MARYSVILLE, Ohio, May 01, 2019 (GLOBE NEWSWIRE) -- The Scotts Miracle-Gro Company (SMG), the world’s leading marketer of branded consumer lawn and garden as well as hydroponic growing products, today announced company-wide sales increased 17 percent in its fiscal second quarter driven by the acquisition of Sunlight Supply and volume growth in both major business segments.
For the quarter ended March 30, 2019, GAAP earnings from continuing operations were $7.10 per share compared with $2.66 per share in the prior year. Within the quarter is a benefit of $259.8 million from the company’s divestiture of its minority stake in TruGreen. Non-GAAP adjusted earnings – which are the basis of the company’s financial guidance – were $3.64 per share compared with $2.88 a year ago.
On a fiscal year-to-date basis entering May, the Company said consumer purchases of its core lawn and garden products at its largest retailers in the U.S. increased by 13 percent.
“Consumers came flying out of the gate compared with last year to get a head start on the lawn and garden season,†said Jim Hagedorn, chairman and chief executive officer. “We’ve seen strong consumer engagement in every region, in every channel of retail and in nearly every product category in which we compete. Innovation has helped drive double-digit increases in lawn food, grass seed and growing media products, while retailer support led to over a 30 percent increase in consumer purchases of mulch. In addition, consumer purchases of non-selective weed control also are well ahead of last year, including a more than 20 percent increase in Roundup purchases.â€
“In Hawthorne, shipments increased double digits on a comparative basis in every month of the quarter, and again in April. We’re seeing consistent growth in both durable and consumable products and solid performance in both new and established markets.â€
“Our strong start in both businesses gives us increased confidence in our full-year guidance and increases the probability that sales growth for the full year could exceed our original guidance range of 10 to 11 percent.â€
Second quarter details
For the fiscal second quarter, the Company reported sales
of $1.19 billion, up 17 percent from $1.01 billion a
year earlier. U.S. Consumer segment sales increased 8 percent
to $993.5 million. Sales for the Hawthorne segment
increased 245 percent to $144.1 million. On a comparative
basis as if Sunlight was owned in 2018, sales increased 21%.
The company-wide gross margin rate was 39.7 percent on a GAAP basis and 39.8 percent on a non-GAAP adjusted basis. Both compare with a rate of 40.4 percent a year ago. The decline was mainly attributed to the impact of the Sunlight acquisition and unfavorable product mix, partially offset by higher pricing. Selling, general and administrative expenses (SG&A) increased 8 percent to $179.7 million due to acquisitions and higher media spending.
Other non-operating income was $260.1 million compared to a loss of $9.2 million a year earlier. The difference is due primarily to a pre-tax gain of $259.8 million related to the company’s divestiture of its minority ownership of TruGreen. The Company used the net proceeds from that transaction to reduce debt.
On a company-wide basis, GAAP income from continuing operations was $396.9 million, or $7.10 per share, compared with $152.7 million, or $2.66 per share, for the second quarter of fiscal 2018. These results include impairment, restructuring, and other items including the impact of the TruGreen transaction. Excluding these items, non-GAAP adjusted earnings was $203.2 million, or $3.64 per share, compared with $165.2 million, or $2.88 per share, last year.
Year-to-date details
For the first six months of fiscal 2019, the Company reported sales
of $1.49 billion, up 20 percent from $1.23 billion a
year earlier. U.S. Consumer segment sales increased 8 percent
to $1.13 billion. Sales for the Hawthorne segment
increased 140 percent to $284.8 million. On a comparative
basis as if Sunlight was owned in 2018, sales increased 5%.
The company-wide gross margin rate was 34.1 percent on a GAAP basis and 34.3 percent on a non-GAAP adjusted basis. Both compare with a rate of 35.9 percent a year ago. Selling, general and administrative expense (SG&A) increased 8 percent to $296.0 million.
Other non-operating income was $262.9 million compared to a loss of $6.7 million a year earlier.
On a company-wide basis, GAAP income from continuing operations was $314.3 million, or $5.62 per share, compared with $132.7 million, or $2.29 per share, for the first six months of fiscal 2018. Excluding impairment, restructuring, and other items including the impact of the TruGreen transaction, non-GAAP adjusted earnings was $126.2 million, or $2.26 per share, compared with $103.0 million, or $1.78 per share, last year.
The Company also announced it has recently sold its ownership stake in a joint venture of a professional U.S. industrial, turf and ornamental herbicide company to Bayer for $37 million. The proceeds from the sale will be used to reduce debt. Also subsequent to the end of the second quarter, Bayer agreed to reimbursements of $20 million related to incremental expenses the Company has incurred and will incur later this year related to the Roundup business. Both of those payments will be reflected in the Company’s third quarter results.
