Scotts Miracle-Gro Archives - Green Market Report

Debra BorchardtMay 5, 2021
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5min5280

The Scotts Miracle-Gro Company (NYSE: SMG)  announced company-wide sales increased 32% in its fiscal second quarter to $1.83 billion versus $1.38 billion a year earlier. This beat the analyst estimates on Yahoo Finance which were $1.73 billion. Sales for the hydroponic segment known as Hawthorne increased 66% to $363.8 million. Scotts said that due to its fiscal calendar, the second quarter of 2021 ended six days later than the second quarter of fiscal 2020. The shift had a sales impact of approximately $122.5 million within the lawn and garden business, impacting the U.S. Consumer and Other segments.

The company beat analyst estimates which were $5.42 according to Yahoo Finance by delivering GAAP earnings from continuing operations of $5.44 per share. This also was much higher than last year’s $4.43 per share. Non-GAAP adjusted earnings, which exclude impairment, restructuring, and other non-recurring items, and are the basis of the company’s financial guidance, were $5.64 per share compared with $4.50 a year ago.

“The record level of consumer demand we have seen for our lawn and garden products is greater than we expected and may provide upside to the updated guidance we provided for our U.S. Consumer business in early April,” said Jim Hagedorn, chairman and chief executive officer. “Consumers told us entering the season that they intended to stay engaged with lawn and garden and, so far, that is exactly what they are doing. Retailer support for the category remains strong as we enter a period of challenging year-over-year comparisons.

“We also continue to exceed expectations at Hawthorne as we reported our fifth consecutive quarter of sales growth in excess of 60 percent and another month of strong results in April. Given the current momentum of this business, we feel comfortable once again increasing our sales guidance for Hawthorne to a range of 30 to 40 percent growth on a fiscal year basis.”

Commodity Costs Rising

“The margin pressure we are experiencing from higher commodity and distribution costs is expected again in the third quarter and should begin to moderate with year-over-year pricing that takes effect in the fourth quarter,” said Cory Miller, senior vice president and interim chief financial officer. “Given cost pressures and other investments necessary to keep pace with recent growth trends, we have communicated to our retail partners our intention to increase prices of our consumer lawn and garden products by mid-to-high-single digits effective in August. A similar price increase was implemented at Hawthorne in recent weeks.”

Outlook

Scotts said it now expects Hawthorne sales to increase 30% to 40% for fiscal 2021. While it reaffirmed its sales outlook for the U.S. Consumer segment of 4% to 6% growth, the company said sales growth in the segment continues to trend above that level and believes upside to be possible on a full-year basis. The gross margin rate is now expected to decline 175 to 225 basis points with the added downward pressure due to higher commodity and distribution costs. Scotts said it expected to provide an update on its full-year expectations in early June.

“We continue to see tremendous momentum in all aspects of the business, and we are extremely optimistic in our ability to drive another year of record results,” Hagedorn said. “Obviously, consumer activity in May is extremely important, and it is historically one of the most critical months of the lawn and garden season. That said, we are encouraged by the level of consumer participation we have been seeing so far this season and are optimistic that consumers will remain engaged throughout the season.”


Debra BorchardtFebruary 3, 2021
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5min6160

The Scotts Miracle-Gro Company (NYSE: SMG) reported that company-wide sales increased 105% to a record $748.6 million in its fiscal first-quarter primarily driven by strong retailer support in the U.S. Consumer segment as well as continued momentum in Hawthorne, the company’s hydroponic subsidiary.

For the quarter ending January 2, 2021, Scotts reported that income from continuing operations was $0.43 per diluted share, compared with a loss of $1.28 per share in fiscal 2020. Non-GAAP adjusted earnings – which is the basis of the Company’s guidance – was $0.39 per diluted share in the quarter compared with a loss of $1.12 per share last year. Due to the seasonal nature of the lawn and garden category, ScottsMiracle-Gro has historically reported a loss during its first quarter. The results in 2021 mark the first time Scotts has ever reported a first-quarter profit.

