The Scotts Miracle-Gro Company Revenue & Financials

For fiscal year 2024 ended September 30, 2024, The Scotts Miracle-Gro Company reported total revenue of $3.55 billion, essentially flat compared to fiscal 2023 revenue of $3.55 billion, as a 2% increase in U.S. Consumer segment sales driven by improved pricing and retail inventory restocking was offset by a 15% decline in Hawthorne segment revenue and modest weakness in international operations. The company's gross profit was $850.5 million, representing a gross margin of 23.9%, up from 21.3% in fiscal 2023 and approaching the 25-26% range the company achieved in fiscal 2020-2021, with the improvement driven by Project Springboard manufacturing and logistics savings, reduced inventory obsolescence costs, and moderation in raw material input costs after the urea and potash spikes of 2021-2022. Operating income was $208.8 million, a significant improvement from the $15.2 million operating loss in fiscal 2023, as the company realized approximately $200 million of the $300 million Project Springboard target and reduced overhead costs across the organization. The company posted a net loss of $34.9 million, or $0.60 per diluted share, compared to a net loss of $380.1 million, or $6.89 per diluted share, in fiscal 2023; the fiscal 2023 loss included significant non-cash impairment charges related to Hawthorne goodwill and intangible assets, while the fiscal 2024 loss was driven by interest expense and a higher effective tax rate. Adjusted EBITDA, the metric management emphasizes for leverage covenant and operational assessment, was $510.1 million in fiscal 2024, up 14.1% from $446.9 million in fiscal 2023 and up 42% from the $359.0 million trough in fiscal 2022, demonstrating that the company's profit recovery has outpaced its revenue stabilization. Interest expense of $158.8 million in fiscal 2024 remained elevated due to the $2.17 billion in long-term debt, but the company benefited from interest rate hedging and the refinancing of higher-coupon debt during the year. Free cash flow generation was a standout metric: the company generated $583.5 million in fiscal 2024 free cash flow, defined as cash from operations minus capital expenditures, up from $438.2 million in fiscal 2023 and $221.0 million in fiscal 2022. This free cash flow was used to fund $153 million in dividend payments, approximately $50 million in capital expenditures, and $300 million in debt reduction, with the balance building cash reserves. The company's balance sheet as of September 30, 2024, showed total assets of $4.18 billion, total liabilities of $3.89 billion, and shareholders' equity of $290.4 million, with the low equity reflecting cumulative losses in fiscal 2022-2023 and substantial share buybacks in prior years. The leverage ratio of 4.86x adjusted EBITDA at year-end, while improved from 5.5x at the end of fiscal 2023, remained above the company's target of below 3.5x and above the 4.0x covenant threshold in its credit agreement, requiring continued debt paydown and EBITDA growth to achieve full financial flexibility. The U.S. Consumer segment generated $498.0 million in segment profit on $3.01 billion in revenue for a 16.5% margin, down from the 19-20% margins of fiscal 2020-2021 but improved from 14.8% in fiscal 2023, with the recovery driven by pricing actions taken in fiscal 2023 that fully annualized in fiscal 2024, reduced promotional intensity as retail inventory normalized, and the flow-through of Project Springboard cost savings. The Hawthorne segment lost $14.2 million on $294.7 million in revenue for a negative 4.8% margin, improved from the negative 17.0% margin in fiscal 2023 but still structurally unprofitable at a revenue level insufficient to cover fixed costs. The company's effective tax rate in fiscal 2024 was 38.2%, higher than the statutory rate due to non-deductible executive compensation, state taxes, and foreign operations; management guided to a normalized tax rate of 24-25% for fiscal 2025. Capital expenditures of $50.2 million in fiscal 2024 were focused on maintenance of existing manufacturing facilities, IT infrastructure upgrades, and selective capacity expansion in high-growth product lines, representing 1.4% of sales and well below the depreciation expense of approximately $100 million, suggesting the company is under-investing in physical infrastructure to prioritize debt reduction. Looking at the five-year financial trajectory, revenue peaked at $4.93 billion in fiscal 2021, declined to $4.49 billion in fiscal 2022, $3.55 billion in fiscal 2023, and stabilized at $3.55 billion in fiscal 2024, a pattern consistent with a post-boom normalization rather than a secular decline. Net income swung from a profit of $512.5 million in fiscal 2021 to losses of $437.5 million in fiscal 2022, $380.1 million in fiscal 2023, and $34.9 million in fiscal 2024, with the fiscal 2024 result representing near-breakeven profitability before the Hawthorne divestiture and further Project Springboard benefits expected in fiscal 2025.