Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) release preliminary unaudited financial results for its second quarter ended June 30, 2022, revealing net sales estimated between $96.0 million to $97.5 million, as compared to $133.8 million for the three months ended June 30, 2021, a decrease of approximately 28% calculated using the midpoint of the range.
Preliminary Q2 2022 Financial Highlights
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Net loss expected to range between ($210.4) million and ($200.4) million, as compared to net income of $2.3 million for the three months ended June 30, 2021.
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Adjusted EBITDA, which was impacted by the $10.2 million inventory reserve, estimated to be between ($8.4) million to ($6.9) million, as compared to $16.2 million for the three months ended June 30, 2021.
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As of June 30, 2022, the company had $27.4 million in cash, cash equivalents and restricted cash, an aggregate principal amount of debt outstanding of $126.7 million, $15.3 million in contingent payments and approximately $71 million of available borrowing capacity under its revolving credit agreement.
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The company decreased its net debt by approximately $14.1 million during the second quarter by improving its working capital position and controlling costs. The company was in compliance with all debt covenants as of June 30, 2022.
Bill Toler, chairman and CEO, stated, “Sales trends in July suggest that the overall industry continues to face headwinds and that typical seasonal patterns may not apply for the duration of this year. For these reasons, we are revising downward our estimates for the remainder of the year. While we expect the industry to return to growth in the future, as highly populated states in the Eastern U.S. actively implement adult-use cannabis legislation and more mature states in the Western U.S. normalize, predicting the exact timing of a return to historical growth remains a challenge for the industry. As a result, we will continue to focus on further cost-saving opportunities and liquidity actions to ensure that our leadership position in the hydroponics industry strengthens during this industry downturn.”
Updated outlook for the full fiscal year 2022:
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Net sales of approximately $330.0 million to $347.0 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.
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Adjusted EBITDA, which is 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 after market close at 4:30 p.m. ET.
Photo by Giorgio Trovato on Unsplash
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