The Scotts Miracle-Gro (SMG) investor relations material

Executive summary

• Strategic focus on long-term value creation, with a multi-year growth plan targeting $1B in incremental sales and $1B in EBITDA by 2030, and major investments in innovation, marketing, automation, and technology, with annual investments approaching $1B.

• Reaffirmed fiscal 2026 guidance and continued progress on Hawthorne divestiture, now classified as a discontinued operation, with closing expected in fiscal Q2 2026.

• U.S. Consumer sales on track for low single-digit net sales growth; e-commerce POS dollars grew 12% and units 17% year-over-year.

• Board approved a $500M multi-year share repurchase program to begin in late 2026, aiming to reduce share count to 40M, aligned with leverage reduction and capital priorities.

• Retailers are building healthy inventory levels ahead of the 2026 lawn and garden season.

Financial highlights

• Q1 net sales (excluding Hawthorne) were $354.4M, down 3% year-over-year; U.S. Consumer sales reached $328.5M, with e-commerce and branded product growth remaining strong.

• GAAP gross margin rate was 25%, up 90 bps year-over-year; adjusted gross margin was 25.4% vs. 24.5% prior year.

• Non-GAAP adjusted EBITDA for Q1 was $3M, up from $0.9M year-over-year, ahead of expectations due to timing of sales.

• GAAP net loss from continuing operations was $47.8M ($0.83/share) vs. $66.1M ($1.15/share) prior year; adjusted loss was $44.6M ($0.77/share) vs. $50.2M ($0.88/share) prior year.

• Interest expense fell 20% year-over-year to $27.2M; leverage ratio improved to 4.03x from 4.52x.

Outlook and guidance

• Fiscal 2026 guidance: U.S. Consumer net sales growth in low single digits, adjusted gross margin rate of at least 32%, adjusted EPS of $4.15–$4.35, mid-single digit adjusted EBITDA growth, and $275M free cash flow.

• Leverage ratio targeted to decline to high threes by year-end, below 3.5x by end of FY27.

• Management expresses high confidence in outperforming guidance, with incentive plans requiring outperformance for full payout.

• Long-term plan targets 5% annual top-line growth through innovation, pricing, volume, and modest M&A.

• Sale of Hawthorne business expected within twelve months, representing a strategic shift.