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Jun 30
Hydrofarm Q2 2025 Earnings Report
Hydrofarm posted a 28% revenue decline in Q2 2025 but improved cash flow and reduced expenses amid ongoing restructuring efforts.
Key Takeaways
Hydrofarm's Q2 2025 revenue dropped to $39.2 million due to industry headwinds and reduced demand for durable products. The company narrowed its net loss and delivered $1.4 million in free cash flow. Strategic cost-cutting and restructuring efforts continued to improve operational efficiency as Hydrofarm reaffirmed its full-year guidance.
Net sales fell to $39.2 million from $54.8 million YoY
Gross margin declined to 7.1% from 19.8% due to lower sales and restructuring
Adjusted EBITDA was $(2.3) million, down from $1.7 million in Q2 2024
Free cash flow reached $1.4 million despite continued industry softness
Hydrofarm
Hydrofarm
Forward Guidance
Hydrofarm reaffirmed expectations for improved margins and lower expenses in FY2025, supported by restructuring benefits, proprietary brand focus, and reduced inventory.
Positive Outlook
- Reaffirmed full-year improvement in adjusted gross margin
- Anticipates $3M+ in annual cost savings from restructuring
- Free cash flow expected to remain positive in second half of 2025
- Inventory reduction targeted for year-end
- Focused investment in proprietary brands to support margin growth
Challenges Ahead
- Persistent industry oversupply pressures sales volume
- Gross margin heavily impacted by restructuring costs
- Adjusted EBITDA turned negative YoY
- SG&A as a percentage of sales rose to 41.1%
- High tariffs and inflation may continue to affect input costs