On this page of StockholderLetter.com we present the latest annual shareholder letter from HYDROFARM HOLDINGS GROUP, INC. — ticker symbol HYFM. Reading current and past HYFM letters to shareholders can bring important insights into the investment thesis.
ANNUAL REPORT | 2024 W W W. H Y D R O FA R M . C O M
Hydrofarm is a leading independent manufacturer and distributor of branded hydroponic equipment and supplies for controlled environment agriculture. MISSION VISION Enabling growers, farmers and cultivators to achieve higher yields and greater quality, consistency, efficiency and sustainability at their farms. Bringing innovative solutions, preferred brands and gold standard service to the growing CEA market. PROPRIETARY BRANDS | 2024
LETTER FROM THE CHAIRMAN AND CEO LETTER FROM THE CEO | 2024 B. John Lindeman CEO Dear Shareholders: 2024 was a year of notable improvements for Hydrofarm, despite facing industry headwinds particularly in the second half of the year. We successfully achieved sales within our full-year guidance and continued our cost-saving and restructuring initiatives, delivering ten consecutive quarters of meaningful year-over-year Adjusted SG&A1 savings. Our strategic priority to drive sales of our higher-margin proprietary brands has yielded positive results, improving our proprietary brand sales mix from an estimated 35% in 2020 to 56% in 2024. We achieved positive Adjusted EBITDA1 for the majority of quarters over the past two years, even as industry sales have compressed. In 2024, we had strong sales performances from select proprietary consumable brands, particularly in our grow media and nutrient product categories. Revenue diversification was another important achievement in 2024, as we estimate that Hydrofarm increased sales to noncannabis related end markets and non-U.S./Canada customers. This diversification helps balance cannabis industry fluctuations in North America. We made significant progress in operational efficiency since the beginning of 2023, reducing our manufacturing footprint by nearly 60% and investing in productivity-enhancing capital equipment. We re now operating below our pre-IPO Adjusted SG&A1 dollar level, which represents a remarkable achievement in cost management. Looking ahead to 2025, our strategic roadmap is clear: drive diverse, high-quality revenue streams, improve profit margins, manage our financial position, and enhance our overall capabilities. We plan to reinvigorate our proprietary brand sales mix through targeted marketing investments, enhanced sales force capabilities, and refined incentive structures. We are also working to further optimize our distribution network, pursue contract manufacturing opportunities, and continue reducing SG&A expenses in several areas. Continued... 1 Adjusted SG&A and Adjusted EBITDA are non-GAAP measures. For more information on the adjustments and additional reconciliations of non-GAAP measures to the most directly comparable GAAP financial measures, see our press release titled Hydrofarm Holdings Group Announces Fourth Quarter and Full Year 2024 Results dated March 5th, 2025 on our website at https://investors.hydrofarm.com/news-events/press-releases. 2024 Hydrofarm Annual Report
Letter from the CEO, continued We are focused on strategic alternatives that could enhance shareholder value, whether through strategic combinations, acquisitions, or divestitures that conform to our priorities and strengthen our business. I am incredibly proud of our team s resilience and dedication. Their efforts have allowed us to navigate challenging industry conditions while continuing to build a stronger foundation for future growth. As a result, we remain optimistic about the longterm prospects for our industry and Hydrofarm s future. Sincerely, B. John Lindeman Chief Executive Officer Cautionary Note Regarding Forward-Looking Statements Statements contained in this annual report, other than statements of historical fact, which address activities, events and developments that the Company expects or anticipates will or may occur in the future, including, but not limited to, information regarding the future economic performance and financial condition of the Company, the plans and objectives of the Company s management, and the Company s assumptions regarding such performance and plans are forward-looking statements within the meaning of the U.S. federal securities laws that are subject to risks and uncertainties. These forward-looking statements generally can be identified as statements that include phrases such as guidance, outlook, projected, believe, target, predict, estimate, forecast, strategy, may, goal, expect, anticipate, intend, plan, foresee, likely, will, should or other similar words or phrases. Actual results could differ materially from the forward-looking information in this release due to a variety of factors, including, but not limited to: The market in which the Company operates has been substantially adversely impacted by conditions of the agricultural and cannabis industries, including oversupply and decreasing prices of the products the Company s end customers sell, which, in turn, has materially adversely impacted the Company s sales and other results of operations and which may continue to do so in the future; If industry conditions worsen or are sustained for a lengthy period, the Company could be forced to take additional impairment charges and/or inventory and accounts receivable reserves, which could be substantial, and, ultimately, the Company may face liquidity challenges; The Company s Revolving Credit Facility and future debt facilities may limit the operation of the Company s business including restricting its ability to sell products directly to the cannabis industry; Although equity financing may be available, the Company s current stock prices are at depressed levels and any such financing would be dilutive; Interruptions in the Company s supply chain could adversely impact expected sales growth and operations; Increased prices and inflation could adversely impact the Company s performance and financial results; Global political and economic conditions including the imposition of potential tariffs could increase the costs of the Company s products and adversely impact the competitiveness of the Company s products and the Company s financial results; The Company may be unable to meet the continued listing standards of Nasdaq; The Company s restructuring activities may increase our expenses and cash expenditures, and may not have the intended cost saving effects; The highly competitive nature of the Company s markets could adversely affect its ability to maintain or grow revenues; Certain of the Company s products may be purchased for use in new or emerging industries or segments, including the cannabis industry, and/or be subject to varying, inconsistent, and rapidly changing laws, regulations, administrative and enforcement approaches, and consumer perceptions which may adversely impact the market for the Company s products; The market for the Company s products has been impacted by conditions impacting its customers, including related crop prices, climate change, and other factors impacting growers; Compliance with government laws and regulations including environmental and other public health regulations or changes in such regulations or regulatory enforcement priorities could increase the Company s costs of doing business or limit the Company s ability to market all of its products; Damage to the Company s reputation or the reputation of its products or products it markets on behalf of third parties could have an adverse effect on its business; If the Company is unable to effectively execute its e-Commerce business, its reputation and operating results may be harmed; The Company s operations may be impaired if its information technology systems fail to perform adequately or if it is the subject of a data breach or cyber-attack; The Company may not be able to adequately protect its intellectual property and other proprietary rights that are material to the Company s business; and Acquisitions, other strategic alliances and investments could result in operating and integration difficulties, dilution and other harmful consequences that may adversely impact the Company s business and results of operations. Additional detailed information concerning a number of the important factors that could cause actual results to differ materially from the forward-looking information contained in this release is readily available in the Company s annual, quarterly and other reports. The Company disclaims any obligation to update developments of these risk factors or to announce publicly any revision to any of the forward-looking statements contained in this release, or to make corrections to reflect future events or developments except as otherwise required by law. 2024 Hydrofarm Annual Report
FORM 10-K | 2024 W W W. H Y D R O FA R M . C O M
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 • Benford's Law Stocks icon HYFM Benford's Law Stock Score = 79


