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Dec 31, 2023
Hydrofarm Q4 2023 Earnings Report
Hydrofarm announced its Q4 and full year 2023 results, showing significant improvement in net loss and adjusted EBITDA for both periods, with a 2024 outlook calling for lower net sales, positive adjusted EBITDA, and positive free cash flow.
Key Takeaways
Hydrofarm's Q4 2023 results showed a decrease in net sales to $47.2 million, but an improvement in gross profit to $8.4 million and a reduced net loss of $(15.2) million. Adjusted EBITDA also improved to $(0.6) million. The company's restructuring plan and cost-saving efforts contributed to positive Adjusted EBITDA and Free Cash Flow for the full year 2023.
Net sales decreased to $47.2 million compared to $61.5 million in the prior year period.
Gross profit increased to $8.4 million compared to a gross loss of $(0.5) million in the prior year period, with gross profit margin increasing to 17.9%.
Net loss improved to $(15.2) million compared to a net loss of $(35.3) million in the prior year period.
Adjusted EBITDA improved to $(0.6) million compared to $(8.4) million in the prior year period.
Forward Guidance
The Company is providing the following outlook for the full fiscal year 2024: Net sales to decrease low to high teens in percentage terms. Adjusted EBITDA that is positive. Free Cash Flow that is positive.
Positive Outlook
- Improved year-over-year Adjusted Gross Profit Margin resulting primarily from cost savings associated with restructuring and related productivity initiatives.
- Improved year-over-year Adjusted Gross Profit Margin resulting primarily from an expectation of minimal non-restructuring inventory reserves or related charges.
- Reduced year-over-year Adjusted SG&A expense resulting primarily from full year benefit of headcount reductions completed in 2023.
- Reduced year-over-year Adjusted SG&A expense resulting primarily from further reductions in professional fees, facilities and insurance expenses.
- Reduction in inventory and net working capital helping to generate positive Free Cash Flow for the full year.
Challenges Ahead
- Net sales to decrease low to high teens in percentage terms.
Historical Earnings Impact
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