The Scotts Miracle-Gro Company (SMG) Q4 2025 earnings summary

Executive summary

• Achieved strong sales growth in U.S. Consumer business, robust gross margin expansion, and substantial free cash flow, with leverage ratio reduced to 4.1x and a healthier balance sheet.

• Deepened competitive moat through brand strength, R&D, supply chain optimization, and sales execution, gaining market share in a growing consumer category.

• Strategic shift to branded products and away from low-margin commodities, enhancing predictability and financial flexibility.

• Announced plans for a multi-year share buyback program and continued high dividend, focusing on shareholder-friendly actions.

• Strategic investments in AI, automation, and operational efficiencies contributed to cost savings, reinvested in brands and innovation.

Financial highlights

• U.S. Consumer net sales reached $2.99 billion, with 3% Q4 growth and 1% annual growth excluding non-recurring items; total fiscal 2025 net sales were $3.41 billion.

• Full-year GAAP gross margin rate rose to 30.6% (from 23.9%), and non-GAAP adjusted gross margin to 31.2% (from 26.3%), up 490 basis points year-over-year.

• Adjusted EBITDA reached $581 million, up $71 million or 14% year-over-year; free cash flow was $274 million, exceeding expectations.

• GAAP net income for the year was $145.2 million ($2.47/share); non-GAAP adjusted earnings were $219.6 million ($3.74/share), up $1.45 per share year-over-year.

• Interest expense fell by $30 million, and total borrowings declined by $120 million.

Outlook and guidance

• Fiscal 2026 guidance: low single-digit U.S. Consumer net sales growth, non-GAAP adjusted gross margin of at least 32%, and adjusted EPS of $4.15–$4.35.

• Free cash flow expected at $275 million, leverage ratio to move into high threes, and mid-single-digit adjusted EBITDA growth.

• Strategic focus on branded sales growth, gross margin, innovation, and e-commerce expansion, with incentive plans aligned to these metrics.