GrowGeneration Q4 and Full Year 2025 Earnings Call - Private Label Push, Cost Cuts Put Break-Even Adjusted EBITDA in Reach for 2026

Operator: Hello everyone, and welcome to GrowGeneration’s fourth quarter and full year 2025 earnings conference call. My name is Alan, and I will be your operator for today’s call. At this time, participants are in listen-only mode. Following prepared remarks, we will open the call to questions from analysts with instructions to be given at that time. This conference call is being recorded and a replay of today’s call will be available on the investor relations section of GrowGeneration’s website. I will now hand over the call to Phil Carlson with KCSA Strategic Communications for introductions and the reading of the Safe Harbor statement. Please go ahead, Phil.

Phil Carlson, Communications Manager, KCSA Strategic Communications: Thank you, operator, and welcome everyone to GrowGeneration’s fourth quarter and full year 2025 earnings results conference call. With us today from GrowGeneration are Darren Lampert, Co-founder and Chief Executive Officer, and Greg Sanders, Chief Financial Officer. The company’s fourth quarter and full year 2025 earnings press release was issued after the close of market today. A copy of this press release is available on the investor relations section of the GrowGeneration website at ir.growgeneration.com. I would like to remind everyone that certain comments made on this call include forward-looking statements, which are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations and beliefs concerning future events and are subject to several risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements.

Please refer to today’s press release and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any of the forward-looking statements made today. During the call, we’ll use some non-GAAP financial measures as we describe business performance. The SEC filing, as well as the earnings press release, which provide reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures, are all available on our website. Following prepared remarks, management will be happy to take your questions. We ask that you limit yourself to one question and one follow-up. If you have additional questions, please re-enter the queue and we will take them as time allows. Now I will hand the call over to GrowGeneration’s Co-founder and CEO, Darren Lampert. Darren, please go ahead.

Darren Lampert, Co-founder and Chief Executive Officer, GrowGeneration: Thanks, Phil, and good afternoon, everyone. Thank you for joining us to review GrowGeneration’s fourth quarter and full year 2025 financial results and to discuss our outlook for 2026. 2025 was a defining year for GrowGen. We transformed the business, rightsizing our retail footprint, dramatically expanding proprietary brand penetration to 32.8% for the full year and delivering a 370 basis point improvement in gross margin to 26.8%. These structural improvements drove a 58.9% year-over-year improvement in adjusted EBITDA and cut our GAAP net loss by more than half. The cost structure and brand platform we built in 2025 are the foundation for profitability in 2026.

With the permanent structural improvements we’ve implemented, we believe the company is well-positioned to reach approximately break-even adjusted EBITDA for the full year 2026. First, I’d like to talk about some of the financial highlights of last year. During 2025, net sales came in at about $162 million. The year-over-year decline was expected and driven by store closures. During 2025, we consolidated 8 retail stores, bringing our current retail footprint to 23 locations as of December 31. On a same-store sales basis, our core locations remain relatively stable, which tells us the business is stabilizing as anticipated. Importantly, looking specifically at the fourth quarter of 2025, net sales were up year over year. During what’s typically our seasonally lowest revenue quarter, we had slightly higher sales compared to last year with fewer retail locations.

I think that says a lot about our core business and the revenue we were able to generate with a smaller, more focused retail footprint. For the full year 2025, gross margin expanded 370 basis points to 26.8%. As such, we were able to grow gross margin substantially, even as total revenue declined as the market came under considerable pressure. This highlights that our proprietary brands are working exactly as they were designed to. For the full year, our private label sales penetration represented 32.8% of cultivation and gardening revenue, up from 24.2% last year. Looking at the fourth quarter of 2025, our private label sales penetration was 35.8%. We’re very happy about this, because every percentage point of private label mix adds margin and pricing control for GrowGen.

Moving down our P&L, in 2025, we took nearly $27 million out of operating expenses compared to last year. That’s a 28% reduction. Again, just looking at the fourth quarter of 2025, we saw a 44.4% year-over-year improvement in operating expenses. To be clear, these aren’t temporary cuts. They’re permanent structural changes we’ve implemented throughout the company that will drive improved costs and savings going forward. All this led to an $8.5 million, or 58.9% year-over-year adjusted EBITDA improvement for 2025, going from negative $14.5 million to negative $6 million. That’s a sizable increase and puts us well within striking distance of reaching breakeven. To sum everything up, in 2025, we improved our adjusted EBITDA profitability by $8.5 million, despite lower revenue volume.

