The Scotts Miracle-Gro Company

What they do

The company markets and sells branded consumer lawn and garden products, including Scotts Turf Builder fertilizers, Miracle-Gro soils and plant foods, Ortho pest controls, and Tomcat rodent control, and is the exclusive U.S. agent for Monsanto's consumer Roundup products. It operates through U.S. Consumer and Other (Canada) segments; Hawthorne was sold in April 2026 and is reported as a discontinued operation. It also has an equity interest in Bonnie Plants, a live plants joint venture.

Revenue drivers

• U.S. Consumer — Core segment selling lawn care and gardening products under Scotts, Miracle-Gro, Ortho, and Roundup brands; generates the majority of revenue and is highly seasonal with 42.7% of sales in Q2 and 35.6% in Q3 for fiscal 2026.
• Other (Canada) — Consumer lawn and garden business in Canada; smaller segment, included with U.S. Consumer for segment reporting.
• Hawthorne (divested) — Former indoor and hydroponic gardening segment with brands like General Hydroponics and Gavita; classified as held for sale in Q1 2026 and sold to Vireo on April 8, 2026 for 213 million Vireo shares, now reported as discontinued operations.

Recent performance

In the fiscal third quarter ended June 27, 2026, net sales were $1.17 billion, up 1% year-over-year, with GAAP diluted EPS from continuing operations of $1.75 (down 34%) and non-GAAP adjusted EPS of $2.82 (up 8%). Full-year fiscal 2025 net sales were $3.41 billion with net income of $145.2 million and diluted EPS of $2.47. For the nine months ended June 27, 2026, the company recorded a loss of $101.8 million on the sale of Hawthorne. As of June 27, 2026, total assets were $3.17 billion, liabilities $3.38 billion, and shareholder equity was negative at -$208.7 million.

Strategy

Management is executing a multi-year 'SMG 2.0' growth strategy focused on channel expansion, innovation, and shifting consumer engagement. The company is investing in supply chain automation, AI, manufacturing capital expenditures, and purchasing efficiencies to expand gross margins. They are also strengthening the balance sheet, with a goal of reducing net leverage; net leverage was 3.78x as of Q3 2026. The sale of Hawthorne is part of a strategic shift to focus on the core consumer business.

Risks

• Hawthorne divestiture execution — The sale to Vireo for shares and a warrant exposes the company to Vireo's stock performance and a $20 million manufacturing services commitment for two years at no cost.
• Seasonal weather dependence — Sales are highly concentrated in Q2 and Q3, making results vulnerable to widespread unfavorable weather across North America.
• Cannabis market oversupply — The former Hawthorne segment faced prolonged low wholesale cannabis prices and reduced cultivation, which contributed to decreased sales volume and led to divestiture.
• Macroeconomic and geopolitical pressures — Elevated interest rates, inflation, tariffs, and conflicts like the Iran conflict are increasing freight and commodity costs and could affect consumer behavior.

Outlook

Management raised full-year fiscal 2026 non-GAAP adjusted EPS from continuing operations guidance to $4.30-$4.45, up from prior $4.15-$4.35. They reaffirmed expectations for U.S. Consumer net sales low single-digit growth, adjusted gross margin rate of at least 32%, adjusted EBITDA mid single-digit growth, and free cash flow of $275 million, which they expect to drive leverage down to the high 3s. The full-year tax rate is expected to be 27-28%.