#1HYDROFARM NAYOUZE Shko Roadshow presentation December 2020#2Disclaimer CONFIDENTIAL Hydrofarm Holdings Group, Inc. (together with its subsidiaries, the "Company") has filed a registration statement (File No. 333-250037), including a preliminary prospectus, with the Securities and Exchange Commission (the "SEC") in connection with the offering to which this presentation relates. Sales of securities of the Company offered pursuant to the registration statement may not be made or offers for such securities accepted prior to the registration statement becoming effective. Before making a decision to invest, you should read the prospectus in that registration statement and other documents that the Company has filed with the SEC for more complete information about the Company and the offering. You may obtain these documents for free by visiting EDGAR on the SEC's web site at www.sec.gov. Copies of the preliminary prospectus may also be obtained, when available, from J.P. Morgan Securities LLC, c/o J.P. Morgan Securities LLC, Attention: Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, or by telephone, at (866) 803-9204; or Stifel, Nicolaus & Company, Incorporated, Attention: Prospectus Department, One Montgomery Street, Suite 3700, San Francisco, CA 94104, by telephone at +1 (415) 364-2720 or by email at [email protected]. This presentation shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. FORWARD LOOKING STATEMENTS IMPORTANT NOTICE REGARDING FORWARD-LOOKING STATEMENTS This presentation regarding the Company is strictly confidential and is for you to familiarize yourself with the Company. The Company requests that you keep any information provided at this meeting confidential and that you do not disclose any of the information to any other parties without the express written permission of the Company. This presentation contains forward-looking statements. In some cases, you can identify forward-looking statements by the words "will," "expect." "intend," "plan," "objective," "believe," "estimate," "potential," "continue" and "ongoing," or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements are based on management's current beliefs and expectations. These statements include but are not limited to statements regarding the Company's financial results, future financial position, expected growth of cash flows, business strategy, budgets, projected costs. projected capital expenditures, taxes, plans, objectives, potential synergies, industry trends and growth opportunities. These statements involve substantial known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. The Company may not actually achieve the plans, intentions or expectations disclosed in its forward-looking statements, and you should not place undue reliance on the Company's forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements the Company makes. The forward-looking statements in this presentation represent the Company's views as of the date of this presentation. The Company's anticipates that subsequent events and developments will cause the its views to change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company has no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing the Company's views as of any date subsequent to the date of this presentation. This presentation also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions, and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk. NON-GAAP MEASURES This presentation contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Management uses these "non- GAAP measures in its analysis of the Company's performance. Management believes these non-GAAP financial measures allow for better comparability of period to period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company's financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. A reconciliation of the non-GAAP measures used in this presentation to the most directly comparable GAAP measures is provided in the Appendix to this presentation. HYDROFARM 1#3Offering summary Issuer: Ticker/ exchange: Base offering size (at midpoint): Shares offered: Filing range: Use of proceeds: Over-allotment option: Expected pricing date: Active Bookrunners: