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Sep 30, 2022
Hydrofarm Q3 2022 Earnings Report
Reported a decrease in net sales and gross profit due to challenging industry conditions, but generated positive free cash flow and reaffirmed full-year outlook.
Key Takeaways
Hydrofarm Holdings Group reported a decrease in net sales to $74.2 million compared to $123.8 million in the prior year period. The company experienced a net loss of $(23.5) million, or $(0.52) per diluted share, compared to net income of $17.3 million, or $0.37 per diluted share in the third quarter of 2021. They generated positive Free Cash Flow of $5.6 million. The company reaffirmed its full year 2022 outlook for net sales and adjusted EBITDA.
Net sales decreased to $74.2 million compared to $123.8 million in the prior year period.
Gross Profit decreased to $5.9 million compared to $30.0 million in the prior year period.
Net loss was $(23.5) million, or $(0.52) per diluted share, compared to net income of $17.3 million, or $0.37 per diluted share in the prior year period.
Adjusted EBITDA decreased to $(9.0) million compared to $16.1 million in the prior year period.
Hydrofarm
Hydrofarm
Forward Guidance
The Company is reiterating its full year 2022 outlook with net sales of approximately $330 million to $347 million and Adjusted EBITDA of $(25) million to $(16) million.
Positive Outlook
- Reaffirming full year 2022 outlook for net sales of approximately $330 million to $347 million.
- Reaffirming full year 2022 outlook for Adjusted EBITDA of approximately $(25) million to $(16) million.
- Assumes similar sales levels in recent months continue over the remaining months in the fiscal year.
- Assumes some further reduction due to holiday shortened months in the fourth quarter.
- Assumes no further material increase in the $19 million of inventory and accounts receivable reserves and related charges recorded during the nine months year-to-date.
Challenges Ahead
- Net sales are expected to be lower than the previous year.
- Adjusted EBITDA is expected to be negative.
- Outlook assumes some further reduction due to holiday shortened months in the fourth quarter.
- Outlook assumes no further material increase in inventory and accounts receivable reserves and related charges.
- Variability, complexity and low visibility with respect to certain items, including, but not limited to, impairment, certain potential future acquisition expenses, and the potential tax implications of these estimated expenses.