Core Insights - Fiscal 2025 was challenging, but decisive actions have positioned the company for future growth, with first quarter net sales and adjusted EBITDA exceeding expectations despite ongoing headwinds [1][2] - The company is optimistic about the recovery in consumables, particularly in the global pet care business, which has returned to growth [4][44] - The overall financial results indicate that the company is on track to achieve its growth objectives for fiscal 2026, with expectations for net sales and adjusted EBITDA to show improvement [40][46] Financial Performance - First quarter net sales decreased by 3.3%, with organic net sales down 6%, primarily due to softness in the home and personal care business [16] - Adjusted EBITDA for the quarter was $62.6 million, a decrease of $15.2 million driven by lower volume and reduced gross margins [18] - The company generated nearly $660 million of adjusted free cash flow in the first quarter and repurchased approximately 600,000 shares [5][6] Business Unit Performance - The global pet care business reported an 8.3% increase in net sales, with organic net sales up 5.8%, driven by strong performance in companion animal categories [20][21] - Home and garden business net sales decreased by 19.8%, but the company expects sales to pick up as the season unfolds, with early indications of strong POS trends [27][29] - Home and personal care business saw a reported net sales decrease of 7.6%, with organic net sales down 11.1%, but there are signs of recovery in core markets [32][34] Strategic Initiatives - The company is focused on maintaining a healthy balance sheet and optimizing working capital, ending the first quarter with nearly $127 million in cash and a net leverage of 1.65 turns [9][12] - Strategic priorities for fiscal 2026 include investing in people, operational excellence, and transformation, with a focus on fewer, bigger, better initiatives [7][11] - The company is committed to disciplined expense management and is optimistic about the evolving M&A landscape, particularly in the global pet care and home and garden sectors [46][44] Market Outlook - The company expects net sales growth in the home and garden business to occur in the second half of the fiscal year, with anticipated improvements in consumer demand [41][39] - Adjusted EBITDA is expected to grow in low single digits, driven by the return to sales growth in the global pet care and home and garden businesses [40][46] - The company remains cautious about the home and personal care business, expecting continued softness in consumer demand in the near term [39][57]

Financial Data and Key Metrics Changes - The company reported a net sales decrease of 3.3% for Q1 2026, with organic net sales down 6% primarily due to softness in the Home and Personal Care business and an accelerated seasonal inventory build from the previous year [18] - Adjusted EBITDA for the quarter was $62.6 million, a decrease of $15.2 million, driven by lower volume and reduced gross margins [20] - The gross profit decreased by $16.2 million, with a gross margin of 35.7%, down 110 basis points [19] Business Line Data and Key Metrics Changes - Global Pet Care business reported an 8.3% increase in net sales, with organic net sales up 5.8%, driven by strong performance in companion animal and aquatics categories [23] - Home and Garden business saw a significant net sales decrease of 19.8%, attributed to prior year inventory build and typical seasonal trends [28] - Home and Personal Care business experienced a net sales decrease of 7.6%, with organic net sales down 11.1%, impacted by higher inventory levels at a key retailer [33] Market Data and Key Metrics Changes - North America showed growth in the Global Pet Care segment, with share gains in companion animal categories [8] - EMEA sales in the Global Pet Care segment decreased in the low single digits, primarily due to a decline in dog and cat food sales [24] - LATAM region reported high teens growth in Home and Personal Care, driven by positive consumer reactions to new product launches [34] Company Strategy and Development Direction - The company aims to maintain a healthy balance sheet and focus on operational excellence, with ongoing investments in brand innovation and strategic acquisitions [10][12] - The strategic priority includes a "fewer, bigger, better" approach to concentrate resources on high-impact initiatives [11] - The company is optimistic about the M&A landscape and aims to be a consolidator in the Global Pet Care and Home and Garden sectors [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery from tariff disruptions and macroeconomic volatility, noting early signs of recovery in consumables [7] - The company anticipates continued softness in the Home and Personal Care business but expects stabilization in the second half of the fiscal year [38] - Management reiterated expectations for flat to low single-digit growth in net sales and adjusted EBITDA for fiscal 2026 [39][46] Other Important Information - The company generated nearly $60 million of adjusted free cash flow in Q1 and repurchased approximately 600,000 shares [9] - A new $300 million share repurchase program has been authorized by the board [9] - The company ended the quarter with a cash balance of $126.6 million and net debt of $452.3 million [22] Q&A Session Summary Question: Has the pet market reached a bottom? - Management refrained from making definitive statements about market bottoms but expressed satisfaction with market share gains in the pet segment [48][49] Question: Commitment of retailers to the garden category? - Management is optimistic about the Home and Garden business, citing strong POS trends and new product launches [50][51] Question: Anticipated improvement in sales cadence? - Management expects the pet business to continue growing, while Home and Garden will see stronger performance in the second half of the year [58][59] Question: Levels of investment in brands? - Investment levels are deemed appropriate for Global Pet Care and Home and Garden, with potential pullbacks in Home and Personal Care based on recovery [62][64] Question: Innovation pipeline for FY 2026? - Management confirmed a strong pipeline of new products for both Home and Garden and Global Pet Care, with successful launches expected to drive growth [66] Question: Progress in the Home and Personal Care business? - Management acknowledged challenges but noted improvements in the North American market and a focus on strategic solutions for the business unit [71][76]

