GrowGeneration Corp.
For the period ended Sep 30, 2026. Filed Nov 10, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 10, 2026
GRWG$1.51-3.8%Stored close · as of Nov 10, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-11.
0001604868-26-000020
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-10.
0001604868-26-000026
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 80 previous paragraphs and 82 current paragraphs.
41 unchanged; 32 reworded; 9 added; 7 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 3 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
On February 20, 2026, the U.S. Supreme Court ruled tariffs imposed under the IEEPA were not authorized, and on March 4, 2026, the U.S. Court of International Trade directed U.S. Customs and Border Protection ("CBP") to refund amounts previously collected. During April 2026, the CBP established a phased administrative process for submitting refund claims for certain IEEPA tariffs. During the three and nine months ended September 30, 2026, we received cash of $2.6 million for IEEPA tariff refund recoveries, which we recognized as a reduction of cost of sales in the Condensed Consolidated Statements of Operations. While we continue to actively pursue refunds for additional amounts previously paid under the invalidated IEEPA tariffs, the timing and ultimate receipt of any additional refunds are uncertain. Refer to Note 13, Commitments and Contingencies, of our Notes to Unaudited Condensed Consolidated Financial Statements in this report for additional information regarding IEEPA tariff refunds.
Current report
STRATEGIC RESTRUCTURING PLANS
Current report
On November 6, 2026, management committed to a strategic restructuring plan (the "2026 Restructuring Plan") focused on long-term profitability in our Cultivation and Gardening segment as part of our accelerated, strategic transformation into a primarily commercial, proprietary-brand-driven business. The 2026 Restructuring Plan primarily includes reductions in cost structure by closing and consolidating four to five underperforming retail locations, workforce reductions, and other operational improvements. We expect that the restructuring activities associated with the 2026 Restructuring Plan will be substantially completed by the end of the first quarter of fiscal 2027.
Current report
We are not currently able to estimate the amount or range of amounts we will incur in connection with the 2026 Restructuring Plan, including charges related to the consolidation or elimination of real estate leases, employee termination benefits, and other associated costs. Management intends to exclude the charges associated with the 2026 Restructuring Plan from our non-GAAP financial measures, including Adjusted EBITDA. No amounts related to these events have been recognized in the accompanying Condensed Consolidated Financial Statements.
Current report
Net sales for the three months ended September 30, 2026 were $44.8 million, a decrease of $2.5 million or 5.2% as compared to net sales of $47.3 million for the three months ended September 30, 2025.
Current report
Cost of sales for the three months ended September 30, 2026 was $30.3 million, a decrease of $4.1 million or 12.0% compared to $34.4 million for the three months ended September 30, 2025. The decrease in cost of sales largely corresponds to the 5.2% decrease in net sales as well as the improvement in the sales mix of proprietary brand sales, given that proprietary brand products generally carry lower product costs as a percentage of sales than non-proprietary brand products. Additionally, during the three months ended September 30, 2026 we recognized a $2.6 million reduction to cost of sales related to IEEPA tariff refunds, whereas no benefit related to refunds was recognized in the three months ended September 30, 2025. Refer to Note 13, Commitments and Contingencies, of our Notes to Unaudited Condensed Consolidated Financial Statements in this report for additional information regarding IEEPA tariff refunds.
Current report
Gross profit was $14.5 million for the three months ended September 30, 2026 compared to $12.9 million for the three months ended September 30, 2025, an increase of $1.7 million or 13.0%. Gross profit related to the Cultivation and Gardening segment increased $1.7 million, or 18.4%, for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to the $2.6 million reduction to cost of sales related to IEEPA tariff refunds as well as the increased sales mix of proprietary brand products during the three months ended September 30, 2026. These increases were partially offset by the overall decrease in net sales volume related to the previously discussed retail store closures as well as higher freight and inventory write-downs related to obsolescence incurred in the three months ended September 30, 2026. The Storage Solutions segment gross profit remained consistent at $3.9 million in each of the three months ended September 30, 2026 and 2025.
Current report
Net sales for the nine months ended September 30, 2026 were $126.4 million, an increase of $2.5 million or 2.0% as compared to net sales of $123.9 million for the nine months ended September 30, 2025.
Current report
Cost of sales for each of the nine months ended September 30, 2026 and 2025 was $89.8 million. Cost of sales remained consistent despite a 2.0% increase in net sales primarily due to the $2.6 million reduction to cost of sales related to IEEPA tariff refunds recognized during the nine months ended September 30, 2026, whereas no benefit related to refunds was recognized in the nine months ended September 30, 2025. Additionally, the increased proportion of proprietary brand sales during the nine months ended September 30, 2026 contributed to the lower cost of sales as our proprietary brand products generally carry lower product costs as a percentage of sales than non-proprietary brand products. These benefits largely offset the higher sales volume and increased mix of durable products during the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025.
