Scotts Miracle-Gro Co Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jon Andersen - William Blair & Company - Analyst : Good morning. Thank you for the questions. I'll ask both my questions off the top here and let you respond. I wanted to ask about point of sale and gross margin beginning with point of sale, could you help us understand a little bit more of the delta between the 12% growth in units and the low single digit growth in dollars. Trying to understand how much of that is mix, how much of that may be retailer, investments and promotions and how you gain confidence from that, those numbers in kind of the mid-single digit growth for you as a consumer on a full year basis. And then on gross margin, I may have overread this, but I think I heard you say, Jim, that expects gross margin greater than 35% over your medium term time frame. Has anything changed there, greater visibility, greater confidence in getting to that objective. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Jon Andersen - William Blair & Company - Analyst : Thanks. Thanks so much appreciate it.

Question: Jonathan Matuszewski - Jefferies - Analyst : Great, good morning, and thanks for taking my question. The first question was on, trade down to DIY. Jim, I think you said it's some survey work around 25% of consumer surveyed or are planning to trade down this year. Maybe if you could elaborate on that, clarify if there is any benefit associated with trade down in your current sales guidance, and any kind of framework to think about, any upside for any point or 5 points or whatever of trade down activity away from DIFM? That's my first question. Thank you.

Question: Jonathan Matuszewski - Jefferies - Analyst : That's helpful. And then just a quick follow up on private label. Jim, I think you mentioned you're seeing little pressure from private label this past quarter. Maybe if you could give us a sense of the pricing GAAP that's trending in the market today, maybe your products versus private label, is it around that kind of historical 30% norm and how you expect maybe that GAAP to fluctuate as the fiscal year continues as store brand pricing changes. Thanks so much.

Question: Jonathan Matuszewski - Jefferies - Analyst : Thank you.

Question: Andrew Carter - Stifel Nicolaus and Company, Incorporated - Analyst : Hey, thank you very much. Just wanted to ask some potentially dumb question, but I can't answer it. In terms of where do you see risk ever like of a garage load or pantry load, whatever you want to call it, like consumers pushing their purchases to the part of the season? I mean, you've had two really good POS unit numbers, well above what the category should be doing, but just give us any context around the category like the categories doing, just your individual categories what you see when people coming back just that risk that's out there? Thanks.

Question: Andrew Carter - Stifel Nicolaus and Company, Incorporated - Analyst : The second question is, I think you withdrew Hawthorne revenue guidance for the year and apologize if I missed it. I don't didn't hear if you reiterated the EBITDA. Is it the same EBITDA guidance, I would guess no for the year, but you've reiterated the full year, so I guess where's the incremental strength coming from relative to the old guidance. Thanks.

Question: Andrew Carter - Stifel Nicolaus and Company, Incorporated - Analyst : Thanks, I'll pass it on.

Question: Joseph Altobello - Raymond James - Analyst : Thanks. Hey guys, good morning. I guess first question maybe -- Mark, by the way, congratulations on removing the interim moniker. Could you quantify the amount of sales that might have shifted from Q2 into Q3?

Question: Joseph Altobello - Raymond James - Analyst : Got it. Helpful just to just to follow up on that. I want to go back to your comments about promotions and the delta between POS units, POS dollars. I've covered you guys for a long time and I think -- correct me if I'm wrong, but I generally view your category as relatively inelastic and driven more by weather really than anything else. So has that changed recently? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Joseph Altobello - Raymond James - Analyst : Appreciate the call guys. Thank you.

Question: Eric Bosshard - Cleveland Research Company - Analyst : Thanks. Good morning. Two follow ups, and then a question. First of all, the promotional spend, just trying to get a sense, are you spending more than you planned more than a year ago? I'm trying to figure out if this is your money or the retailer's money that's being spent on what sounds like heightened promotional spending?

Question: Eric Bosshard - Cleveland Research Company - Analyst : Secondly, Jim, you talked about, the importance of narrowing the price gap relative to private label, and I guess I just want to dig on that question a little bit because, even what you just talked about, you're spending to build a great brand franchise. Why do you need to narrow the gap versus private label? It seems like it suggests that the value of the brand is not as significant. Can you explain that?

Question: Eric Bosshard - Cleveland Research Company - Analyst : Okay, and then the last question, Jim, you're over the last couple years you clearly become more focused on units in a lot of the communication, the messaging, again, not to quote you, but a common or units more important than dollars. The concern would be, units aligning also with the gross margin goal. How are you managing a greater focus on units and also the clear commitment you have written on your wall of getting a gross margin? How do you manage that?

Question: Eric Bosshard - Cleveland Research Company - Analyst : Thank you.

Question: Rob Briggs - BofA Global Research - Analyst : Hi guys, good morning. Thank you for taking our question. This is Rob Briggs on for Bill. So I appreciate all of the color on private label. I guess just one last one on that, how much, would you say you're taking in terms of share and then, regarding shelf space, are you taking any shelf space from the private label?

Question: Rob Briggs - BofA Global Research - Analyst : Great. That, that's super helpful color. I appreciate that. And the last one from me, regarding that 3.5 times leverage target by the end of '27, is that where you want to keep leveraged long term and then, would you consider, increasing leverage for M&A or share repurchases?

Question: Rob Briggs - BofA Global Research - Analyst : Great thank you so much.