The Scotts Miracle-Gro (SMG) investor relations material

Executive summary

• Strategic focus on long-term value creation, targeting $1B in incremental sales and $1B in EBITDA by 2030, with a 5% annual top-line growth goal driven by innovation, pricing, volume, and modest M&A.

• Announced advanced discussions to divest the Hawthorne business, classified as a discontinued operation, with closing expected in fiscal Q2 2026 and a $104.8M non-cash pre-tax charge recorded.

• Board approved a $500M multi-year share repurchase program to reduce share count to 40M, reflecting confidence in undervalued stock and commitment to shareholder returns, to begin in late 2026 as leverage falls below 4x.

• Management reaffirmed fiscal 2026 guidance, stating Hawthorne's reclassification does not impact the full-year outlook and expressing confidence in achieving and potentially outperforming conservative targets.

• Aggressive investment in R&D, marketing, automation, and technology, with $1B annual spend to drive innovation and consumer engagement.

Financial highlights

• Q1 net sales (excluding Hawthorne) were $354.4M, down 3% year-over-year; U.S. Consumer sales reached $328.5M, ahead of expectations due to early season load-in.

• GAAP gross margin rate improved to 25% (up 90 bps YoY); adjusted gross margin at 25.4% vs. 24.5% prior year.

• SG&A decreased 7% to $106M, driven by lower equity compensation, partially offset by higher marketing spend.

• Adjusted EBITDA for the quarter was $3M, up from $0.9M prior 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.

Outlook and guidance

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

• Leverage ratio targeted to high threes by year-end; share repurchases to begin in late 2026 as leverage falls below 4x.

• Longer-term targets: 5% annual sales growth, $1B EBITDA by 2030, with incremental growth from innovation, e-commerce, and tuck-in M&A.