Q3 2024 Scotts Miracle-Gro Co Earnings Call Transcript
Key Points
- The Scotts Miracle Gro Co (SMG) achieved a 2% increase in US consumer net sales and a 10% growth in unit POS through the first nine months of fiscal 2024.
- The company reaffirmed its guidance of 5% to 7% net sales growth for the lawn and garden business and is on track to meet its adjusted EBITDA guidance of $530 million to $540 million.
- SMG successfully reduced its inventory to pre-COVID levels and improved gross margin by 260 basis points, surpassing its full-year target.
- The Hawthorne Division posted its first profitable quarter in two years, with a 6% increase in branded sales and a 144% increase in profit.
- The company is on track to generate $1 billion in free cash flow by the end of fiscal 2024 and plans to pay down at least $350 million in debt, improving leverage ratios.
- The overall lawn and garden market was flat to declining, impacting SMG's performance despite its market share gains.
- The company faced significant challenges with inventory management post-COVID, which required substantial efforts to address.
- Pricing has not kept pace with inflation, and SMG plans only modest price increases for 2025, which may impact margins.
- The lawn fertilizer and grass seed categories underperformed, with the company acknowledging the need for further work to address these areas.
- The live goods segment, including the Bonnie JV, experienced a tough year with significant double-digit declines in market performance.
Good morning and welcome to Scotts Miracle-Groâs third quarter 2024 earnings webcast. I Aimee DeLuca, Head of Investor Relations. With me this morning our Chairman, President and CEO, Jim Hagedorn; and Chief Financial and Administrative Officer, Matt Garth. Jim will provide an overall business update, followed by Matt with a review of our financial results.
During our review, we will make forward-looking statements and discuss certain non-GAAP financial measures. Please be aware that our actual results could differ materially from what we share today. Please refer to our Form 10-K filed with the SEC for details of the full range of risk factors that could impact our results.
Following the webcast, Chief Operating Officer, Nate Baxter; and Hawthorne Division President, Chris Hagedorn, will join Jim and Matt for an audio-only Q&A session. To listen to the Q&A, simply remain on this webcast. To ask a question, please join via the audio link shared in our press release. As always, todayâs session will be
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