Scotts Miracle-Gro Company (SCQA) Q4 2026 Earnings Report

The call was predominantly positive. Management reported two consecutive years of meeting or exceeding objectives, positive sales growth, higher margins, 18% adjusted EPS growth, strong free cash flow, and meaningful deleveraging. The fiscal 2027 plan includes multiple branded-product, e-commerce, innovation, and cost-saving drivers, although elevated retailer inventories, upwards of $100 million of commodity headwinds, slower lawn POS, and expectations for gross margin expansion near the lower end of the target range remain notable challenges.

For fiscal 2027, Scotts Miracle-Gro expects net sales growth of 2%-4%, with 1%-2% of that growth coming from Black Kow, along with pricing, initiatives, and innovation; continued expansion of non-GAAP adjusted gross margin rate, including supply chain cost savings of at least $35 million; non-GAAP adjusted earnings per share from continuing operations of $4.70-$4.90; free cash flow of approximately $275 million; and expected spend of $130 million on supply chain and IT initiatives. The company expects lower year-over-year leverage ratio and remains on track for a target range of 3x-3.5x by the end of fiscal 2029, while planning for low-single-digit headwinds to sales from retail inventories, upwards of, call it $100 million of commodity headwinds, average price increases of about 4% across the portfolio and pricing growth of about 2% after elasticity, and SG&A flat as a percentage of sales within the 17%-18% range, with flexibility to move closer to, call it 17%; gross margin improvement is expected within the midterm range of 50 basis points of improvement to 100 basis points of improvement, with guidance closer to the lower-end of that range, and first half sales are expected to be flat to last year with the growth in second half.