Scotts Miracle-Gro narrows fiscal Q1 net loss to US$68.3M from loss of US$73.1M in year-ago period, as seasonal nature of lawn, garden category often leads to Q1 loss, company says; net sales up 3% to US$205.8M
Andrew Rogers
MARYSVILLE, Ohio
,
February 6, 2013
(press release)
–
The Scotts Miracle-Gro Company (NYSE: SMG), the world's leading marketer of branded consumer lawn and garden products, today announced results for its fiscal first quarter ended December 29, 2012.
THE SCOTTS MIRACLE GRO-COMPANY Condensed Consolidated Statement of Operations (In millions, except for per common share data) (Unaudited) Three Months Ended Footnotes December 29, December 31, % Change Net sales $ 205.8 $ 199.6 3 % Cost of sales 174.7 174.0 Gross profit 31.1 25.6 21 % % of sales 15.1 % 12.8 % Operating expenses: Selling, general and administrative 124.5 122.5 2 % Impairment, restructuring and other (0.4) 2.4 Product registration and recall matters — 0.3 Other income, net (1.1) (0.6) Loss from operations (91.9) (99.0) 7 % % of sales (44.7) % (49.6) % Interest expense 13.2 15.3 Loss from continuing operations before income taxes (105.1) (114.3) 8 % Income tax benefit from continuing operations (36.8) (41.2) Loss from continuing operations (68.3) (73.1) 7 % Income (loss) from discontinued operations, net of tax (3) 0.6 (0.8) Net loss $ (67.7) $ (73.9) Basic income (loss) per common share: (1) Loss from continuing operations $ (1.11) $ (1.20) 8 % Income (loss) from discontinued operations 0.01 (0.01) Net loss $ (1.10) $ (1.21) Diluted income (loss) per common share: (2) Loss from continuing operations $ (1.11) $ (1.20) 8 % Income (loss) from discontinued operations 0.01 (0.01) Net loss $ (1.10) $ (1.21) Common shares used in basic loss per share calculation 61.4 60.9 1 % Common shares and potential common shares used in diluted loss per share calculation 61.4 60.9 1 % Non-GAAP results from continuing operations: Adjusted loss from continuing operations (4) $ (68.5) $ (71.4) 4 % Adjusted diluted loss per share from continuing operations (2) (4) $ (1.12) $ (1.17) 4 % Adjusted EBITDA (3) (4) $ (75.4) $ (84.4) 11 % Note: See accompanying footnotes at the end of the release.
Net sales were $205.8 million, an increase of 3 percent, compared to $199.6 million, during the same quarter a year ago. Sales in the Global Consumer segment were up 3 percent to $153.2 million, compared to $149.1 million a year ago, attributable to increased volume during the quarter, as price increases for fiscal 2013 did not take effect until January. Consumer purchases at point-of-sale (POS) at the Company's largest U.S. retailers increased 1 percent during the quarter. POS was in line with expectations for the first quarter, though it represents a small portion of the full year.
Scotts LawnService sales were up 19 percent to $44.8 million in the first quarter, compared to $37.6 million during the same quarter a year ago, primarily due to a 6 percent increase in customer count and a weather-driven delay of sales from the fiscal fourth quarter of 2012 to the fiscal first quarter of 2013.
"Continued consumer engagement, coupled with solid execution, leaves us well-positioned for the 2013 lawn and garden season," said Jim Hagedorn, chairman and chief executive officer. "We are on plan with our initiatives designed to drive meaningful and sustainable growth in earnings and cash flow, while continuing to maintain a strong consumer focus."
The loss from continuing operations was $68.3 million, or $1.11 per share, compared with a loss of $73.1 million, or $1.20 per share, during the same quarter a year ago. The adjusted loss from continuing operations for the first quarter of 2013 was $68.5 million, or $1.12 per share, which excludes impairment, restructuring and other charges. Given the seasonal nature of the lawn and garden category, the Company historically reports a loss in its fiscal first quarter.
The adjusted company-wide gross margin rate was 15.1 percent, compared with 12.8 percent during the first quarter a year ago. The 230-basis-point improvement was primarily attributable to increased volume within the higher-margin Scotts LawnService segment and favorable product mix in the Global Consumer segment.
Selling, general and administrative expenses (SG&A) were $124.5 million, compared to $122.5 million a year ago, in line with Company expectations.
The operating loss for the Global Consumer segment was $68.7 million during the first quarter, compared with a loss of $69.5 million last year. Scotts LawnService reported operating loss of $0.9 million, compared with a loss of $4.6 million a year ago. The consolidated company-wide adjusted loss from continuing operations before income taxes was $105.1 million during the first quarter of 2013, compared to a loss of $114.3 million during the same quarter a year ago.
Management Reaffirms Full-Year Outlook
The Company continues to expect company-wide net sales to increase by approximately 1 to 3 percent in fiscal 2013 on flat unit volume, modest price increases in its core business and the continued strong performance of Scotts LawnService.
The Company reaffirmed its expectations for fiscal 2013 adjusted earnings per share from continuing operations in the range of $2.50 to $2.75. In addition, the Company continues to expect operating cash flow of at least $250 million for the year.
"Our immediate focus is to leverage our cost structure with an eye toward margin improvement, reduced SG&A and improved cash flow," said Hagedorn. "And we are taking a balanced approach in how we invest for long-term growth. I am confident in the plan we have put in place and believe our shareholders will begin to see significant improvement starting in the second half of the year."
Conference Call and Webcast Scheduled for 9 a.m. ET Today, Feb. 6
The Company will discuss its results during a webcast and conference call today at 9 a.m. Eastern Time. Conference call participants should call 1-866-682-3515 (Conference ID: 88031745). A webcast of the call will be available live at http://investor.scotts.com. An archive of the webcast, as well as accompanying financial information regarding any non-GAAP financial measures discussed by the Company during the call, will be available on the website for at least 12 months.
About ScottsMiracle-Gro
With more than $2.8 billion in worldwide sales, The Scotts Miracle-Gro Company, through its wholly-owned subsidiary, The Scotts Company LLC, is the world's largest marketer of branded consumer products for lawn and garden care. The Company's brands are the most recognized in the industry. In the U.S., 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 North America and most of Europe exclusively by Scotts and owned by Monsanto. In the U.S., we operate Scotts LawnService®, the second largest residential lawn care service business. In Europe, the Company's brands include Weedol®, Pathclear®, Evergreen®, Levington®, Miracle-Gro®, KB®, Fertiligene® and Substral®. For additional information, visit us at www.scotts.com.
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," "estimate," "forecast," "strategy," "may," "goal," "expect," "anticipate," "intend," "plan," "foresee," "likely," "will," "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.
2012
2011
* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.