Scotts Miracle-Gro's Q3 Earnings Top, Revenues Lag Estimates

Core Insights - Scotts Miracle-Gro Company (SMG) reported a third-quarter fiscal 2025 profit of $149.1 million or $2.54 per share, an increase from $132.1 million or $2.28 per share in the same quarter last year [1] - Adjusted earnings were $2.59 per share, up from $2.31 a year ago, surpassing the Zacks Consensus Estimate of $2.19 [1] - Net sales decreased by approximately 1.2% year over year to $1,188 million, missing the consensus mark of $1,230.9 million [1] Segment Performance - In the U.S. Consumer division, net sales increased by 1% year over year to $1,030.2 million, although it fell short of the estimate of $1,071.4 million; the segment's profit rose by 12% to $235.5 million [2] - The Hawthorne segment experienced a significant decline, with net sales plummeting 54% year over year to $31.2 million, missing the estimate of $56.5 million [2] - The other segment saw an 8% increase in net sales year over year to $126.6 million, exceeding the estimate of $100.2 million, and reported a profit of $16.8 million, up 44% year over year [3] Financial Position - At the end of the quarter, the company had cash and cash equivalents of $51.1 million, down from $279.9 million a year ago; long-term debt was $2,136.2 million, a decrease of approximately 12.3% year over year [4] Future Outlook - The company reaffirmed its full-year adjusted fiscal 2025 outlook, projecting low single-digit growth in U.S. Consumer net sales, excluding non-recurring sales from AeroGarden and bulk raw materials; adjusted gross margin is expected to be around 30% [5] - Adjusted EBITDA is anticipated to be between $570 million and $590 million, with adjusted earnings per share projected to be at least $3.50 and free cash flow estimated at approximately $250 million [5] Stock Performance - Shares of Scotts Miracle-Gro have declined by 10.5% over the past year, contrasting with a 10.2% rise in the industry [6]