ScottsMiracle-Gro Announces Record Consumer Purchase Activity in May; Updates Financial Outlook for Fiscal 2018
- Consumer purchases surge 28% in May, year-to-date POS in line with year-ago levels
- Consumer purchases at home center and hardware channels now positive year-to-date
- Sales and non-GAAP adjusted EPS guidance reduced for Hawthorne, slow start to lawn and garden season
On a year-to-date basis through
The Company now expects reported full-year sales to be within a range of flat to 2 percent higher than year-ago levels compared with a previous range of 2 to 4 percent growth. This guidance assumes a decline in U.S. Consumer sales of 1 to 3 percent versus a previous projection of 0 to 2 percent growth. Sales in the Hawthorne segment are expected to increase 25 to 30 percent for fiscal 2018, driven by the recently completed Sunlight Supply acquisition. Excluding Sunlight, but including previous acquisitions, Hawthorne sales are expected to be slightly down from 2017.
Non-GAAP adjusted earnings are expected to range from
“The recovery in our U.S. Consumer business in May speaks to the strength of our brands, the resilience of the lawn and garden category and the continued support of consumers and our retail partners,” said
“While consumer purchases have been tracking positively for weeks, the combination of the slow start to the season and improved inventory planning by our retail partners is causing us to lower sales guidance for our U.S. Consumer segment. Our original guidance assumed there would be a 2-to-3 point gap between POS and our shipments, which is, in fact, what we’re seeing.”
The company also provided the following revisions to its full-year outlook:
- Selling, general and administrative expense (SG&A) is expected to be 0 to 2 percent higher than 2017 driven by the impact of the Sunlight deal and offset by benefits from restructuring, lower year-over-year variable compensation and other expense control measures.
- Interest expense is now expected to be roughly
$90 million, driven by higher borrowing levels associated with acquisitions, including Sunlight.
- Share repurchase activity through the third quarter is expected to exceed
$300 million, leading to a full-year diluted share count of approximately 57.5 million shares. The Company expects a modest level of repurchase activity during its fiscal fourth quarter.
Separately, the Company said it took actions last week resulting in annualized savings of
“In addition to tightly managing the P&L, we remain focused on strong working capital management and a free cash flow productivity target of at least 100 percent on a full-year basis,” said
ScottsMiracle-Gro management will be discussing the updated guidance and other strategic initiatives on
Forward Looking Non-GAAP Measures
In this release, the Company provides an outlook for 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,” “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:
- Acquisitions, other strategic alliances and investments could result in operating difficulties, dilution, and other harmful consequences that may adversely impact the Company’s business and results of operations;
- Compliance with environmental and other public health regulations or changes in such regulations or regulatory enforcement priorities could increase the Company’s costs of doing business or limit the Company’s ability to market all of its products;
- Disruptions in availability or increases in the prices of raw materials and fuel costs could adversely affect the Company’s results of operations;
- The highly competitive nature of the Company’s markets could adversely affect its ability to maintain or grow revenues;
- Because of the concentration of the Company’s sales to a small number of retail customers, the loss of one or more of, or significant reduction in orders from, its top customers could adversely affect the Company’s financial results;
- Climate change and unfavorable weather conditions could adversely impact financial results;
- Certain of our products may be purchased for use in new or emerging industries or segments and/or be subject to varying, inconsistent, and rapidly changing laws, regulations, administrative practices, enforcement approaches, judicial interpretations and consumer perceptions;
- The Company may not be able to adequately protect its intellectual property and other proprietary rights that are material to the Company’s business;
- In the event the Restated Marketing Agreement for consumer Roundup products terminates, we would lose a substantial source of future earnings and overhead expense absorption;
Hagedorn Partnership, L.P. beneficially owns approximately 26% of the Company’s common shares and can significantly influence decisions that require the approval of shareholders.
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.
Senior Vice President
Investor Relations & Corporate Affairs