Removed paragraphs (7)
Previous report
On February 20, 2026, the U.S. Supreme Court struck down certain tariffs imposed under the IEEPA. Subsequently, the United States Customs and Border Protection agency was ordered to begin accepting refund requests for these IEEPA tariffs. During the three and six months ended June 30, 2026, we received an immaterial amount of refunds of tariffs imposed under IEEPA. Subsequent to June 30, 2026, we received approximately $2.6 million of refunds related to previously submitted claims. Because realization of these refunds remained uncertain as of occurred June 30, 2026, no amounts were recognized in the accompanying Condensed Consolidated Financial Statements.
Previous report
Strategic Restructuring Plan
Previous report
Net sales for the three months ended June 30, 2026 were $43.2 million, an increase of $2.3 million or 5.5% as compared to net sales of $41.0 million for the three months ended June 30, 2025.
Previous report
Cost of sales for the three months ended June 30, 2026 was $30.9 million, an increase of $1.5 million or 5.2% compared to $29.4 million for the three months ended June 30, 2025. The increase in cost of sales largely corresponds to the 5.5% increase in net sales, as previously discussed.
Previous report
Gross profit was $12.3 million for the three months ended June 30, 2026 compared to $11.6 million for the three months ended June 30, 2025, an increase of $0.7 million or 6.3%. Gross profit related to the Cultivation and Gardening segment increased $0.8 million, or 10.3%, for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily as a result of the increased sales volume and mix of proprietary brand products and durable products during the three months ended June 30, 2026. The increase in gross profit was partially offset by our Storage Solutions segment decreased $0.1 million or 3.5% in the three months ended June 30, 2026 compared to the three months ended June 30, 2025.
Previous report
Net sales for the six months ended June 30, 2026 were $81.6 million, an increase of $4.9 million or 6.4% as compared to net sales of $76.7 million for the six months ended June 30, 2025.
Previous report
Cost of sales for the six months ended June 30, 2026 was $59.5 million, an increase of $4.2 million or 7.6% compared to $55.4 million for the six months ended June 30, 2025. The increase in cost of sales largely corresponds to the 6.4% increase in net sales, with cost of sales increasing at a higher rate in part due to the increased sales mix of durable products previously discussed. The remaining increase in cost of sales relates to inventory disposal costs incurred in connection with the closure of four retail locations during six months ended June 30, 2026 compared to two retail location closures during the six months ended June 30, 2025.
Reworded paragraphs (32)
Previous wording
The President has continued to indicate his intent to impose tariffs under other statutory authorities going forward. It is unclear at this time what impact tariffs will have on our future financial results, including whether we will be able to obtain more refunds of amounts previously paid for the IEEPA tariffs or any fluctuations of the level of replacement tariffs imposed or the addition of any new tariffs through other means. We continue to actively monitor these developments and the evolving tariff environment and its potential effects on our cost structure and supply chain. We will continue to explore and adjust our mitigation strategies as circumstances develop.
Current wording
The President has continued to utilize other statutory authorities to impose tariffs following the February 2026 U.S. Supreme Court ruling invalidating the previous IEEPA structure, including new and replacement tariffs. It is unclear at this time what impact tariffs will have on our future financial results, including whether we will be able to obtain more refunds of amounts previously paid for the IEEPA tariffs or any fluctuations of the level of replacement tariffs imposed or the addition of any new tariffs through other means. We continue to actively monitor these developments and the evolving tariff environment and its potential effects on our cost structure and supply chain. We will continue to explore and adjust our mitigation strategies as circumstances develop.
Previous wording
We make our products available to growers through a variety of channels, including our hydroponic retail locations, a commercial sales division that provides white glove service to commercial cultivators, a wholesale division that markets to mass-market retailers and independent resellers in both the hydroponic and traditional gardening markets, and an online platform at growgeneration.com, which includes a B2B customer portal for commercial and wholesale customers. Management believes that the Company has the largest chain of specialty retail hydroponic and organic garden centers in the U.S., with 19 retail locations across 9 states as of June 30, 2026. We closed four retail locations during the six months ended June 30, 2026. We continue to evaluate our retail footprint to identify cost redundancies and optimize coverage by leveraging nearby locations and our online sales platforms.
Current wording
We make our products available to growers through a variety of channels, including our hydroponic retail locations, a commercial sales division that provides white glove service to commercial cultivators, a wholesale division that markets to mass-market retailers and independent resellers in both the hydroponic and traditional gardening markets, and an online platform at growgeneration.com, which includes a B2B customer portal for commercial and wholesale customers. Management believes that the Company has the largest chain of specialty retail hydroponic and organic garden centers in the U.S., with 19 retail locations across 9 states as of September 30, 2026. We closed four retail locations during the nine months ended September 30, 2026. Additionally, as discussed below, on November 6, 2026, management committed to a strategic restructuring plan which includes planned closures of four to five additional retail locations by the end of the first quarter of 2027. We continue to evaluate our retail footprint to identify cost redundancies and optimize coverage by leveraging nearby locations and our online sales platforms.
