Hydrofarm Holdings Group, Inc. (“Hydrofarm” or the “Company”)
(Nasdaq: HYFM), a leading independent distributor and manufacturer
of hydroponics equipment and supplies for controlled environment
agriculture (“CEA”), today announced financial results for its
fourth quarter and full fiscal year ended December 31, 2020.
Fourth Quarter 2020 Highlights vs. Prior
Year Period:
- Net sales increased 62.6% to $87.4
million compared to $53.8 million.
- Gross profit increased 190.5% to
$16.0 million, or 18.3% of net sales, compared to $5.5 million, or
10.2% of net sales.
- Net loss attributable to common
stockholders was ($10.0) million or ($0.43) per diluted share
compared to a net loss of ($17.7) million or ($0.86) per diluted
share. Pro forma adjusted net income(1) was $0.5 million, or $0.02
per pro forma diluted share compared to a loss of $(9.6) million,
or $(0.29) per pro forma diluted share.
- Adjusted EBITDA(1) was $5.0 million
compared to a loss of ($5.7) million.
Fiscal Year 2020 Highlights vs. Prior
Year:
- Net sales increased 45.6% to $342.2
million compared to $235.1 million.
- Net loss attributable to common
stockholders was ($9.9) million or ($0.46) per diluted share
compared to a net loss of ($40.1) million or ($1.94) per diluted
share. Pro forma adjusted net income(1) was $7.3 million, or $0.21
per pro forma diluted share compared to a loss of $(22.6) million,
or $(0.68) per pro forma diluted share.
- Adjusted
EBITDA(1) was $21.1 million, compared to a loss of ($9.5)
million.
Full Year 2021 Outlook vs. Prior
Year:
- Organic net sales growth of 20% to
25%.
- Adjusted
EBITDA(1) estimated at $28.0 million to $31.0
million.(1) Adjusted EBITDA and Pro Forma Adjusted Net
Income/Loss are non-GAAP measures. For reconciliations of GAAP to
non-GAAP measures see the ”Reconciliation of Non-GAAP Measures”
accompanying this release.
Bill Toler, Chairman and Chief Executive Officer
of Hydrofarm, said, “Fiscal 2020 was an excellent year for
Hydrofarm in many ways. First, our organic sales growth across the
year was outstanding, increasing in each sequential quarter and
culminating in over 60% year-over-year growth in each of our last
two quarters as our entire company worked feverishly throughout the
COVID-19 pandemic to meet the growing demand in the CEA industry.
We also raised our profit margin profile during the year by
implementing several management initiatives which resulted in a
considerable improvement in our Adjusted EBITDA margin compared to
the prior period. Simultaneously, our leadership team completed our
highly successful initial public offering (“IPO”), which culminated
in our first day of trading on NASDAQ on December 10th, under the
ticker, HYFM. I could not be more proud of our entire
team.”
Mr. Toler added, “Looking ahead into 2021, we
expect robust CEA industry demand will result in organic net sales
growth well above the long-term company expectations outlined
during our IPO roadshow. We also will continue to evaluate
acquisition candidates leveraging our strong balance sheet
position, and seek to further improve our profit margin profile to
drive long-term value for our shareholders.”
Initial Public Offering
On December 14, 2020, the Company successfully
completed its IPO of common stock at $20.00 per share. The Company
issued 9,966,667 shares of common stock, including the full
exercise by the underwriters of their option to purchase 1,300,000
additional shares of common stock. The Company received net
proceeds from the offering of approximately $182.3 million after
underwriter discounts and commissions and offering expenses. The
net proceeds from the offering were used to repay debt, increase
cash holdings and reposition the Company’s capital structure for
future growth.
Fourth Quarter 2020 Financial
Results
Net sales in the fourth quarter of 2020 were
$87.4 million, an increase of $33.7 million or 62.6% compared to
the fourth quarter of 2019, driven by an approximate 59% increase
in volume of products sold and an approximate 4% increase in
price/mix of products sold. The growth in volume of products sold
was related to increased demand from multiple end-markets,
including but not limited to Michigan, Oklahoma, California, and
Canada, and higher demand across each of our Proprietary, Preferred
and Distributed brand categories. The increase in price was
primarily related to list price increases and more effective sales
incentives.
