HYFM

Download the Complete Report Here Key Takeaways: LOCL’s 2Q results reinforce the transition from facility build-out toward yield, customer mix, SKU expansion, and operating leverage. Revenue increased 14% y/y to $13.9 million from $12.1 million and rose ~4% sequentially from $13.3 million, driven by higher production and sales from Georgia, Texas, and Washington. 1H26 revenue reached $27.2 million, up ~15% from $23.7 million in 1H25, extending the growth trend as LOCL converts higher output from its installed asset base into retail sales. Adjusted EBITDA loss narrowed 17% y/y to $5.8 million from $7.1 million and was broadly stable versus $5.7 million in 1Q26. The y/y improvement indicates that higher revenue and tighter cost discipline are beginning to translate into operating leverage despite temporary gross-margin pressure during the quarter. With the three Stack & Flow-enabled facilities already at full harvestable capacity, incremental growth is increasingly coming from better asset productivity, although further gross-margin improvement is needed to accelerate progress toward positive adjusted EBITDA. Food safety and traceability emerged as an important strategic theme this quarter, increasing retailer focus on the attributes that differentiate LOCL’s controlled-environment model. Retail sourcing conversations that historically centered on cost and availability are increasingly incorporating water sourcing, environmental control, traceability, and food-safety monitoring. This shift is visible more broadly, with FMI’s 2026 research indicating that 31% of responding retailers plan to add food-traceability technology capabilities this year, while recent produce-safety events have highlighted the commercial impact of supply-chain exposure, with U.S. fresh-lettuce unit sales falling 9% w/w during July’s Cyclospora outbreak, per NielsenIQ data. Against this backdrop, LOCL’s seed-to-package controlled environment and closed-loop water management reduce exposure to several variables associated with open-field agriculture, including runoff, wildlife, and changing outdoor conditions. With approximately 13,000 retail doors already serviced, this strengthens LOCL’s positioning with retailers seeking more traceable, controlled, and resilient fresh-produce supply and could support deeper commercial relationships over time. Commercial momentum continued to build as previously announced wins converted into active placements and new accounts broadened distribution entering 2H26. The six-SKU Harris Teeter rollout across more than 250 stores and a separate large regional retailer covering approximately 160 stores are now fully launched and tracking in line with expectations. The account base expanded further after quarter-end, with a new Mid-South retailer launching five SKUs across approximately 66 stores in July and a Rocky Mountain partner beginning shipments of four SKUs across approximately 110 stores in early August. LOCL also received bid awards during 1H26 extending supply arrangements with multiple national retail accounts across baby leaf lettuce and organic butter lettuce through 1Q27. The progression from account wins to multi-SKU launches and longer supply commitments provides greater demand visibility and should support more efficient crop planning and facility utilization as retail programs scale. The single-serve salad-kit relaunch adds a potentially meaningful value-added growth vector, while Romano Caesar and arugula continue to broaden LOCL’s opportunity within existing retail relationships. Following discussions with a major retailer, LOCL agreed to relaunch its single-serve salad-kit line through a Mid-Atlantic pilot covering approximately 400 stores this fall. The initiative builds on encouraging performance from the family-sized Romano Caesar Salad Kit, which recorded a 75% increase in baseline velocity in 4Q25; an additional distribution center launched in May 2026 and has since reached velocities comparable with the existing network. Arugula also remains an active growth opportunity following successful 2025 launches from Washington and Texas, particularly where conventional supply has struggled to consistently meet retailer demand. Together with baby leaf and organic butter lettuce program extensions through 1Q27, these initiatives give LOCL additional ways to deepen shelf presence and expand revenue per retail relationship without requiring a proportionate increase in physical capacity. Yield remains the primary operating growth lever, with Georgia, Texas, and Washington sustaining the approximately 10% higher run-rate capacity benefit from tower upgrades completed in 4Q25. The three Stack & Flow-enabled facilities continue to operate at the highest yield levels in company history, with tower upgrades completed in 4Q25 supporting approximately 10% higher run-rate yield capacity. Revenue increased 14% y/y in 2Q26, driven by increased production and sales from Georgia, Texas, and Washington, providing evidence that higher facility productivity is translating into incremental volume. These gains allow LOCL to increase production from the existing facility base and support continued revenue growth without adding comparable new capacity. California is beginning to provide a second proof point for the yield-led strategy, while network-wide cost initiatives broaden the path to improved unit economics. Selective investments at the California facilities remain targeted to generate as much as a 20% improvement in yields, with initial work at one location already driving an approximately 10% increase in total production versus the prior-year period. At the same time, more efficient seeding practices reduced seed costs approximately 20% y/y, while additional savings are being pursued across procurement, maintenance, labor efficiency, and freight management. These initiatives complement the ~10% yield-capacity improvement across Georgia, Texas, and Washington and reinforce the broader strategy of extracting more output at lower unit costs from the existing network. The benefits were partly obscured in 2Q26 by temporary Georgia packing inefficiencies, making gross-margin recovery an important 2H26 indicator of whether these operating gains are translating into reported profitability. Strategic partnership discussions are gaining relevance as retailer interest in controlled supply increases, while LOCL continues to keep future capacity tied to committed demand. Food-safety concerns are increasing the urgency of strategic retailer discussions, while LOCL reaffirmed its existing demand-backed approach to future capacity. Additional Stack & Flow-enabled capacity, including potential Midwest expansion, remains under review, with timing and configuration being evaluated alongside retailer discussions and product-specific requirements. This approach allows LOCL to prioritize growth from higher yields and deeper retail penetration before committing capital to additional capacity. A demand-backed expansion model could help LOCL scale distribution while limiting the capital intensity associated with its earlier build-out phase. This becomes increasingly relevant as retailers place greater emphasis on traceability, food safety, and regional supply reliability. Adjusted gross margin temporarily moderated to 27% as Georgia’s channel diversification introduced packing inefficiencies, while underlying yield and cost trends remained constructive. Adjusted gross profit was $3.7 million, essentially unchanged from 2Q25, while adjusted gross margin declined approximately 300 bps y/y from 30% and approximately 200 bps sequentially from 29%. The moderation reflected packing inefficiencies created as LOCL diversified Georgia’s channel mix; those processes have since been refined and implemented. In our view, the decline did not reflect deterioration in facility yields, which remained at record levels, but it highlights the near-term complexity that can accompany broader retail mix and package formats. A return toward the 29%-30% adjusted gross-margin range alongside continued revenue growth would provide a stronger indication that LOCL’s retail mix and cost initiatives are converting into better unit economics. Operating leverage continued to improve as LOCL shifted spending toward commercial expansion while reducing development and corporate overhead. Sales and marketing expense increased approximately 20% y/y to $2.9 million in 2Q26 and 14% to $5.1 million in 1H26, broadly in line with revenue growth of approximately 15%, suggesting the recent rollout cadence has not required disproportionate commercial spending. Retailer wins, SKU breadth, program duration, and product velocity remain the more relevant commercial indicators, with recent launches across 250+ Harris Teeter stores, a 160-store regional account, new Mid-South and Rocky Mountain programs across 66 and 110 stores, respectively, and the planned 400-store salad-kit pilot indicating that higher selling investment is translating into distribution growth. At the same time, operating expenses declined approximately 11% y/y to $15.0 million, with R&D down 29% to $4.6 million and adjusted G&A down 17% to $4.1 million. The shift is consistent with LOCL moving from heavier technology and facility-ramp spending toward scaled commercial execution, while keeping overhead growth below revenue growth. Adjusted EBITDA loss improved 17% y/y, advancing LOCL toward management’s goal of positive adjusted EBITDA. Net loss narrowed to $19.8 million from $21.6 million in 2Q25, supported by lower operating expenses and a modest reduction in net interest expense. Sequentially, the increase in GAAP net loss from 1Q26 was largely attributable to a roughly $6.6 million swing in warrant fair value accounting. More importantly, adjusted EBITDA loss improved to $5.8 million from $7.1 million y/y, while the 1H26 loss narrowed approximately 24% to $11.5 million from $15.3 million. The continued improvement, alongside higher revenue and tighter cost discipline, supports management’s view that the business is steadily narrowing the gap to positive adjusted EBITDA. Cash consumption improved as the business moved beyond the heavier facility build-out phase, although liquidity remained modest at quarter-end ahead of the subsequent financing. Net cash used in operating activities improved approximately 26% to $13.4 million in 1H26 from $18.3 million in 1H25, while investing cash use declined approximately 80% to $2.2 million from $10.9 million as construction spending normalized. Cash, cash equivalents, and restricted cash declined to $10.1 million at June 30 from $18.8 million at the end of 1Q26, with working capital narrowing to approximately $1.5 million. Inventory remained relatively stable at $7.6 million versus $7.4 million at year-end despite new retail programs ramping, indicating that the liquidity draw was driven primarily by continued operating cash consumption rather than inventory build. The lower capital-spending burden is constructive, but further revenue growth, margin recovery, and EBITDA improvement remain necessary to support stronger internal cash generation and reduce reliance on external capital. Leverage remains elevated, keeping balance-sheet discipline central to the broader profitability and cash-generation story. LOCL had approximately $302.8 million of principal outstanding under the Cargill Senior Facility and $328.3 million of total long-term debt principal at June 30. Reported long-term debt was approximately $489.3 million, primarily reflecting the debt premium recorded in connection with the 2025 restructuring. While the restructuring reduced prior obligations and the business is now operating with a lower capital-spending burden, the absolute debt load remains significant relative to LOCL’s current revenue base and cash generation, making sustained EBITDA improvement and lower cash consumption critical to improving financial flexibility. The subsequent $12.5 million strategic investment and related Cargill amendments materially improve near-term liquidity and financial flexibility. U.S. Bounti’s additional investment brings total strategic capital committed in 2026 to $27.5 million and was structured through a 7.0% convertible note maturing in August 2031, initially convertible at $1.37 per share, together with a 1.0 million-share warrant at $0.125. PIK interest reduces near-term cash requirements, while conversion of the initial principal alone could add approximately 9.1 million shares. In connection with the financing, Cargill waived a minimum-liquidity covenant default, reset required liquidity to $3.5 million through March 2027 and $2.0 million thereafter, and permitted certain 2027 interest to be paid in kind, subject to conditions. These measures extend LOCL’s liquidity runway, but continued improvement in adjusted EBITDA and operating cash flow remains necessary to address the company’s leverage and reduce reliance on external capital. 2H26 setup remains constructive, with new retail programs, sustained yield gains, and continued cost actions providing multiple levers for sequential improvement. Management expects revenue and the adjusted EBITDA loss rate to continue improving through 2026, with revenue growth and cost discipline remaining the primary drivers toward breakeven. Entering 3Q, LOCL is carrying forward $13.9 million of quarterly revenue, new launches across approximately 66 Mid-South and 110 Rocky Mountain stores, sustained ~10% higher run-rate yield capacity across Georgia, Texas, and Washington, and early production benefits from the California optimization program. The ~400-store single-serve salad-kit pilot expected this fall adds another potential growth driver. The key 2H26 proof points are continued sequential revenue growth, recovery in adjusted gross margin from 27%, and further narrowing of the $5.8 million adjusted EBITDA loss as LOCL progresses toward positive adjusted EBITDA. Disclaimer: Exec Edge does not publish proprietary estimates, ratings, price targets, or investment recommendations. The valuation discussion below is illustrative only and is based on company filings, management commentary, and third-party data and estimates. It does not constitute a recommendation, price target, rating, or prediction of future pricing. LOCL trades near the lower end of its historical valuation range despite recent operating improvement. LOCL currently trades at 0.51x LTM sales versus a three-year high multiple of 1.92x and a three-year mean of 0.83x. Applying the historical high multiple to LTM sales of $51.8 million implies an illustrative market capitalization of $99.5 million, or $4.25 per share. Importantly, this framework does not require aggressive forward revenue assumptions; rather, it reflects potential multiple recovery if investors gain confidence that LOCL’s recent execution improvements, including higher revenue, record facility yields, lower adjusted G&A, normalization of temporary gross-margin pressure, and narrowing adjusted EBITDA losses, are sustainable. Relative valuation remains nuanced across the CEA-linked peer set, while traditional fresh-produce peers provide a useful valuation anchor. LOCL trades at 0.51x LTM sales, below Village Farms at 1.22x and GrowGeneration at 0.66x, while remaining above Hydrofarm at 0.07x and below the headline CEA-linked peer average of 1.21x, which is elevated by CEA Industries at 3.57x. Against traditional fresh-produce companies, which average 0.53x LTM sales, LOCL now trades at a modest discount despite its patented Stack & Flow platform, approximately 13,000-door retail footprint, recent double-digit revenue growth, and improving adjusted EBITDA trajectory. In our view, sustained execution could support a valuation premium to conventional produce peers if investors increasingly recognize LOCL as a technology-enabled CEA platform rather than a traditional produce supplier. The key re-rating triggers remain execution-led rather than purely multiple-led. Continued sequential revenue growth, recovery in adjusted gross margin toward prior levels, further narrowing of the adjusted EBITDA loss, and conversion of recent retail wins into repeatable volume would provide the clearest support for valuation recovery. Strategic investor backing also strengthens the setup, with U.S. Bounti committing an additional $12.5 million following its $15.0 million March investment, bringing total strategic capital committed in 2026 to $27.5 million and strengthening near-term financial flexibility. At the same time, leverage and prospective dilution remain important constraints, meaning a sustained re-rating will ultimately depend on LOCL converting higher facility productivity and broader distribution into stronger margins, lower cash consumption, and improved per-share economics. Read Exec Edge’s Initiation on Local Bounti Corporation Here Subscribe to our Weekly Newsletter to Receive All Research Contact: Executives-Edge.com [email protected] The post Local Bounti’s Network Yields at Record Levels, Retail Momentum Broadened – Quarterly Update Report appeared first on ExecEdge.