Previous wording
In July 2024, we announced a strategic restructuring plan focused on long-term profitability and advancing growth initiatives in key areas of our Cultivation and Gardening segment such as our proprietary brands, commercial sales, and e-commerce business. The restructuring plan primarily included product development costs, digital transformation initiatives, reductions in cost structure by closing and consolidating 12 redundant or underperforming retail locations, workforce reductions, and other operational improvements in inventory management, sales and marketing, and administrative activities.
Current wording
In July 2024, we announced a restructuring plan (the "2024 Restructuring Plan") focused on key areas of our Cultivation and Gardening segment, which primarily included product development costs, digital transformation initiatives, reductions in cost structure by closing and consolidating 12 redundant or underperforming retail locations, workforce reductions, and other operational improvements in inventory management, sales and marketing, and administrative activities.
Previous wording
As of March 31, 2025, we had substantially completed our restructuring activities, and we do not expect to incur significant additional restructuring and restructuring-related costs in future periods. Overall, we incurred a total of approximately $3.5 million in restructuring and restructuring-related costs. During the six months ended June 30, 2025, we incurred approximately $1.1 million of restructuring and restructuring related charges as described in Note 15, Restructuring of our Notes to Condensed Consolidated Financial Statements in this report.
Current wording
As of March 31, 2025, we had substantially completed our 2024 Restructuring Plan. For the 2024 Restructuring Plan overall, we incurred a total of approximately $3.5 million in restructuring and restructuring-related costs, of which approximately $1.1 million were incurred during the nine months ended September 30, 2025 as described in Note 16, Restructuring of our Notes to Condensed Consolidated Financial Statements in this report.
Previous wording
Operating expenses are comprised of the following components: store operations and other operational expenses; selling, general, and administrative; estimated credit losses; depreciation and amortization; and impairment losses when applicable. Store operations and other operational expenses consist primarily of payroll, rent and utilities, and specifically identifiable operating costs related to our retail locations and distribution centers. Selling, general, and administrative expenses consist of corporate salaries, stock-based compensation, advertising and promotions, travel and entertainment, professional fees, insurance, and other corporate administrative costs. Selling, general, and administrative expenses as a percentage of net sales typically do not increase commensurately with an increase in net sales. Our largest expenses are generally related to employee compensation and leases, which are primarily fixed and not variable. Our advertising and marketing expenses are largely controllable and variable depending on the particular market.
Current wording
Operating expenses consist of the following components: store operations and other operational expenses; selling, general, and administrative; estimated credit losses; depreciation and amortization; and impairment losses when applicable. Store operations and other operational expenses consist primarily of payroll, rent and utilities, and specifically identifiable operating costs related to our retail locations and distribution centers. Selling, general, and administrative expenses consist of corporate salaries, stock-based compensation, advertising and promotions, travel and entertainment, professional fees, insurance, and other corporate administrative costs. Selling, general, and administrative expenses as a percentage of net sales typically do not increase commensurately with an increase in net sales. Our largest expenses are generally related to employee compensation and leases, which are primarily fixed and not variable. Our advertising and marketing expenses are largely controllable and variable depending on the particular market.
Previous wording
The increase in net sales was driven in part by our Cultivation and Gardening segment, which had net sales of $34.9 million for the three months ended June 30, 2026 compared to $32.9 million for the three months ended June 30, 2025. This increase in net sales was primarily due to improvements in durable product sales driven by increased demand for capital investments by our customers in the three months ended June 30, 2026. As a result, the ratio of consumables net sales as a percentage of Cultivation and Gardening net sales was 72.0% in the three months ended June 30, 2026, as compared to consumables net sales representing 79.7% of Cultivation and Gardening net sales in the three months ended June 30, 2025. The increase in net sales was partially offset by retail store closures, including four retail locations closed during 2026 and six retail locations closed in 2025 subsequent to June 30, 2025. Proprietary brand sales as a percentage of Cultivation and Gardening net sales for the three months ended June 30, 2026 increased to 39.7% as compared to 32.0% for the three months ended June 30, 2025, largely driven by our continued strategic initiatives to increase sales mix of our expanded portfolio of proprietary brands.
Current wording
The decrease in net sales was driven in part by our Cultivation and Gardening segment, which had net sales of $35.6 million for the three months ended September 30, 2026 compared to $38.4 million for the three months ended September 30, 2025. This decrease in net sales was primarily due to the closure of one retail location during 2025 subsequent to September 30, 2025 as well as the closure of four additional retail locations during 2026. This decrease was partially offset by increased penetration of sales to our commercial and wholesale customers and improvements in proprietary brand sales in the three months ended September 30, 2026. Proprietary brand sales as a percentage of Cultivation and Gardening net sales for the three months ended September 30, 2026 increased to 40.6% as compared to 31.6% for the three months ended September 30, 2025, largely driven by our continued strategic initiatives to increase sales mix of our expanded portfolio of proprietary brands. The percentage of Cultivation and Gardening net sales related to consumable products for the three months ended September 30, 2026 was 68.6%, a slight increase from 68.2% for the three months ended September 30, 2025.
