Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) reported preliminary income statement results for the second quarter ended June 30, 2022, with net sales estimated between $96.0 million and $97.5 million, in comparison to $133.8 million for the three months ended June 30, 2021, a decrease of about 28% calculated using the midpoint of the range.
Preliminary Q2 2022 Financial Highlights
- A net loss of between ($210.4) million and ($200.4) million is predicted, compared to a net income of $2.3 million for the three months ended June 30, 2021.
- Adjusted EBITDA, influenced by the $10.2 million inventory reserve, is expected to range from $8.4 million to $6.9 million for the three months ended June 30, 2021, compared to $16.2 million for the same period last year.
- As of June 30, 2022, the firm had $27.4 million in cash, cash equivalents, restricted cash, $126.7 million in total debt outstanding, $15.3 million in contingent payments, and $71 million in standby in borrowing capacity under its credit arrangement.
During the second quarter, the company reduced its net debt by about $14.1 million by improving its working capital position and reducing costs. As of June 30, 2022, the company complied with all loan covenants.
"Sales figures in July imply that the broader industry continues to face headwinds and that usual seasonal patterns may not apply for this year," said Bill Toler, chairman, and CEO. As a result, we are lowering our estimates for the rest of the year downward. While we anticipate that the industry will return to growth in the future as highly populated states in the Eastern United States actively implement adult-use cannabis legislation and more mature states in the Western United States normalize, estimating the exact timing of a return to historical growth continues to remain a difficulty for the industry. As a result of this, we will continue to focus on additional cost-cutting options and liquidity steps to improve our leadership position in the hydroponics market during this industry slump."
Updated Outlook for the Full Fiscal Year 2022:
- Net Sales of approximately $330.0 million to $347.0 million, which assumes similar sales levels to those experienced from the late second quarter through July 2022, continue over the remaining months in the fiscal year, combined with some further reduction to account for the holiday-shortened months in the fourth quarter.
- Adjusted EBITDA, impacted by $13.4 million of inventory reserves in the year-to-date period, of negative ($25) million to ($16) million, which assumes no material increase in the amount of inventory or accounts receivable reserves.
Second Quarter 2022 Results
Full second quarter results will be discussed during the upcoming Hydrofarm earnings conference call, scheduled for August 9, 2022, at 4:30 p.m. ET.
Featured Image: Megapixl @Patongens