Financial Data and Key Metrics Changes - In Q1 2026, net sales decreased by 3.3%, with organic net sales down 6% primarily due to softness in the Home and Personal Care business and an accelerated seasonal inventory build from the previous year [17] - Adjusted EBITDA for the quarter was $62.6 million, a decrease of $15.2 million, driven by lower volume and reduced gross margins [19] - Gross profit decreased by $16.2 million, with a gross margin of 35.7%, down 110 basis points [18] Business Line Data and Key Metrics Changes - Global Pet Care reported net sales increased by 8.3%, with organic net sales up 5.8%, driven by strong performance in companion animal and aquatics categories [21] - Home and Garden net sales decreased by 19.8%, aligning with historical averages for the first quarter, which is typically the slowest sales quarter [26] - Home and Personal Care saw reported net sales decrease by 7.6%, with organic net sales down 11.1%, impacted by higher inventory levels at a retailer following a weaker holiday season [31] Market Data and Key Metrics Changes - North America showed growth in the Global Pet Care segment, with sales increasing in both companion animal and aquatics [21] - EMEA sales in Global Pet Care decreased in the low single digits, primarily due to a decline in dog and cat food sales following a portfolio refresh [22] - LATAM region experienced high teens growth in Home and Personal Care, driven by positive consumer reactions to new product launches [32] Company Strategy and Development Direction - The company aims to maintain a healthy balance sheet and focus on operational excellence, with a disciplined approach to investments and a commitment to innovation [10][12] - The strategic priority includes transformation, with expectations for both Global Pet Care and Home and Garden businesses to return to growth in fiscal 2026 [13][15] - The company is optimistic about the evolving M&A landscape and aims to be a consolidator of choice in its categories [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the most significant impacts from tariff disruptions and macroeconomic volatility are largely behind them, with early signs of recovery in consumables [5] - The company anticipates continued softness in global consumer demand within Home and Personal Care categories, with expectations for improvement in the second half of the fiscal year [37] - Management reiterated expectations for flat to low single-digit growth in net sales and low single-digit growth in Adjusted EBITDA for fiscal 2026 [45] Other Important Information - The company generated nearly $60 million of adjusted free cash flow in Q1 and repurchased approximately 600,000 shares [8] - A new $300 million share repurchase program has been authorized by the board [8] - The company ended the quarter with a cash balance of $126.6 million and $492.2 million available on its cash flow revolver [20] Q&A Session Questions and Answers Question: Do you agree with a competitor's assessment that the pet market has reached a bottom? - Management refrained from making predictions about market bottoms but expressed satisfaction with the new leadership and market share gains in the pet segment [48][49] Question: How committed are retailers to the garden category this upcoming season? - Management expressed bullishness on the Home and Garden business, citing strong POS trends and successful new product launches [50][51] Question: Can you discuss the anticipated improvement in sales growth for the year? - Management indicated that while the pet business is expected to continue growing, Home and Garden may see a more back-half weighted growth story due to disciplined inventory management by retailers [56][58] Question: Are investment levels in brands where you want them? - Management stated that investment levels are appropriate for Global Pet Care and Home and Garden, but there may be a pullback in Home and Personal Care investments based on recovery timing [62][64] Question: Can you elaborate on the innovation pipeline for FY 2026? - Management confirmed a strong pipeline of new products for both Home and Garden and Global Pet Care, with plans for expanded distribution [66]

