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Dec 30, 2023
Scotts Q1 2024 Earnings Report
ScottsMiracle-Gro's first quarter performance reflected measurable progress with early season lawn and garden results aligning with expectations. The company reaffirmed its full-year non-GAAP adjusted gross margin and EBITDA targets despite a decline in total company sales due to shipment phasing and Hawthorne segment pressures.
Key Takeaways
ScottsMiracle-Gro reported a 22% decrease in total company sales, amounting to $410.4 million, for the quarter ended December 30, 2023. The U.S. Consumer net sales decreased by 17%, while the Hawthorne segment experienced a 39% decline. The company reported a GAAP net loss of $80.5 million, or $1.42 per share, and a non-GAAP adjusted loss of $82.2 million, or $1.45 per share. Despite the sales decline, ScottsMiracle-Gro reaffirmed its full-year non-GAAP adjusted gross margin improvement of 250 bps and adjusted EBITDA of $575 million.
Total Company sales decreased by 22% to $410.4 million, compared to $526.6 million in the prior year.
U.S. Consumer net sales decreased by 17% to $306.7 million, driven by normalization of shipment phasing.
Hawthorne segment sales decreased by 39% to $80.1 million due to industry pressures and business restructuring.
The company reaffirmed its full-year non-GAAP adjusted gross margin improvement of 250 bps and adjusted EBITDA of $575 million.
Revenue by Segment
Forward Guidance
The Company reaffirms the non-GAAP fiscal 2024 guidance provided last quarter with the exception of Hawthorne net sales. The Company’s primary objective remains restoring a strong balance sheet by generating $575 million adjusted EBITDA and free cash flow of $560 million to deliver the remainder of $1 billion in free cash flow over two years.
Positive Outlook
- Reaffirming full-year non-GAAP adjusted gross margin improvement of 250 bps.
- Reaffirming full-year non-GAAP adjusted EBITDA of $575 million.
- Focus on top-line growth.
- Tightly controlling expenses.
- Delivering on targets for free cash flow generation.
Challenges Ahead
- Hawthorne is aggressively pursuing its Signature product strategy to focus on fewer but more profitable brands. The full-year impact on segment net sales cannot yet be estimated with rapid changes underway though the segment is expected to be cash flow positive for the full year.
Revenue & Expenses
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Historical Earnings Impact
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Avg. Return Before/After Earnings
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