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 financial results for its
third quarter ended September 30, 2023.
Third Quarter
2023 Highlights vs. Prior Year
Period:
- Net sales decreased to $54.2
million compared to $74.2 million.
- Gross Profit decreased to
$3.3 million compared to $5.9 million. Gross Profit
Margin decreased to 6.1% of net sales compared to 7.9%.
- Adjusted Gross Profit(1) increased
to $12.5 million compared to $7.8 million. Adjusted Gross
Profit Margin(1) increased to 23.0% of net sales compared to
10.5%.
- Net loss was $19.9 million
compared to net loss of $23.5 million.
- Adjusted EBITDA(1) increased to
$0.5 million compared to $(9.0) million.
- Inventory charges and accounts
receivable reserves impacted results in the quarter(2).
- Cash from operating activities of
$7.7 million and Free Cash Flow(1) of $6.9 million.
- Initiated a second phase of
restructuring plan, which includes U.S. manufacturing facility
consolidations, to improve efficiency and generate further cost
savings.
(1) Adjusted Gross Profit, Adjusted Gross Profit
Margin, Adjusted SG&A, Adjusted SG&A as a percent of net
sales, Adjusted EBITDA, and Free Cash Flow are non-GAAP measures.
For reconciliations of GAAP to non-GAAP measures see the
“Reconciliation of Non-GAAP Measures” accompanying the release.
(2) In Q3 2023, $1.2 million of inventory
charges negatively impacted Gross Profit, Adjusted Gross Profit,
Net Loss, and Adjusted EBITDA; while SG&A, Adjusted SG&A,
Net Loss, and Adjusted EBITDA were positively impacted by $0.7
million of benefits from recoveries of accounts receivable reserves
and write-downs. In Q3 2022, $4.4 million of inventory reserves and
related charges negatively impacted Gross Profit, Adjusted Gross
Profit, Net Loss, and Adjusted EBITDA; and accounts receivable
reserves of $1.1 million negatively impacted SG&A, Adjusted
SG&A, Net Loss, and Adjusted EBITDA.
Bill Toler, Chairman and Chief Executive Officer
of Hydrofarm, said, “We delivered positive adjusted EBITDA for the
second quarter in a row, and we saw improvement in Adjusted Gross
Profit Margin compared to 2022 as we successfully executed our cost
reduction measures and focused on higher margin products. We grew
our cash balance by nearly $6 million during the quarter as we
remain focused on managing working capital. Given the ongoing
industry softness, we are introducing the second phase of our
restructuring strategy to enhance operational efficiency, reduce
our manufacturing footprint in the U.S., and realize additional
future cost savings. We are encouraged by the progress we have
achieved so far this year and by recent US regulatory developments,
and we are confident in the long-term fundamentals of our business
going into 2024 and beyond.”
Third Quarter
2023 Financial Results
Net sales in the third quarter of 2023 decreased
to $54.2 million compared to $74.2 million in the third quarter of
2022, due to a 22% decline in volume of products sold and a 5%
decrease in price/mix of products sold. The decrease in volume was
primarily related to an oversupply in the cannabis industry. The
reduction in price/mix was mainly due to lower pricing in certain
categories including lighting and grow media products, as well as a
higher mix of lower-priced consumables relative to higher-priced
durable products.
The Company initiated a second phase of its
restructuring plan in the third quarter of 2023 primarily to
right-size its durable equipment manufacturing facilities to better
match the current levels of demand, while maintaining its high
standard of customer service. For the third quarter 2023, the
Company incurred estimated charges of $7.8 million for the second
phase of its restructuring plan, consisting primarily of non-cash
raw material inventory write-downs related to planned reductions in
storage facility space. Hydrofarm expects this second phase of
restructuring to result in cost savings of approximately $1.5
million annually.
Gross profit decreased to $3.3 million, or
6.1% of net sales, during the third quarter of 2023, compared to
$5.9 million, or 7.9% of net sales, in the prior year period.