SHOEMAKERSVILLE, Pa., Aug. 14, 2026 (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, today announced financial results for its second quarter ended June 30, 2026. Comparison of Second Quarter vs. Prior Year Period: Net sales decreased to $23.2 million compared to $39.2 million. Gross Profit Margin increased to 11.3% of net sales compared to 7.1%. Adjusted Gross Profit Margin(1) increased to 20.0% of net sales compared to 19.2%. SG&A expense and Adjusted SG&A(1) expense decreased by 37.7% and 35.7%, respectively. Net loss decreased to $10.6 million compared to $16.9 million. Adjusted EBITDA(1) of $(1.7) million compared to $(2.3) million. Cash from operating activities and Free Cash Flow(1) were each approximately break-even, compared to $1.7 million and $1.4 million, respectively, in the prior year. (1) Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted SG&A, Adjusted SG&A as a percent of net sales, Adjusted EBITDA, and Free Cash Flow are non-GAAP measures. For a description of our non-GAAP measures see the “Non-GAAP Measures” section accompanying this release; and for reconciliations of GAAP to non-GAAP measures see the “Reconciliation of Non-GAAP Measures” accompanying this release. William Toler Chief Executive Officer of Hydrofarm, said, "In the second quarter, we achieved our best quarterly proprietary brand sales mix ever, consistent with our strategy of focusing sales efforts on these products. We also significantly reduced Adjusted SG&A expense by 35.7% compared to the prior year, aided by facility cost reductions from logistics services. This represents our 16th consecutive quarter of meaningful year-over-year expense reductions. In July, we closed on the sale of Aurora Peat Products, which was a key strategic step in optimizing our portfolio and strengthening Hydrofarm's capital structure, as the proceeds from the transaction reduced our outstanding debt. We are committed to our strategic priorities to drive high-quality revenue streams, and improve profit margins and profitability." Second Quarter 2026 Financial Results Net sales decreased 40.9% to $23.2 million compared to $39.2 million in the prior year period. This was due to a decline in volume/mix of products sold, primarily related to industry oversupply and the discontinuation of certain distributed brands. Gross Profit decreased to $2.6 million, or 11.3% of net sales, compared to $2.8 million, or 7.1% of net sales, in the prior year period. Gross profit and gross profit margin were negatively impacted by $1.1 million of restructuring expenses in the second quarter, compared to $3.3 million in the prior year period. Adjusted Gross Profit (1) decreased to $4.6 million, or 20.0% of net sales, compared to $7.5 million, or 19.2% of net sales, in the prior year period. The decreases in Gross Profit and Adjusted Gross Profit (1) were primarily due to lower net sales. Gross Profit Margin and Adjusted Gross Profit Margin (1) increased primarily due to selling a higher proportion of proprietary brand products. Selling, general and administrative ("SG&A") expense improved to $10.1 million, compared to $16.1 million in the prior year period, and Adjusted SG&A (1) expense improved to $6.3 million compared to $9.8 million in the prior year period. SG&A declined as a result of lower amortization expense, partially offset by non-cash restructuring expenses and costs associated with the Company's strategic alternatives. In addition, Adjusted SG&A (1) expenses decreased $3.5 million from the Company's cost saving initiatives, including a $1.2 million decrease in facility expenses, a $1.1 million decrease in employee compensation costs, and $1.2 million of reductions in other general and administrative costs. Net loss was $10.6 million, or $(2.23) per diluted share, compared to net loss of $16.9 million, or $(3.63) per diluted share in the prior year period. Net loss decreased primarily due to lower SG&A expense in the current year. Adjusted EBITDA (1) improved to $(1.7) million, compared to $(2.3) million in the prior year period. The improvement was related to Adjusted SG&A (1) expense reductions, partially offset by lower net sales and lower Adjusted Gross Profit (1). Balance Sheet, Liquidity, and Strategic Alternatives Update As of June 30, 2026, the Company had $6.2 million in cash and $0.5 million in restricted cash. The Company ended the second quarter with $114.4 million in principal balance on its Term Loan outstanding, $7.6 million in finance leases, and $0.1 million in other debt outstanding. Cash from operating activities was $0.1 million and the Company invested less than $0.1 million in capital expenditures, yielding approximately break-even Free Cash Flow (1) during the three months ended June 30, 2026, compared to Free Cash Flow (1) of $1.4 million in the prior year period. As previously disclosed, on February 4, 2026, the Company elected to defer making the interest payment of approximately $2.8 million on the Company's Term Loan, and as a result, an event of default occurred regarding the Term Loan and it has been classified as current debt. On April 8, 2026, the Company entered into a Forbearance Agreement with the Term Loan lenders requiring certain provisions and reporting obligations. The Company, Lenders, and FEAC agreed to extend the Forbearance Period under the Forbearance Agreement through and including August 31, 2026. On July 31, 2026, the Company completed the sale of Aurora Peat Products ULC (“APP”) in Canada for total consideration of $16 million, a portion of which was represented by a promissory note in the amount of $5 million. The APP sale proceeds were applied to reduce outstanding Term Loan debt, including interest. The sale of APP marked a key milestone in the Company's exploration of strategic alternatives to strengthen its capital structure and enhance liquidity. The Company and its Board of Directors remain in ongoing discussions with the Term Loan lenders to continue this process. The Company continues to offer its high-performing Roots Organics product line and other proprietary brands manufactured in Eugene, Oregon, along with several partner brands that provide a comprehensive customer solution to meet CEA needs. Hydrofarm remains committed to drive high-quality revenue streams, improve profit margins and strengthen its financial position. While maintaining its dedication to customer service, the Company is focused on reducing costs and improving productivity within the organization. Hydrofarm's initiatives include implementing operational changes, reducing headcount, and focusing its sales efforts on its proprietary brand offerings. Additionally, the Company is scaling its logistics services business, leveraging its distribution center footprint to drive cost savings. (1) Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted SG&A, Adjusted SG&A as a percent of net sales, Adjusted EBITDA, and Free Cash Flow are non-GAAP measures. For a description of our non-GAAP measures see the “Non-GAAP Measures” section accompanying this release; and for reconciliations of GAAP to non-GAAP measures see the “Reconciliation of Non-GAAP Measures” accompanying this release. About Hydrofarm Holdings Group, Inc. Hydrofarm is a leading independent manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture, including grow lights, climate control solutions, grow media and nutrients, as well as a broad portfolio of innovative proprietary branded products. For over 40 years, Hydrofarm has helped growers make growing easier and more productive. The Company’s mission is to empower growers, farmers and cultivators with products that enable greater quality, efficiency, consistency and speed in their grow projects. Cautionary Note Regarding Forward-Looking Statements Statements contained in this press release, other than statements of historical fact, which address activities, events and developments that the Company expects or anticipates will or may occur in the future, including, but not limited to, information regarding the future economic performance and financial condition of the Company, the plans and objectives of the Company’s management, and the Company’s assumptions regarding such performance and plans are “forward-looking statements” within the meaning of the U.S. federal securities laws that are subject to risks and uncertainties. These forward-looking statements generally can be identified as statements that include phrases such as “guidance,” “outlook,” “projected,” “believe,” “target,” “predict,” “estimate,” “forecast,” “strategy,” “may,” “goal,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “should” or other similar words or phrases. Actual results could differ materially from the forward-looking information in this release due to a variety of factors, including, but not limited to: The Company's ability to continue as a going concern; The Company's level of indebtedness; The market in which the Company operates has been substantially adversely impacted by conditions of the agricultural and cannabis industries, including oversupply and decreasing prices of the products the Company's end customers sell, which, in turn, has materially adversely impacted the Company's sales and other results of operations and which may continue to do so in the future; If industry conditions worsen or are sustained for a lengthy period, the Company could be forced to take additional impairment charges and/or inventory and accounts receivable reserves, which could be substantial, and, ultimately, the Company may face liquidity challenges; The Company’s current and future debt facilities may limit the operation of the Company’s business including restricting its ability to sell products directly to the cannabis industry; Although equity financing may be available, the Company's current stock prices are at depressed levels and any such financing would be dilutive; Interruptions in the Company's supply chain could adversely impact expected sales growth and operations; Increased prices and inflation could adversely impact the Company's performance and financial results; Global political and economic conditions including the imposition of potential tariffs could increase the costs of the Company's products and adversely impact the competitiveness of the Company's products and the Company's financial results; The Company may be unable to regain compliance and continue to meet the continued listing standards of Nasdaq; The Company's restructuring activities may increase our expenses and cash expenditures, and may not have the intended cost saving effects; The highly competitive nature of the Company’s markets could adversely affect its ability to maintain or grow revenues; Certain of the Company’s products may be purchased for use in new or emerging industries or segments, including the cannabis industry, and/or be subject to varying, inconsistent, and rapidly changing laws, regulations, administrative and enforcement approaches, and consumer perceptions which may adversely impact the market for the Company’s products; The market for the Company’s products has been impacted by conditions impacting its customers, including related crop prices, climate change, and other factors impacting growers; Compliance with government laws and regulations including environmental and other public health regulations or changes in such regulations or regulatory enforcement priorities could increase the Company’s costs of doing business or limit the Company’s ability to market all of its products; Damage to the Company’s reputation or the reputation of its products or products it markets on behalf of third parties could have an adverse effect on its business; If the Company is unable to effectively execute its e-commerce business, its reputation and operating results may be harmed; The Company’s operations may be impaired if its information technology systems fail to perform adequately or if it is the subject of a data breach or cyber-attack; The Company may not be able to adequately protect its intellectual property and other proprietary rights that are material to the Company’s business; Acquisitions, other strategic alliances and investments could result in operating and integration difficulties, dilution and other harmful consequences that may adversely impact the Company’s business and results of operations. Additional detailed information concerning a number of the important factors that could cause actual results to differ materially from the forward-looking information contained in this release is readily available in the Company’s annual, quarterly and other reports. The Company disclaims any obligation to update developments of these risk factors or to announce publicly any revision to any of the forward-looking statements contained in this release, or to make corrections to reflect future events or developments except as otherwise required by law. Contacts:Investor [email protected] Notes to GAAP to Non-GAAP reconciliations presented above (Adjusted Gross Profit, Adjusted SG&A, Adjusted EBITDA, and Free Cash Flow): For the three and six months ended June 30, 2026, non-cash restructuring expenses were primarily associated with the write-down of certain ROU assets which were recorded in SG&A and inventory write-downs which were recorded in cost of goods sold. Cash charges were primarily comprised of costs incurred to relocate and terminate certain facilities. For the three and six months ended June 30, 2025, Restructuring expenses primarily related to non-cash inventory markdowns. For the six months ended June 30, 2026, other charges was primarily comprised of certain legal charges. For the six months ended June 30, 2025, other charges primarily related to legal costs related to the 1-for-10 reverse stock split