Hydrofarm Holdings Group, Inc. · NASDAQ:HYFM
Hydrofarm — Investor Presentation (December 2022)
20 slides from Hydrofarm's investor presentation, Dec 5, 2022
Slide 1: Investor Presentation: Growing starts with knowing
Investor Presentation Growing starts with knowing December 2022
Slide 2: Disclaimer: Forward-Looking Statements
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 ma
Slide 3: Introduction and Investment Thesis
Introduction and Investment Thesis 3
Slide 4: Hydrofarm is well-positioned with 'picks and shovels' for the Gold Rush
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
Slide 5: 'Picks and shovels' to the cannabis market
'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
Slide 6: Where and How We Compete
rem tonn Where and How We Compete
Slide 7: Serving a vast and growing hydroponics marketplace
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. T
Slide 8: Sustaining momentum in state-level cannabis legalization
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 M
Slide 9: Branded manufacturer and distributor serving growth markets
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 HYDROFAR
Slide 10: End-to-end category coverage through proprietary and preferred brands
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 con
Slide 11: Evolving our customer base to reach the most active growers
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 Sp
Slide 12: Serving the unique needs of commercial and home growers
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 commercia
Slide 13: Value Creation: Past, Present and Future
Value Creation: Past, Present and Future 13
Slide 14: Leadership combines industry & consumer brands know-how
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,
Slide 15: Compounding in an emerging growth market
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
Slide 16: More compounding to come given solid market tailwinds
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 t
Slide 17: Bold moves to focus the business in 2022, with more in 2023
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, l
Slide 18: Key value drivers with near-term and long-term goals
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
Slide 19: The path to legalization has been bumpy
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
Slide 20: CONFIDENTIAL
CONFIDENTIAL
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