The decrease was primarily due to $7.4 million of restructuring
charges and $1.2 million of non-restructuring inventory charges
incurred in the third quarter of 2023. Collectively, these charges
more than offset favorable gross profit from a higher proportion of
proprietary brand products sold, lower freight costs and improved
productivity in the current year, while also lapping $4.4 million
of inventory reserves and related charges recorded in the prior
year period. Adjusted Gross Profit(1) increased to
$12.5 million, or 23.0% of net sales, compared to
$7.8 million, or 10.5% of net sales, in the prior year period.
Adjusted Gross Profit(1) and Adjusted Gross Profit Margin(1)
increased primarily due to a significant decrease in inventory
reserves and related charges, a higher proportion of proprietary
brand products sold, improved productivity, and lower freight
costs. This margin improvement was aided by the first phase of the
restructuring plan and the related cost saving initiatives.
Selling, general and administrative (“SG&A”)
expense was $19.5 million, compared to $26.2 million in
the prior year period and Adjusted SG&A(1) was
$12.0 million, compared to $16.8 million in the prior
year period. The decrease in SG&A and Adjusted SG&A(1) was
primarily due to a reduction in headcount, accounts receivable
reserves, and professional fees, which was aided by the Company's
restructuring plan and related cost saving initiatives.
Net loss was $19.9 million, or $0.44 per
diluted share, compared to a net loss of $23.5 million, or
$0.52 per diluted share, in the prior year period. The improvement
was primarily due to lower SG&A expenses.
Adjusted EBITDA(1) was $0.5 million,
compared to $(9.0) million in the prior year period. The
improvement related to higher Adjusted Gross Profit(1) and lower
Adjusted SG&A(1).
Balance Sheet, Liquidity and Cash
Flow
As of September 30, 2023, the Company had
$32.5 million in cash and approximately $28 million of
available borrowing capacity on its Revolving Credit Facility. The
Company finished the third quarter with $122.8 million in principal
balance on its Term Loan outstanding, $9.9 million in finance
leases, and $0.1 million in other debt outstanding. During 2023,
the Company has maintained a zero balance on its Revolving Credit
Facility and is in compliance with debt covenants as of
September 30, 2023.
The Company generated net cash from operating
activities of $7.7 million and invested $0.8 million in capital
expenditures, yielding Free Cash Flow(1) of $6.9 million during the
three months ended September 30, 2023. As a result of the
positive cash flow generated during the third quarter, the
Company's cash level increased by $5.8 million from the prior
quarter, to $32.5 million.
Full Year 2023 Outlook
The Company is reaffirming its full year 2023
outlook with the following assumptions and expectations:
- Net sales of
approximately $230 million to $240 million, and expect results to
be around the low end of the range.
- Adjusted EBITDA(1)
that is modestly positive for the full year.
- Free Cash Flow(1)
that is positive for the full year.
- Improved year-over-year Adjusted
Gross Profit and Adjusted Gross Profit margin resulting primarily
from (i) cost savings associated with restructuring and related
productivity initiatives and (ii) an expectation of minimal
additional non-restructuring inventory and accounts receivable
reserves or related charges beyond the amounts already incurred in
the nine months year-to-date.
- Reduction in inventory and net
working capital helping to generate positive Free Cash Flow(1) for
the full year.
The Company is updating the following
assumption:
- Revising its expectation of capital
expenditures downward to approximately $4.5 million to $5.5 million
from approximately $7.0 million to $9.0 million previously.
(1) Adjusted Gross Profit, Adjusted Gross Profit
Margin, Adjusted SG&A, Adjusted SG&A as a percent of net
sales, Adjusted EBITDA, and Free Cash Flow are non-GAAP measures.
For reconciliations of GAAP to non-GAAP measures see the
“Reconciliation of Non-GAAP Measures” accompanying the release.