effected on February 12, 2025, as well as severance charges. Includes stock-based compensation and related employer payroll taxes on stock-based compensation for the periods presented. For the three and six months ended June 30, 2026, debt transactions and strategic alternatives charges include legal and advisory services associated with debt transactions, including the forbearance agreement. For the three and six months ended June 30, 2025, debt transactions and strategic alternatives charges include consulting, transaction services and legal fees for potential acquisitions, divestitures, or strategic combinations. Such amounts were previously presented in the line item titled “Acquisition and integration expenses.” For the three and six months ended June 30, 2026 and 2025, other expense (income), net related primarily to foreign currency exchange rate gains and losses and other non-operating income and expenses. Non-GAAP Financial Measures We report our financial results in accordance with generally accepted accounting principles in the U.S. (“GAAP”). Management believes that certain non-GAAP financial measures provide investors with additional useful information in evaluating our performance and that excluding certain items that may vary substantially in frequency and magnitude period-to-period from net loss provides useful supplemental measures that assist in evaluating our ability to generate earnings and to more readily compare these metrics between past and future periods. These non-GAAP financial measures may be different than similarly titled measures used by other companies. To supplement our condensed consolidated financial statements which are prepared in accordance with GAAP, we use "Adjusted EBITDA", "Adjusted Gross Profit", "Adjusted SG&A", "Free Cash Flow", "Net Debt", and "Liquidity" which are non-GAAP financial measures. We also present certain of these non-GAAP metrics as a percentage of net sales. Our non-GAAP financial measures should not be considered in isolation from, or as substitutes for, financial information prepared in accordance with GAAP. There are several limitations related to the use of our non-GAAP financial measures as compared to the closest comparable GAAP measures. We define Adjusted EBITDA (non-GAAP) as net loss (GAAP) excluding interest expense, income taxes, depreciation, depletion and amortization, stock-based compensation including employer payroll taxes on stock-based compensation, restructuring expenses, impairments, severance, loss on asset disposition, other income/expense, net, and other non-cash, unusual and/or infrequent costs (i.e., acquisition and integration expenses), which we do not consider in our evaluation of ongoing operating performance. We define Adjusted EBITDA (non-GAAP) as a percent of net sales as Adjusted EBITDA (as defined above) divided by net sales in the respective period. We define Adjusted Gross Profit (non-GAAP) as Gross Profit (GAAP) excluding depreciation, depletion, and amortization, restructuring expenses, severance and other expenses, and other non-cash, unusual and/or infrequent costs, which we do not consider in our evaluation of ongoing operating performance. We define Adjusted Gross Profit Margin (non-GAAP) as a percent of net sales as Adjusted Gross Profit (as defined above) divided by net sales in the respective period. We define Adjusted SG&A (non-GAAP) as SG&A (GAAP) excluding depreciation, depletion, and amortization, stock-based compensation including employer payroll taxes on stock-based compensation, restructuring expenses, severance and other expenses, and other non-cash, unusual and/or infrequent costs (i.e., acquisition and integration expenses), which we do not consider in our evaluation of ongoing operating performance. We define Adjusted SG&A (non-GAAP) as a percent of net sales as Adjusted SG&A (as defined above) divided by net sales in the respective period. We define Free Cash Flow (non-GAAP) as Net cash from (used in) operating activities less capital expenditures for property, plant and equipment. We believe this provides additional insight into the Company's ability to generate cash and maintain liquidity. However, Free Cash Flow does not represent funds available for investment or other discretionary uses since it does not deduct cash used to service our debt or other cash flows from financing activities or investing activities. We define Liquidity as total cash, cash equivalents and restricted cash, if applicable. We define Net Debt as total debt principal outstanding plus finance lease liabilities and other debt, less cash, cash equivalents and restricted cash, if applicable.

SHOEMAKERSVILLE, Pa., May 15, 2026 (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, today announced financial results for its first quarter ended March 31, 2026. Comparison of First Quarter vs. Prior Year Period: Net sales decreased to $28.5 million compared to $40.5 million. Gross Profit Margin decreased to 6.4% of net sales compared to 17.0%. Adjusted Gross Profit Margin(1) decreased to 15.8% of net sales compared to 21.0%. SG&A expense and Adjusted SG&A(1) expense decreased by 40.8% and 23.1%, respectively. Net loss increased to $14.6 million compared to $14.4 million. Adjusted EBITDA(1) of $(3.9) million compared to $(2.4) million. Cash used in operating activities and Free Cash Flow(1) were each $(0.8) million, compared to $(11.8) million and $(12.0) million, respectively, in the prior year. (1) Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted SG&A, Adjusted SG&A as a percent of net sales, Adjusted EBITDA, and Free Cash Flow are non-GAAP measures. For a description of our non-GAAP measures see the “Non-GAAP Measures” section accompanying this release; and for reconciliations of GAAP to non-GAAP measures see the “Reconciliation of Non-GAAP Measures” accompanying this release. William Toler Chief Executive Officer of Hydrofarm, said, "In the first quarter, we continued to execute on our strategic priorities. We have completed the consolidation of our U.S. manufacturing facilities into one location. During the quarter, we significantly reduced Adjusted SG&A expense by 23.1% compared to the prior year, representing our 15th consecutive quarter of meaningful year-over-year expense reductions. Free Cash Flow in the first quarter was also a significant improvement over the prior year. We are focused on positioning the business to drive high quality revenue streams, improved profitability, and strengthen our financial position." First Quarter 2026 Financial Results Net sales decreased 29.6% to $28.5 million compared to $40.5 million in the prior year period. This was due to a decline in volume/mix of products sold primarily related to industry oversupply. Gross Profit decreased to $1.8 million, or 6.4% of net sales, compared to $6.9 million, or 17.0% of net sales, in the prior year period. Gross profit and gross profit margin were negatively impacted by $1.7 million of restructuring expenses in the first quarter. Adjusted Gross Profit(1) decreased to $4.5 million, or 15.8% of net sales, compared to $8.5 million, or 21.0% of net sales, in the prior year period. The decreases in Gross Profit, Gross Profit Margin, Adjusted Gross Profit(1) and Adjusted Gross Profit Margin(1) were primarily due to lower net sales as well as lower production volumes and productivity at manufacturing facilities. Selling, general and administrative (“SG&A”) expense improved to $10.6 million, compared to $17.9 million in the prior year period, and Adjusted SG&A(1) expense improved to $8.4 million compared to $11.0 million in the prior year period. Lower amortization expense contributed to the reduction in SG&A. In addition, both SG&A and Adjusted SG&A(1) expenses decreased primarily as a result of the Company's restructuring actions and cost saving initiatives, primarily attributable to a $1.2 million decrease in employee compensation costs. Net loss was $14.6 million, or $(3.07) per diluted share, compared to net loss of $14.4 million, or $(3.12) per diluted share in the prior year period. Net loss declined primarily due to lower net sales, lower gross profit, and higher interest expense, partially offset by SG&A reductions. Adjusted EBITDA(1) decreased to $(3.9) million, compared to $(2.4) million in the prior year period. The reduction was related to lower net sales and lower Adjusted Gross Profit(1), partially offset by Adjusted SG&A(1) expense reductions. Balance Sheet, Liquidity and Cash Flow As of March 31, 2026, the Company had $4.8 million in cash and $0.5 million in restricted cash. The Company ended the first quarter with $114.4 million in principal balance on its Term Loan outstanding, $7.7 million in finance leases, and $0.1 million in other debt outstanding. Cash used in operating activities was $(0.8) million and the Company invested less than $0.1 million in capital expenditures, yielding Free Cash Flow(1) of $(0.8) million during the three months ended March 31, 2026. Free Cash Flow(1) improved by $11.2 million compared to the prior year. On February 4, 2026, the Company elected to defer making the interest payment of approximately $2.8 million on the Term Loan. As a result of the Company’s failure to pay the interest within the grace period, an event of default occurred with respect to the Term Loan. As a result of the event of default, the Term Loan was reclassified to current portion of long-term debt from long-term debt. On April 8, 2026, the Company entered into a Forbearance Agreement with the Term Loan lenders requiring certain provisions and reporting obligations, including a $1 million minimum liquidity threshold and regular budget approvals. As of the date of this earnings release, the Forbearance Agreement is continuing. The Company and its Board of Directors are exploring strategic alternatives to strengthen the Company’s liquidity and capital structure, and are engaged in ongoing discussions with the Term Loan lenders. Strategic Priorities Hydrofarm remains committed to its strategic priorities: drive high-quality revenue streams, improve profit margins and strengthen financial position. While maintaining our dedication to customer service, we are focused on reducing costs and improving productivity within the organization. Our initiatives include implementing operational changes, consolidating our facility footprint, reducing headcount, and focusing our sales efforts on our proprietary brand offerings. (1) Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted SG&A, Adjusted SG&A as a percent of net sales, Adjusted EBITDA, and Free Cash Flow are non-GAAP measures. For a description of our non-GAAP measures see the “Non-GAAP Measures” section accompanying this release; and for reconciliations of GAAP to non-GAAP measures see the “Reconciliation of Non-GAAP Measures” accompanying this release. About Hydrofarm Holdings Group, Inc. Hydrofarm is a leading independent manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture, including grow lights, climate control solutions, grow media and nutrients, as well as a broad portfolio of innovative proprietary branded products. For over 40 years, Hydrofarm has helped growers make growing easier and more productive. The Company’s mission is to empower growers, farmers and cultivators with products that enable greater quality, efficiency, consistency and speed in their grow projects. Cautionary Note Regarding Forward-Looking Statements Statements contained in this press release, other than statements of historical fact, which address activities, events and developments that the Company expects or anticipates will or may occur in the future, including, but not limited to, information regarding the future economic performance and financial condition of the Company, the plans and objectives of the Company’s management, and the Company’s assumptions regarding such performance and plans are “forward-looking statements” within the meaning of the U.S. federal securities laws that are subject to risks and uncertainties. These forward-looking statements generally can be identified as statements that include phrases such as “guidance,” “outlook,” “projected,” “believe,” “target,” “predict,” “estimate,” “forecast,” “strategy,” “may,” “goal,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “should” or other similar words or phrases. Actual results could differ materially from the forward-looking information in this release due to a variety of factors, including, but not limited to: The Company's ability to continue as a going concern; The Company's level of indebtedness; The market in which the Company operates has been substantially adversely impacted by conditions of the agricultural and cannabis industries, including oversupply and decreasing prices of the products the Company's end customers sell, which, in turn, has materially adversely impacted the Company's sales and other results of operations and which may continue to do so in the future; If industry conditions worsen or are sustained for a lengthy period, the Company could be forced to take additional impairment charges and/or inventory and accounts receivable reserves, which could be substantial, and, ultimately, the Company may face liquidity challenges; The Company’s current and future debt facilities may limit the operation of the Company’s business including restricting its ability to sell products directly to the cannabis industry; Although equity financing may be available, the Company's current stock prices are at depressed levels and any such financing would be dilutive; Interruptions in the Company's supply chain could adversely impact expected sales growth and operations; Increased prices and inflation could adversely impact the Company's performance and financial results; Global