The Scotts Miracle-Gro Company SMG released financial results for the third quarter ended July 2, 2022, revealing that company-wide sales decreased 26 percent year-over-year to $1.19 billion.
Q3 2022 Financial Highlights
Gross profit was $236.6 million, an unfavorable decrease of 52% compared to gross profit of $494.6 million in the same quarter of 2021.
GAAP and non-GAAP adjusted gross margin rates for the quarter were 19.9 percent and 25.5 percent, respectively. These compare to 30.7 percent and 30.8 percent, respectively, in the prior year.
SG&A decreased 30 percent to $135.8 million due to lower accruals for annual incentive compensation and cost-reduction efforts.
Net loss was $443.9 million compared to net income of $225.9 million in the same quarter of 2021.
Adjusted EBITDA was $209.6 million, an unfavorable decrease of 41% compared to $357.1 million in the same quarter of 2021.
Jim Hagedorn, chairman and chief executive officer stated, “The lower-than-expected sales in our U.S. consumer segment, combined with continued pressure on Hawthorne sales due to oversupply issues in the cannabis industry, leave us unsatisfied with our financial results and with higher leverage than we want to maintain. That is why we have launched the business transformation effort we are calling Project Springboard, which includes a series of aggressive steps to return the business to an appropriate level of performance.
The company lowered its full-year sales guidance in the U.S. consumer segment due to lower-than-expected replenishment orders from retail partners. The company now expects sales to decline 8 to 9 percent. The company also expects further SG&A favorability and is now guiding full-year SG&A down 15 percent. As a result of these changes, the full-year adjusted EPS outlook is now expected to be $4.00 to $4.20.
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