Hydrofarm Holdings Group Announces Third Quarter 2024 Results and Reaffirms 2024 Outlook on Key Metrics
Hydrofarm Holdings Group (HYFM) reported Q3 2024 results with net sales decreasing 18.8% to $44.0 million compared to $54.2 million in Q3 2023. Gross Profit Margin improved to 19.4% from 6.1%, while Adjusted Gross Profit Margin increased to 24.3% from 23.0%. Net loss improved to $13.1 million from $19.9 million. The company reaffirmed its 2024 outlook, expecting net sales to decrease in low to high teens percentage, with positive Adjusted EBITDA and Free Cash Flow. The decline in sales was primarily attributed to a 13.7% decline in volume/mix due to cannabis industry oversupply and a 4.9% decrease in price.
Hydrofarm Holdings Group (HYFM) ha riportato i risultati del terzo trimestre 2024, con un calo delle vendite nette del 18,8%, scendendo a 44,0 milioni di dollari rispetto ai 54,2 milioni di dollari del terzo trimestre 2023. Il margine di profitto lordo è migliorato al 19,4% rispetto al 6,1%, mentre il margine di profitto lordo rettificato è aumentato al 24,3% dal 23,0%. La perdita netta è migliorata a 13,1 milioni di dollari, rispetto ai 19,9 milioni di dollari precedenti. L'azienda ha confermato le sue previsioni per il 2024, prevedendo una diminuzione delle vendite nette in una percentuale bassa per i teen fino ad alta, con un EBITDA rettificato e flusso di cassa libero positivi. Il calo delle vendite è stato principalmente attribuito a un declino del volume/mix del 13,7% a causa dell'eccesso di offerta nel settore della cannabis e a una diminuzione del prezzo del 4,9%.
Hydrofarm Holdings Group (HYFM) informó los resultados del tercer trimestre de 2024, con ventas netas que disminuyeron un 18.8%, alcanzando 44.0 millones de dólares en comparación con 54.2 millones en el tercer trimestre de 2023. El margen de beneficio bruto mejoró al 19.4% desde el 6.1%, mientras que el margen de beneficio bruto ajustado aumentó al 24.3% desde el 23.0%. La pérdida neta se redujo a 13.1 millones de dólares, desde 19.9 millones de dólares. La empresa reafirmó su perspectiva para 2024, esperando que las ventas netas disminuyan en un porcentaje bajo a alto en los adolescentes, con EBITDA ajustado positivo y flujo de caja libre. La disminución en las ventas se atribuyó principalmente a una reducción del volumen/mezcla del 13.7% debido al exceso de oferta en la industria del cannabis y una disminución del 4.9% en los precios.
Hydrofarm Holdings Group (HYFM)는 2024년 3분기 실적을 보고했으며, 순매출이 54.2백만 달러에서 4400만 달러로 18.8% 감소했습니다. 총 이익률은 6.1%에서 19.4%로 개선되었으며, 조정된 총 이익률은 23.0%에서 24.3%로 증가했습니다. 순손실은 1990만 달러에서 1310만 달러로 개선되었습니다. 회사는 2024년 전망을 재확인하며, 순매출이 저조한 10대에서 높은 10대 비율로 감소할 것으로 예상하고, 조정된 EBITDA와 무료 현금 흐름이 긍정적일 것이라고 밝혔습니다. 매출 감소는 주로 대마초 산업의 공급 과잉으로 인한 13.7%의 물량/구성 감소와 가격의 4.9% 감소에 기인합니다.
Hydrofarm Holdings Group (HYFM) a publié ses résultats du troisième trimestre 2024, avec des ventes nettes en baisse de 18,8 % à 44,0 millions de dollars contre 54,2 millions de dollars au troisième trimestre 2023. La marge brute a été améliorée à 19,4 % contre 6,1 %, tandis que la marge brute ajustée a augmenté à 24,3 % contre 23,0 %. La perte nette a été réduite à 13,1 millions de dollars, contre 19,9 millions de dollars. L'entreprise a réaffirmé ses prévisions pour 2024, s'attendant à une baisse des ventes nettes dans une fourchette basse à élevée des adolescents, avec un EBITDA ajusté et des flux de trésorerie disponibles positifs. La diminution des ventes a été principalement attribuée à une baisse de 13,7 % du volume/mix en raison d'un excédent d'offre dans l'industrie du cannabis et à une baisse de 4,9 % des prix.