Gross profit increased $10.5 million or 190.5%
to $16.0 million compared to the fourth quarter of 2019, primarily
driven by an increase in net sales and an approximate 810 basis
point improvement in gross margin to 18.3% compared to 10.2% in the
fourth quarter of 2019. Gross profit in last year’s fourth quarter
was impacted by an estimated $2.8 million in inventory adjustments
and write-downs primarily associated with our 2019 SKU
rationalization initiative. Excluding the impact of last year’s
inventory adjustments and write downs, year-over-year gross profit
as a percentage of net sales improved approximately 280 basis
points, driven primarily by a more favorable sales mix of
proprietary and preferred branded products which typically carry a
higher gross margin.
Selling, general and administrative (“SG&A”)
expense was $21.4 million in the fourth quarter of 2020 compared to
$13.0 million in the fourth quarter of 2019. As a percentage of net
sales, SG&A increased to 24.5% from 24.2%. The increase in
SG&A was primarily related to increases in IPO-related
share-based compensation, in addition to higher management salaries
and professional fees as a result of the Company’s growth and
transition to a public company. SG&A expense, excluding
share-based compensation and depreciation/amortization expenses,
decreased to 12.8% of net sales from 20.7% of net sales in the
prior year period.
Net loss attributable to common stockholders was
($10.0) million or ($0.43) per diluted share in the fourth quarter
of 2020 compared to a net loss of ($17.7) million or ($0.86) per
diluted share in the fourth quarter of 2019. Pro Forma Adjusted Net
Income(1) was $0.5 million, or $0.02 per pro forma diluted share in
the fourth quarter of 2020 compared to a loss of ($9.6) million or
($0.29) per pro forma diluted share in the fourth quarter of
2019.
Adjusted EBITDA(1) increased $10.6 million to
$5.0 million, or 5.7% of net sales, for the fourth quarter of 2020
from ($5.7) million, or (10.6%) in the fourth quarter of 2019. The
improvement in Adjusted EBITDA was driven by an increase in net
sales, the improvement in gross profit margin and leverage realized
on SG&A expenses, excluding stock-based compensation and
depreciation/amortization.
Balance Sheet and Liquidity
As of December 31, 2020, the Company had $1.0
million of interest-bearing debt outstanding, $75.2 million in
unrestricted cash and cash equivalents and up to $45.0 million in
total borrowing capacity under its existing revolving credit
facility. The Company anticipates approximately $56.0 million
available in additional equity capital from the future exercise of
Investor Warrants by the Investor Warrant holders. Upon the full
exercise of all outstanding Investor Warrants, the Company would
expect the net proceeds to be used to accelerate its growth plans,
including potential future acquisitions.
Subsequent to our fiscal year end, on March 29,
2021, the Company entered into a senior secured
revolving credit facility with JPMorgan Chase Bank, N.A.
The new JPMorgan Credit Facility replaced the Company’s existing
revolving credit facility (the “JPMorgan Credit Facility”). The new
three-year JPMorgan Credit Facility has a borrowing limit of $50
million and the Company has the right to increase the amount of the
facility in an amount up to $25 million. Additional details
regarding the JPMorgan Credit Facility may be found in the
Company’s Annual Report on Form 10-K for the year ended 2020.
Full Year 2021 Outlook
John Lindeman, Chief Financial Officer of
Hydrofarm, stated, “We are off to a strong start in 2021 with net
sales growth year-to-date roughly on par with levels realized
during our recently ended fourth quarter of 2020. Based in part on
this strong start, we are currently estimating 20% to 25% organic
net sales growth in fiscal 2021. We expect outsized growth in the
first half to moderate in the second half of 2021 as we begin to
lap particularly strong comparable periods in the third and fourth
quarter. We also expect this growth will be dominantly driven by
volume in conjunction with broader demand themes in the CEA
industry; though we do anticipate that commodity cost inflation may
result in some price increases across the industry during the
year.”