• CEO Overview – David Maura Chairman and Chief Executive Officer • Financial & Business Review – Faisal Qadir Chief Financial Officer • Q&A – David Maura and Faisal Qadir • Introduction – Jen Schultz Fiscal 2026 First Quarter Earnings Call Division Vice President, FP&A and Investor Relations February 5, 2026 Forward-looking Statements We have made or implied certain forward-looking statements in this document. Statements or expectations regarding our business and M&A strategy, earnings framework, future fr ...

Core Viewpoint - Scotts Miracle-Gro Company is in advanced discussions to sell its Hawthorne subsidiary to Vireo Growth, Inc., with the deal expected to close in the second quarter of fiscal 2026 [1] Group 1: Sale of Hawthorne Subsidiary - The proposed terms involve Vireo Growth acquiring Hawthorne in exchange for an investment in Vireo, integrating cultivation supply into its consumer cannabis operations [1] Group 2: Financial Reporting and Guidance - The company has classified the Hawthorne business as a discontinued operation effective in the first quarter of fiscal 2026 and reaffirmed its fiscal 2026 guidance [2] - In the first quarter, the net loss from continuing operations was $47.8 million, an improvement from a loss of $66.1 million in the prior year, with loss per share from continuing operations at $0.83 compared to $1.15 [3] - Adjusted net loss per common share from continuing operations was $0.77, down from $0.88 a year ago, while net sales were $354.4 million, reflecting a 3% decrease [3] Group 3: Share Repurchase Program - The Board has approved a share repurchase program authorizing the repurchase of up to $500 million of Scotts Miracle-Gro common stock [2] Group 4: Market Reaction - In pre-market trading on NYSE, Scotts Miracle-Gro shares decreased by 0.4 percent to $63.00 [4]

Core Insights - Spectrum Brands reported revenue of $733.5 million for the quarter ended September 2025, a decrease of 5.2% year-over-year [1] - The company's EPS was $2.61, significantly higher than the $0.97 reported in the same quarter last year, resulting in an EPS surprise of +238.96% [1] - The revenue fell short of the Zacks Consensus Estimate of $744.93 million, indicating a surprise of -1.53% [1] Financial Performance Metrics - Net Sales in Home & Personal Care (HPC) were $296.2 million, below the estimated $314.5 million, reflecting an 11.9% decline year-over-year [4] - Net Sales in Home & Garden (H&G) reached $139.2 million, slightly above the estimated $147.55 million, showing a year-over-year increase of 3.2% [4] - Net Sales in Global Pet Care (GPC) amounted to $298.1 million, surpassing the estimated $291.95 million, but representing a year-over-year decrease of 1.5% [4] Stock Performance - Spectrum's shares have returned +3.3% over the past month, compared to a +4.6% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [3]

