GrowGeneration Corp. Q2 FY2025 earnings call

• Continued executing on the strategic plan to transform into a leaner, more profitable, product-driven business focused on B2B customers, with sequential improvements in revenue, gross margin, and operating expenses.
• Launched the digital B2B platform, GrowGen Pro Portal, which has gained traction with commercial customers.
• Acquired Viagrow, strengthening the proprietary portfolio and providing a platform to serve home gardeners and hobbyists.
• Expanded internationally, signing a distribution agreement in Europe and launching a proprietary product line in Costa Rica.
• Streamlined operations by closing stores, with 2 closed in Q2 and 2 more expected to close by end of Q3, reducing store count to 25.
• MMI Storage Solutions segment showed growth due to product diversification, including a mobile luggage solution in partnership with Waldorf Astoria.

In the Cultivation and Gardening segment, net revenue was $32.9 million for the second quarter of 2025, compared to $46.1 million in the comparable year-ago period. Proprietary brand sales accounted for 32% of Cultivation and Gardening revenue in Q2 2025, up from 21.5% in Q2 2024. The MMI Storage Solutions segment posted $8.1 million in revenue for the quarter, up over 69% sequentially.

• Expect revenue in excess of $41 million for the third quarter of 2025.
• Not providing full year 2025 guidance due to ongoing tariff uncertainty and cannabis reform uncertainties, but remains focused on gross margin expansion, EBITDA profitability, and execution of transformational plan.

• Tariffs introducing additional cost pressures.
• Uncertainties in global trade policy.
• Uncertainties related to cannabis reform and potential variability in consumer demand.

Q: Talk about the Viagrow acquisition and the opportunity in the gardening space. Are there more robust near-term opportunities?

A: Viagrow brings relationships and products with crossover into cannabis space. Expect Viagrow to start contributing more in fourth quarter and next year as they build inventory and rebrand products.

Q: Discuss gross margin, tariff risk, and how to think about gross margin going forward?

A: Aiming for 30% total gross margin. Monitored and adapting to global trade changes, diversified sourcing, optimized supply chain, and leveraged scale and purchasing power to mitigate tariff impact.

Q: Expense reductions, where are we in the plan? Any more cuts?

A: Continuing to cut costs, with store and other operating expenses down and SG&A reduced. Expect additional cost savings in the second half of 2025.

Q: Industry outlook, durable side demand?

A: Backlog is largest in 3 years for durable products like lighting, dehumidification. Seeing customers refurbishing portfolios and new builds, private label brands are gaining adoption.

Q: Repositioning from retail to commercial, how long will it take? Any investments needed?

A: Believe they have most needed internally. Private label portfolio expected to increase. Seeing solidification in demand, both industry dynamic and internal efforts contributing to growth.