Hydrofarm Holdings Group (HYFM) berichtete über die Ergebnisse des 3. Quartals 2024, wobei die Nettoumsätze um 18,8% auf 44,0 Millionen Dollar im Vergleich zu 54,2 Millionen Dollar im 3. Quartal 2023 zurückgingen. Die Bruttomarge verbesserte sich auf 19,4% von 6,1%, während die bereinigte Bruttomarge auf 24,3% von 23,0% anstieg. Der Nettoverlust verbesserte sich auf 13,1 Millionen Dollar von 19,9 Millionen Dollar. Das Unternehmen bestätigte seinen Ausblick für 2024 und erwartet, dass die Nettoumsätze um einen niedrigen bis hohen zweistelligen Prozentsatz sinken werden, bei positivem bereinigtem EBITDA und freiem Cashflow. Der Rückgang der Umsätze wurde hauptsächlich auf einen Rückgang des Volumens/Mix um 13,7% aufgrund eines Überangebots in der Cannabisindustrie und einen Preisrückgang von 4,9% zurückgeführt.
- Gross Profit Margin increased significantly to 19.4% from 6.1%
- Adjusted Gross Profit Margin improved to 24.3% from 23.0%
- Net loss improved by $6.8 million to $13.1 million
- SG&A expenses reduced by more than 10%
- Maintained zero balance on Revolving Credit Facility
- Net sales decreased 18.8% to $44.0 million
- Negative operating cash flow of $4.5 million
- Negative Free Cash Flow of $5.3 million
- 13.7% decline in volume/mix due to cannabis industry oversupply
- 4.9% decrease in pricing
Insights
The Q3 2024 results reveal significant challenges and some improvements for Hydrofarm. Net sales declined 18.8% to
The focus on proprietary brands and cost-cutting measures is yielding results, with Adjusted SG&A expenses down
The reaffirmed guidance suggesting continued sales decline in the low to high teens indicates ongoing industry headwinds, though operational efficiency improvements provide some stability.
SHOEMAKERSVILLE, Pa., Nov. 07, 2024 (GLOBE NEWSWIRE) -- Hydrofarm Holdings Group, Inc. (“Hydrofarm” or the “Company”) (Nasdaq: HYFM), a leading independent manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture, today announced financial results for its third quarter ended September 30, 2024.
Third Quarter 2024 Highlights vs. Prior Year Period:
- Net sales decreased to
$44.0 million compared to$54.2 million . - Gross Profit Margin increased to
19.4% of net sales compared to6.1% . - Adjusted Gross Profit Margin(1) increased to
24.3% of net sales compared to23.0% . - SG&A expense and Adjusted SG&A(1) expense decreased by more than
10% . - Net loss improved to
$13.1 million compared to$19.9 million . - Adjusted EBITDA(1) remained positive.
- Cash used in operating activities and Free Cash Flow(1) were
$(4.5) million and$(5.3) million , respectively.
(1) Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted SG&A, Adjusted SG&A as a percent of net sales, Adjusted EBITDA, and Free Cash Flow are non-GAAP measures. For reconciliations of GAAP to non-GAAP measures see the “Reconciliation of Non-GAAP Measures” accompanying the release.
Bill Toler, Chairman and Chief Executive Officer of Hydrofarm, said, “We achieved significant Adjusted Gross Profit Margin(1) year-over-year expansion in Q3 for the fifth time in the last six quarters, as our strategic focus on proprietary brands continues to deliver mix benefits and operational efficiencies. We also continued to integrate and consolidate our manufacturing, distribution and back-office operations during the third quarter. And through these restructuring and related cost-saving efforts, we realized an additional
Third Quarter 2024 Financial Results
Net sales in the third quarter of 2024 decreased
Gross Profit increased to
Selling, general and administrative (“SG&A”) expense was
Net loss improved to
Adjusted EBITDA(1) decreased to less than
Balance Sheet, Liquidity and Cash Flow
As of September 30, 2024, the Company had
The Company had net cash used in operating activities of
Reaffirms Full Year 2024 Outlook on Key Metrics
The Company is reaffirming its full year 2024 outlook on Key Metrics:
- Net sales to decrease low to high teens in percentage terms, tracking toward the middle of the range.