Previous wording
Net sales of commercial fixtures within our Storage Solutions segment increased to $8.3 million for the three months ended June 30, 2026 compared to $8.1 million for the three months ended June 30, 2025 as a result of increased demand for capital investments by our customers primarily in the retail industry.
Current wording
Net sales of commercial fixtures within our Storage Solutions segment increased to $9.2 million for the three months ended September 30, 2026 compared to $8.9 million for the three months ended September 30, 2025 as a result of increased demand for capital investments by our customers primarily in the retail industry.
Previous wording
Gross profit margin was 28.5% for the three months ended June 30, 2026, an increase of 20 basis points from a gross profit margin of 28.3% for the three months ended June 30, 2025. The increase in gross profit margin was largely driven by the Cultivation and Gardening segment, which had a gross profit margin of 25.8% for the three months ended June 30, 2026 as compared to 24.8% for the three months ended June 30, 2025. This increase was primarily driven by the increased mix of proprietary brand products, which generally have higher margins than non-proprietary brand products, partially offset by the increased sales mix of durable products, which generally have lower margins than consumable products during the three months ended June 30, 2026. The Storage Solutions gross profit margin decreased to 39.8% in the three months ended June 30, 2026 from 42.3% in the three months ended June 30, 2025, primarily as a result of industry pricing compression and higher cost of services for the Storage Solutions segment.
Current wording
Gross profit margin was 32.4% for the three months ended September 30, 2026, an increase of 520 basis points from a gross profit margin of 27.2% for the three months ended September 30, 2025. The increase in gross profit margin was largely driven by the Cultivation and Gardening segment, which had a gross profit margin of 29.9% for the three months ended September 30, 2026 as compared to 23.5% for the three months ended September 30, 2025. The $2.6 million reduction to cost of sales related to IEEPA tariff refunds contributed approximately 740 basis points to the Cultivation and Gardening gross profit margin, driving the increase from the three months ended September 30, 2025. Excluding this benefit, the Cultivation and Gardening gross profit margin decreased approximately 100 basis points as higher freight and obsolete inventory write-downs more than offset the gross profit margin improvement from an increased mix of proprietary brand products. The Storage Solutions gross profit margin decreased to 42.2% in the three months ended September 30, 2026 from 43.4% in the three months ended September 30, 2025, primarily as a result of industry pricing compression and higher cost of services for the Storage Solutions segment.
Previous wording
Operating expenses are comprised of store operations and other operational expenses, selling, general, and administrative, estimated credit losses, depreciation and amortization, and impairment loss. Operating expenses were $14.7 million for the three months ended June 30, 2026 and $16.9 million in the three months ended June 30, 2025, a decrease of $2.2 million or 13.1%.
Current wording
Operating expenses are comprised of store operations and other operational expenses, selling, general, and administrative expense, estimated credit losses, depreciation and amortization, and impairment loss. Operating expenses were $14.6 million for the three months ended September 30, 2026 and $15.7 million in the three months ended September 30, 2025, a decrease of $1.1 million or 7.1%.
Previous wording
Store operating costs and other operational expenses, which consisted primarily of payroll, rent and utilities, and specifically identifiable operating costs related to our retail locations and distribution centers, were $6.1 million for the three months ended June 30, 2026 compared to $7.9 million for the three months ended June 30, 2025, a decrease of $1.7 million or 21.9%. The decrease in store operating costs was primarily due to the six retail locations closed in 2025 subsequent to June 30, 2025 as well as the closure of four retail locations during 2026.
Current wording
Store operating costs and other operational expenses, which consisted primarily of payroll, rent and utilities, and specifically identifiable operating costs related to our retail locations and distribution centers, were $6.4 million for the three months ended September 30, 2026 compared to $7.2 million for the three months ended September 30, 2025, a decrease of $0.9 million or 11.9%. The decrease in store operating costs was primarily driven by the closure of one retail location during 2025 subsequent to September 30, 2025 as well as the closure of four additional retail locations during 2026.
Previous wording
Total corporate overhead, which is comprised of selling, general, and administrative expense, estimated credit losses, and depreciation and amortization expense, was $8.3 million for the three months ended June 30, 2026 compared to $9.0 million for the three months ended June 30, 2025. The decrease was largely driven by reduced depreciation and amortization costs, which decreased $1.2 million or 44.0% for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily as a result of asset retirements in conjunction with the restructuring plan and certain intangible assets reaching the end of their estimated useful lives. This was partially offset by increased selling, general, and administrative costs of $0.3 million, or 5.0%, largely due to increased professional services costs.
