ScottsMiracle-Gro Drives EBITDA and EPS Growth in Third Quarter; Gross Margin Improvement and Increase in U.S. Consumer Net Sales Fuel Gains

THE SCOTTS MIRACLE-GRO COMPANY
Condensed Consolidated Statements of Operations
(In millions, except per share data)
(Unaudited)

Three Months Ended

Nine Months Ended

Footnotes

June 28,
2025

June 29,
2024

%
Change

June 28,
2025

June 29,
2024

%
Change

Net sales

$

1,188.0

$

1,202.2

(1

)%

$

3,025.8

$

3,138.0

(4

)%

Cost of sales

806.3

850.6

1,989.0

2,191.4

Cost of sales—impairment, restructuring and other

3.7

(2.5

)

16.1

66.6

Gross margin

378.0

354.1

7

%

1,020.7

880.0

16

%

% of sales

31.8

%

29.5

%

33.7

%

28.0

%

Operating expenses:

Selling, general and administrative

153.4

147.9

4

%

466.5

441.4

6

%

Impairment, restructuring and other

2.4

(0.8

)

29.6

(5.9

)

Other expense, net

7.2

6.9

15.9

19.6

Income from operations

215.0

200.1

7

%

508.7

424.9

20

%

% of sales

18.1

%

16.6

%

16.8

%

13.5

%

Equity in (income) loss of unconsolidated affiliates

(25.3

)

(23.0

)

(9.5

)

6.5

Interest expense

31.8

38.8

102.0

125.6

Other non-operating expense, net

1.2

1.3

3.9

4.2

Income before income taxes

207.3

183.0

13

%

412.3

288.6

43

%

Income tax expense

58.2

50.9

115.2

79.5

Net income

$

149.1

$

132.1

13

%

$

297.1

$

209.1

42

%

Basic net income per common share

(1)

$

2.58

$

2.33

11

%

$

5.17

$

3.69

40

%

Diluted net income per common share

(2)

$

2.54

$

2.28

11

%

$

5.07

$

3.64

39

%

Common shares used in basic net income per share calculation

57.7

56.8

2

%

57.5

56.7

1

%

Common shares and potential common shares used in diluted net income per share calculation

58.6

58.0

1

%

58.6

57.5

2

%

Non-GAAP results:

Adjusted net income

(3

$

151.5

$

133.8

13

%

$

332.7

$

263.5

26

%

Adjusted diluted net income per common share

(2) (3)

$

2.59

$

2.31

12

%

$

5.68

$

4.58

24

%

Adjusted EBITDA

(3)

$

256.1

$

236.8

8

%

$

662.7

$

607.4

9

%

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

Nine Months Ended

June 28,
2025

June 29,
2024

%
Change

June 28,
2025

June 29,
2024

%
Change

Net Sales:

U.S. Consumer

$

1,030.2

$

1,017.5

1

%

$

2,682.6

$

2,704.0

(1

)%

Hawthorne

31.2

67.7

(54

)%

115.9

214.2

(46

)%

Other

126.6

117.0

8

%

227.3

219.8

3

%

Consolidated

$

1,188.0

$

1,202.2

(1

)%

$

3,025.8

$

3,138.0

(4

)%

Segment Profit (Loss) (Non-GAAP):

U.S. Consumer

$

235.5

$

210.3

12

%

$

638.1

$

580.5

10

%

Hawthorne

—

3.8

(100

)%

0.7

(9.2

)

108

%

Other

16.8

11.7

44

%

22.7

13.0

75

%

Total Segment Profit (Non-GAAP)

252.3

225.8

12

%

661.5

584.3

13

%

Corporate

(28.0

)

(25.1

)

(97.6

)

(86.8

)

Intangible asset amortization

(3.2

)

(3.9

)

(9.4

)

(11.8

)

Impairment, restructuring and other

(6.1

)

3.3

(45.8

)

(60.8

)

Equity in income (loss) of unconsolidated affiliates

25.3

23.0

9.5

(6.5

)

Interest expense

(31.8

)

(38.8

)

(102.0

)

(125.6

)

Other non-operating expense, net

(1.2

)

(1.3

)

(3.9

)

(4.2

)

Income before income taxes (GAAP)

$

207.3

$

183.0

13

%

$

412.3

$

288.6

43

%

THE SCOTTS MIRACLE-GRO COMPANY
Condensed Consolidated Balance Sheets
(In millions)
(Unaudited)

June 28,
2025

June 29,
2024

September 30,
2024

ASSETS

Current assets:

Cash and cash equivalents

$

51.1

$

279.9

$

71.6

Accounts receivable, net

573.8

504.6

176.8

Inventories

544.3

606.8

587.5

Prepaid and other current assets

114.1

147.1

144.5

Total current assets

1,283.3

1,538.4

980.4

Investment in unconsolidated affiliates

65.9

106.8

45.2

Property, plant and equipment, net

609.4

599.0

609.5

Goodwill

243.9

243.9

243.9

Intangible assets, net

409.6

424.9

418.8

Other assets

478.5

576.3

574.1

Total assets

$

3,090.6

$

3,489.3

$

2,871.9

LIABILITIES AND EQUITY (DEFICIT)

Current liabilities:

Current portion of debt

$

52.1

$

52.9

$

52.6

Accounts payable

261.7

316.7

254.7

Other current liabilities

484.8

484.8

443.0

Total current liabilities

798.6

854.4

750.3

Long-term debt

2,136.2

2,436.4

2,174.2

Other liabilities

326.7

344.7

338.0

Total liabilities

3,261.5

3,635.5

3,262.5

Equity (deficit)

