Scotts Miracle Gro : Raymond James 42nd Annual Institutional Investors Conference Transcript

The Scotts Miracle-Gro Company NYSE:SMG

Company Conference Presentation

Monday, March 01, 2021 1:20 PM GMT

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Contents

Table of Contents

Call Participants	..................................................................................	3
Presentation	..................................................................................	4
Question and Answer	..................................................................................	6

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THE SCOTTS MIRACLE-GRO COMPANY COMPANY CONFERENCE PRESENTATION | MAR 01, 2021

Call Participants

EXECUTIVES

Cory T. Miller

Senior VP & Interim CFO

James D. King

Chief Communications Officer & Executive VP

ANALYSTS

Joseph Nicholas Altobello Raymond James & Associates, Inc., Research Division

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THE SCOTTS MIRACLE-GRO COMPANY COMPANY CONFERENCE PRESENTATION | MAR 01, 2021

Presentation

Joseph Nicholas Altobello

Raymond James & Associates, Inc., Research Division

Okay. Great. Great. Thanks. Good morning, everyone. Thank you for joining us for the 42nd Annual Raymond James Institutional Investors Conference. I'm Joe Altobello, Equity Research Analyst here at Raymond James, covering the household, personal care and leisure sectors.

We are very pleased to have with us this morning members of senior management from Scotts Miracle-Gro, including interim CFO, Cory Miller; as well as the Executive Vice President and Chief Communications Officer, Jim King. Welcome to you both.

As many of you know, Scotts is the unquestioned leader in the U.S. consumer lawn and garden space, which is now being augmented by its very fast-growing Hawthorne hydroponics business. And we should have some time at the end of our chat for audience questions as well, which you can submit electronically via open exchange.

Now before we begin, I did want to quickly hand things over to Cory, who want to make a few introductory remarks about the state of the business. Cory?

Cory T. Miller

Senior VP & Interim CFO

Good Morning, Joe. Thanks for having us join today. While this is the first time I've attended the event, I know Jim and the team believe it's one of the best conferences of the year to share our message. So even though we're doing this virtually, we appreciate the opportunity to speak with you and the hundreds of institutional investors who are attending.

I just want to start with a few comments to reiterate that we are extremely confident about our business right now. We continue to see strong momentum in the Hawthorne business and are extremely optimistic about the outlook in the U.S. consumer business as well.

As most of you know, we recently increased our guidance for sales growth in the Hawthorne segment to a range of plus 20% to plus 30% versus the original guidance of plus 15% to plus 20%. Our original guidance for the U.S. consumer business was to be flat to minus 5% compared to last year. However, we just finished fiscal February last Saturday. And with 5 months behind us, we now have enough visibility to say that we expect to exceed that range as well. We are looking to report positive sales growth on a year-over-year basis.

Shipments remain well ahead of last year's pace as retailers prepare for the peak of the lawn and garden season. And consumer purchases of our product at our largest retailers are up 25% year-to-date entering March. That performance includes 2 weeks of pretty brutal numbers in Texas, which is one of our most important markets this early in the season. To be clear, the over-delivery in the U.S. consumer business means that we also expect to exceed our current earnings guidance of $8 to $8.40 per share on an adjusted basis.

We have some big shipment weeks ahead of us. So we're going to wait a little longer before providing specifics on an updated range. However, we felt it was important to share this update since you've heard some of our retail partners begin to talk a little more conservatively over the past week or so on their own expectations.

Like our retailers, we agree growth will get tougher later in the year given the record comparisons we're up against beginning in May. We've been saying this all along. However, our fiscal year ends in September, and we now feel we have enough visibility to say that U.S. consumer business will be positive for our fiscal '21.

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