Hydrofarm Q2 2023 Financials: A Look At Margins, EBITDA, And Growth Outlook

Hydrofarm Holdings Group, Inc. HYFM reported its Q2 2023 financials Wednesday afternoon after market close.

• Net sales totaled $63.1 million, down from $97.5 million, yet gross profit surged to $14.5 million from $7.3 million, with a gross profit margin of 23.0%.
• Adjusted gross profit reached $17.0 million, up from $9.1 million, with an increased adjusted gross profit margin of 27.0%.
• Adjusted EBITDA saw a positive turnaround at $2.5 million from $(6.8) million.

CEO Bill Toler's Optimistic Vision: Strong Margins and Resilience Amid Industry Challenges

Bill Toler, CEO of Hydrofarm, emphasized strengthened margins through efficient cost measures and expressed confidence in the firm's future, despite industry challenges.

“In Q2, we achieved positive Adjusted EBITDA, a first since Q1 2022, propelled by robust gross margin expansion and impactful cost reductions. Our Adjusted SG&A is at its lowest since Q2 2021 pre-acquisitions. Executing our restructuring plan bolstered margins, enhancing our resilience amid industry challenges,” Toler said. “Aggressive working capital management lowered inventory and generated significant free cash flow, exceeding $8 million. Our progress is gratifying, and we maintain unwavering confidence in our business's long-term fundamentals.”

2023 Outlook 

The updated 2023 outlook anticipates net sales of $230-240 million, positive adjusted EBITDA, and encouraging free cash flow.

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Price Action: Shares of Hydrofarm were up 3.81% at $1.09 per share after the close Wednesday afternoon.

Photo by Markus Winkler on Unsplash.