What happened

Shares of Scotts Miracle-Gro (SMG -2.12%) were moving higher today after the lawn-care products company offered an update to its fiscal second-quarter performance this morning. As a result, the stock was up 4.5% as of 12:04 p.m. ET.

So what

Scotts didn't report preliminary results but said it expects a Q2 net debt/EBITDA (earnings before interest, taxes, depreciation, and amortization) leverage ratio in the range of 6, which is below the facility covenant limit of 6.5 for the second quarter. That implies that its trailing EBITDA over the last four quarters is approximately $550 million, as the company finished the fiscal fourth quarter with $3.4 billion in debt.

Investors have been concerned about the company's cash position as its sales fell sharply after a boom during the pandemic, so it's a good sign that it continues to be within its debt covenants. Management credited a disciplined approach to cost control and a focus on efficiency.

CEO Jim Hagedorn said: "I'm proud of what we've accomplished this fiscal year and the positive direction we are heading. While the past eight months have been challenging, a tremendous amount of work continues to be undertaken to improve the financial and operating performance of Scotts Miracle-Gro."

Separately, the company also announced that Nate Baxter would become its new executive vice president of technology and operations. 

Now what

The update gave the impression that Scotts is turning the corner, as it's set to report numbers for the all-important spring planting season. The stock still looks cheap based on trailing EBITDA and cash-flow projections, so there could be more upside if the business continues to recover.

We'll learn more when the company delivers its full earnings report on May 3. Analysts are expecting revenue to fall 3.5% to $1.62 billion and earnings per share to decline from $5.03 to $3.42.