Scotts Miracle Gro Pulls Hawthorne Guidance, Citing Uncertain Environment In Cannabis Industry, Stock Falls

Scotts Miracle Gro SMG on Wednesday reported second-quarter 2025 adjusted earnings per share of $3.98, up 8%, beating the consensus of $3.95.

The branded consumer lawn and garden product marketer reported sales of $1.42 billion, down 7% year over year, missing the consensus of $1.50 billion.

U.S. Consumer sales decreased 5% to $1.31 billion, resulting from the impact of a colder and slower start to the lawn and garden season, pushing some expected second-quarter sales into the third quarter and non-repeating fiscal 2024 net sales of bulk raw materials and AeroGarden products.

Hawthorne sales fell 51% to $32.7 million.

Also Read: The Week In Cannabis: Delays, Decrees And Deals Reshape The Global Playbook

Q2 GAAP and non-GAAP adjusted gross margins were 38.6% and 39.1%, respectively. These compare to 30.4% and 35.3%, respectively, in the prior year. The improvements were primarily due to lower material, manufacturing, and distribution costs, as well as an improved product and segment mix.

"We continue to advance our fiscal 2025 financial plan focused on sustainable net sales growth, margin recovery and a stronger balance sheet," said Mark Scheiwer, chief financial officer and chief accounting officer. "We are driving significant free cash flow and debt paydown while making incremental investments in consumer activation programs. POS trends have remained consistent through April, and retailer replenishment is expected to be strong in our fiscal third quarter."

Q2 2025 non-GAAP Adjusted EBITDA reached $402.8 million, an improvement of $6.5 million over the prior year.

Guidance: Scotts Miracle Gro reaffirms 2025 guidance and expects low single-digit growth in fiscal 2025 for the U.S. consumer segment.

Given the continued uncertain environment in the cannabis industry, the company is no longer providing full-year revenue guidance for its Hawthorne segment.

"An important underlying story is POS, as for the second straight quarter we drove double-digit increases in consumer takeaway, reflecting the power of our franchise and health of our consumer,” said Jim Hagedorn, chairman and CEO. “This, combined with the fact that we are largely unaffected by tariffs this fiscal year, reaffirms our confidence in our outlook."

The company expects adjusted EBITDA of $570 million to $590 million, with an adjusted gross margin of around 30%.

Price Action: SMG stock was down 13.7% at $46.23 at the last check on Wednesday.

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