ScottsMiracle-Gro Reports Fiscal 2024 Fourth Quarter and Full-Year Results
ScottsMiracle-Gro (NYSE: SMG) reported its fiscal 2024 results with U.S. Consumer sales up 6% and total company net sales flat at $3.6 billion. The company posted a GAAP loss per share of $0.61 and non-GAAP adjusted EPS of $2.29. Notable achievements include exceeding the free cash flow target of $1 billion over two years, achieving net leverage of 4.86x, and delivering non-GAAP adjusted EBITDA of $510 million. The U.S. Consumer segment showed strength with a 9% increase in POS units, while Hawthorne segment sales decreased 37% to $294.7 million. The company's gross margin rate improved to 23.9% GAAP and 26.3% non-GAAP adjusted.
ScottsMiracle-Gro (NYSE: SMG) ha riportato i risultati fiscali per il 2024 con un aumento delle vendite al consumatore negli Stati Uniti del 6% e un fatturato totale dell'azienda stabile a 3,6 miliardi di dollari. L'azienda ha registrato una perdita per azione secondo i principi contabili GAAP di 0,61 dollari e un utile per azione al di fuori del GAAP di 2,29 dollari. Tra i risultati rilevanti si segnala il superamento dell'obiettivo di flusso di cassa libero di 1 miliardo di dollari in due anni, raggiungendo un leverage netto di 4,86x e consegnando un EBITDA rettificato non GAAP di 510 milioni di dollari. Il segmento dei consumatori negli Stati Uniti ha mostrato forza con un aumento del 9% nelle unità POS, mentre le vendite del segmento Hawthorne sono diminuite del 37%, raggiungendo i 294,7 milioni di dollari. Il tasso di margine lordo dell'azienda è migliorato al 23,9% secondo GAAP e al 26,3% rettificato non GAAP.
ScottsMiracle-Gro (NYSE: SMG) reportó sus resultados fiscales para 2024 con un aumento del 6% en las ventas al consumidor en EE. UU. y ventas netas totales de la empresa estables en 3.6 mil millones de dólares. La compañía reportó una pérdida por acción bajo los principios contables GAAP de $0.61 y una EPS ajustada no GAAP de $2.29. Entre los logros destacados se incluye el superación de la meta de flujo de caja libre de $1 mil millones en dos años, logrando un apalancamiento neto de 4.86x y entrega de un EBITDA ajustado no GAAP de $510 millones. El segmento de consumidores de EE. UU. mostró fortaleza con un aumento del 9% en las unidades POS, mientras que las ventas del segmento Hawthorne disminuyeron un 37% a $294.7 millones. La tasa de margen bruto de la empresa mejoró al 23.9% bajo GAAP y al 26.3% ajustado no GAAP.
ScottsMiracle-Gro (NYSE: SMG)는 2024 회계 연도 결과를 발표하며 미국 소비자 판매가 6% 증가했으며, 회사의 총 매출은 36억 달러로 유지되었다고 보고했습니다. 회사는 GAAP 기준으로 주당 0.61달러의 손실을 기록했으며, 비GAAP 조정 EPS는 2.29달러로 나타났습니다. 주요 성과에는 2년 동안 10억 달러의 자유 현금 흐름 목표를 초과 달성하고, 순부채 비율을 4.86배로 유지하며, 비GAAP 조정 EBITDA가 5억 1천만 달러에 달한 것이 포함됩니다. 미국 소비자 부문은 POS 장치 수가 9% 증가하며 강세를 보였고, Hawthorne 부문 매출은 37% 감소하여 2억 9천470만 달러에 달했습니다. 회사의 총 매출 마진 비율은 GAAP 기준으로 23.9%, 비GAAP 조정 기준으로 26.3%로 개선되었습니다.
ScottsMiracle-Gro (NYSE: SMG) a publié ses résultats pour l'exercice 2024, affichant une augmentation de 6% des ventes pour les consommateurs américains et un chiffre d'affaires total stable à 3,6 milliards de dollars. L'entreprise a enregistré une perte par action de 0,61 dollar selon les normes GAAP et un BPA ajusté non-GAAP de 2,29 dollars. Parmi les réalisations notables, on note le dépassement de l'objectif de flux de trésorerie libre de 1 milliard de dollars sur deux ans, atteignant un endettement net de 4,86x, et un EBITDA ajusté non-GAAP de 510 millions de dollars. Le segment des consommateurs américains a montré une certaine force avec une augmentation de 9% des unités POS, tandis que les ventes du segment Hawthorne ont diminué de 37% pour atteindre 294,7 millions de dollars. La marge brute de l'entreprise s'est améliorée, atteignant 23,9% selon GAAP et 26,3% ajusté non-GAAP.
ScottsMiracle-Gro (NYSE: SMG) hat seine Ergebnisse für das fiskalische Jahr 2024 bekannt gegeben, mit einem Umsatzanstieg von 6% im US-Verbrauchersegment und einem stabilen Gesamtumsatz von 3,6 Milliarden Dollar. Das Unternehmen verzeichnete einen GAAP-Verlust pro Aktie von 0,61 Dollar und ein nicht-GAAP angepasstes EPS von 2,29 Dollar. Zu den bemerkenswerten Erfolgen gehören das Übertreffen des Ziels für den freien Cashflow von 1 Milliarde Dollar über zwei Jahre, die Erreichung eines Nettoschuldenfaktors von 4,86x und die Bereitstellung eines nicht-GAAP angepassten EBITDA von 510 Millionen Dollar. Das US-Verbrauchersegment zeigte Stärke mit einem Anstieg der POS-Einheiten um 9%, während die Verkäufe im Hawthorne-Segment um 37% auf 294,7 Millionen Dollar zurückgingen. Die Bruttomarge des Unternehmens verbesserte sich auf 23,9% GAAP und 26,3% nicht-GAAP angepasst.
