GrowGeneration Q2 Earnings Call Highlights

Key Points

• Revenue increased 5.5% year over year to $43.2 million, marking GrowGeneration’s third consecutive quarter of annual growth, driven by its commercial B2B business and stronger proprietary-brand adoption.
• Proprietary brands reached 39.7% of cultivation and gardening revenue, nearly achieving the company’s 40% year-end target six months early. Positive adjusted EBITDA of $0.3 million and lower operating costs also helped narrow the GAAP net loss to $2 million.
• GrowGeneration maintained its full-year revenue forecast of $162 million to $168 million but raised adjusted EBITDA guidance to $2 million-$3 million, citing margin improvements, cost reductions and expected tariff refunds.

GrowGeneration NASDAQ: GRWG reported second-quarter 2026 revenue growth, improved proprietary-brand penetration and positive adjusted EBITDA as the hydroponics supplier continued its shift toward a commercial, proprietary brand-driven business model.

Net sales increased 5.5% year over year to $43.2 million, while revenue rose 12.6% sequentially. The company said the quarter marked its third consecutive period of year-over-year revenue growth, supported primarily by its commercial business-to-business platform and higher adoption of proprietary products.

“Our expanded commercial B2B business is the core growth driver of our strategy,” Co-founder and Chief Executive Officer Darren Lampert said. He said the company has expanded relationships with single-state and multistate operators, greenhouse growers and other commercial cultivation customers through its GrowGen Pro digital platform.

Proprietary Brands Reach Year-End Mix Target Early

Proprietary brands accounted for 39.7% of cultivation and gardening segment revenue in the second quarter, up from 32% a year earlier. The company had set a goal for proprietary products to represent 40% of cultivation and gardening revenue by the end of 2026, a level it effectively reached midway through the year.

Lampert identified Char Coir, Drip Hydro, The Harvest Company, Dialed In and Power Si among the brands gaining adoption. He said approximately 90% of proprietary-brand sales currently flow through GrowGeneration’s own commercial division, but management sees additional potential through third-party distribution.

During the question-and-answer session, Lampert said the company is increasing distribution efforts and has added technical advisers who work with cultivation facilities. He said the company believes its consumable brands have growth opportunities in hydroponics, cannabis, lawn and garden, and agricultural markets.

Cultivation and gardening sales rose to $34.9 million from $32.9 million in the prior-year period. The company’s MMI Storage Solutions segment generated $8.3 million in sales, compared with $8.1 million a year earlier. Management said the storage business benefited from demand across retail, industrial and commercial infrastructure projects, including warehouse modernization and automation investments.

Margins Improve as Costs Decline

Gross profit rose to $12.3 million from $11.6 million a year earlier, while total gross margin increased to 28.5% from 28.3%. Gross margin also improved 310 basis points sequentially from 25.4% in the first quarter.

Chief Financial Officer Greg Sanders said the higher mix of proprietary products and increased cultivation and gardening sales supported gross-profit growth. The gains were partially offset by higher transportation costs, while storage solutions gross-profit dollars declined modestly because of project mix and those costs.

GrowGeneration continued to reduce its operating cost base. Store and other operating expenses fell about 21.9% year over year to $6.1 million, while total operating expenses declined 13.1% to $14.7 million. Selling, general and administrative expense increased 5% to $6.5 million, primarily because the company invested in commercial sales capabilities.

Sanders said the increase in SG&A reflected a rebalancing of expenses following store closures, including more spending on commercial sales personnel, marketing and product trials. He said management expects SG&A to remain in the “low sixes” during the second half, potentially declining modestly from the second-quarter level.

Depreciation and amortization fell 44% to $1.5 million, reflecting asset retirements associated with cost-reduction efforts and certain intangible assets reaching the end of their useful lives.

The company’s GAAP net loss narrowed to $2 million, or $0.03 per share, from a loss of $4.8 million, or $0.08 per share, in the second quarter of 2025. Adjusted EBITDA was positive $0.3 million, compared with a $1.3 million adjusted EBITDA loss in the prior-year quarter.

Full-Year EBITDA Outlook Raised

GrowGeneration reaffirmed its full-year revenue outlook of $162 million to $168 million and raised its adjusted EBITDA forecast to $2 million to $3 million. Its prior outlook called for approximately breakeven adjusted EBITDA.

For the third quarter, the company expects revenue of $44 million to $46 million and positive adjusted EBITDA. Sanders said the higher full-year EBITDA outlook reflects underlying operational performance, stronger gross margin, cost reductions and the anticipated recognition of more than $2 million in previously incurred IEEPA tariff refunds during the third quarter.

Management noted that third-quarter revenue guidance may be lower year over year because the comparable 2025 period included an unusually large volume of durable-product sales. Sanders said GrowGeneration expects revenue to be more evenly distributed in 2026 and still anticipates the third quarter will be its strongest period of the year from a revenue standpoint.

Lampert added that the company expects higher third-quarter margins than in the year-earlier period due to a larger mix of consumables relative to durable products. He also said GrowGeneration expects a stronger fourth quarter than it recorded in 2025.

Cash Position and Capital Allocation

GrowGeneration ended the quarter with $41 million in cash equivalents and marketable securities and no debt. During the period, the company repurchased 700,000 shares at an average price of $1.38 per share. About $9 million remained available under its $10 million share repurchase authorization as of June 30.

Lampert said the company remains open to acquisitions in cannabis, agriculture and lawn-and-garden markets, but is not seeking revenue that it cannot integrate profitably. He also said GrowGeneration has become more active in evaluating lending opportunities connected to customer capital-expenditure projects.

Looking ahead, Lampert said the company believes it is positioned to support additional customer investment activity regardless of the timing of a ruling on federal cannabis rescheduling proceedings. He cited GrowGeneration’s proprietary brands, infrastructure capabilities, systems integration offerings, customer relationships and balance sheet as differentiators.

About GrowGeneration (NASDAQ:GRWG)

GrowGeneration Corp. is the largest chain of specialty hydroponic and organic garden centers in the United States, serving commercial and home growers of all experience levels. The company offers a broad assortment of cultivation supplies, including high-efficiency LED lighting, climate control systems, irrigation and fertigation equipment, growing media and nutrients. Through its retail outlets and e-commerce platform, GrowGeneration caters to indoor and outdoor horticultural operations, with a particular focus on the rapidly expanding legal cannabis market.

In addition to its product offerings, GrowGeneration provides design, consulting and project management services for turnkey cultivation facilities.

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