The Scotts Miracle-Gro Company Q2 FY2026 earnings call

• E-comm: Up double digits, gained market share and innovation adoption, with more to be discussed at Investor Day. • Lawns: Transitioned to a portfolio, introduced new product, adjusted media and promotional plans, and seeing good sell-through of halts. • Ortho: Focused on giving consumers new solutions for controls, with e-com first approach. • Supply chain: Team can continue to deliver and even over deliver. • Merchandising: Retail partnerships important, with examples like Rona's rollout of dedicated shops, and more to come with other retailers. • Pricing: Comfortable with taking pricing to cover costs, evolved from being hesitant, and sees it as manageable for the consumer in the long term. • Share repurchases: Encouraging Nate to drive towards goals for share repurchases as it's a good investment opportunity.

For lawns, they transitioned from a product program to a portfolio and sold a four-step solution. Introduced a new turf builder lawn food product safe for kids and pets. E-comm is up double digits, gaining market share and seeing adoption of innovation. Ortho business is focusing on giving consumers new solutions for controls, with e-com first approach. Lawns shipments remain strong, with slightly elevated inventory levels but supported by the category. E-comm is up double digits, gained market share and innovation adoption. Lawns business has a transition to a portfolio and new product rollout.

• SMG 2.0: Will lay out a year-by-year roadmap at the August meeting, with focus on e-com, product assortment, tuck in M&A, expanded programs with retailers, and focus on Hispanic. • Gross margin: Feel confident in delivering 32% gross margin guide with additional supply chain efficiencies in the back half of the year. • Pricing: Pricing will be used as a tool this year to cover costs, and will be discussed with retailers during line reviews. • Share repurchases: Comfortable with current leverage profile, with Mark having knock-it-off rights regarding leverage, and likely to continue share repurchases at current levels.

• Commodity prices: Elevated commodity prices due to factors like the Iran conflict, which may require waiting and seeing approach for purchasing for next year. • Retailer negotiations: Uncertainties in retailer negotiations regarding promotional money and pricing, although efforts are made to manage margin goals. • Economic wobbliness: Potential impact on commodities and consumer spending, but also opportunities as people spend more time on yard and garden.

Q: Talk about restage on lawns business, fertilizer, e-comm, and shipment/retail inventory.

A: Shipments strong, e-comm up double digits, lawns business transitioned to portfolio, introduced new product, and seeing good sell-through.

Q: On SMG 2.0, billion-dollar sales target and gross margin.

A: Will get more detail at Investor Day, focus on e-com, early days, and comfortable with overshooting.

Q: On gross margin year to date and outlook.

A: Branded products emphasis helped, overperformed expectations, will navigate back half commodity inflation with supply chain efficiencies.

Q: Historical quarterly sequencing of raw material securing and current raw material prices.

A: Purchased most likely six to nine months previously, delayed purchases for 27, Urea is a small part of COGS.

Q: In-store merchandising, Rona's rollout.

A: Early to quantify results, important retail partnership, more to come with other retailers.

Q: Pricing evolution and manageable next year.

A: Evolved to be more comfortable, pricing manageable from consumer perspective, important for margin goals and share repurchases.

Q: Impact of e-commerce shift on margin structure, investment, etc.

A: Affects all aspects, invest in people, has margin delta but teams in place to manage.

Q: Inflation curve into fiscal 27, locking in exposure, pricing with retailers.

A: Need to make decisions in Q3, teams done scenario planning, pricing to be used as tool.

Q: Price increases timing and leverage profile for share repurchases.

A: Typical line review pricing, comfortable with current leverage profile, Mark has knock-it-off rights regarding leverage