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Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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Hydrofarm Holdings Group Inc / Equity Bottom-Up

<ul><li>Top line and margins come in weaker than expected. </li><li>Hydrofarm reported 3Q25 results that included net sales of $29.4MM, down 33.3% Y/Y, driven primarily by a 32% decline in volume/mix and (1%) Y/Y price change.</li><li>Adjusted gross margin of 18.8% declined sequentially and was down meaningfully versus 24.3% in 3Q24 as lower manufacturing production volumes compressed margins, despite a positive mix and largely stable prices. </li></ul>

Top line and margins come in weaker than expected. Hydrofarm reported 3Q25 results that included net sales of $29.4MM, down 33.3% Y/Y, driven primarily by a 32% decline in volume/mix and (1%) Y/Y price change.Adjusted gross margin of 18.8% declined sequentially and was down meaningfully versus 24.3% in 3Q24 as lower manufacturing production volumes compressed margins, despite a positive mix and largely stable prices. 

HYFM: Continuing Market Pressures Drive Weaker 3Q25 Results and CEO Change

<div><ul><li>Hydrofarm is a non-plant touching, NASDAQ-listed, leading manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture (CEA). </li><li>The company’s products consist primarily of consumable products, such as nutrients and grow media, and durable products, such as grow lights, climate control solutions, rolling racks/benches, and various other equipment and supplies.</li><li>Cannabis-related downturn could be ending. HYFM has seen a precipitous decline in revenue and profitability from 2021 peak revenue of nearly $480MM to $190MM in 2024 and could decline further to ~$150MM in 2025. </li></ul></div>

Hydrofarm is a non-plant touching, NASDAQ-listed, leading manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture (CEA). The company’s products consist primarily of consumable products, such as nutrients and grow media, and durable products, such as grow lights, climate control solutions, rolling racks/benches, and various other equipment and supplies.Cannabis-related downturn could be ending. HYFM has seen a precipitous decline in revenue and profitability from 2021 peak revenue of nearly $480MM to $190MM in 2024 and could decline further to ~$150MM in 2025. 

HYFM: As Cannabis Market's Headwinds Subside, 2026 Could See a Return to Growth

<ul><li>2Q25 results reflect continued market weakness.</li><li>HYFM delivered 2Q25 results that missed our expectations, with revenue of $39MM falling short of our $42MM estimate, while the adjusted EBITDA loss of $2.3MM was worse than our estimate of a loss of $0.3MM.</li><li>Industry oversupply and consolidating customer base resulted in a 28% decline in Y/Y volume/mix, with most of the decline attributed to durable product sales, with consumables seeing a less drastic correction. </li></ul>

2Q25 results reflect continued market weakness.HYFM delivered 2Q25 results that missed our expectations, with revenue of $39MM falling short of our $42MM estimate, while the adjusted EBITDA loss of $2.3MM was worse than our estimate of a loss of $0.3MM.Industry oversupply and consolidating customer base resulted in a 28% decline in Y/Y volume/mix, with most of the decline attributed to durable product sales, with consumables seeing a less drastic correction. 

Hydrofarm Holdings Group, Inc. Portfolio and Footprint Optimization...

<ul><li>HYFM is a leading manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture (CEA).</li><li>The company’s products consist primarily of consumable products, such as nutrients and plant growth media, grow lights, climate control solutions, rolling racks/benches, and various other equipment and supplies.</li><li>1Q25 results modestly exceeded our expectations. Quarterly revenue of $40.5 million was slightly below our $41.7 million estimate, driven by greater-than-expected volume declines, only partially offset by a less-than-expected decline in prices.</li></ul>

HYFM is a leading manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture (CEA).The company’s products consist primarily of consumable products, such as nutrients and plant growth media, grow lights, climate control solutions, rolling racks/benches, and various other equipment and supplies.1Q25 results modestly exceeded our expectations. Quarterly revenue of $40.5 million was slightly below our $41.7 million estimate, driven by greater-than-expected volume declines, only partially offset by a less-than-expected decline in prices.

Hydrofarm Holdings Group, Inc: Cost Savings and Mix Improvement Drive Outperformance...

<ul><li>HYFM is a leading manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture (CEA).</li><li>The company’s products consist primarily of consumable products, such as nutrients and growth media, grow lights, climate control solutions, rolling racks/benches, and various other equipment and supplies.</li><li>Meeting full-year 2024 guidance despite weaker 4Q24. </li></ul>

HYFM is a leading manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture (CEA).The company’s products consist primarily of consumable products, such as nutrients and growth media, grow lights, climate control solutions, rolling racks/benches, and various other equipment and supplies.Meeting full-year 2024 guidance despite weaker 4Q24. 

Hydrofarm Holdings Group, Inc: 4Q24 Results Reflect Prevailing Industry Headwinds..

United States

Hydrofarm Holdings Group, Inc. operates as a holding company. The Company, through its subsidiaries, manufactures and distributes hydroponics products such as lighting equipment, climate control devices, garden accessories, and other related products. Hydrofarm Holdings Group serves customers in the United States.

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Hydrofarm Holdings Group Inc (HYFM US)

HYFM: Continuing Market Pressures Drive Weaker 3Q25 Results and CEO Change

Hydrofarm reported 3Q25 results that included net sales of $29.4MM, down 33.3% Y/Y, driven primarily by a 32% decline in volume/mix and (1%) Y/Y...

Water Tower Research

HYFM: As Cannabis Market's Headwinds Subside, 2026 Could See a Return to Growth

Hydrofarm is a non-plant touching, NASDAQ-listed, leading manufacturer and distributor of branded hydroponics equipment and supplies for controlled...

Water Tower Research

Hydrofarm Holdings Group, Inc. Portfolio and Footprint Optimization...

2Q25 results reflect continued market weakness. HYFM delivered 2Q25 results that missed our expectations, with revenue of $39MM falling short of...

Water Tower Research

Hydrofarm Holdings Group, Inc: Cost Savings and Mix Improvement Drive Outperformance...

HYFM is a leading manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture (CEA).

Water Tower Research

Hydrofarm Holdings Group, Inc: 4Q24 Results Reflect Prevailing Industry Headwinds..

HYFM is a leading manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture (CEA).

Water Tower Research

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