PresentationJoseph AltobelloRaymond James & Associates, Inc., Research Division Good afternoon, everybody, and thank you for joining us. I'm Joe Altobello, leisure analyst here at Raymond James. And I'm very pleased to have with me today senior management from The Scotts Miracle-Gro, including President and COO, Nate Baxter; and CFO, Mark Scheiwer. Welcome, gentlemen. I'm sure most people in this room are at least somewhat familiar with Scotts as the company is the leader in the consumer lawn and garden spa ...

Summary of Scotts Miracle-Gro Conference Call (December 09, 2025) Company Overview - **Company**: Scotts Miracle-Gro (NYSE: SMG) - **Industry**: Consumer Lawn and Garden Products, Hydroponics Key Points U.S. Consumer Business Performance - The U.S. consumer business experienced a cumulative sales growth of approximately 6%-7% over fiscal years 2024 and 2025, translating to an annual growth rate of about 3%-3.5% [2][4] - Recent volatility in sales is attributed to post-COVID adjustments, inventory management, and a shift in sales phasing from 60% in the first half to 55% in the past year [3][4] - Retailer inventories are reported to be healthy, supporting future growth initiatives [4] Future Growth Projections - The company anticipates annual sales growth of at least 3% moving forward, with historical growth rates averaging between 3% to 5% over a decade [5][6] - Innovation, e-commerce expansion, and strategic pricing are identified as key growth drivers [6][17] E-commerce and Market Trends - E-commerce sales currently account for about 10% of total POS sales, up from less than 2% five years ago, with expectations for continued double-digit growth [34] - The company is focusing on expanding its presence in the e-commerce space, particularly through partnerships with major retailers [20][34] Product Strategy and Market Share - The company gained four points of market share in fiscal year 2024 and netted one point in the following year, indicating resilience against private label competition [31][32] - The strategy includes moving away from low-margin commodity products towards branded offerings, with expectations for mid-single-digit growth in branded products [9][32] Gross Margin Recovery - Gross margins fell from mid-30s to below 24% due to COVID-related buildouts and increased fixed costs, but are projected to recover to 31% by the end of 2025, with a goal of reaching mid-30s in the future [44][48] - Key drivers for margin recovery include pricing strategies, cost savings initiatives, and investments in automation and technology [49][50] Consumer Engagement and Education - The company aims to increase household penetration in lawn care, currently at about 11%, by focusing on education and frequency of product use [26][27] - There is a strategic shift towards promoting multi-step lawn care programs to enhance consumer engagement [28][30] Innovation and M&A Strategy - The innovation pipeline is expected to contribute significantly to future growth, with plans for small tuck-in acquisitions to enhance product offerings [17][18] - The company is exploring opportunities in adjacent categories, particularly in pest control and gardening, to expand its market presence [22][23] Demographic Focus - A dedicated team is being formed to engage with the Hispanic demographic, recognizing its growing importance in the consumer base [21][22] Conclusion - Scotts Miracle-Gro is positioning itself for consistent growth through strategic innovation, e-commerce expansion, and a focus on branded products while navigating the challenges of post-COVID market dynamics and improving gross margins [10][50]

Core Insights - Scott's Miracle Grow is focusing on balancing innovation with sustainability while modernizing its legacy brands to attract younger consumers, particularly millennials and Gen Z [1][2][3] - The company reported a loss in its latest earnings, but positive EBIT and a significant margin recovery of almost 500 basis points over the past year, indicating operational improvements [1][2] - The decision to exit the cannabis business through its Hawthorne subsidiary is driven by a challenging market environment, with plans to find a partner outside the company [3][4] Financial Performance - The company experienced a loss in Q4, which is typical due to its seasonal business model, with profits primarily generated in fiscal Q2 and Q3 [1][2] - Free cash flow for the most recent period was just under $275 million, with a focus on deleveraging and reducing historical debt levels [13][15] - The company aims for $150 million in supply chain cost savings over three years, with a significant portion driven by technology improvements in demand planning and forecasting [4][5] Consumer Engagement and Target Demographics - The company is targeting two main demographics: older consumers (baby boomers and Gen X) focused on traditional lawn aesthetics, and younger consumers (millennials and Gen Z) who prioritize health, wellness, and creating engaging outdoor spaces [2][3] - Younger consumers are increasingly interested in indoor gardening and sustainable practices, leading the company to adapt its messaging and marketing strategies to resonate with this audience [2][3][4] - The company recognizes the need for authenticity in its branding and is shifting its marketing efforts towards digital platforms to better engage younger consumers [2][3] Product Development and Sustainability - Scott's Miracle Grow is committed to increasing the proportion of natural and organic products, with a goal of having at least 25% of its point-of-sale offerings be natural or organic within the next three to four years [3][4] - The company is exploring partnerships and research into biological solutions to reduce reliance on synthetic chemicals, aiming for a more sustainable product line [3][4] - Modernization efforts include updating packaging aesthetics to appeal to younger consumers and developing products tailored to regional needs, particularly in areas with different climate challenges [3][4][12] Strategic Focus and Future Plans - The company is prioritizing its core lawn and garden business while considering small tuck-in acquisitions to enhance its brand portfolio [15][16] - There is an emphasis on improving e-commerce presence, with plans to launch a new website that is more engaging and educational for consumers [3][4] - The management is open to exploring larger transformational opportunities in the lawn and garden sector, while maintaining a cautious approach to capital allocation [20][21]