- Adjusted EBITDA(1) that is positive.
- Free Cash Flow(1) that is positive.
Hydrofarm’s 2024 outlook also reaffirms the following assumptions:
- Reduced year-over-year Adjusted SG&A(1) expense resulting primarily from (i) full year benefit of headcount reductions completed in 2023 and (ii) reductions in professional fees, facilities and insurance expenses.
- Reduction in inventory and net working capital helping to generate positive Free Cash Flow(1) for the full year.
Hydrofarm’s 2024 outlook also includes the following updated assumptions:
- Adjusted Gross Profit Margin(1) that is flat to slightly down compared to the prior year. This is an update to the prior expectation of a year-over-year improvement.
- Capital expenditures of
$2.5 million to$3.5 million , compared to the prior expectation of$3.5 million to$4.5 million .
(1) Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted SG&A, Adjusted SG&A as a percent of net sales, Adjusted EBITDA, and Free Cash Flow are non-GAAP measures. For reconciliations of GAAP to non-GAAP measures see the “Reconciliation of Non-GAAP Measures” accompanying the release.
Conference Call and Presentation
The Company will host a conference call to discuss financial results for the third quarter 2024 today at 8:30 a.m. Eastern Time. Bill Toler, Chairman and Chief Executive Officer, and John Lindeman, Chief Financial Officer, will host the call. An investor presentation is also available for reference on the Hydrofarm investor relations website.
The conference call can be accessed live over the phone by dialing 1-800-343-5172 and entering the conference ID: HYFMQ3. The conference call will also be webcast live and archived on the Company's investor relations website at https://investors.hydrofarm.com/ under the “News & Events” section.
About Hydrofarm Holdings Group, Inc.
Hydrofarm is a leading independent manufacturer and distributor of branded 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 market in which we operate has been substantially adversely impacted by industry conditions, including oversupply and decreasing prices of the products the Company's end customers sell, which, in turn, have materially adversely impacted the Company's sales and other results of operations and which may continue to do so in the future; If industry conditions worsen or are sustained for a lengthy period, we could be forced to take additional impairment charges and/or inventory and accounts receivable reserves, which could be substantial, and, ultimately, we may face liquidity challenges; Although equity financing may be available, the Company's current stock prices are at depressed levels and any such financing would be dilutive; Interruptions in the Company's supply chain could adversely impact expected sales growth and operations; We may be unable to meet the continued listing standards of Nasdaq; Our restructuring activities may increase our expenses and cash expenditures, and may not have the intended cost saving effects; 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; The market for the Company’s products has been impacted by conditions impacting its customers, including related crop prices and other factors impacting growers; 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 annual, quarterly 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 Contact
Anna Kate Heller / ICR
ir@hydrofarm.com
| Hydrofarm Holdings Group, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands, except share and per share amounts) | ||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net sales | $ | 44,009 | $ | 54,168 | $ | 152,974 | $ | 179,397 | ||||||||