Current wording
Total corporate overhead, which is comprised of selling, general, and administrative expense, estimated credit losses, and depreciation and amortization expense, was $8.1 million for the three months ended September 30, 2026 compared to $8.5 million for the three months ended September 30, 2025. The decrease was largely driven by reduced depreciation and amortization costs, which decreased $1.5 million or 55.2% for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, primarily as a result of asset retirements in conjunction with the restructuring plan and the closure of retail locations as well as certain intangible assets reaching the end of their estimated useful lives. This was partially offset by increased selling, general, and administrative costs of $1.1 million, or 19.6%, largely due to increased employee costs.
Previous wording
Impairment loss was $0.2 million in the three months ended June 30, 2026 and was related to a closed, wholly-owned retail location classified as held for sale. Refer to Note 5, Property and Equipment for additional information regarding our impairment loss.
Current wording
Impairment loss was $0.1 million in the three months ended September 30, 2026 and was related to a closed, wholly-owned retail location classified as held for sale. Refer to Note 5, Property and Equipment for additional information regarding our impairment loss.
Previous wording
Other income was $0.3 million for the three months ended June 30, 2026 compared to $0.5 million for the three months ended June 30, 2025, a decrease of $0.1 million or 25.1%. The decrease in other income was primarily attributable to decreased investment income on our marketable securities.
Current wording
Other income was $0.3 million for the three months ended September 30, 2026 compared to $0.4 million for the three months ended September 30, 2025, a decrease of $0.1 million or 29.0%. The decrease in other income was primarily attributable to decreased investment income on our marketable securities.
Previous wording
Comparison of the Unaudited Results for the Six Months Ended June 30, 2026 and 2025
Current wording
Comparison of the Unaudited Results for the Nine Months Ended September 30, 2026 and 2025
Previous wording
Net sales of commercial fixtures within our Storage Solutions segment increased to $14.8 million for the six months ended June 30, 2026 compared to $12.9 million for the six months ended June 30, 2025 as a result of increased demand for capital investments by our customers primarily in the retail industry.
Current wording
The increase in net sales was primarily driven by our Storage Solutions segment, which increased its sales of commercial fixtures to $24.0 million for the nine months ended September 30, 2026 compared to $21.8 million for the nine months ended September 30, 2025 as a result of increased demand for capital investments by our customers primarily in the retail industry.
Previous wording
The increase in net sales was driven in part by our Cultivation and Gardening segment, which had net sales of $66.8 million for the six months ended June 30, 2026 compared to $63.8 million for the six months ended June 30, 2025. This increase in net sales was primarily due to improvements in durable product sales driven by increased demand for capital investments by our customers in the six months ended June 30, 2026. As a result, the ratio of consumables net sales as a percentage of Cultivation and Gardening net sales was 72.0% in the six months ended June 30, 2026, as compared to consumables net sales representing 77.8% of Cultivation and Gardening net sales in the six months ended June 30, 2025. This increase in net sales was partially offset by retail store closures, including four retail locations during six months ended June 30, 2026 and six retail locations closed in 2025 subsequent to June 30, 2025. Proprietary brand sales as a percentage of Cultivation and Gardening net sales for the six months ended June 30, 2026 increased to 38.4% as compared to 32.0% for the six months ended June 30, 2025, largely driven by our continued strategic initiatives to increase sales mix of our expanded portfolio of proprietary brands.
Current wording
Our Cultivation and Gardening segment had net sales of $102.4 million for the nine months ended September 30, 2026 compared to $102.1 million for the nine months ended September 30, 2025, representing a slight increase of $0.3 million. This increase in net sales was primarily driven by increased penetration of sales to our commercial and wholesale customers and improvements in durable product sales due to increased demand for capital investments by our customers in the nine months ended September 30, 2026. As a result, the ratio of consumables net sales as a percentage of Cultivation and Gardening net sales was 70.9% in the nine months ended September 30, 2026, as compared to consumables net sales representing 74.2% of Cultivation and Gardening net sales in the nine months ended September 30, 2025. This increase in net sales was partially offset by retail store closures, including four retail locations during the nine months ended September 30, 2026 and one retail location closed in 2025 subsequent to September 30, 2025. Proprietary brand sales as a percentage of Cultivation and Gardening net sales for the nine months ended September 30, 2026 increased to 39.1% as compared to 31.8% for the nine months ended September 30, 2025, largely driven by our continued strategic initiatives to increase sales mix of our expanded portfolio of proprietary brands.
Previous wording
Gross profit was $22.1 million for the six months ended June 30, 2026 compared to $21.3 million for the six months ended June 30, 2025, an increase of $0.8 million or 3.6%. Gross profit related to the Cultivation and Gardening segment increased $0.1 million, or 0.7%, for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily as a result of the increased sales volume and mix of proprietary brand products and durable products during, which were partially offset by inventory disposal costs and inventory sales discounts incurred in connection with retail location closures during the six months ended June 30, 2026. Gross profit from our Storage Solutions segment increased $0.7 million or 12.4% in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily as a result of increased sales volume.