We think this shows the tremendous operating leverage that we’ve been able to achieve at GrowGen and the expanded margins we’ve generated from our growing segment of proprietary brand sales. Private label brands remain our primary growth driver as we move forward. Our leading brands, Char Coir, Drip Hydro, The Harvest Company, Dialed In, and Power Si, continue to see strong adoption in the market. These brands are still in their early stages of introduction, and we’re expanding into new revenue channels and product extensions, mainly B2B as well as via multi-state operators. We expect proprietary brands to reach 40% of cultivation and gardening revenue in 2026. On a broader basis, we continue to shift beyond our legacy retail base to a national controlled environment agriculture supplier focused on the larger specialty agricultural and controlled environment markets.

In the second half of 2025, we started selling our proprietary brands into the independent garden center channel and relaunched theharvestco.com to serve greenhouse and specialty crop growers. We also established a distribution partnership with Arid Sales, expanding our wholesale and B2B reach into thousands of new retail stores across 32 states. Additionally, the company entered the home gardening market through our 2025 acquisition of Viagrow, a domestic brand with distribution across retailers such as Amazon, The Home Depot, Walmart, Lowe’s, and Tractor Supply. The addition of Viagrow further provides us with a scalable platform to serve home gardeners and hobbyist cultivators across multiple retail channels nationwide. Last year, we also began to see cultivation infrastructure projects become a larger portion of our business. In 2025, this offering that we’ve branded as GrowGen Build, contributed considerable revenue to GrowGen.

These are projects where we help commercial and craft operators to either monetize existing facilities or build new ones, including areas such as lighting, benching, fertigation, HVAC, irrigation, and automation systems. Demand for this offering remains strong, and we expect this business will be a meaningful contributor to revenue in the coming years. In 2025, we also continued our digital transformation of sales as more customers adopted our customized B2B Pro portal. Our commercial and wholesale customers are continuing to move their purchasing online, utilizing automated ordering and custom catalogs while being able to view inventory in real time. Concurrently, this is reducing transaction costs and driving greater recurring revenue for GrowGen. Last year, we also commenced our international expansion to improve our growth trajectory. Specifically, we look for opportunities to enter new high growth cultivation markets with growing numbers of hemp and cannabis licenses.

As part of this, we formed a distribution partnership with V1 Solutions to support commercial sales throughout the European Union. We also began distributing our proprietary products in Costa Rica, which opens up the Central American markets for us. We are thrilled to bring our proprietary products to professional growers across Europe and Central America, and believe these distribution partnerships will allow us to quickly scale our brand presence in these markets with minimal capital investment. Complementing this, our MMI Storage Solutions segment also grew in 2025, reaching $27.5 million in revenue. MMI continues to diversify into industrial, agricultural, and specialty end markets, and we expect this segment will continue to grow steadily in 2026. Given our progress this past year, we believe repurchasing shares at current levels represents a compelling and responsible allocation of capital.

Today, in tandem with our financial results, we announced that our board of directors has authorized a share repurchase program for up to 10 million of the company’s outstanding common stock. This authorization reflects our confidence in GrowGen’s long-term strategy and our commitment to driving sustainable shareholder value. Turning to our outlook for 2026, we expect modest revenue growth for the full year as we’re focused on revenue quality, not volume. As I mentioned previously, we expect proprietary brand sales as a percentage of cultivation and gardening revenue to reach 40% by year-end. We also expect to see further steady improvement in margins and operating expenses during 2026. Through all of this, we anticipate reaching approximately break-even adjusted EBITDA for the full year. Greg will give more color on this shortly.

With over $46 million in cash and no debt, our improved cost structure and growing multi-channel brand strategy, we believe GrowGen is well-positioned to capitalize on the anticipated growth of the controlled environment agricultural industry, as well as positive developments within the cannabis industry. We expect to generate sustainable and profitable long-term growth from our growing proprietary brand sales, further revenue expansion across independent garden centers, greenhouse agriculture, specialty crops, and cannabis, and through cultivation infrastructure projects. We believe we are still in our early stages of the growth cycle, and that the best is yet to come. With that, I’ll turn the call over to our CFO, Greg Sanders.

