Ohio Ag Connection - Scotts Miracle-Gro Reports Record First Quarter Sales

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Scotts Miracle-Gro Reports Record First Quarter Sales
Ohio Ag Connection - 02/08/2010

The Scotts Miracle-Gro Company reported record first quarter sales of $302.2 million, up 6 percent from the same period a year ago. The improvement was driven by a 14 percent increase in the Global Consumer segment.

The strong performance of Global Consumer, which reported record sales of $214 million, was led by a 17 percent improvement in the United States. Consumer purchases of the Company's branded products at our largest U.S. retailers increased 14 percent, with gains in 49 states.

For the three months ended January 2, 2010, the Company reported a loss from continuing operations of $49.8 million, or $0.76 per share, as compared with a loss of $52.9 million, or $0.82 per share, for the same period a year ago. The adjusted loss from continuing operations, which excludes the costs related to product registration and recall matters, was $48.1 million, or $0.73 per share, as compared with a loss of $48.0 million, or $0.74 per share, for the same period a year ago. Given the seasonal nature of the lawn and garden category, ScottsMiracle-Gro has historically reported a net loss in its fiscal first quarter.

"Our first quarter results were better than we had originally anticipated and demonstrate the continued resilience of our consumer business and our brands," said Jim Hagedorn, chairman and chief executive officer. "We invested heavily to support the fall lawn care season and our efforts successfully kept both our retail partners and consumers engaged in the category. It was a great way to end the 2009 lawn and garden season and an even better way to begin a new fiscal year."

Global Professional, which serves specialty agriculture and professional growers, reported sales of $55.4 million, compared with $59.5 million for the same period a year earlier. Scotts LawnService reported revenues of $33.0 million, compared with $38.8 million for the same period a year ago.

Adjusted gross margin rate declined to 21.8 percent from 27.5 percent. This decline was in line with the Company's expectations and due primarily to results in the Global Professional business. The Company continues to expect its full-year gross margin rate to be comparable with prior year as selling price reductions in Global Professional reach their anniversary and the benefits of declining commodity costs are realized. Selling, general and administrative expense for the first quarter was $137.6 million, compared with $138.7 million for the same period a year earlier. Interest expense was $10.7 million, compared with $16.3 million.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter of fiscal 2010 was a loss of $60.9 million, compared with a loss of $58.3 million a year earlier.

The Company re-affirmed its full-year outlook on an adjusted basis at a range of $3.00 to $3.10 per share, which assumes sales growth of 3 to 5 percent, flat gross margin rate and flat SG&A. The forecast assumes interest expense to be at the high-end of the original outlook of $50 to $55 million due to the Company's $200 million senior notes offering completed in January, but excludes the impact of product recall and registration matters.

"We are well-positioned entering the peak months of the year and we remain confident in our current outlook," said Dave Evans, chief financial officer. "Early shipments to our retailers have been strong and our retail partners remain poised to provide continued support to our brands and the overall lawn and garden category. In addition, we have locked in over 60 percent of our most sensitive commodities and are maintaining strong expense control."