political and economic conditions including the imposition of potential tariffs could increase the costs of the Company's products and adversely impact the competitiveness of the Company's products and the Company's financial results; The Company may be unable to regain compliance and continue to meet the continued listing standards of Nasdaq; The Company's restructuring activities may increase our expenses and cash expenditures, and may not have the intended cost saving effects; The highly competitive nature of the Company’s markets could adversely affect its ability to maintain or grow revenues; Certain of the Company’s products may be purchased for use in new or emerging industries or segments, including the cannabis industry, and/or be subject to varying, inconsistent, and rapidly changing laws, regulations, administrative and enforcement approaches, and consumer perceptions which may adversely impact the market for the Company’s products; The market for the Company’s products has been impacted by conditions impacting its customers, including related crop prices, climate change, and other factors impacting growers; Compliance with government laws and regulations including environmental and other public health regulations or changes in such regulations or regulatory enforcement priorities could increase the Company’s costs of doing business or limit the Company’s ability to market all of its products; Damage to the Company’s reputation or the reputation of its products or products it markets on behalf of third parties could have an adverse effect on its business; If the Company is unable to effectively execute its e-commerce business, its reputation and operating results may be harmed; The Company’s operations may be impaired if its information technology systems fail to perform adequately or if it is the subject of a data breach or cyber-attack; The Company may not be able to adequately protect its intellectual property and other proprietary rights that are material to the Company’s business; Acquisitions, other strategic alliances and investments could result in operating and integration difficulties, dilution and other harmful consequences that may adversely impact the Company’s business and results of operations. Additional detailed information concerning a number of the important factors that could cause actual results to differ materially from the forward-looking information contained in this release is readily available in the Company’s annual, quarterly and other reports. The Company disclaims any obligation to update developments of these risk factors or to announce publicly any revision to any of the forward-looking statements contained in this release, or to make corrections to reflect future events or developments except as otherwise required by law. Notes to GAAP to Non-GAAP reconciliations presented above (Adjusted Gross Profit, Adjusted SG&A, Adjusted EBITDA, and Free Cash Flow): Non-GAAP Financial Measures We report our financial results in accordance with generally accepted accounting principles in the U.S. (“GAAP”). Management believes that certain non-GAAP financial measures provide investors with additional useful information in evaluating our performance and that excluding certain items that may vary substantially in frequency and magnitude period-to-period from net loss provides useful supplemental measures that assist in evaluating our ability to generate earnings and to more readily compare these metrics between past and future periods. These non-GAAP financial measures may be different than similarly titled measures used by other companies. To supplement our condensed consolidated financial statements which are prepared in accordance with GAAP, we use "Adjusted EBITDA", "Adjusted Gross Profit", "Adjusted SG&A", "Free Cash Flow", "Net Debt", and "Liquidity" which are non-GAAP financial measures. We also present certain of these non-GAAP metrics as a percentage of net sales. Our non-GAAP financial measures should not be considered in isolation from, or as substitutes for, financial information prepared in accordance with GAAP. There are several limitations related to the use of our non-GAAP financial measures as compared to the closest comparable GAAP measures. We define Adjusted EBITDA (non-GAAP) as net loss (GAAP) excluding interest expense, income taxes, depreciation, depletion and amortization, stock-based compensation including employer payroll taxes on stock-based compensation, restructuring expenses, impairments, severance, loss on asset disposition, other income/expense, net, and other non-cash, unusual and/or infrequent costs (i.e., acquisition and integration expenses), which we do not consider in our evaluation of ongoing operating performance. We define Adjusted EBITDA (non-GAAP) as a percent of net sales as Adjusted EBITDA (as defined above) divided by net sales in the respective period. We define Adjusted Gross Profit (non-GAAP) as Gross Profit (GAAP) excluding depreciation, depletion, and amortization, restructuring expenses, severance and other expenses, and other non-cash, unusual and/or infrequent costs, which we do not consider in our evaluation of ongoing operating performance. We define Adjusted Gross Profit Margin (non-GAAP) as a percent of net sales as Adjusted Gross Profit (as defined above) divided by net sales in the respective period. We define Adjusted SG&A (non-GAAP) as SG&A (GAAP) excluding depreciation, depletion, and amortization, stock-based compensation including employer payroll taxes on stock-based compensation, restructuring expenses, severance and other expenses, and other non-cash, unusual and/or infrequent costs (i.e., acquisition and integration expenses), which we do not consider in our evaluation of ongoing operating performance. We define Adjusted SG&A (non-GAAP) as a percent of net sales as Adjusted SG&A (as defined above) divided by net sales in the respective period. We define Free Cash Flow (non-GAAP) as Net cash from (used in) operating activities less capital expenditures for property, plant and equipment. We believe this provides additional insight into the Company's ability to generate cash and maintain liquidity. However, Free Cash Flow does not represent funds available for investment or other discretionary uses since it does not deduct cash used to service our debt or other cash flows from financing activities or investing activities. We define Liquidity as total cash, cash equivalents and restricted cash, if applicable. We define Net Debt as total debt principal outstanding plus finance lease liabilities and other debt, less cash, cash equivalents and restricted cash, if applicable. CONTACT: Contacts: Investor Contact [email protected]

SHOEMAKERSVILLE, Pa., March 27, 2026 (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, today announced financial results for its fourth quarter and fiscal year ended December 31, 2025. Fourth Quarter vs. Prior Year Period: Net sales decreased to $25.1 million compared to $37.3 million. Gross Profit Margin increased to 8.5% of net sales compared to 4.9%. Adjusted Gross Profit Margin(1) increased to 15.4% of net sales compared to 9.6%. SG&A expense and Adjusted SG&A(1) expense decreased by 43.5% and 18.9%, respectively. Net loss increased to $242.2 million compared to $17.5 million. Net loss in the fourth quarter of 2025 included a non-cash impairment charge of $232.2 million, primarily attributable to intangible assets. Adjusted EBITDA(1) of $(4.9) million compared to $(7.3) million. Cash used in operating activities and Free Cash Flow(1) were $(4.0) million and $(4.3) million, respectively. (1) Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted SG&A, Adjusted SG&A as a percent of net sales, Adjusted EBITDA, and Free Cash Flow are non-GAAP measures. For a description of our non-GAAP measures see the “Non-GAAP Measures” section accompanying this release; and for reconciliations of GAAP to non-GAAP measures see the “Reconciliation of Non-GAAP Measures” accompanying this release. Bill Toler, Chief Executive Officer of Hydrofarm, said, "In the fourth quarter we continued to execute against our strategy and achieved our best proprietary sales mix quarter of 2025. Despite this sales mix improvement, lower volumes hindered our Adjusted Gross Profit Margin in the quarter. We reduced Adjusted SG&A expense by 18.9% compared to the fourth quarter of 2024, representing our 14th consecutive quarter of meaningful year-over-year expense reductions. To further reduce costs and right size our operations, we made significant progress towards our previously announced restructuring plan. We are now substantially complete with the consolidation of our U.S. manufacturing facilities into one location, and further reduced our U.S. distribution centers down to two locations. We are focused on positioning the business to drive high quality revenue streams, improved profitability, and strengthen our financial position." Fourth Quarter 2025 Financial Results Net sales in the fourth quarter of 2025 decreased 32.7% to $25.1 million compared to $37.3 million in the prior year period. This was primarily due to a 27.3% decline in volume/mix of products sold primarily related to industry oversupply, and a 5.6% decrease in price. Gross Profit increased to $2.1 million, or 8.5% of net sales, compared to $1.8 million, or 4.9% of net sales, in the prior year period. Adjusted Gross Profit(1) increased to $3.9 million, or 15.4% of net sales, compared to $3.6 million, or 9.6% of net sales, in the prior year period. Gross Profit, Adjusted Gross Profit(1), Gross Profit Margin, and Adjusted Gross Profit Margin(1) improved as a result of higher sales of proprietary brands and improved productivity. These increases more than offset the impact of lower net sales. Selling, general and administrative (“SG&A”) expense was $9.6 million, compared to $17.0 million in the prior year period, and Adjusted SG&A(1) expense was $8.8 million compared to $10.8 million in the prior year period. SG&A expense decreased primarily due to lower amortization expense. In addition, both SG&A and Adjusted SG&A(1) expenses decreased as a result of the Company’s restructuring actions and cost-saving initiatives. Net loss was $242.2 million, or $(51.89) per diluted share, compared to a net loss of $17.5 million, or $(3.80) per diluted share, in the prior year period. The decline in net loss was due to an impairment charge of $232.2 million primarily attributable to intangible assets, as well as lower net sales, partially offset by SG&A expense reductions. Adjusted EBITDA(1) increased to $(4.9) million, compared to $(7.3) million in the prior year period. The increase was related to higher Adjusted Gross Profit(1) and lower Adjusted SG&A(1) expenses. Balance Sheet, Liquidity and Cash Flow As of December 31, 2025, the Company had $6.3 million in cash. The Company ended the fourth quarter with $114.4 million in principal balance on its Term Loan outstanding, $7.8 million in finance leases, and $0.1 million in other debt outstanding. Cash used in operating activities was $4.0 million and the Company invested $0.3 million in capital expenditures, yielding Free Cash Flow(1) of $(4.3) million during the three months ended December 31, 2025. Free Cash Flow(1) decreased from the prior year period, primarily due to lower earnings and working capital changes. On February 4, 2026, the Company elected to defer making the interest payment of approximately $2.8 million on the Term Loan. As a result of the Company’s failure to pay the interest within the grace period, an event of default occurred with respect to the Term Loan. As a result of the event of default, the Term Loan was reclassified to current portion of long-term debt from long-term debt and interest began accruing at a rate that is 2% per annum in excess of the interest rate otherwise payable. The Company and its Board of Directors are exploring strategic alternatives to strengthen the Company’s liquidity and capital structure, and are engaged in ongoing discussions with the Term Loan lenders. On February 17, 2026, the Company entered into an agreement to terminate its Revolving Credit Facility. Strategic Priorities Hydrofarm remains committed to its strategic priorities: drive high-quality revenue streams, improve profit margins and strengthen financial position. While maintaining our dedication to customer service, we are focused on reducing costs and improving productivity within the organization. Our initiatives include implementing operational changes, consolidating our facility footprint, reducing headcount, and focusing our sales efforts on our proprietary brand offerings. (1) Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted SG&A, Adjusted SG&A as a percent of net sales, Adjusted EBITDA, and Free Cash Flow are non-GAAP measures. For a description of our non-GAAP measures see the “Non-GAAP Measures” section accompanying this release; and for reconciliations of GAAP to non-GAAP measures see the “Reconciliation of Non-GAAP Measures” accompanying this release. About Hydrofarm Holdings Group, Inc. Hydrofarm is a leading independent manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture, including grow lights, climate control solutions, grow media and nutrients, as well as a broad portfolio of innovative proprietary branded products. For over 40 years, Hydrofarm has helped growers make growing easier and more productive. The Company’s mission is to empower growers, farmers and cultivators with products that enable greater quality, efficiency, consistency and speed in their grow projects. Cautionary Note Regarding Forward-Looking Statements Statements contained in this press release, other than statements of historical fact, which address activities, events and developments