Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM), a cannabis-focused manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture, announced its financial results on Tuesday for its first quarter ended March 31, 2024.
"We are pleased with our first quarter results, as we delivered adjusted gross profit margin expansion for the fifth consecutive quarter driven by elevated operational productivity," Bill Toler, chairman and CEO of Hydrofarm said.
Q1 2024 Financial Highlights
- Net sales decreased to $54.2 million compared to $62.2 million in the prior year's period.
- Gross profit decreased to $10.9 million, compared to $11.4 million in the same quarter of last year.
- Gross profit margin increased to 20.2% of net sales compared to 18.3% in the first quarter of fiscal 2023.
- Adjusted gross profit margin increased to 23.4% of net sales compared to 22.6% in the prior year's period.
- Net loss improved to $12.6 million compared to $16.8 million in the corresponding quarter of 2023.
- Adjusted EBITDA came in positive at $0.3 million compared to an adjusted EBITDA loss of $2.1 million in the first three months of fiscal 2023.
- Selling, general and administrative expenses totaled $19.6 million, compared to $24.4 million in the prior year's period.
- Cash used in operating activities and free cash flow improved by $6.7 million and $6.9 million, respectively.
See also: Restructuring Plan Pays Off For Ancillary Cannabis Co. Despite YoY Net Sales Drop In Q4
Full Year 2024 Outlook
The Shoemakersville, Pennsylvania-based company also reaffirmed its full-year 2024 outlook:
- Net sales to decrease low to high teens in percentage terms.
- Adjusted EBITDA that is positive.
- Free cash flow that is positive.
"Our restructuring plan has been effective so far, and we still expect to realize further cost savings in 2024," Toler explained. "As a result of our accomplishments, we are reiterating our 2024 guidance of positive Adjusted EBITDA and positive free cash flow."
Toler added the company's team is encouraged by recent U.S. regulatory developments related to rescheduling of cannabis.
"Our focus remains on selling higher margin products, and despite industry softness, we are confident in the fundamentals of our business and are optimistic about our opportunity for growth," he added.
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HYFM Price Action
Hydrofarm's shares traded 0.01% higher at $0.9237 per share during the pre-market session on Tuesday morning.