SMG · The Scotts Miracle-Gro Company

The Scotts Miracle-Gro Company delivered a strong fiscal second quarter, marked by 5% top-line growth and significant margin expansion. Net sales reached $1.46 billion, driven by a 5% increase in the U.S. Consumer segment, which constitutes the core of the company's continuing operations following the classification of the Hawthorne business as discontinued. The most notable operational improvement was the GAAP gross margin rate expansion of 280 basis points to 41.8%, reflecting effective cost management and favorable mix. This margin leverage flowed through to the bottom line, resulting in GAAP diluted EPS of $4.46, an 18% increase over the prior year period. Adjusted EBITDA grew 9% to $437.4 million. The company also made progress on its balance sheet, reducing its net leverage ratio to 3.71x from 4.41x in the prior year. Management expressed confidence in the full-year outlook, reaffirming fiscal 2026 guidance that includes non-GAAP adjusted EPS of $4.15 to $4.35 and free cash flow of $275 million. The classification of Hawthorne as a discontinued operation resulted in a net loss of $24.7 million for the quarter attributable to that unit, separating its volatility from the continuing operations' performance.