- Strong first half 2024 execution has Company on pace for full-year targets
U.S. Consumer second quarter net sales of$1.38B equal record high- Q2 2024 GAAP gross margin of 30.4% and non-GAAP adjusted gross margin of 35.3% reflect 350 and 60 basis point improvements, respectively
- Strong free cash flow delivers net leverage of 6.95x, well below covenant maximum
- Q2 2024 GAAP EPS of
$2.74 ; non-GAAP Adjusted EPS of$3.69 are ahead of plan - Teams driving consumer engagement in Q3 representing 60 percent of seasonal POS
“Through the first six months of our fiscal year, we exceeded operating plan targets and made progress on the most important financial metrics driving our business,” said
“We’re a much leaner and more cost-efficient organization with a near-term focus on precision execution. At the same time, because we’ve stabilized and created financial flexibility, we can shift from crisis management to operating the business the way it should be run - from a position of strength and with a growth mindset.”
Financial Results
Second Quarter Details
For the quarter ended
“With outstanding retail partnerships and execution by our team, the
Hawthorne segment sales for the quarter decreased 28 percent to
GAAP and non-GAAP adjusted gross margin rates for the quarter were 30.4 percent and 35.3 percent, respectively. These compare to 26.9 percent and 34.7 percent, respectively, in the prior year. The improvement was due primarily to the annualization of distribution savings and lower cost materials partially offset by net price decreases.
SG&A decreased 4 percent to
Other expense was
Interest expense during the quarter declined 9 percent compared to the same quarter last year driven by the Company’s utilization of its Accounts Receivable facility resulting in lower debt during the period. The Company’s average net debt to adjusted EBITDA leverage ratio at the end of the quarter was 6.95 times, well within the covenant maximum of 7.75 times. The maximum EBITDA multiple under the revised leverage ratio covenants decreases to 6.50 in the third quarter and to 6.00 in the fourth quarter of the fiscal year. Going forward, the Company expects to operate well within covenant bounds.
The Company recorded pre-tax restructuring charges of
The Company reported GAAP net income of
Year-to-date Details
For the first six months of fiscal 2024, the Company reported sales of
The company-wide gross margin rate was 27.2 percent on a GAAP basis and 30.7 percent on a non-GAAP adjusted basis compared with rates of 24.7 percent and 31.0 percent, respectively, a year ago. SG&A decreased 7 percent to
Below operating income, first-half results include a
On a company-wide basis, GAAP net income was
Fiscal 2024 Outlook
The Company reaffirms its previously announced non-GAAP fiscal 2024 guidance. More details will be shared during today’s call, and the Company expects to provide an updated outlook in early June. The Company’s primary objective remains restoring a strong balance sheet with meaningful improvements in leverage and working capital by generating
Conference Call and Webcast Scheduled for
The Company will discuss results during a video presentation via webcast today at
Net Sales Details
Fiscal Second Quarter (January - | ||||||||||
Volume & Mix | Foreign Exchange | Price | Other(2) | |||||||
4% | –% | (2)% | –% | 2% | ||||||
Hawthorne | (24)% | –% | (4)% | –% | (28)% | |||||
Other | (2)% | –% | (1)% | –% | (3)% | |||||
Total SMG | 2% | –% | (2)% | –% | –% |
Fiscal Year-to-Date ( | ||||||||||
Volume & Mix | Foreign Exchange | Price | Other(2) | |||||||
–% | –% | (2)% | –% | (2)% | ||||||
Hawthorne | (32)% | –% | (3)% | –% | (35)% | |||||
Other | (4)% | –% | (1)% | –% | (5)% | |||||
Total SMG | (4)% | –% | (2)% | –% | (6)% |
(1) | |
(2) | Other includes the impact of acquisitions and divestitures and rounding impacts necessary to reconcile to net sales |
About ScottsMiracle-Gro
With approximately
Cautionary Note Regarding Forward-Looking Statements
