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Date of report (Date of earliest event reported): December 5, 2022




Hydrofarm Holdings Group, Inc.

(Exact name of registrant as specified in its charter)




Delaware   001-39773   81-4895761
(State or other jurisdiction of
incorporation or organization)
  (Commission File
  (I.R.S. Employer
Identification No.)


  1510 Main Street
Shoemakersville, PA 19555
  (Address of Principal Executive
Offices) (Zip Code)


Registrant’s telephone number, including area code: (707) 765-9990




Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:


  ¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


  ¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


  ¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


  ¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Securities registered pursuant to Section 12(b) of the Act:


Title of each class Trading symbol(s) Name of each exchange on which registered
Common Stock, $0.0001 par value per share HYFM NASDAQ Global Select Market


Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).


Emerging growth company ¨


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨






Item 7.01Regulation FD Disclosure.


On December 5, 2022, Hydrofarm Holdings Group, Inc. (the “Company”) posted an updated investor presentation (the “Investor Presentation”) under the “Investors” tab in the “Events & Presentations” section of its website located at www.hydrofarm.com. Members of the Company’s management may use all or portions of these materials from time to time in meetings with or when making presentations to the investment community, current or potential stakeholders, and others. The Investor Presentation is furnished herewith as Exhibit 99.1 of this Current Report on Form 8-K and is incorporated herein by reference.


The information in this Item 7.01 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act. The information contained in this Item 7.01 (including the exhibit hereto) shall not be incorporated by reference into any filing with the SEC made by the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.


Forward-Looking Statements


Certain statements in this Current Report on Form 8-K (including the exhibit hereto) constitute “forward-looking” statements. These statements are based on management’s current opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results. These forward-looking statements are only predictions, not historical fact, and involve certain risks and uncertainties, as well as assumptions. Actual results, levels of activity, performance, achievements and events could differ materially from those stated, anticipated or implied by such forward-looking statements. While the Company believes that its assumptions are reasonable, it is very difficult to predict the impact of known factors, and, of course, it is impossible to anticipate all factors that could affect actual results. There are a number of risks and uncertainties that could cause actual results to differ materially from forward-looking statements made herein including, most prominently, the risks discussed under the heading “Risk Factors” in each of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and Quarterly Report on Form 10-Q for the period ended September 30, 2022, as well as its consolidated financial statements, related notes, and other financial information appearing therein, and its other filings with the SEC.


Additionally, Exhibit 99.1 includes certain preliminary financial estimates for the year ended December 31, 2022, for which financial statements are not yet available and for which the audit has not been completed. Such estimates are “forward-looking” statements. Our actual results remain subject to the completion of our year-end closing process, which includes review by management and our board of directors, including our audit committee. While carrying out such procedures, we may identify items that require us to make adjustments to such preliminary estimates. Our independent registered public accounting firm has also not audited, reviewed, compiled or performed any procedures on this preliminary financial information, and, accordingly, does not express an opinion or other form of assurance with respect thereto. Such estimates are preliminary and may change. There can be no assurance that our final audited results of operations for such periods will not differ from these estimates, and any such changes could be material. Therefore, you should not place undue reliance on these preliminary estimates of our results.


Such forward-looking statements are made only as of the date of this Current Report on Form 8-K. The Company expressly disclaims any obligation or undertaking to release any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or changes in events, conditions, or circumstances on which any such statement is based.


Item 9.01Financial Statements and Exhibits.


99.1   Investor Presentation.
104   Cover Page Interactive Data File (embedded within the Inline XBRL document).







Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


  Hydrofarm Holdings Group, Inc.
Date: December 5, 2022 By: /s/ William Toler
    Name: William Toler
    Title: Chief Executive Officer





