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Sep 30, 2021
Hydrofarm Q3 2021 Earnings Report
Hydrofarm's financial results increased in Q3 2021, driven by net sales growth and improved gross profit.
Key Takeaways
Hydrofarm Holdings Group reported a 28.1% increase in net sales, a 64.9% increase in gross profit, and a significant increase in net income attributable to common stockholders. Adjusted EBITDA also saw a substantial increase. The company reaffirmed its updated full-year 2021 outlook.
Net sales increased by 28.1% to $123.8 million compared to the prior year period.
Gross profit increased by 64.9% to $30.0 million, with gross margin improving to 24.2%.
Net income attributable to common stockholders was $17.3 million, or $0.37 per diluted share.
Adjusted EBITDA increased by 116.7% to $16.1 million.
Hydrofarm
Hydrofarm
Forward Guidance
The company reaffirmed its updated outlook for the full fiscal year 2021, expecting net sales growth between 37% and 43%, or approximately $470.0 million to $490.0 million, and Adjusted EBITDA of $47.0 million to $53.0 million, representing margin expansion to approximately 10.0% to 11.0% for the full fiscal year.
Positive Outlook
- Net sales growth between 37% and 43%, or approximately $470.0 million to $490.0 million.
- Adjusted EBITDA of $47.0 million to $53.0 million, representing margin expansion to approximately 10.0% to 11.0% for the full fiscal year.
- Partial period contributions from acquisitions.
- Full-year organic growth of approximately 18% to 23% and M&A growth of approximately 19% to 20%.
- Capital expenditures of approximately $8.0 to $10.0 million to support expansion to recently acquired manufacturing operations in addition to distribution center expansions.
Challenges Ahead
- Agriculture oversupply putting downward pressure on cannabis growing activity.
- Impacted results for the balance of the year due to oversupply.
- Organic growth heavily weighted toward the first half of fiscal 2021.
- M&A growth heavily weighted toward the second half of fiscal 2021.
- An estimated tax provision between $2.5 million and $3.5 million for the full year, excluding the large discrete tax benefit recognized in Q3.