- U.S. Consumer segment sales increased 6% to $3.0 billion
- Free cash flow improved to $583.5 million from $438.2 million
- Non-GAAP adjusted EBITDA increased to $510.1 million from $446.9 million
- Gross margin rate improved by 340 basis points on non-GAAP adjusted basis
- Interest expense decreased by $19.3 million to $158.8 million
- GAAP net loss of $34.9 million or $0.61 per share
- Hawthorne segment sales decreased 37% to $294.7 million
- $51.5 million non-cash impairment charge for Bonnie Plants joint venture
- $64.6 million non-cash impairments related to RIV Capital investments
- Net leverage remains high at 4.86x
Insights
The Q4 and FY2024 results demonstrate a significant financial turnaround for ScottsMiracle-Gro. Key highlights include: U.S. Consumer sales growth of
Notable improvements in gross margin (up 340 basis points) and debt management (leverage ratio at 4.86x) signal operational efficiency. However, Hawthorne segment's
The results reflect strategic repositioning in the lawn and garden market. The
Inventory management improvements, bringing levels below
- U.S. Consumer fiscal 2024 sales up 6 percent in line with guidance; POS units up 9 percent year-over-year
- Full-year GAAP gross margin rate of 23.9 percent; Non-GAAP adjusted gross margin rate up 340 basis points excluding one-time charges of 80 basis points
- Full-year GAAP loss per share of
$0.61 ; Non-GAAP adjusted EPS of$2.29 including one-time charges of$0.35 per share - Company exceeds free cash flow target of
$1 billion over two years through fiscal 2024; Net leverage at 4.86x - Non-GAAP adjusted EBITDA of
$510 million at high end of guidance range when excluding$29 million of one-time charges
MARYSVILLE, Ohio, Nov. 06, 2024 (GLOBE NEWSWIRE) -- The Scotts Miracle-Gro Company (NYSE: SMG), the world’s largest marketer of branded consumer lawn and garden as well as a leader in indoor and hydroponic growing products, today announced its results for the full year and fourth quarter ended September 30, 2024.
“Our performance in fiscal 2024 serves as a testament to our financial turnaround,” said Jim Hagedorn, chairman, CEO and president of ScottsMiracle-Gro. “We delivered upon or exceeded the goals we set this year and returned to managing the business with an eye toward future growth and value creation.
“We’ve established a foundation for our three-year growth plan that is grounded in my mid-term priorities, and we expect to make substantial progress against these priorities in 2025. It’s important to recognize that throughout our recovery journey, we have upheld our commitment to shareholders while investing in the core strengths of our business to enhance our ability to deliver improved returns.”
Financial Results
Fourth Quarter Details
For the quarter ended September 30, 2024, total Company net sales were
Hawthorne segment sales decreased 46 percent, to
GAAP and non-GAAP adjusted gross margin rates for the quarter were negative 7.1 percent and negative 3.1 percent, respectively. These compare to negative 15.2 percent and negative 8.8 percent, respectively, in the prior year with the year-over-year improvements mainly driven by fixed-cost leverage from higher sales volume. These improvements were partially offset by incremental charges of
Equity in loss of unconsolidated affiliates, which represents the Company’s share of the results of its live goods joint venture, Bonnie Plants, LLC, includes a non-cash, pre-tax impairment charge of
For the fourth quarter, the Company reported GAAP net loss of
Non-GAAP adjusted net loss for the quarter, which excludes impairment, restructuring and other non-recurring items, was a loss of
Full Fiscal Year Details
For the fiscal year ended September 30, 2024, total Company net sales were roughly flat compared to prior year at
The company-wide gross margin rate was 23.9 percent on a GAAP basis and 26.3 percent on a non-GAAP adjusted basis compared with rates of 18.5 percent and 23.7 percent, respectively, a year ago. Improvements were primarily driven by annualization of distribution network savings, favorable segment mix and material cost deflation partially offset by negative pricing. These improvements were partially offset by the
SG&A of
Other operating expense was
Interest expense decreased
GAAP net loss was
Non-GAAP adjusted EBITDA was
Free cash flow for fiscal 2024 was
“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, chief financial officer 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.
“These investments, along with the difficult choices we made to discontinue underperforming business lines in fiscal 2024, position us to make positive strides towards our three-year financial targets shared at our July investor day. In fiscal 2025, we will achieve additional gross margin recovery, make incremental investments in our brands of at least
Fiscal 2025 Outlook
The Company will outline its expectations for fiscal 2025 during today’s call.
Conference Call and Webcast Scheduled for 9 a.m. ET Today, November 6
The Company will discuss results during a video presentation via webcast today at 9 a.m. ET. To watch the Company presentation and listen to the question-and-answer session, please register in advance at this webcast link. For those planning to participate in the question-and-answer session that follows the video presentation, please register for the webcast to view the presentation in addition to registering in advance via this audio link to receive call-in details and a unique PIN. A replay of the conference call will also be available on the Company’s investor website where an archive of the press release and any accompanying information will remain available for at least a 12-month period.