HYDROFARM Hydrofarm Holdings Group, Inc. HYFM/ NASDAQ $130,000,005 (100% primary) 8,666,667 shares $14.00 $16.00 Repay debt and general corporate purposes 15% (100% primary) December 9, 2020 J.P. Morgan, Stifel CONFIDENTIAL 2#4Today's speakers HYDROFARM Bill Toler Chairman & Chief Executive Officer Hostess AdvancePierre P&G HABSOO Campbells John Lindeman Chief Financial Officer Calavo A family of fresh food Janney Pinnacle STIFEL pwc Agenda 1) Hydrofarm opportunity 2) Growth strategies 3) Financial summary CONFIDENTIAL 3#5Hydrofarm is a leading branded hydroponics company with a comprehensive distribution platform serving the Controlled Environment Agriculture ("CEA") market Mission Vision FRIKA Enabling growers, farmers and cultivators to achieve higher yields and greater quality, consistency, efficiency and sustainability at their farms $309mm LTM Q3 2020 Net Sales 8 Distribution centers across North America and opportunity to scale ~60% Sales from margin- advantaged proprietary and preferred brands ~90% Delivery coverage of U.S. population within 24-48 hours HYDROFARM Source: Company information, industry reports +17% Sales CAGR since 2005 2,000+ Wholesale customer accounts globally Bringing innovative solutions, preferred brands and gold standard service to the rapidly expanding and complex controlled environment agriculture industry +16% '19 - '23 CAGR Global CEA Market CONFIDENTIAL ~400 Supplier relationships globally 40+ Years of operating experience ~2/3 Sales from consumables with recurring revenue streams 4#6Hydrofarm serves a critical role as a leading solutions provider to the complex CEA supply chain Brands from ~400 suppliers Proprietary brands Active AQUA PHANTOM GROW!T Preferred brands FOX FARM Cutting Edge SOLUTIONS anden Distributed brands EYE EYE LIGHTING INTERNATIONAL USHIO grodan HYDROFARM Source: Company information Branded provider of all CEA needs HYDROFARM Full CEA solutions Best-in-class branded portfolio B2B eCommerce platform JIT delivery of consumables Category and technical specialists Distribution across U.S. and Canada Excellent customer service Over 2,000 B2B customers Specialty hydroponic retailers GREENCOAST Garden centers/retail Grow Generation nurseryland CE Hardware amazon eCommerce BFG Hydrobuilder ORIFERO Spreetail Greenhouse/commercial distributors NOVATIVE (RIMOL Case S End users CONFIDENTIAL Commercial growers Vertical farming FREIGHT FARMS leafia labs GRASSROOTS Liv Well plenty SUSTAINITICS cresco SUPER FRM Wonderful nurseries. # AURORA Consumer gardeners 5#7Introduction to Controlled Environment Agriculture The growing, farming and cultivation of cannabis, flowers, fruits, plants, vegetables, grains and herbs in controlled environment settings that allow end users to control key farming variables, including temperature, humidity, CO2, light intensity and color, nutrient concentration and pH. Through CEA, growers are able to be more efficient, effective and sustainable with physical space, water and resources, enjoy year-round and more rapid grow cycles, with more predictable and abundant grow yields compared with traditional growing methods. Hydroponics is the primary category of CEA and we use the terms CEA/hydroponics interchangeably. 88 More efficient land usage Reduced food waste More efficient fresh water usage Lower fertilizer & pesticides usage Chemical runoff prevention HYDROFARM Source: Company information, industry reports CONFIDENTIAL Reduced carbon emissions CEA can grow plants with up to 98% less water than soll based agriculture The yield of vertical farming, a form of CEA, is 20x more than that of outdoor farming per acre Zero chemical runoff 6#8Hydrofarm is an excellent way to enjoy pure-play exposure to the long-term growth of CEA and cannabis without "touching the plant" - Unprecedented tailwinds for our large and rapidly-growing end-markets as cannabis legalization expands UNIQUE POSITION 9 Truly unique ability to invest pure-play in the long-term growth of CEA and cannabis without ever "touching the plant" DIFFERENTIATED BRANDED PRODUCT OFFERING Majority of sales are from products that are only or primarily sold by Hydrofarm and allow for advantaged margins HIGH PROPORTION OF