Hydrofarm reports $13.1M net loss amid third-quarter grow glut
Hydrofarm maintained its full-year outlook, expecting sales to decline in the “low to high teens” percentage range.
Pennsylvania-based Hydrofarm Holdings Group Inc. (Nasdaq: HYFM) financials took a hit in the third quarter as the hydroponics equipment maker continues to face pressure from oversupply issues plaguing cannabis more broadly.
Revenue dropped 18.8% to $44 million, falling short of analysts’ average estimate of $49.14 million. The decline was driven by a 13.7% decrease in sales volume and a 4.9% reduction in pricing, the company said.
The company posted a net loss of $13.1 million, versus a loss of $19.9 million in the same period last year.
Despite the top-line pressure, Chairman and CEO Bill Toler pointed to improvements in the company’s gross margins, which expanded to 19.4% from 6.1% a year earlier.
“We achieved significant adjusted gross profit margin year-over-year expansion in Q3 for the fifth time in the last six quarters, as our strategic focus on proprietary brands continues to deliver mix benefits and operational efficiencies,” Toler said in a statement.
The company has been working to streamline operations, cutting SG&A expenses by more than 10% versus last year. That was the ninth consecutive quarter of year-over-year reductions in adjusted SG&A expenses, according to the firm.
Hydrofarm maintained its full-year outlook, expecting sales to decline in the “low to high teens” percentage range. The company still anticipates positive adjusted EBITDA and free cash flow for 2024.
Cannabis hydroponic suppliers have been navigating persistent weakness in the cultivation side of cannabis, though some more successfully than others. Hydrofarm reported $24.4 million in cash and about $17 million in available credit at the end of September.