Net Sales Details
| Fiscal Fourth Quarter (July - September 2024) | ||||||||||
| Net Sales Drivers (1) | Volume & Mix | Foreign Exchange | Price | Other(2) | Net Sales | |||||
| U.S. Consumer | 53 | % | – | % | 1 | % | – | % | 54 | % |
| Hawthorne | (47 | )% | – | % | 1 | % | – | % | (46 | )% |
| Other | 7 | % | (1 | )% | (3 | )% | – | % | 3 | % |
| Total SMG | 10 | % | – | % | 1 | % | – | % | 11 | % |
| Fiscal 2024 (October 2023 - September 2024) | |||||
| Net Sales Drivers (1) | Volume & Mix | Foreign Exchange | Price | Other(2) | Net Sales |
| U.S. Consumer | | –% | (1)% | –% | |
| Hawthorne | (37)% | –% | –% | –% | (37)% |
| Other | | –% | (1)% | –% | |
| Total SMG | –% | (1)% | –% | –% | |
(1) Net Sales percentage changes are approximations based on quantitative formulas that are consistently applied
(2) Other includes the impact of acquisitions and divestitures and rounding impacts necessary to reconcile to net sales
About ScottsMiracle-Gro
With approximately
Cautionary Note Regarding Forward-Looking Statements
Statements contained in this press release, other than statements of historical fact, which address activities, events and developments that the Company expects or anticipates will or may occur in the future, including, but not limited to, information regarding the future economic performance and financial condition of the Company, the plans and objectives of the Company’s management, and the Company’s assumptions regarding such performance and plans are “forward-looking statements” within the meaning of the U.S. federal securities laws that are subject to risks and uncertainties. These forward-looking statements generally can be identified as statements that include phrases such as “guidance,” “outlook,” “projected,” “believe,” “target,” “predict,” “estimate,” “forecast,” “strategy,” “may,” “goal,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “should” or other similar words or phrases. Actual results could differ materially from the forward-looking information in this release due to a variety of factors, including, but not limited to:
- An economic downturn and economic uncertainty may adversely affect demand for the Company’s products;
- The Company’s operations, financial condition or reputation may be impaired if its information or operational technology systems fail to perform adequately or if it is the subject of a data breach or cyber-attack;
- The highly competitive nature of the Company’s markets could adversely affect it ability to maintain or grow revenues;
- In the event of a disaster, the Company’s disaster recovery and business continuity plans may fail, which could adversely interrupt its operations;
- Climate change and unfavorable weather conditions could adversely impact financial results;
- The Company may not successfully develop new product lines and products or improve existing product lines and products;
- The Company’s indebtedness could limit its flexibility and adversely affect its financial condition;
- If the Company underestimates or overestimates demand for its products and does not maintain appropriate inventory levels, its net sales and/or working capital could be negatively impacted;
- Disruptions in availability or increases in the prices of raw materials, fuel or transportation costs could adversely affect the Company’s results of operations;
- A significant interruption in the operation of the Company’s or its suppliers’ facilities could impact the Company’s capacity to produce products and service its customers, which could adversely affect the Company’s revenues and earnings;
- Acquisitions, other strategic alliances and investments could result in operating difficulties, dilution and other harmful consequences that may adversely impact the Company’s business and results of operations;
- Compliance with environmental and other public health regulations or changes in such regulations or regulatory enforcement priorities could increase the Company’s cost of doing business or limit its ability to market all of its products;
- Because of the concentration of the Company’s sales to a small number of retail customers, the loss of one or more of, or significant reduction in orders from, its top customers, or a material reduction in the inventory of the Company’s products that they carry, could adversely affect the Company’s financial results;
- If the perception of the Company’s brands or organizational reputation are damaged, its consumers, distributors and retailers may react negatively, which could materially and adversely affect the Company’s business, financial condition and results of operations; and
- Hagedorn Partnership, L.P. beneficially owns approximately
24% of the Company’s common shares and can significantly influence decisions that require the approval of shareholders.
Additional detailed information concerning a number of the important factors that could cause actual results to differ materially from the forward-looking information contained in this release is readily available in the Company’s publicly filed quarterly, annual and other reports. The Company disclaims any obligation to update developments of these risk factors or to announce publicly any revision to any of the forward-looking statements contained in this release, or to make corrections to reflect future events or developments.
