Becoming a publicly traded company, temporarily moving its headquarters from Petaluma to the east coast, spending $ 343 million to acquire three more companies, preparing to move back to a larger North Bay hub. It’s been a busy seven months for indoor grow equipment manufacturer and distributor Hydrofarm.
On December 14, nearly 10 million shares of Hydrofarm Holding Group began trading on the Nasdaq Global Select Market under the symbol “HYFM”, raising proceeds of $ 182.3 million, according to the annual report of the March, 31st. The company made a follow-up offer of 5.5 million shares that ended on May 3, bringing in an additional $ 309.8 million.
After peaking at $ 92 in mid-February, the stock price was $ 56.96 at the market close on Friday.
Earlier this year, Hydrofarm moved its corporate headquarters to its distribution center in the Philadelphia area. It is one of nine totaling 900,000 square feet that the 4-year-old company operates in the United States, Canada and Spain. Hydrofarm also has offices in China.
This happened because Hydrofarm was preparing a larger location elsewhere in North Bay, which it had been pursuing for a few years.
Hydrofarm had planned to move its headquarters from Petaluma to the 250,000-square-foot warehouse at Victory Station in South Sonoma, but that deal did not materialize amid the rapid cooling of demand for real estate in the New Zealand. legal cannabis industry, according to real estate sources.
Hydrofarm could not be reached for comment on its plans for North Bay.
As cannabis has emerged as a key driver of demand for environmentally controlled agricultural products, Hydrofarm made its debut in Marin County during the catastrophic drought of 1977-1978, the Business Journal reported in 2010. gardeners.
The product line has expanded to include energy efficient grow lights and germination kits. Then Hydrofarm began manufacturing and distributing indoor gardening equipment for professional growers and hobbyists.
Today, the key markets are producers of cannabis, flowers, fruits, plants, vegetables, grains and herbs. The portfolio now includes 26 exclusive brands developed in-house with around 900 product variants under 24 patents and 60 registered trademarks. The company also owns more than 40 exclusive and preferred brands totaling 900 other storage units.
The company’s brands represent around 60% of sales. The total catalog, which contains products from more than 400 suppliers, includes more than 6,000 references.
“Our revenue mix continues to shift towards exclusive brands as we continue to innovate, improving overall margins,” says the annual report. “In addition, our revenue stream is very consistent as, according to our estimate, we believe that approximately two-thirds of our net sales are generated from the sale of recurring consumables, including growing media, nutrients and supplies. . “
Last year’s net sales were $ 342.2 million, up 45.6% from 2019. The company speculated in its annual report that public health home shelter orders in the event of a coronavirus pandemic have contributed to this increase in sales. The net turnover for the previous year only increased by 11.0% compared to 2018.
First quarter net sales were $ 111.4 million, up 66.5% from the previous year. The company attributed this to a 59.6% increase in the volume of products sold and a 6.9% increase in the price and mix of these products.
As a sign of its commitment to stay in North Bay, Hydrofarm was awarded a lease earlier this year for a new 175,000 square foot distribution warehouse at 2225 Huntington Drive in Fairfield. Meanwhile, Hydrofarm founder Stuart Dvorin was preparing to sell the 110,000 square foot Petaluma main facility at 2249 S. McDowell Blvd. Extension, a $ 17.5 million deal struck on June 7.
“We also intend to move our existing distribution operations in Northern California from the existing Petaluma building to a larger distribution center nearby,” the company wrote in its annual report.
Started in Marin County in 1977 as Applied Hydroponics, Hydrofarm moved its headquarters to Petaluma in 1994, employing 65 people at the time. It gradually expanded to 150,000 square feet there with a workforce of over 150 employees in 2010, and then to 195,000 square feet in the city in 2017. The company employed 327 full-time across all sites in at the end of February, he reported.
In 2017, Hydrofarm made a big expansion in Canada with the acquisition of the wholesale of Eddi and Greenstar Plant Products. The deal helped Hydrofarm become one of the leading suppliers of hydroponics equipment in Canada, the company said.
This year, Hydrofarm acquired three other companies. Los Angeles-area high-end nutrient maker Heavy 16 was bought for $ 78.1 million, and Humboldt County’s House & Garden brand portfolio for $ 125 million. A $ 161 million deal was announced this month for Aurora International Inc. and Gotham Properties LLC, manufacturers and suppliers of organic hydroponic products based in Oregon.
“We see mergers and acquisitions as an important driver of potential growth, as the hydroponics industry is fragmented and ready to be consolidated,” Hydrofarm wrote in its annual report.
Hydrofarm has also fertilized its C suite with insight over the past two years. In early 2019, Bill Toler arrived as CEO, bringing with him over 3 decades of senior executive experience at large consumer packaged goods companies, most recently including seven years as CEO and Chairman of Hostess. Brands. B. John Lindeman arrived as CFO in March 2020 with 25 years of experience in agriculture and finance.
Jeff Quackenbush covers wine, construction and real estate. Prior to Business Journal, he wrote for Bay City News Service in San Francisco. He graduated from Walla Walla University. Contact him at [email protected] or 707-521-4256.