ScottsMiracle-Gro Provides Update on Fiscal 2024 Second Quarter

Rhea-AI Summary

The Scotts Miracle-Gro Company (NYSE: SMG) expects to achieve a second-quarter net leverage ratio around 7 times adjusted EBITDA, below the first-quarter ratio of 7.75 times. The company's chairman, CEO, and president, Jim Hagedorn, highlighted the progress in financial and operating performance. Retail shipments were near record levels, with year-to-date POS units showing mid-teens percentage growth. Free cash flow exceeded expectations in the first half of the year, supporting the $1 billion free cash flow target for fiscal years '23 and '24.

Insights

Financial Analyst

Observing the update from The Scotts Miracle-Gro Company regarding its second-quarter net leverage ratio, it's evident that the company is managing its debt levels effectively. Net leverage ratio, a common measure of a company's financial health, is calculated by dividing net debt by adjusted EBITDA (earnings before interest, taxes, depreciation and amortization). A ratio of 7 times suggests that the company has seven times more debt than its earnings before those adjustments. While this may seem high, it's noteworthy that it is an improvement from the previous quarter and below the maximum set for the quarter.

From an investor's perspective, the trend towards a lower leverage ratio could signal a strengthening financial position, potentially making the company's stocks more attractive. Moreover, the mention of strong retail shipments and positive free cash flow performance implies operational efficiency and could forecast future profitability. This data is essential for stakeholders to gauge the company's ability to meet its financial obligations and invest in growth opportunities.

Market Research Analyst

When considering the consumer lawn and garden industry, Scotts Miracle-Gro's report of near-record retail shipments is a robust indicator of market demand. The trend towards mid-teens percentage growth in point-of-sale (POS) units year-to-date is particularly encouraging, suggesting a solid consumer base and successful retail partnerships. This performance speaks to the company's market presence and could reflect a broader trend in the industry towards home gardening and indoor/hydroponic cultivation.

For businesses operating in this sector, such growth rates can provide a benchmark for comparison. It's also a sign that Scotts Miracle-Gro's product portfolio and marketing strategies are resonating with consumers. This performance may influence stock market sentiment, as investors often look for companies with strong sales momentum and market share gains.

Economist

Scotts Miracle-Gro's ability to generate substantial free cash flow in the first half of the year has broader economic implications. Free cash flow is a critical metric as it represents the cash that a company is able to generate after laying out the money required to maintain or expand its asset base. This is an important indicator of financial flexibility and a company's potential for growth, dividends, or debt reduction.

In the current economic environment, where interest rates and inflation can impact consumer spending and borrowing costs, Scotts Miracle-Gro's performance suggests resilience. The company's focus on debt reduction and covenant compliance is a prudent strategy that can help mitigate financial risks in uncertain times. Additionally, the free cash flow target of $1 billion in the fiscal '23 and '24 period is an ambitious goal that, if met, could significantly strengthen the company's financial standing and investor confidence.

MARYSVILLE, Ohio, April 04, 2024 (GLOBE NEWSWIRE) -- The Scotts Miracle-Gro Company (NYSE: SMG), the world’s leading marketer of branded consumer lawn and garden as well as indoor and hydroponic growing products, today announced that it expects to achieve a second-quarter net leverage ratio around 7 times adjusted EBITDA. This will be below the Company’s first-quarter net leverage ratio and its second-quarter maximum of 7.75 times.

“We continue to make real progress in improving the financial and operating performance of ScottsMiracle-Gro,” said Jim Hagedorn, chairman, CEO and president. “Net leverage not only will be comfortably below the second-quarter maximum and better than Q1, but it also will be a less critical metric going forward as debt reduction and covenant compliance are manageable.

“In the second quarter, we delivered near-record retail shipments coupled with year-to-date POS units trending to mid-teens percentage growth versus last year. Our teams executed flawlessly, and our retailer partnerships are stronger than ever. Free cash flow in the first half of the year outperformed expectations, providing solid support for achieving the balance of our $1 billion free cash flow target in the fiscal ‘23 and ‘24 period.”

The Company will provide a detailed second-quarter earnings report on May 1.

About ScottsMiracle-Gro
With approximately $3.6 billion in sales, the Company is the world’s largest marketer of branded consumer products for lawn and garden care. The Company’s brands are among the most recognized in the industry. The Company’s Scotts®, Miracle-Gro®, and Ortho® brands are market-leading in their categories. The Company’s wholly-owned subsidiary, The Hawthorne Gardening Company, is a leading provider of nutrients, lighting, and other materials used in the indoor and hydroponic growing segment. For additional information, visit us at www.scottsmiraclegro.com.

For investor inquiries:
Aimee DeLuca
Sr. Vice President
Investor Relations
aimee.deluca@scotts.com
(937) 578-5621

For media inquiries:
Tom Matthews
Chief Communications Officer
tom.matthews@scotts.com
(937) 644-7044

FAQ

What is the expected second-quarter net leverage ratio for The Scotts Miracle-Gro Company (NYSE: SMG)?

The company expects to achieve a second-quarter net leverage ratio around 7 times adjusted EBITDA, below the first-quarter ratio of 7.75 times.

Who is the chairman, CEO, and president of The Scotts Miracle-Gro Company (NYSE: SMG)?

Jim Hagedorn is the chairman, CEO, and president of The Scotts Miracle-Gro Company.

When will The Scotts Miracle-Gro Company (NYSE: SMG) provide a detailed second-quarter earnings report?

The company will provide a detailed second-quarter earnings report on May 1.

What was highlighted as progress by Jim Hagedorn, chairman, CEO, and president of The Scotts Miracle-Gro Company (NYSE: SMG)?

Jim Hagedorn highlighted the progress in improving the financial and operating performance of The Scotts Miracle-Gro Company.

How did retail shipments perform for The Scotts Miracle-Gro Company (NYSE: SMG) in the second quarter?

Retail shipments were near record levels in the second quarter for The Scotts Miracle-Gro Company.