Scotts Miracle-Gro Company (SCQA) Q3 2026 Earnings Report

The call presents a constructive picture of strategic progress: branded portfolio expansion, strong e-commerce momentum (+27% e‑com POS YTD), YTD margin improvement (+130 bps GAAP YTD), improved YTD EBITDA (+5%) and an upward revision to non‑GAAP EPS guidance. At the same time, the quarter experienced near-term pressure from commodity and freight cost volatility (a $15M incremental hit), one-time $64M charges that reduced GAAP quarterly earnings, and slightly elevated retailer inventories that could pressure Q4 sales. Management emphasized disciplined margin focus, active hedging, continued investment in innovation and digital, and a path to further deleveraging. Overall, positives around margin improvement, e-commerce and innovation materially outweigh the temporary headwinds, though risks remain for Q4 timing and commodity exposure.

Management reaffirmed fiscal 2026 guidance and raised non‑GAAP adjusted EPS from continuing operations to $4.30–$4.45 (from $4.15–$4.35); they expect full‑year net sales to land in low‑single‑digit growth (Q3 net sales $1.17B; YTD $2.99B; U.S. Consumer YTD $2.74B), with branded sales up 4.5% YTD, innovation contributing $75M this year and $278M from launches over the last three years, e‑commerce now 13% of POS (+300 bps y/y) and e‑com POS dollars +27% YTD. Gross margin expansion is on track (GAAP YTD 35.7%, +130 bps; non‑GAAP YTD 35.8% vs 34.7%), although the quarter was pressured (Q GAAP 31.2%, non‑GAAP 31.3%) by higher freight/commodity costs and a $15M incremental commodity impact this year; supply‑chain savings are expected to net roughly 1% of sales by year‑end. Profitability and balance‑sheet metrics show YTD non‑GAAP adjusted EBITDA $686.6M (Q $246.3M), YTD non‑GAAP adjusted net income $390.2M ($6.60/sh), GAAP YTD net income $319.1M ($5.40/sh), interest expense down (Q $28M; YTD $86.5M), leverage improved to 3.78x from 4.15x with a target below 3.12x, SG&A running toward ~17–18% of sales, retailer inventories slightly elevated (high‑single‑digit %), and a plan to remove ~30% of lowest‑performing SKUs by the close of FY2027 (about two‑thirds of the way there).