Scotts Miracle-Gro (NYSE:SMG) has released its financial results for the first quarter of the fiscal year 2023, which ended on December 31, 2022. The results reflect the company’s disciplined approach to improving its operational and financial performance.
Jim Hagedorn, chairman, and CEO, commented on the first quarter results: “our first quarter results show our disciplined approach to improving operational and financial performance, positioning the company for long-term growth and shareholder value. The U.S. Consumer business had strong results with record December shipments. While the Hawthorne segment is facing challenges, the company is committed to returning to profitability by the end of the fiscal year. In addition, project Springboard is expected to deliver savings above the initial target, providing opportunities to reinvest in the business. As a result, the company is stable and well prepared to execute its full-year plan.”
U.S. Consumer net sales increased by 8% to $369.0 million, while the smaller Hawthorne segment sales decreased by 31% to $131.5 million. Despite these diverging results, total company sales declined 7% in the quarter to $527 million, typically less than 15% of full-year sales.
Scotts Miracle-Gro’s Project Springboard is expected to deliver $185 million of annualized savings in 2023 ahead of schedule, with additional savings expected in 2024. This project has contributed to a 17% reduction in SG&A. In addition, it has helped the company maintain compliance with its covenants while investing in strategic initiatives.
The company recorded a GAAP loss of $1.17 per share and a non-GAAP adjusted earnings loss of $1.02 per share. Despite this, the company’s CFO, Matt Garth, is confident in maintaining compliance with its covenants.
The gross margin rates for the quarter were 18.2% (GAAP) and 20.1% (non-GAAP). Interest expense increased to $42.7 million, but the average debt-to-EBITDA ratio at the quarter’s end was 5.9 times, within the covenant maximum of 6.25 times.
Image provided by Scotts Miracle Gro (NYSE:SMG)
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