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].

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, grow media, and nutrients, along with a portfolio of innovative proprietary branded products [3] - With over 40 years of experience, Hydrofarm aims to empower growers, farmers, and cultivators by providing products that enhance quality, efficiency, consistency, and speed in their growing projects [3] Upcoming Events - Hydrofarm will host a conference call to review its second quarter 2025 results on August 12, 2025, at 8:30 AM ET [1] - A press release with the second quarter 2025 results will be issued before the market opens on the same day [1] - The conference call can be accessed live by dialing 1-800-445-7795 and entering the conference ID: HYFMQ2, and it will also be available as a webcast on the corporate website [2]

Core Insights - The company reported a significant decline in net sales and gross profit for the first quarter of 2025, primarily due to an oversupply in the cannabis industry, with net sales decreasing by 25.2% to $40.5 million compared to $54.2 million in the prior year period [5][8][9] - Despite the challenges, the company achieved improvements in its proprietary brand sales mix and continued to implement cost-saving measures, resulting in a reduction of SG&A expenses for the 11th consecutive quarter [4][7][9] - The company has withdrawn its full-year 2025 outlook due to macroeconomic uncertainties and ongoing industry headwinds, while reaffirming its commitment to strategic priorities aimed at improving profit margins and financial position [13][17] Financial Performance - Gross profit decreased to $6.9 million, representing 17.0% of net sales, down from 20.2% in the prior year period, while adjusted gross profit was $8.5 million, or 21.0% of net sales, compared to 23.4% previously [6][9][21] - SG&A expenses were reduced to $17.9 million from $19.6 million year-over-year, with adjusted SG&A expenses decreasing to $11.0 million from $12.3 million [7][9][21] - The net loss for the first quarter was $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 [8][21] Cash Flow and Liquidity - Cash used in operating activities was $(11.8) million, with free cash flow also negative at $(12.0) million for the quarter [12][9] - As of March 31, 2025, the company had $13.7 million in cash and approximately $17.0 million of available borrowing capacity on its revolving credit facility [11][9] - The company maintained compliance with debt covenants and entered into an amendment to extend the maturity date of its revolving credit facility [11][9] Strategic Initiatives - The company is focused on enhancing its proprietary brand sales mix, optimizing its distribution network, and implementing additional cost-saving measures to build long-term shareholder value [4][9] - The management emphasized the importance of controlling internal factors despite external industry challenges, aiming to improve profit margins and strengthen the financial position [4][13]

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] - Hydrofarm has over 40 years of experience in helping growers enhance productivity and efficiency in their growing projects [3] Upcoming Events - The company will host a conference call to review first quarter 2025 results on May 13, 2025, at 8:30 AM ET [1] - A press release with the first quarter 2025 results will be issued before market open on the same day [1] - The conference call can be accessed live by phone or via a webcast on the corporate website [2]