Hydrofarm Shares Trading Higher On Reaffirmed 2022 Full Year Outlook

Hydrofarm Holdings Group, Inc. HYFM Q3 2022 net sales decreased 40% to $74.2 million compared to $123.8 million in Q3 2021.

Q3 2022 Highlights vs. Q3 2021

• Gross profit decreased to $5.9 million, or 7.9% of sales, during the third quarter of 2022 compared to $30.0 million, or 24.2% of sales in the prior year.

• 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.

• Adjusted EBITDA was $(9.0) million, or (12.2)% of net sales, for the third quarter of 2022, compared to $16.1 million, or 13.0% of net sales, in the third quarter of 2021.

Reaffirming Full Year 2022 Outlook:

• Net sales of approximately $330 million to $347 million.

• Adjusted EBITDA of approximately $(25) million to $(16) million.

Bill Toler, chairman and CEO of Hydrofarm, stated, “While our third quarter results were below last year due to the persistent and well acknowledged industry recession, our underlying performance was generally in-line with our internal expectations. Moreover, our strong cash flow from operating activities exceeded our expectations as we generated positive free cash flow for the second quarter in a row. Together, these results demonstrate our ability to navigate the challenging operating environment while the broader industry finds its way through supply/demand imbalances, and as such, we are reaffirming our full year 2022 outlook ranges for net sales and Adjusted EBITDA."

Balance Sheet and Liquidity

As of September 30, 2022, the company had $16.5 million in cash and an aggregate principal amount of debt outstanding of $126.3 million which consisted of approximately $124.1 million in principal balance on its term loan and approximately $2.2 million in finance leases and other debt.

Price Action

Hydrofarm shares were trading 11.11% higher at $2.3 during Thursday’s pre-market session.

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Photo by Giorgio Trovato on Unsplash

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