Leveraging Our Core Strengths To Drive Growth And Enhance Shareholder Value

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1 Leveraging Our Core Strengths To Drive Growth And Enhance Shareholder Value Dave Evans Executive Vice President & Chief Financial Officer SunTrust Robinson Humphrey 37 th Annual Institutional Conference Atlanta, Georgia April 15, 2008

2 As we ve said for a decade If there s a better business to be in, let us know Healthy category with strong demographics Category leader with growing share Trusted brands, unrivaled consumer relationships World-class Supply Chain State-of-the-art technology platform Industry-leading R&D efforts that drive growth Strong retailer relationships driven by: - Exceptional service levels - Unrivaled in-store support These strengths will drive our continued success

3 Our historic financial performance demonstrates a track record for building shareholder value Five-year total return* Since 2002 Sales CAGR: 10.1% Operating income CAGR: 5.0% Adjusted net income CAGR: 8.8% $1 billion in free cash flow Total return of 140%

4 By leveraging our unique position, we are confident we can deliver sustainable growth Our goals for (stated in annual terms) Sales growth of 5 to 7 percent Gross margin rate improvement averaging 20 bps Operating income growth of 8 to 12 percent ROIC improvement of 30 to 50 bps Free Cash Flow of $150 to $200 million

5 Our primary focus is driving our global consumer business in our largest market, North America Total Company Sales Global Consumer: 75% Global Consumer Sales Global Professional: 10% Smith & Hawken: 7% Scotts LawnService: 8% Lawns: 30% Gardens: 36% International: 16% Home Protection: 18%

6 To achieve our financial goals we will further strengthen our core competitive advantages Our mission is clear 1. Dial up our relationship with consumers 2. Further improve our sales force 3. Bring more game-changing innovation to the market 4. Drive real improvements in technology and process to crush unproductive overhead Our goal is to leverage our position as category leader to drive growth in lawn & garden and further distance ourselves from the competition

7 1) To dial up our relationship with the consumer we will exploit our unique category position Support of our brands is nearly double the rest of the industry combined $90.0 $ U.S. advertising spend $80.0 $70.0 $60.0 $50.0 $40.0 The result of our efforts: 91% brand recognition High levels of consumer trust $30.0 $20.0 $10.0 $0.0 $15.9 $11.5 $6.7 $7.4 $3.0 $3.0 $0.0 $1.5 $1.2 $1.1 $1.0 $0.7 $0.6 Scotts Raid OFF Bayer Central D-Con Iams Mosquito Magnet Proven Winners Dynamite Spectrum Endless Summer Preen Image Source: TNS Media Intelligence Reported Time Period: 1/1/07-12/30/07 (B) TNS categorization of brands may not equal or match actual brand activity

8 This unique position is made more attractive by long-term demographics favorable for growth Lawn and Garden participation increases as the population ages Age Population Projections % 84% 87% 100% Population (Millions) % 75% 50% 25% L&G Participation (Percent) Age Group L&G Participation 0% Source: Age Population Projections: U.S. Census Bureau, 2004, "U.S. Interim Projections by Age, Sex, Race, and Hispanic Origin. L&G Participation: National Gardening Association, 2005, National Gardening Survey.

9 Advertising messages will balance brand image with call to action and will be more diversified across multiple mediums Gro Time launch in April will focus on the emotional connection to gardening Multi-media outreach Television Radio Print Web Public Relations

10 We have recently re-launched our website to further strengthen our consumer relationships Our new web site, re-launched February 17 Personalization All brands are integrated into experience Easier navigation Product information is still just a click away Friendly, optimistic tone Clean, intuitive design

11 2) Our category scale allows us to field an extensive sales team, enhancing the consumer experience and driving sales productivity Investment in sales force will increase 11% in 2008 More than 2,000 member sales force merchandisers and in-store counselors will interact with consumers More autonomy to drive sales at the regional and local levels In-store counselors result in higher consumer purchases Improved in-store displays are designed to enhance the shopping experience for consumers

12 3.) We follow a simple model to develop game changing innovation to drive profitable growth Simple Understanding of need Ease of use Transit and storage Fun to use Sustainable Safe Easy to use properly Low environmental impact Recyclable material Significant EBITA accretive Meets competitive threat Global opportunity Proprietary to Scotts

13 2008 launch of Water Smart lawn fertilizers is an example of this model A healthier lawn with less water! 1. $30mm consumer marketing investment is the largest in SMG history 2. Strong retailer support with strong in-store presence 3. Meaningful innovation that speaks to an important consumer and environmental need Fed with Water Smart Unfed

14 4.) We are investing in technology and infrastructure to remove unproductive costs Our recently initiated Project Catalyst will reduce costs by $30mm over 3 years Global Standard Platforms SAP and Manugistics Other standard global systems, tools, and services Global Organizational Alignment Leverage scale and intellectual properties Eliminate geographic span breaks Global Common Processes Leverage efficiencies of shared services Reduce transaction work with consolidation Improve acquisition integration