Exhibit 99.1


Investor Presentation Growing starts with knowing December 2022



Disclaimer Forward - Looking Statements This presentation contains forward - looking statements, within the meaning of the Private Securities Litigation Reform Act of 199 5, which are subject to known and unknown risks, uncertainties and other important factors that may cause actual results to be materially different from the statements ma de herein. All statements other than statements of historical fact included in this presentation are forward - looking statements, including, but not limited to, the C ompany’s financial results, future financial position, expected growth of cash flows, business strategy, budgets, projected costs, projected capital expenditures, taxes, pla ns, objectives, potential synergies, industry trends and growth opportunities. Forward - looking statements discuss the Company’s current expectations and projections relating to its financial operations, plans, objectives, future performance and business. You can identify forward - looking statements by the fact that they do not relate st rictly to historical or current facts. These statements may include words such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “future,” “intend,” “o utl ook,” “potential,” “project,” “projection,” “plan,” “seek,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other similar expre ssi ons. All forward - looking statements are expressly qualified in their entirety by these cautionary statements. These forward - looking statements are only predictions, not historica l fact, and involve certain risks and uncertainties, as well as assumptions. While Hydrofarm believes that its assumptions are reasonable, it is very difficult to predict the impact of known factors, and, of course, it is impossible to anticipate all factors that could affect actual results. There are many risks and uncertainties that could cause actual results to differ materially from forward - looking statements made herein including, most prominently, the risks discussed under the heading “Risk Factors” in the Company’s latest annual report on Form 10 - K and quarterly reports on Form 10 - Q filed with the U.S. Securities and Exchange Commission (“SEC”). Such forward - looking sta tements are made only as of the date of this presentation. All of the Company’s SEC filings are available online at www.sec.gov . Hydrofarm undertakes no obligation to publicly update or revise any forward - looking statement because of new information, future events or otherwise, except as otherwise required by law. If we do update one or m ore forward - looking statements, no inference should be made that we will make additional updates with respect to those or other forward - looking statements. This p resentation also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our indu str y. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assu mpt ions, and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncerta int y and risk. Non - GAAP Measures This presentation may contain financial information determined by methods other than in accordance with accounting principles ge nerally accepted in the United States of America (“GAAP”). Management uses these “non - GAAP” measures in its analysis of the Company’s performance. Management believes th ese non - GAAP financial measures allow for better comparability of period to period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non - GAAP performance measures that may be presented b y other companies. If applicable, a reconciliation of the non - GAAP measures used in this presentation to the most directly comparable GAAP measures is provided in t he Appendix to this presentation. 2



Introduction and Investment Thesis 3



4 Hydrofarm is well - positioned with 'picks and shovels’ for the Gold Rush Serving a l arge and growing market Addressing a l ong - term opportunity in an evolving marketplace Working through a supply/demand imbalance



'Picks and shovels' to the cannabis market Uniquely asymmetric risk/reward Leading branded hydroponics company serving the $12BN global Controlled Environment Agriculture market Manufacturer and distributor with well invested supply chain platform and gold standard service Advantaged product mix: 75%+ sales from margin - accretive proprietary & preferred brands; ~2/3 recurring revenue from consumables 11% organic revenue growth CAGR over 17 years, with an opportunity to return to double digit EBITDA margins following post - COVID industry disruption ​ State - level cannabis legalization and roll outs have been bumpy as new end markets emerge ​ High quality, sustainably grown hydroponic supply will eventually balance with steadily expanding recreational and medicinal volume demand ​ Long term, the cannabis market will mature and professionalize, with recognized brands and product innovation providing predictable consumer experiences -- reliable time to onset, predictable duration, and targeted intensity ​ This market will be served by stronger, scaled manufacturers and distributors of branded hydroponic equipment and supplies ​ Hydrofarm has taken actions to weather the storm – SG&A expense reduction and working capital management ​ We are pursuing additional value unlocks, including real estate monetization, and manufacturing consolidation ​ We are expanding our reach to serve commercial cannabis and commercial food & floral end users We are preserving liquidity – limited draw on revolver facility until supply/demand rebalances ​ As in the Gold Rush, nimble 'picks and shovel' providers are best positioned to survive & thrive Leading manufacturer & distributor serving growing markets Navigating the path to industry normalization Emerging stronger and compounding HYDROFARM INVESTMENT THESIS Leadership, talent and infrastructure to support a compounding business orders of magnitude larger 5



Where and How We Compete 6



Serving a vast and growing hydroponics marketplace Expecting robust end market growth supported by healthy gains for input markets HYDROFARM END MARKETS Our customers’ key end markets Controlled Environment Agriculture Growing and cultivation that allows end users to control key farming variables. Through CEA, growers are able to be more efficient, effective, and sustainable. Chemical runoff prevention Reduced food waste Reduced carbon emissions Lower fertilizer & pesticides usage More efficient freshwater usage More efficient land usage Our categories Lighting Equipment * Nutrients Supplies Grow Media * I ncludes HVAC products Global CEA market wholesale inputs ~$65B Global CEA Market (includes cannabis) ~$75bn +19% CAGR to 2025E Global CEA market outputs Source: Industry Reports 7 ~$12bn globally ~$3.7bn North America + 11% CAGR to 2026E