Financial Data and Key Metrics Changes - The company reported a net sales decline of 10.2% in Q3, with organic sales decreasing by 11.1% when excluding foreign currency benefits [20][34] - Adjusted EBITDA was $76.6 million, a decrease of $29.7 million year-over-year, primarily due to lower sales volumes and reduced gross margins [35][36] - Gross margins contracted by 110 basis points to 37.8%, driven by unfavorable mix, tariffs, and inflation [21][35] Business Line Data and Key Metrics Changes - Global Pet Care reported a net sales decrease of 9.6%, with organic sales down 11.4%, primarily due to targeted stop shipments during tariff-related pricing negotiations [38][39] - Home and Garden net sales decreased by 10.3%, negatively impacted by a cold and wet start to the season [46] - Home and Personal Care saw a reported net sales decline of 10.8%, with organic sales also down 11.4%, driven by softness in personal care and home appliance categories [52][53] Market Data and Key Metrics Changes - The overall North American Companion Animal category declined in the low single digits, while European consumer sentiment weakened, impacting sales [40][45] - In Latin America, organic net sales grew in the low double digits, predominantly in the chews category [41] - The Home and Garden category experienced lower total sales, but Spectracide gained market share in pest control products [47] Company Strategy and Development Direction - The company is focused on protecting its balance sheet and maintaining a nimble stance during volatile times, with a target of approximately $160 million in free cash flow for the fiscal year [26][60] - There is an ongoing effort to diversify the supplier base and develop non-Chinese sourcing alternatives to mitigate tariff impacts [16][17] - The company is actively pursuing M&A opportunities to accelerate growth in its pet and home and garden businesses, while maintaining a disciplined approach to capital allocation [29][83] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in overcoming near-term tariff-related volatility and emphasized the importance of making difficult decisions for long-term health [19][66] - There are signs of improving macroeconomic conditions, with expectations for consumer confidence to stabilize as geopolitical tensions subside [65][66] - The company anticipates a strong start to Q4, with improved sales performance and positive momentum in the Home and Garden division [23][66] Other Important Information - The company executed cost reduction activities, expecting to reduce costs by over $50 million in fiscal 2025 [15] - Share repurchases totaled approximately 900,000 shares during Q3, with a total of about 4 million shares repurchased since the HHI transaction [31] - The company is streamlining its global business and reducing fixed costs while diversifying its sourcing footprint [59] Q&A Session Summary Question: How much sales were left on the table by stopping shipments in Q2, and what impact lingers into Q4? - The estimated sales left on the table in Q3 is around $30 million, with a significantly lower impact expected in Q4 [72] Question: Why is guidance still difficult despite improved clarity on tariffs? - The company emphasized the complexity of the situation, noting that Q3 results were distorted due to significant operational changes and tariff impacts, making it challenging to provide accurate guidance [75][76] Question: Can you discuss your capital allocation strategy in a soft consumer environment? - The company believes the market is undervalued and plans to continue share repurchases while pursuing M&A opportunities to grow its pet and home and garden businesses [82][83]

Financial Performance - Q3 2025 - Net sales decreased by 10.2% from $779 million in Q3 2024 to $700 million in Q3 2025[25, 38] - Organic sales decreased by 11.1%[25, 38] - Adjusted EBITDA decreased by 27.9% from $106 million in Q3 2024 to $77 million in Q3 2025[25, 38] - GAAP Net Income increased by $1.4 million[25, 38] Segment Performance - Q3 2025 - Global Pet Care net sales decreased by 9.6% and adjusted EBITDA decreased by 22.4%[49] - Home & Garden net sales decreased by 10.3% and adjusted EBITDA decreased by 10.9%[53] - Home & Personal Care net sales decreased by 10.8% and adjusted EBITDA decreased by 40.7%[57] Financial Position - Debt outstanding is $0.7 billion[44] - Cash and cash equivalents are $0.1 billion[44] - Revolver usage is $112 million, with $388 million available[44] Share Repurchases - The company repurchased 17.1 million shares[31] - Total shares outstanding after repurchases are approximately 41.0 million[31] - Approximately 42% reduction in total shares outstanding[31] - $1.3 billion spent on share repurchases[31] - In June FY25, the company entered into a $50 million 10b5-1 share repurchase plan[32] Outlook - Reaffirming FY25 Free Cash Flow expectation of approximately $160 million[33, 61] - The company suspended the FY25 earnings framework due to a volatile trade environment and cautious consumers[70, 71]