15 The future state of our supply chain will migrate to a more regional design, cutting additional costs & improving cash flow FUTURE STATE: Product-Centric Supply Chain strategy Slower velocity, each pick, case product Higher velocity, full pallet, bagged products Product Flow 5 warehouses ship Seed, Durables, Plant Foods & Controls to retailers. Regional fertilizer blend/pack sites ship to Growing Media plants. 25 Growing Media plants produce Growing Media product, which is shipping with fertilizer to retailers. Potential Financial Rewards Improve retailer turns Up to $100-$150 million in incremental cash flow Up to $50 million in annual savings Next Steps Pilot in 2008 to validate operational assumptions Confirm plans to complete roll-out by end of 2010

16 Growth should be solid in 2008, EPS affected by long-term investments & higher interest $ in millions (except EPS) Actual Pro Forma Guidance Net sales $2,872 na +6% to +8% Gross margin rate 35.0% flat SG&A % Other income (12) flat Operating income $315 +4% to +6% Interest expense $71 $94 $80 -$85 Tax rate 35% 35% 36% Fully diluted shares to 67.0 Adjusted EPS $2.37 $2.19 Flat vs actual Growth up to 8% vs Pro Forma

17 Gross margin rates are expected to remain flat in 2008 despite significant commodity cost pressure 2007 Actual 35.0% Pricing 4% in North America Consumer / 3% overall Effective January, 2008 Late season rolling increases In-line with other category participants Commodity Costs Cost increases now exceeding original plan Key focus areas: Nitrogen, fuel, resins, sphagnum, bird food, grass seed 65% of 2008 costs with market volatility have been locked as of 2/1/07 Approximately $200 million remain to be purchased 2008 Plan 35.0% Mix / Supply Chain Savings Normalized April weather will positively influence mix Rate neutral/accretive new launches / re-launches Supply Chain savings to offset natural impact resulting from higher growth in lower rate Growing Media products

18 Free cash flow from operations will remain strong $ in millions $200 Excluding nonrecurring Roundup payment $168 $193 $180 $125 + Improved working capital management - Increased investment in capital expenditures +/- Flat adjusted earnings (increased interest) 2006 Actual 2007 Actual 2008 Expectation

19 With industry leadership and a solid long-term strategy ScottsMiracle-Gro is a compelling story Points to remember 1) We will grow Pro Forma earnings up to 8% in 2008, while concurrently Spending $20 to $25 million on incremental strategic initiatives Offsetting a $17 million incentive compensation headwind 2) We will deliver EPS growth in the mid-teens in 2009 and beyond, aided by balance sheet de-levering 1) Our long-term strategic initiatives give us Greater confidence in achieving future sales growth Tangible process and technology improvements to drive cost efficiencies Improved management of Human Capital 2) Cash flow generation will continue at record levels and grow 3) We have the depth of talent, skill, category knowledge and know how to give us confidence in achieving these outcomes

20 Leveraging Our Core Strengths To Drive Growth And Enhance Shareholder Value Dave Evans Executive Vice President & Chief Financial Officer Raymond James Conference Orlando, Florida March 3, 2008

21 Executive Biographies Dave Evans Executive Vice President & Chief Financial Officer Dave was named executive vice president and chief financial officer in September He has overall responsibility for the corporate financial functions, which include the corporate controller, financial planning and analysis, treasury, tax, risk management, audit, financial compliance and investor relations. Dave previously was senior vice president, Global Service Center and Finance. He joined the Company in 1993 as finance director, Operations, and was promoted to vice president of Finance for the Consumer Lawns business in In 2000, he was named vice president of Finance, North America Sales, before being named Finance head for the North America business unit in A certified public accountant, Dave holds a bachelor of science degree in accounting from The Ohio State University and attended the Kellogg Management Institute at Northwestern University.

22 Executive Biographies Jim King Vice President, Investor Relations & Corporate Affairs Jim was named to lead the Investor Relations & Corporate Affairs function in September He is responsible for all external and internal communications activities as well as environmental stewardship. Jim was most recently vice president, Investor Relations & Corporate Communications, an assignment he began in April He joined the Company as director, Investor Relations and Corporate Communications, in Prior to ScottsMiracle-Gro, Jim was vice president, Investor Relations, with the consulting firm of Edward Howard & Co., in Cleveland, manager of Investor and Media Relations at American Greetings Corp., Cleveland, and a business journalist in Phoenix, Atlanta and Cleveland. Jim is an active member of the National Investor Relations Institute and the Communications Executive Board. He also is member of the Board of Advisors of the Kent State University School of Journalism and Mass Communications, where he received a bachelor's degree in journalism and a MBA degree.

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