that the Company expects or anticipates will or may occur in the future, including, but not limited to, information regarding the future economic performance and financial condition of the Company, the plans and objectives of the Company’s management, and the Company’s assumptions regarding such performance and plans are “forward-looking statements” within the meaning of the U.S. federal securities laws that are subject to risks and uncertainties. These forward-looking statements generally can be identified as statements that include phrases such as “guidance,” “outlook,” “projected,” “believe,” “target,” “predict,” “estimate,” “forecast,” “strategy,” “may,” “goal,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “should” or other similar words or phrases. Actual results could differ materially from the forward-looking information in this release due to a variety of factors, including, but not limited to: The Company's ability to continue as a going concern; The Company's level of indebtedness; The market in which the Company operates has been substantially adversely impacted by conditions of the agricultural and cannabis industries, including oversupply and decreasing prices of the products the Company's end customers sell, which, in turn, has materially adversely impacted the Company's sales and other results of operations and which may continue to do so in the future; If industry conditions worsen or are sustained for a lengthy period, the Company could be forced to take additional impairment charges and/or inventory and accounts receivable reserves, which could be substantial, and, ultimately, the Company may face liquidity challenges; The Company’s current and future debt facilities may limit the operation of the Company’s business including restricting its ability to sell products directly to the cannabis industry; Although equity financing may be available, the Company's current stock prices are at depressed levels and any such financing would be dilutive; Interruptions in the Company's supply chain could adversely impact expected sales growth and operations; Increased prices and inflation could adversely impact the Company's performance and financial results; Global political and economic conditions including the imposition of potential tariffs could increase the costs of the Company's products and adversely impact the competitiveness of the Company's products and the Company's financial results; The Company may be unable to meet the continued listing standards of Nasdaq; The Company's restructuring activities may increase our expenses and cash expenditures, and may not have the intended cost saving effects; The highly competitive nature of the Company’s markets could adversely affect its ability to maintain or grow revenues; Certain of the Company’s products may be purchased for use in new or emerging industries or segments, including the cannabis industry, and/or be subject to varying, inconsistent, and rapidly changing laws, regulations, administrative and enforcement approaches, and consumer perceptions which may adversely impact the market for the Company’s products; The market for the Company’s products has been impacted by conditions impacting its customers, including related crop prices, climate change, and other factors impacting growers; Compliance with government laws and regulations including environmental and other public health regulations or changes in such regulations or regulatory enforcement priorities could increase the Company’s costs of doing business or limit the Company’s ability to market all of its products; Damage to the Company’s reputation or the reputation of its products or products it markets on behalf of third parties could have an adverse effect on its business; If the Company is unable to effectively execute its e-commerce business, its reputation and operating results may be harmed; The Company’s operations may be impaired if its information technology systems fail to perform adequately or if it is the subject of a data breach or cyber-attack; The Company may not be able to adequately protect its intellectual property and other proprietary rights that are material to the Company’s business; Acquisitions, other strategic alliances and investments could result in operating and integration difficulties, dilution and other harmful consequences that may adversely impact the Company’s business and results of operations. Additional detailed information concerning a number of the important factors that could cause actual results to differ materially from the forward-looking information contained in this release is readily available in the Company’s annual, quarterly and other reports. The Company disclaims any obligation to update developments of these risk factors or to announce publicly any revision to any of the forward-looking statements contained in this release, or to make corrections to reflect future events or developments except as otherwise required by law. Contact: [email protected] Notes to GAAP to Non-GAAP reconciliations presented above (Adjusted Gross Profit, Adjusted SG&A, Adjusted EBITDA, and Free Cash Flow): Non-GAAP Financial Measures We report our financial results in accordance with generally accepted accounting principles in the U.S. (“GAAP”). Management believes that certain non-GAAP financial measures provide investors with additional useful information in evaluating our performance and that excluding certain items that may vary substantially in frequency and magnitude period-to-period from net loss provides useful supplemental measures that assist in evaluating our ability to generate earnings and to more readily compare these metrics between past and future periods. These non-GAAP financial measures may be different than similarly titled measures used by other companies. To supplement our condensed consolidated financial statements which are prepared in accordance with GAAP, we use "Adjusted EBITDA", "Adjusted Gross Profit", "Adjusted SG&A", "Free Cash Flow", "Net Debt", and "Liquidity" which are non-GAAP financial measures. We also present certain of these non-GAAP metrics as a percentage of net sales. Our non-GAAP financial measures should not be considered in isolation from, or as substitutes for, financial information prepared in accordance with GAAP. There are several limitations related to the use of our non-GAAP financial measures as compared to the closest comparable GAAP measures. We define Adjusted EBITDA (non-GAAP) as net loss (GAAP) excluding interest expense, income taxes, depreciation, depletion and amortization, stock-based compensation including employer payroll taxes on stock-based compensation, restructuring expenses, impairments, severance, loss on asset disposition, other income/expense, net, and other non-cash, unusual and/or infrequent costs (i.e., acquisition and integration expenses), which we do not consider in our evaluation of ongoing operating performance. We define Adjusted EBITDA (non-GAAP) as a percent of net sales as Adjusted EBITDA (as defined above) divided by net sales in the respective period. We define Adjusted Gross Profit (non-GAAP) as Gross Profit (GAAP) excluding depreciation, depletion, and amortization, restructuring expenses, severance and other expenses, and other non-cash, unusual and/or infrequent costs, which we do not consider in our evaluation of ongoing operating performance. We define Adjusted Gross Profit Margin (non-GAAP) as a percent of net sales as Adjusted Gross Profit (as defined above) divided by net sales in the respective period. We define Adjusted SG&A (non-GAAP) as SG&A (GAAP) excluding depreciation, depletion, and amortization, stock-based compensation including employer payroll taxes on stock-based compensation, restructuring expenses, severance and other expenses, and other non-cash, unusual and/or infrequent costs (i.e., acquisition and integration expenses), which we do not consider in our evaluation of ongoing operating performance. We define Adjusted SG&A (non-GAAP) as a percent of net sales as Adjusted SG&A (as defined above) divided by net sales in the respective period. We define Free Cash Flow (non-GAAP) as Net cash from (used in) operating activities less capital expenditures for property, plant and equipment. We believe this provides additional insight into the Company's ability to generate cash and maintain liquidity. However, Free Cash Flow does not represent funds available for investment or other discretionary uses since it does not deduct cash used to service our debt or other cash flows from financing activities or investing activities. We define Liquidity as total cash, cash equivalents and restricted cash, if applicable, plus available borrowing capacity on our Revolving Credit Facility. We define Net Debt as total debt principal outstanding plus finance lease liabilities and other debt, less cash, cash equivalents and restricted cash, if applicable.

Announces CEO Transition SHOEMAKERSVILLE, Pa., Nov. 12, 2025 (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, today announced financial results for its third quarter ended September 30, 2025. Comparison of Third Quarter vs. Prior Year Period: Net sales decreased to $29.4 million compared to $44.0 million. Gross Profit Margin decreased to 11.6% of net sales compared to 19.4%. Adjusted Gross Profit Margin(1) decreased to 18.8% of net sales compared to 24.3%. SG&A expense and Adjusted SG&A(1) expense decreased by 6.8% and 7.4%, respectively. Net loss increased to $16.4 million compared to $13.1 million. Adjusted EBITDA(1) of $(4.4) million compared to less than $0.1 million. Cash used in operating activities and Free Cash Flow(1) improved $4.4 million and $5.1 million, respectively. (1) Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted SG&A, Adjusted SG&A as a percent of net sales, Adjusted EBITDA, and Free Cash Flow are non-GAAP measures. For a description of our non-GAAP measures see the “Non-GAAP Measures” section accompanying this release; and for reconciliations of GAAP to non-GAAP measures see the “Reconciliation of Non-GAAP Measures” accompanying this release. John Lindeman, Chief Executive Officer of Hydrofarm, said, "In the third quarter we achieved our best quarterly proprietary brand sales mix of 2025, consistent with our strategy of focusing sales efforts on our higher-margin products. This performance was aided both by heightened investments in certain proprietary products and the previously announced restructuring of our product portfolio. Despite this sales mix improvement, lower manufacturing production volumes hindered our Adjusted Gross Profit Margin in the quarter. To address this issue, we are taking actions to consolidate our two remaining U.S. manufacturing facilities, an activity expected to be completed over the next few quarters, which should generate an estimated $2 million in annual cost savings incremental to the $3 million originally announced last quarter. In addition, we have line of sight and are taking action against further estimated annual cost savings of $4 million. During the quarter, we delivered 7.4% of Adjusted SG&A expense savings, representing our 13th consecutive quarter of meaningful year-over-year expense reductions and continuing our strong track record of disciplined cost management. We are on track with the restructuring plan announced last quarter, demonstrated by the significant inventory and SKU reductions we completed in the third quarter of this year. We also generated a significant $5.1 million year-over-year improvement in free cash flow in the third quarter while continuing to execute on our strategic roadmap and position the business to better drive high quality revenue streams, improved profitability, and strengthen our financial position. We are focused on what we can control and will remain disciplined in our cost-management as we aim to improve our proprietary brand performance and enhance long-term value for our stockholders." CEO Transition Effective December 1, 2025, Bill Toler, Executive Chairman of the Board, is resuming the position of Chief Executive Officer of Hydrofarm. Mr. Lindeman will remain with the Company through December 1, 2025, to ensure a smooth transition. Mr. Toler has served as Hydrofarm’s Chairman of the Board of Directors since January 1, 2019, and previously served as the Company’s Chief Executive Officer from January 1, 2019 until January 1, 2025. Mr. Toler will continue to serve on the Board in the role of Chairman. “I want to thank John for his dedicated leadership and valuable contributions to Hydrofarm,” said Mr. Toler. “We wish him well in his future endeavors. I am excited to return to the CEO role and remain fully committed to Hydrofarm’s success and restoring the company to profitability, building on the significant progress we’ve made.” Third Quarter 2025 Financial Results Net sales decreased 33.3% to $29.4 million compared to $44.0 million in the prior year period. This was due to a 32.2% decline in volume/mix of products sold primarily related to industry oversupply and a 1.1% decrease in price. Gross Profit decreased to $3.4 million, or 11.6% of net sales, compared to $8.5 million, or 19.4% of net sales, in the prior year period. Adjusted Gross Profit(1) decreased to $5.5 million, or 18.8% of net sales, compared to $10.7 million, or 24.3% of net sales, in the prior year period. The decreases in Gross Profit, Adjusted Gross Profit(1), Gross Profit Margin, and Adjusted Gross Profit Margin(1) were primarily due to lower net sales and lower manufacturing production volumes. Selling, general and administrative (“SG&A”) expense improved to $16.4 million, compared to $17.6 million in the prior year period, and Adjusted SG&A(1) expense improved to $9.9 million compared to $10.7 million