Sustaining momentum in state - level cannabis legalization Cannabis flower end market posting high teens volume growth in consumption HYDROFARM INDUSTRY OUTLOOK TX MT CA ID NV AZ OR IL NM CO WY MN SD IA ND UT KS NE WA WI OK MI MO NY PA FL IN AL GA AR LA NC VA TN KY OH MS ME SC MI WV VT NH MA CT NJ MD DE RI HI Adult - use Legal Medicinal - use Legal New Adult - use Legalizations None Sources: Census data, news media Source: Stifel: November 2022 Cannabis Category Update 6.0% 16.7% 10.8% 20.6% Aug-21 Feb-22 Aug-22 Nov-22 % change y/y CANNABIS FLOWER CONSUMPTION RE - ACCELERATING IN FALL 2022 8



Source: Company Information Specialty hydroponic retailers Garden centers / retail eCommerce Greenhouse / channel partners Selling to a fragmented customer base… Branded manufacturer and distributor serving growth markets Adding value within a complex value chain with high barriers to entry HYDROFARM VALUE CHAIN ​ ~75% of revenue Hydrofarm’s Value Proposition Proprietary brands Preferred brands Distributed brands Over 80 brands, including: Over 40 brands, including: B2B eCommerce platform Just - in - time delivery Technical specialists advising customers & end users Superior customer service Inventory management capabilities Full Solution Provider Infrastructure to service 90% of US population within 48 hours …that reaches an evolving mix of end users Commercial growers Cannabis - MSO Individuals Consumer gardeners & hobbyists Cannabis – Craft/midsize Food & floral Over 30 brands, including: 9



Preferred (~25%) Proprietary (~50%) Up from 35% in 2020 Source: Company estimates. We have end - to - end category coverage through innovative, well - recognized proprietary and preferred brands Strong portfolio of solutions across key categories Leaning into proprietary and preferred brands and consumables to improve margins HYDROFARM PORTFOLIO Illustrative margin benefit as we move to proprietary Distributed Preferred Proprietary and/or Self - Manufactured Consumables (~67% of sales) Durables (~33% of sales) Nutrients Grow Media Supplies Lighting Equipment Strong proprietary & self manufactured brands; highest margins Brands acquired through 2021 acquisitions Prominent distributed & preferred brands; lowest margins Diverse products & Brands; lower margins Strong proprietary brands; demand challenges; generally higher margins Strong proprietary brands; strength in newer states; higher margins 10



HYDROFARM B2B CUSTOMERS Evolving our customer base to reach the most active growers Our sales and customer mix is evolving as the industry matures 2020 2022 Specialty Hydroponic Retailers Lawn Garden Centers/Other Retail YTD Revenues E - Commerce Commercial & Other Channel Partners Total Accounts Specialty Hydroponic Retailers Commercial & Other Channel Partners Lawn & Garden and Other Retailers Source: Company estimates. 11



HYDROFARM END USERS Home / Hobby Craft / Mid - Size Cannabis CEA FF UNICORN MID - SIZE Cannabis Food & Floral Commercial Cannabis Food & Floral MSO HOME GARDEN CRAFT HOME GROWER Serving the unique needs of commercial and home growers Expanding our penetration within commercial cannabis and commercial food & floral Home growers & hobbyists Note: 'MSO' is multi - state operator 12



Value Creation: Past, Present and Future 13



Leadership combines industry & consumer brands know - how HYDROFARM LEADERSHIP Bill Toler Chairman & Chief Executive Officer Prior: Renah Persofsky Vice Chair & Lead Director, Tilray Susan Peters Former SVP HR, General Electric John Lindeman EVP & Chief Financial Officer Prior: Rick Moss Former CFO, Hanesbrands Mark Parker EVP, Business Development Prior: Patrick Chung VP Finance, CentreCourt Eric Ceresnie SVP, Corporate Dev. & International Markets Prior: Melisa Denis Retired Lead Partner, KPMG Prior : Prior: Prior : Prior: Prior: Proven management team with deep experience base Diverse board with relevant experience Rob Marlow Chief Information Officer Prior : Tais Martinez Vice President Human Resources Prior: 14