Statements contained in this press release, other than statements of historical fact, which address activities, events and developments that the Company expects or anticipates will or may occur in the future, including, but not limited to, information regarding the future economic performance and financial condition of the Company, the plans and objectives of the Company’s management, and the Company’s assumptions regarding such performance and plans are “forward-looking statements” within the meaning of the
- An economic downturn and economic uncertainty may adversely affect demand for the Company’s products;
- If the Company underestimates or overestimates demand for its products and does not maintain appropriate inventory levels, its net sales and/or working capital could be negatively impacted;
- The Company’s operations, financial condition or reputation, may be impaired if its information technology systems fail to perform adequately or if it is the subject of a data breach or cyber-attack;
- Climate change and unfavorable weather conditions could adversely impact financial results;
- Our success depends upon the retention and availability of key personnel and the effective succession of senior management;
- Our workforce reductions may cause undesirable consequences and our results of operations may be harmed;
- Disruptions in availability or increases in the prices of raw materials, fuel or transportation costs could adversely affect our results of operations;
- A significant interruption in the operation of the Company’s or its suppliers’ facilities could impact the Company’s capacity to produce products and service its customers, which could adversely affect the Company’s revenues and earnings;
- Acquisitions, other strategic alliances and investments could result in operating difficulties, dilution and other harmful consequences that may adversely impact the Company’s business and results of operations;
- Compliance with environmental and other public health regulations or changes in such regulations or regulatory enforcement priorities could increase our costs of doing business or limit our ability to market all of our products;
- Because of the concentration of the Company’s sales to a small number of retail customers, the loss of one or more of, or significant reduction in orders from, its top customers, or a material reduction in the inventory of the Company’s products that they carry, could adversely affect the Company’s financial results;
- The Company’s indebtedness could limit its flexibility and adversely affect its financial condition;
- The Company’s decision to maintain, reduce or discontinue paying cash dividends to its shareholders or repurchasing its Common Shares could cause the market price for its common shares to decline;
- If the perception of the Company’s brands or organizational reputation are damaged, its customers, distributors and retailers may react negatively, which could materially and adversely affect the Company’s business, financial condition and results of operations;
- In the event the Third Restated Marketing Agreement for consumer Roundup products terminates, or Monsanto’s consumer Roundup business materially declines the Company would lose a substantial source of future earnings and overhead expense absorption; and
Hagedorn Partnership, L.P. beneficially owns approximately 24% of the Company’s common shares and can significantly influence decisions that require the approval of shareholders.
Additional detailed information concerning a number of the important factors that could cause actual results to differ materially from the forward-looking information contained in this release is readily available in the Company’s publicly filed quarterly, annual and other reports. The Company disclaims any obligation to update developments of these risk factors or to announce publicly any revision to any of the forward-looking statements contained in this release, or to make corrections to reflect future events or developments.