Analysts predict an earnings per share (EPS) of -$0.20 and projected revenue of around $657.86 million for the quarter.Zacks Investment Research suggests that Central Garden might surpass these estimates, potentially impacting the stock price positively.Key financial metrics include a price-to-earnings (P/E) ratio of 13.98, a price-to-sales ratio of 0.61, and a current ratio of 3.56, indicating financial stability.Central Garden & Pet Company, listed on NASDAQ:CENT, is a key player in the pet supply and law ...

Core Viewpoint - Central Garden (CENT) is expected to report a year-over-year decline in earnings due to lower revenues, with a consensus outlook indicating a quarterly loss of $0.20 per share and revenues of $666.08 million, down 0.5% from the previous year [1][3]. Earnings Expectations - The consensus EPS estimate has been revised 8.33% lower in the last 30 days, reflecting a reassessment by analysts [4]. - A positive Earnings ESP of +6.56% suggests analysts have recently become more optimistic about Central Garden's earnings prospects, despite the stock holding a Zacks Rank of 3 [12]. Earnings Surprise History - Central Garden has a history of beating consensus EPS estimates, having done so in the last four quarters, including a +16.42% surprise in the most recent quarter [13][14]. Market Reaction - The stock price may increase if the actual earnings exceed expectations, while a miss could lead to a decline [2]. - Management's discussion during the earnings call will significantly influence the sustainability of any immediate price changes and future earnings expectations [2].

At 98 years old, service never really ended for Navy veteran Ron Gibbons. >> Well, they say, "You've been here 17 years." I said, "Yeah, they're going to keep me here till I do it right." So, >> customers call him Mr. . Ron.Most days you can find him working in the lawn and garden department at Lowe's in Olter, New York. >> What's the the best type of plant to to get in the ground right now. >> The moms are out now.Yeah. And I told him the dads will be in later. But uh >> after serving his country and 35 ye ...

Core Insights - Scotts Miracle-Gro is a prominent player in the lawn and garden industry, known for its consumer and professional products, facing competition from companies like Bayer and Syngenta [1] Financial Performance - Stifel Nicolaus has set a price target of $70 for Scotts Miracle-Gro, indicating a potential upside of approximately 25% from its current trading price of $56.02 [2][6] - The stock has recently increased by $1.56, or 2.86%, reflecting positive investor sentiment [2] Strategic Initiatives - The company is implementing a turnaround strategy focused on reducing debt and enhancing free cash flow, which is essential after a challenging year [3][6] - E-commerce sales in the consumer business have risen by 23%, indicating growing momentum [3] - Retailer destocking is nearly complete, which is expected to positively impact performance in 2026 [3] Operational Developments - The Hawthorne unit, which previously faced challenges, is no longer consuming cash, marking a significant improvement for the company [4] - The dividend is now secure and fully covered by free cash flow, providing reassurance to investors regarding financial stability [4][6] Market Metrics - Scotts Miracle-Gro has a market capitalization of approximately $3.23 billion, with a trading volume of 1,445,083 shares [5] - The stock has experienced volatility, trading between $52.75 and $56.51 on the current day, with a yearly high of $83.55 and a low of $45.61 [5]

