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Dec 31, 2024
Hydrofarm Q4 2024 Earnings Report
Hydrofarm reported a decline in revenue and a widened net loss in Q4 2024 due to industry headwinds.
Key Takeaways
Hydrofarm reported Q4 2024 revenue of $37.3 million, a 20.9% decline year-over-year due to weaker demand in the cannabis industry. Net loss widened to $17.5 million, driven by lower sales and higher inventory reserves. Adjusted EBITDA fell to -$7.3 million, reflecting a challenging operating environment. The company maintained positive free cash flow of $2.4 million, supported by cost-cutting initiatives.
Q4 2024 revenue declined 20.9% to $37.3 million due to lower demand in the cannabis sector.
Net loss widened to $17.5 million, compared to $15.2 million in Q4 2023.
Gross profit margin fell to 4.9% from 17.9% in Q4 2023.
Adjusted EBITDA decreased to -$7.3 million from -$0.6 million in the prior year.
Forward Guidance
Hydrofarm expects revenue to decline 10-20% in FY2025 due to continued industry challenges, but anticipates improvement in Adjusted EBITDA and Free Cash Flow through cost-saving measures.
Positive Outlook
- Cost-saving initiatives expected to improve Adjusted EBITDA in 2025.
- Proprietary brand sales mix projected to increase, boosting margins.
- E-commerce growth and diversification into non-cannabis sectors remain strong.
- Further reductions in SG&A expected to enhance profitability.
- Capital expenditures to remain under $2 million, preserving cash flow.
Challenges Ahead
- Revenue expected to decline 10-20% in FY2025 due to industry weakness.
- Adjusted EBITDA expected to remain negative despite some improvement.
- Inventory challenges persist, impacting profitability.
- Higher restructuring costs anticipated due to ongoing cost-cutting initiatives.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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