“While we anticipated a strong start to fiscal 2021, both the U.S. Consumer and Hawthorne segments surpassed our expectations and put us on a good trajectory for the balance of the year,” said Jim Hagedorn, chairman, and chief executive officer. “And Hawthorne continues to demonstrate its best-in-class performance within its industry, working with retailers and growers to help drive their success. Our strong start gives us renewed confidence in our full-year outlook although we remain sensitive to the challenges in the second half of the fiscal year against historic comparisons. We now believe we have enough visibility, however, to raise our full-year sales growth outlook for Hawthorne to a range of 20 to 30%, compared with our previous outlook of 15 to 20%. Despite the historically strong start in U.S. Consumer, it remains too early in the season to adjust our outlook for that business.”

Revenue

Sales rose 105% to $748.6 million from $365.8 million, helped in part by the company’s fiscal calendar, where the first quarter of 2021 had five more days than the first quarter of fiscal 2020. The difference had a sales impact of approximately $43 million. The real shining star though is the indoor growing company Hawthorne whose sales increased 71% to $309.4 million driven by strong demand in all categories of indoor growing equipment and supplies. U.S. Consumer segment sales increased 147 percent to $408.2 million. Consumer purchases of the Company’s products at its largest retail partners increased 40 percent in the quarter. A significant portion of the sales increase for U.S. Consumer is attributable to the replenishing of retail inventory.

Selling, general and administrative expenses (SG&A) increased 31% to $156.7 million. The company attributed the increase to higher marketing expenses in the U.S. Consumer segment. “Our investment in marketing continues to be a focus area as we strengthen our relationship with gardeners,” Hagedorn said. “Our year-round commitment to driving the conversation with consumers will include our first commercial specially produced for the Super Bowl, which is scheduled to appear in the second quarter of this Sunday’s game.

Outlook

Scotts said it now expects fiscal 2021 sales growth of 1 to 6% compared to 0 to 5% previously. Hawthorne sales guidance was increased to a range of 20 to 30% from a previous range of 15 to 20%. Guidance for U.S. Consumer sales of 0 to minus 5% was reaffirmed. Guidance for non-GAAP adjusted EPS of $8.00 to $8.40 was reaffirmed as the company noted that it now expects SG&A to decline 3 to 8% from 2020 spending levels, compared to a previous estimate of a 6 to 11% year-over-year decline. The adjusted gross margin rate is now expected to decline 125 to 175 basis points year-over-year due to higher commodity costs and segment mix more heavily skewed to the lower margin Hawthorne business than previously contemplated. The revised gross margin rate guidance compares to a previously expected decline of 50 basis points.

 


Video StaffJuly 31, 2020

3min11180

 Scotts Miracle-Gro Company reported fiscal third-quarter sales increased 28% to $1.49 billion, beating analyst estimates for $1.3 billion. Hydroponic subsidiary Hawthorne sales increased 72% to $302 million versus $176 million for the same time period a year ago. Scotts to increase its guidance for full-year sales, adjusted earnings, and free cash flow

Aphria Inc. reported net revenue of $152.2 million in the fourth quarter, an increase of 18% from the prior-year quarter. This number also beat the analyst estimate of $149 million. However, the stock was getting beaten up after the company also reported a $98.8 million net loss for the fourth quarter, which was much worse than last year’s net income of $15.7 million. The losses were attributed to the COVID-19 pandemic.”

PotNetwork Holdings, Inc. (OTC PINK:POTN)  filed its 2019 Annual Report and reported that its revenues fell 41% to $15 million versus $25.5 million in 2018. The company attributed the drop in revenue to “distribution contraction as a result of the FDA Warning Letter, along with the paring and streamlining of the product lines in mid-2019.”

MYM Nutraceuticals Inc. is buying Biome Grow Inc. for roughly C$12 million. Biome is a Canadian-based company with national and international business interests in the cannabis industry. Its wholly-owned subsidiary Highland Grow Inc. is licensed to cultivate, process, and sell cannabis.

As announced in early June, Clever Leaves International is continuing to make its way onto the NASDAQ through the Schultze Special Purpose Acquisition Corp. (NASDAQ: SAMA). The deal is expected to close in the fourth quarter and will be known as Clever Leaves Holding Corp. 


