Scotts Miracle-Gro Q1 loss widens but tops Wall Street estimates

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Scotts Miracle-Gro (NYSE:SMG) +5.4% in Wednesday's trading after topping expectations for FQ1 adjusted earnings and revenues, even as the producer of lawn and cannabis products lowered guidance.

Q1 net loss totaled $64.7M, or a loss of $1.17/share, compared to a loss of $50M, or $0.90/share, in the year-ago period, while total sales slumped 7% Y/Y to $526.7M, but the result was well above the $502M analyst consensus.

Q1 U.S. Consumer segment sales climbed 8% Y/Y to $369M and beat estimates of $339M, but Hawthorne segment sales tumbled 31% to $131.5M and missed expectations of ~$150M, reflecting continued pressure on the hydroponic industry as a whole.

Scotts (SMG) revised its FY 2023 outlook to reflect a low single-digit decline in total net sales while anticipating a 20%-30% decline in Hawthorne segment net sales, but it guided for low single-digit percentage growth in adjusted EBITDA and adjusted operating income.

The company also said December shipments in its U.S. Consumer business hit a record, contributing to "a strong early season buildout demonstrating confidence in the lawn and garden season," Chairman and CEO Jim Hagedorn said, adding it is committed to returning the Hawthorne business to profitability by the end of the current fiscal year.

Scotts Miracle-Gro (SMG) shares have gained 52% so far this year but lost 49% during the past year.