Greg Sanders, Chief Financial Officer, GrowGeneration: Thank you, Darren, and good afternoon, everyone. I’ll briefly review our fourth quarter and full year 2025 results, and then I’ll provide additional context on our outlook for 2026. Starting with our fourth quarter 2025 results, GrowGeneration reported net sales of $37.8 million, up $0.4 million compared to $37.4 million during the same period last year. Encouragingly, the fourth quarter returned to year-over-year revenue growth despite operating with eight fewer retail locations. Net sales in our cultivation and gardening segment were $32.1 million for the quarter, compared to $32.9 million in the same period last year. Proprietary brand sales represented 35.8% of cultivation and gardening revenue, up from 30.4% in the prior year.

This continued shift towards higher-margin proprietary products remains one of the primary drivers of our margin expansion and long-term profitability strategy. In our storage solution segment, net sales were $5.7 million for the quarter, up from $4.5 million in the fourth quarter of 2024, reflecting stable demand across product lines and diversification into new end markets. Gross profit increased to $9.1 million, an increase of $3 million compared to gross profit of $6.1 million for the fourth quarter of 2024. Gross margin increased to 24.1% for the fourth quarter of 2025, compared to 16.4% for the prior year period, primarily due to higher proprietary brand penetration and the absence of restructuring-related costs incurred in the prior year. Now turning to expenses.

In the fourth quarter of 2025, store and other operating expenses declined by approximately 26.6% to $6.8 million, compared to $9.3 million in the fourth quarter of 2024, reflecting the benefits of our cost reduction initiatives. Selling, general and administrative expenses were $7.3 million compared to $6.8 million last year. This increase was mainly due to one-time severance and legal costs of approximately $1.5 million. Total operating expenses decreased by $13.3 million or 45.3% to $16.7 million, compared to $30.1 million in the comparable 2024 period. Depreciation and amortization totaled $2.4 million compared to $7.1 million in the same period last year. The decrease primarily reflects the absence of prior year asset impairment and restructuring-related depreciation associated with store closures.

GAAP net loss decreased to $7.4 million or $(0.12) per share, a $15.9 million improvement compared to a net loss of $23.3 million or $(0.39) per share in the prior year period. The improvement was primarily driven by higher gross margins and lower operating expenses. Non-GAAP adjusted EBITDA, as defined in our press release, was a loss of $2 million, a $6.1 million year-over-year improvement compared to a loss of $8.1 million in the prior year, reflecting improved sales mix from proprietary brands, gross margin expansion, and the continued benefits of our cost reduction initiatives. Now I’ll provide a quick overview of our full year 2025 results.

Net sales were $161.7 million, compared to $188.9 million for 2024, primarily due to declining retail volume from store consolidations. In 2025, proprietary brands accounted for 32.8% of cultivation and gardening sales, up from 24.2% in 2024. Additionally, proprietary brand sales increased on an absolute basis, growing from $39.5 million in 2024 to $44 million in 2025, representing an 11.3% year-over-year growth. Gross profit was $43.3 million for the full year 2025, a slight decrease compared to gross profit of $43.7 million for the full year 2024.

Gross profit margin increased to 26.8% for the full year 2025, compared to 23.1% for 2024, an improvement of 370 basis points. Net loss was $24 million for the full year 2025, or -$0.40 per share, a $25.5 million improvement compared to a net loss of $49.5 million for the full year 2024, or -$0.82 per share. Adjusted EBITDA, as defined in our press release, was -$6 million for the full year 2025, an $8.5 million improvement compared to -$14.5 million for the full year 2024. The improvement in adjusted EBITDA was primarily driven by gross margin expansion from higher proprietary brand penetration and the continued realization of operational cost reduction initiatives. Now turning to the balance sheet.