Conference Call
The Company will host a conference call to
discuss financial results for the third quarter 2023 today at 4:30
p.m. Eastern Time. Bill Toler, Chairman and Chief Executive
Officer, and John Lindeman, Chief Financial Officer, will host the
call.
The conference call can be accessed live over the
phone by dialing 1-877-451-6152. The conference call will also be
webcast live and archived on the corporate website at
www.hydrofarm.com, under the “News & Events” section.
About Hydrofarm Holdings Group,
Inc.
Hydrofarm is a leading independent manufacturer
and distributor of branded hydroponics equipment and supplies for
controlled environment agriculture, including grow lights, climate
control solutions, growing media and nutrients, as well as a broad
portfolio of innovative and proprietary branded products. For over
40 years, Hydrofarm has helped growers make growing easier and more
productive. The Company’s mission is to empower growers, farmers
and cultivators with products that enable greater quality,
efficiency, consistency and speed in their grow projects.
Cautionary Note Regarding
Forward-Looking Statements
Statements contained in this press release,
other than statements of historical fact, which address activities,
events and developments that the Company expects or anticipates
will or may occur in the future, including, but not limited to,
information regarding the future economic performance and financial
condition of the Company, the plans and objectives of the Company’s
management, and the Company’s assumptions regarding such
performance and plans are “forward-looking statements” within the
meaning of the U.S. federal securities laws that are subject to
risks and uncertainties. These forward-looking statements generally
can be identified as statements that include phrases such as
“guidance,” “outlook,” “projected,” “believe,” “target,” “predict,”
“estimate,” “forecast,” “strategy,” “may,” “goal,” “expect,”
“anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,”
“should” or other similar words or phrases. Actual results could
differ materially from the forward-looking information in this
release due to a variety of factors, including, but not limited
to:
The market in which we operate has been
substantially adversely impacted by industry conditions, including
oversupply and decreasing prices of the products the Company's end
customers sell, which, in turn, has materially adversely impacted
the Company's sales and other results of operations and which may
continue to do so in the future; If industry conditions worsen or
are sustained for a lengthy period, we could be forced to take
additional impairment charges and/or inventory and accounts
receivable reserves, which could be substantial, and, ultimately,
we may face liquidity challenges; Although equity financing may be
available, the current stock prices are at depressed levels and any
such financing would be dilutive. The ongoing COVID-19 pandemic
could have a material adverse effect on the Company’s business,
results of operation, financial condition and/or cash flows;
Interruptions in the Company's supply chain, whether due to
COVID-19 or otherwise could adversely impact expected sales growth
and operations; We may be unable to meet the continued listing
standards of Nasdaq; Our restructuring activities may increase our
expenses and cash expenditures, and may not have the intended cost
saving effects; The highly competitive nature of the Company’s
markets could adversely affect its ability to maintain or grow
revenues; Certain of the Company’s products may be purchased for
use in new or emerging industries or segments, including the
cannabis industry, and/or be subject to varying, inconsistent, and
rapidly changing laws, regulations, administrative and enforcement
approaches, and consumer perceptions and, among other things, such
laws, regulations, approaches and perceptions may adversely impact
the market for the Company’s products; The market for the Company’s
products has been impacted by conditions impacting its customers,
including related crop prices and other factors impacting growers;
Compliance with environmental and other public health regulations
or changes in such regulations or regulatory enforcement priorities
could increase the Company’s costs of doing business or limit the
Company’s ability to market all of its products; Damage to the
Company’s reputation or the reputation of its products or products
it markets on behalf of third parties could have an adverse effect
on its business; If the Company is unable to effectively execute
its e-commerce business, its reputation and operating results may
be harmed; The Company’s operations may be impaired if its
information technology systems fail to perform adequately or if it
is the subject of a data breach or cyber-attack; The Company may
not be able to adequately protect its intellectual property and
other proprietary rights that are material to the Company’s
business; Acquisitions, other strategic alliances and investments
could result in operating and integration difficulties, dilution
and other harmful consequences that may adversely impact the
Company’s business and results of operations. Additional detailed
information concerning a number of the important factors that could
cause actual results to differ materially from the forward-looking
information contained in this release is readily available in the
Company’s annual, quarterly and other reports. The Company
disclaims any obligation to update developments of these risk
factors or to announce publicly any revision to any of the
forward-looking statements contained in this release, or to make
corrections to reflect future events or developments.
