Hydrofarm Group (HYFM) investor relations material

Executive summary

• Net sales for Q2 2026 were $23.2M, down 40.9% year-over-year, primarily due to industry oversupply and discontinued distributed brands.

• Net loss for Q2 2026 was $10.6M, narrowed from $16.9M prior year, reflecting significant SG&A reductions.

• Gross profit margin improved to 11.3% from 7.1% year-over-year, driven by a higher mix of proprietary brand sales.

• The company faces substantial doubt about its ability to continue as a going concern due to recurring losses, negative cash flows, and significant debt obligations, including a Term Loan in default.

• Strategic alternatives are being explored, including asset sales and restructuring, to address liquidity and compliance issues.

Financial highlights

• Q2 2026 net sales decreased by $16.0M (40.9%) year-over-year to $23.2M; six-month sales fell by $28.0M (35.2%).

• Gross profit for Q2 2026 was $2.6M (11.3% margin), up from 7.1% margin in Q2 2025; adjusted gross profit was $4.6M (20.0% margin).

• SG&A expenses for Q2 2026 were $10.1M, down 37.7% year-over-year; adjusted SG&A was $6.3M.

• Net loss per share for Q2 2026 was $(2.23); six-month net loss per share was $(5.29).

• Cash and equivalents at June 30, 2026, were $6.2M, with a working capital deficit of $108.1M.

Outlook and guidance

• Management anticipates annual cost savings of over $5M from restructuring, but ongoing market uncertainty and liquidity challenges persist.

• The company is pursuing additional financing, asset sales, and strategic alternatives to improve liquidity and strengthen capital structure.

• Focus remains on proprietary brands, cost reductions, and operational efficiency.