Financial Data and Key Metrics Changes - In Q2, net sales decreased by 6%, while organic net sales decreased by 4.6% when excluding unfavorable foreign exchange impacts [21][36] - Adjusted EBITDA was $71.3 million, a decline of $24 million compared to the previous year, excluding investment income [23][36] - Gross margins decreased by 60 basis points to 37.5%, driven by lower volume, higher trade promotions, and inflation [23][36] Business Line Data and Key Metrics Changes - Global Pet Care reported a 7.1% decrease in net sales, with organic sales down 6.3%, primarily due to softness in the companion animal and aquatics categories [41][42] - Home and Garden net sales decreased by 5.2%, attributed to timing shifts and retailer inventory builds [47][50] - Home and Personal Care saw a 5.1% decrease in reported net sales, with organic net sales down 2.2% due to softness in North America [54][56] Market Data and Key Metrics Changes - Consumer sentiment in the U.S. weakened, impacting category growth, with consumers seeking value amid economic uncertainty [22][24] - EMEA organic sales for Global Pet Care grew mid-single digits, while North American sales declined low double digits [42][43] - Latin America experienced low double-digit growth in organic net sales, driven by distribution wins and new product launches [57] Company Strategy and Development Direction - The company is focused on protecting its balance sheet and generating free cash flow, targeting approximately $160 million for the year [25][62] - Plans to transition sourcing out of China are underway, with expectations to have minimal exposure by the end of the fiscal year [12][71] - The company aims to leverage its strong balance sheet for potential acquisitions in the pet category, positioning itself as a consolidator in the market [28][67] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current tariff environment and emphasized the importance of maintaining liquidity and a strong balance sheet [19][70] - The company anticipates that the challenges related to tariffs will be resolved in the coming quarters, particularly for the Global Pet Care and Home and Garden segments [70][72] - Management remains optimistic about future growth opportunities despite current economic volatility [74] Other Important Information - The company repurchased approximately 3.2 million shares year-to-date, returning over $1.28 billion to shareholders since the HHI transaction [32][33] - Adjusted diluted EPS decreased to $0.68, driven by lower adjusted EBITDA and operating income [37][60] Q&A Session Summary Question: Any areas where you see yourself competitively advantaged versus your peers given the new landscape? - Management indicated that while the playing field is level, the company's scale and strong brand presence provide a competitive advantage in securing supply outside of China [79][82] Question: How is the company positioned to handle the current tariff situation? - Management highlighted that the company is well-prepared to transition sourcing and expects to have minimal exposure to China in the near future, which is seen as a competitive advantage [79][80]

Financial Data and Key Metrics Changes - In Q2, net sales decreased by 6%, while organic net sales decreased by 4.6% when excluding unfavorable foreign exchange impacts [20][35] - Adjusted EBITDA was $71.3 million, a decline of $24 million compared to the previous year, primarily due to lower sales volumes and increased brand-focused investments [22][36] - Gross margins decreased by 60 basis points to 37.5%, driven by lower volume, higher trade promotions, and inflation [22][35] Business Line Data and Key Metrics Changes - Global Pet Care reported a 7.1% decrease in net sales, with organic sales down 6.3%, affected by softness in both companion animal and aquatics categories [39][46] - Home and Garden net sales decreased by 5.2%, primarily due to timing shifts in retailer inventory builds [46][47] - Home and Personal Care saw a 5.1% decrease in reported net sales, with organic net sales down 2.2%, driven by softness in North America [53][58] Market Data and Key Metrics Changes - Consumer sentiment in the U.S. weakened, impacting category growth, with consumers seeking value amid economic uncertainty [21][22] - EMEA organic sales for Global Pet Care grew mid-single digits, while North American sales declined, particularly in premium segments [42][54] - Latin America experienced low double-digit growth in organic net sales, driven by strong new product launches [56] Company Strategy and Development Direction - The company is focused on protecting its balance sheet and generating free cash flow, targeting approximately $160 million for the year [24][61] - Plans to transition sourcing out of China are underway, with expectations to have 100% of Home and Garden sourced outside of China by the end of the calendar year [71][72] - The company aims to leverage its strong balance sheet for potential acquisitions in the pet category, positioning itself as a consolidator in the market [27][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current tariff environment and emphasized the importance of maintaining liquidity and a strong balance sheet [18][74] - The company anticipates challenges in the Home and Personal Care segment but expects to emerge stronger due to its strategic initiatives [70][72] - Management highlighted the potential for strategic acquisitions as asset prices reset in the current economic climate [66][73] Other Important Information - The company repurchased approximately 2 million shares during the second quarter, continuing its disciplined approach to share repurchases [30][31] - The company does not have sufficient visibility to provide an earnings framework for fiscal 2025 due to the unpredictable nature of global trade negotiations [32][61] Q&A Session Summary Question: Are there areas where the company sees itself competitively advantaged in sourcing? - Management indicated that while the tariff situation presents challenges, the company is well-positioned to reduce its exposure to China and has a competitive advantage due to its scale and strong relationships with suppliers [80][84] Question: Can the company frame the gross impact of tariffs and mitigation actions? - Management stated that while it is difficult to provide absolute numbers, the company has pivoted its operating strategy and stopped ordering from China, which will mitigate the gross impact of tariffs [88]