Mr. Lindeman added, “Similar to our results in
2020, we anticipate our ongoing initiatives to drive favorable
sales mix of our proprietary and preferred brands, and to drive
operating leverage on our SG&A expenses, excluding stock-based
compensation and depreciation/amortization, leading to Adjusted
EBITDA margin expansion.”
For full year 2021, the Company’s is providing
the following guidance:
- Organic
net sales growth between 20% and 25% with stronger growth
in the first half and moderating growth in the second half.
-
Adjusted EBITDA(1) estimated at $28.0
million to $31.0 million representing further margin
expansion to approximately 6.8% to 7.2%.(1) Adjusted EBITDA is
a non-GAAP measure. For reconciliations of GAAP to non-GAAP
measures see the ”Reconciliation of Non-GAAP Measures” accompanying
this release.
In addition to the risks and uncertainties
identified below under our “Cautionary Note Regarding
Forward-Looking Statements”, our 2021 guidance is also based on the
following assumptions:
- Additional
annual facility expenses of approximately $2.0 to $3.0 million, of
which approximately half will impact fiscal 2021, as we expand our
distribution center footprint by over 25% over the course of the
year;
- Capital
expenditures of approximately $3.5 to $4.5 million; and
- An effective tax
rate of 12% to 16% of pre-tax book income.
With respect to projected fiscal year 2021
Adjusted EBITDA, a quantitative reconciliation is not available
without unreasonable effort due to the variability, complexity and
low visibility with respect to certain items, including, but not
limited to, stock-based compensation and employer payroll taxes,
uncertainties caused by the global COVID-19 pandemic, changes to
the regulatory landscape, and certain potential future transaction
expenses, which are excluded from Adjusted EBITDA. We expect
the variability of these items to have a potentially unpredictable,
and potentially significant, impact on our future GAAP financial
results.
Conference Call
The Company will host a conference call to
discuss financial results for the fourth quarter of 2020 today at
5:00pm Eastern Standard Time. Bill Toler, Chairman and Chief
Executive Officer, and John Lindeman, Chief Financial Officer will
host the call.
The conference call can be accessed live over
the phone by dialing 1-201-389-0879. A replay will be available
after the call until Tuesday, April 6, 2021 and can be accessed by
dialing 1-412-317-6671. The passcode is 13717234. The conference
call will also be webcast live and archived on the corporate
website at www.hydrofarm.com, under the “Investors” section.
About Hydrofarm
Hydrofarm is a leading independent distributor
and manufacturer of hydroponics equipment and supplies for
controlled environment agriculture, including grow lights, climate
control solutions, growing media and nutrients, as well as a broad
portfolio of innovative and proprietary branded products. For over
40 years, Hydrofarm has helped growers make growing easier and more
productive. The Company’s mission is to empower growers, farmers
and cultivators with products that enable greater quality,
efficiency, consistency and speed in their grow projects.
Cautionary Note Regarding
Forward-Looking Statements
Statements contained in this press release,
other than statements of historical fact, which address activities,
events and developments that the Company expects or anticipates
will or may occur in the future, including, but not limited to,
information regarding the future economic performance and financial
condition of the Company, the plans and objectives of the Company’s
management, and the Company’s assumptions regarding such
performance and plans are “forward-looking statements” within the
meaning of the U.S. federal securities laws that are subject to
risks and uncertainties. These forward-looking statements generally
can be identified as statements that include phrases such as
“guidance,” “outlook,” “projected,” “believe,” “target,” “predict,”
“estimate,” “forecast,” “strategy,” “may,” “goal,” “expect,”
“anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,”
“should” or other similar words or phrases. Actual results could
differ materially from the forward-looking information in this
release due to a variety of factors, including, but not limited
to:
The ongoing COVID-19 pandemic could have a
material adverse effect on the Company’s business, results of
operation, financial condition and/or cash flows; Interruptions in
the Company's supply chain, whether due to COVID-19 or otherwise
could adversely impact expected sales growth and operations; The
highly competitive nature of the Company’s markets could adversely
affect its ability to maintain or grow revenues; Certain of the
Company’s products may be purchased for use in new or emerging
industries or segments, including the cannabis industry, and/or be
subject to varying, inconsistent, and rapidly changing laws,
regulations, administrative and enforcement approaches, and
consumer perceptions and, among other things, such laws,
regulations, approaches and perceptions may adversely impact the
market for the Company’s products; Compliance with environmental
and other public health regulations or changes in such regulations
or regulatory enforcement priorities could increase the Company’s
costs of doing business or limit the Company’s ability to market
all of its products; Damage to the Company’s reputation or the
reputation of its products or products it markets on behalf of
third parties could have an adverse effect on its business; If the
Company is unable to effectively execute its e-commerce business,
its reputation and operating results may be harmed; The Company’s
operations may be impaired if its information technology systems
fail to perform adequately or if it is the subject of a data breach
or cyber-attack; The Company may not be able to adequately protect
its intellectual property and other proprietary rights that are
material to the Company’s business; Acquisitions, other strategic
alliances and investments could result in operating and integration
difficulties, dilution and other harmful consequences that may
adversely impact the Company’s business and results of operations.
