ScottsMiracle-Gro Q2 Sales Up 5%, EPS Rises 13%, Leverage Cuts to 3.71x
ScottsMiracle-Gro posted $1.46 billion in second-quarter net sales, up 5% year-over-year, and improved non-GAAP gross margin rate by 240 basis points to 41.8%. Non-GAAP EPS rose 13% to $4.53 and net leverage fell to 3.71x from 4.41x, supporting a multi-year share repurchase program.
1. Strong Sales Growth and Margin Expansion
Net sales reached $1.46 billion for the quarter, marking a 5% increase over the prior year. The company expanded its non-GAAP gross margin rate by 240 basis points to 41.8%, driven by pricing actions and cost efficiencies.
2. Profitability Gains and EPS Improvement
GAAP net income from continuing operations delivered earnings of $4.46 per share, while non-GAAP adjusted earnings rose 13% to $4.53 per share. Adjusted EBITDA climbed 9% to $437.4 million, reflecting operational leverage and disciplined expense management.
3. Deleveraging and Capital Allocation
Net leverage improved to 3.71x from 4.41x a year ago, driven by strong free cash flow and earnings growth. Management highlighted a previously announced multi-year share repurchase program as a key shareholder return initiative.
4. Outlook and Guidance
The company reaffirmed fiscal 2026 targets, forecasting low single-digit U.S. Consumer net sales growth, a non-GAAP adjusted gross margin rate of at least 32%, adjusted EPS of $4.15 to $4.35, mid single-digit EBITDA growth and $275 million in free cash flow.