| Cost of goods sold | 35,490 | 50,859 | 122,679 | 150,234 | ||||||||||||
| Gross profit | 8,519 | 3,309 | 30,295 | 29,163 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | 17,556 | 19,543 | 55,836 | 67,442 | ||||||||||||
| Loss on asset disposition | — | — | 11,520 | — | ||||||||||||
| Loss from operations | (9,037 | ) | (16,234 | ) | (37,061 | ) | (38,279 | ) | ||||||||
| Interest expense | (3,910 | ) | (3,963 | ) | (11,652 | ) | (11,423 | ) | ||||||||
| Other income, net | 80 | 402 | 374 | 22 | ||||||||||||
| Loss before tax | (12,867 | ) | (19,795 | ) | (48,339 | ) | (49,680 | ) | ||||||||
| Income tax (expense) benefit | (279 | ) | (89 | ) | (865 | ) | 82 | |||||||||
| Net loss | $ | (13,146 | ) | $ | (19,884 | ) | $ | (49,204 | ) | $ | (49,598 | ) | ||||
| Net loss per share: | ||||||||||||||||
| Basic | $ | (0.29 | ) | $ | (0.44 | ) | $ | (1.07 | ) | $ | (1.09 | ) | ||||
| Diluted | $ | (0.29 | ) | $ | (0.44 | ) | $ | (1.07 | ) | $ | (1.09 | ) | ||||
| Weighted-average shares of common stock outstanding: | ||||||||||||||||
| Basic | 46,034,799 | 45,607,195 | 45,942,827 | 45,429,139 | ||||||||||||
| Diluted | 46,034,799 | 45,607,195 | 45,942,827 | 45,429,139 | ||||||||||||
| Hydrofarm Holdings Group, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share and per share amounts) | ||||||||
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Assets | ||||||||
| Current assets: | | |||||||
| Cash and cash equivalents | $ | 24,404 | $ | 30,312 | ||||
| Accounts receivable, net | 15,756 | 16,890 | ||||||
| Inventories | 58,221 | 75,354 | ||||||
| Prepaid expenses and other current assets | 4,551 | 5,510 | ||||||
| Assets held for sale | 470 | — | ||||||
| Total current assets | 103,402 | 128,066 | ||||||
| Property, plant and equipment, net | 39,770 | 47,360 | ||||||
| Operating lease right-of-use assets | 45,723 | 54,494 | ||||||
| Intangible assets, net | 255,258 | 275,881 | ||||||
| Other assets | 1,788 | 1,842 | ||||||
| Total assets | $ | 445,941 | $ | 507,643 | ||||
| Liabilities and stockholders’ equity | | | ||||||
| Current liabilities: | | |||||||
| Accounts payable | $ | 10,169 | $ | 12,613 | ||||
| Accrued expenses and other current liabilities | 9,497 | 9,529 | ||||||
| Deferred revenue | 2,821 | 3,231 | ||||||
| Current portion of operating lease liabilities | 7,689 | 8,336 | ||||||
| Current portion of finance lease liabilities | 455 | 954 | ||||||
| Current portion of long-term debt | 1,318 | 2,989 | ||||||
| Total current liabilities | 31,949 | 37,652 | ||||||
| Long-term operating lease liabilities | 40,420 | 47,506 | ||||||
| Long-term finance lease liabilities | 7,956 | 8,734 | ||||||
| Long-term debt | 114,820 | 115,412 | ||||||
| Deferred tax liabilities | 3,232 | 3,232 | ||||||
| Other long-term liabilities | 4,582 | 4,497 | ||||||
| Total liabilities | 202,959 | 217,033 | ||||||
| Commitments and contingencies | | | ||||||
| Stockholders’ equity | | | ||||||
| Common stock ( | 5 | 5 | ||||||
| Additional paid-in capital | 790,012 | 787,846 | ||||||
| Accumulated other comprehensive loss | (7,087 | ) | (6,497 | ) | ||||
| Accumulated deficit | (539,948 | ) | (490,744 | ) | ||||
| Total stockholders’ equity | 242,982 | 290,610 | ||||||
| Total liabilities and stockholders’ equity | $ | 445,941 | $ | 507,643 | ||||
| Hydrofarm Holdings Group, Inc. RECONCILIATION OF NON-GAAP MEASURES (In thousands, except share and per share amounts) (Unaudited) | ||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Reconciliation of Adjusted Gross Profit: | ||||||||||||||||
| Gross Profit (GAAP) | $ | 8,519 | $ | 3,309 | $ | 30,295 | $ | 29,163 | ||||||||
| Depreciation, depletion and amortization | 1,603 | 1,626 | 4,860 | 4,907 | ||||||||||||