For investor inquiries:
Aimee DeLuca
Sr. Vice President, Investor Relations
aimee.deluca@scotts.com
(937) 578-5621
For media inquiries:
Tom Matthews
Chief Communications Officer
tom.matthews@scotts.com
(937) 644-7044
| THE SCOTTS MIRACLE-GRO COMPANY Condensed Consolidated Statements of Operations (In millions, except per share data) (Unaudited) | |||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||
| Footnotes | September 30, 2024 | September 30, 2023 | % Change | September 30, 2024 | September 30, 2023 | % Change | |||||||||||||||||||
| Net sales | $ | 414.7 | $ | 374.5 | 11 | % | $ | 3,552.7 | $ | 3,551.3 | — | % | |||||||||||||
| Cost of sales | 427.5 | 407.5 | 2,618.7 | 2,708.3 | |||||||||||||||||||||
| Cost of sales—impairment, restructuring and other | 16.8 | 23.9 | 83.5 | 185.7 | |||||||||||||||||||||
| Gross margin | (29.6 | ) | (56.9 | ) | 48 | % | 850.5 | 657.3 | 29 | % | |||||||||||||||
| % of sales | (7.1)% | (15.2)% | 23.9 | % | 18.5 | % | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||
| Selling, general and administrative | 117.6 | 108.0 | 9 | % | 559.0 | 551.3 | 1 | % | |||||||||||||||||
| Impairment, restructuring and other | 68.7 | 248.5 | 62.8 | 280.5 | |||||||||||||||||||||
| Other (income) expense, net | 0.1 | 2.7 | 19.9 | (0.1 | ) | ||||||||||||||||||||
| Income (loss) from operations | (216.0 | ) | (416.1 | ) | 48 | % | 208.8 | (174.4 | ) | 220 | % | ||||||||||||||
| % of sales | (52.1)% | (111.1)% | 5.9 | % | (4.9)% | ||||||||||||||||||||
| Equity in loss of unconsolidated affiliates | 61.6 | 104.6 | 68.1 | 101.1 | |||||||||||||||||||||
| Interest expense | 33.1 | 40.0 | 158.8 | 178.1 | |||||||||||||||||||||
| Other non-operating (income) expense, net | 1.4 | — | 5.5 | (0.3 | ) | ||||||||||||||||||||
| Loss before income taxes | (312.1 | ) | (560.7 | ) | 44 | % | (23.6 | ) | (453.3 | ) | 95 | % | |||||||||||||
| Income tax expense (benefit) | (68.1 | ) | (92.3 | ) | 11.3 | (73.2 | ) | ||||||||||||||||||
| Net loss | $ | (244.0 | ) | $ | (468.4 | ) | 48 | % | $ | (34.9 | ) | $ | (380.1 | ) | 91 | % | |||||||||
| Basic net loss per common share | (1 | ) | $ | (4.29 | ) | $ | (8.33 | ) | 48 | % | $ | (0.61 | ) | $ | (6.79 | ) | 91 | % | |||||||
| Diluted net loss per common share | (2) (4) | $ | (4.29 | ) | $ | (8.33 | ) | 48 | % | $ | (0.61 | ) | $ | (6.79 | ) | 91 | % | ||||||||
| Common shares used in basic net loss per share calculation | 56.9 | 56.2 | 1 | % | 56.8 | 56.0 | 1 | % | |||||||||||||||||
| Common shares and potential common shares used in diluted net loss per share calculation | 56.9 | 56.2 | 1 | % | 56.8 | 56.0 | 1 | % | |||||||||||||||||
| Non-GAAP results: | |||||||||||||||||||||||||
| Adjusted net income (loss) | (3 | ) | $ | (131.5 | ) | $ | (155.4 | ) | 15 | % | $ | 132.0 | $ | 68.1 | 94 | % | |||||||||
| Adjusted diluted net income (loss) per common share | (2) (3) (4) | $ | (2.31 | ) | $ | (2.77 | ) | 17 | % | $ | 2.29 | $ | 1.21 | 89 | % | ||||||||||
| Adjusted EBITDA | (3 | ) | $ | (97.2 | ) | $ | (106.1 | ) | 8 | % | $ | 510.1 | $ | 446.9 | 14 | % | |||||||||
| Note: See accompanying footnotes. | |||||||||||||||||||||||||
THE SCOTTS MIRACLE-GRO COMPANY
Segment Results
(In millions)
(Unaudited)
The Company divides its operations into three reportable segments: U.S. Consumer, Hawthorne and Other. U.S. Consumer consists of the Company’s consumer lawn and garden business in the United States. Hawthorne consists of the Company’s indoor and hydroponic gardening business. Other primarily consists of the Company’s consumer lawn and garden business in Canada. This identification of reportable segments is consistent with how the segments report to and are managed by the chief operating decision maker of the Company. In addition, Corporate consists of general and administrative expenses and certain other income and expense items not allocated to the business segments.
The performance of each reportable segment is evaluated based on several factors, including income (loss) before income taxes, amortization, impairment, restructuring and other charges (“Segment Profit (Loss)”), which is a non-GAAP financial measure. Senior management uses Segment Profit (Loss) to evaluate segment performance because they believe this measure is indicative of performance trends and the overall earnings potential of each segment.
The following tables present financial information for the Company’s reportable segments for the periods indicated:
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||
| September 30, 2024 | September 30, 2023 | % Change | September 30, 2024 | September 30, 2023 | % Change | ||||||||||||||||
| Net Sales: | |||||||||||||||||||||
| U.S. Consumer | $ | 309.7 | $ | 201.0 | 54 | % | $ | 3,013.7 | $ | 2,843.7 | 6 | % | |||||||||
| Hawthorne | 80.5 | 149.7 | (46)% | 294.7 | 467.3 | (37)% | |||||||||||||||
