Hydrofarm Group (HYFM) Q1 2025 earnings summary

Executive summary

• Net sales for Q1 2025 were $40.5 million, down 25.2% year-over-year, primarily due to reduced volume, lower prices, and cannabis industry oversupply.

• Gross profit fell to $6.9 million (17% margin), down from $10.9 million (20.2%) last year, reflecting lower sales and product mix.

• Net loss widened to $14.4 million ($3.12/share) from $12.6 million ($2.75/share) year-over-year.

• Proprietary brands accounted for 55% of net sales, up from 52% in Q4 2024, supporting margin improvement.

• Restructuring actions, including U.S. manufacturing consolidation and asset sales, were completed to streamline operations and reduce costs.

Financial highlights

• Net sales: $40.5 million (down 25.2% year-over-year); gross profit: $6.9 million (17% margin); adjusted gross profit: $8.5 million (21% margin).

• Adjusted EBITDA loss was $2.4 million, improving $4.8 million sequentially from Q4 2024 but down from $0.3 million year-over-year.

• SG&A expenses were $17.9 million (down 9% year-over-year); adjusted SG&A down 11% to $11.0 million.

• Cash and equivalents at March 31, 2025, were $13.7 million; total liquidity stood at $31 million, with $17 million available on the revolver.

• Negative free cash flow of $12 million in Q1, with expectations for break-even or better free cash flow for the remainder of 2025.

Outlook and guidance

• Full-year 2025 guidance for net sales, adjusted EBITDA, and free cash flow withdrawn due to macro and tariff uncertainty.

• Expectation to improve adjusted gross profit margin and lower adjusted SG&A expense for the full year remains.

• New proprietary product launches planned for the U.S. in the second half of 2025; international expansion ongoing.

• Capital expenditures projected to be under $2 million for full year 2025.

• Ongoing evaluation of product portfolio, supply chain, and potential asset sales to supplement liquidity.