For investor inquiries:
Sr. Vice President, Investor Relations
aimee.deluca@scotts.com
(937) 578-5621
For media inquiries:
Chief Communications Officer
tom.matthews@scotts.com
(937) 644-7044
Condensed Consolidated Statements of Operations (In millions, except per share data) (Unaudited) | |||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
Footnotes | 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||||||||||
Net sales | $ | 1,525.4 | $ | 1,531.5 | — | % | $ | 1,935.8 | $ | 2,058.1 | (6 | )% | |||||||||||||
Cost of sales | 986.8 | 1,000.1 | 1,340.8 | 1,420.7 | |||||||||||||||||||||
Cost of sales—impairment, restructuring and other | 74.9 | 118.7 | 69.1 | 129.0 | |||||||||||||||||||||
Gross margin | 463.7 | 412.7 | 12 | % | 525.9 | 508.4 | 3 | % | |||||||||||||||||
% of sales | 30.4 | % | 26.9 | % | 27.2 | % | 24.7 | % | |||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||
Selling, general and administrative | 178.7 | 186.3 | (4 | )% | 293.5 | 314.8 | (7 | )% | |||||||||||||||||
Impairment, restructuring and other | 2.1 | 21.8 | (5.0 | ) | 30.2 | ||||||||||||||||||||
Other (income) expense, net | 10.8 | (1.6 | ) | 12.6 | (1.0 | ) | |||||||||||||||||||
Income from operations | 272.1 | 206.2 | 32 | % | 224.8 | 164.4 | 37 | % | |||||||||||||||||
% of sales | 17.8 | % | 13.5 | % | 11.6 | % | 8.0 | % | |||||||||||||||||
Equity in loss of unconsolidated affiliates | 7.0 | 7.3 | 29.5 | 18.7 | |||||||||||||||||||||
Interest expense | 44.1 | 48.3 | 86.8 | 91.0 | |||||||||||||||||||||
Other non-operating (income) expense, net | 1.2 | 0.8 | 2.9 | (0.8 | ) | ||||||||||||||||||||
Income before income taxes | 219.8 | 149.8 | 47 | % | 105.6 | 55.5 | 90 | % | |||||||||||||||||
Income tax expense | 62.3 | 40.4 | 28.6 | 10.8 | |||||||||||||||||||||
Net income | $ | 157.5 | $ | 109.4 | 44 | % | $ | 77.0 | $ | 44.7 | 72 | % | |||||||||||||
Basic net income per common share | (1 | ) | $ | 2.77 | $ | 1.95 | 42 | % | $ | 1.36 | $ | 0.80 | 70 | % | |||||||||||
Diluted net income per common share | (2 | ) | $ | 2.74 | $ | 1.94 | 41 | % | $ | 1.34 | $ | 0.80 | 68 | % | |||||||||||
Common shares used in basic net income per share calculation | 56.8 | 56.0 | 1 | % | 56.7 | 55.8 | 2 | % | |||||||||||||||||
Common shares and potential common shares used in diluted net income per share calculation | 57.4 | 56.5 | 2 | % | 57.3 | 56.1 | 2 | % | |||||||||||||||||
Non-GAAP results: | |||||||||||||||||||||||||
Adjusted net income | (3 | ) | $ | 211.9 | $ | 213.8 | (1 | )% | $ | 129.7 | $ | 157.4 | (18 | )% | |||||||||||
Adjusted diluted net income per common share | (2) (3 | ) | $ | 3.69 | $ | 3.78 | (2 | )% | $ | 2.26 | $ | 2.81 | (20 | )% | |||||||||||
Adjusted EBITDA | (3 | ) | $ | 396.3 | $ | 404.8 | (2 | )% | $ | 370.5 | $ | 426.0 | (13 | )% | |||||||||||
Note: See accompanying footnotes. | |||||||||||||||||||||||||
The Company divides its operations into three reportable segments:
The performance of each reportable segment is evaluated based on several factors, including income (loss) before income taxes, amortization, impairment, restructuring and other charges (“Segment Profit (Loss)”), which is a non-GAAP financial measure. Senior management uses Segment Profit (Loss) to evaluate segment performance because they believe this measure is indicative of performance trends and the overall earnings potential of each segment.
