The Scotts Miracle-Gro Company (SMG) Q4 2024 earnings summary

Executive summary

• Fiscal 2024 marked a pivotal turnaround, achieving all key objectives: improved adjusted gross margin, strong free cash flow, and strategic progress in Hawthorne, while shifting to a forward-focused growth strategy.

• U.S. Consumer segment net sales grew 6% year-over-year, driven by new listings, promotions, and increased shelf space.

• Hawthorne segment loss improved 70% year-over-year, achieving breakeven adjusted EBITDA and focusing on proprietary brands.

• Strategic investments in marketing and innovation supported sales and brand health, alongside cost-reduction initiatives.

• Laid out a three-year plan targeting 3% annual growth, $700 million EBITDA, mid-30% gross margin, and leverage near 3x by 2027.

Financial highlights

• Full-year net sales were $3.55–$3.6 billion, flat year-over-year; U.S. Consumer sales up 6%, Hawthorne down 37%.

• Adjusted EBITDA for FY24 was $510.1–$539 million, up 20% year-over-year, with $29 million in one-time charges.

• Adjusted gross margin was 26.3%, up 260–340 bps year-over-year; GAAP gross margin at 23.9%.

• Free cash flow exceeded $1 billion over two years; $580–$584 million generated in 2024.

• Adjusted EPS for FY24 was $2.29, up from $1.21; adjusted net income was $132.0 million.

Outlook and guidance

• Fiscal 2025 guidance: adjusted EBITDA of $570–$590 million (6–9% growth), U.S. Consumer sales up 2%, Hawthorne EBITDA at $20 million.

• Gross margin expected near 30% in 2025, with at least $40 million in incremental brand investments.

• Free cash flow projected at $250 million, CapEx of $100 million, and leverage targeted in the low 4x range by year-end.

• Continued progress toward a three-year growth plan and potential Hawthorne separation.