The Scotts Miracle-Gro Company (SMG) 6 Nov 24 2024 Q4 Earnings call transcript
AInvestWednesday, Nov 6, 2024 9:31 pm ET
1min read
SMG --

In Scotts Miracle-Gro's fiscal '24 year-end earnings webcast, CEO Jim Hagedorn provided an insightful update on the company's journey from crisis management to a focus on the future, outlining key achievements, priorities, and strategies for growth.

From Crisis to Growth: Achievements and Challenges

Two years ago, Scotts Miracle-Gro faced significant challenges, including high debt and a cost structure that could no longer be sustained. Despite these challenges, the company made strategic decisions to rightsize its business, cut operating expenses, and reinvest in its core strengths. This resilience has resulted in a pivotal shift from crisis management to growth-focused strategies.

One of the most notable achievements in fiscal '24 was the company's ability to drive consistent and sustained growth, despite a challenging lawn and garden market. Scotts Miracle-Gro achieved 6% top-line growth in its consumer business, taking significant market share in gardens and controls. This success was attributed to increased listings, expanded share of shelf, and investments in the company's superpowers.

Midterm Priorities: Driving Growth and Improving Financial Metrics

Hagedorn outlined his midterm priorities, which include driving consistent and sustained growth averaging 3% annually, deploying at least $200 million in advertising and marketing spend each year, improving gross margin rate to the mid-30% range, delivering EBITDA approaching $700 million, and reducing leverage to approximately 3x. These priorities are expected to be achieved by the end of fiscal '27, with significant progress expected in fiscal '25.

Adapting to Market Challenges and Consumer Sentiment

The company's successes, however, were not without challenges. Hagedorn acknowledged the impact of consumer sentiment on pricing and profitability, particularly in the face of ongoing economic uncertainty and high prices. Despite these challenges, Scotts Miracle-Gro has shown a commitment to improving gross margins and working closely with retailers to address consumer sentiment and pricing strategies.

Looking Ahead: A Focus on Stability and Dependability

With a focus on stability and dependability, Scotts Miracle-Gro aims to maximize its ability to regain its share price and deliver outsized shareholder returns. The company's achievements in fiscal '24, including a 20% increase in adjusted EBITDA and significant improvements in financial metrics, set a strong foundation for this ambitious plan.

As Scotts Miracle-Gro embarks on its journey towards sustainable growth, investors and stakeholders will closely watch the company's progress in implementing its strategic priorities and navigating the challenges of market conditions and consumer sentiment. With a clear vision and a proven track record of resilience, Scotts Miracle-Gro is poised for a promising future.

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