in the prior year period. The reductions were mainly due to decreases in compensation costs from lower headcount and performance bonus, and facility costs, primarily driven by the Company's restructuring actions and related cost-saving initiatives. Net loss was $16.4 million, or $(3.51) per diluted share, compared to net loss of $13.1 million, or $(2.86) per diluted share in the prior year period. Net loss was negatively impacted by lower net sales and gross profit, partially offset by current year SG&A expense reductions. Adjusted EBITDA(1) decreased to $(4.4) million, compared to less than $0.1 million in the prior year period. The reduction was related to lower net sales and lower Adjusted Gross Profit Margin(1), partially offset by Adjusted SG&A(1) expense reductions. Balance Sheet, Liquidity and Cash Flow 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. The Company ended the third quarter with $114.5 million in principal balance outstanding on its Term Loan, $8.0 million in finance leases, and $0.1 million in other debt outstanding. During 2025 and 2024, the Company maintained a zero balance on its Revolving Credit Facility. As of September 30, 2025, the Company was in compliance with debt covenants under its Revolving Credit Facility and Term Loan. Cash used in operating activities was less than $0.1 million and the Company invested $0.2 million in capital expenditures, yielding Free Cash Flow(1) of $(0.2) million during the three months ended September 30, 2025. Free Cash Flow(1) improved $5.1 million compared to the prior year third quarter due to working capital benefits including from a reduction in inventory. Full Year 2025 Expectations The Company is updating the following expectation for fiscal year 2025: Adjusted Gross Profit Margin(1) of approximately 20% for 2025, resulting primarily from an expectation of (i) a higher proprietary brand sales mix in the second half of 2025 compared to the first half, (ii) continued benefit from cost savings associated with prior year restructuring and related productivity initiatives, (iii) incremental cost savings expected from the new restructuring plan and related cost savings initiatives, and (iv) minimal non-restructuring inventory reserves or related charges. The Company is reaffirming the following expectations for fiscal year 2025: Reduced year-over-year Adjusted SG&A(1) expense, consistent with previous expectations, resulting from a full year benefit of reductions completed in 2024 as well as incremental expense savings expected in the second half of 2025 related to the new restructuring and cost savings initiatives, including compensation savings, and further reductions in professional and outside service fees, facilities and insurance expense. Reduction in inventory and positive free cash flow for the final nine months of 2025, consistent with previous expectations. High tariffs on imported products from China or other countries, or new tariffs from other countries, could impact the cost of certain products and may negatively impact the Company's financial performance. Capital expenditures of less than $2 million for full year 2025, consistent with previous expectations. Hydrofarm remains committed to its strategic priorities: drive diverse high-quality revenue streams, improve profit margins and strengthen financial position. (1) Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted SG&A, Adjusted SG&A as a percent of net sales, Adjusted EBITDA, and Free Cash Flow are non-GAAP measures. For a description of our non-GAAP measures see the “Non-GAAP Measures” section accompanying this release; and for reconciliations of GAAP to non-GAAP measures see the “Reconciliation of Non-GAAP Measures” accompanying this release. Prepared Remarks and Presentation Prepared remarks from management regarding quarterly performance and other business matters, and an earnings presentation for reference, have been made available on the Company’s investor relations website at https://investors.hydrofarm.com/. About Hydrofarm Holdings Group, Inc. Hydrofarm is a leading independent manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture, including grow lights, climate control solutions, grow media and nutrients, as well as a broad portfolio of innovative proprietary branded products. For over 40 years, Hydrofarm has helped growers make growing easier and more productive. The Company’s mission is to empower growers, farmers and cultivators with products that enable greater quality, efficiency, consistency and speed in their grow projects. Cautionary Note Regarding Forward-Looking Statements Statements contained in this press release, other than statements of historical fact, which address activities, events and developments that the Company expects or anticipates will or may occur in the future, including, but not limited to, information regarding the future economic performance and financial condition of the Company, the plans and objectives of the Company’s management, and the Company’s assumptions regarding such performance and plans are “forward-looking statements” within the meaning of the U.S. federal securities laws that are subject to risks and uncertainties. These forward-looking statements generally can be identified as statements that include phrases such as “guidance,” “outlook,” “projected,” “believe,” “target,” “predict,” “estimate,” “forecast,” “strategy,” “may,” “goal,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “should” or other similar words or phrases. Actual results could differ materially from the forward-looking information in this release due to a variety of factors, including, but not limited to: The market in which the Company operates has been substantially adversely impacted by conditions of the agricultural and cannabis industries, including oversupply and decreasing prices of the products the Company's end customers sell, which, in turn, has materially adversely impacted the Company's sales and other results of operations and which may continue to do so in the future; If industry conditions worsen or are sustained for a lengthy period, the Company could be forced to take additional impairment charges and/or inventory and accounts receivable reserves, which could be substantial, and, ultimately, the Company may face liquidity challenges; The Company’s Revolving Credit Facility and future debt facilities may limit the operation of the Company’s business including restricting its ability to sell products directly to the cannabis industry; Although equity financing may be available, the Company's current stock prices are at depressed levels and any such financing would be dilutive; Interruptions in the Company's supply chain could adversely impact expected sales growth and operations; Increased prices and inflation could adversely impact the Company's performance and financial results; Global political and economic conditions including the imposition of potential tariffs could increase the costs of the Company's products and adversely impact the competitiveness of the Company's products and the Company's financial results; The Company may be unable to meet the continued listing standards of Nasdaq; The Company's ability to effectively transition the Chief Executive Officer role and facilitate the continued succession of the Company's leadership; The Company's restructuring activities may increase our expenses and cash expenditures, and may not have the intended cost saving effects; The highly competitive nature of the Company’s markets could adversely affect its ability to maintain or grow revenues; Certain of the Company’s products may be purchased for use in new or emerging industries or segments, including the cannabis industry, and/or be subject to varying, inconsistent, and rapidly changing laws, regulations, administrative and enforcement approaches, and consumer perceptions which may adversely impact the market for the Company’s products; The market for the Company’s products has been impacted by conditions impacting its customers, including related crop prices, climate change, and other factors impacting growers; Compliance with government laws and regulations including environmental and other public health regulations or changes in such regulations or regulatory enforcement priorities could increase the Company’s costs of doing business or limit the Company’s ability to market all of its products; Damage to the Company’s reputation or the reputation of its products or products it markets on behalf of third parties could have an adverse effect on its business; If the Company is unable to effectively execute its e-commerce business, its reputation and operating results may be harmed; The Company’s operations may be impaired if its information technology systems fail to perform adequately or if it is the subject of a data breach or cyber-attack; The Company may not be able to adequately protect its intellectual property and other proprietary rights that are material to the Company’s business; Acquisitions, other strategic alliances and investments could result in operating and integration difficulties, dilution and other harmful consequences that may adversely impact the Company’s business and results of operations. Additional detailed information concerning a number of the important factors that could cause actual results to differ materially from the forward-looking information contained in this release is readily available in the Company’s annual, quarterly and other reports. The Company disclaims any obligation to update developments of these risk factors or to announce publicly any revision to any of the forward-looking statements contained in this release, or to make corrections to reflect future events or developments except as otherwise required by law. Contacts: Investor Contact Anna Kate Heller / ICR [email protected] Notes to GAAP to Non-GAAP reconciliations presented above (Adjusted Gross Profit, Adjusted SG&A, Adjusted EBITDA, and Free Cash Flow): Non-GAAP Financial Measures We report our financial results in accordance with generally accepted accounting principles in the U.S. (“GAAP”). Management believes that certain non-GAAP financial measures provide investors with additional useful information in evaluating our performance and that excluding certain items that may vary substantially in frequency and magnitude period-to-period from net loss provides useful supplemental measures that assist in evaluating our ability to generate earnings and to more readily compare these metrics between past and future periods. These non-GAAP financial measures may be different than similarly titled measures used by other companies. To supplement our condensed consolidated financial statements which are prepared in accordance with GAAP, we use "Adjusted EBITDA", "Adjusted Gross Profit", "Adjusted SG&A", "Free Cash Flow", "Net Debt", and "Liquidity" which are non-GAAP financial measures. We also present certain of these non-GAAP metrics as a percentage of net sales. Our non-GAAP financial measures should not be considered in isolation from, or as substitutes for, financial information prepared in accordance with GAAP. There are several limitations related to the use of our non-GAAP financial measures as compared to the closest comparable GAAP measures. We define Adjusted EBITDA (non-GAAP) as net loss (GAAP) excluding interest expense, income taxes, depreciation, depletion and amortization, stock-based compensation including employer payroll taxes on stock-based compensation, restructuring expenses, impairments, severance, loss on asset disposition, other income/expense, net, and other non-cash, unusual and/or infrequent costs (i.e., acquisition and integration expenses), which we do not consider in our evaluation of ongoing operating performance. We define Adjusted EBITDA (non-GAAP) as a percent of net sales as Adjusted EBITDA (as defined above) divided by net sales in the respective period. We define Adjusted Gross Profit (non-GAAP) as Gross Profit (GAAP) excluding depreciation, depletion, and amortization, restructuring expenses, severance and other expenses, and other non-cash, unusual and/or infrequent costs, which we do not consider in our evaluation of ongoing operating performance. We define Adjusted Gross Profit Margin (non-GAAP) as a percent of net sales as Adjusted Gross Profit (as defined above) divided by net sales in the respective period. We define Adjusted SG&A (non-GAAP) as SG&A (GAAP) excluding depreciation, depletion, and amortization, stock-based compensation including employer payroll taxes on stock-based compensation, restructuring expenses, severance and other expenses, and other non-cash, unusual and/or infrequent costs (i.e., acquisition and integration expenses), which we do not consider in our evaluation of ongoing operating performance. We define Adjusted SG&A (non-GAAP) as a percent of net sales as Adjusted SG&A (as defined above) divided by net sales in the respective period. We define Free Cash Flow (non-GAAP) as Net cash from (used in) operating activities less capital expenditures for property, plant and equipment. We believe this provides additional insight into the Company's ability to generate cash and maintain liquidity. However, Free Cash Flow does not represent funds available for investment or other discretionary uses since it does not deduct cash used to service our debt or other cash flows from financing activities or investing activities. We define Liquidity as total cash, cash equivalents and restricted cash, if applicable, plus available borrowing capacity on our Revolving Credit Facility. We define Net Debt as total debt principal outstanding plus finance lease liabilities and other debt, less cash, cash equivalents and restricted cash, if applicable.

