h3 Hydrofarm Holdings Group Inc Reports Second Quarter 2024 Financial Resultsh3p Hydrofarm Holdings
Intellectia.AI Updated: 1970-01-01
Hydrofarm Holdings Group, Inc. Reports Second Quarter 2024 Financial Results
Hydrofarm Holdings Group, Inc. ("Hydrofarm" or the "Company") (NASDAQ:HYFM), a leading independent manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture, today announced its financial results for the second quarter ended June 30, 2024.
Key Financial Metrics
| Metric | Q2 2023 | Q2 2024 | Year-over-Year Change |
|---|---|---|---|
| Net Sales | $63.1 million | $54.8 million | -13.1% |
| Gross Profit | $14.5 million | $10.9 million | -24.8% |
| Gross Profit Margin | 23.0% | 19.8% | -3.2 pp |
| Adjusted Gross Profit(1) | $17.0 million | $13.3 million | -21.8% |
| Adjusted Gross Profit Margin(1) | 27.0% | 24.4% | -2.6 pp |
| Net Loss | $12.9 million | $23.5 million | -82.2% |
| EPS | $(0.28) | $(0.51) | -82.1% |
| Adjusted EBITDA(1) | $2.5 million | $1.7 million | -32.0% |
The company experienced significant year-over-year declines across most key financial metrics, driven primarily by reduced sales volume due to an oversupply in the cannabis industry and lower productivity in select manufacturing facilities. Despite the challenges, Hydrofarm managed to achieve positive Adjusted EBITDA for the fourth time in the last five quarters, illustrating the effectiveness of its restructuring and cost-saving initiatives.
Revenue Performance by Segment
| Segment | Q2 2023 | Q2 2024 |
|---|---|---|
| Hydroponics Equipment & Supplies | $63.1 million | $54.8 million |
Segment revenue saw a notable decline, which was strongly influenced by an oversupply in the cannabis sector. This impacted the volume/mix of products sold, leading to a 13.1% decrease in net sales compared to the prior-year period.
Executive Commentary
Bill Toler, Chairman and Chief Executive Officer of Hydrofarm, remarked, "In the second quarter we delivered positive Adjusted EBITDA for the fourth time in the last five quarters, illustrating the effectiveness of our restructuring plan and related cost savings efforts. We also increased our Adjusted Gross Profit Margin on a sequential basis, as we continue to strategically focus on higher margin proprietary brands and enhancing our operational efficiency."
Forward Guidance
The company reaffirmed its full-year 2024 outlook on key metrics: - Net sales are expected to decrease in the low to high teens in percentage terms. - Adjusted EBITDA is anticipated to be positive. - Free Cash Flow is expected to be positive.
Stock Price Movement
After the earnings release, Hydrofarm's stock price experienced a slight decline of 0.6%.
Conclusion
Hydrofarm continues to navigate challenging industry conditions, marked by an oversupply in the cannabis market, while focusing on higher-margin products and operational efficiencies to sustain profitability. The company remains committed to long-term fundamentals and growth opportunities despite short-term financial setbacks.
(1) Adjusted metrics are non-GAAP financial measures.
