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Scotts Miracle-Gro’s Cannabis-Focused Subsidiary Reports 39% YoY Revenue Drop In Q1

The Scotts Miracle-Gro Company has reported financial results for Q1 2024, with sales dropping 22% to $410.4m compared to $526.6m the previous year. Net sales for its US consumer division fell 17% to $306.7m, while subsidiary the Hawthorne Gardening Company saw sales decline 39% from $131.5m to $80.1m. The firm's GAAP and non-GAAP adjusted gross margin rates stood at 15.2% and 13.7%, respectively, compared to 18.2% and 20.1% the previous year. The company's CEO and chairman, Jim Hagedorn, reaffirmed its guidance for high-single-digit growth in its consumer business. Meanwhile, for Hawthorne, the firm said it was taking "actions to ensure the business remains cash flow positive in fiscal 2024 and a major contributor to our debt paydown".
byJelena Martinovic
February 8, 2024
2 minute read
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Scotts Miracle-Gro (NYSE:SMG) reported its financial results on Wednesday for its first quarter ended Dec. 30. The report included results of its subsidiary Hawthorne Gardening Company, a provider of nutrients, lighting and other materials used in the indoor and hydroponic growing segment that includes the cannabis industry.

“We are reaffirming our guidance of high-single-digit growth in our consumer business, and in Hawthorne, we continue to take actions to ensure the business remains cash flow positive in fiscal 2024 and a major contributor to our debt paydown,” said Jim Hagedorn, CEO, chairman and president of ScottsMiracle-Gro.

Q1 2024 Financial Highlights

  • Sales declined 22% to $410.4 million from $526.6 million a year ago.
  • U.S. Consumer net sales decreased 17 percent to $306.7 million from $369.0 million in the same period last year.
  • Hawthorne segment sales decreased 39% to $80.1 million compared to $131.5 million last year.
  • GAAP and non-GAAP adjusted gross margin rates for the quarter were 15.2% and 13.7%, respectively, compared to 18.2% and 20.1%, respectively in the prior year.
  • Selling, general and administrative expenses were down 11% to $114.8 million during the quarter compared to $128.5 million a year ago, and down 26 percent compared to the first quarter of fiscal 2022.
  • A GAAP net loss was $80.5 million, or $1.42 per share, compared with a prior year loss of $64.7 million, or $1.17 per share.
  • Non-GAAP adjusted loss, which excludes impairment, restructuring and other non-recurring items, was $82.2 million, or $1.45 per share, for the quarter, compared with a loss of $56.4 million, or $1.02 per share, for the same period last year.

Fiscal 2024 Outlook

The company said it is reaffirming the non-GAAP fiscal 2024 guidance provided last quarter except for Hawthorne net sales.

Hawthorne is pursuing its signature product strategy to focus on fewer but more profitable brands.

Scotts Miracle-Gro said its objective remains to restore 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.

SMG Price Action

The Scotts Miracle-Gro’s shares traded 1.98% lower at $56.03 per share at the time of writing on Thursday morning.

  • Scotts Miracle-Gro Co. Reveals Fiscal 2023 & 4Q Results, Hawthorne Subsidiary Performance
  • The Scotts Miracle-Gro Hawthorne Sales Drop 50% YoY, Here Are The Details
 
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