The Scotts Miracle-Gro Company (NYSE:SMG) Q1 2023 Earnings Call Transcript

Bill Chappell: Hey. Just a few things. One, I guess, looking back at 1Q, I am a little confused of was this significantly better than you expected or was it more of a timing of shipments? You said last year, part of the problem was retailers didn’t order in line with demand and so I would assume that there would be kind of out of stocks or inventory that you had replenished? And then you also said that there was inventory problem at retail. So and then I think you had said there were some 2Q shipments that came in 1Q. So I am — just help me understand like, is this kind of a, it’s a good start and we will no more less or are you really ahead of plan starting out.

Jim Hagedorn: All right. I think I understood, although, it became somewhat garbled. So I don’t know if you are on a cell phone, Bill. I think the quarter was a lot better than we thought it was going to be. Remember that we had in December, so we were really managing, at least I was very focused on sort of leverage in the quarter. We had agreements with our retailers on a rational first half load. We probably came out a little bit better, not by much, but I think we said $25 million better. But that was not without challenges in that we had that period right before Christmas where it got really cold and shipments became a little bit painful and I think the supply chain team did a fantastic job kind of managing orders to get them out.

I don’t think we have an inventory problem at all at retail. And I think that the Springboard work, which was the entire company did fantastic and that — there’s no one person you can sort of give credit to. It was a real company effort under the gun to get the orders out and drive our expenses down through a lot of very challenging sort of decisions that we had to make, especially in regard to people. So I think we had a good quarter and for those people who know us well and you do, it was a, I think, a lot of last year, I think, we take a step forward and it felt like get two steps backwards that just things were and the great thing about this company is that the company — this is a company that with a challenge operates well as a group.

So that all came together at the end of the quarter to a result that was better than we had expected. We were working to stay within 6.25 coming in at 5.9 was a really good result for us. And a lot of people have written on where they thought leverage was going to be for us. I — it is a big success for us to have gotten through this. And it goes back to our team and our retailers agreeing to sort of numbers and not excessive load, this is a natural load for us. But what we needed was commitments for Q1 and Q2 that would meet the load. But given our tightness for leverage would make sure that as long as we could execute on our side, we could — we would get the inventory in and had orders and all of our retailers were fantastic, getting product in and our team did the work.

So I think it was a good result. Mike, I don’t know.

Mike Lukemire: Yeah.