We ended the year with $46.1 million of cash equivalents, and marketable securities, and no debt. We have maintained one of the strongest balance sheets in our sector, which provides significant financial flexibility to support our strategic initiatives. As Darren mentioned today, we announced a share repurchase program authorized by our board of directors for up to 10 million of the company’s outstanding common stock. Our board evaluated the program in the context of our financial position, capital needs, and our view that the current share price does not reflect the long-term value of the business. With $46 million in cash and no debt, we have the financial strength to execute this program while preserving flexibility to pursue organic and strategic growth opportunities. We expect to be in the market in the near term. Now I’ll discuss our guidance for 2026.

For the full year 2026, we expect modest revenue growth as our focus remains on revenue quality and margin improvement more so than volume. We are guiding net revenue in the range of $162 million-$168 million. We expect proprietary brand sales as a percentage of cultivation and gardening revenue to reach approximately 40% by year-end. We also anticipate further improvement in margins and operating expenses during 2026, although the majority of the savings we had expected to realize are already reflected in our current run rate. With this and the improvements we’ve made in our inventory base, we anticipate gross margins for the full year 2026 to be in the range of 27%-29%. Based on these factors, we expect to achieve approximately break-even adjusted EBITDA for the full year 2026.

Our updated guidance assumes a softer first quarter, as is typical for our seasonally lightest period. We expect profitability to build progressively throughout the year with Q2 and Q3 benefiting from outdoor cultivation season, continued gross margin expansion, and lower operating cost base relative to 2025. Taken together, this expected cadence supports our goal of approximately break-even adjusted EBITDA for the full year. To summarize, in the fourth quarter, we generated net sales that were slightly higher than the same period last year, despite having fewer retail locations. At the same time, we improved profitability dramatically, reflecting margin expansion and structural cost reductions. We have maintained a strong balance sheet while remaining debt-free.

Looking ahead, we enter 2026 with a significantly improved cost structure, meaningful financial flexibility, and clear operating targets, including 40% proprietary brand penetration by year’s end, a return to sustainable top-line growth, and break-even adjusted EBITDA for the full year. We believe the structural work we completed in 2025 positions us to execute on future growth and profitability targets. With that, I’ll turn the call back to Darren for closing remarks.

Darren Lampert, Co-founder and Chief Executive Officer, GrowGeneration: Thanks, Greg, and thank you again to everyone for joining us today. In closing, 2025 was a year of significant change for GrowGen. We exited underperforming stores, reduced headcount, and implemented cost reduction initiatives across our entire organization. These actions were difficult but necessary for our future. Today’s results clearly show that our restructuring plan is working. We have stabilized revenue, successfully executed our private label strategy, improved margins, and fundamentally reset our cost structure, demonstrating the tremendous operating leverage within our business model while improving profitability dramatically year-over-year. Looking forward in 2026, GrowGen is well positioned to scale as a lean, brand-led company, supported by a strong balance sheet and ample liquidity. In 2026, we will continue the expansion of our private label brands.

At the same time, we will work to increase our presence in the larger specialty agricultural and controlled environment markets. We will also continue our digital sales transformation as more and more customers migrate to our B2B e-commerce portal. Importantly, we also continue to prioritize margin expansion and discipline cost control. We are proud of what we’ve accomplished in 2025, but now 2026 is all about executing with our new business model. Our target is clear. Break-even adjusted EBITDA for the full year, driven by 40% proprietary brand penetration and continued cost discipline. We appreciate your continued support and look forward to keeping you updated on our progress. That concludes our prepared remarks. Operator, please open the lines for questions.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star two. If you’re using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Aaron Gray of Alliance Global Partners. Your line is already open.

Aaron Gray, Analyst, Alliance Global Partners: Good evening and, thank you for the questions here. First for me, just want to talk about the share repurchase that you announced. Mostly just in terms of, you know, what went into the contemplation. Obviously, you know, we can appreciate how you might feel, you know, the stock is undervalued, but we know there’s a lot of struggles in the hydroponics market right now that could present potential M&A opportunity we’ve spoken to in the past. Just want to get some incremental color in terms of, you know, how you thought about the use, potential use of $10 million, assuming at all used for the share repurchase to be used for that versus potentially, you know, buying an asset, you know, to drive greater sales growth or potential profitability. Thank you.

