Leveraging our strengths to drive shareholder value. CIBC World Market s 7 th Annual Consumer Growth Conference Boston, Massachusetts July, 2007

Transcription

1 Leveraging our strengths to drive shareholder value CIBC World Market s 7 th Annual Consumer Growth Conference Boston, Massachusetts July, 2007

2 Safe Harbor Disclosure Statement under the Private Securities Litigation Act of 1995: Certain of the statements contained in this presentation, including, but not limited to, information regarding the future economic performance and financial condition of the company, the plans and objectives of the company s management, and the company s assumptions regarding such performance and plans are forward-looking in nature. Actual results could differ materially from the forward-looking information in this presentation due to a variety of factors. The Scotts Miracle-Gro Company encourages investors to learn more about these risk factors. A detailed explanation of these factors are available in the company s publicly filed quarterly and annual reports. 2

3 Scotts Miracle-Gro: Our clear competitive advantages create a compelling investment story Industry-leading brands & unrivaled consumer relationships Proven record of innovation Efficient operational platform and unique store service model Promising growth opportunities with Scotts LawnService 3

4 Updated 2007 Financial Outlook Due to unseasonable weather in April, third quarter results will be lower than expected, resulting in a reduction in EPS for 2007 Current expectations Third quarter EPS: $1.95 to $2.00 vs. $1.93 Full-year sales growth: 6 to 8% Full-year EPS: $2.35 to $2.45 vs. $2.62* * 2007 results impacted by increased interest expense from recapitalization program. 4

5 Consumer demand strong outside April Unseasonable weather kept consumers inside during SMG s largest and most profitable month of the fiscal year Points to consider Consumer purchases up 13% through first six months (ending March) Consumer purchases up 11% through June when excluding April Market share gains expected Category remains healthy with ongoing growth opportunities 5

6 SMG: A track record of driving shareholder value SMG has consistently outperformed competitors and the market 2001 through 2006 Sales have grown at a 10% CAGR Adjusted net income has grown at a 23% CAGR Cumulative free cash flow has exceeded $800 million Returned $900 million to shareholders through dividends and share repurchases Five year total return of 135% 6

7 We remain confident in our five-year outlook and ability deliver strong financial performance Goals for (stated in annual terms) Organic sales growth of 6 to 8 percent* Gross margin rate improvement ranging up to 40 bps Operating income growth of 8 to 10 percent ROIC improvement of 30 to 50 bps * Excludes pricing and acquisitions. 7

8 North America will remain our largest segment and the key to our continued success Percent of Total Company 2006 Net Sales Smith & Hawken (6%) Scotts LawnService (8%) International (15%) North America (71%) 8

9 Driving Growth and Value in North America

10 0$4.82SMG has consistently driven growth and gained share in the Lawn and Garden consumables category Lawn and Garden Consumables Retail Category Sales $3.6 $4.1 ($ Billions) $4.6 $5.0 $1.7 $1.8 $2.1 $2.3 $2.5 $ ScotsAlers$3.6 OthScotts Share = 49% 53% 10

11 Consumer participation in gardening remains strong Key Facts: Participation in gardening reached an all-time high in 2006, according to independent consumer research (a) - Gardening remains top leisure activities for consumers, most popular with people over 50 Consumer purchases of our products have improved at least 7% each year since 2001 Point-of-sale improvements of 10% in 2006 are in line with 2001 and 2002, when consumers pulled back from other spending but remained loyal to lawn & garden Our premium priced brands continue to gain market share and have gained share during economic downturns as well (a) National Gardening Association 11

12 Favorable category characteristics and steady focus on our competencies add confidence in continued growth Category characteristics are favorable Favorable demographics Committed consumers Receptivity to brands Our advantages and initiatives will help us win Ubiquitous brands that continue to win against the competition Superior advertising that drives consumer purchases Innovation targeted to reach broader segment Ability to leverage No. 1 brands with product extensions World-class supply chain infrastructure and in-store execution 12

13 We will win with a focus on both our consumers and our retailers We will win with consumers by Delivering high-quality, differentiated products Finding new innovations that make gardening more enjoyable Consistently advertising and growing our relationship with consumers We will win with our retailers by Driving consumers into their stores Providing unmatched supply chain efficiencies and in-store sales support Improving inventory turns and productivity 13

14 Our brands connect with consumers in all categories Recent innovations and advertising focus promote easy-to-use products that resonate with consumers and drive POS growth Plant Food Growing Media Insect Control Weed Control Lawn Products LiquaFeed Moisture Control Bug B Gon Max Extended Control Bonus S Max 14

15 With 85 percent share of voice, advertising remains critical to consumer relationships LiquaFeed: A powerful combination of success advertising and Innovation Media GRP's LiquaFeed POS$ $1,800 $1,500 $1,200 $900 $ $ $0 15

16 Our advertising will increasingly focus on a new consumer Real people. Real stories. Messages focus on the personal satisfaction of creating a beautiful lawn & garden and ease of getting great results Increased emphasis on emotional rather than rational benefits Women and minority consumers replace male lawn warriors Increased cross-advertising of products (e.g. seed and soil) 16

17 New consumer touch points: Increased use of the Internet and consumer-generated content Contests create online excitement Postings support consumer pride Increased project orientation Broad web re-launch scheduled Improved use of search utilization 17

18 New consumer touch points: As we compete for the consumer s time, we are finding new ways to reach them Primary sponsor of Carl Edwards in the #60 Scotts Miracle-Gro Fusion in the NASCAR Busch Series Car designs promote regionally specific products High expectations for participation in Gillette Young Guns reality show Desperate Housewives Increased product placements in top TV shows, movies King of Queens 18

19 Our in-store presence and sales force is a major advantage 1,800+ merchandisers ensure that store displays are maximized to drive sales In-store counselors solve consumers problems, recommend ScottsMiracle-Gro products for help Continued investment in sales force as competitors scale back 19

20 Supply Chain infrastructure is a competitive advantage ScottsMiracle-Gro has emerged as the premier supply chain operation in the home center retail channel Increased capacity and integrated systems have improved product fill rates and reduced lead times 99.8% in 2006 vs. 92% in 2001 Scotts competency has helped enable retail partners to improve inventory turns and return on investment, driving retailer productivity 20

21 We remain bullish on the prospects for continued success Summary: Leading brands in a growing category A commitment to continued innovation New efforts to reach the consumer and drive participation rates higher Important growth engine in Scotts LawnService Strong cash flow and a commitment to drive shareholder value 21

22 Questions?