Net Sales: $39.2 million, down 28.4% year-over-year. Volume Mix Decline: 27.9% decrease. Pricing Decline: 0.4% decrease. Gross Profit: $2.8 million or 7.1% of net sales. Adjusted Gross Profit: $7.5 million or 19.2% of net sales. SG&A Expense: $16.1 million, down from $18.7 million last year. Adjusted SG&A Expense: $9.8 million, a 16% reduction from last year. Adjusted EBITDA: Loss of $2.3 million. Cash Balance: $11 million as of June 30, 2025. Total Debt: Approximately $122.6 million. Free Cash Flow: $1.4 million for the quarter. Restructuring Charges: $3.3 million related to noncash inventory write-downs. Annual Cost Savings from Restructuring: Estimated in excess of $3 million. Consumables Mix: Approximately 80% of sales in the second quarter. Total Liquidity: $20 million as of June 30, 2025. Warning! GuruFocus has detected 4 Warning Signs with HYFM. Release Date: August 12, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Hydrofarm Holdings Group Inc (NASDAQ:HYFM) achieved its 12th consecutive quarter of year-over-year adjusted SG&A savings, with a nearly 16% reduction in expenses compared to 2024. The company delivered positive free cash flow for the quarter, aided by disciplined working capital management and inventory optimization. Hydrofarm Holdings Group Inc (NASDAQ:HYFM) initiated a new restructuring plan to focus on higher-margin brands and optimize its distribution and manufacturing network, expected to drive higher-quality revenue streams. The company saw strong performance from its SunBlaster brand, particularly with innovative and award-winning Nano and Halo plant lights. International sales performed well, with improvements in select European and Asian countries, contributing to revenue diversification. Net sales for the second quarter were down 28.4% year-over-year, primarily due to a decline in volume mix and industry oversupply. The company faced industry headwinds, particularly affecting the durable lighting and equipment products, leading to a decline in performance. Gross profit was negatively impacted by $3.3 million of restructuring charges related to noncash inventory write-downs. The tariff environment remains uncertain, with potential impacts on gross margins, particularly in the durables business sourced from China. Hydrofarm Holdings Group Inc (NASDAQ:HYFM) reported an adjusted EBITDA loss of $2.3 million in the second quarter, due to lower net sales and adjusted gross profit margin. Q: Can you elaborate on the tariff impact and what you expect if negotiations with China do not yield expected results? A: Tariffs are challenging to predict due to their dynamic nature. In the first half of 2025, we've managed to cover incremental tariff costs on products sourced from China. In the second half, we'll continue to manage tariffs by carefully purchasing from vendors where costs can be shared or passed on to customers. We're also exploring alternative sourcing and focusing on proprietary consumables, which have less tariff exposure. B. John Lindeman, CEO Q: Regarding your product portfolio optimization, how will reducing third-party products affect your ability to be a one-stop shop for customers? A: We have strong relationships with distributed brand partners, but industry challenges necessitate reducing redundant and underperforming products. We've rationalized over one-third of SKUs, primarily in durable and distributed brands, to improve margins. Despite this, we will maintain a broad offering across product categories. B. John Lindeman, CEO Q: What efforts are you making to grow the non-cannabis part of your business, and what should we expect for the rest of 2025? A: Our international sales have performed well, and we're focusing on non-cannabis markets through food and floral sales, Garden Center, and e-commerce. We've modified products to appeal to these markets and are exploring opportunities in the nutrient category. B. John Lindeman, CEO Q: What are your thoughts on President Trump's consideration of reclassifying cannabis? A: While we don't have a direct line to the administration, we're encouraged by reports of potential rescheduling. A positive outcome could benefit the industry by freeing up capital and cash flow for our end users. However, we'll wait for concrete developments before making judgments. B. John Lindeman, CEO Q: How did the second quarter financial results reflect your restructuring efforts? A: Net sales were down 28.4% year-over-year due to industry oversupply, but we saw improvements in our proprietary brand mix. Our restructuring plan aims to simplify our product portfolio and optimize inventory management, with expected annual cost savings exceeding $3 million. Kevin O'Brien, CFO For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.

SHOEMAKERSVILLE, Pa., Aug. 12, 2025 (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, today announced financial results for its second quarter ended June 30, 2025. Second Quarter Highlights vs. Prior Year Period: Net sales decreased to $39.2 million compared to $54.8 million. Gross Profit Margin decreased to 7.1% of net sales compared to 19.8%. Adjusted Gross Profit Margin(1) decreased to 19.2% of net sales compared to 24.4%. SG&A expense and Adjusted SG&A(1) expense decreased by (13.5)% and (15.7)%, respectively. Net loss decreased to $16.9 million compared to $23.5 million. Adjusted EBITDA(1) of $(2.3) million compared to $1.7 million. Cash from operating activities and Free Cash Flow(1) were $1.7 million and $1.4 million, respectively. Initiated restructuring plan to reduce costs and improve efficiency. (1) Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted SG&A, Adjusted SG&A as a percent of net sales, Adjusted EBITDA, and Free Cash Flow are non-GAAP measures. For a description of our non-GAAP measures see the “Non-GAAP Measures” section accompanying this release; and for reconciliations of GAAP to non-GAAP measures see the “Reconciliation of Non-GAAP Measures” accompanying this release. John Lindeman, Chief Executive Officer of Hydrofarm, said, “In the second quarter we delivered nearly 16% of year-over-year Adjusted SG&A expense savings, our 12th consecutive quarter of significant year-over-year expense reductions, which helped generate positive Free Cash Flow of $1.4 million. While our topline was softer than anticipated due to persistent industry headwinds, we did see encouraging performances from certain proprietary brands as well as our international business. As a result of the continued headwinds, we initiated a new restructuring plan designed to further reduce costs by optimizing our product portfolio, with a primary focus on rationalizing underperforming distributed brands, as well as right-sizing our manufacturing and distribution footprint. We expect this plan will result in excess of $3 million in annual cost savings plus additional working capital improvements. We are planning incremental marketing investments in the second half of 2025 to further invigorate the performance of our higher-margin, proprietary brands. We believe these actions collectively position us well to accomplish our strategic priorities to drive high quality revenue streams, improve our profitability, and strengthen our financial position." Second Quarter 2025 Financial Results Net sales decreased 28.4% to $39.2 million compared to $54.8 million in the prior year period. This was due to a 27.9% decline in volume/mix of products sold primarily related to industry oversupply and a 0.4% decrease in price. Though the overall industry continues to be pressured, volume/mix declines were most significant in our durable products versus our consumable products within the quarter. Gross Profit decreased to $2.8 million, or 7.1% of net sales, compared to $10.9 million, or 19.8% of net sales, in the prior year period. Gross profit was impacted by non-cash restructuring costs of $3.3 million in the second quarter of 2025. Adjusted Gross Profit(1) 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 period. The decreases in Gross Profit, Adjusted Gross Profit(1), Gross Profit Margin, and Adjusted Gross Profit Margin(1) were primarily due to lower net sales and a decline in proprietary brand sales mix. The decline in proprietary brand mix was primarily due to the performance in several durable lighting and equipment products. Selling, general and administrative (“SG&A”) expense improved to $16.1 million, compared to $18.7 million in the prior year period, and Adjusted SG&A(1) expense improved to $9.8 million compared to $11.6 million in the prior year period. The reductions were mainly due to decreases in compensation costs from lower headcount and performance bonus, insurance expenses, and facility costs, primarily driven by the Company's restructuring actions and related cost-saving initiatives. Net loss was $16.9 million, or $(3.63) per diluted share, compared to net loss of $23.5 million, or $(5.10) per diluted share in the prior year period. Net loss was negatively impacted by lower sales and gross profit margin, partially offset by current year SG&A expense reductions. In addition, the prior year period was impacted by a loss recorded on the IGE Asset Sale. Adjusted EBITDA(1) decreased to $(2.3) million, compared to $1.7 million in the prior year period. The reduction was related to lower net sales and lower Adjusted Gross Profit Margin(1), partially offset by Adjusted SG&A(1) expense reductions. Restructuring Plan The Company initiated a restructuring plan in the second quarter of 2025 to narrow its product portfolio and operational footprint, reduce costs and improve efficiency. The Company incurred estimated restructuring costs of $3.3 million during the second quarter of 2025 which were primarily associated with non-cash inventory write-downs. The restructuring plan is expected to result in estimated annual cost savings in excess of $3 million plus incremental working capital reductions. Balance Sheet, Liquidity and Cash Flow 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. The Company made a $4.5 million prepayment on its Term Loan and ended the second quarter with $114.5 million in principal balance outstanding, $8.1 million in finance leases, and $0.1 million in other debt outstanding. During 2025 and 2024, the Company maintained a zero balance on its Revolving Credit Facility. As of June 30, 2025, the Company was in compliance with debt covenants under its Revolving Credit Facility and Term Loan. As previously disclosed, on May 9, 2025, the Company entered into a seventh amendment to its Revolving Credit Facility to extend the maturity date to June 30, 2027 and reduce the maximum commitment amount to $22 million. Cash from operating activities was $1.7 million and the Company invested $0.3 million in capital expenditures, yielding Free Cash Flow(1) of $1.4 million during the three months ended June 30, 2025. Working capital benefits led to a sequential improvement in Free Cash Flow(1) in the second quarter of 2025. Reaffirms Full Year 2025 Expectations The Company is reaffirming the following expectations for fiscal year 2025: Improved year-over-year Adjusted Gross Profit Margin(1) resulting primarily from an expectation of (i) a higher full year proprietary brand sales mix, (ii) continued benefit from cost savings associated with prior year restructuring and related productivity initiatives, (iii) incremental cost savings expected in the second half of 2025 related to the new restructuring and related cost savings initiatives, and (iv) minimal non-restructuring inventory reserves or related charges. Reduced year-over-year Adjusted SG&A(1) expense resulting from a full year benefit of reductions completed in 2024 as well as incremental expense savings expected in the second half of 2025 related to the new restructuring and cost savings initiatives, including compensation savings, and further reductions in professional and outside service fees, facilities and insurance expense. Reduction in inventory and positive free cash flow for the final nine months of 2025. High tariffs on imported products from China or other countries, or new tariffs from other countries, could impact the cost of certain products and may negatively impact the Company's 2025 financial performance. Capital expenditures of less than $2 million for full year 2025. Hydrofarm remains committed to its strategic priorities: drive diverse high-quality revenue streams, improve profit margins and strengthen financial position. (1) Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted SG&A, Adjusted SG&A as a percent of net sales, Adjusted EBITDA, and Free Cash Flow are non-GAAP measures. For a description of our non-GAAP measures see the “Non-GAAP Measures” section accompanying this release; and for reconciliations of GAAP to non-GAAP measures see the “Reconciliation of Non-GAAP Measures” accompanying this release. Conference Call and Presentation The Company will host a conference call to discuss financial results for the second quarter 2025 today at 8:30 a.m. Eastern Time. John Lindeman, Chief Executive Officer, and Kevin O'Brien, Chief Financial Officer, will host the call. An earnings presentation is also available for reference on the Hydrofarm investor relations website. The conference call can be accessed live over the phone by dialing 1-800-445-7795 and entering the conference ID: HYFMQ2. The conference call will also be webcast live and archived on the Company's investor relations website at https://investors.hydrofarm.com/ under the “News & Events” section. About Hydrofarm Holdings Group, Inc. Hydrofarm is a leading independent manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture, including grow lights, climate control solutions, grow media and nutrients, as well as a broad portfolio of innovative proprietary branded products. For over 40 years, Hydrofarm has helped growers make growing easier and more productive. The Company’s mission is to empower growers, farmers and cultivators with products that enable greater quality, efficiency, consistency and speed in their grow projects. Cautionary Note Regarding Forward-Looking Statements Statements contained in this press release, other than statements of historical fact, which address activities, events and developments that the Company expects or anticipates will or may occur in the future, including, but not limited to, information regarding the future economic performance and financial condition of the Company, the plans and objectives of the Company’s management, and the Company’s assumptions regarding such performance and plans are “forward-looking statements” within the meaning of the U.S. federal securities laws that are subject to risks and uncertainties. These forward-looking statements generally can be identified as statements that include phrases such as “guidance,” “outlook,” “projected,” “believe,” “target,” “predict,” “estimate,” “forecast,” “strategy,” “may,” “goal,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “should” or other similar words or phrases. Actual results could differ materially