Contacts:Investor
ContactAnna Kate Heller / ICRir@hydrofarm.com
|
Hydrofarm Holdings Group, Inc. |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) |
(In thousands, except share and per share
amounts) |
|
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net sales |
|
$ |
54,168 |
|
|
$ |
74,155 |
|
|
$ |
179,397 |
|
|
$ |
283,040 |
|
Cost of goods sold |
|
|
50,859 |
|
|
|
68,291 |
|
|
|
150,234 |
|
|
|
253,231 |
|
Gross profit |
|
|
3,309 |
|
|
|
5,864 |
|
|
|
29,163 |
|
|
|
29,809 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
19,543 |
|
|
|
26,186 |
|
|
|
67,442 |
|
|
|
92,407 |
|
Impairments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
192,328 |
|
Loss from operations |
|
|
(16,234 |
) |
|
|
(20,322 |
) |
|
|
(38,279 |
) |
|
|
(254,926 |
) |
Interest expense |
|
|
(3,963 |
) |
|
|
(3,073 |
) |
|
|
(11,423 |
) |
|
|
(7,863 |
) |
Other income, net |
|
|
402 |
|
|
|
615 |
|
|
|
22 |
|
|
|
971 |
|
Loss before tax |
|
|
(19,795 |
) |
|
|
(22,780 |
) |
|
|
(49,680 |
) |
|
|
(261,818 |
) |
Income tax (expense) benefit |
|
|
(89 |
) |
|
|
(759 |
) |
|
|
82 |
|
|
|
11,671 |
|
Net loss |
|
$ |
(19,884 |
) |
|
$ |
(23,539 |
) |
|
$ |
(49,598 |
) |
|
$ |
(250,147 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.44 |
) |
|
$ |
(0.52 |
) |
|
$ |
(1.09 |
) |
|
$ |
(5.57 |
) |
Diluted |
|
$ |
(0.44 |
) |
|
$ |
(0.52 |
) |
|
$ |
(1.09 |
) |
|
$ |
(5.57 |
) |
Weighted-average shares of common stock outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
45,607,195 |
|
|
|
45,089,286 |
|
|
|
45,429,139 |
|
|
|
44,907,355 |
|
Diluted |
|
|
45,607,195 |
|
|
|
45,089,286 |
|
|
|
45,429,139 |
|
|
|
44,907,355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hydrofarm Holdings Group, Inc. |
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) |
(In thousands, except share and per share
amounts) |
|
|
|
September 30, |
|
December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
32,457 |
|
|
$ |
21,291 |
|
Accounts receivable, net |
|
|
17,070 |
|
|
|
17,227 |
|
Inventories |
|
|
80,101 |
|
|
|
111,398 |
|
Prepaid expenses and other current assets |
|
|
4,272 |
|
|
|
5,032 |
|
Total current assets |
|
|
133,900 |
|
|
|
154,948 |
|
Property, plant and equipment, net |
|
|
48,119 |
|
|
|
51,135 |
|
Operating lease right-of-use assets |
|
|
56,655 |
|
|
|
65,265 |
|
Intangible assets, net |
|
|
281,990 |
|
|
|
300,366 |
|
Other assets |
|
|
1,766 |
|
|
|
1,845 |
|
Total assets |
|
$ |
522,430 |
|
|
$ |
573,559 |
|
Liabilities and stockholders’ equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
13,028 |
|
|
$ |
13,633 |
|