| Restructuring expenses1 | 577 | 7,444 | 1,558 | 9,401 | ||||||||||||
| Severance and other3 | — | 76 | — | 76 | ||||||||||||
| Adjusted Gross Profit (Non-GAAP) | $ | 10,699 | $ | 12,455 | $ | 36,713 | $ | 43,547 | ||||||||
| As a percent of net sales: | ||||||||||||||||
| Gross Profit Margin (GAAP) | 19.4 | % | 6.1 | % | 19.8 | % | 16.3 | % | ||||||||
| Adjusted Gross Profit Margin (Non-GAAP) | 24.3 | % | 23.0 | % | 24.0 | % | 24.3 | % | ||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Reconciliation of Adjusted SG&A: | ||||||||||||||||
| Selling, general and administrative (GAAP) | $ | 17,556 | $ | 19,543 | $ | 55,836 | $ | 67,442 | ||||||||
| Depreciation, depletion and amortization | 6,060 | 6,282 | 18,464 | 19,258 | ||||||||||||
| Restructuring expenses1 | 79 | 159 | 163 | 401 | ||||||||||||
| Stock-based compensation2 | 669 | 1,031 | 2,306 | 4,057 | ||||||||||||
| Acquisition and integration expenses | — | 39 | — | 39 | ||||||||||||
| Severance and other3 | 69 | 72 | 264 | 956 | ||||||||||||
| Adjusted SG&A (Non-GAAP) | $ | 10,679 | $ | 11,960 | $ | 34,639 | $ | 42,731 | ||||||||
| As a percent of net sales: | ||||||||||||||||
| SG&A (GAAP) | 39.9 | % | 36.1 | % | 36.5 | % | 37.6 | % | ||||||||
| Adjusted SG&A (Non-GAAP) | 24.3 | % | 22.1 | % | 22.6 | % | 23.8 | % | ||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Reconciliation of Adjusted EBITDA: | ||||||||||||||||
| Net loss (GAAP) | $ | (13,146 | ) | $ | (19,884 | ) | $ | (49,204 | ) | $ | (49,598 | ) | ||||
| Interest expense | 3,910 | 3,963 | 11,652 | 11,423 | ||||||||||||
| Income tax expense (benefit) | 279 | 89 | 865 | (82 | ) | |||||||||||
| Depreciation, depletion and amortization | 7,663 | 7,908 | 23,324 | 24,165 | ||||||||||||
| Restructuring expenses1 | 656 | 7,603 | 1,721 | 9,802 | ||||||||||||
| Stock-based compensation2 | 669 | 1,031 | 2,306 | 4,057 | ||||||||||||
| Severance and other3 | 69 | 148 | 264 | 1,032 | ||||||||||||
| Acquisition and integration expenses | — | 39 | — | 39 | ||||||||||||
| Other income, net4 | (80 | ) | (402 | ) | (374 | ) | (22 | ) | ||||||||
| Loss on asset disposition5 | — | — | 11,520 | — | ||||||||||||
| Adjusted EBITDA (Non-GAAP) | $ | 20 | $ | 495 | $ | 2,074 | $ | 816 | ||||||||
| As a percent of net sales: | ||||||||||||||||
| Net loss (GAAP) | (29.9) | % | (36.7) | % | (32.2) | % | (27.6) | % | ||||||||
| Adjusted EBITDA (Non-GAAP) | 0.0 | % | 0.9 | % | 1.4 | % | 0.5 | % | ||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Reconciliation of Free Cash Flow6: | ||||||||||||||||
| Net cash (used in) from operating activities (GAAP)6: | $ | (4,467 | ) | $ | 7,668 | $ | (2,980 | ) | $ | 8,629 | ||||||
| Capital expenditures of Property, plant and equipment (GAAP) | (812 | ) | (750 | ) | (2,622 | ) | (4,056 | ) | ||||||||
| Free Cash Flow (Non-GAAP)6: | $ | (5,279 | ) | $ | 6,918 | $ | (5,602 | ) | $ | 4,573 | ||||||
Notes to GAAP to Non-GAAP reconciliations presented above (Adjusted Gross Profit, Adjusted SG&A, Adjusted EBITDA, and Free Cash Flow):
- For the three and nine months ended September 30, 2024, Restructuring expenses related primarily to manufacturing facility consolidations, and the charges incurred to relocate and terminate certain facilities. For the three and nine months ended September 30, 2023, Restructuring expenses related primarily to non-cash inventory markdowns associated with manufacturing facility consolidations, and the charges incurred to relocate and terminate certain facilities in Canada.
- Includes stock-based compensation and related employer payroll taxes on stock-based compensation for the periods presented.