from the forward-looking information in this release due to a variety of factors, including, but not limited to: The market in which the Company operates has been substantially adversely impacted by conditions of the agricultural and cannabis industries, including oversupply and decreasing prices of the products the Company's end customers sell, which, in turn, has materially adversely impacted the Company's sales and other results of operations and which may continue to do so in the future; If industry conditions worsen or are sustained for a lengthy period, the Company could be forced to take additional impairment charges and/or inventory and accounts receivable reserves, which could be substantial, and, ultimately, the Company may face liquidity challenges; The Company’s Revolving Credit Facility and future debt facilities may limit the operation of the Company’s business including restricting its ability to sell products directly to the cannabis industry; Although equity financing may be available, the Company's current stock prices are at depressed levels and any such financing would be dilutive; Interruptions in the Company's supply chain could adversely impact expected sales growth and operations; Increased prices and inflation could adversely impact the Company's performance and financial results; Global political and economic conditions including the imposition of potential tariffs could increase the costs of the Company's products and adversely impact the competitiveness of the Company's products and the Company's financial results; The Company may be unable to meet the continued listing standards of Nasdaq; The Company's restructuring activities may increase our expenses and cash expenditures, and may not have the intended cost saving effects; The highly competitive nature of the Company’s markets could adversely affect its ability to maintain or grow revenues; Certain of the Company’s products may be purchased for use in new or emerging industries or segments, including the cannabis industry, and/or be subject to varying, inconsistent, and rapidly changing laws, regulations, administrative and enforcement approaches, and consumer perceptions which may adversely impact the market for the Company’s products; The market for the Company’s products has been impacted by conditions impacting its customers, including related crop prices, climate change, and other factors impacting growers; Compliance with government laws and regulations including environmental and other public health regulations or changes in such regulations or regulatory enforcement priorities could increase the Company’s costs of doing business or limit the Company’s ability to market all of its products; Damage to the Company’s reputation or the reputation of its products or products it markets on behalf of third parties could have an adverse effect on its business; If the Company is unable to effectively execute its e-commerce business, its reputation and operating results may be harmed; The Company’s operations may be impaired if its information technology systems fail to perform adequately or if it is the subject of a data breach or cyber-attack; The Company may not be able to adequately protect its intellectual property and other proprietary rights that are material to the Company’s business; Acquisitions, other strategic alliances and investments could result in operating and integration difficulties, dilution and other harmful consequences that may adversely impact the Company’s business and results of operations. Additional detailed information concerning a number of the important factors that could cause actual results to differ materially from the forward-looking information contained in this release is readily available in the Company’s annual, quarterly and other reports. The Company disclaims any obligation to update developments of these risk factors or to announce publicly any revision to any of the forward-looking statements contained in this release, or to make corrections to reflect future events or developments except as otherwise required by law. Contacts: Investor Contact Anna Kate Heller / ICR [email protected] Notes to GAAP to Non-GAAP reconciliations presented above (Adjusted Gross Profit, Adjusted SG&A, Adjusted EBITDA, and Free Cash Flow): Non-GAAP Financial Measures We report our financial results in accordance with generally accepted accounting principles in the U.S. (“GAAP”). Management believes that certain non-GAAP financial measures provide investors with additional useful information in evaluating our performance and that excluding certain items that may vary substantially in frequency and magnitude period-to-period from net loss provides useful supplemental measures that assist in evaluating our ability to generate earnings and to more readily compare these metrics between past and future periods. These non-GAAP financial measures may be different than similarly titled measures used by other companies. To supplement our condensed consolidated financial statements which are prepared in accordance with GAAP, we use "Adjusted EBITDA", "Adjusted Gross Profit", "Adjusted SG&A", "Free Cash Flow", "Net Debt", and "Liquidity" which are non-GAAP financial measures. We also present certain of these non-GAAP metrics as a percentage of net sales. Our non-GAAP financial measures should not be considered in isolation from, or as substitutes for, financial information prepared in accordance with GAAP. There are several limitations related to the use of our non-GAAP financial measures as compared to the closest comparable GAAP measures. We define Adjusted EBITDA (non-GAAP) as net loss (GAAP) excluding interest expense, income taxes, depreciation, depletion and amortization, stock-based compensation including employer payroll taxes on stock-based compensation, restructuring expenses, impairments, severance, loss on asset disposition, other income/expense, net, and other non-cash, unusual and/or infrequent costs (i.e., acquisition and integration expenses), which we do not consider in our evaluation of ongoing operating performance. We define Adjusted EBITDA (non-GAAP) as a percent of net sales as Adjusted EBITDA (as defined above) divided by net sales in the respective period. We define Adjusted Gross Profit (non-GAAP) as Gross Profit (GAAP) excluding depreciation, depletion, and amortization, restructuring expenses, severance and other expenses, and other non-cash, unusual and/or infrequent costs, which we do not consider in our evaluation of ongoing operating performance. We define Adjusted Gross Profit Margin (non-GAAP) as a percent of net sales as Adjusted Gross Profit (as defined above) divided by net sales in the respective period. We define Adjusted SG&A (non-GAAP) as SG&A (GAAP) excluding depreciation, depletion, and amortization, stock-based compensation including employer payroll taxes on stock-based compensation, restructuring expenses, severance and other expenses, and other non-cash, unusual and/or infrequent costs (i.e., acquisition and integration expenses), which we do not consider in our evaluation of ongoing operating performance. We define Adjusted SG&A (non-GAAP) as a percent of net sales as Adjusted SG&A (as defined above) divided by net sales in the respective period. We define Free Cash Flow (non-GAAP) as Net cash from (used in) operating activities less capital expenditures for property, plant and equipment. We believe this provides additional insight into the Company's ability to generate cash and maintain liquidity. However, Free Cash Flow does not represent funds available for investment or other discretionary uses since it does not deduct cash used to service our debt or other cash flows from financing activities or investing activities. We define Liquidity as total cash, cash equivalents and restricted cash, if applicable, plus available borrowing capacity on our Revolving Credit Facility. We define Net Debt as total debt principal outstanding plus finance lease liabilities and other debt, less cash, cash equivalents and restricted cash, if applicable.

Hydrofarm Holdings Group Inc (NASDAQ:HYFM) is set to release its Q2 2025 earnings on Aug 12, 2025. The consensus estimate for Q2 2025 revenue is $51.00 million, and the earnings are expected to come in at -$1.33 per share. The full year 2025's revenue is expected to be $191.00 million and the earnings are expected to be -$6.19 per share. More detailed estimate data can be found on the Forecast page. Warning! GuruFocus has detected 4 Warning Signs with HYFM. Revenue estimates for Hydrofarm Holdings Group Inc (NASDAQ:HYFM) have declined from $196.73 million to $191.00 million for the full year 2025 and increased from $207.22 million to $208.00 million for 2026 over the past 90 days. Earnings estimates have improved from -$7.25 per share to -$6.19 per share for the full year 2025 and from -$6.16 per share to -$4.62 per share for 2026 over the past 90 days. In the previous quarter of 2025-03-31, Hydrofarm Holdings Group Inc's (NASDAQ:HYFM) actual revenue was $40.53 million, which missed analysts' revenue expectations of $53.55 million by -24.31%. Hydrofarm Holdings Group Inc's (NASDAQ:HYFM) actual earnings were -$3.12 per share, which missed analysts' earnings expectations of -$1.71 per share by -82.46%. After releasing the results, Hydrofarm Holdings Group Inc (NASDAQ:HYFM) was down by -13.12% in one day. Based on the one-year price targets offered by 1 analyst, the average target price for Hydrofarm Holdings Group Inc (NASDAQ:HYFM) is $7.50 with a high estimate of $7.50 and a low estimate of $7.50. The average target implies an upside of 67.04% from the current price of $4.49. Based on GuruFocus estimates, the estimated GF Value for Hydrofarm Holdings Group Inc (NASDAQ:HYFM) in one year is $7.65, suggesting an upside of 70.38% from the current price of $4.49. Based on the consensus recommendation from 1 brokerage firm, Hydrofarm Holdings Group Inc's (NASDAQ:HYFM) average brokerage recommendation is currently 3.0, indicating a "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell. This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein. This article first appeared on GuruFocus.

Net Sales: $40.5 million, down 25.2% year-over-year. Volume Mix Decrease: 22.6% decline, primarily due to cannabis industry oversupply. Pricing Decline: 1.8% decrease driven by promotional activity. Proprietary Brands Sales Mix: 55% of net sales, improved from Q4 2024. Gross Profit: $6.9 million or 17% of net sales. Adjusted Gross Profit: $8.5 million or 21% of net sales. SG&A Expense: $17.9 million, with adjusted SG&A expenses reduced by 11% year-over-year. Adjusted EBITDA: Loss of $2.4 million, improved by $4.8 million from Q4 2024. Cash Balance: $13.7 million as of March 31, 2025. Total Debt: Approximately $127.3 million, including financial lease liabilities. Free Cash Flow: Negative $12 million for the first quarter. Total Liquidity: $31 million as of March 31, 2025. Warning! GuruFocus has detected 3 Warning Signs with HYFM. Release Date: May 13, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Hydrofarm Holdings Group Inc (NASDAQ:HYFM) reported a promising sequential improvement in proprietary brand sales, increasing from 52% to 55% of total sales, which helped improve adjusted gross profit margins. The company achieved its 11th consecutive quarter of significant adjusted SG&A expense savings, with an 11% reduction compared to the previous year. Hydrofarm Holdings Group Inc (NASDAQ:HYFM) saw strong performance in its proprietary consumable brands, particularly in the nutrients and grow media categories. The company is actively pursuing strategic alternatives to enhance shareholder value, including potential acquisitions or strategic combinations. Hydrofarm Holdings Group Inc (NASDAQ:HYFM) is making progress in diversifying its sales mix, with non-cannabis and non-US Canadian sales accounting for less than a quarter of total sales in Q1 2025. Net sales for the first quarter were down 25.2% year-over-year, primarily due to a 22.6% decrease in volume mix and a 1.8% decline in pricing. The company withdrew its full-year 2025 guidance for net sales, adjusted EBITDA, and free cash flow due to ongoing tariff uncertainties and prolonged industry challenges. Hydrofarm Holdings Group Inc (NASDAQ:HYFM) faced challenges from prolonged industry oversupply and lack of government progress on cannabis rescheduling and safer banking. The company's gross profit and adjusted gross profit margins decreased compared to the previous year, driven by lower net sales and a reduction in proprietary brand mix. Tariff uncertainties, particularly related to products sourced from China, pose challenges for the company's durable goods segment, affecting inventory and customer order patterns. Q: Can you provide an outlook for proprietary brand sales and their growth as a percentage of revenue for the remainder of the year? A: B. John Lindeman, CEO: Our proprietary nutrient brands, such as Grotek and House and Garden, performed better than expected in Q1. We are refining incentive programs and investing in our sales team's capabilities to drive growth. We expect these efforts to continue improving our proprietary brand sales percentage over time. Q: What is the impact of tariffs on your business, and how are you managing these challenges? A: B. John Lindeman, CEO: Our consumables are largely manufactured in the US and Canada, minimizing tariff impact. However, we source some durable products from China, which are affected by tariffs. We are renegotiating with vendors and exploring alternative sourcing options. The recent 90-day pause on China tariffs provides some relief, but the situation remains fluid. Q: What is the current regulatory environment for the cannabis market, and are there any signs of progress? A: B. John Lindeman, CEO: There is growing support for rescheduling cannabis, with over 70% of Americans in favor, including a majority of Republicans. President Trump's nominee for the DEA has prioritized rescheduling, and there are efforts to push forward on safer banking. These developments could positively impact the industry. Q: Can you elaborate on the positive developments or "green shoots" you mentioned in the industry and your business? A: B. John Lindeman, CEO: We are on track for new proprietary product launches in the US in the second half of the year and are expanding internationally with new distribution partners in Europe and Southeast Asia. These initiatives are key to our strategy and growth. Q: Given the withdrawal of 2025 guidance, how do you see the year unfolding based on current conditions? A: B. John Lindeman, CEO: Our Q1 performance aligned with previous expectations, except for free cash flow. The tariff situation adds uncertainty, but we maintain expectations to improve adjusted gross profit margin and reduce adjusted SG&A expenses. We are pausing guidance due to these uncertainties but remain focused on strategic initiatives. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.