Accrued expenses and other current liabilities |
|
|
8,023 |
|
|
|
13,208 |
|
Deferred revenue |
|
|
3,564 |
|
|
|
3,654 |
|
Current portion of operating lease liabilities |
|
|
8,505 |
|
|
|
9,099 |
|
Current portion of finance lease liabilities |
|
|
974 |
|
|
|
704 |
|
Current portion of long-term debt |
|
|
1,295 |
|
|
|
1,307 |
|
Total current liabilities |
|
|
35,389 |
|
|
|
41,605 |
|
Long-term operating lease liabilities |
|
|
49,843 |
|
|
|
56,299 |
|
Long-term finance lease liabilities |
|
|
8,956 |
|
|
|
1,200 |
|
Long-term debt |
|
|
117,169 |
|
|
|
117,461 |
|
Deferred tax liabilities |
|
|
2,684 |
|
|
|
2,685 |
|
Other long-term liabilities |
|
|
4,465 |
|
|
|
4,428 |
|
Total liabilities |
|
|
218,506 |
|
|
|
223,678 |
|
Commitments and contingencies |
|
|
|
|
Stockholders’ equity |
|
|
|
|
Common stock ($0.0001 par value; 300,000,000 shares authorized;
45,688,695 and 45,197,249 shares issued and outstanding at
September 30, 2023, and December 31, 2022,
respectively) |
|
|
5 |
|
|
|
5 |
|
Additional paid-in capital |
|
|
786,829 |
|
|
|
783,042 |
|
Accumulated other comprehensive loss |
|
|
(7,381 |
) |
|
|
(7,235 |
) |
Accumulated deficit |
|
|
(475,529 |
) |
|
|
(425,931 |
) |
Total stockholders’ equity |
|
|
303,924 |
|
|
|
349,881 |
|
Total liabilities and stockholders’ equity |
|
$ |
522,430 |
|
|
$ |
573,559 |
|
|
|
|
|
|
|
|
|
|
Hydrofarm Holdings Group, Inc. |
RECONCILIATION OF NON-GAAP MEASURES |
(In thousands, except share and per share
amounts) |
(Unaudited) |
|
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Reconciliation of Adjusted Gross Profit: |
|
|
|
|
|
|
|
|
Gross Profit (GAAP) |
|
$ |
3,309 |
|
|
$ |
5,864 |
|
|
$ |
29,163 |
|
|
$ |
29,809 |
|
Depreciation, depletion and amortization |
|
|
1,626 |
|
|
|
1,747 |
|
|
|
4,907 |
|
|
|
4,609 |
|
Restructuring expenses1 |
|
|
7,444 |
|
|
|
— |
|
|
|
9,401 |
|
|
|
— |
|
Acquisition and integration expenses5 |
|
|
— |
|
|
|
125 |
|
|
|
— |
|
|
|
4,492 |
|
Severance and other7 |
|
|
76 |
|
|
|
60 |
|
|
|
76 |
|
|
|
238 |
|
Adjusted Gross Profit (Non-GAAP) |
|
$ |
12,455 |
|
|
$ |
7,796 |
|
|
$ |
43,547 |
|
|
$ |
39,148 |
|
|
|
|
|
|
|
|
|
|
As a percent of net sales: |
|
|
|
|
|
|
|
|
Gross Profit Margin (GAAP) |
|
|
6.1 |
% |
|
|
7.9 |
% |
|
|
16.3 |
% |
|
|
10.5 |
% |
Adjusted Gross Profit Margin (Non-GAAP) |
|
|
23.0 |
% |
|
|
10.5 |
% |
|
|
24.3 |
% |
|
|
13.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit (GAAP) and Adjusted Gross Profit
(Non-GAAP) for the three and nine months ended September 30, 2023,
were negatively impacted by $1.2 million of inventory charges.