| Other | 24.5 | 23.8 | 3 | % | 244.3 | 240.3 | 2 | % | |||||||||||||
| Consolidated | $ | 414.7 | $ | 374.5 | 11 | % | $ | 3,552.7 | $ | 3,551.3 | — | % | |||||||||
| Segment Profit (Loss) (Non-GAAP): | |||||||||||||||||||||
| U.S. Consumer | $ | (82.5 | ) | $ | (99.3 | ) | 17 | % | $ | 498.0 | $ | 454.1 | 10 | % | |||||||
| Hawthorne | (5.0 | ) | (6.4 | ) | 22 | % | (14.2 | ) | (48.1 | ) | 70 | % | |||||||||
| Other | (8.2 | ) | (9.4 | ) | 13 | % | 4.7 | 12.4 | (62)% | ||||||||||||
| Total Segment Profit (Loss) (Non-GAAP) | (95.7 | ) | (115.1 | ) | 17 | % | 488.5 | 418.4 | 17 | % | |||||||||||
| Corporate | (30.9 | ) | (24.3 | ) | (117.7 | ) | (101.6 | ) | |||||||||||||
| Intangible asset amortization | (3.9 | ) | (4.4 | ) | (15.7 | ) | (25.2 | ) | |||||||||||||
| Impairment, restructuring and other | (85.5 | ) | (272.3 | ) | (146.3 | ) | (466.0 | ) | |||||||||||||
| Equity in loss of unconsolidated affiliates | (61.6 | ) | (104.6 | ) | (68.1 | ) | (101.1 | ) | |||||||||||||
| Interest expense | (33.1 | ) | (40.0 | ) | (158.8 | ) | (178.1 | ) | |||||||||||||
| Other non-operating income (expense), net | (1.4 | ) | — | (5.5 | ) | 0.3 | |||||||||||||||
| Loss before income taxes (GAAP) | $ | (312.1 | ) | $ | (560.7 | ) | 44 | % | $ | (23.6 | ) | $ | (453.3 | ) | 95 | % | |||||
| THE SCOTTS MIRACLE-GRO COMPANY Condensed Consolidated Balance Sheets (In millions) (Unaudited) | ||||||||
| September 30, 2024 | September 30, 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 71.6 | $ | 31.9 | ||||
| Accounts receivable, net | 176.8 | 304.2 | ||||||
| Inventories | 587.5 | 880.3 | ||||||
| Prepaid and other current assets | 144.5 | 181.4 | ||||||
| Total current assets | 980.4 | 1,397.8 | ||||||
| Investment in unconsolidated affiliates | 45.2 | 91.9 | ||||||
| Property, plant and equipment, net | 609.5 | 610.3 | ||||||
| Goodwill | 243.9 | 243.9 | ||||||
| Intangible assets, net | 418.8 | 436.7 | ||||||
| Other assets | 574.1 | 633.1 | ||||||
| Total assets | $ | 2,871.9 | $ | 3,413.7 | ||||
| LIABILITIES AND EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Current portion of debt | $ | 52.6 | $ | 52.3 | ||||
| Accounts payable | 254.7 | 271.2 | ||||||
| Other current liabilities | 443.0 | 450.2 | ||||||
| Total current liabilities | 750.3 | 773.7 | ||||||
| Long-term debt | 2,174.2 | 2,557.4 | ||||||
| Other liabilities | 338.0 | 349.9 | ||||||
| Total liabilities | 3,262.5 | 3,681.0 | ||||||
| Equity (deficit) | (390.6 | ) | (267.3 | ) | ||||
| Total liabilities and equity (deficit) | $ | 2,871.9 | $ | 3,413.7 | ||||
| THE SCOTTS MIRACLE-GRO COMPANY Condensed Consolidated Statements of Cash Flows (In millions) (Unaudited) | |||||||
| Year Ended September 30, | |||||||
| 2024 | 2023 | ||||||
| OPERATING ACTIVITIES | |||||||
| Net loss | $ | (34.9 | ) | $ | (380.1 | ) | |
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
| Impairment, restructuring and other | 84.3 | 288.6 | |||||
| Share-based compensation expense | 80.4 | 68.9 | |||||
| Depreciation | 64.9 | 67.3 | |||||
| Amortization | 15.7 | 25.2 | |||||
| Deferred taxes | 9.3 | (58.7 | ) | ||||
| Equity in loss of unconsolidated affiliates | 68.1 | 101.1 | |||||
| Changes in assets and liabilities, net of acquisitions: | |||||||
| Accounts receivable | 128.2 | 77.7 | |||||
| Inventories | 293.8 | 450.5 | |||||
| Prepaid and other current assets | 10.2 | 18.6 | |||||
| Accounts payable | (1.6 | ) | (153.6 | ) | |||
| Other current liabilities | (45.4 | ) | 52.0 | ||||
| Other non-current items | (6.2 | ) | (30.7 | ) | |||
| Other, net | 0.7 | 4.2 | |||||
| Net cash provided by operating activities | 667.5 | 531.0 | |||||
| INVESTING ACTIVITIES | |||||||
| Proceeds from sale of long-lived assets | 2.4 | 2.5 | |||||
| Investments in property, plant and equipment | (84.0 | ) | (92.8 | ) | |||
| Proceeds from loans receivable | — | 37.0 | |||||
| Investments in unconsolidated affiliates | (21.4 | ) | — | ||||
| Other investing, net | 2.6 | (12.4 | ) | ||||
| Net cash used in investing activities | (100.4 | ) | (65.7 | ) | |||
| FINANCING ACTIVITIES | |||||||
| Borrowings under revolving and bank lines of credit and term loans | 648.5 | 1,336.2 | |||||
| Repayments under revolving and bank lines of credit and term loans | (1,039.5 | ) | (1,689.8 | ) | |||
| Financing and issuance fees | — | (6.4 | ) | ||||
| Dividends paid | (151.3 | ) | (149.1 | ) | |||
| Purchase of Common Shares | (5.1 | ) | (9.3 | ) | |||
| Cash received from exercise of stock options | 3.8 | 2.3 | |||||
| Other financing, net | 15.7 | (4.0 | ) | ||||
| Net cash used in financing activities | (527.9 | ) | (520.1 | ) | |||
| Effect of exchange rate changes on cash | 0.5 | (0.1 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | 39.7 | (54.9 | ) | ||||
| Cash and cash equivalents at beginning of year | 31.9 | 86.8 | |||||
| Cash and cash equivalents at end of year | $ | 71.6 | $ | 31.9 | |||
| THE SCOTTS MIRACLE-GRO COMPANY Reconciliation of Non-GAAP Disclosure Items (3) (In millions, except per share data) (Unaudited) | ||||||||||||||||||||
| Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | |||||||||||||||||||