CONSUMABLES -2/3 of sales come from consumables, which create a large source of recurring revenue WINNING PLATFORM Supply chain excellence with just-in-time coverage of North America and disruptive DMI technology IMPRESSIVE GROWTH ALGORITHM 15-year track record of double-digit revenue growth with a goal to achieve mid-teens+ organic topline growth over the long-term DRIVING PROFITABILITY Significant EBITDA and margin growth in 2020, with potential for material and sustainable margin upside CONFIDENTIAL CONSOLIDATOR OF CHOICE Differentiated positioning expands opportunity set to broaden industry footprint and strengthen portfolio HYDROFARM Source: Company information, industry reports 7#9After growing consistently over its 40+ year history, Hydrofarm has been repositioned under current management ✓ Re-shaped leadership team with public company experience Investments in innovation to drive proprietary brand growth ✓ Focus on expanding preferred distribution partnerships ✓Launch of disruptive DMI technology platform Introduction of technical sales team 1980 Peter Wardenburg joins firm 1977 Founded as Applied Hydroponics (1977) Recent initiatives 2003-2007 R&D investment and proprietary brand expansion 1996 HQ moves to Petaluma, CA HYDROFARM 2011-2018 Launched Phantom, Active Air and Active Aqua brands ✓ eCommerce expansion ✓ Increase in marketing spend ✓ Efficiency initiatives boosting profitability Expansion of M&A pipeline 2010 Expanded into Spain via Eltac acquisition 2017 Acquired by investor consortium 2019 Bill Toler joins as CEO 2017 Acquired Canada's leading hydroponics and lawn & garden distributors greenstar Today 2020 John Lindeman joins as CFO Terence Fitch President Peter Wardenburg Vice Chairman, Head of Product Development Renah Persofsky Vice Chair & Lead Director, Aphria aphria CIBC Mark Parker SVP Bus Benoit Goessens EVP Supplier Developmen Experienced leadership Eric Ceresnie SVP, Corporate Development & Finance LOEWS Kathy Glovennell Sales Director Susan Peters Former SVP HR, General Electric General Electric Strong board with diverse, relevant experience Rob Marlow Chief Information Officer Aaron Hauck Sales Director Rick Moss Former CFO, Hanesbrands HANES Brands Inc CHATTEM Colin Campbell Canada GM Shanna Peterson Human Resources Patrick Chung VP Finance, Serruye Private Equity SPE CONFIDENTIAL Deloitte. Gerry Cartwell SVP Supply Chain Zonne Kuhlman Director Customer Service Melisa Denis Retired Lead Partner, KPMG KPMG enactus 8#10Hydrofarm services a large and rapidly growing market agriculture, food & related industries ~$1tn Commercial North American cannabis market 22% CAGR United States Canada $14bn $12bn 2019 $2bn $37bn $60 $31bn $65bn Global CEA market (incl, cannabis) Global CEA market 16% CAGR $65bm 2019 -$48bn Consumer gardening & growing $118bn HYDROFARM Source: industry reports Global vertical farming market 24% CAGR 2024 2023 Our customers' key end markets $3bn 2019 $7bn 2023 Lighting Grow Media Supplies $8bn ~$8bn Global CEA wholesale HVAC Equipment +13% 19-25 CAGR $17bn 2019 2025E Our total addressable market CONFIDENTIAL Represent Hydrofarm's current categories Nutrients#11We expect accelerated cannabis market growth resulting from state legislative changes and increasing popular support 66% of the population does not have access to legal adult-use cannabis 52% 41% S 2010 Do you think the use of marijuana should be made legal, or not?¹ -Yes --No 6% live in states that legalized adult-use on Nov 3, 2020 50% 3 45% HM 2011 52% 45% 2013 Sources: Pew Research Pull Database, Census data Adult-use not yet legal Adult-use legalized November 3, 2020 HYDROFARM Note: Data for 2012 was not availabic 52% 45% 2014 53% 44% 2015 34% of the population is in states that are in active consideration for expanded cannabis laws 53% 37% 1 2016 61% 37% 2017 MB Active consideration adult-use Active consideration medical use 62% 34% CONFIDENTIAL 2018 67% 32% 2019 10#12Our margin advantaged proprietary & preferred brand portfolio delivers comprehensive hydroponic & CEA solutions with meaningful room to grow Durables (-1/3 of sales) Significant margin benefit Distributed Preferred Proprietary Proprietary (-40%) Preferred (-20%) Lighting