The Scotts Miracle-Gro Hawthorne Sales Drop 50% YoY, Here Are The Details

Zinger Key Points

The Scotts Miracle-Gro Company SMG fiscal year 2022 company-wide sales decreased 20%, to $3.92 billion, compared with $4.93 billion a year ago. Hawthorne sales decreased 50% to $716.2 million.

Q4 Results Highlights

  • Company-wide sales decreased 33%, to $493.6 million. Hawthorne segment sales decreased 49%, to $168.5 million, compared with $329.1 million during the same period last year.

  • GAAP and non-GAAP adjusted gross margin rates for the quarter were negative 14.3% and positive 3.5%, respectively. These compare to 17.1% and 17.4%, respectively, in the prior year.

  • Net loss was $220.1 million, compared with a prior year loss of $47.8 million.

  • Adjusted EBITDA was a loss of $71.3 million, compared to a loss of $9 million during the same period last year.

Fiscal 2022 Details

  • The GAAP gross margin rate on a year-to-date basis was 22.2%. The non-GAAP adjusted rate was 26.3%. These compare with 29.8% and 30.3%, respectively, last year.

  • Net loss was $437.5 million, compared with a prior year net income of $513.4 million.

  • Adjusted EBITDA was $557.9 million, compared to $902.6 million in the prior year.

Project Springboard 2.0 - Additional $85 Million of Cost Reductions Planned

On August 3, 2022, the company announced its cross-functional Project Springboard initiative to expand margins, improve free cash flow and strengthen the balance sheet. The first phase of this initiative achieved $100 million of annualized savings split between fiscal 2022 and fiscal 2023, primarily realized in headcount and variable SG&A reductions.

The company has launched the second phase of this initiative, Project Springboard 2.0, targeting an additional $85 million of cost reductions to be realized in fiscal 2023 and fiscal 2024. Expected savings will be driven by:

  • Reducing the operating footprint in the Hawthorne and U.S. Consumer segments by closing points of distribution

  • Further right-sizing of overhead expenses in Hawthorne enabled by integration into ScottsMiracle-Gro

  • Enhancing profitability driven by improved product mix and fewer SKUs in the Hawthorne segment

  • Executing on supply chain labor and materials efficiencies

  • Improving productivity of trade programs

  • Further reductions in corporate SG&A spending

“The operating cost savings identified by Project Springboard 2.0 give us momentum toward our targeted debt-to-EBITDA leverage ratio in the 4’s by the end of fiscal 2023,” stated Dave Evans, interim CFO. “We will continue to have high levels of financial discipline to ensure we maintain appropriate financial headroom under our lending agreements.”

Fiscal 2023 Outlook

The company provided direction for fiscal 2023 that includes the following:

  • Low single-digit percentage growth in adjusted operating income versus fiscal 2022

  • Mid-single digit percentage growth in adjusted EBITDA versus fiscal 2022

  • Interest expense increase of $35 million to $40 million

  • Effective tax rate of 25% to 26%

  • Free cash flow of $1 billion over the next two years

Get your daily dose of cannabis news on Benzinga Cannabis. Don’t miss out on any important developments in the industry.

Photo by Mackenzie Marco on Unsplash

Related News

3 Under The Radar Dividend Stocks In Agriculture As $20B From Biden Inflation Bill Flows To Farms

ScottsMiracle-Gro Q3 2022 Hawthorne Sales Drop Due To Oversupply Issues In The Cannabis Industry

ScottsMiracle-Gro Appoints Ex Nevada Governor Brian Sandoval To Its Board Of Directors

 

SMG Logo
SMGThe Scotts Miracle Gro Co
$60.29-0.43%

Stock Score Locked: Edge Members Only

Benzinga Rankings give you vital metrics on any stock – anytime.

Unlock Rankings
Edge Rankings
Momentum
28.60
Growth
7.51
Quality
Not Available
Value
25.26
Price Trend
Short
Medium
Long
Market News and Data brought to you by Benzinga APIs
Date
ticker
name
Actual EPS
EPS Surprise
Actual Rev
Rev Surprise

Posted In:

Cannabis is evolving—don’t get left behind!

Curious about what’s next for the industry and how to stay ahead in today’s competitive market?

Join top executives, investors, and industry leaders at the Benzinga Cannabis Capital Conference in Chicago on June 9-10. Dive deep into market-shaping strategies, investment trends, and brand-building insights that will define the future of cannabis.

Secure your spot now before prices go up—this is where the biggest deals and connections happen!

Get your tickets today!

Comments
Loading...