Darren Lampert, Co-founder and Chief Executive Officer, GrowGeneration: Yeah, I can start. I can answer that for you, Aaron. To start with, like anything else, it’s never an easy choice. You know, when you take a look at GrowGen’s stock right now, I mean, we’re trading at about a $60 million market cap, with about $85 million of cash and inventory and some tremendous assets within our company. We have been looking for the past year for acquisitions and really haven’t found anything that really fit our profile. On the private label brand side of it, we continue to roll out new products. We have a tremendous R&D team at GrowGen. So the products that we’re rolling out are best of breed, as you can see from the increase of private label penetration into the markets.

On the store side of it, you know, we’re shedding stores, not buying stores, but we’ve pretty much shifted our operations around tremendously. On the brand side of it, we just haven’t found something that, you know, for the right price that fits our operations. You know, with that, we believe come 2027, this company will be throwing off cash, and still have $46 million of cash on our balance sheet and almost $40 million of inventory. We still have plenty of flexibility if we found that right acquisition. You know, we believe right now it’s in our shareholders best interest and certainly our company’s best interest to start buying back stock and see where it goes.

We still are in the market, still looking to, you know, find the right fit for GrowGen, but unfortunately, we just haven’t found it as of yet.

Aaron Gray, Analyst, Alliance Global Partners: Yeah, I appreciate the color. That’s helpful there. On proprietary brands, you want to talk a bit there. You know, I know you’ve increasingly been selling your proprietary brands outside your own stores. Can you maybe give some color in terms of, you know, how much sales now are within your own, you know, channels versus third-party channels for proprietary brands? And then secondly, you know, how much of proprietary brand sales you expect to be driven by sales to third-party and whether or not those third parties now start to increasingly go towards, you know, more traditional indoor controlled environment market. Thanks.

Darren Lampert, Co-founder and Chief Executive Officer, GrowGeneration: I think the majority right now, Aaron, you’re seeing going through GrowGen. I’d probably say about 80% still. We certainly would love that number to go down to 50/50. A majority of our private label brands are being sold either through portals or into the commercial markets to our commercial team. You know, as we continue to shed stores, we’re seeing an increase in private label penetration as opposed to the other way. You know, way back when it was, you know, pretty much the stores that were selling our own brands.

Now, you know, I think with the continued success of these brands, with the continued success of our commercial team, our facility advisors that are going to the largest facilities around the country and certainly helping sell and introduce the value proposition of our brands, it’s working. When you take, you know, a private label division, when you go back a couple of years ago, that was in the teens expecting over 40% this year and growing. It’s been a quite successful endeavor for GrowGen, and I do believe it’s changed the company, the outlook of the company and where the company is going. You are starting to see products of ours going into the agricultural side of the industry.

You’re also seeing hardcore products being sold, you know, through The Home Depot and certain other stores right now. Our Viagrow products are starting to, you know, to sell within some of the big box stores. You know, we’re starting off a base of zero, you know, in the gardening centers. You know, you’ll see 20%+ growth in these, in this side of our business, but it’s gonna take time to ramp up to become a meaningful part of the GrowGen story.

Aaron Gray, Analyst, Alliance Global Partners: Okay. I appreciate that, Darren. Last one from me, if I could. Just on storage solutions. A nice rebound, you know, holistically for 2025 after some softness in 2024. Some accelerated growth in 4Q. Maybe just talk about some of the dynamics that you’re seeing there and outlook for 2026. You know, maybe if there’s been some effort put back into the business after you no longer have it for potential sales. Any color in terms of that business line would be helpful. Thanks.

Darren Lampert, Co-founder and Chief Executive Officer, GrowGeneration: We have put effort into it. We’ll be consolidating different locations for MMI this year into one location in Middletown. You know, it’s starting to hit on all cylinders. The product that it sells. It’s space saving, and it’s something that’s needed in retail right now, in agriculture and anything you do. You know, as buy online, pick up in store, whether it’s grocery, whether it’s golf, whether it’s agricultural, they have a tremendous niche and a tremendous clientele. We see, you know, we see growth in that company for years to come.

We are consolidating it, you know, into one location, which we believe will help for some legacy locations, buying new equipment for this company, putting some money into it, and we believe it’ll pay off and continue to grow.

Aaron Gray, Analyst, Alliance Global Partners: Okay. Appreciate the color, Dan. I’ll jump back in the queue.