| As Reported (GAAP) | Impairment, Restructuring and Other | Adjusted (Non- GAAP) | As Reported (GAAP) | Impairment, Restructuring and Other | Adjusted (Non- GAAP) | |||||||||||||||
| Gross margin | $ | (29.6 | ) | $ | (16.8 | ) | $ | (12.7 | ) | $ | (56.9 | ) | $ | (23.9 | ) | $ | (33.0 | ) | ||
| Gross margin as a % of sales | (7.1)% | (3.1)% | (15.2)% | (8.8)% | ||||||||||||||||
| Loss from operations | (216.0 | ) | (85.5 | ) | (130.5 | ) | (416.1 | ) | (272.3 | ) | (143.7 | ) | ||||||||
| Loss from operations as a % of sales | (52.1)% | (31.5)% | (111.1)% | (38.4)% | ||||||||||||||||
| Equity in loss of unconsolidated affiliates | (61.6 | ) | (51.5 | ) | (10.1 | ) | (104.6 | ) | (94.7 | ) | (9.9 | ) | ||||||||
| Loss before income taxes | (312.1 | ) | (137.0 | ) | (175.2 | ) | (560.7 | ) | (367.0 | ) | (193.7 | ) | ||||||||
| Income tax benefit | (68.1 | ) | (24.5 | ) | (43.7 | ) | (92.3 | ) | (54.0 | ) | (38.3 | ) | ||||||||
| Net loss | (244.0 | ) | (112.4 | ) | (131.5 | ) | (468.4 | ) | (313.0 | ) | (155.4 | ) | ||||||||
| Diluted net loss per common share | (4.29 | ) | (1.98 | ) | (2.31 | ) | (8.33 | ) | (5.57 | ) | (2.77 | ) | ||||||||
| Common shares and potential common shares used in diluted net loss per share calculation (4) | 56.9 | 56.9 | 56.2 | 56.2 | ||||||||||||||||
| Calculation of Adjusted EBITDA (3): | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | ||||||
| Net loss (GAAP) | $ | (244.0 | ) | $ | (468.4 | ) | ||
| Income tax benefit | (68.1 | ) | (92.3 | ) | ||||
| Interest expense | 33.1 | 40.0 | ||||||
| Depreciation | 16.1 | 17.8 | ||||||
| Amortization | 3.9 | 4.4 | ||||||
| Impairment, restructuring and other charges | 85.5 | 272.3 | ||||||
| Equity in loss of unconsolidated affiliates | 61.6 | 104.6 | ||||||
| Interest income | (0.1 | ) | (0.7 | ) | ||||
| Share-based compensation expense | 14.8 | 16.2 | ||||||
| Adjusted EBITDA (Non-GAAP) | $ | (97.2 | ) | $ | (106.1 | ) | ||
| Note: See accompanying footnotes. | ||||||||
| The sum of the components may not equal due to rounding. | ||||||||
| THE SCOTTS MIRACLE-GRO COMPANY Reconciliation of Non-GAAP Disclosure Items (3) (In millions, except per share data) (Unaudited) | ||||||||||||||||||||
| Twelve Months Ended September 30, 2024 | Twelve Months Ended September 30, 2023 | |||||||||||||||||||
| As Reported (GAAP) | Impairment, Restructuring and Other | Adjusted (Non- GAAP) | As Reported (GAAP) | Impairment, Restructuring and Other | Adjusted (Non- GAAP) | |||||||||||||||
| Gross margin | $ | 850.5 | $ | (83.5 | ) | $ | 933.9 | $ | 657.3 | $ | (185.6 | ) | $ | 842.9 | ||||||
| Gross margin as a % of sales | 23.9 | % | 26.3 | % | 18.5 | % | 23.7 | % | ||||||||||||
| Income (loss) from operations | 208.8 | (146.3 | ) | 355.1 | (174.4 | ) | (466.0 | ) | 291.7 | |||||||||||
| Income (loss) from operations as a % of sales | 5.9 | % | 10.0 | % | (4.9)% | 8.2 | % | |||||||||||||
| Equity in loss of unconsolidated affiliates | (68.1 | ) | (61.9 | ) | (6.2 | ) | (101.1 | ) | (94.7 | ) | (6.4 | ) | ||||||||
| Income (loss) before income taxes | (23.6 | ) | (208.2 | ) | 184.6 | (453.3 | ) | (560.7 | ) | 107.4 | ||||||||||
| Income tax expense (benefit) | 11.3 | (41.3 | ) | 52.6 | (73.2 | ) | (112.6 | ) | 39.3 | |||||||||||
| Net income (loss) | (34.9 | ) | (166.9 | ) | 132.0 | (380.1 | ) | (448.1 | ) | 68.1 | ||||||||||
| Diluted net income (loss) per common share | (0.61 | ) | (2.89 | ) | 2.29 | (6.79 | ) | (7.95 | ) | 1.21 | ||||||||||
| Common shares and potential common shares used in diluted net income (loss) per share calculation (4) | 56.8 | 57.7 | 56.0 | 56.4 | ||||||||||||||||
| Calculation of Adjusted EBITDA (3): | Twelve Months Ended September 30, 2024 | Twelve Months Ended September 30, 2023 | ||||||
| Net loss (GAAP) | $ | (34.9 | ) | $ | (380.1 | ) | ||
| Income tax expense (benefit) | 11.3 | (73.2 | ) | |||||
| Interest expense | 158.8 | 178.1 | ||||||
| Depreciation | 64.9 | 67.3 | ||||||
| Amortization | 15.7 | 25.2 | ||||||
| Impairment, restructuring and other charges | 146.3 | 466.0 | ||||||
| Equity in loss of unconsolidated affiliates | 68.1 | 101.1 | ||||||
| Interest income | (0.5 | ) | (6.4 | ) | ||||
| Share-based compensation expense | 80.4 | 68.9 | ||||||
| Adjusted EBITDA (Non-GAAP) | $ | 510.1 | $ | 446.9 | ||||
| Note: See accompanying footnotes. | ||||||||
| The sum of the components may not equal due to rounding. | ||||||||
| THE SCOTTS MIRACLE-GRO COMPANY Reconciliation of Non-GAAP Disclosure Items (3) (In millions) (Unaudited) | ||||||||
| Year Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Calculation of free cash flow (3): | ||||||||
| Net cash provided by operating activities (GAAP) | $ | 667.5 | $ | 531.0 | ||||
| Investments in property, plant and equipment | (84.0 | ) | (92.8 | ) | ||||
| Free cash flow (Non-GAAP) | $ | 583.5 | $ | 438.2 | ||||
| Note: See accompanying footnotes. | ||||||||
THE SCOTTS MIRACLE-GRO COMPANY
Footnotes to Preceding Financial Statements
(1) Basic net income (loss) per common share amounts are calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period.