Additional detailed information concerning a number of the
important factors that could cause actual results to differ
materially from the forward-looking information contained in this
release is readily available in the Company’s publicly filed
Registration Statement on Form S-1 and will also be included in
quarterly, annual and other reports. The Company disclaims any
obligation to update developments of these risk factors or to
announce publicly any revision to any of the forward-looking
statements contained in this release, or to make corrections to
reflect future events or developments.
Contacts:
Investor ContactFitzhugh Taylor
/ ICRir@hydrofarm.com
Hydrofarm Holdings Group,
Inc.Consolidated Statements of Operations(in thousands,
except share and per share amounts)
|
|
|
|
Three months ended December 31, |
Years ended December 31, |
|
|
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
87,441 |
|
|
$ |
53,773 |
|
|
$ |
342,205 |
|
|
$ |
235,111 |
|
Cost of goods sold |
|
71,433 |
|
|
|
48,263 |
|
|
|
278,572 |
|
|
|
208,025 |
|
|
|
Gross profit |
|
16,008 |
|
|
|
5,510 |
|
|
|
63,633 |
|
|
|
27,086 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
21,407 |
|
|
|
13,025 |
|
|
|
58,492 |
|
|
|
43,784 |
|
|
Impairment, restructuring and other |
|
584 |
|
|
|
6,446 |
|
|
|
860 |
|
|
|
10,035 |
|
|
|
(Loss) Income from operations |
|
(5,983 |
) |
|
|
(13,961 |
) |
|
|
4,281 |
|
|
|
(26,733 |
) |
|
Interest expense |
|
(2,283 |
) |
|
|
(3,678 |
) |
|
|
(10,141 |
) |
|
|
(13,467 |
) |
|
Loss on debt extinguishment |
|
(907 |
) |
|
|
(288 |
) |
|
|
(907 |
) |
|
|
(679 |
) |
|
Other (loss) income, net |
|
(33 |
) |
|
|
(229 |
) |
|
|
70 |
|
|
|
105 |
|
|
|
Loss before tax |
|
(9,206 |
) |
|
|
(18,156 |
) |
|
|
(6,697 |
) |
|
|
(40,774 |
) |
Income tax (expense) benefit |
|
(192 |
) |
|
|
445 |
|
|
|
(576 |
) |
|
|
691 |
|
|
|
Net loss |
|
(9,398 |
) |
|
|
(17,711 |
) |
|
|
(7,273 |
) |
|
|
(40,083 |
) |
Cumulative dividends allocated to Series A Convertible Preferred
Stock |
|
(608 |
) |
|
|
— |
|
|
|
(2,597 |
) |
|
|
— |
|
|
|
Net loss attributable to common stockholders |
$ |
(10,006 |
) |
|
$ |
(17,711 |
) |
|
$ |
(9,870 |
) |
|
$ |
(40,083 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.43 |
) |
|
$ |
(0.86 |
) |
|
$ |
(0.46 |
) |
|
$ |
(1.94 |
) |
|
|
Diluted |
$ |
(0.43 |
) |
|
$ |
(0.86 |
) |
|
$ |
(0.46 |
) |
|
$ |
(1.94 |
) |
|
Weighted-average shares used to compute net loss per share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
Basic |
|
23,110,174 |
|
|
|
20,688,439 |
|
|
|
21,298,849 |
|
|
|
20,688,439 |
|
|
|
Diluted |
|
23,110,174 |
|
|
|
20,688,439 |
|
|
|
21,298,849 |
|