Debra BorchardtJuly 29, 2020
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5min10820

The Scotts Miracle-Gro Company (NYSE: SMG) reported fiscal third-quarter sales increased 28% to $1.49 billion, beating analyst estimate for $1.3 billion (Yahoo Finance). The stock was popping over 12% on the revenue and earnings beat.

Hawthorne sales increased 72% to $302 million versus $176 million for the same time period a year ago. The U.S. consumer increased by 21% to $1.08 billion from $889.1 million.

Increased Guidance

The continued strength of the business in fiscal 2020 caused Scotts to increase its guidance for full-year sales, adjusted earnings, and free cash flow. The new sales forecast for fiscal 2020 is for 26-28% growth and is estimating the U.S. consumer segment grows 20-22%. Hawthorne sales are forecast to grow 55-60%. Scotts had said back in June, that it expected U.S. Consumer sales to increase 9-11% in fiscal 2020 and Hawthorne to increase 45 to 50%.

The revised guidance for non-GAAP adjusted earnings per share of $6.65 to $6.85 compares with the June forecast of $5.65 to $5.85 per share. The company said it expected non-GAAP free cash flow of approximately $400 million, up from approximately $350 million earlier.

Third Quarter Results

The company also delivered net income of $203 million. The third-quarter GAAP EPS increased 13% to $3.57; Non-GAAP adjusted EPS up 22% to $3.80. The average analyst estimate was for $3.37 according to Yahoo Finance.

“In our U.S. Consumer segment, we saw significant acceleration of consumer engagement beginning in May that continues as we speak,” said Jim Hagedorn, Chairman, and Chief Executive Officer. “Consumer purchases entering August are up 23 percent at our largest four retail partners and we’ve seen increases in every product category. We especially have benefitted from a more than 40 percent increase in branded soils and even higher gains in consumer purchases for most of our Ortho insect control business.”

“We also continued to see strong third-quarter growth at Hawthorne in every product category and geography. The team at Hawthorne has done an outstanding job this year achieving significantly higher-than-expected growth while also exceeding our operating margin targets.”

“Our results this year continue to exceed our most optimistic expectations and are a testament to the critical nature of the categories in which we compete, the commitment of our retail partners, and the loyalty of the consumers and cultivators who rely on our products for their success,” said Hagedorn. “As we enter the final weeks of fiscal 2020 and prepare for the start of our next fiscal year, we remain optimistic about the strength of our business as well as our ability to continue to enhance shareholder value.

Giving Back

ScottsMiracle-Gro said its Board of Directors approved payment of a special dividend of $5 per share and increased its regular quarterly dividend by 7 percent to $0.62 per share. Both dividends are payable September 10 to shareholders of record on August 27.

The company also decided to make special one-time payments later this year to nearly 3,000 hourly and salaried associates who did not participate in the bonus plans. “We also will enhance bonus payments to another nearly 1,500 eligible associates who do participate in incentive plans. In addition, we plan to double our charitable contributions to benefit the communities we serve.”


William SumnerJuly 31, 2018
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6min10360

It’s time for your Daily Hit of cannabis financial news for July 31, 2018.

On the Site

Scotts Miracle-Gro

Regulatory changes in California and an over-production of cannabis in the state put pressure on revenue in the Hawthorne segment of business for Scotts Miracle-Gro (SMG). The lawn and garden company that is known for its pesticides and fertilizers released its fiscal third-quarter results after the market close on Tuesday.

Company-wide sales increased 2% to $994.6 million versus $973.4 million last year for the same time period. At first glance, the Hawthorne business looked okay as sales jumped 2% to $74.2 million from last year’s $72.4 million, but excluding company acquisitions sales actually dropped 37%. Those acquisitions include the recently acquired Sunlight Supply.

Isodiol International Inc.

Isodiol International Inc. (ISOLF) reported its annual earnings with a gross profit of C$8.8 million for the year ending March 31, 2018, which was well above last year’s gross profit of C$126,715. However, the net losses were tremendous at C$36 million versus last year’s net loss of C$4 million as the company embarked on numerous acquisitions. Revenues for the year logged in at C$19 million, well above last year’s C$355,959. The cost of goods sold was C$10 million for the year versus last year’s C$229,243.

