SMG - The Scotts Miracle-Gro Company (SMG) Q1 2024 Earnings Call Transcript
2024-02-07 11:38:04 ET
The Scotts Miracle-Gro Company (SMG)
Q1 2024 Earnings Conference Call
February 07, 2024 09:00 AM ET
Company Participants
Aimee DeLuca - Senior Vice President of Investor Relations
Jim Hagedorn - Chairman, President, & Chief Executive Officer
Matt Garth - Chief Financial & Administrative Officer
Nate Baxter - Chief Operating Officer
Chris Hagedorn - Group President, Hawthorne
Conference Call Participants
Joe Altobello - Raymond James
Andrew Carter - Stifel
Jon Andersen - William Blair
Chris Carey - Wells Fargo Securities
Peter Grom - UBS
William Reuter - Bank of America
Presentation
Operator
Good day, and thank you for standing by. Welcome to SMG's First Quarter 2024 Earnings Presentation. I would now like to hand it over to Aimee DeLuca, Head of Investor Relations. Please proceed.
Aimee DeLuca
Good morning. I'm Aimee DeLuca, Head of Investor Relations at the Scotts Miracle-Gro Company. Welcome to our first quarter 2024 earnings presentation and business update. During our review, we will make forward-looking statements. Please be aware that our actual results could differ materially from what we share today. Please refer to our Form 10-K filed with the SEC for details of the full range of risk factors that could impact our results. We will also discuss certain non-GAAP financial measures during our remarks. These measures should not be considered a replacement for and should be read together with our results under GAAP.
With me for this morning's webcast are Chairman, President and CEO, Jim Hagedorn; and Chief Financial and Administrative Officer, Matt Garth. Jim will provide an overall business update, followed by Matt with a brief review of our financial results through the first quarter and our outlook for the full year. Following the webcast, Chief Operating Officer, Nate Baxter; and Hawthorne Division President, Chris Hagedorn, will join Jim and Matt for an audio-only Q&A session. To listen to the Q&A, simply remain on this webcast. If you wish to ask a question, please pre-register via the audio link shared in our press release for call-in details and a unique pin. Please note that today's session will be recorded. An archived version will be published on our website at investor.scotts.com. For further discussion after the call, you are invited to e-mail or call me directly.
With that, let's get started with Jim's business update.
Jim Hagedorn
Welcome, everyone. Jim Hagedorn, here. I'm in my office in Marysville, Ohio. We're opening our doors to let you see the people behind our company. We'll also share visuals and charts to help you gain a better understanding of what we're up to. We really love this company, and the better we communicate what we're all about, the better you can share our view.
Let me kick things off by expressing how pleased I am with the progress we've made and the direction we're headed in. We're in a different place from last year. We're running the business the way it should be operated. And that's a good thing. I want to give a lot of credit to the management team, which is entirely new from about a year ago. The team has created a solid plan for 2024 and is developing great strategies for 2025 and beyond. They're coalescing and working together well. And that's a good thing, too.
We're all aligned to driving top line growth, tightly controlling expenses and delivering on fiscal 2024 goals that I outlined on our last call, and Matt will discuss later. Real progress is being made every day. And in fiscal 2024, here's what we have to do: make meaningful headway on gross margin improvement; increase investments in marketing, sales, R&D and our other most competitive advantages; continue to generate strong free cash flow; allocate the bulk of this cash flow to significant reduction in our debt and leverage ratios while paying the quarterly dividend.
The results of Q1 are an early indicator we're on the right path. POS was up over 8% in dollars and units, and we picked up 300 basis points of unit market share in key categories. The lift is due to conservative but favorable pricing actions, along with extended Fall promotions and media investment across Scotts and Tomcat.
SG&A was down 11%, the result of effectively balancing cost control with investments in high-value programs and initiatives. Free cash flow, gross margin and net sales were ahead of our operating plan, setting us up well into the peak of our Q2 load-in. As for Q1 sales, I want to emphasize that last year's sales cadence is not a predictor of how retailer load will go in this year. We're shifting back to a more normal load. Retailers are happy about this, and so are we....
The Scotts Miracle-Gro Company (SMG) Q1 2024 Earnings Call Transcript