Gross Profit (GAAP) and Adjusted Gross Profit (Non-GAAP) for the
three and nine months ended September 30, 2022, were negatively
impacted by $4.4 million and $17.8 million, respectively, of
inventory reserves and related charges.
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Reconciliation of Adjusted SG&A: |
|
|
|
|
|
|
|
|
Selling, general and administrative (GAAP) |
|
$ |
19,543 |
|
|
$ |
26,186 |
|
|
$ |
67,442 |
|
|
$ |
92,407 |
|
Depreciation, depletion and amortization |
|
|
6,282 |
|
|
|
6,692 |
|
|
|
19,258 |
|
|
|
28,606 |
|
Restructuring expenses1 |
|
|
159 |
|
|
|
— |
|
|
|
401 |
|
|
|
— |
|
Stock-based compensation2 |
|
|
1,031 |
|
|
|
1,678 |
|
|
|
4,057 |
|
|
|
6,834 |
|
Acquisition and integration expenses5 |
|
|
39 |
|
|
|
742 |
|
|
|
39 |
|
|
|
2,610 |
|
Distribution center exit costs and other6 |
|
|
— |
|
|
|
37 |
|
|
|
— |
|
|
|
1,412 |
|
Severance and other7 |
|
|
72 |
|
|
|
193 |
|
|
|
956 |
|
|
|
986 |
|
Adjusted SG&A (Non-GAAP) |
|
$ |
11,960 |
|
|
$ |
16,844 |
|
|
$ |
42,731 |
|
|
$ |
51,959 |
|
|
|
|
|
|
|
|
|
|
As a percent of net sales: |
|
|
|
|
|
|
|
|
SG&A (GAAP) |
|
|
36.1 |
% |
|
|
35.3 |
% |
|
|
37.6 |
% |
|
|
32.6 |
% |
Adjusted SG&A (Non-GAAP) |
|
|
22.1 |
% |
|
|
22.7 |
% |
|
|
23.8 |
% |
|
|
18.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A (GAAP) and Adjusted SG&A (Non-GAAP)
for the three and nine months ended September 30, 2023, were
positively impacted by $0.7 million of benefits from recoveries of
accounts receivable reserves and write-downs. SG&A (GAAP) and
Adjusted SG&A (Non-GAAP) for the three and nine months ended
September 30, 2022, were negatively impacted by $1.1 million of
accounts receivable reserves.
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Reconciliation of Adjusted EBITDA: |
|
|
|
|
|
|
|
|
Net loss (GAAP) |
|
$ |
(19,884 |
) |
|
$ |
(23,539 |
) |
|
$ |
(49,598 |
) |
|
$ |
(250,147 |
) |
Interest expense |
|
|
3,963 |
|
|
|
3,073 |
|
|
|
11,423 |
|
|
|
7,863 |
|
Income tax expense (benefit) |
|
|
89 |
|
|
|
759 |
|
|
|
(82 |
) |
|
|
(11,671 |
) |
Depreciation, depletion and amortization |
|
|
7,908 |
|
|
|
8,439 |
|
|
|
24,165 |
|
|
|
33,215 |
|
Restructuring expenses1 |
|
|
7,603 |
|
|
|
— |
|
|
|
9,802 |
|
|
|
— |
|
Stock-based compensation2 |
|
|
1,031 |
|
|
|
1,678 |
|
|
|
4,057 |
|
|
|
6,834 |
|
Other income, net3 |
|
|
(402 |
) |
|
|
(615 |
) |
|
|
(22 |
) |
|
|
(971 |
) |
Impairments4 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
192,328 |
|
Acquisition and integration expenses5 |
|
|
39 |
|
|
|
867 |
|
|
|
39 |
|
|
|
7,102 |
|
Distribution center exit costs and other6 |
|
|
— |
|
|
|
37 |
|
|
|
— |
|
|
|
1,412 |
|
Severance and other7 |
|
|
148 |
|
|
|
253 |
|
|
|
1,032 |
|
|
|
1,224 |
|
Adjusted EBITDA (Non-GAAP) |
|
$ |
495 |
|
|
$ |
(9,048 |
) |
|
$ |
816 |
|
|
$ |
(12,811 |
) |
|
|
|
|
|
|
|
|
|
As a percent of net sales: |
|
|
|
|
|
|
|
|
Net loss (GAAP) |
|
(36.7 |
)% |
|
(31.7 |
)% |
|
(27.6 |
)% |
|
(88.4 |
)% |
Adjusted EBITDA (Non-GAAP) |
|
|
0.9 |
% |
|
(12.2 |
)% |
|
|
0.5 |
% |
|
(4.5 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss (GAAP) and Adjusted EBITDA (Non-GAAP)
for the three and nine months ended September 30, 2023, were