 

In Other News

MedMen Enterprises Inc.

MedMen Enterprises Inc. (MMEN) announced today that RocNation Co-founder and CEO Jay Brown had joined its Board of Directors. With years of experience, Brown is one of the most powerful executives in the music industry and has had a hand in the success of several Grammy-nominated and award-winning artists throughout his lifetime. “Marijuana today is less about smoking a joint, and much more about lifestyle and culture. It is about healthier, safer choices for mind and body, and community,” said MedMen Co-founder and CEO Adam Bierman in a statement. “For more than two decades, Jay Brown has had his finger on the pulse of pop culture. We are honored to have him on our Board and look forward to working with him as MedMen continues on its mission to mainstream marijuana.”

Aphria Inc.

Aphria Inc. (APHQF) announced that on July 27, 2018, the company secured $25 million in debt financing from WFCU Credit Union (WFCU). The five-year loan has an interest of 4.68% and is the second loan that the company has received from WFCU. The previous loan was also a $25 million five-year loan and was secured on May 9, 2017. “We are delighted to once again have the support of WFCU Credit Union as Aphria continues to execute on its long-term strategic plan,” said Aphria CEO Vic Neufeld. “Our diversified approach to innovation, strategic partnerships and global expansion are driving long-term shareholder value, and as our company and industry evolve we are always looking for opportunities to normalize our debt to equity structure.”

Starbuds

10330698 Canada Ltd., holder of Starbuds Canada (Starbuds), announced today that it has secured several dispensary locations in Ontario and has entered into multiple operational agreements to obtain more. Starbuds Canada is the result of a joint venture between Compass Cannabis Clinic and Starbuds U.S. The initial dispensary locations will be in Whitby and Windsor, Ontario. To increase the speed of their expansion, 10330698 Canada Ltd. is launching a private placement for investors. “We’re thrilled to have an opportunity for our joint venture to expand into Ontario. Consumers should have options in who they purchase cannabis from, and this expansion only strengthens our position as a leading provider across not only Canada but North America as well,” said Brian Ruden, Founder and CEO of Starbuds U.S. “Our goal is to provide fantastic customer service combined with educational support for patrons in Ontario, along with further investment opportunities for our stakeholders.”


Debra BorchardtJuly 31, 2018
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3min17840

Regulatory changes in California and an over-production of cannabis in the state put pressure on revenue in the Hawthorne segment of business for Scotts Miracle-Gro (SMG). The lawn and garden company that is known for its pesticides and fertilizers released its fiscal third-quarter results after the market close on Tuesday.

Company-wide sales increased 2% to $994.6 million versus $973.4 million last year for the same time period. Non-GAAP adjusted earnings were $2.67 a share versus last year’s $2.47 and GAAP income was $2.23 for this year, which was lower than last year’s $2.41. Net income for the quarter was $82.8 million, which fell from last year’s $151.9 million.

“Our U.S. core business was simply outstanding in May with record results and positive year-over-year consumer purchases nearly every day during the month,” said Jim Hagedorn, chairman, and chief executive officer. “The fact that consumer purchases were down 12 percent entering May and were essentially flat versus year-ago levels by the end of June speaks to the resilience of our category and strength of our brands. It also speaks to the commitment of our team as well as our consumers and retail partners.”

At first glance, the Hawthorne business looked okay as sales jumped 2% to $74.2 million from last year’s $72.4 million, but excluding company acquisitions sales actually dropped 37%. Those acquisitions include the recently acquired Sunlight Supply.

“The integration of Sunlight into the Hawthorne operations is moving swiftly and we are already more than halfway to our goal of achieving at least $35 million in synergies by combining our two businesses,” Hagedorn said. “While we still have a lot of work to do to finish the integration, I’m confident that our Hawthorne business will be vastly improved as a result of this transaction and will be uniquely positioned to benefit from the rapidly evolving marketplace for hydroponic products.”

Scotts re-affirmed the revised guidance that it provided in mid-June forecasting that full-year sales would be flat to 2% higher than year-ago levels. Non-GAAP Adjusted earnings per share are expected to be in a range of $3.70 to $3.90 per share.


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