HYDROFARM Source: Power B PHANTOM PHOTOBIO digilux ogrobrite RAPTOR ANTUM JUMP START ANT XTRASUN Corporate development opportunities Equipment Active AQUA ACTIVE AIR autopilot PE-BAY FAMILY anden GREE JETFAN Gorilla ATMOSPHERE REVELRY IGS Supplies Active AQUA JUMP START active eye EXTRACTIT TRIM FAST PRIVATE RESERVE Jeffan ENVIRO GUARD KEEX Safer dirt INB STACK! TROBAD Consumables (-2/3 of sales) Grow Media GROWIT COMMERCIAL POX FARM aurora Corporate development/ target M&A GEOLITE BIOBIZZ Coast of Maine Nutrients CONFIDENTIAL Cutting Edge APTUS Procidic BioSafe BIOBIZZ End-to-end category coverage through innovative, well-recognized proprietary and preferred brands MUN FARM BIG 11#13Select proprietary brands - organically launched, constantly innovating PHOTOBIO ACTIVE AIR PHANTOM Market leading reliability, light output and efficiency with high penetration in retail, commercial Launching new LED technology in 2020 Commercial DE Open Reflector 24 patents & 60 registered trademarks HYDROFARM Focus on innovation and data driven performance Re-launching an improved offering alongside "endorser" parent brand Phantom in fall 2020 X3, 340W, 100-277V, $4 spectrum Global R&D teams based in China and Canada GROW!T COMMERCIAL Ground-breaking soilless growing Fans, filters, CO2 systems and media that work with any hydroponic system dehumidifiers Revitalizing line with new commercial coir in fall 2020 Commercial Coco, RapidRIZE Block Commercial Coco Loose OROWIT Continuously developing pipeline of next-generation proprietary products GROWIT cocd com LOOSE Outstanding value and quality in management of atmospheric conditions In-house core competencies in lighting and equipment Dehumidifier CONFIDENTIAL ActiveAQUA Premier line of hydroponic drainage equipment and systems Partner with experts to develop more effective consumables products Water chillers, pumps, pots, tubing, trays, benches and accessories Air Pump, 2 Outlets | Commercial Air Pump | Dual Diaphragm Air Pump Investing in multiple sources of supply both domestically and internationally 12#14Our robust infrastructure positions us to capitalize on rapidly growing markets Langley, BC Portland, OR Petaluma, CA Santa Fe Springs, CA Distribution centers HYDROFARM Denver, CO Cambridge, ON New Hudson, MI Fairless Hills, PA 00 88 -900k sq. ft. of distribution space in our North American distribution centers CONFIDENTIAL Distribution footprint can reach ~90% of U.S population in <48 hours Long-term relationships with network of -400 suppliers Serve >2k wholesale customers across multiple channels in North America Commercial sales and DMI programs enhance customer value proposition 13#15Growth strategies#16Our strategic framework Our industry premise Our value proposition Our growth strategies HYDROFARM Branded provider of all CEA needs Expand proprietary brand offering Capitalize on rapidly growing markets Innovation via R&D Increase brand coverage Marketing initiatives Adding strategic distribution relationships and preferred brands Relationship model National network Access to key end markets Gold standard in distribution & service Enabling wholesale network to effectively serve commercial growers Supply chain excellence Build commercial DMI program Securing customer success CONFIDENTIAL Acquire value enhancing businesses Acquire leading brands Add tech & capabilities Expand industry footprint Productivity enhancements to expand our operating margins 15#17Expand our proprietary & preferred brand offering in underweight categories Ample room to expand proprietary/preferred categories Proprietary & preferred Distributed Lighting Equipment Grow media Supplies Nutrients HYDROFARM Source: Company information We have four clear product mix growth levers Internal External Launch new products under existing brands Selectively create new brands Increase distribution of preferred brands Acquire value- enhancing brands and technologies PHANTOM GROW!T COMMERCIAL COCO COIR Cutting Edge SOLUTIONS 9 Leading brands CONFIDENTIAL Active AQUA FOX FARM PHANTOM PHOTOBIO APTUS PLANT CARE New technologies 16#18Adding strategic distribution relationships and preferred brands 2018 FOX FARM Cutting Edge SOLUTIONS EARTH JUICE