The following tables present financial information for the Company’s reportable segments for the periods indicated:
Segment Results (In millions) (Unaudited) | |||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
2024 | 2023 | % Change | 2024 | 2023 | % Change | ||||||||||||||||
$ | 1,379.8 | $ | 1,357.4 | 2 | % | $ | 1,686.5 | $ | 1,726.3 | (2 | )% | ||||||||||
Hawthorne | 66.4 | 92.7 | (28 | )% | 146.6 | 224.2 | (35 | )% | |||||||||||||
Other | 79.2 | 81.4 | (3 | )% | 102.7 | 107.6 | (5 | )% | |||||||||||||
Consolidated | $ | 1,525.4 | $ | 1,531.5 | — | % | $ | 1,935.8 | $ | 2,058.1 | (6 | )% | |||||||||
Segment Profit (Loss) (Non-GAAP): | |||||||||||||||||||||
$ | 385.7 | $ | 397.4 | (3 | )% | $ | 370.3 | $ | 428.7 | (14 | )% | ||||||||||
Hawthorne | (3.4 | ) | (16.8 | ) | 80 | % | (13.0 | ) | (33.0 | ) | 61 | % | |||||||||
Other | 6.4 | 14.6 | (56 | )% | 1.2 | 16.0 | (93 | )% | |||||||||||||
Total Segment Profit (Non-GAAP) | 388.7 | 395.2 | (2 | )% | 358.5 | 411.7 | (13 | )% | |||||||||||||
Corporate | (35.7 | ) | (42.1 | ) | (61.7 | ) | (74.0 | ) | |||||||||||||
Intangible asset amortization | (3.9 | ) | (6.4 | ) | (7.9 | ) | (14.1 | ) | |||||||||||||
Impairment, restructuring and other | (77.0 | ) | (140.5 | ) | (64.1 | ) | (159.2 | ) | |||||||||||||
Equity in loss of unconsolidated affiliates | (7.0 | ) | (7.3 | ) | (29.5 | ) | (18.7 | ) | |||||||||||||
Interest expense | (44.1 | ) | (48.3 | ) | (86.8 | ) | (91.0 | ) | |||||||||||||
Other non-operating income (expense), net | (1.2 | ) | (0.8 | ) | (2.9 | ) | 0.8 | ||||||||||||||
Income before income taxes (GAAP) | $ | 219.8 | $ | 149.8 | 47 | % | $ | 105.6 | $ | 55.5 | 90 | % |
Condensed Consolidated Balance Sheets (In millions) (Unaudited) | |||||||||||
2024 | 2023 | 2023 | |||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 65.1 | $ | 25.0 | $ | 31.9 | |||||
Accounts receivable, net | 876.9 | 1,457.9 | 304.2 | ||||||||
Inventories | 824.3 | 1,127.6 | 880.3 | ||||||||
Prepaid and other current assets | 168.8 | 231.9 | 181.4 | ||||||||
Total current assets | 1,935.1 | 2,842.4 | 1,397.8 | ||||||||
Investment in unconsolidated affiliates | 83.8 | 174.2 | 91.9 | ||||||||
Property, plant and equipment, net | 608.2 | 588.9 | 610.3 | ||||||||
243.9 | 254.3 | 243.9 | |||||||||
Intangible assets, net | 428.9 | 565.5 | 436.7 | ||||||||
Other assets | 624.3 | 562.8 | 633.1 | ||||||||
Total assets | $ | 3,924.2 | $ | 4,988.1 | $ | 3,413.7 | |||||
LIABILITIES AND EQUITY (DEFICIT) | |||||||||||
Current liabilities: | |||||||||||
Current portion of debt | $ | 57.8 | $ | 435.4 | $ | 52.3 | |||||
Accounts payable | 440.4 | 415.5 | 271.2 | ||||||||
Other current liabilities | 562.1 | 521.6 | 450.2 | ||||||||
Total current liabilities | 1,060.3 | 1,372.5 | 773.7 | ||||||||
Long-term debt | 2,760.5 | 3,138.0 | 2,557.4 | ||||||||
Other liabilities | 354.3 | 340.1 | 349.9 | ||||||||
Total liabilities | 4,175.1 | 4,850.6 | 3,681.0 | ||||||||
Equity (deficit) | (250.9 | ) | 137.5 | (267.3 | ) | ||||||
Total liabilities and equity (deficit) | $ | 3,924.2 | $ | 4,988.1 | $ | 3,413.7 |
Reconciliation of Non-GAAP Disclosure Items (3) (In millions, except per share data) (Unaudited) | ||||||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||||||
As Reported (GAAP) | Impairment, Restructuring and Other | Adjusted (Non- GAAP) | As Reported (GAAP) | Impairment, Restructuring and Other | Adjusted (Non- GAAP) | |||||||||||||||
Gross margin | $ | 463.7 | $ | (74.9 | ) | $ | 538.6 | $ | 412.7 | $ | (118.7 | ) | $ | 531.5 | ||||||
Gross margin as a % of sales | 30.4 | % | 35.3 | % | 26.9 | % | 34.7 | % | ||||||||||||
Income from operations | 272.1 | (77.0 | ) | 349.1 | 206.2 | (140.5 | ) | 346.7 | ||||||||||||
