The Scotts Miracle-Gro Company SMG reported a first-quarter fiscal 2024 (ended Dec 31, 2023) loss of $80.5 million or $1.42 per share compared with a loss of $64.7 million or $1.17 per share in the year-ago quarter.

Barring one-time items, the adjusted loss was $1.45 per share, wider than a loss of $1.02 a year ago. The figure was narrower than the Zacks Consensus Estimate of a loss of $1.62.

Net sales fell around 22% year over year to $410.4 million and also lagged the consensus mark of $423.3 million. Due to seasonality, the first quarter typically represents less than 15% of full-year sales.

The Scotts Miracle-Gro Company Price, Consensus and EPS Surprise The Scotts Miracle-Gro Company Price, Consensus and EPS Surprise

The Scotts Miracle-Gro Company price-consensus-eps-surprise-chart | The Scotts Miracle-Gro Company Quote

Segment Details

In the fiscal first quarter, net sales in the U.S. Consumer division were down 17% year over year to $306.7 million. It was lower than our estimate of $352.4 million.

Net sales in the Hawthorne segment plunged 39% year over year to $80.1 million in the reported quarter. The figure was higher than our estimate of $57.9 million. The downside reflects sustained pressure on the indoor and hydroponic industry and SMG’s move to restructure the business.

Net sales in the other segment fell 10% year over year to $23.6 million.

Balance Sheet

At the end of the quarter, the company had cash and cash equivalents of $10.4 million, down from $25.6 million in the year-ago quarter. Long-term debt was $2,969 million, down from $3,189.6 million in the year-ago quarter.

Outlook

The company reaffirmed its fiscal 2024 guidance, except for Hawthorne net sales, which are undergoing strategic changes. While the full impact on net sales is uncertain, Hawthorne aims for positive cash flow this year. The company's main objective is to strengthen its balance sheet, targeting $575 million adjusted EBITDA and $560 million free cash flow to achieve $1 billion in free cash flow over two years.



Price Performance

Shares of Scotts Miracle-Gro have lost 27.2% in the past year against a 38% decline of the industry. Zacks Investment Research

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Zacks Rank & Key Picks

Scotts Miracle-Gro currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Basic Materials space are Cameco Corporation CCJ and Carpenter Technology Corporation CRS, both sporting a Zacks Rank #1 (Strong Buy), and Cleveland-Cliffs Inc. CLF, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cameco has a projected earnings growth rate of 188% for the current year. The Zacks Consensus Estimate for CCJ’s current-year earnings has been revised upward by 12.5% in the past 60 days. The stock is up around 68.5% in a year.

The consensus estimate for CRS’s current fiscal year earnings is pegged at $3.97, indicating a year-over-year surge of 248.3%. CRS beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise being 14.3%. The company’s shares have rallied 28.1% in the past year.

The consensus estimate for CLF’s current fiscal year earnings is pegged at $2.27, indicating a year-over-year surge of 112%. The Zacks Consensus Estimate for CLF’s current-year earnings has been revised upward by 4.6% in the past 60 days. CLF beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise being 24.7%.

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