Darren Lampert, Co-founder and Chief Executive Officer, GrowGeneration: Thank you.

Operator: Your next question comes from Brian Nagel of Oppenheimer. Your line is already open.

Brian Nagel, Analyst, Oppenheimer: Hey, guys. Good afternoon.

Darren Lampert, Co-founder and Chief Executive Officer, GrowGeneration: Good afternoon, Brian.

Brian Nagel, Analyst, Oppenheimer: I think I wanna follow up maybe on that prior question, but you know, I guess in its bigger picture, Darren, but as you look at the business now and you know, you’ve had a lot of success you know, expanding these you know, the proprietary brands and you know, really diversifying away from, as I understand, diversifying away from you know, the core cannabis market. You know, so as long as we watch you you know, you’ve been dealing with these so-called cannabis headwinds, which have persisted a lot longer than I think most people expected.

I guess the question I want to ask is, you know, given the change in mix here and given the changing complexion of the business, you know, at what point do you see GrowGen as a company really being driven by a different set of sector or macro factors?

Darren Lampert, Co-founder and Chief Executive Officer, GrowGeneration: You know, as of now, Brian, our core competency still is, it’s in growing, whether it’s cannabis, whether it’s fruits, vegetables, specialty crop. You know, again, we were brought up and, you know, into the industry, in the cannabis industry. You know, when you look at the mix of our customers right now, it’s commercial, it’s B2B. You know, we’ve gone away from the, you know, business to consumer model. You know, when you take a look at, you know, again, big ag, it’s no different than, you know, big cannabis MSOs, you know, large single state operators with very complex, growing techniques, and facilities. That’s what we do. You know, something that we’ve gotten much more involved in recently is, again, starting to build facilities. We’ve brought in facility advisors.

We brought in, you know, some tremendous talent on the build side of it, that, you know, we’re project managing, bringing in groups to build facilities for some of the larger groups out there in the cannabis space. It’s no different in the ag space. We just haven’t gotten there yet, but we believe we have the products to do it. We have the best products on the market coming out of GrowGen right now, and they’re extremely price competitive. You know, the quality that we’re seeing out there on the markets right now are exceptional. We believe right now, you know, it’s still, you know, the restructuring has taken way longer than we would have liked it. You know, we’ve gone from 65 stores, we’re down to 20 stores right now.

We’ve closed another three stores in the first quarter, and we will be closing an additional store in the first quarter. You see the store count down to 19 at the end of the first quarter. You’re not seeing it affect sales, and you’re not seeing it affect private label brands. You know, I think the restructuring and what you’ve seen over the last three years is coming to an end. Our core structures, our cost structures that are placed right now that we believe we can start making money. You know, we were dealing with some tariff issues in the first, you know, last year, that, you know, we’ve worked ourselves through.

We saw almost a $3 million tariff, $3.5 million tariff hit over the last couple of quarters, you know, that has flown through our P&L. You know, even with that, you know, we do believe that you’ll see a profitable year out of GrowGen, from losing $14 million on an adjusted basis in 2024 to seeing us picking up about $6-$7 million a year on the EBITDA side of it. We don’t see that stopping. We think these brands are just getting stronger. We think their reach is getting further. You know, we just signed a deal, you know, six months ago with Arid Sales, but that takes time. Same thing, you know, getting into the agricultural industry. We are hiring people and sales people on that side of it.

We’ve been to some of the trade shows on the ag side of it. You know, if we can start diversifying product mix, you know, from 90% cannabis to 50% cannabis, you know, we’re not losing cannabis business, we’re picking up cannabis business. If we can start on the other side of it, you can see a, you know, extremely explosive, you know, sales side of our business at high margins. You know, that’s what we’re looking forward to, and that’s one of the reasons why we feel comfortable right now with our share buyback, you know, of $10 million to start bringing the float down, especially at these levels.

Brian Nagel, Analyst, Oppenheimer: That’s helpful, Terry. That’s my, I guess, a good segue to my second question. You announced a buyback today. Is it, you know, I mean, how should we be thinking about the timing of that? You know, is it something you plan, you know, you could do relatively quickly? Or is it more of a, you know, kind of ease into it?