(2) Diluted net income (loss) per common share amounts are calculated by dividing net income (loss) by the weighted average number of common shares, plus all potential dilutive securities (common stock options, performance shares, performance units, restricted stock and restricted stock units) outstanding during the period.
(3) Reconciliation of Non-GAAP Measures
Use of Non-GAAP Measures
To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company uses non-GAAP financial measures. The reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are shown in the tables above. These non-GAAP financial measures should not be considered in isolation from, or as a substitute for or superior to, financial measures reported in accordance with GAAP. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of the business as determined in accordance with GAAP. Other companies may calculate similarly titled non-GAAP financial measures differently than the Company, limiting the usefulness of those measures for comparative purposes.
In addition to GAAP measures, management uses these non-GAAP financial measures to evaluate the Company’s performance, engage in financial and operational planning, determine incentive compensation and monitor compliance with the financial covenants contained in the Company’s borrowing agreements because it believes that these non-GAAP financial measures provide additional perspective on and, in some circumstances are more closely correlated to, the performance of the Company’s underlying, ongoing business.
Management believes that these non-GAAP financial measures are useful to investors in their assessment of operating performance and the valuation of the Company. In addition, these non-GAAP financial measures address questions routinely received from analysts and investors and, in order to ensure that all investors have access to the same data, management has determined that it is appropriate to make this data available to all investors. Non-GAAP financial measures exclude the impact of certain items (as further described below) and provide supplemental information regarding operating performance. By disclosing these non-GAAP financial measures, management intends to provide investors with a supplemental comparison of operating results and trends for the periods presented. Management believes these non-GAAP financial measures are also useful to investors as such measures allow investors to evaluate performance using the same metrics that management uses to evaluate past performance and prospects for future performance. Management views free cash flow as an important measure because it is one factor used in determining the amount of cash available for dividends and discretionary investment.
Exclusions from Non-GAAP Financial Measures
Non-GAAP financial measures reflect adjustments based on the following items:
- Impairments, which are excluded because they do not occur in or reflect the ordinary course of the Company’s ongoing business operations and their exclusion results in a metric that provides supplemental information about the sustainability of operating performance.
- Restructuring and employee severance costs, which include charges for discrete projects or transactions that fundamentally change the Company’s operations and are excluded because they are not part of the ongoing operations of its underlying business, which includes normal levels of reinvestment in the business.
- Costs related to refinancing, which are excluded because they do not typically occur in the normal course of business and may obscure analysis of trends and financial performance. Additionally, the amount and frequency of these types of charges is not consistent and is significantly impacted by the timing and size of debt financing transactions.
- Discontinued operations and other unusual items, which include costs or gains related to discrete projects or transactions and are excluded because they are not comparable from one period to the next and are not part of the ongoing operations of the Company’s underlying business.
The tax effect for each of the items listed above is determined using the tax rate and other tax attributes applicable to the item and the jurisdiction(s) in which the item is recorded.
Definitions of Non-GAAP Financial Measures
The reconciliations of non-GAAP disclosure items include the following financial measures that are not calculated in accordance with GAAP:
Adjusted gross margin: Gross margin excluding impairment, restructuring and other charges / recoveries.
Adjusted income (loss) from operations: Income (loss) from operations excluding impairment, restructuring and other charges / recoveries.
Adjusted equity in (income) loss of unconsolidated affiliates: Equity in (income) loss of unconsolidated affiliates excluding impairment charges.
Adjusted income (loss) before income taxes: Income (loss) before income taxes excluding impairment, restructuring and other charges / recoveries, costs related to refinancing and certain other non-operating income / expense items.
Adjusted income tax expense (benefit): Income tax expense (benefit) excluding the tax effect of impairment, restructuring and other charges / recoveries, costs related to refinancing and certain other non-operating income / expense items.
Adjusted net income (loss): Net income (loss) excluding impairment, restructuring and other charges / recoveries, costs related to refinancing and certain other non-operating income / expense items, each net of tax.
Adjusted diluted net income (loss) per common share: Diluted net income (loss) per common share excluding impairment, restructuring and other charges / recoveries, costs related to refinancing and certain other non-operating income / expense items, each net of tax.
Adjusted EBITDA: Net income (loss) before interest, taxes, depreciation and amortization as well as certain other items such as the impact of the cumulative effect of changes in accounting, costs associated with debt refinancing and other non-recurring or non-cash items affecting net income (loss). A form of Adjusted EBITDA is used in agreements governing the Company’s outstanding indebtedness for debt covenant compliance purposes. Adjusted EBITDA as used in those agreements includes additional adjustments to the Adjusted EBITDA presented in the reconciliations above which may decrease or increase Adjusted EBITDA for purposes of the Company’s financial covenants.
Free cash flow: Net cash provided by (used in) operating activities reduced by investments in property, plant and equipment.
