Hydrofarm 2022 Net Sales Decline 28% To 344.5M, What About Profit?

Hydrofarm Holdings Group, Inc. HYFM net sales in 2022 decreased 28% to $344.5 million compared to $479.4 million in 2021.

Q4 2022 Financial Highlights vs. Prior Year Period:

• Net sales decreased 44% to $61.5 million compared to $110.4 million.

• Gross loss was $473,000 compared to gross profit of $18.7 million.

• Net loss was $35.3 million compared to net loss of $11.0 million.

• Adjusted EBITDA was negative $8.4 million compared to $4.9 million in the prior year period;

Fiscal Year 2022 Highlights vs. Prior Year:

• Gross profit decreased to $29.3 million compared to $101.5 million.

• Net loss decreased to $285.4 million compared to net income of $13.4 million.

• Adjusted EBITDA was negative $21.2 million compared to $47.1 million;

• As of December 31, 2022, the company had $21.3 million in cash and an aggregate principal amount of debt outstanding of $125.8 million which consisted of approximately $123.8 million in principal balance on its term loan and approximately $2.1 million in finance leases and other debt.

Bill Toler, chairman and CEO of Hydrofarm, stated, “While the current operating environment remains challenging, I am encouraged that we finished 2022 with our net sales coming in at the upper end of our previously provided outlook and that we generated positive free cash flow for the third quarter in a row. We have experienced sales stabilization over the last several months and are seeing some positive indicators that the industry is moving closer to a rebound. I am pleased with the many actions behind the restructuring initiative and related actions that our team has launched to right-size our business and become a leaner, more profitable company. We remain confident in the long-term strength of our business, as our disciplined approach to working capital and restructuring actions initiated in 2022 have put us in a healthy position heading into 2023 and beyond.”

Full Year 2023 Outlook:

• Net sales of approximately $290 million to $310 million.

• Adjusted EBITDA that is modestly positive.

• Positive free cash flow.

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