The following is a summary of the The Scotts Miracle-Gro Company (SMG) Q4 2024 Earnings Call Transcript:

Financial Performance:

• Adjusted EBITDA growth of 20% in fiscal year '24, finishing at $539 million; achieved despite an overall downturn in the lawn and garden market.

• Achieved 6% top-line growth in the U.S. consumer business, with significant market share gains in gardens and controls.

• Reduced inventory levels below $600 million, a historic achievement for the company.

• Managed leverage effectively, reducing it to 4.86x EBITDA by year-end.

Business Progress:

• Restructured the Hawthorne division, focusing on the company's most profitable owned brands, which contributed to its first consecutive quarters of positive EBITDA in two years.

• Invested over $100 million to strengthen core 'superpowers': brands, sales force, supply chain, and innovation.

• Committed to further investments in consumer business and the narrower-focused Hawthorne, enhancing brand support and innovation.

• Continued emphasis on automation and predictive analytics to achieve additional supply chain savings of $150 million over the next three years.

Opportunities:

• Plans to leverage brand strength and increase advertising by $30 million in the consumer segment and $10 million in Hawthorne, aligning with strategic priorities to fuel growth and margin recovery.

• Emphasizing the expansion of the Miracle-Gro Organic line and introducing a new natural lawn product under the O.M. Scotts & Son brand, focusing on sustainability and consumer engagement.

Risks:

• Difficult consumer market dynamics highlighted by resistance to price increases as reflected in retail partners' sensitivity to margin impacts and consumer reluctance due to economic sentiment.

• Potential operational challenges to achieving the targeted margin recovery fully due to shifting retail dynamics and consumer price sensitivity.

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