negatively impacted by $1.2 million of inventory charges and
positively impacted by $0.7 million of benefits from recoveries of
accounts receivable reserves and write-downs. Net Loss (GAAP) and
Adjusted EBITDA (Non-GAAP) for the three and nine months ended
September 30, 2022, were negatively impacted by $4.4 million and
$17.8 million, respectively, of inventory reserves and related
charges, and both periods were impacted by $1.1 million of accounts
receivable reserves.
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Reconciliation of Free Cash
Flow8: |
|
|
|
|
|
|
|
|
Net cash from operating activities
(GAAP)8: |
|
$ |
7,668 |
|
|
$ |
8,222 |
|
|
$ |
8,629 |
|
|
$ |
15,490 |
|
Capital expenditures of Property, Plant and Equipment (GAAP) |
|
|
(750 |
) |
|
|
(2,591 |
) |
|
|
(4,056 |
) |
|
|
(7,113 |
) |
Free Cash Flow
(Non-GAAP)8: |
|
$ |
6,918 |
|
|
$ |
5,631 |
|
|
$ |
4,573 |
|
|
$ |
8,377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to GAAP to Non-GAAP
reconciliations presented above (Adjusted Gross Profit, Adjusted
SG&A, Adjusted EBITDA, and Free Cash Flow):
- For the three and
nine months ended September 30, 2023, restructuring expenses
related primarily to non-cash inventory markdowns associated with
manufacturing facility consolidations, and the charges incurred to
relocate and terminate certain facilities in Canada.
- Includes
stock-based compensation and related employer payroll taxes on
stock-based compensation for the periods presented.
- Other income, net
related primarily to foreign currency exchange rate gains and
losses and other non-operating income and expenses. For the three
and nine months ended September 30, 2023, Other income, net
also included charges from Amendment No. 1 to the Term Loan.
- For the nine months
ended September 30, 2022, the Company recorded a goodwill
impairment charge of $189.6 million due to market softness in
demand in the U.S. and Canada and a $2.6 million impairment charge
associated with a note receivable that originated in 2019
associated with a third party independent processor.
- For the three and
nine months ended September 30, 2023, acquisition and
integration expenses primarily include charges incurred for certain
potential acquisitions. For the three and nine months ended
September 30, 2022, acquisition and integration expenses
included charges related to acquisitions completed in 2021,
including non-cash purchase accounting inventory adjustments,
transaction services and legal fees, as well as the impact of
changes in fair value of contingent consideration.
- For the three and
nine months ended September 30, 2022, this related to costs
incurred to exit and relocate distribution centers in California
and Pennsylvania including lease exit costs, transportation, and
labor related costs.
- For the three and
nine months ended September 30, 2023, Severance and other
charges primarily related to workforce reductions, and charges in
conjunction with a sale-leaseback transaction during the first
quarter of 2023. For the three and nine months ended
September 30, 2022, the charges included severance costs
related to workforce reductions.