Current wording
Gross profit was $36.6 million for the nine months ended September 30, 2026 compared to $34.2 million for the nine months ended September 30, 2025, an increase of $2.4 million or 7.1%. Gross profit related to the Cultivation and Gardening segment increased $1.8 million, or 7.0%, for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to the $2.6 million reduction to cost of sales related to IEEPA tariff refunds as well as the increased sales volume and mix of proprietary brand products. These increases were partially offset by higher sales mix of durable products, higher freight and obsolete inventory write-downs, and inventory sales discounts incurred in connection with retail location closures during the nine months ended September 30, 2026. Gross profit from our Storage Solutions segment increased $0.7 million or 7.3% in the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily as a result of increased sales volume.
Previous wording
Gross profit margin was 27.0% for the six months ended June 30, 2026, a decrease of 80 basis points from a gross profit margin of 27.8% for the six months ended June 30, 2025. The decrease in gross profit margin was largely driven by the Cultivation and Gardening segment, which had a gross profit margin of 24.2% for the six months ended June 30, 2026 as compared to 25.2% for the six months ended June 30, 2025. This decrease was primarily driven by the increased sales mix of durable products, which generally have lower margins than consumable products, as well as additional cost of sales and inventory sales discounts incurred in the six months ended June 30, 2026. These decreases were partially offset by the increased sales mix of proprietary brand products, which generally have higher margins than non-proprietary brand products. The Storage Solutions gross profit margin decreased to 39.7% in the six months ended June 30, 2026 from 40.6% in the six months ended June 30, 2025, primarily as a result of industry pricing compression for the Storage Solutions segment.
Current wording
Gross profit margin was 28.9% for the nine months ended September 30, 2026, an increase of 130 basis points from a gross profit margin of 27.6% for the nine months ended September 30, 2025. The increase in gross profit margin was largely driven by the Cultivation and Gardening segment, which had a gross profit margin of 26.2% for the nine months ended September 30, 2026 as compared to 24.5% for the nine months ended September 30, 2025. The $2.6 million reduction to cost of sales related to IEEPA tariff refunds contributed approximately 260 basis points to the Cultivation and Gardening gross profit margin, driving the increase from the nine months ended September 30, 2025. Excluding this benefit, the Cultivation and Gardening gross profit margin decreased approximately 90 basis points as higher sales mix of durable products, higher freight and obsolete inventory write-downs, and inventory sales discounts more than offset the gross profit margin improvement from an increased mix of proprietary brand products. The Storage Solutions gross profit margin decreased to 40.7% in the nine months ended September 30, 2026 from 41.7% in the nine months ended September 30, 2025, primarily as a result of industry pricing compression and higher cost of services for the Storage Solutions segment.
Previous wording
Operating expenses are comprised of store operations and other operational expenses, selling, general, and administrative, estimated credit losses, depreciation and amortization, and impairment loss. Operating expenses were $29.7 million for the six months ended June 30, 2026 and $36.4 million in the six months ended June 30, 2025, a decrease of $6.8 million or 18.6%.
Current wording
Operating expenses are comprised of store operations and other operational expenses, selling, general, and administrative expense, estimated credit losses, depreciation and amortization, and impairment loss. Operating expenses were $44.2 million for the nine months ended September 30, 2026 and $52.1 million in the nine months ended September 30, 2025, a decrease of $7.9 million or 15.2%.
Previous wording
Store operating costs and other operational expenses, which consisted primarily of payroll, rent and utilities, and specifically identifiable operating costs related to our retail locations and distribution centers, were $12.5 million for the six months ended June 30, 2026 compared to $16.7 million for the six months ended June 30, 2025, a decrease of $4.1 million or 24.7%. The decrease in store operating costs was primarily due to the six retail locations closed in 2025 subsequent to June 30, 2025 as well as the closure of four retail locations during six months ended June 30, 2026.
Current wording
Store operating costs and other operational expenses, which consisted primarily of payroll, rent and utilities, and specifically identifiable operating costs related to our retail locations and distribution centers, were $18.9 million for the nine months ended September 30, 2026 compared to $23.9 million for the nine months ended September 30, 2025, a decrease of $5.0 million or 20.8%. The decrease in store operating costs was primarily driven by the closure of one retail location during 2025 subsequent to September 30, 2025 as well as the closure of four additional retail locations during 2026.
Previous wording
Total corporate overhead, which is comprised of selling, general, and administrative expense, estimated credit losses, and depreciation and amortization expense, was $16.9 million for the six months ended June 30, 2026 compared to $19.8 million for the six months ended June 30, 2025. The decrease was largely driven by reduced depreciation and amortization costs, which decreased by $3.2 million or 50.3% for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily as a result of asset retirements in conjunction with the restructuring plan and certain intangible assets reaching the end of their estimated useful lives. This was partially offset by a $0.1 million increase to selling, general, and administrative costs and a $0.1 million increase to estimated credit losses for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.
