Hydrofarm(US:HYFM)2025-11-12 12:37Financial 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].