Restructuring Plan Pays Off For Ancillary Cannabis Co. Despite YoY Net Sales Drop In Q4

Author: Jelena Martinovic | February 29, 2024 09:53am

Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) announced its financial results Thursday for the fourth quarter and full year ended Dec. 31, 2023, revealing a 23% year-over-year drop to $47.2 million in net sales.

"Successful execution of our restructuring plan and related cost savings efforts throughout the year enabled us to deliver positive Adjusted EBITDA and Free Cash Flow in 2023," said Bill Toler, chairman and CEO of the Pennsylvania-based company.

Q4 2023 Financial Highlights

• Net sales decreased to $47.2 million compared to $61.5 million in the prior year's period.
• Gross profit increased to $8.4 million compared to a gross loss of $0.5 million in the fourth quarter of 2022.
• Gross profit margin increased to 17.9% of net sales compared to a negative profit margin of 0.8%.
• Adjusted gross profit increased to $11.5 million compared to $9 million.
• Adjusted gross profit margin grew to 24.3% of net sales compared to 14.7%.
• Net loss improved to $15.2 million compared to net loss of $35.3 million.
• Adjusted EBITDA came in negative at $0.6 million compared to a negative adjusted EBITDA of $8.4 million. In the prior year's period, representing a year-over-year improvement of 92%.

See also: Restructuring Efforts Yield Results For Cannabis-Focused Agriculture Equipment Maker Despite 27% YoY Revenue Drop In Q3

FY 2023 Financial Highlights

• Net sales decreased to $226.6 million compared to $344.5 million in fiscal 2022.
• Gross profit increased to $37.6 million compared to $29.3 million in the prior period.
• Gross profit margin increased to 16.6% of net sales compared to 8.5% in the previous year.
• Adjusted gross profit increased to $55 million compared to $48.2 million in 2022.
• Adjusted gross profit margin increased to 24.3% of net sales compared to 14% in 2022.
• Net loss improved to $64.8 million compared to net loss of $285.4 million in the previous year.
• Adjusted EBITDA came in positive at $0.3 million compared to a negative adjusted EBITDA of $21.2 million in the prior year.
• Cash from operating activities was $7 million and free cash flow was $2.8 million.

Now read: Majority Of Marijuana Growers Feel ‘Terrible’ Or ‘Bad’ About Current Market Situation, Finds Wells Fargo Survey

HYFM Price Action

Hydrofarm's shares traded 3.63% lower at $0.85 per share during the pre-market session on Thursday morning.

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