Bountea HUMBOLDT NUTRIENTS ATMOSPHERE HYDROFARM Source: Company information 2019 APTUS PLANT CARE PureCropl GREE Coast of maine CHOWTH BENCE Procidic² 2020 RARE DANKNESS NUTRIENTS roots organics BIOBIZZ Pipeline CONFIDENTIAL We target 3 types of brands: 1) Self-distributed brands 2) Preferred brand conversions 3) New brands 17#19Proprietary DMI technology platform creates a simple, highly efficient supply chain and will help drive growth in the commercial segment What is DMI? Launched in 2019, the DMI model is a collaboration between Hydrofarm, re-sellers and cultivators to optimize inventory management and order fulfillment DMI manages Supplies: Consumables, Nutrients & Substrates, IPM Products Equipment: Lighting, Benching, Irrigation The DMI system has multiple benefits for growers ■Brings highly efficient, world-class supply chain management to an unstructured and fragmented industry Simplicity of a single supplier, standardization of systems HYDROFARM Source: Company information Services: Consumable Forecasting, Re-lamping ■ Industry-leading prices Maximizes cubic space in growing facilities, reduces inventory on hand creating space for new raw materials ■Helps reduce procurement team size requirements CONFIDENTIAL 18#20Hydrofarm is positioned as the acquirer of choice in a fragmented industry We think about M&A in three main categories: 1 2 3 Acquiring leading brands to enhance proprietary offering Tech-focused product portfolio expansion Consolidation of industry distributors HYDROFARM Source: Company information Hydrofarm can serve as the preferred acquirer in the industry A leading platform and industry data/insights make us the optimal partner Strong balance sheet post-IPO, public stock to serve as acquisition currency Synergy potential enhances our ability to compete for deals Management team brings excellent track record and experience with M&A execution with over 100 deals combined 100+ 40+ 15 CONFIDENTIAL Identified targets: Potential target companies with strategic fit. Many are existing suppliers Evaluated transactions: Reviewed transaction opportunities over the past two years Active pipeline: Ongoing discussions with potential targets Our active M&A pipeline represents significant financial upside 19#21Our various productivity initiatives are driving significant margin expansion SKU optimization Number of active U.S. SKUs 31% decrease 5,400 3,700 2019 2020 Strategic reduction of SKUS has allowed us to decrease supply chain costs while improving both our top and bottom lines Elimination of redundancies has created a more cost- effective supply chain Customer Investment program % gross-to-net spend Significant improvement Q3 YTD 2019 Q3 YTD 2020 Designed effective customer investment program to improve gross-to-net spend Targeted trade spending to drive proprietary and preferred brand growth Favorable sales mix Proprietary and exclusive brand sales as Freight costs % of sales a % of sales Source: Company information, management estimates HYDROFARM Note: 198A excludes depreciation and stock based compensation Significant improvement -60% Q3 YTD 2019 Q3 YTD 2020 Focused effort to drive growth in our margin advantaged proprietary and preferred brands ☐Multi-faceted effort includes sales, marketing and product development teams Supply chain, logistics optimization Significant improvement Q3 YTD 2019 Q3 YTD 2020 Optimized freight via improved sourcing and reduced intra- warehouse shipments Enhanced forecasting and inventory planning resources Targeting double digit EBITDA margin in the medium term CONFIDENTIAL Operating leverage through scale SG&A¹ as % of net sales Significant improvement 14.0% 12.4% Q3 YTD 2019 Q3 YTD 2020 Strong profitability growth driven by improved COGS and SG&A efficiencies Significant margin opportunity as fixed costs are leveraged and operations are optimized 20#22Financial overview#23John Lindeman Chief Financial Officer Years of experience Hydrofarm: <1 year ■ Industry: 21 years HYDROFARM Background and key accomplishments Joined Hydrofarm as Chief Financial Officer in 2020 From 2015 until assuming his current role at Hydrofarm, John served as Chief Financial Officer and Corporate Secretary at Calavo