Q2 2024

Quarterly Earnings Report

Second quarter ended March 30, 2024

Supplemental Financial Presentation

May 1, 2024

Please view this presentation in conjunction with our Q2 2024 earnings release, which is filed on Form 8-K, our related pre-recorded remarks and additional information regarding our non-GAAP financial measures, including GAAP to non-GAAP reconciliations, available on our website at https://investor.scotts.com.

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Safe Harbor Disclosure

Statements contained in this presentation, which address activities, events and developments that the Company expects or anticipates will or may occur in the future, including, but not limited to, information regarding the future economic performance and financial condition of the Company, the plans and objectives of the Company's management, and the Company's assumptions regarding such performance and plans are "forward-looking statements" within the meaning of the U.S. federal securities laws that are subject to risks and uncertainties.

Additional detailed information concerning a number of the important factors that could cause actual results to differ materially from the forward-looking information contained in this presentation is readily available in the Company's publicly filed annual, quarterly and other reports. The Company disclaims any obligation to update developments of these factors or to announce publicly any revision to any of the forward-looking statements contained in this presentation, or to make updates to reflect future events or developments.

This presentation contains certain non-GAAP financial measures. For a reconciliation of GAAP to non-GAAP financial measures, please see the Appendix of this presentation.

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Today's speakers

Jim Hagedorn

Chairman,

Chief Executive Officer

and President

Matt Garth

EVP, Chief Financial Officer

and Chief Administrative Officer

Q&A

A Q&A session will follow the earnings webcast at approximately 9:30 a.m. ET.

Jim Hagedorn

Nate Baxter

Matt Garth

Chris Hagedorn

Chairman,

EVP & COO

EVP, CFO & CAO

President, Hawthorne

CEO & President

Division

Review the press release for registration details.

● To listen to the Q&A, please remain on the webcast linkfollowing our video.

● To ask a question, please pre-register via the audio linkfor call-in details and a unique PIN.

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2Q 2024 - 3 Months ended March 30, 2024.

Second Quarter Performance Summary

Total Company non-GAAP Results vs. Q2 2023

Net sales

$1.53 billion

Flat

Adjusted Gross Margin Rate

35.3%

+60 bps

SG&A

$178.7 million

-4%

Adjusted Net Income

$211.9 million

vs. $213.8M

Interest Expense

$44.1 million

-9%

Adjusted Effective Tax Rate

28.6%

+220 bps

Adjusted Diluted EPS

$3.69

vs. $3.78

Adjusted EBITDA

$396.3 million

vs. $404.8M

Leverage

6.95x

vs. 7.75x maximum

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Non-GAAP Measures. Comparisons are to Q2 2023 unless otherwise indicated.

Q2 2024 Business Update

PRESENTED BY

Jim Hagedorn

Chairman, Chief Executive Officer and President

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Fiscal 2024.

Three Key Objectives for Fiscal 2024 - all on pace

Drive $575M

Adjusted EBITDA

  • Near record U.S. Consumer Q2 Sales and Total Company gross margin improvement exceed operating plan
  • High single-digit growth in Lawn & Garden is on track and achievable for the full year
  • Minimum 250 bps gross margin rate improvement in FY24
  • ~60% of POS in Q3
  • Activating consumers with new innovation and aggressive marketing plans - 25% more planned media in Q3 vs. prior year

$560M Free Cash Flow / $350M Debt Paydown

  • Strengthening balance sheet is key to improving financial flexibility for growth-driving investments
  • Q2 Leverage of 6.95x adjusted EBITDA comfortably below 7.75x max and targeting ~4.50x by year-end
  • YTD free cash flow through March improved >$500M vs. prior year - on track to $560M for full fiscal year
  • Debt paydown of at least $350M by fiscal year-end
  • Committed to retaining quarterly dividend

Advance Strategic Path

for Hawthorne

  • Optimizing for future growth and optionality; on track to breakeven or better contribution to adjusted EBITDA
  • Focusing on our best-in-class Signature brands and discontinuing distribution of non-proprietary brands advances margin recovery
  • New national distribution partnership with BFG Supply is important step in achieving profitability goals
  • Continued efforts to support an eventual separation of the business when the timing is appropriate

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2Q 2024 - 3 Months ended March 30, 2024.

US Consumer Launches Exciting Innovations & Marketing

New Innovations

Associated Marketing

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Q2 2024 Financial

Update

PRESENTED BY

Matt Garth

EVP, Chief Financial Officer and Chief Administrative Officer

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2Q 2024 - 3 Months ended March 30, 2024.

Total Company Net Sales

● U.S. Consumer

○ In line with record set in 2Q 2022 ○ 1.7% increase versus 2Q last year

○ High single digit percentage growth in unit POS through April

● Hawthorne

○ Decline driven by industry headwinds and discontinuing third-party distributed brands

○ 28.4% decline versus 2Q last year

● Other

○ Primarily Canada L&G Business ○ 2.7% decline versus 2Q last year

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The Scotts Miracle-Gro Company published this content on 01 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 May 2024 10:07:32 UTC.