Darren Lampert, Co-founder and Chief Executive Officer, GrowGeneration: I think we’ll be easing into it, Brian, dependent upon, you know, again, where the stock trades. You know, I think it’s more of an ease like anything else. It’s not a quick fix. Certainly not looking to move our stock. I think it’ll be a controlled buyback, but I think it will be effective. You know, like anything else, you know, GrowGen is happy to buy back stock at these levels.

Brian Nagel, Analyst, Oppenheimer: I appreciate all the color. Thank you.

Darren Lampert, Co-founder and Chief Executive Officer, GrowGeneration: Thank you, Brian.

Operator: Your next question comes from Mark Smith of Lake Street. Your line is already open.

Mark Smith, Analyst, Lake Street: Hi, guys. Darren, you just hit a little bit of this, but I wanted to dig deeper into kind of the store base. Ended at 23. Sounds like you’re at 20 today and likely go to 19 at the end of the quarter. You called early in your commentary the store base kinda stable. I’m curious if we, you know, does this kind of end some of these closures or there’s still some maybe that come up at the end of lease periods that we see closed as we work through 2026?

Darren Lampert, Co-founder and Chief Executive Officer, GrowGeneration: Yeah, I think we’ve been pretty clear that, you know, the future of GrowGen certainly isn’t in the retail stores. I mean, we’re a B2B business and, you know, some of our locations aren’t stores, they’re more B2B distribution centers. You know, the name stores probably gonna come out and we’re probably gonna rename so there is no misunderstanding. You know, GrowGen is no longer a business to consumer operation. Our stores are closed on weekends. Hours are different right now. There are warehouse people working in our stores as opposed to salespeople. You know, there’s a salesperson in each store, but even the mix of employees have changed within our stores.

I think, you know, when you look at GrowGen in 2026 and beyond, it’s really a business to business brand driven company, as opposed to a, you know, a retail location. You know, any of our retail sales will be going through portals out of our warehouses, and also through distribution channels that we secure in the future. One is Arid. You know, hopefully, you know, there are others, you know, in other countries. We do believe probably this year we’ll probably finish somewhere in that 15 locations, you know. There’s probably another 4 locations that we’ll shed, you know, by the end of the year, as long as we can do some work with the leases.

Most of them are the smaller locations that are, you know, in areas that, you know, cannabis isn’t as, you know, abundantly sold as it used to be, as abundantly grown as it used to be. You know, the future is, you know, small hubs, as we always said, not small, but you know, 20-30,000 sq ft hubs around the country. You know, a few large warehouses to supply, you know, for marketing and, you know, some areas that are just that the growing is so intense that we believe that product within those areas makes sense.

Mark Smith, Analyst, Lake Street: Okay. The next question for me is just kinda similar as we look at the operating expenses that you guys cut in 2025. As we look at 2026, it certainly looks like built into your guidance is continued cuts. Is a lot of that just, you know, having a full year of some of the cuts that have already been made or there are other places where you feel like you can still cut operating expenses?

Greg Sanders, Chief Financial Officer, GrowGeneration: Yeah. Thanks for the question, Mark. In terms of operating expenses for 2025, we brought down our operating expense base $27 million in comparison to the prior year of 2024. We do see incremental improvements in 2026. Some of it is due to, you know, the 8 closures that we had in 2025, where you had partial impact throughout the course of the year from those stores. Potentially even closure costs that got embedded into the results as we’re working through consolidation and moving inventory and shutting down the locations. Some of the fallout in 2026 from an expense improvement perspective is just due to those changes operationally in the business. There are other areas of the business just in the same sense that, look, we think there’s incremental opportunity to continue to improve upon expense base.

We expect expenses to continue to come down generally for both reasons in 2026.

Mark Smith, Analyst, Lake Street: Great. Thank you, guys.

Operator: There are no further questions at this time. I would hand over the call to Darren Lampert for closing comments. Please go ahead.

Darren Lampert, Co-founder and Chief Executive Officer, GrowGeneration: Thank you. I’d like to thank our shareholders and employees for their continued support. I look forward to sharing our progress on our first quarter call in early May. Thank you, everyone, and have a beautiful day.

Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation, and you may now disconnect.