The Scotts Miracle-Gro 2025 Q2 Earnings Strong EPS Growth as Net Income Rises 38.1%

The Scotts Miracle-Gro (SMG) reported its fiscal 2025 Q2 earnings on April 30, 2025. The company surpassed earnings expectations with an EPS of $3.78, higher than the anticipated $3.95, indicating continued growth. However, the revenue of $1.42 billion marked a decline from the previous year. The firm maintained its guidance for the U.S. Consumer segment but withdrew revenue forecasts for its Hawthorne segment due to cannabis industry uncertainties. This decision reflects both confidence and caution in navigating current market challenges.

Revenue
The Scotts Miracle-Gro experienced a 6.8% decline in total revenue for Q2 2025, reaching $1.42 billion compared to $1.53 billion in the same quarter of the previous year. The U.S. Consumer segment was the largest contributor, generating $1.31 billion. Meanwhile, the Hawthorne segment brought in $32.70 million, and the Other segment added $76.80 million to the overall revenue, maintaining the consolidated total at $1.42 billion.

Earnings/Net Income
The company's EPS increased by 36.5% to $3.78 in Q2 2025 from $2.77 in Q2 2024, highlighting strong earnings growth. Net income also rose significantly, reaching $217.50 million, a 38.1% increase from the prior year's $157.50 million. This performance indicates robust profitability for the quarter.

Price Action
The stock price of the scotts miracle-gro fell 3.10% during the latest trading day, declined 5.95% over the full week, and decreased 8.00% month-to-date.

Post-Earnings Price Action Review
Following the earnings report, The Scotts Miracle-Gro (SMG) experienced mixed short-term stock price performance, although a positive long-term trend is evident. The 3-day win rate for earnings-driven metrics stands at 38.10%, indicating that less than half of the days post-earnings saw positive returns. In contrast, the 10-day win rate improves to 52.38%, suggesting a slightly better medium-term performance. However, the 30-day win rate drops significantly to 28.57%, indicating that the majority of the month post-earnings showed negative returns. In terms of returns, the average 3-day return was -0.04%, reflecting a slight immediate decline, while the 10-day return was a positive 0.67%. The 30-day return showed a more pronounced decline at -5.42%. Notably, the maximum return observed post-earnings was 0.91% on the day of the earnings release, indicating limited positive momentum beyond the event itself. Overall, while short-term volatility exists, the stock exhibits a medium-term uptrend, which could be of interest to investors assessing the impact of earnings on SMG's stock price movements.

CEO Commentary
Jim Hagedorn, Chairman and CEO, expressed satisfaction with the company's progress in key financial metrics supporting their full-year guidance. He highlighted a 12 percent increase in consumer point-of-sale units, indicating robust consumer demand and brand strength. Hagedorn noted minimal impact from tariffs this fiscal year and acknowledged challenges from a colder start to the lawn and garden season, deferring some sales into the third quarter. Despite this, he remains confident in the health of their consumer base and overall franchise.

Guidance
The company reaffirms its previously announced guidance for the U.S. Consumer segment's net sales, adjusted gross margin, adjusted EBITDA, and free cash flow for the full year. However, due to ongoing uncertainties in the cannabis industry, it will no longer provide full-year revenue guidance for its Hawthorne segment. The company anticipates strong retailer replenishment in the fiscal third quarter, with expected consumer takeaway trends remaining consistent through April. Further updates on guidance will be shared in early June.

Additional News
Scotts Miracle-Gro recently transferred its wholly-owned subsidiary, The Hawthorne Collective, Inc., to an independent strategic partner as part of its strategic focus on core lawn and garden business growth. This move is intended to reduce the impact of cannabis sector volatility on the company's stock and create opportunities for increased investment in its consumer business. Additionally, the company plans to separate The Hawthorne Gardening Company from Scotts Miracle-Gro by the end of fiscal 2025, further distancing itself from the volatile cannabis market. This strategic shift aligns with the company's long-term goals and highlights its commitment to enhancing shareholder value through focused investments in its core operations.

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