Full-year outlook
The Company re-affirmed all aspects of its fiscal 2019 guidance
although it acknowledged the strong start in both the U.S. Consumer
and Hawthorne segments increases the probability that sales growth
for the full year could exceed its original forecast.
“We are extremely pleased with our strong start to the year, which gives us a high degree of confidence in our guidance for non-GAAP adjusted earnings in a range of $4.10 to $4.30 per share,†said Randy Coleman, executive vice president and chief financial officer. “Our expected performance, combined with the cash proceeds from two divestitures, is allowing us to pay down debt more quickly than we expected several months ago.â€
“While it’s still too early in the fiscal year to adjust any of our guidance targets, we currently anticipate providing the financial community with an updated outlook on fiscal 2019 in early June, consistent with how we’ve operated in the past.â€
Conference Call and Webcast Scheduled
for 9 a.m. EDT Today, May 1
The Company will discuss results during a webcast and conference
call today at 9:00 a.m. EST. To participate in the conference
call, please call 866-337-5532 (Conference Code: 7577941). A
replay of the call can be heard by calling 888-203-1112. The
replay will be available for 30 days.
A live webcast of the call and the press release will be available
on Company’s investor relations website at http://investor.scotts.com. An archive of the
press release and any accompanying information will remain
available for at least a 12-month period.
About
ScottsMiracle-Gro
With approximately $2.6 billion in sales, the Company is one of the
world's largest marketers of branded consumer products for lawn and
garden care. The Company's brands are among the most recognized in
the industry. The Company's Scotts®, Miracle-Gro® and Ortho® brands
are market-leading in their categories, as is the consumer Roundup®
brand, which is marketed in the U.S. and certain other countries by
Scotts and owned by Monsanto. We maintain a minority interest in
Bonnie Plants®, the largest marketer of edible gardening plants in
retail channels. The Company’s wholly-owned subsidiary, The
Hawthorne Gardening Company, is a leading provider of nutrients,
lighting and other materials used in the hydroponic growing
segment. For additional information, visit us at www.scottsmiraclegro.com.
Forward Looking Non-GAAP
Measures
In this release, the Company provides an outlook for fiscal 2019
non-GAAP adjusted EPS. The Company does not provide a GAAP EPS
outlook, which is the most directly comparable GAAP measure to
non-GAAP adjusted EPS, because changes in the items that the
Company excludes from GAAP EPS to calculate non-GAAP adjusted EPS,
described above, can be dependent on future events that are less
capable of being controlled or reliably predicted by management and
are not part of the Company’s routine operating activities.
Additionally, due to their unpredictability, management does not
forecast the excluded items for internal use and therefore cannot
create or rely on a GAAP EPS outlook without unreasonable efforts.
The timing and amount of any of the excluded items could
significantly impact the Company’s GAAP EPS. As a result, the
Company does not provide a reconciliation of guidance for non-GAAP
adjusted EPS to GAAP EPS, in reliance on the unreasonable efforts
exception provided under Item 10(e)(1)(i)(B) of Regulation S-K.
Cautionary Note Regarding Forward-Looking
Statements
Statements contained in this press release, other than statements
of historical fact, which address activities, events and
developments that the Company expects or anticipates will or may
occur in the future, 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 statements†within the
meaning of the U.S. federal securities laws that are subject to
risks and uncertainties. These forward-looking statements generally
can be identified as statements that include phrases such as
“guidance,†“outlook,†“projected,†“believe,†“target,†“predict,â€
“estimate,†“forecast,†“strategy,†“may,†“goal,†“expect,â€
“anticipate,†“intend,†“plan,†“foresee,†“likely,†“will,â€
“should†or other similar words or phrases. Actual results could
differ materially from the forward-looking information in this
release due to a variety of factors, including, but not limited
to:
Additional detailed information concerning a
number of the important factors that could cause actual results to
differ materially from the forward-looking information contained in
this release is readily available in the Company’s publicly filed
quarterly, annual and other reports. The Company disclaims any
obligation to update developments of these risk factors or to
announce publicly any revision to any of the forward-looking
statements contained in this release, or to make corrections to
reflect future events or developments.
Contact:
Jim King
Senior Vice President
Investor Relations & Corporate Affairs
(937) 578-5622
THE SCOTTS MIRACLE-GRO
COMPANY
Condensed Consolidated Statements of
Operations
(In millions, except for per common share data)
(Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
| Footnotes | March 30, 2019 |
March 31, 2018 |
% Change | March 30, 2019 |
March 31, 2018 |
% Change | |||||||||||||||||||
| Net sales | $ | 1,189. | |||||||||||||||||||||||