Hydrofarm Holdings Group, Inc. · NASDAQ:HYFM
Hydrofarm — Investor Presentation (January 2022)
22 slides from Hydrofarm's investor presentation, Jan 11, 2022
Slide 1: Investor presentation January 2022
Investor presentation J a n u a r y 2 0 2 2
Slide 2: Disclaimer: Forward-Looking Statements
1 Disclaimer Forward-Looking Statements This presentation contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to known and unknown risks, uncertainties and other important factors that may cause actual results to be mater
Slide 3: Reaffirming Fiscal 2021 Outlook
2 Reaffirming Fiscal 2021 Outlook 2021 Fiscal Outlook Net sales of approximately $470.0 million to $490.0 million, representing growth of 37% to 43% compared to fiscal 2020. Adjusted EBITDA1 of $47.0 million to $53.0 million. Full-year organic growth of approximately 18% to 23% and M&A growth
Slide 4: Hydrofarm: leading branded hydroponics company
3 Enabling growers, farmers and cultivators to achieve higher yields and greater quality, consistency, efficiency and sustainability at their farms Bringing innovative solutions, preferred brands and gold standard service to the rapidly expanding and complex controlled environment agriculture indust
Slide 5: Hydrofarm is well-positioned for the future – key investor highlights
4 Hydrofarm is well-positioned for the future – key investor highlights IMPRESSIVE GROWTH ALGORITHM +15-year track record of 19% revenue CAGR with a goal to achieve mid-teens+ organic topline growth WINNING PLATFORM Supply chain excellence with just-in-time coverage of North America and disruptive D
Slide 6: Distribution centers and manufacturing sites
5 Distribution centers New Hudson, MI Fairless Hills, PA Portland, OR Petaluma, CA Denver, CO Fontana, CA Langley, BC Cambridge, ON Distribution footprint can reach ~90% of U.S population in <48 hours Serve >2k wholesale customers across multiple channels in North America Long-term relationships wit
Slide 7: Strong leadership team with relevant public company experience
6 Strong leadership team with relevant public company experience Bill Toler Chairman & Chief Executive Officer Joined in 2019 Prior experience Renah Persofsky Vice Chair & Lead Director, Tilray Joined in 2020 Terence Fitch President Joined in 2019 Susan Peters Former SVP HR, General Electric Joined
Slide 8: Hydrofarm services a large and rapidly growing market
7 ~$10bn ~$18bn 2020 2026E Hydrofarm services a large and rapidly growing market Source: Industry reports Our total addressable market ~$1tn Commercial agriculture, food & related industries ~$48bn Consumer gardening & growing ~$65B Global CEA Market (includes cannabis) ~$75bn Global CEA market (inc
Slide 9: Progress since our initial public offering in Q4 2020
8 Progress since our initial public offering in Q4 2020 Source: Company information Note: All financials shown are as reported and exclude pro forma impact from recently completed acquisitions unless otherwise stated; 1 Adj. EBITDA is a non-GAAP measure, see reconciliation to the nearest GAAP measur
Slide 10: We have seen success across all growth strategies year to date
9 Innovation via R&D Increase brand coverage Marketing initiatives Relationship model National network Access to key end markets Supply chain excellence Build commercial DMI program Securing customer success Acquire leading brands Add tech & capabilities Expand industry footprint We have seen succes
Slide 11: Five recent acquisitions highlight accretive brand acquisition strategy
10 Five recent acquisitions highlight Hydrofarm’s accretive brand acquisition strategy. Invested $505 million on five acquisitions at average multiple of ~7x Adj. EBITDA Overview & rationale Select products Nutrient products for professional growers Significant distribution opportunity Heavy Fire
Slide 12: Margin advantaged proprietary & preferred brand portfolio
11 Pr ef er re d Pr op rie ta ry End-to-end category coverage through innovative, well-recognized proprietary and preferred brands D is tri bu te d Pr ef er re d Pr op rie ta ry Pr op rie ta ry & S el f- m an uf ac tu re d Significant margin benefit Lighting Equipment Durables (~30% of sales) Suppli
Slide 13: HYFM Long Term Growth Drivers
HYFM Long Term Growth Drivers These materials are not to be printed, downloaded or distributed.
Slide 14: Several momentum builders carrying into 2022
13 Several momentum builders carrying into 2022 IGE Acquisition: Acquisition closed in November 2021. Carrying +$25mm backlog into 2022 driven by new state build outs and vertical rack retrofits Commercial Channel: 2021 was the largest ever for our commercial channel. Seeing strength in the comm
Slide 15: CEA for food and ornamental crops and international expansion
14 CEA for food and ornamental crops along with international expansion remain attractive long-term growth opportunities Sources: Research & Markets CEA for North America Food and Ornamental Crops Vertical farming market projected to grow at 23% CAGR over the next 4 years per Research & Markets
Slide 16: Continued acceleration in cannabis market growth from legislative changes
15 We expect continued acceleration in cannabis market growth resulting from state legislative changes and increasing popular support Notes: 1 Adult-Use States: CA, MI, CO, OR, ME, MA, WA, IL, AZ, NV, VT, AK, DC 2 Medicinal-Use States: ND, LA, MS, IA, DE, AR, MN, HI, UT, WV, MD, NH, GA, NM, MO, TX,
Slide 17: U.S. Cannabis market continues to grow following pandemic boost
16 U.S. Cannabis market continues to grow following 2020/21 Pandemic Boost Sources: Headset U.S. Cannabis Retail Sales $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 Q1 Q2 Q3 Q4 Bi lli on s 2018 2019 2020 2021 Headset dispensary retail sales Growth in Q4’21 remains positive despite pandemic boost from Q2
Slide 18: Legalization supports long-term increased consumption trend
17 Legalization supports long-term increased consumption trend Legalization removes stigma, increases awareness, increases accessibility and as result increased consumption Cannabis Prevalence significantly higher in states with Adult-Use and Medical legalization Like other consumer products…a
Slide 19: ESG – Recently published our first sustainability report
18 ESG – Recently published our first sustainability report Initiated ESG reporting in 2020 in conjunction with an internal ESG Committee, the Board’s Nominations and Governance Committee, and a third-party expert. Key areas of focus: Sustainable Products • Product Strategy – Targeting products whic
Slide 20: Category growth opportunity with accelerating legislative support
19 Category growth opportunity with accelerating legislative support and increasing consumer demand Opportunity to leverage our unique position in the value chain Unique pure-play “picks and shovels” supplier to the industry without “touching the plant” Executing on consolidation strategy in
Slide 21: Appendix
Appendix
Slide 22: Adjusted EBITDA reconciliation
21 Adjusted EBITDA reconciliation Notes: All figures rounded to the nearest $0.1 million, total lines may not foot due to rounding. 1Reflects the elimination of the impairment, restructuring and other for the periods presented; 2Reflects the elimination of acquisition and integration investment bank
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