GrowGeneration Corp. Q4 FY2025 earnings call

• 2025 was a defining year: transformed business, right-sized retail footprint, expanded proprietary brand penetration to 32.8% full year, improved gross margin by 370 basis points to 26.8%, saw 58.9% year-over-year improvement in adjusted EBITDA, cut net loss by more than half. • In 2025, consolidated 8 retail stores, current retail footprint 23 locations. Fourth quarter net sales up year over year despite fewer locations. • Proprietary brands working as designed, private label sales penetration at 32.8% full year and 35.8% in fourth quarter 2025. • Took nearly $27 million out of operating expenses in 2025, 28% reduction, 44.4% improvement in fourth quarter 2025. • Shift to national controlled environment agriculture supplier, started selling proprietary brands into independent garden center channel, relaunched harvestco.com, established distribution partnership with Aric Sales, acquired Viagro for home gardening market, cultivation infrastructure projects became larger portion of business with GrowGen Build, continued digital transformation of sales with B2B Pro Portal, commenced international expansion, MMI storage solution segment grew in 2025. • Board of directors authorized share repurchase program for up to $10 million of outstanding common stock.

In 2025, net sales were about 162 million. Gross margin expanded 370 basis points to 26.8%. Proprietary brand sales penetration was 32.8% for the full year, up from 24.2% last year. Fourth quarter net sales were up year over year. Cultivation and gardening segment net sales in fourth quarter 2025 were $32.1 million, with proprietary brand sales representing 35.8% of cultivation and gardening revenue. Storage solution segments net sales in fourth quarter 2025 were $5.7 million, up from $4.5 million in same period 2024. Full year 2025 proprietary brand sales increased from $39.5 million in 2024 to $44 million in 2025. MMI storage solution segment reached $27.5 million in revenue in 2025.

• Expect modest revenue growth in 2026, focus on revenue quality. • Expect proprietary brand sales as percentage of cultivation and gardening revenue to reach 40% by year end. • Anticipate further improvement in margins and operating expenses in 2026, gross margins for full year 2026 in range of 27% - 29%. • Expect approximately break-even adjusted EBITDA for full year 2026. • Guidance for 2026 net revenue in range of $162 - $168 million. • Updated guidance assumes softer first quarter, profitability to build progressively throughout the year with Q2 and Q3 benefiting from outdoor cultivation season, gross margin expansion, and lower operating cost base relative to 2025.

Q: Aaron Gray of Alliance Global Partners asked about the share repurchase, including contemplation and potential use of $10 million.

A: Darren Lampert said when looking at GrowGen stock, trading at about $60 million market cap with $85 million cash in inventory, had been looking for acquisitions but didn't find fitting ones, believed it in shareholders' and company's best interest to start buying back stock but still looking for right acquisition.

Q: Aaron Gray also asked about proprietary brands, sales within own channels vs third-party channels and future drive by third-party sales.

A: Darren Lampert said majority of proprietary brand sales still about 80% within own channels, would love to see 50-50, private label brands being sold through portals and commercial markets, products starting to go into agricultural side and big box stores but take time to ramp up.

Q: Brian Nagel of Oppenheimer asked about when GrowGen would be driven by different sector or macro factors.

A: Darren Lampert said core competency still in growing, mix of customers now commercial and B2B, gone away from business to consumer model, restructuring taking longer than expected but cost structure at place to start making money, brands getting stronger, reach getting further, expecting profitable year with EBITDA improvement.

Q: Brian Nagel asked about timing of share buyback.

A: Darren Lampert said would be easing into it depending on stock trade, controlled buyback but effective.

Q: Mark Smith of Lake Street asked about store base.

A: Darren Lampert said store base ended at 23, now at 20 and likely to 19 at end of quarter, future of GrowGen not in retail stores, more B2B distribution centers, probably finish at around 15 locations by end of 2026.

Q: Mark Smith also asked about operating expenses cuts in 2026.

A: Greg Sanders said some of expense improvement in 2026 due to 2025 store closures and partial impact, and there are incremental opportunities to continue improving expense base, expect expenses to continue coming down in 2026.