Current wording
Total corporate overhead, which is comprised of selling, general, and administrative expense, estimated credit losses, and depreciation and amortization expense, was $25.0 million for the nine months ended September 30, 2026 compared to $28.2 million for the nine months ended September 30, 2025. The decrease was largely driven by reduced depreciation and amortization costs, which decreased by $4.6 million or 51.8% for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily as a result of asset retirements in conjunction with the restructuring plan and the closure of retail locations as well as certain intangible assets reaching the end of their estimated useful lives. This was partially offset by a $1.2 million increase to selling, general, and administrative costs, related to employee and professional services costs, and a $0.2 million increase to estimated credit losses for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025.
Previous wording
Impairment loss was $0.2 million in the six months ended June 30, 2026 and was related to a closed, wholly-owned retail location classified as held for sale. Refer to Note 5, Property and Equipment for additional information regarding our impairment loss.
Current wording
Impairment loss was $0.3 million in the nine months ended September 30, 2026 and was related to a closed, wholly-owned retail location classified as held for sale. Refer to Note 5, Property and Equipment for additional information regarding our impairment loss.
Previous wording
Other income was $0.7 million for the six months ended June 30, 2026 compared to $1.0 million for the six months ended June 30, 2025, a decrease of $0.3 million or 30.1%. The decrease in other income was primarily attributable to decreased investment income on our marketable securities.
Current wording
Other income was $1.0 million for the nine months ended September 30, 2026 compared to $1.4 million for the nine months ended September 30, 2025, a decrease of $0.4 million or 29.8%. The decrease in other income was primarily attributable to decreased investment income on our marketable securities.
Previous wording
The following non-GAAP financial measures of EBITDA and Adjusted EBITDA are not in accordance with, or an alternative for, generally accepted accounting principles ("GAAP") and should be considered in addition to, and not as a substitute for, the most directly comparable GAAP financial measures. We believe these non-GAAP financial measures, when used in conjunction with their most directly comparable GAAP financial measures, net income (loss), provide meaningful supplemental information to both management and investors, facilitating the evaluation of performance across reporting periods, identify trends affecting our business, and project future performance. Management uses these non-GAAP financial measures for internal planning and reporting purposes, and we believe that these non-GAAP financial measures may be useful to investors in their assessment of our operating performance, our ability to generate cash, and valuation. In addition, these non-GAAP financial measures address questions routinely received from analysts and investors and, in order to ensure that all investors have access to the same data, we have determined that it is appropriate to make this data available to all investors. These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies.
Current wording
The following non-GAAP financial measures of EBITDA and Adjusted EBITDA are not in accordance with, or an alternative for, generally accepted accounting principles ("GAAP") and should be considered in addition to, and not as a substitute for, the most directly comparable GAAP financial measures. We believe these non-GAAP financial measures, when used in conjunction with their most directly comparable GAAP financial measures, net income (loss), provide meaningful supplemental information to both management and investors, facilitating the evaluation of performance across reporting periods, identification of trends affecting our business, and projection of future performance. Management uses these non-GAAP financial measures for internal planning and reporting purposes, and we believe that these non-GAAP financial measures may be useful to investors in their assessment of our operating performance, our ability to generate cash, and valuation. In addition, these non-GAAP financial measures address questions routinely received from analysts and investors and, in order to ensure that all investors have access to the same data, we have determined that it is appropriate to make this data available to all investors. These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies.
Previous wording
EBITDA and Adjusted EBITDA are non-GAAP financial measures commonly used in our industry and should not be construed in isolation as substitutions to net income (loss) as indicators of operating performance or as alternatives to cash flow provided by operating activities as a measure of liquidity (each as determined in accordance with GAAP). GrowGeneration defines EBITDA as net income (loss) before interest income, interest expense, income tax expense, depreciation and amortization, and Adjusted EBITDA as further adjusted to exclude certain items such as stock-based compensation, impairment losses, restructuring and corporate rationalization costs, and other non-core or non-recurring expenses and to include income from our marketable securities as these investments are part of our operational business strategy and increase the cash available to us.
Current wording
EBITDA and Adjusted EBITDA are non-GAAP financial measures commonly used in our industry and should not be construed in isolation as substitutes for net income (loss) as indicators of operating performance or as alternatives to cash flow provided by operating activities as a measure of liquidity (each as determined in accordance with GAAP). GrowGeneration defines EBITDA as net income (loss) before interest income, interest expense, income tax expense, depreciation and amortization, and Adjusted EBITDA as further adjusted to exclude certain items such as stock-based compensation, impairment losses, restructuring and corporate rationalization costs, and other non-core or non-recurring expenses and to include income from our marketable securities as these investments are part of our operational business strategy and increase the cash available to us.
