The Scotts Miracle-Gro Company (SMG) Q2 2025 earnings summary

Executive summary

• Q2 2025 net sales declined 6.8–7% year-over-year to $1.42 billion, mainly due to delayed lawn and garden season, colder weather, and hydroponics industry pressure.

• Net income for Q2 2025 rose 38% to $217.5 million ($3.72/share), with adjusted net income at $232.2 million and adjusted EPS at $3.98.

• Gross margin improved to 38.6% (up 820 bps), and adjusted gross margin to 39.1% (up 380 bps), driven by supply chain savings and lower costs.

• Adjusted EBITDA increased to $402.8 million, up from $396.3 million year-over-year.

• Hawthorne segment sales dropped over 50% due to cannabis oversupply and strategic exits, while U.S. Consumer profit increased.

Financial highlights

• U.S. Consumer net sales were $1.31 billion, down 4.9–5% year-over-year; Hawthorne segment sales dropped 50.8–51% to $32.7 million.

• Q2 2025 net income rose 38% to $217.5 million; adjusted net income was $232.2 million, up 10%.

• Operating income increased 26.7–27% to $344.7 million; adjusted operating margin rose to 25.5%.

• Interest expense decreased 17% year-over-year in Q2 2025.

• Cash used in operating activities for the first half was $257.2 million, mainly due to higher inventory production and timing of receivables.

Outlook and guidance

• Full-year adjusted EBITDA guidance reaffirmed at $570–$590 million; U.S. Consumer net sales expected to grow low single digits, excluding non-recurring sales.

• Adjusted gross margin targeted at ~30% for FY25, with mid-30% by FY27.

• Free cash flow forecasted at ~$250 million; capital expenditures at ~$100 million.

• Leverage ratio expected in low 4's by end of FY25, below 3.5x by end of FY27.

• No full-year revenue guidance for Hawthorne segment due to cannabis industry uncertainty.