Income from operations as a % of sales | 17.8 | % | 22.9 | % | 13.5 | % | 22.6 | % | ||||||||||||
Income before income taxes | 219.8 | (77.0 | ) | 296.8 | 149.8 | (140.5 | ) | 290.3 | ||||||||||||
Income tax expense | 62.3 | (22.6 | ) | 84.9 | 40.4 | (36.1 | ) | 76.5 | ||||||||||||
Net income | 157.5 | (54.4 | ) | 211.9 | 109.4 | (104.4 | ) | 213.8 | ||||||||||||
Diluted net income per common share | 2.74 | (0.95 | ) | 3.69 | 1.94 | (1.85 | ) | 3.78 |
Calculation of Adjusted EBITDA (3): | Three Months Ended | Three Months Ended | ||||||
Net income (GAAP) | $ | 157.5 | $ | 109.4 | ||||
Income tax expense | 62.3 | 40.4 | ||||||
Interest expense | 44.1 | 48.3 | ||||||
Depreciation | 16.2 | 16.0 | ||||||
Amortization | 3.9 | 6.4 | ||||||
Impairment, restructuring and other charges | 77.0 | 140.5 | ||||||
Equity in loss of unconsolidated affiliates | 7.0 | 7.3 | ||||||
Interest income | (0.2 | ) | (1.0 | ) | ||||
Share-based compensation | 28.5 | 37.5 | ||||||
Adjusted EBITDA (Non-GAAP) | $ | 396.3 | $ | 404.8 | ||||
Note: See accompanying footnotes. | ||||||||
The sum of the components may not equal due to rounding. |
Six Months Ended | Six Months Ended | |||||||||||||||||||
As Reported (GAAP) | Impairment, Restructuring and Other | Adjusted (Non- GAAP) | As Reported (GAAP) | Impairment, Restructuring and Other | Adjusted (Non- GAAP) | |||||||||||||||
Gross margin | $ | 525.9 | $ | (69.1 | ) | $ | 595.0 | $ | 508.4 | $ | (128.9 | ) | $ | 637.3 | ||||||
Gross margin as a % of sales | 27.2 | % | 30.7 | % | 24.7 | % | 31.0 | % | ||||||||||||
Income from operations | 224.8 | (64.1 | ) | 288.9 | 164.4 | (159.2 | ) | 323.6 | ||||||||||||
Income from operations as a % of sales | 11.6 | % | 14.9 | % | 8.0 | % | 15.7 | % | ||||||||||||
Equity in loss of unconsolidated affiliates | 29.5 | 10.4 | 19.1 | 18.7 | — | 18.7 | ||||||||||||||
Income before income taxes | 105.6 | (74.5 | ) | 180.1 | 55.5 | (159.2 | ) | 214.7 | ||||||||||||
Income tax expense | 28.6 | (21.9 | ) | 50.5 | 10.8 | (46.5 | ) | 57.2 | ||||||||||||
Net income | 77.0 | (52.7 | ) | 129.7 | 44.7 | (112.7 | ) | 157.4 | ||||||||||||
Diluted net income per common share | 1.34 | (0.92 | ) | 2.26 | 0.80 | (2.01 | ) | 2.81 |
Calculation of Adjusted EBITDA (3): | Six Months Ended | Six Months Ended | ||||||
Net income (GAAP) | $ | 77.0 | $ | 44.7 | ||||
Income tax expense | 28.6 | 10.8 | ||||||
Interest expense | 86.8 | 91.0 | ||||||
Depreciation | 32.3 | 33.6 | ||||||
Amortization | 7.9 | 14.1 | ||||||
Impairment, restructuring and other charges | 64.1 | 159.2 | ||||||
Equity in loss of unconsolidated affiliates | 29.5 | 18.7 | ||||||
Interest income | (0.3 | ) | (4.4 | ) | ||||
Share-based compensation | 44.6 | 58.3 | ||||||
Adjusted EBITDA (Non-GAAP) | $ | 370.5 | $ | 426.0 | ||||
Note: See accompanying footnotes. | ||||||||
The sum of the components may not equal due to rounding. |
(1) | Basic net income (loss) per common share amounts are calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. |
(2) | Diluted net income (loss) per common share amounts are calculated by dividing net income (loss) by the weighted average number of common shares, plus all potential dilutive securities (common stock options, performance shares, performance units, restricted stock and restricted stock units) outstanding during the period. |
(3) | Reconciliation of Non-GAAP Measures |
Use of Non-GAAP Measures
To supplement the financial measures prepared in accordance with
In addition to GAAP measures, management uses these non-GAAP financial measures to evaluate the Company’s performance, engage in financial and operational planning, determine incentive compensation and monitor compliance with the financial covenants contained in the Company’s borrowing agreements because it believes that these non-GAAP financial measures provide additional perspective on and, in some circumstances are more closely correlated to, the performance of the Company’s underlying, ongoing business.