- Gross proceeds of
$8.6 million received during the first quarter of 2023 from a
sale-leaseback of real estate located in Eugene, Oregon, was
classified as a financing activity and is not reflected in cash
flows from operating activities or Free Cash Flow.
Non-GAAP Financial Measures
We report our financial results in accordance
with generally accepted accounting principles in the U.S. (“GAAP”).
Management believes that certain non-GAAP financial measures
provide investors with additional useful information in evaluating
our performance and that excluding certain items that may vary
substantially in frequency and magnitude period-to-period from net
loss provides useful supplemental measures that assist in
evaluating our ability to generate earnings and to more readily
compare these metrics between past and future periods. These
non-GAAP financial measures may be different than similarly titled
measures used by other companies.
To supplement our condensed consolidated
financial statements which are prepared in accordance with GAAP, we
use “Adjusted EBITDA”, “Adjusted Gross Profit”, “Adjusted
SG&A”, “Free Cash Flow”, “Net Debt”, and “Liquidity” which are
non-GAAP financial measures. We also present certain of these
non-GAAP metrics as a percentage of net sales. Our non-GAAP
financial measures should not be considered in isolation from, or
as substitutes for, financial information prepared in accordance
with GAAP. There are several limitations related to the use of our
non-GAAP financial measures as compared to the closest comparable
GAAP measures.
We define Adjusted EBITDA
(non-GAAP) as net loss (GAAP) excluding interest expense, income
taxes, depreciation, depletion and amortization, stock-based
compensation including employer payroll taxes on stock-based
compensation, restructuring charges which represent fundamental
changes to our operations, and other non-cash, unusual and/or
infrequent costs (i.e., impairments, severance, acquisition and
integration expenses, distribution center exit costs, and other
income/expense, net), which we do not consider in our evaluation of
ongoing operating performance.
We define Adjusted EBITDA
(non-GAAP) as a percent of net sales as adjusted
EBITDA (as defined above) divided by net sales realized in the
respective period.
We define Adjusted Gross Profit
(non-GAAP) as gross profit (GAAP) excluding depreciation,
depletion, and amortization, restructuring charges, and other
non-cash, unusual and/or infrequent costs (i.e., severance and
other expenses, and acquisition and integration expenses), which we
do not consider in our evaluation of ongoing operating
performance.
We define Adjusted Gross Profit
Margin (non-GAAP) as a percent of net
sales as Adjusted Gross Profit (as defined above) divided
by net sales realized in the respective period.
We define Adjusted SG&A
(non-GAAP) as SG&A (GAAP) excluding depreciation, depletion,
and amortization, stock-based compensation including employer
payroll taxes on stock-based compensation, restructuring charges,
and other non-cash, unusual and/or infrequent costs (i.e.,
severance and other expenses, acquisition and integration expenses,
and distribution center exit costs), which we do not consider in
our evaluation of ongoing operating performance.
We define Adjusted SG&A
(non-GAAP) as a percent of net sales as Adjusted
SG&A (as defined above) divided by net sales realized in the
respective period.
We define Free Cash Flow
(non-GAAP) as Net cash from (used in) operating activities less
capital expenditures for property, plant and equipment. We believe
this provides additional insight into the Company's ability to
generate cash and maintain liquidity. However, Free Cash Flow does
not represent funds available for investment or other discretionary
uses since it does not deduct cash used to service our debt or
other cash flows from financing activities.
We define Liquidity as total
cash, cash equivalents and restricted cash, plus available
borrowing capacity on our Revolving Credit Facility.
We define Net Debt as total
debt principal outstanding plus finance lease liabilities, less
cash, cash equivalents and restricted cash.
Hydrofarm (NASDAQ:HYFM)
과거 데이터 주식 차트
부터 4월(4) 2024 으로 5월(5) 2024
Hydrofarm (NASDAQ:HYFM)
과거 데이터 주식 차트
부터 5월(5) 2023 으로 5월(5) 2024