Scotts Miracle-Gro Co. Reveals Fiscal 2023 & 4Q Results, Hawthorne Subsidiary Performance

Scotts Miracle-Gro Co. SMG recently reported its results for the fourth quarter and fiscal year that ended September 30, 2023, including the results of its subsidiary Hawthorne Gardening Company, a provider of nutrients, lighting and other materials used in the indoor and hydroponic growing segment that includes the cannabis industry.

Annual Sales And Segment Performance

• The fiscal year concluded on September 30, 2023, witnessed a 10% decrease in total company net sales, amounting to $3.55 billion, which aligned with the company's guidance.
• This decline was notably impacted by the performance of the Marysville, Ohio-based company, U.S. Consumer segment, which experienced a 3% sales decline, dropping to $2.84 billion from $2.93 billion.
• The Hawthorne segment's sales saw a significant 35% decrease, falling to $467.3 million compared with $716.2 million during the same period the previous year.

“The outcome of fiscal ’23 is the stabilization of the business and a return to a more normal state of operating,” said chairman and CEO Jim Hagedorn.

Earnings and Margins: Scotts reported a full-year GAAP loss per share of $6.79. However, the non-GAAP adjusted earnings, which exclude impairment, restructuring, and other non-recurring items, painted a favorable picture at $1.21 per diluted share, exceeding the company's guidance.

Fourth Quarter Performance

• The fourth quarter of the fiscal year ending on September 30, 2023, saw a 24% decrease in company-wide sales, plummeting to $374.5 million. In particular, the U.S. consumer segment experienced a significant 33% sales decline, falling to $201.0 million from $302.1 million the previous year.
• Hawthorne segment sales also faced an 11% decline, amounting to $149.7 million compared with $168.5 million during the same period the previous year.

Gross Margin Rates: The quarter was characterized by notable declines in both GAAP and non-GAAP adjusted gross margin rates. GAAP gross margin rates were negative, with a figure of negative 15.2 percent, while non-GAAP adjusted gross margin rates stood at negative 8.8 percent.

Financial Reaffirmation and Free Cash Flow

A highlight of the fiscal year was an improvement in free cash flow, amounting to $438 million, which marked a noteworthy $681 million year-over-year increase. The company has reaffirmed its objective of generating $1 billion in free cash flow over two years through Fiscal 2024.

“We have developed an aggressive operating plan for fiscal ’24 that is built upon strong engagement with our retailer partners as well as continued diligence with cost control, free cash flow generation, and debt paydown," said Hagedorn. "Additionally, we upgraded talent at the executive and senior levels with leaders who bring energy and fresh perspectives. The team and our associates are committed to the fiscal ‘24 plan and delivering improved shareholder value,”

Project Springboard and Non-GAAP Adjusted EBITDA: Project Springboard cost savings played a pivotal role in contributing to the full-year non-GAAP adjusted EBITDA, which reached $447 million. “We made measurable progress on several fronts with Project Springboard cost savings, free cash flow generation, and debt reduction. We have secured greater financial flexibility to drive improved performance and value creation. We are on a path to margin recovery, growth in our consumer business, and a solution for Hawthorne,” concluded Hagedorn.

Price Action

SMG shares were trading down at 0.47% at $52.4314 per share Thursday afternoon.

Related News

• Ohio's $260M Economic Boom In First Year Of Legal Cannabis: New Study Predicts Windfall
• The Scotts Miracle-Gro Company Announces Quarterly Dividend Payment
• How To Grow Weed With No Soil: What Is Hydroponic Cannabis And How Do You Cultivate It?

Image: Kindel Media by Pexels edited by Benzinga