Hydrofarm Holdings Group, Inc. (Nasdaq: HYFM) announced financial results for its fourth quarter and full fiscal year ended December 31, 2021. In the fourth quarter, Hydrofarm‘s net sales increased 26.3% to $110.4 million compared to $87.4 million. This beat the Yahoo Finance estimate for $105 million in revenues. The growth in the volume of products sold was related entirely to recently acquired brands, which offset a decline in organic sales.
The net loss attributable to common stockholders was ($11.0) million, or ($0.25) per diluted share, compared to a net loss of ($10.0) million, or ($0.43) per diluted share. The pro forma adjusted net loss was ($2.3) million, or ($0.05) per pro forma diluted share, compared to a pro forma adjusted net income of $0.5 million, or $0.02 per pro forma diluted share. This missed the estimate of earnings of $0.03.
For the full year, Hydrofarm reported that the net sales increased 40.1% to $479.4 million compared to $342.2 million. The net income attributable to common stockholders was $13.4 million, or $0.31 per diluted share, compared to a net loss of ($9.9) million, or ($0.46) per diluted share. Pro forma adjusted net income was $25.4 million, or $0.59 per pro forma diluted share, compared to $7.3 million, or $0.21 per pro forma diluted share.
“While we posted solid top-line growth during the fourth quarter, our overall results were impacted by industry agricultural oversupply, which we discussed on our last earnings call, as well as higher freight and labor costs,” said Bill Toler, Chairman and Chief Executive Officer of Hydrofarm. “For the full year 2021, we’re pleased to report successful results as we grew our top line by 40%, including organic net sales growth of over 18%. We also completed five acquisitions that further strengthened our branded product portfolio and manufacturing capabilities. To further support our manufacturing, we expanded our distribution centers and production space by nearly 70%. And importantly, we more than doubled our adjusted EBITDA to $47 million for the year, which is within our previously provided guidance range.”
The company gave the following outlook for the full fiscal year 2022 for net sales growth between 20% and 28%, or approximately $575.0 million to $615.0 million and adjusted EBITDA of $63.0 million to $74.0 million, representing approximately 11.0% to 12.0% of net sales for the full fiscal year. the company said that the modest full-year organic growth and strong full-year M&A growth; organic growth is heavily weighted toward the back-half of the year with sequential improvement from negative organic growth in 1Q to positive organic growth in 3Q. This assumes industry recovery throughout 2022, as well as expected growth both in the Company’s commercial channel and in its proprietary brand portfolio. They also said that pricing and cost-saving initiatives will help to mitigate the impact of rising input, freight, and labor costs. Capital expenditures are forecast to be approximately $8.0 million to $12.0 million.
Mr. Toler added, “As we look ahead, we believe we have several momentum builders in the new year, including growth expected both in the commercial channel and in our proprietary brand portfolio. Additionally, in late 2021 and early 2022, we acted on several margin-enhancing initiatives to reduce costs and mitigate inflationary pressures, including increasing prices where appropriate, as well as right-sizing our headcount as we have begun realizing synergies from our 2021 acquisitions. Together with our unique position as a leading ‘picks and shovels’ supplier to the CEA industry and a strong balance sheet that can support future growth, we remain excited about our prospects in 2022 and beyond.”