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Jun 30, 2021
Hydrofarm Q2 2021 Earnings Report
Hydrofarm's financial performance improved significantly in the second quarter of 2021, marked by substantial revenue growth, enhanced profitability, and strategic acquisitions.
Key Takeaways
Hydrofarm Holdings Group reported a strong second quarter in 2021, with net sales increasing by 46.7% to $133.8 million and adjusted EBITDA more than doubling to $16.2 million. The company completed two acquisitions during the quarter and revised its full-year outlook upward, anticipating continued growth and profitability.
Net sales increased by 46.7% to $133.8 million compared to the prior year period.
Gross profit increased by 65.5% to $29.6 million, representing 22.1% of net sales.
Adjusted EBITDA increased by 127.5% to $16.2 million.
The company completed the acquisitions of HEAVY 16 and House & Garden during the quarter, expanding its proprietary consumable offerings.
Forward Guidance
Hydrofarm anticipates net sales growth between 45% and 50% and adjusted EBITDA of $55.0 million to $62.0 million for the full fiscal year 2021. These estimates include partial-period contributions from recent acquisitions.
Positive Outlook
- Net sales growth between 45% and 50%.
- Adjusted EBITDA of $55.0 million to $62.0 million, representing margin expansion to approximately 11.0% to 12.1% for the full fiscal year.
- Partial period contributions from the acquisitions of Heavy 16, House & Garden, Aurora Innovations and Greenstar Plant Products.
- Moderating organic growth in the second half augmented by acquisition growth from the completed transactions.
- An effective tax rate of 10% to 14% of pre-tax book income enabled by the utilization of tax credits and carryforwards.
Challenges Ahead
- The ongoing COVID-19 pandemic could have a material adverse effect on the Company’s business, results of operation, financial condition and/or cash flows.
- Interruptions in the Company's supply chain, whether due to COVID-19 or otherwise could adversely impact expected sales growth and operations.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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