ScottsMiracle-Gro Reports First Quarter Results; Company Well Positioned for 2025 Lawn & Garden Season

Core Insights - The Scotts Miracle-Gro Company reported a solid start to the fiscal year, driven by strong performance in its U.S. Consumer business, with year-over-year improvements in shipments and point-of-sale (POS) metrics [2][3] - The company reaffirmed its confidence in its guidance for the year, aiming for adjusted EBITDA approaching $700 million by the end of fiscal 2027 [3] Financial Performance - For the first quarter ended December 28, 2024, total sales were $416.8 million, a slight increase from $410.4 million in the prior year [4] - U.S. Consumer net sales rose 11% to $340.9 million, up from $306.7 million, attributed to a strong fall season and early retailer load-in for spring [5][8] - The Hawthorne segment saw a 35% decline in sales to $52.1 million, down from $80.1 million, due to a strategic exit from third-party distribution [5][24] - GAAP gross margin improved to 22.7%, up from 15.2% in the prior year, while non-GAAP adjusted gross margin increased to 24.0% from 13.7% [6][8] - Selling, general and administrative (SG&A) expenses increased by 9% to $124.8 million, reflecting investments in marketing and innovation [7] Key Metrics - Non-GAAP adjusted EBITDA for the quarter was $3.8 million, a significant improvement from a loss of $25.8 million a year ago [10][23] - The company reported a GAAP net loss of $69.5 million, or $1.21 per share, compared to a loss of $80.5 million, or $1.42 per share, in the prior year [11][22] - Interest expense decreased by 21% to $33.7 million, with expectations for a full-year reduction of $15 million to $20 million compared to the previous year [9] Segment Performance - U.S. Consumer segment profit improved to $10.0 million from a loss of $15.5 million, while Hawthorne segment profit rose to $1.7 million from a loss of $9.7 million [26] - The Other segment reported a slight increase in sales to $23.8 million, up from $23.6 million [26] Balance Sheet and Outlook - The average net debt to adjusted EBITDA leverage ratio improved to 4.52 times, down from 4.86 times in the previous quarter [13] - The company reaffirmed its fiscal 2025 guidance for non-GAAP adjusted EBITDA and lowered expected interest expense [14][16]