Gardening Giant Scotts Miracle-Gro Reports 46% YoY Drop In Q4 Net Sales For Its Cannabis-Focused Subsidiary

The Scotts Miracle-Gro Company SMG announced its results Wednesday for the full year and fourth quarter ended Sept. 30, 2024.

"Fiscal 2024 was a strong transition year for the Company in which we continued to transform the business while achieving meaningful top-and bottom-line growth in our core business," said Matt Garth, the company's CFO and chief administrative officer. "We made strategic investments in marketing and innovation to drive sales and support the long-term health of our brands powered by additional efficiency gains across our organization."

Net sales for the company's subsidiary for cannabis growers, Hawthorne Gardening Company, decreased 46% year-over-year to $80.5 million in the fourth quarter of fiscal 2024. The Ohio-based gardening giant reported this trend in the previous quarter as well, which it attributed to the previously announced discontinuation of its third-party distributed brands business.

Read Also: This Cannabis Merger Will Cover 25% Of U.S. Population: Cansortium & RIV Capital Powered By ScottsMiracle-Gro

• Get Benzinga's exclusive analysis and the top news about the cannabis industry and markets daily in your inbox for free. Subscribe to our newsletter here. If you're serious about the business, you can't afford to miss out.

Q4 2024 Financial Highlights

• Total company net sales were $414.7 million, an increase of 11% from $374.5 million in the same quarter last year.
• U.S. consumer net sales increased 54% year-over-year to $309.7 million.
• Hawthorne segment sales decreased 46% year-over-year, to $80.5 million.
• GAAP and non-GAAP adjusted gross margin rates for the quarter were negative 7.1% and negative 3.1%, respectively, compared to negative 15.2 percent and negative 8.8 percent, respectively, in the prior year's period.
• GAAP net loss of $244 million, or $4.29 per share, compared with the prior year's fourth-quarter loss of $468.4 million, or $8.33 per share.
• Non-GAAP adjusted net loss for the quarter, which excludes impairment, restructuring and other non-recurring items, was a loss of $131.5 million, or $2.31 per share, compared to a loss of $155.4 million, or $2.77 per share, for the same period last year.

FY 2024 Financial Highlights

• Total net sales were roughly flat compared to the prior year at $3.6 billion.
• U.S. Consumer segment sales increased 6% year-over-year, to $3 billion, driven by incremental shelf space, new listings and promotions mainly in the gardens and controls businesses.
• Sales for the Hawthorne segment decreased 37% year-over-year to $294.7 million, primarily due to the discontinuation of its third-party distribution business.
• The company-wide gross margin rate was 23.9% on a GAAP basis and 26.3% on a non-GAAP adjusted basis compared with rates of 18.5% and 23.7%, respectively, a year ago.
• Selling, general and administrative expenses of $559 million were 15.7% of net sales, a 9% decrease from fiscal 2022 reflecting the company's previously announced cost-reduction efforts.
• Other operating expenses were $19.9 million primarily due to the discount cost on sales of accounts receivable under the company's accounts receivable sale agreement.
• GAAP net loss was $34.9 million, or $0.61 per share, compared with a loss of $380.1 million, or $6.79 per share, in the prior year.
• Non-GAAP adjusted EBITDA was $510.1 million for fiscal 2024 including one-time charges of $29 million related to the AeroGarden write-down and other items, compared to $446.9 million last year.
• Free cash flow for fiscal 2024 was $583.5 million, compared to $438.2 million a year ago.

Read Next:

• Class Action Lawsuit Against Scotts Miracle-Gro: Investors Allege ‘Misleading Information’ And ‘Artificially Inflated Prices’

SMG Price Action

The Scotts Miracle-Gro Company's shares traded 4.78% lower at $89 per share during the pre-market session on Wednesday morning.