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

Executive summary

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

• Met or exceeded all financial guidance for fiscal 2025, with U.S. Consumer net sales growth in line with long-term targets and increased market share in the Lawn & Garden category.

• Strategic focus on branded products, e-commerce expansion, and innovation in organics and controls, with a multi-year share buyback program proposed.

• Significant supply chain optimization and investments in AI, automation, and operational efficiencies drove cost savings and margin expansion.

• Continued debt reduction, lowering leverage ratio to 4.1x and interest expense by $30 million.

Financial highlights

• Fiscal 2025 net sales were $3.41 billion; adjusted EBITDA was $581 million, up 14% year-over-year.

• U.S. Consumer net sales reached $2.99 billion, with POS units up 8.5% and dollars up 1.4%.

• GAAP gross margin improved to 30.6%, and non-GAAP adjusted gross margin to 31.2%, up 490–670 bps year-over-year.

• Free cash flow was $274 million, exceeding expectations and used for debt reduction and dividends.

• Adjusted EPS was $3.74, up 63% year-over-year; GAAP net income was $145.2 million.

Outlook and guidance

• Fiscal 2026 guidance: low single-digit U.S. Consumer net sales growth, non-GAAP gross margin at least 32%, adjusted EPS $4.15–$4.35, and free cash flow of $275 million.

• Leverage ratio expected to fall into the high threes by end of FY26 and below 3.5x by FY27.

• Multi-year targets include 3%+ annual U.S. Consumer net sales growth, gross margin rates of 35%+, mid-single-digit EBITDA growth, and leverage ratio of 3–3.5x.

• Continued focus on innovation, ecommerce expansion, and supply chain savings to drive growth and margin expansion.