The Scotts Miracle-Gro Company has reported its second-quarter results, showing a 7% decline in total company sales to $1.42 billion from $1.53 billion in the prior year. U.S. consumer sales decreased by 5% to $1.31 billion from $1.38 billion in the same period last year. However, the company's gross margin rates showed significant improvement, with GAAP gross margin rate of 38.6% and non-GAAP adjusted gross margin rate of 39.1%, reflecting 820 and 380 basis point improvements over the prior year, respectively.
The company's non-GAAP adjusted EBITDA for the quarter was $402.8 million, marking an improvement of $6.5 million over the previous year. The net leverage also decreased to 4.41x from the prior year's 6.95x.
The company's GAAP EPS for the quarter was $3.72, while non-GAAP adjusted EPS stood at $3.98. This represents an improvement in both metrics compared to the same quarter a year ago.
The press release also highlights the company's affirmation of its full-year U.S. consumer segment net sales, consolidated adjusted gross margin, adjusted EBITDA, and free cash flow guidance. The company mentioned that consumer purchases, measured through point-of-sale (POS) data from its largest retailers, saw double-digit increases in consumer takeaway for the second consecutive quarter.
Despite the decline in sales, the company has made substantial progress in key financial metrics, supporting its full-year guidance. The improvements in gross margin rates and non-GAAP adjusted EBITDA, along with the decrease in net leverage, indicate a positive financial trajectory for The Scotts Miracle-Gro Company. As a result of these announcements, the company's shares have moved -11.2% on the market, and are now trading at a price of $47.54. For the full picture, make sure to review Scotts Miracle-Gro's 8-K report.