|
|
20,688,439 |
|
Hydrofarm Holdings Group,
Inc.Consolidated Balance Sheets(in thousands, except share
and per share amounts)
|
|
|
December 31, |
|
|
|
|
2020 |
|
|
|
2019 |
|
Assets |
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
$ |
75,178 |
|
|
$ |
22,866 |
|
|
Restricted cash |
|
1,777 |
|
|
|
9,991 |
|
|
Accounts receivable, net |
|
21,626 |
|
|
|
15,246 |
|
|
Inventories |
|
88,618 |
|
|
|
50,228 |
|
|
Notes receivable |
|
3,151 |
|
|
|
4,796 |
|
|
Prepaid expenses and other current assets |
|
9,567 |
|
|
|
1,840 |
|
|
|
Total current assets |
|
199,917 |
|
|
|
104,967 |
|
Property and equipment, net |
|
3,988 |
|
|
|
3,550 |
|
Operating lease right-of-use assets |
|
18,289 |
|
|
|
18,521 |
|
Intangible assets, net |
|
52,421 |
|
|
|
57,406 |
|
Other assets |
|
1,180 |
|
|
|
1,207 |
|
|
|
Total assets |
$ |
275,795 |
|
|
$ |
185,651 |
|
|
|
|
|
|
|
Liabilities, convertible preferred stock and stockholders'
equity |
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
$ |
22,638 |
|
|
$ |
17,224 |
|
|
Accrued expenses and other current liabilities |
|
21,615 |
|
|
|
9,188 |
|
|
Current portion of lease liabilities |
|
3,701 |
|
|
|
3,181 |
|
|
Current portion of long-term debt |
|
746 |
|
|
|
34,827 |
|
|
|
Total current liabilities |
|
48,700 |
|
|
|
64,420 |
|
|
|
|
|
|
|
Long-term lease liabilities |
|
15,320 |
|
|
|
15,786 |
|
Long-term debt |
|
290 |
|
|
|
73,105 |
|
Deferred tax liabilities |
|
— |
|
|
|
— |
|
Other long-term liabilities |
|
567 |
|
|
|
1,160 |
|
|
Total liabilities |
|
64,877 |
|
|
|
154,471 |
|
|
|
|
|
|
|
|
|
|
|
Convertible preferred stock ($0.0001 par value;
50,000,000 shares authorized; 0 and 7,007,429 shares issued
and outstanding at December 31, 2020 and 2019,
respectively) |
|
— |
|
|
|
21,802 |
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
Common stock ($0.0001 par value; 300,000,000 shares authorized
at |
|
|
|
|
|
December 31, 2020 and 2019, respectively; 33,499,953 and 20,688,439
shares issued and |
|
|
|
|
outstanding
at December 31, 2020 and 2019 |
|
3 |
|
|
|
2 |
|
|
Additional paid-in capital |
|
364,248 |
|
|
|
156,179 |
|
|
Accumulated other comprehensive income (loss) |
|
599 |
|
|
|
(144 |
) |
|
Accumulated deficit |
|
(153,932 |
) |
|
|
(146,659 |
) |
|
|
Total stockholders' equity |
|
210,918 |
|
|
|
9,378 |
|
|
|
Total liabilities, convertible preferred stock and
stockholders' equity |
$ |
275,795 |
|
|
$ |
185,651 |
|
|
|
|
|
|
|
Hydrofarm Holdings Group,
Inc.Reconciliation of Non-GAAP Measures(in thousands,
except share and per share amounts)
Adjusted EBITDA |
Three months ended December 31, |
|
