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The Scotts Miracle-Gro's CEO Discusses F3Q12 Results - Earnings Call Transcript

Stocks in this article: SMG

As a reminder this call is being recorded and an archived version of the call will be available on our website. And if we make any comments related to non-GAAP financial measures that we have not covered in the press release, we will provide those items on the website as well.

With that, I want to turn the call over to Jim Hagedorn to discuss our performance.

James Hagedorn

Thanks, Mr. Jim King, and good morning everyone. We are going to take a slightly different approach today than in the past. I am going to set the tone for the call and then Dave will follow with a look at the numbers. From there, I will come back and share thoughts about the state of the business and where we are headed in 2013 and beyond.

As a precursor, I will tell you now that we remain committed to our consumer-focused strategy and believe our category continues to have solid long term growth potential. That’s why category growth was our number one objective for this year. We spent hard this year and made big bets to drive growth, and you will get no apologies from me for that decision. But I will say that the growth we achieved was expensive, too expensive.

What we are seeing right now is that lawn and garden is performing more in line with other consumer industries and I don’t see that changing in a significant way until the consumer gets healthier. So while we believe our consumer focused strategy is still the right long term approach to drive shareholder value, the pace at which we invest behind that strategy in the near-term will be adjusted to reflect the current reality.

We said in the press release that we want to return the business to the level of profitability we saw just two years ago. Let me elaborate. While we are not going to unwind our investments, we will dial some of them back. And although we decided to forego pricing in 2012, it will be a part of our plan for 2013. And given our relatively pessimistic view of the consumer market place right now, and our ability to grow within that marketplace, we will be more restrictive on CapEx and acquisitions as well.

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