HYFM Shareholder/Stockholder Letter Transcript:

ANNUAL REPORT | 2024
W W W. H Y D R O FA R M . C O M

Hydrofarm is a leading independent manufacturer and
distributor of branded hydroponic equipment and supplies for
controlled environment agriculture.
MISSION
VISION
Enabling growers, farmers and cultivators to achieve
higher yields and greater quality, consistency,
efficiency and sustainability at their farms.
Bringing innovative solutions, preferred brands and
gold standard service to the growing CEA market.
PROPRIETARY BRANDS | 2024

LETTER FROM THE CHAIRMAN AND CEO
LETTER FROM THE CEO | 2024
B. John Lindeman
CEO
Dear Shareholders:
2024 was a year of notable improvements for Hydrofarm, despite
facing industry headwinds particularly in the second half of
the year. We successfully achieved sales within our full-year
guidance and continued our cost-saving and restructuring
initiatives, delivering ten consecutive quarters of meaningful
year-over-year Adjusted SG&A1 savings.
Our strategic priority to drive sales of our higher-margin
proprietary brands has yielded positive results, improving
our proprietary brand sales mix from an estimated 35% in
2020 to 56% in 2024. We achieved positive Adjusted EBITDA1
for the majority of quarters over the past two years, even as
industry sales have compressed. In 2024, we had strong sales
performances from select proprietary consumable brands,
particularly in our grow media and nutrient product categories.
Revenue diversification was another important achievement in
2024, as we estimate that Hydrofarm increased sales to noncannabis related end markets and non-U.S./Canada customers.
This diversification helps balance cannabis industry fluctuations
in North America.
We made significant progress in operational efficiency since
the beginning of 2023, reducing our manufacturing footprint
by nearly 60% and investing in productivity-enhancing capital
equipment. We   re now operating below our pre-IPO Adjusted
SG&A1 dollar level, which represents a remarkable achievement
in cost management.
Looking ahead to 2025, our strategic roadmap is clear: drive
diverse, high-quality revenue streams, improve profit margins,
manage our financial position, and enhance our overall
capabilities. We plan to reinvigorate our proprietary brand sales
mix through targeted marketing investments, enhanced sales
force capabilities, and refined incentive structures. We are also
working to further optimize our distribution network, pursue
contract manufacturing opportunities, and continue reducing
SG&A expenses in several areas.
Continued...
1 Adjusted SG&A and Adjusted EBITDA are non-GAAP measures. For more information on the adjustments and additional reconciliations of non-GAAP
measures to the most directly comparable GAAP financial measures, see our press release titled    Hydrofarm Holdings Group Announces Fourth Quarter and
Full Year 2024 Results    dated March 5th, 2025 on our website at https://investors.hydrofarm.com/news-events/press-releases.
2024 Hydrofarm Annual Report