Years ended December 31, |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
(Dollars in
thousands) |
|
|
Net loss |
$ |
(9,398 |
) |
|
$ |
(17,711 |
) |
|
$ |
(7,273 |
) |
|
$ |
(40,083 |
) |
|
Interest
expense |
|
2,283 |
|
|
|
3,678 |
|
|
|
10,141 |
|
|
|
13,467 |
|
|
Income tax
expense (benefit) |
|
192 |
|
|
|
(445 |
) |
|
|
576 |
|
|
|
(691 |
) |
|
Depreciation
and amortization |
|
1,609 |
|
|
|
1,797 |
|
|
|
6,779 |
|
|
|
6,995 |
|
|
Impairment,
restructuring and other |
|
584 |
|
|
|
6,446 |
|
|
|
860 |
|
|
|
10,035 |
|
|
Other
income, net |
|
33 |
|
|
|
229 |
|
|
|
(70 |
) |
|
|
(105 |
) |
|
Stock-based
compensation (*) |
|
8,746 |
|
|
|
35 |
|
|
|
9,156 |
|
|
|
208 |
|
|
Loss on debt
extinguishment |
|
907 |
|
|
|
288 |
|
|
|
907 |
|
|
|
679 |
|
Adjusted EBITDA |
$ |
4,956 |
|
|
$ |
(5,683 |
) |
|
$ |
21,076 |
|
|
$ |
(9,495 |
) |
Adjusted EBITDA as a percent of net sales |
|
5.7 |
% |
|
|
-10.6 |
% |
|
|
6.2 |
% |
|
|
-4.0 |
% |
|
|
|
|
|
|
|
|
|
|
(*) Includes the amount of employer payroll taxes on share-based
compensation |
|
|
|
|
Pro Forma Adjusted Net Income (Loss) |
Three months ended December 31, |
|
Years Ended December 31, |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
(Dollars in
thousands) |
|
|
Net loss |
$ |
(9,398 |
) |
|
$ |
(17,711 |
) |
|
$ |
(7,273 |
) |
|
$ |
(40,083 |
) |
|
Interest
expense (1) |
|
2,283 |
|
|
|
3,678 |
|
|
|
10,141 |
|
|
|
13,467 |
|
|
Impairment,
restructuring and other (2) |
|
584 |
|
|
|
6,446 |
|
|
|
860 |
|
|
|
10,035 |
|
|
Stock-based
compensation (3) |
|
8,746 |
|
|
|
35 |
|
|
|
9,156 |
|
|
|
208 |
|
|
Loss on debt
extinguishment (4) |
|
907 |
|
|
|
288 |
|
|
|
907 |
|
|
|
679 |
|
|
Incremental
public costs (5) |
|
(1,088 |
) |
|
|
(1,088 |
) |
|
|
(4,350 |
) |
|
|
(4,350 |
) |
|
Income tax
expense on adjustments (6) |
|
(1,486 |
) |
|
|
(1,217 |
) |
|
|
(2,173 |
) |
|
|
(2,605 |
) |
Pro forma adjusted net income (loss) |
$ |
548 |
|
|
$ |
(9,568 |
) |
|
$ |
7,268 |
|
|
$ |
(22,649 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) per share - pro forma: |
|
|
|
|
|
|
|
|
Basic |
$ |
0.02 |
|
|
$ |
(0.29 |
) |
|
$ |
0.22 |
|
|
$ |
(0.68 |
) |
|
Diluted |
$ |
0.02 |
|
|
$ |
(0.29 |
) |
|
$ |
0.21 |
|
|
$ |
(0.68 |
) |
|
Weighted-average shares outstanding - pro forma: |
|
|
|
|
|
|
|
Basic
(7) |
|
33,499,953 |
|
|
|
33,499,953 |
|
|
|
33,499,953 |
|
|
|
33,499,953 |
|
|
Diluted
(8) |
|
36,304,778 |
|
|
|
33,499,953 |
|
|
|
34,835,271 |
|
|
|
33,499,953 |
|
|
|
|
|
|
|
|
|
|
- Reflects the adjustment to eliminate the historical interest
expense for all periods presented that were based upon actual
outstanding balances before the application of the net proceeds
from our IPO.