- For the three and nine months ended September 30, 2024, Severance and other charges primarily related to estimated legal costs related to certain litigation and severance charges. For the three and nine months ended September 30, 2023, Severance and other charges primarily related to workforce reductions and charges in conjunction with a sale-leaseback transaction during the first quarter of 2023.
- Other income, net related primarily to foreign currency exchange rate gains and losses and other non-operating income and expenses. For the three and nine months ended September 30, 2023, Other income, net also included charges from Amendment No. 1 to the Term Loan.
- Loss on asset disposition for the nine months ended September 30, 2024, relates to the IGE Asset Sale.
- The total gross proceeds associated with the IGE Asset Sale were
$8.7 million , of which the Company estimated and classified$5.0 million in Net cash from operating activities, and$3.7 million in Investing activities, as these cash flows were associated with the sale of inventory and property, plant and equipment, respectively. The cash proceeds classified within Net cash from operating activities were partially offset by$1.3 million cash paid to terminate the associated facility lease and cash transaction costs paid during the period. As a result, the Asset Sale contributed an estimated$3.5 million to Net cash from operating activities and Free Cash Flow during the nine months ended September 30, 2024. In addition, in connection with the Asset Sale, the Company paid$0.7 million to terminate certain equipment finance leases and classified this cash outflow within Financing activities for the nine months ended September 30, 2024. In total, the IGE Asset Sale contributed net cash proceeds, after repayment of certain lease liabilities and transaction expenses, of an estimated$6.3 million . In 2023, gross proceeds of$8.6 million received during the nine months ended September 30, 2023 from a sale-leaseback of real estate located in Eugene, Oregon, was classified as a Financing activity and is not reflected in Net cash from operating activities or Free Cash Flow in the prior year period.
Non-GAAP Financial Measures
We report our financial results in accordance with generally accepted accounting principles in the U.S. (“GAAP”). 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 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 condensed consolidated financial statements which are prepared in accordance with GAAP, we use "Adjusted EBITDA", "Adjusted Gross Profit", "Adjusted SG&A", "Free Cash Flow", "Net Debt", and "Liquidity" which are non-GAAP financial measures. We also present certain of these non-GAAP metrics as a percentage of net sales. 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.
We define Adjusted EBITDA (non-GAAP) as net loss (GAAP) excluding interest expense, income taxes, depreciation, depletion and amortization, stock-based compensation including employer payroll taxes on stock-based compensation, restructuring expenses, impairments, severance, loss on asset disposition, other income/expense, net, and other non-cash, unusual and/or infrequent costs (i.e., acquisition and integration expenses), which we do not consider in our evaluation of ongoing operating performance.
We define Adjusted EBITDA (non-GAAP) as a percent of net sales as adjusted EBITDA (as defined above) divided by net sales in the respective period.
We define Adjusted Gross Profit (non-GAAP) as gross profit (GAAP) excluding depreciation, depletion, and amortization, restructuring expenses, severance and other expenses, and other non-cash, unusual and/or infrequent costs, which we do not consider in our evaluation of ongoing operating performance.
We define Adjusted Gross Profit Margin (non-GAAP) as a percent of net sales as Adjusted Gross Profit (as defined above) divided by net sales in the respective period.
We define Adjusted SG&A (non-GAAP) as SG&A (GAAP) excluding depreciation, depletion, and amortization, stock-based compensation including employer payroll taxes on stock-based compensation, restructuring expenses, severance and other expenses, and other non-cash, unusual and/or infrequent costs (i.e., acquisition and integration expenses), which we do not consider in our evaluation of ongoing operating performance.
We define Adjusted SG&A (non-GAAP) as a percent of net sales as Adjusted SG&A (as defined above) divided by net sales in the respective period.
We define Free Cash Flow (non-GAAP) as Net cash from (used in) operating activities less capital expenditures for property, plant and equipment. We believe this provides additional insight into the Company's ability to generate cash and maintain liquidity. However, Free Cash Flow does not represent funds available for investment or other discretionary uses since it does not deduct cash used to service our debt or other cash flows from financing activities or investing activities.
We define Liquidity as total cash, cash equivalents and restricted cash, if applicable, plus available borrowing capacity on our Revolving Credit Facility.
We define Net Debt as total debt principal outstanding plus finance lease liabilities and other debt, less cash, cash equivalents and restricted cash, if applicable.
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