Letter from the CEO, continued
We are focused on strategic alternatives that could enhance
shareholder value, whether through strategic combinations,
acquisitions, or divestitures that conform to our priorities and
strengthen our business.
I am incredibly proud of our team   s resilience and dedication.
Their efforts have allowed us to navigate challenging industry
conditions while continuing to build a stronger foundation for
future growth. As a result, we remain optimistic about the longterm prospects for our industry and Hydrofarm   s future.
Sincerely,
B. John Lindeman
Chief Executive Officer
Cautionary Note Regarding Forward-Looking Statements
Statements contained in this annual report, other than statements of historical fact, which address activities, events and developments that the Company expects
or anticipates will or may occur in the future, including, but not limited to, information regarding the future economic performance and financial condition of the
Company, the plans and objectives of the Company   s management, and the Company   s assumptions regarding such performance and plans are    forward-looking
statements    within the meaning of the U.S. federal securities laws that are subject to risks and uncertainties. These forward-looking statements generally can be
identified as statements that include phrases such as    guidance,       outlook,       projected,       believe,       target,       predict,       estimate,       forecast,       strategy,       may,       goal,   
   expect,       anticipate,       intend,       plan,       foresee,       likely,       will,       should    or other similar words or phrases. Actual results could differ materially from the forward-looking
information in this release due to a variety of factors, including, but not limited to:
The market in which the Company operates has been substantially adversely impacted by conditions of the agricultural and cannabis industries, including oversupply
and decreasing prices of the products the Company   s end customers sell, which, in turn, has materially adversely impacted the Company   s sales and other results of
operations and which may continue to do so in the future; If industry conditions worsen or are sustained for a lengthy period, the Company could be forced to take
additional impairment charges and/or inventory and accounts receivable reserves, which could be substantial, and, ultimately, the Company may face liquidity
challenges; The Company   s Revolving Credit Facility and future debt facilities may limit the operation of the Company   s business including restricting its ability to
sell products directly to the cannabis industry; Although equity financing may be available, the Company   s current stock prices are at depressed levels and any such
financing would be dilutive; Interruptions in the Company   s supply chain could adversely impact expected sales growth and operations; Increased prices and inflation
could adversely impact the Company   s performance and financial results; Global political and economic conditions including the imposition of potential tariffs could
increase the costs of the Company   s products and adversely impact the competitiveness of the Company   s products and the Company   s financial results; The Company
may be unable to meet the continued listing standards of Nasdaq; The Company   s restructuring activities may increase our expenses and cash expenditures, and may
not have the intended cost saving effects; The highly competitive nature of the Company   s markets could adversely affect its ability to maintain or grow revenues;
Certain of the Company   s products may be purchased for use in new or emerging industries or segments, including the cannabis industry, and/or be subject to
varying, inconsistent, and rapidly changing laws, regulations, administrative and enforcement approaches, and consumer perceptions which may adversely impact
the market for the Company   s products; The market for the Company   s products has been impacted by conditions impacting its customers, including related crop
prices, climate change, and other factors impacting growers; Compliance with government laws and regulations including environmental and other public health
regulations or changes in such regulations or regulatory enforcement priorities could increase the Company   s costs of doing business or limit the Company   s ability to
market all of its products; Damage to the Company   s reputation or the reputation of its products or products it markets on behalf of third parties could have an adverse
effect on its business; If the Company is unable to effectively execute its e-Commerce business, its reputation and operating results may be harmed; The Company   s
operations may be impaired if its information technology systems fail to perform adequately or if it is the subject of a data breach or cyber-attack; The Company may
not be able to adequately protect its intellectual property and other proprietary rights that are material to the Company   s business; and Acquisitions, other strategic
alliances and investments could result in operating and integration difficulties, dilution and other harmful consequences that may adversely impact the Company   s
business and results of operations. Additional detailed information concerning a number of the important factors that could cause actual results to differ materially
from the forward-looking information contained in this release is readily available in the Company   s annual, quarterly and other reports. The Company disclaims any
obligation to update developments of these risk factors or to announce publicly any revision to any of the forward-looking statements contained in this release, or to
make corrections to reflect future events or developments except as otherwise required by law.
2024 Hydrofarm Annual Report

FORM 10-K | 2024
W W W. H Y D R O FA R M . C O M



shareholder letter icon 4/17/2025 Letter Continued (Full PDF)
 

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