The following is a summary of the The Scotts Miracle-Gro Company (SMG) Q2 2024 Earnings Call Transcript:
Financial Performance:
Scotts Miracle-Gro reported high single-digit growth in its consumer business and anticipates reaching $575M in adjusted EBITDA this year.
Free cash flow improved by over $500M in comparison to the previous year, exceeding half-year target by $200M.
Company's debt levels were reduced by $750M, with total leverage for Q2 reported at 6.95x EBITDA, projected to fall within a 4x range by fiscal year-end.
Consumer business net sales grew by 2% YoY, however, Hawthorne saw a segment loss of $3M for Q2, improving from the $17M loss a year ago.
Scotts Miracle-Gro's year-to-date interest expense through March was $4 million lower than the same period last year, a 5% reduction driven by significantly lower debt levels.
Business Progress:
Through restructuring measures, Hawthorne has isolated its operations to 2 distribution centers and under 300 employees from previously 15 centers and 1,000 employees.
They aim to reach breakeven or better for the full year and focus on marketing its profitable, exclusive, and owned brands in the future.
A strategic partnership with BFG Supply aims to service smaller retail customers and reduce Hawthorne's cost structure.
Scotts Miracle-Gro made a strategic investment in RIV Capital, a NY cultivator and retail operator in the cannabis space.
The firm reported $65M savings in 2024 from 'Project Springboard' and expects to benefit an additional $20M in EBITDA next year.
The company is confident about upcoming promotional activities, especially around soils with attractive margins, and plans to update their 2024 guidance at the William Blair's 44th Annual Growth Stock Conference based on May's Point of Sale (POS) performance.
More details: The Scotts Miracle IR
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