Q1 2025 Scotts Miracle-Gro Co Earnings Call Transcript
Key Points
- The Scotts Miracle Gro Co (SMG) reported strong first-quarter results, exceeding expectations and setting a positive tone for fiscal 2025.
- The company is investing an additional $40 million into brand support and innovation, with a focus on advertising and expanding demographic reach.
- SMG achieved over 750 basis points of improvement in both GAAP and non-GAAP adjusted gross margin rates, driven by lower material costs and improved product mix.
- The company is on track to achieve $75 million in supply chain cost savings for fiscal 2025, contributing to a near 30% gross margin rate target for the full year.
- SMG is focusing on channel expansion, particularly in the e-commerce space, to capture a broader consumer base and drive growth.
- Hawthorne sales declined 35% due to a strategic shift to exit low-margin third-party distribution, impacting overall company sales.
- Despite strong first-quarter results, SMG is maintaining its guidance due to the first quarter representing less than 10% of total POS.
- The company faces challenges in the lawn fertilizer business due to climate change and pricing issues, impacting unit volume.
- There is a need for significant cost savings and transformation efforts to achieve long-term financial goals, which could pose risks if not executed effectively.
- The separation of Hawthorne from SMG is still in progress, with logistical challenges and the need for bank approvals potentially delaying the process.
Good morning. I'm Brad Chelton, and I would like to welcome you to the Scotts Miracle-Gro first-quarter earnings conference call. I have recently stepped in to lead Investor Relations after 17 years at Scotts in a variety of finance leadership roles. I am grateful to succeed Aimee DeLuca, who will retire from Scotts Miracle-Gro at the end of this month after a 23-year career at the company. I've appreciated the opportunity to meet many of you already, and I look forward to meeting all of you over the coming months.
Speaking today are Chairman and CEO, Jim Hagedorn; and Interim Chief Financial Officer and Chief Accounting Officer; Mark Scheiwer. Jim will provide a business update, followed by Mark with a review of our financial results. Following the webcast, President and Chief Operating Officer, Nate Baxter; and Executive Vice President and Chief of Staff, Chris Hagedorn, will join Jim and Mark for an audio-only Q&A session.
To listen to the Q&A, simply remain on this webcast. To participate, please join
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