- Reflects the elimination of the impairment, restructuring and
other for the periods presented.
- Reflects the elimination of the stock-based compensation for
the periods presented.
- Reflects the elimination of one-time charges for loss on debt
extinguishment for 2020 and 2019.
- Reflects an estimate of recurring incremental legal,
accounting/SOX, D&O insurance, public company director fees and
expenses and other compliance costs we expect to incur as a public
company.
- Reflects the tax expense related with adjustments in 1 through
5 above at the normalized tax rate of 13%, which reflects our
currently estimated effective tax rate.
- Reflects (i) 9,966,667 additional shares of common stock issue
in conjunction with the Company’s IPO, (ii) all RSUs converted to
common stock as of December 31, 2020, and (iii) the conversion of
all of our outstanding Series A Convertible Preferred Stock into
common stock as if all of these transactions occurred at the
beginning of fiscal year 2019.
- Reflects (i) the dilutive effect of RSUs with no change to
time-based and market condition grants outstanding as of year end,
(ii) dilutive effect of warrants, and (iii) dilutive effect of
stock options.
Non-GAAP Financial Measures
We report our financial results in accordance
with generally accepted accounting principles in the United States
(“GAAP”). However, management believes that certain non-GAAP
financial measures provide investors with additional useful
information in evaluating our performance and that excluding
certain items that may vary substantially in frequency and
magnitude period-to-period from net income (loss) provides useful
supplemental measures that assist in evaluating our ability to
generate earnings and to more readily compare these metrics between
past and future periods. These non-GAAP financial measures may be
different than similarly titled measures used by other
companies.
To supplement our audited consolidated financial
statements which are prepared in accordance with GAAP, we use
“Adjusted EBITDA”, “Adjusted EBITDA as a percent of net sales”,
“Pro Forma Adjusted Net Income” and “Pro Forma Adjusted Net Income
per Diluted Share” which are non-GAAP financial measures. Our
non-GAAP financial measures should not be considered in isolation
from, or as substitutes for, financial information prepared in
accordance with GAAP. There are several limitations related to the
use of our non-GAAP financial measures as compared to the closest
comparable GAAP measures. Some of these limitations include:
We define Adjusted EBITDA as
net income (loss) excluding interest expense, income taxes,
depreciation and amortization, share-based compensation, employer
payroll taxes on share-based compensation and other unusual and/or
infrequent costs (i.e., impairment, restructuring and other
expenses, loss on debt extinguishment and other income, net), which
we do not consider in our evaluation of ongoing operating
performance.
We define Adjusted EBITDA
as a percent of net sales” as adjusted EBITDA as
defined above divided by net sales realized in the respective
period.
We define Pro Forma Adjusted Net
Income as net income (loss) excluding (i) pro forma
adjustments to interest expense for all periods presented as if our
IPO and the resulting paydown of all outstanding debt had occurred
at the beginning of each period presented, (ii) share-based
compensation and employer payroll taxes on share-based compensation
which have disproportionately impacted select periods presented as
certain awards had catch-up vesting conditions triggered by the
IPO, (iii) certain other unusual and/or infrequent costs (i.e.,
impairment, restructuring and other expenses, loss on debt
extinguishment and other income, net), which we do not consider in
our evaluation of ongoing operating performance but including (iv)
incremental costs of being a public company estimated and uniformly
applied pro forma to all periods presented and (v) the pro forma
income tax expense resulting from the above adjustments to net
income.
We define Pro Forma Adjusted Net Income
per Diluted Share as pro forma adjusted net income as
defined above divided by the weighted average shares that would
have been outstanding if our IPO had occurred at the beginning of
each period presented.
Hydrofarm (NASDAQ:HYFM)
Historical Stock Chart
From Apr 2024 to May 2024
Hydrofarm (NASDAQ:HYFM)
Historical Stock Chart
From May 2023 to May 2024