HYFM News & Events

The Company is reaffirming the following expectations for fiscal year 2025: Reduced year-over-year Adjusted SG&A 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.

The Company is updating the following expectation for fiscal year 2025: Adjusted Gross Profit Margin of approximately 20% for 2025, resulting primarily from an expectation of a higher proprietary brand sales mix in the second half of 2025 compared to the first half, continued benefit from cost savings associated with prior year restructuring and related productivity initiatives, incremental cost savings expected from the new restructuring plan and related cost savings initiatives, and (iv) minimal non-restructuring inventory reserves or related charges.

Reports Q3 revenue $29.35M vs $44M last year. 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."

Hydrofarm announced that Chris Yetter has been appointed to serve on the Company's Board of Directors and the Compensation Committee of the Board, effective October 1, 2025. Susan Peters has notified the Company of her intention to retire to spend more time with family and tendered her resignation from the Company's Board, also effective October 1, 2025. Peters did not resign as a result of any disagreement with the Company on any matter related to the Company's operations, policies or practices.