Management believes that these non-GAAP financial measures are useful to investors in their assessment of operating performance and the valuation of the Company. In addition, these non-GAAP financial measures address questions routinely received from analysts and investors and, in order to ensure that all investors have access to the same data, management has determined that it is appropriate to make this data available to all investors. Non-GAAP financial measures exclude the impact of certain items (as further described below) and provide supplemental information regarding operating performance. By disclosing these non-GAAP financial measures, management intends to provide investors with a supplemental comparison of operating results and trends for the periods presented. Management believes these non-GAAP financial measures are also useful to investors as such measures allow investors to evaluate performance using the same metrics that management uses to evaluate past performance and prospects for future performance. Management views free cash flow as an important measure because it is one factor used in determining the amount of cash available for dividends and discretionary investment.
Exclusions from Non-GAAP Financial Measures
Non-GAAP financial measures reflect adjustments based on the following items:
- Impairments, which are excluded because they do not occur in or reflect the ordinary course of the Company’s ongoing business operations and their exclusion results in a metric that provides supplemental information about the sustainability of operating performance.
- Restructuring and employee severance costs, which include charges for discrete projects or transactions that fundamentally change the Company’s operations and are excluded because they are not part of the ongoing operations of its underlying business, which includes normal levels of reinvestment in the business.
- Costs related to refinancing, which are excluded because they do not typically occur in the normal course of business and may obscure analysis of trends and financial performance. Additionally, the amount and frequency of these types of charges is not consistent and is significantly impacted by the timing and size of debt financing transactions.
- Discontinued operations and other unusual items, which include costs or gains related to discrete projects or transactions and are excluded because they are not comparable from one period to the next and are not part of the ongoing operations of the Company’s underlying business.
The tax effect for each of the items listed above is determined using the tax rate and other tax attributes applicable to the item and the jurisdiction(s) in which the item is recorded.
Definitions of Non-GAAP Financial Measures
The reconciliations of non-GAAP disclosure items include the following financial measures that are not calculated in accordance with GAAP:
Adjusted gross margin: Gross margin excluding impairment, restructuring and other charges / recoveries.
Adjusted income (loss) from operations: Income (loss) from operations excluding impairment, restructuring and other charges / recoveries.
Adjusted equity in income (loss) of unconsolidated affiliates: Equity in income (loss) of unconsolidated affiliates excluding impairment charges.
Adjusted income (loss) before income taxes: Income (loss) before income taxes excluding impairment, restructuring and other charges / recoveries, costs related to refinancing and certain other non-operating income / expense items.