Growers, Inc. (NASDAQ: CVGW), a global avocado industry leader and expanding provider of valued-added fresh food Has held various leadership positions within the finance and investment banking industries, including serving as managing director at Sageworth Trust Company, a family office and private trust company. managing director and co-head of the consumer and retail group at Janney Montgomery Scott, managing director at Stifel Nicolaus and principal at Legg Mason Prior to joining Legg Mason, John was a Manager at PricewaterhouseCoopers LLP Previous experience Calavo A family of fresh food CONFIDENTIAL STIFEL Janney pwc 22#24Our flywheel for driving shareholder value Reinvest into internal and external (M&A) opportunities HYDROFARM Significant organic and inorganic growth opportunity Long-term target of 20%+ EBITDA growth IPO growth capital and free cash flow fueling our competitive strengths Delivering margin enhancement CONFIDENTIAL 23#25History of consistent top-line growth with strong acceleration in the last 4 quarters Net sales Quarterly net sales $30mm 2005 $163mm 2010 17% CAGR $225mm 2015 Following a decade of +15% CAGR, the U.S. market experienced a reset in 2018 driven by regulatory challenges in California which we believe to be an anomaly $235mm $212mm 2018 2019 $309mm LTM September 2020 Source: Company information HYDROFARM Note: Net sales in Q4 2019 demonstrate natural seasonality in the business +27% $60mm Q3 2019 +30% $54mm Q4 2019 ¹ YOY growth +19% $67mm Q1 2020 +41% $91mm Q2 2020 CONFIDENTIAL +60% $97mm Q3 2020 24#26Top-line growth and margin enhancement drivers Revenue drivers Gross profit drivers Bottom- line drivers End-market growth Proprietary and preferred brand mix shift Operating leverage Brand marketing and product innovation Customer investment program Debt reduction DMI rollout Supply chain/logistics efficiency Tax savings from NOLS Key metrics $255mm -17% Q3 YTD 2020 net sales Q3 YTD 2020 gross margin CONFIDENTIAL 18.7% +680bps YOY (Q3 2020) gross margin expansion 2005-Sept. 2020 net sales CAGR 6.3% +840bps YOY (Q3 2020) Adj. EBITDA¹ margin expansion Q3 YTD 2020 Adj. EBITDA¹ margin Source: Company information and management estimates HYDROFARM Note: Ad EBITDA margin is a non-GAAP measure, which is obtained by dividing Adi EBITDA by net sales, see reconciliation to the nearest GAAP measure at the end of this presentation 25#27Sales growth has continued to accelerate in 2020 Weekly gross sales ($mm) $10 $9 $8 $7 $6 $5 $4 $3 $2 $1 $0 Oct-19 We experience some seasonality, with Q2 and Q3 generally being stronger Q4'19 30% YoY net sales growth Nov-19 Dec-19 Jan-20 HYDROFARM Source: Company information -Current year COVID-19 shelter in place Q1'20 19% YoY net sales growth Feb-20 Mar-20 Prior year Re-stocking of inventory Apr-20 Q2'20 41% YoY net sales growth May 20 Strong post-COVID performance in spite of several known headwinds which are now behind us: Inventory stocking - Light inventory positions in Q1 and early Q2 resulted in some missed sales ■China supply chain - Disruption of Chinese equipment suppliers due to COVID shutdowns Jun-20 Jul-20 Q3'20 60% YoY net sales growth Aug-20 CONFIDENTIAL Sep-20 26#282020 YTD performance is reflective of both our topline growth drivers and margin enhancement strategies Net sales 41% YoY growth $181mm $255mm Q3 YTD 2019 Q3 YTD 2020 Top-line growth accelerated across the period 34% volume + 7% price/CIP Volume across all brand categories with particular strength in proprietary and preferred Price includes % GTN Impact (customer Investment program) HYDROFARM compensation Gross profit % margin 121% YoY growth 11.9% $22mm Q3 YTD 2019 18.7% $48mm Q3 YTD 2020 Gross profit margin improvement of -680bps driven by improved gross-to-net, an increase in proprietary and preferred brand mix, and freight cost optimization Adj. EBITDA¹ ~840bps margin improvement (2.1%) 6.3% % margin ($4mm) Q3 YTD 2019 CONFIDENTIAL Q3 2020 net sales up -60% YoY with adj. EBITDA margin of -7.7% $16mm Q3 YTD 2020 Emphasis on our higher margin brands has boosted our Adj. EBITDA margin Operating leverage as SG&A² as a % of net sales is down-160bps Source: Company information Note: Adj. EBITDA margin is a non-GAAP