The Scotts Miracle-Gro (SMG) Q1 2026 earnings summary

Executive summary

• Strategic focus on shareholder value through innovation, digital marketing, and supply chain optimization, with reaffirmed 2026 guidance and advanced Hawthorne divestiture classified as a discontinued operation, including a $104.8 million non-cash charge.

• U.S. Consumer sales on track for low single-digit growth; e-commerce POS dollars grew 12% and units 17% year-over-year, now representing 14% of overall POS.

• Retailers are building healthy inventory levels ahead of the 2026 lawn and garden season, supporting category growth.

• Board approved a $500 million multi-year share repurchase program to begin in late 2026, targeting a reduction in share count and aligned with leverage reduction.

• Maintains leading market position in branded consumer lawn and garden products in North America, with recognized brands and exclusive marketing rights for Roundup® consumer products.

Financial highlights

• Q1 net sales (excluding Hawthorne) were $354.4 million, down 3% year-over-year; U.S. Consumer sales reached $328.5 million.

• GAAP gross margin rate improved to 25%, up 90 bps year-over-year; adjusted gross margin was 25.4%.

• Non-GAAP adjusted EBITDA for the quarter was $3 million, up from $0.9 million prior year.

• GAAP net loss from continuing operations was $47.8 million ($0.83/share), improved from $66.1 million prior year; adjusted net loss was $44.6 million ($0.77/share).

• Free cash flow improved by $78 million due to working capital management and supply chain optimization; new $2 billion credit agreement provides increased liquidity.

Outlook and guidance

• Fiscal 2026 guidance reaffirmed: U.S. Consumer net sales growth in low single digits, adjusted gross margin rate of at least 32%, adjusted EPS of $4.15–$4.35.

• Adjusted EBITDA growth expected in mid-single digits; free cash flow target of $275 million, with leverage ratio to decline to high threes.

• Longer-term targets include 5% annual sales growth and $1 billion EBITDA by 2030.

• Sale of Hawthorne business expected within twelve months, with closing anticipated in fiscal Q2 2026.

• Guidance is conservative; actual results may differ due to seasonality, weather, and macroeconomic factors.