Adjusted income tax expense (benefit): Income tax expense (benefit) excluding the tax effect of impairment, restructuring and other charges / recoveries, costs related to refinancing and certain other non-operating income / expense items.
Adjusted net income (loss): Net income (loss) excluding impairment, restructuring and other charges / recoveries, costs related to refinancing and certain other non-operating income / expense items, each net of tax.
Adjusted diluted net income (loss) per common share: Diluted net income (loss) per common share excluding impairment, restructuring and other charges / recoveries, costs related to refinancing and certain other non-operating income / expense items, each net of tax.
Adjusted EBITDA: Net income (loss) before interest, taxes, depreciation and amortization as well as certain other items such as the impact of the cumulative effect of changes in accounting, costs associated with debt refinancing and other non-recurring or non-cash items affecting net income (loss). A form of Adjusted EBITDA is used in agreements governing the Company’s outstanding indebtedness for debt covenant compliance purposes. Adjusted EBITDA as used in those agreements includes additional adjustments to the Adjusted EBITDA presented in the reconciliations above which may decrease or increase Adjusted EBITDA for purposes of the Company’s financial covenants.
For the three and six months ended
- During fiscal 2022, the Company began implementing a series of Company-wide organizational changes and initiatives intended to create operational and management-level efficiencies. As part of this restructuring program, the Company is reducing the size of its supply chain network, reducing staffing levels and implementing other cost-reduction initiatives. During the second quarter of fiscal 2024, the Company commenced plans to close additional Hawthorne distribution centers. The Company has also accelerated the reduction of certain Hawthorne inventory, primarily lighting, growing environments and hardware products, to reduce its on hand inventory to align with the reduced network capacity. During the three and six months ended
March 30, 2024 , the Company incurred costs of$74.9 million and$69.1 million , respectively, in the “Cost of sales—impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations and$2.0 million and$4.1 million , respectively, in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations associated with this restructuring initiative primarily related to inventory write-down charges, employee termination benefits, facility closure costs and impairment of right-of-use assets and property, plant and equipment. - During the three and six months ended
March 30, 2024 , the Company recorded a gain of$0.0 million and$12.1 million , respectively, in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations associated with a payment received in resolution of a dispute with the former ownership group of a business that was acquired in fiscal 2022. - During the three and six months ended
March 30, 2024 , the Company recorded a pre-tax impairment charge of$0.0 million and$10.4 million , respectively, associated with its investment inBonnie Plants, LLC in the “Equity in loss of unconsolidated affiliates” line in the Condensed Consolidated Statements of Operations.
For the three and six months ended
- During fiscal 2022, the Company began implementing a series of Company-wide organizational changes and initiatives intended to create operational and management-level efficiencies. During the three and six months ended
April 1, 2023 , the Company incurred costs of$118.7 million and$128.2 million , respectively, in the “Cost of sales—impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations and$18.1 million and$23.2 million , respectively, in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations associated with this restructuring initiative primarily related to inventory write-down charges, employee termination benefits, facility closure costs and impairment of right-of-use assets and property, plant and equipment.
Forward Looking Non-GAAP Measures
In this release, the Company presents certain forward-looking non-GAAP measures. The Company does not provide outlook on a GAAP basis because changes in the items that the Company excludes from GAAP to calculate the comparable non-GAAP measure, described above, can be dependent on future events that are less capable of being controlled or reliably predicted by management and are not part of the Company’s routine operating activities. Additionally, due to their unpredictability, management does not forecast many of the excluded items for internal use and therefore cannot create or rely on a GAAP outlook without unreasonable efforts. The occurrence, timing and amount of any of the items excluded from GAAP to calculate non-GAAP could significantly impact the Company’s GAAP results. As a result, the Company does not provide a reconciliation of forward-looking non-GAAP measures to GAAP measures, in reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K.
Source:
2024 GlobeNewswire, Inc., source