For the three and twelve months ended September 30, 2024, the following items were adjusted, in accordance with the definitions above, to arrive at the non-GAAP financial measures:
- During fiscal 2022, the Company began implementing a series of Company-wide organizational changes and initiatives intended to create operational and management-level efficiencies. As part of this restructuring initiative, the Company reduced the size of its supply chain network, reduced staffing levels and implemented other cost-reduction initiatives. The Company also accelerated the reduction of certain Hawthorne inventory, primarily lighting, growing environments and hardware products, to reduce our on hand inventory to align with the reduced network capacity. During the three months ended September 30, 2024, the Company incurred costs of
$16.8 million in the “Cost of sales—impairment, restructuring and other” line and$2.9 million in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations associated with this restructuring initiative primarily related to facility closure costs and impairment of right-of-use assets, intangible assets, property, plant and equipment and software. During the twelve months ended September 30, 2024, the Company incurred costs of$83.5 million in the “Cost of sales—impairment, restructuring and other” line and$5.9 million in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations associated with this restructuring initiative primarily related to inventory write-down charges, employee termination benefits, facility closure costs and impairment of right-of-use assets, intangible assets, property, plant and equipment and software. - During the three and twelve months ended September 30, 2024, the Company recognized a non-cash, pre-tax other-than-temporary impairment charge related to its convertible debt investments of
$64.6 million in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations. - During the three and twelve months ended September 30, 2024, the Company recorded pre-tax impairment charges of
$51.5 million and$61.9 million , respectively, associated with its investment in Bonnie Plants, LLC in the “Equity in loss of unconsolidated affiliates” line in the Condensed Consolidated Statements of Operations. - During the three and twelve months ended September 30, 2024, the Company established a valuation allowance against certain deferred tax assets associated with non-cash impairment charges, which resulted in the recognition of additional tax expense of
$15.6 million in the “Income tax expense (benefit)” line in the Condensed Consolidated Statements of Operations. - During the three and twelve months ended September 30, 2024, the Company recorded a gain of
$0.0 million and$12.1 million , respectively, in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations associated with a payment received in resolution of a dispute with the former ownership group of a business that was acquired in fiscal 2022.
For the three and twelve months ended September 30, 2023, the following items were adjusted, in accordance with the definitions above, to arrive at the non-GAAP financial measures:
- During the three and twelve months ended September 30, 2023, the Company recognized non-cash, pre-tax goodwill and intangible asset impairment charges of
$127.9 million in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations, comprised of$117.7 million of finite-lived intangible asset impairment charges associated with the Hawthorne segment and$10.3 million of goodwill impairment charges associated with the Other segment. - During the three and twelve months ended September 30, 2023, the Company recognized a non-cash, pre-tax other-than-temporary impairment charge related to its convertible debt investments of
$101.3 million in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations. - During the three and twelve months ended September 30, 2023, the Company recognized a non-cash, pre-tax impairment charge of
$94.7 million associated with its investment in Bonnie Plants, LLC in the “Equity in loss of unconsolidated affiliates” line in the Condensed Consolidated Statements of Operations. - During the three and twelve months ended September 30, 2023, the Company established a valuation allowance against certain deferred tax assets associated with non-cash impairment charges, which resulted in the recognition of additional tax expense of
$29.7 million in the “Income tax expense (benefit)” line in the Condensed Consolidated Statements of Operations. - During fiscal 2022, the Company began implementing a series of Company-wide organizational changes and initiatives intended to create operational and management-level efficiencies. During the three and twelve months ended September 30, 2023, the Company incurred costs of
$23.9 million and$184.8 million , respectively, in the “Cost of sales—impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations and$19.1 million and$44.1 million , respectively, in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations associated with this restructuring initiative primarily related to inventory write-down charges, employee termination benefits, facility closure costs and impairment of right-of-use assets and property, plant and equipment.
Forward Looking Non-GAAP Measures
In this release, the Company presents certain forward-looking non-GAAP measures. The Company does not provide outlook on a GAAP basis because changes in the items that the Company excludes from GAAP to calculate the comparable non-GAAP measure, described above, can be dependent on future events that are less capable of being controlled or reliably predicted by management and are not part of the Company’s routine operating activities. Additionally, due to their unpredictability, management does not forecast many of the excluded items for internal use and therefore cannot create or rely on a GAAP outlook without unreasonable efforts. The occurrence, timing and amount of any of the items excluded from GAAP to calculate non-GAAP could significantly impact the Company’s GAAP results. As a result, the Company does not provide a reconciliation of forward-looking non-GAAP measures to GAAP measures, in reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K.
(4) Due to the GAAP net loss for the three and twelve months ended September 30, 2024, diluted average common shares used in the GAAP diluted loss per common share calculation excluded potential Common Shares of 1.4 million and 0.9 million, respectively, because the effect of their inclusion would be anti-dilutive. Due to the non-GAAP net loss for the three months ended September 30, 2024, diluted average common shares used in the non-GAAP adjusted diluted loss per common share calculation excluded potential Common Shares of 1.4 million because the effect of their inclusion would be anti-dilutive. Diluted average common shares used in the non-GAAP adjusted diluted income per common share calculation for the twelve months ended September 30, 2024 included dilutive potential Common Shares of 0.9 million.
Due to the GAAP net loss for the three and twelve months ended September 30, 2023, diluted average common shares used in the GAAP diluted loss per common share calculation excluded potential Common Shares of 0.4 million because the effect of their inclusion would be anti-dilutive. Due to the non-GAAP net loss for the three months ended September 30, 2023, diluted average common shares used in the non-GAAP adjusted diluted loss per common share calculation excluded potential Common Shares of 0.4 million because the effect of their inclusion would be anti-dilutive. Diluted average common shares used in the non-GAAP adjusted diluted income per common share calculation for the twelve months ended September 30, 2023 included dilutive potential Common Shares of 0.4 million.
FAQ
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