Compounding in an emerging growth market Delivering 11% organic growth CAGR from 2005 - 22 with a long history of healthy profitability HYDROFARM HISTORY US Organic Sales Acquisition Sales $ in Millions 2011 - 13 Down Cycle Market saturation in Colorado and California driven by expansion of medical legalization 2014 - 17 Up Cycle Expansion of legalization, both medical and adult - use 2017 - 18 Down Cycle Slow/difficult implementation of CA adult - use regulations 2022 Down Cycle Pandemic over - production, demand pull - forward and shift from consumer hobbyists to commercial growers 2019 - 21 Up Cycle Resolution of CA regulations; expansion of legalization in new states; pandemic pull - forward Source: Company estimates; note that pre - 2019 unaudited management estimates of net sales. - 47% 15 ​ 76% 22% 16% 51% 42% 1% - 4% 2% 8% 29% 18% - 6% - 36% 18% 50% 18% - 47% $0 $100 $200 $300 $400 $500 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022E



More compounding to come given solid market tailwinds The industry is steadily maturing into the mainstream HYDROFARM INDUSTRY OUTLOOK Sources: US Census, US Bureau of Economic Analysis & AGP % of US 22+ Population % of US FY22 GDP Nearly Half of Americans are in An Adult - Use Cannabis state Post the Nov 22 Election % of Population & GDP in States with Legal Adult - Use Cannabis 4% 6% 21% 24% 33% 44% 48% 5% 6% 24% 27% 37% 49% 52% 0% 20% 40% 60% 2012 2014 2016 2018 2020 2022 Pre-Election 2022 Post-Election Green Thumb Industries Inc. , one of the largest US cannabis producers, signed a deal with Circle K , the global convenience - store chain, to sell licensed marijuana at its Florida gasoline retailers . The partnership will begin next year with 10 of the company’s 600 locations in the state, Green Thumb said. A Growing Number of California Cities Are Opening Weed Cafes Lounges where customers consume cannabis on site are the next frontier of the state’s recreational marijuana industry. “The re - scheduling of cannabis would unleash the real potential of the US cannabis industry , in terms of jobs, tax revenue, and scientific research.” — Jonathan Sandelman , CEO of Ayr Wellness 16



Bold moves to focus the business in 2022, with more in 2023 Staying nimble while riding out the path to industry normalization HYDROFARM RECENT ACTIONS Rationalizing brands and SKUs • Reducing redundancy, focusing on proprietary/higher - margin brands & SKUs • Right - sizing investment in storage, labor/handling and freight costs Leaning into diverse revenue streams • Investing to better serve Food/Floral growers and Garden Center customers • Reinvesting prudently in peat bog development Improving sourcing, distribution and manufacturing activities • Centralizing and consolidating sourcing • Consolidating nutrient manufacturing • Sub - leasing more distribution center space Reallocating and rightsizing our SG&A spend • Extract further savings in facilities, insurance & professional/outside services • Enable reinvestment in our people and brands Rightsizing Workforce Reduced headcount, achieved through M&A integration efforts and better matching our workforce to current industry demand Headcount Working Capital Management Reduced inventory, maintained collection on receivables to help generate positive cash flow from operations Net working capital investment* $162 MM $132 MM Q4 2021 Q3 2022 739 547 Q4 2021 Q3 2022 * Net working capital defined as current assets less cash/cash equivalents minus current liabilities less debt and leases 17



Key value drivers with near - term and long - term goals Focusing on near - term performance without losing focus on long - term opportunity HYDROFARM VALUE LEVERS Revenue drivers Net price realization End - market volume demand growth 1 Gross profit drivers Proprietary and preferred brand mix shift Productivity across manufacturing and distribution footprint Trade spend optimization 2 Cash flow drivers Working capital management SG&A expense reduction Real estate monetization 3 KEY GOALS Return to mid - teens organic sales growth Return to mid - teen EBITDA margins Targeting debt/leverage reduction Gain share during industry recession Emphasis on improving profit margin profile Preserve liquidity and reinvest prudently NEAR - TERM LONG - TERM 18



The path to legalization has been bumpy Inconsistent state ramps & COVID stimulus causing cannabis supply/demand imbalances The growing pains are real, but not structural Certain key causes of bumpiness – COVID pandemic over - stimulating supply most recently – seem unlikely to repeat Supply/demand balance to come Over time, supply should start to match up better with more predictable, expanding recreational and medicinal demand by state Brands & innovation expand As the industry matures further, cannabis brands and innovation will expand profit pools, served by predictable, legal, sustainably grown hydroponic craft and multi - state operators Overdue shake out leaves fewer stronger distributors Like the Gold Rush, the path to stabilization is wiping out some speculators. But the surviving picks and shovels suppliers should thrive Opportunity to invest near the bottom Legalization trends sustain, brands and innovation grow demand. Higher quality supply meets that demand. Surviving players emerge stronger and poised to scale if federal legalization comes Putting it all together How we got here and how it gets better HYDROFARM OUTLOOK 19