Previous wording
Set forth below is a reconciliation of EBITDA and Adjusted EBITDA to net loss (in thousands):
Current wording
Set forth below is a reconciliation of EBITDA and Adjusted EBITDA to net income (loss) (in thousands):
Previous wording
As of June 30, 2026, we had working capital of $74.0 million compared to working capital of $77.8 million as of December 31, 2025, a decrease of $3.8 million. The decrease in working capital from December 31, 2025 to June 30, 2026 was due primarily to a net decrease in cash, cash equivalents, and marketable securities as a result of net cash used in operating activities.
Current wording
As of September 30, 2026, we had working capital of $75.8 million compared to working capital of $77.8 million as of December 31, 2025, a decrease of $1.9 million. The decrease in working capital from December 31, 2025 to September 30, 2026 was due primarily to a net decrease in cash, cash equivalents, and marketable securities as a result of net cash used in operating activities as discussed below.
Previous wording
As of June 30, 2026, we had cash, cash equivalents, and marketable securities of $41.0 million. Currently, we are not aware of any extraordinary demands, commitments, or uncertainties that would materially reduce our current working capital. Our material future cash requirements from contractual and other obligations relate primarily to our operating leases. Refer to Note 8, Leases, of the Condensed Consolidated Financial Statements for additional information regarding leases.
Current wording
As of September 30, 2026, we had cash, cash equivalents, and marketable securities of $41.8 million. Currently, we are not aware of any extraordinary demands, commitments, or uncertainties that would materially reduce our current working capital. Our material future cash requirements from contractual and other obligations relate primarily to our operating leases. Refer to Note 8, Leases, of the Condensed Consolidated Financial Statements for additional information regarding leases.
Previous wording
The following discussion sets forth the major sources and uses of cash for the six months ended June 30, 2026 and 2025.
Current wording
The following discussion sets forth the major sources and uses of cash for the nine months ended September 30, 2026 and 2025.
Previous wording
Net cash and cash equivalents used in operating activities for the six months ended June 30, 2026 was $4.1 million compared to $6.8 million for the six months ended June 30, 2025. The decrease in cash used in operating activities was primarily related to changes in our operating assets and liabilities including the timing of cash receipts related to our accounts and notes receivables and customer deposits offset by the difference in sell through of inventory for the six months ended June 30, 2026 as compared to the build-up of inventory in six months ended June 30, 2025.
Current wording
Net cash and cash equivalents used in operating activities for the nine months ended September 30, 2026 was $3.6 million compared to $7.2 million for the nine months ended September 30, 2025. The decrease in cash used in operating activities was primarily attributable to a lower net loss during the current period, as discussed previously within the Results of Operations, and changes in our operating assets and liabilities, including a $5.2 million reduction in inventory compared to a $0.4 million reduction in the prior period, reflecting continued sell-through of inventory. These benefits were partially offset by increases in accounts and notes receivable and a decrease in customer deposits during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025.
Previous wording
Net cash and cash equivalents used in investing activities for the six months ended June 30, 2026 was $1.8 million compared to net cash provided by investing activities of $2.7 million for the six months ended June 30, 2025. Investing activities for the six months ended June 30, 2026 were primarily attributable to investment of excess cash into marketable securities of $8.9 million and purchases of property and equipment of $0.3 million, offset by maturity of marketable securities of $7.4 million. Investing activities for the six months ended June 30, 2025 were primarily attributable to investment of excess cash into marketable securities of $19.0 million, $1.0 million of cash paid for the Viagrow acquisition and purchases of property and equipment of $0.3 million, offset by maturity of marketable securities of $23.0 million.
Current wording
Net cash and cash equivalents provided by investing activities for the nine months ended September 30, 2026 was $1.2 million compared to $7.2 million for the nine months ended September 30, 2025. Investing activities for the nine months ended September 30, 2026 were attributable to the maturity of marketable securities of $14.3 million and proceeds from disposal of assets of $1.3 million, primarily related to the completion of the sale of building and land associated with a closed retail location that had been previously classified as held for sale. This was offset by the investment of excess cash into marketable securities of $13.9 million and purchases of property and equipment of $0.5 million. Investing activities for the nine months ended September 30, 2025 were primarily attributable to the maturity of marketable securities of $33.7 million, offset by the investment of excess cash into marketable securities of $25.0 million, $1.0 million of cash paid for the Viagrow acquisition, and purchases of property and equipment of $0.4 million.
Previous wording
Net cash and cash equivalents used in financing activities for the six months ended June 30, 2026 was $1.1 million and was primarily attributable to common stock repurchased under our share repurchase program. Net cash and cash equivalents used in financing activities for the six months ended June 30, 2025 was $0.1 million and was attributable to common stock withheld for employee payroll taxes.
Current wording
Net cash and cash equivalents used in financing activities for the nine months ended September 30, 2026 was $2.1 million and was primarily attributable to common stock repurchased under our share repurchase program. Net cash and cash equivalents used in financing activities for the nine months ended September 30, 2025 was $0.1 million and was attributable to common stock withheld for employee payroll taxes.