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

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I blame a lot of this myself, on very poor public policy. I mean all you got to do is look at New York, and say, could it possibly go worse than what’s happening in New York. But remember, in California, they went recreational in California and the entire country was down 50%. So safe banking didn’t happen and there’s a lot of things that we thought would happen. But if you want me to — I do think if — because I do reflect occasionally and I think we assumed you would have federal normalization by now. That has been much more challenging than we thought. I think that you look at Oklahoma and Michigan as far as issuing permits far in excess of what the states require. It just — it’s pretty screwed up. But we just think that without that we are fully invested in the space, we are committed to seeing it through and we think it will give us a growth rate that’s in excess of what the consumer business can grow, and ultimately, we think we need to show growth and we can do it profitably.

I don’t know that’s my view.

Eric Bosshard: No.

Jim Hagedorn: Garth, you got a different view.

Matt Garth: Absolutely not. And as you said, we sit down as a team and go through this on a fairly frequent basis. You are sitting right now, Chris, and I think, you are very aware of this, Eric. Oh, Eric, I am sorry. Yeah, I have been moving backwards. You have been — you are aware of this. The industry itself, as Jim just outlined, probably, not in the most advantaged position. However, what we do and I think this is not just me saying it, it’s everyone in the business is fairly unique. And the proposition that we have, the strategic position that we have, the customer position that we have all put you in a very good place for an industry that has a somewhat longer time line than we thought. That being said, you also heard Jim talk in his prepared remarks that this opens up some strategic opt for us, which are we feel we are in an advantaged position, given what we bring to the market and there are others out there who may not be in that position, but we can all benefit with together.

So, just looking at it from a holistic perspective, how you maneuver through this market, how you strengthen our position and how we set up a business that on any type of recovery is in a strength and winning position is what we are looking to do.

Eric Bosshard: Understood. That’s very helpful. Thank you.

Operator: Thank you. Our next question comes from Andrew Carter with Stifel. Your line is open.

Andrew Carter: Hey. Thank you. Good morning. I wanted to ask about Hawthorne just digging into it like the 31% decline. I know Vegas completely incremental. I think you said sixth. So is that a sixth incremental. But could you also dig into kind of Signature brands versus non-distributed and how much of that non-distributed kind of rational or kind of shift in focus you are making this year kind of is reflected in your topline outlook for this year and also in the quarter? Thanks.

Jim Hagedorn: Yeah. Hi. I will leave it to the smart guys.

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