Hydrofarm Holdings Group Announces Third Quarter 2025 Results

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].