(170.9

)

(146.2

)

(390.6

)

Total liabilities and equity (deficit)

$

3,090.6

$

3,489.3

$

2,871.9

THE SCOTTS MIRACLE-GRO COMPANY
Reconciliation of Non-GAAP Disclosure Items (3)
(In millions, except per share data)
(Unaudited)

Three Months Ended June 28, 2025

Three Months Ended June 29, 2024

As
Reported
(GAAP)

Impairment,
Restructuring
and Other

Adjusted
(Non-
GAAP)

As
Reported
(GAAP)

Impairment,
Restructuring
and Other

Adjusted
(Non-
GAAP)

Gross margin

$

378.0

$

(3.7

)

$

381.7

$

354.1

$

2.5

$

351.6

Gross margin as a % of sales

31.8

%

32.1

%

29.5

%

29.2

%

Income from operations

215.0

(6.1

)

221.2

200.1

3.3

196.8

Income from operations as a % of sales

18.1

%

18.6

%

16.6

%

16.4

%

Income before income taxes

207.3

(6.1

)

213.4

183.0

3.3

179.6

Income tax expense

58.2

(3.7

)

61.9

50.9

5.1

45.8

Net income

149.1

(2.5

)

151.5

132.1

(1.8

)

133.8

Diluted net income per common share

2.54

(0.04

)

2.59

2.28

(0.03

)

2.31

Calculation of Adjusted EBITDA(3):

Three Months Ended June 28, 2025

Three Months Ended June 29, 2024

Net income (GAAP)

$

149.1

$

132.1

Income tax expense

58.2

50.9

Interest expense

31.8

38.8

Depreciation

15.5

16.4

Amortization

3.2

3.9

Impairment, restructuring and other charges (recoveries)

6.1

(3.3

)

Equity in income of unconsolidated affiliates

(25.3

)

(23.0

)

Interest income

—

(0.1

)

Share-based compensation

17.5

21.1

Adjusted EBITDA (Non-GAAP)

$

256.1

$

236.8

Note: See accompanying footnotes.

The sum of the components may not equal due to rounding.

Nine Months Ended June 28, 2025

Nine Months Ended June 29, 2024

As
Reported
(GAAP)

Impairment,
Restructuring
and Other

Adjusted
(Non-
GAAP)

As
Reported
(GAAP)

Impairment,
Restructuring
and Other

Adjusted
(Non-
GAAP)

Gross margin

$

1,020.7

$

(16.1

)

$

1,036.8

$

880.0

$

(66.6

)

$

946.6

Gross margin as a % of sales

33.7

%

34.3

%

28.0

%

30.2

%

Income from operations

508.7

(45.8

)

554.5

424.9

(60.8

)

485.6

Income from operations as a % of sales

16.8

%

18.3

%

13.5

%

15.5

%

Equity in income (loss) of unconsolidated affiliates

9.5

—

9.5

(6.5

)

(10.4

)

3.9

Income before income taxes

412.3

(45.8

)

458.1

288.6

(71.2

)

359.8

Income tax expense

115.2

(10.1

)

125.4

79.5

(16.8

)

96.3

Net income

297.1

(35.6

)

332.7

209.1

(54.4

)

263.5

Diluted net income per common share

5.07

(0.61

)

5.68

3.64

(0.95

)

4.58

Calculation of Adjusted EBITDA(3):

Nine Months Ended June 28, 2025

Nine Months Ended June 29, 2024

Net income (GAAP)

$

297.1

$

209.1

Income tax expense

115.2

79.5

Interest expense

102.0

125.6

Depreciation

47.1

48.8

Amortization

9.4

11.8

Impairment, restructuring and other charges

45.8

60.8

Equity in (income) loss of unconsolidated affiliates

(9.5

)

6.5

Interest income

—

(0.4

)

Share-based compensation

55.6

65.7

Adjusted EBITDA (Non-GAAP)

$

662.7

$

607.4

Note: See accompanying footnotes.

The sum of the components may not equal due to rounding.

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.

For the three and nine months ended June 28, 2025, the following items were adjusted, in accordance with the definitions above, to arrive at the non-GAAP financial measures:

•

During the three and nine months ended June 28, 2025, the Company incurred employee and executive severance charges of $2.6 million and $6.2 million, respectively, in the “Cost of sales—impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations and $1.4 million and $16.2 million, respectively, in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations.

•

During the three and nine months ended June 28, 2025, the Company incurred a non-cash loss of $0.0 million and $7.0 million, respectively, in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations related to the exchange of its convertible debt investment in RIV Capital Inc. for non-voting exchangeable shares of Fluent Corp. (formerly Cansortium Inc.).

•

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 the supply chain network, reduced staffing levels and implemented other cost-reduction initiatives. During the three and nine months ended June 28, 2025, the Company incurred costs of $1.1 million and $9.9 million, respectively, in the “Cost of sales—impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations associated with this restructuring initiative.

For the three and nine months ended June 29, 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. During the three months ended June 29, 2024, the Company recorded net recoveries associated with this restructuring initiative that were not material. During the nine months ended June 29, 2024, the Company incurred costs of $66.6 million in the “Cost of sales—impairment, restructuring and other” line and $3.0 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 and property, plant and equipment.

•

During the three and nine months ended June 29, 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.

•

During the three and nine months ended June 29, 2024, the Company recorded a pre-tax impairment charge of $0.0 million and $10.4 million, respectively, associated with its investment in Bonnie Plants, LLC in the “Equity in (income) loss of unconsolidated affiliates” line in the Condensed Consolidated Statements of Operations.

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.