The Scotts Miracle-Gro Company (NYSE: SMG), the world’s largest
marketer of branded consumer lawn and garden as well as a leader in
indoor and hydroponic growing products, today is hosting a “Meet
the Management” Investor Day at its headquarters and research and
development facilities in Marysville, Ohio.
“Over the past two years, we’ve been on a
journey to transform our Company and return to a more shareholder
friendly environment,” said Jim Hagedorn, chairman, CEO and
president. “We’ve made major progress on this front and are on
track to our near-term targets. Looking to fiscal ‘25 through
fiscal ‘27, we expect to further drive meaningful value by
delivering significant gross margin improvement and consistent
annual growth rates.
“Investor Day is our opportunity not only to
provide insights into these go-forward plans, but also to showcase
the power and enduring nature of our franchise. The leadership team
has brought a broader base of talent, experience and diversity of
thought to our organization, and we’re approaching our business
with renewed enthusiasm, energy and momentum.”
Strategic Objectives and Plans to
Deliver Shareholder Value Creation
The Company will highlight its strategic and
operational objectives for the next three years that will build
upon its leading market positions in both the U.S.Consumer lawn and
garden and Hawthorne businesses.
The U.S. Consumer business is pursuing growth
opportunities at emerging touchpoints, such as with omnichannel
retail partnerships and Hispanic consumers. Additionally,
investments in technology and infrastructure for predictive
analysis and optimized service models are fueling margin growth and
efficiency. Through these efforts, the U.S. Consumer business
expects $150 million in supply chain cost savings over the next
three years, a component of the Company’s projected return to
adjusted gross margin rates above 30 percent.
The Company also continues to transform its
Hawthorne subsidiary through its previously announced strategic
pivot from distributor to branded solution provider. By focusing on
its proprietary “Signature” brands, Hawthorne expects to
meaningfully contribute to total Company adjusted earnings
beginning in fiscal 2025 through single-digit net sales growth
weighted towards higher-margin consumable versus durable
products.
Midterm Targets - Fiscal 2025 through
Fiscal 2027
On a total Company basis, the Company expects to
average 3 percent net sales growth through innovation, net pricing
and synergistic mergers and acquisitions in near adjacencies in the
U.S. Consumer business.
The non-GAAP adjusted gross margin rate is
expected to return to above 30 percent via improved volume and mix,
net pricing averaging more than 1 percent per year, additional
fixed cost leverage and over $150 million in U.S. Consumer supply
chain efficiencies over three years including material cost
savings.
SG&A is expected to remain in the range of
15 to 16 percent of net sales while reinvesting operational cost
savings in important growth drivers including marketing and
innovation. Taken together, delivering these mid-range targets will
achieve total Company non-GAAP adjusted operating margin in excess
of 15 percent and adjusted EBITDA in excess of $600 million.
“Over the past two years, we’ve tightly
controlled costs while transforming the organizational structure of
ScottsMiracle-Gro for a return to sustainable growth and
shareholder value creation,” said Matt Garth, chief financial
officer and chief administrative officer. “While work remains to
achieve an acceptable level of leverage and financial flexibility,
the Company is poised to capitalize on its leading market positions
and unmatched strengths. Because our midterm plans are built on
these core competencies, we are highly confident in our ability to
execute upon and achieve our targets.”
With a return to normalized working capital
levels, the Company expects greater than $300 million annualized
free cash flow after annual capital expenditures in a range of 2.5
percent to 3.5 percent of net sales. Near-term, free cash flow will
continue to be directed toward further debt paydown, driving
leverage below four times non-GAAP adjusted EBITDA by the end of
fiscal 2026, and sustaining the quarterly dividend to shareholders.
Longer term, the Company anticipates returning to a more balanced
capital allocation including a return to accretive mergers and
acquisitions and further returns to shareholders.
2024 Outlook
The Company affirms it is on track to achieve
the updated full-year guidance provided in June and is encouraged
by consumer engagement with unit POS through June up 10 percent
over prior year despite challenging weather and macroeconomic
conditions.
The Company will provide fiscal third quarter
financial results and hold its quarterly webcast on July 31, 2024
at 9 a.m. ET. Registration details will be shared the week prior to
the event.
Supporting Materials
Today’s financial presentation is available on
the events page of the Company’s investor website at
investor.scotts.com. Summarized videos featuring other key events
and messages from the investor day will be posted to the website
within the next 10 business days.
About ScottsMiracle-GroWith
approximately $3.6 billion in sales, the Company is the world’s
largest marketer of branded consumer products for lawn and garden
care. The Company’s brands are among the most recognized in the
industry. The Company’s Scotts®, Miracle-Gro®, and Ortho® brands
are market-leading in their categories. The Company’s wholly-owned
subsidiary, The Hawthorne Gardening Company, is a leading provider
of nutrients, lighting, and other materials used in the indoor and
hydroponic growing segment. For additional information, visit us at
www.scottsmiraclegro.com.
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 U.S. federal
securities laws that are subject to risks and uncertainties. These
forward-looking statements generally can be identified as
statements that include phrases such as “guidance,” “outlook,”
“projected,” “believe,” “target,” “predict,” “estimate,”
“forecast,” “strategy,” “may,” “goal,” “expect,” “anticipate,”
“intend,” “plan,” “foresee,” “likely,” “will,” “should” or other
similar words or phrases. Actual results could differ materially
from the forward-looking information in this release due to a
variety of factors, including, but not limited to:
- 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:Aimee DeLucaSr. Vice
President, Investor Relationsaimee.deluca@scotts.com (937)
578-5621
For media inquiries:Tom MatthewsChief
Communications Officertom.matthews@scotts.com (937)
644-7044
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