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It has been about a month since the last earnings report for Scotts Miracle-Gro (SMG). Shares have lost about 18.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Scotts due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Scotts Miracle-Gro’s Q1 Earnings and Revenues Beat Estimates
Scotts Miracle-Gro Company reported a first-quarter fiscal 2025 (ended Dec. 28, 2024) loss of $69.5 million or $1.21 per share compared with a loss of $80.5 million or $1.42 per share in the year-ago quarter.
Barring one-time items, the adjusted loss was 89 cents a share, narrower than a loss of $1.45 a year ago. The figure was also narrower than the Zacks Consensus Estimate of a loss of $1.28.
Net sales rose around 1.6% year over year to $416.8 million and beat the consensus mark of $393.4 million. The first quarter typically accounts for less than 15% of full-year sales due to the seasonal nature of the business.
Segment Details
In the fiscal first quarter, net sales in the U.S. Consumer division were up 11% year over year to $340.9 million. It topped our estimate of $318.8 million. A robust fall season across all categories, as well as early retailer load-in for the spring season, drove the upside.
Net sales in the Hawthorne segment plunged 35% year over year to $52.1 million in the reported quarter. The figure missed our estimate of $61.7 million. The reduction was owing to Hawthorne's strategic departure from third-party distribution.
Net sales in the other segment were up 1% year over year to $23.8 million.
Balance Sheet
At the end of the quarter, the company had cash and cash equivalents of $9.8 million, down from $10.4 million in the year-ago quarter. Long-term debt was $2,636.9 million, down from $2,969 million.
Fiscal 2025 Outlook
The company reaffirmed full-year sales, adjusted gross margin and adjusted EBITDA guidance, which it stated last quarter, and reduced interest expense guidance. U.S. consumer net sales are projected to experience low single-digit growth, excluding non-repeat sales for AeroGarden and bulk raw material sales. Hawthorne's net sales are expected to decrease by mid-single digits. The company expects adjusted gross margin of around 30% for fiscal 2025. Adjusted EBITDA is projected to range from $570 million to $590 million. Interest expenses are estimated to be $15 million to $20 million lower than the previous year compared with an earlier expected decrease of $10 million.