Hydrofarm Holdings Group Announces Second Quarter 2025 Results

Core Viewpoint - Hydrofarm Holdings Group, Inc. reported a significant decline in net sales and gross profit for the second quarter of 2025, prompting the initiation of a restructuring plan aimed at cost reduction and efficiency improvement while maintaining a focus on proprietary brands and international business growth [4][5][6]. Financial Performance - Net sales decreased by 28.4% to $39.2 million compared to $54.8 million in the prior year period, primarily due to a 27.9% decline in volume/mix of products sold and a 0.4% decrease in price [5][9]. - Gross profit fell to $2.8 million, representing 7.1% of net sales, down from $10.9 million or 19.8% of net sales in the prior year period, impacted by non-cash restructuring costs of $3.3 million [6][9]. - Adjusted gross profit decreased to $7.5 million, or 19.2% of net sales, compared to $13.3 million, or 24.4% of net sales in the prior year [6][9]. - Selling, general and administrative (SG&A) expenses improved to $16.1 million from $18.7 million in the prior year, with adjusted SG&A expenses decreasing to $9.8 million from $11.6 million [7][9]. - The net loss was $16.9 million, or $(3.63) per diluted share, compared to a net loss of $23.5 million, or $(5.10) per diluted share in the prior year [8][9]. Restructuring Plan - The company initiated a restructuring plan to optimize its product portfolio and reduce costs, expecting annual savings exceeding $3 million along with additional working capital improvements [4][11]. - Estimated restructuring costs of $3.3 million were incurred during the second quarter, primarily related to non-cash inventory write-downs [11]. Cash Flow and Liquidity - Cash from operating activities was $1.7 million, with free cash flow of $1.4 million during the three months ended June 30, 2025 [13][9]. - As of June 30, 2025, the company had $11.0 million in cash and approximately $9 million of available borrowing capacity on its Revolving Credit Facility [12]. Strategic Outlook - The company reaffirmed its commitment to strategic priorities for fiscal year 2025, focusing on driving diverse high-quality revenue streams, improving profit margins, and strengthening its financial position [14].