Hydrofarm Holdings Group Inc. · Q2 2022 earnings

Briefing

Hydrofarm's financial performance declined due to industry challenges and inventory reserves.

Hydrofarm Holdings Group reported a decrease in net sales and gross profit for the second quarter of 2022, driven by an industry recession and inventory reserves. The company experienced a net loss, including a significant non-cash goodwill impairment charge. Despite these challenges, Hydrofarm is taking steps to lower costs and maintain liquidity.

• Net sales decreased to $97.5 million compared to $133.8 million in the prior year period.
• Gross profit decreased to $7.3 million compared to $29.6 million in the prior year period.
• Net loss was $(203.3) million, or $(4.53) per diluted share, compared to net income of $2.3 million, or $0.05 per diluted share in the prior year period.
• Adjusted EBITDA decreased to $(6.8) million compared to $16.2 million in the prior year period.

Headline financials

Revenue & EPS history

The Company is reiterating its full year 2022 outlook, which was updated on August 2, 2022: Net sales of approximately $330 million to $347 million, which assumes similar sales levels to those experienced from late second quarter through July 2022 continue over the remaining months in the fiscal year, combined with some further reduction to account for holiday shortened months in the fourth quarter. Adjusted EBITDA(1)(2), which is impacted by $13.4 million of inventory reserves in the year-to-date period, of $(25) million to $(16) million, which assumes no further material increase in the amount of inventory or accounts receivable reserves.