messure, which is obtained by dividing Adj. EBITDA by net sales, see reconciliation to the rearest GAAP messure at the end of this presentation: 50&A excludes depreciation and stock-based 27#29Given strong industry tailwinds and our growth and profitability enhancing strategies, we aim to deliver 20%+ EBITDA growth Expand our proprietary and preferred offering Capitalize on rapidly growing end markets Mid-teens+ organic topline growth HYDROFARM Source: Management estimates Productivity gains High-teens EBITDA growth CONFIDENTIAL Fragmented industry = significant M&A opportunities +20% EBITDA growth 28#30Hydrofarm is uniquely positioned to capitalize on the rapid growth in the cannabis and CEA industries Category topline momentum of +15% with accelerating legislative support and increasing consumer demand Opportunity to leverage our unique position in the value chain Unique pure-play "picks and shovels" supplier to the industry without "touching the plant" Likely consolidator of choice in highly fragmented industry Proven management team with public company CEO/CFO and deep experience base HYDROFARM HYDROFARM CONFIDENTIAL 29#31Appendix#32Hydrofarm's strong relationships with a global network of suppliers has created a meaningful moat around our business Supplier breakdown Spend with suppliers by country Netherlands 3% Poland 5% Canada 16% Other 9% China 24% United States 43% Suppliers by % of total supplier costs 9% 7% 5% 4% 4% 3% CONFIDENTIAL Commentary Spend is distributed broadly across many suppliers and categories Total spend of $200mm across ~400 suppliers ■>$1mm spend with ~40 suppliers No single supplier makes up more than 9% of total supplier costs ■Long-term relationships with key suppliers, with an average relationship for our top 20 suppliers in excess of 11 years HYDROFARM Note: Category breakdown accounts for top 80% of suppliers by spend: supplier breakdown only includes suppliers that account for at least $500k in costs 31#33We are optimizing our proprietary product sourcing through diversification of our supplier base Our lighting products are sourced globally from premier suppliers Reflector Hydrofarm patented European hammertone specular aluminum Armature Phantom branded integrated mounting Lamp socket European vossloh-schwabe socket 80%+ Proprietary share of the lighting category 27 parts Electronic ballast Patented ignition control high-precision microprocessor Double end lamp European sourced and manufactured arc-tube materials HYDROFARM Source: Company information and internal RF shielding made with high-grade components from Japan, U.S. and Europe 4 vendors Shifting lighting supply to further diversify our geographic split North America Asia Europe Current 7% 70% 23% CONFIDENTIAL Future 7% 26% 67% 32#34Adjusted EBITDA reconciliation $mm Net income Interest Taxes Depreciation and amortization Other income, net Stock-based compensation expense Impairment, restructuring, and other¹ Loss on debt extinguishment Adj. EBITDA 2018 (32.9) 11.6 (0.4) 8.3 (1.0) HYDROFARM (0.8mm (N) Other expenses ($0.2mm) 7.2 (7.2) 2019 Q3 YTD 2019 (40.1) (22.4) 13.5 9.8 (0.2) 5.2 (0.7) 7.0 (0.1) 0.2 10.0 0.7 (10.2) (0.3) 0.2 3.6 0.4 (3.8) CONFIDENTIAL Q3 YTD 2020 2.1 7.9 0.4 5.2 (0.1) 0.4 0.3 16.1 Source: Company information management estimates Note: For YTD 2020, includes costs and expenses related to the anticipated IPO ($0.3mm) For YTD 2019, includes costs and expenses related to 0) Corporate restructuring and severance payments ($2.1mm) (1) Various SEC filings, lender financial advisor oversight, and private placements of equity and refinancing initiatives ($1.5mm) For 2019, includes costs and expenses related to impairment of intangible assets related to Canadian acquisition ($5.4mm) (i) Restructuring costs including consulting costs to evaluate and complete recapitalization ($2.0mm) () Coets related to SEC filings ($1.0mmi (iv) Severance costs (50.8mm) 0) Costs related to earty lease termination and other expenses ($0.8mm) For 2015, Includes costs and expenses related to 0) Impairment of intangible assets ($2.7mm) 0) Restructuring costs including consulting costs to evaluate and complete recupitalization ($5,4mm) (8) Costs related to SEC fings 33