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Mar 31, 2021
Hydrofarm Q1 2021 Earnings Report
Hydrofarm reported strong first-quarter results, driven by increased net sales and improved gross profit.
Key Takeaways
Hydrofarm Holdings Group reported a strong start to 2021 with net sales increasing by 66.5% to $111.4 million and a significant rise in adjusted EBITDA to $9.9 million. The company also completed a follow-on equity offering, raising approximately $309.8 million, and acquired branded nutrient manufacturer, HEAVY 16.
Net sales increased by 66.5% to $111.4 million compared to the prior year period.
Gross profit increased by 100.8% to $23.2 million, representing 20.8% of net sales.
Net income attributable to common stockholders was $4.9 million, or $0.13 per diluted share, compared to a net loss of $3.7 million, or $0.18 per diluted share.
Adjusted EBITDA increased to $9.9 million compared to $1.6 million in the prior year period.
Forward Guidance
Hydrofarm anticipates net sales growth between 30% and 40% and adjusted EBITDA of $36.0 million to $42.0 million for the full year 2021.
Positive Outlook
- Net sales growth between 30% and 40%.
- Stronger growth in the first half of the year.
- Adjusted EBITDA of $36.0 million to $42.0 million.
- Full year margin expansion to approximately 8.1% to 8.9%.
- Expects to accelerate its growth plans, including potential future acquisitions, using the net proceeds from the recent equity offering and the future exercise of the Investor Warrants.
Challenges Ahead
- Moderating growth in the second half of the year.
- Additional annual facility expenses of approximately $2.0 to $3.0 million.
- Capital expenditures of approximately $4.0 to $5.0 million.
- An effective tax rate of 12% to 16% of pre-tax book income.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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