Hydrofarm(HYFM) - 2024 Q3 - Quarterly Results

Financial Performance - Net sales decreased by 18.8% to $44.0 million compared to $54.2 million in the prior year period[4] - Net loss improved to $13.1 million, or $(0.29) per diluted share, compared to a net loss of $19.9 million, or $(0.44) per diluted share in the prior year[7] - Adjusted EBITDA decreased to less than $0.1 million, down from $0.5 million in the prior year[8] - Free cash flow was $(5.3) million during the three months ended September 30, 2024, a decrease from the same period last year[10] - Adjusted EBITDA (Non-GAAP) was $20 thousand for the three months ended September 30, 2024, compared to $495 thousand for the same period in 2023[21] - The company reported a net loss (GAAP) of $(13,146) thousand for the three months ended September 30, 2024, compared to a net loss of $(19,884) thousand for the same period in 2023[21] Profitability Metrics - Gross profit margin increased to 19.4% of net sales, up from 6.1% in the prior year[5] - Adjusted gross profit margin increased to 24.3% of net sales compared to 23.0% in the prior year[5] - Gross profit margin (GAAP) improved to 19.4% for the three months ended September 30, 2024, compared to 6.1% for the same period in 2023[18] - Adjusted gross profit margin (Non-GAAP) was 24.3% for the three months ended September 30, 2024, slightly down from 24.0% in the previous year[18] Expenses and Cost Management - SG&A expense decreased by more than 10% to $17.6 million from $19.5 million in the prior year[2] - Selling, general and administrative expenses (GAAP) were $17,556 thousand for the three months ended September 30, 2024, down from $19,543 thousand in the same period of 2023[20] - Adjusted SG&A excludes specific expenses to reflect the company's selling, general, and administrative costs more accurately[32] Cash Flow and Liquidity - The company ended the third quarter with $24.4 million in cash and approximately $17 million of available borrowing capacity[10] - Net cash used in operating activities was $(4,467) thousand for the three months ended September 30, 2024, compared to $7,668 thousand for the same period in 2023[22] - Free cash flow (Non-GAAP) was $(5,279) thousand for the three months ended September 30, 2024, compared to $6,918 thousand in the same period of 2023[22] - Liquidity is calculated as total cash and equivalents plus available borrowing capacity, reflecting the company's financial flexibility[35] Balance Sheet and Financial Position - Total current assets decreased from $128,066 thousand on December 31, 2023, to $103,402 thousand on September 30, 2024, a decline of approximately 19.3%[17] - Total liabilities decreased from $217,033 thousand on December 31, 2023, to $202,959 thousand on September 30, 2024, a reduction of approximately 6.5%[17] - The accumulated deficit increased to $(539,948) thousand as of September 30, 2024, from $(490,744) thousand on December 31, 2023[17] Future Outlook - The company reaffirms its full year 2024 outlook, expecting net sales to decrease in the low to high teens percentage range[11] - Capital expenditures are projected to be between $2.5 million and $3.5 million, down from the previous expectation of $3.5 million to $4.5 million[10] Non-GAAP Financial Measures - The company reports financial results in accordance with GAAP, but also provides non-GAAP financial measures for additional insights into performance[27] - Key non-GAAP metrics include Adjusted EBITDA, Adjusted Gross Profit, Adjusted SG&A, Free Cash Flow, Net Debt, and Liquidity, which are presented as a percentage of net sales[28] - Adjusted EBITDA is defined as net loss excluding various expenses, providing a clearer view of ongoing operating performance[29] - Adjusted Gross Profit excludes certain costs and is used to evaluate the company's operational efficiency[30] - Adjusted Gross Profit Margin is calculated as Adjusted Gross Profit divided by net sales for the respective period[31] - Free Cash Flow is defined as net cash from operating activities minus capital expenditures, indicating the company's cash generation ability[34] - Net Debt is defined as total debt minus cash and equivalents, providing insight into the company's leverage position[35]