Financial Data and Key Metrics Changes - Fiscal 2025 results showed strong sales growth in the U.S. Consumer business, with net sales reaching $2,990 million, a 1% increase from the previous year when excluding nonrecurring sales [38][39] - Gross margin improved significantly, with a non-GAAP adjusted gross margin rate of 31.2%, up from 26.3% in the prior year, exceeding the target of 30% [49][48] - Free cash flow for the year was $274 million, exceeding expectations and contributing to a reduction in leverage ratio to 4.1x from 4.86x in fiscal 2024 [52][54] Business Line Data and Key Metrics Changes - U.S. Consumer net sales for Q4 were $311.2 million, a 3% increase driven by strong demand for lawn products and Roundup [37] - E-commerce POS units increased by 51%, with e-commerce sales doubling at the largest retailer, contributing to a 10% share of overall POS [46][18] - The Hawthorne segment saw a significant decline in net sales, down 44% to $165.8 million, as the company focused on profitability improvements and divestiture strategies [46][31] Market Data and Key Metrics Changes - The overall category market share in units grew by 1%, with minimal competitive pressure from private label products, which represent less than 10% of the total category [45][27] - Point of sale (POS) units increased by 8.5% in fiscal 2025, building on nearly 9% growth from the previous year, indicating strong consumer engagement [29][42] Company Strategy and Development Direction - The company aims for U.S. Consumer net sales growth averaging at least 3% annually, with a focus on branded products and a shift away from low-margin commodities [8][13] - A multi-year share buyback program is planned for fiscal 2026, reflecting the company's commitment to shareholder-friendly actions [7][34] - The strategy includes significant investments in e-commerce, innovation, and marketing, particularly in the organic and natural solutions segment [20][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute its strategic plans, emphasizing the importance of branded products in driving growth [34][58] - The company is optimistic about fiscal 2026, expecting low single-digit growth in U.S. Consumer net sales and continued improvements in gross margin [55][54] - The management highlighted the resilience of the lawn and garden category, which is expected to grow despite economic challenges [27][26] Other Important Information - The company is undergoing SKU rationalization to streamline its portfolio and improve cost efficiencies [30][80] - A new incentive plan for associates will focus on metrics related to branded sales growth and gross margin, differing from previous plans based on EBITDA [16][16] Q&A Session Summary Question: How does the lawn strategy fit into the branded focus? - Management noted that the lawn strategy aims to increase consumer frequency and engagement, with new products designed to be effective and affordable [70][75] Question: Did the focus on branded solutions impact overall performance? - Management indicated that there was no significant pressure from private labels, and the shift towards branded products is expected to yield better margins and consumer engagement [84][90] Question: What are the expectations for advertising spend in FY 2026? - The company aims to increase advertising spend to around 8% of revenue in the long term, with a targeted spend of approximately $152 million for FY 2026 [96][101]

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying strong growth stocks can be challenging due to inherent volatility and risks [1] Group 1: Company Overview - Central Garden (CENT) is currently highlighted as a recommended growth stock by the Zacks Growth Style Score system, which evaluates a company's genuine growth potential [2] - The company has a favorable Growth Score and a top Zacks Rank, indicating strong investment potential [2] Group 2: Earnings Growth - Earnings growth is a critical factor for growth investors, with double-digit growth being particularly desirable [4] - Central Garden's projected EPS growth for this year is 17.9%, significantly outperforming the industry average of 1% [5] Group 3: Cash Flow Growth - High cash flow growth is essential for growth-oriented companies, allowing them to fund new projects without relying on external financing [6] - Central Garden's year-over-year cash flow growth stands at 8.7%, compared to an industry average of -3.8% [6] - The company's annualized cash flow growth rate over the past 3-5 years is 11.4%, exceeding the industry average of 9% [7] Group 4: Earnings Estimate Revisions - Positive trends in earnings estimate revisions are correlated with stock price movements [8] - The current-year earnings estimates for Central Garden have increased by 0.4% over the past month, indicating a favorable outlook [8] Group 5: Investment Positioning - Central Garden has achieved a Zacks Rank 1 (Strong Buy) due to overall positive earnings estimate revisions and has a Growth Score of B [10] - This combination positions Central Garden favorably for potential outperformance, making it an attractive option for growth investors [10]

Core Viewpoint - Central Garden (CENT) is expected to report a year-over-year increase in earnings despite lower revenues, with the actual results being crucial for near-term stock price movements [1][2]. Earnings Expectations - The upcoming earnings report is anticipated to show quarterly earnings of $1.34 per share, reflecting a +1.5% change year-over-year, while revenues are projected at $987.14 million, down 0.9% from the previous year [3]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating a stable outlook from covering analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates a positive Earnings ESP of +6.98% for Central Garden, suggesting analysts have recently become more optimistic about the company's earnings prospects [12]. Historical Performance - Central Garden has a strong track record, having beaten consensus EPS estimates in the last four quarters, including a +10.64% surprise in the most recent quarter [13][14]. Investment Considerations - While a positive earnings surprise is likely, other factors may influence stock performance, making it essential for investors to consider the broader context beyond just earnings results [15][17].