Management is cautious about M&A due to current equity prices but is exploring opportunities for outsourcing volume from smaller players unable to maintain operations [62] Question: Future SG&A cost reductions - Management confirmed there is still some room for further SG&A reductions, although it may become more challenging as they approach pre-IPO levels [66]

Company Performance - Hydrofarm Holdings Group, Inc. (HYFM) reported a quarterly loss of $0.26 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.23, and compared to a loss of $0.25 per share a year ago, indicating an earnings surprise of -13.04% [1] - The company posted revenues of $44.01 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 6.36%, and down from $54.17 million in the same quarter last year [2] - Over the last four quarters, Hydrofarm has surpassed consensus EPS estimates only once and has topped consensus revenue estimates two times [2] Stock Performance - Hydrofarm shares have declined approximately 35.9% since the beginning of the year, contrasting with the S&P 500's gain of 24.3% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.28 on revenues of $41 million, and for the current fiscal year, it is -$0.99 on revenues of $197 million [7] Industry Outlook - The Agriculture - Products industry, to which Hydrofarm belongs, is currently ranked in the bottom 24% of over 250 Zacks industries, suggesting a challenging environment for stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Hydrofarm's stock performance [5]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Emerging growth company ☐ 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 September 30, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from to Commission File Number: 001-39773 Hydrofarm Holdings Group, Inc. (Exact name of registrant as specified in its charter) Delaware ...

Financial Performance - Net sales decreased by 18.8% to $44.0 million compared to $54.2 million in the prior year period[4] - Net loss improved to $13.1 million, or $(0.29) per diluted share, compared to a net loss of $19.9 million, or $(0.44) per diluted share in the prior year[7] - Adjusted EBITDA decreased to less than $0.1 million, down from $0.5 million in the prior year[8] - Free cash flow was $(5.3) million during the three months ended September 30, 2024, a decrease from the same period last year[10] - Adjusted EBITDA (Non-GAAP) was $20 thousand for the three months ended September 30, 2024, compared to $495 thousand for the same period in 2023[21] - The company reported a net loss (GAAP) of $(13,146) thousand for the three months ended September 30, 2024, compared to a net loss of $(19,884) thousand for the same period in 2023[21] Profitability Metrics - Gross profit margin increased to 19.4% of net sales, up from 6.1% in the prior year[5] - Adjusted gross profit margin increased to 24.3% of net sales compared to 23.0% in the prior year[5] - Gross profit margin (GAAP) improved to 19.4% for the three months ended September 30, 2024, compared to 6.1% for the same period in 2023[18] - Adjusted gross profit margin (Non-GAAP) was 24.3% for the three months ended September 30, 2024, slightly down from 24.0% in the previous year[18] Expenses and Cost Management - SG&A expense decreased by more than 10% to $17.6 million from $19.5 million in the prior year[2] - Selling, general and administrative expenses (GAAP) were $17,556 thousand for the three months ended September 30, 2024, down from $19,543 thousand in the same period of 2023[20] - Adjusted SG&A excludes specific expenses to reflect the company's selling, general, and administrative costs more accurately[32] Cash Flow and Liquidity - The company ended the third quarter with $24.4 million in cash and approximately $17 million of available borrowing capacity[10] - Net cash used in operating activities was $(4,467) thousand for the three months ended September 30, 2024, compared to $7,668 thousand for the same period in 2023[22] - Free cash flow (Non-GAAP) was $(5,279) thousand for the three months ended September 30, 2024, compared to $6,918 thousand in the same period of 2023[22] - Liquidity is calculated as total cash and equivalents plus available borrowing capacity, reflecting the company's financial flexibility[35] Balance Sheet and Financial Position - Total current assets decreased from $128,066 thousand on December 31, 2023, to $103,402 thousand on September 30, 2024, a decline of approximately 19.3%[17] - Total liabilities decreased from $217,033 thousand on December 31, 2023, to $202,959 thousand on September 30, 2024, a reduction of approximately 6.5%[17] - The accumulated deficit increased to $(539,948) thousand as of September 30, 2024, from $(490,744) thousand on December 31, 2023[17] Future Outlook - The company reaffirms its full year 2024 outlook, expecting net sales to decrease in the low to high teens percentage range[11] - Capital expenditures are projected to be between $2.5 million and $3.5 million, down from the previous expectation of $3.5 million to $4.5 million[10] Non-GAAP Financial Measures - The company reports financial results in accordance with GAAP, but also provides non-GAAP financial measures for additional insights into performance[27] - Key non-GAAP metrics include Adjusted EBITDA, Adjusted Gross Profit, Adjusted SG&A, Free Cash Flow, Net Debt, and Liquidity, which are presented as a percentage of net sales[28] - Adjusted EBITDA is defined as net loss excluding various expenses, providing a clearer view of ongoing operating performance[29] - Adjusted Gross Profit excludes certain costs and is used to evaluate the company's operational efficiency[30] - Adjusted Gross Profit Margin is calculated as Adjusted Gross Profit divided by net sales for the respective period[31] - Free Cash Flow is defined as net cash from operating activities minus capital expenditures, indicating the company's cash generation ability[34] - Net Debt is defined as total debt minus cash and equivalents, providing insight into the company's leverage position[35]

SHOEMAKERSVILLE, Pa., Oct. 09, 2024 (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 the Company was featured on the WTR Small-Cap Spotlight with Jesse Redmond, Head of Cannabis at Water Tower Research ("WTR"). The episode is now available for replay on Apple Podcasts, Spotify, and all podcast pl ...