Press Release

• Global Consumer reports full-year sales and operating income increases of 6%
• Full-year sales and operating income increases 10% for Scotts LawnService
• Company-wide adjusted gross margin rate improved 140 basis points in Q4
• Company expects adjusted earnings per share of $3.75 to $3.95 in fiscal 2016
• Analyst and Investor Day meeting scheduled for December 10 in New York

MARYSVILLE, Ohio, Nov. 03, 2015 (GLOBE NEWSWIRE) -- The Scotts Miracle-Gro Company (NYSE:SMG), the world’s leading marketer of branded consumer lawn and garden products, today announced that sales in fiscal 2015 increased 6 percent on a company-wide basis driven by strong unit volume growth in its core U.S. consumer business.

Adjusted income from continuing operations for the year ended September 30, 2015 was $219.3 million, or $3.53 per share, compared with  $206.3 million, or $3.29 per share, a year earlier. Results exclude costs related to impairment, restructuring and other charges, and one-time costs related to financing.  Including those items, reported income from continuing operations for fiscal 2015 was $159.8 million, or $2.57 per share, compared with $165.7 million, or $2.64 per share, a year ago.

“A highly engaged consumer, strong retailer support, new product launches, and a dedicated team of associates allowed us to report our strongest results in years,” said Jim Hagedorn, chairman and chief executive officer. “In our core business, the gardening, controls and mulch categories all saw strong increases in consumer purchase activity, and Scotts LawnService continued to benefit from higher customer count, solid retention levels and record customer satisfaction scores.

“During the year, we also completed eight acquisitions, successfully renegotiated our Roundup agency agreement with Monsanto, increased our quarterly dividend and continued to streamline our executive ranks to improve efficiency. We’re well positioned as we start a new fiscal year and I’m confident that we continue to take the right steps to drive shareholder value.”

The Company provided initial financial guidance for fiscal 2016, projecting sales growth of 4 to 5 percent and adjusted earnings in the range of $3.75 to $3.95 per share.

Fourth-Quarter 2015 Details
Company-wide net sales increased 6 percent in the fourth quarter to $483.2 million, compared with $454.3 million during the same quarter a year ago. Organic volume contributed 2 points of growth, acquisitions added another 7 points and foreign exchange rates had a negative impact of 3 points.

Global Consumer segment sales increased 4 percent in the fourth quarter to $370.6 million. Sales in the U.S. increased 7 percent during the quarter.  Outside the U.S., sales increased 12 percent, excluding the impact of foreign exchange rates; including the impact of foreign exchange rates, sales decreased 4 percent. Scotts LawnService sales increased 13 percent to $107.8 million in the fourth quarter, compared with $95.0 million during the same quarter a year ago. 

The company-wide adjusted gross margin rate was 32.3 percent during the fourth quarter, compared with 30.9 percent during the same quarter a year ago. The year-over-year improvement was due primarily to manufacturing and other supply chain efficiencies.

A strong focus on expense control led to a 2 percent increase in SG&A in the fourth quarter to $158.0 million despite the impact of acquisitions.  

“Controlling SG&A was a major focus throughout the year and managers throughout the company excelled in not allowing expenses to creep back into the business,” said Randy Coleman, executive vice president and chief financial officer. “Our ability to continue improving our operating leverage will remain an important part of our plan for fiscal 2016 and beyond.”

The Global Consumer segment reported an operating loss of $1.1 million, compared with an operating loss of $7.8 million a year ago. Operating income for the Scotts LawnService segment increased 3 percent during the quarter to $28.1 million.
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Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the fourth quarter were $19.8 million, compared with $0.3 million a year ago.

Adjusted loss from continuing operations was $7.4 million in the fourth quarter, or $0.12 per share, compared with a loss of $10.8 million, or $0.18 per share a year ago. On a reported basis, reported loss from continuing operations for the fourth quarter was $23.6 million, or $0.38 per share, compared with a loss of $14.9 million, or $0.24 per share, a year ago.

Full-Year 2015 Details
Company-wide net sales increased 6 percent in 2015 to $3.02 billion, compared with $2.84 billion a year ago.  Global Consumer sales increased 6 percent to $2.70 billion compared with $2.55 billion a year ago.  Scotts LawnService sales increased 10 percent to $288.5 million compared with $263.0 million a year ago.

On an adjusted basis, the company-wide gross margin rate decreased 70 basis points to 35.6 percent for the year. The decline was attributable primarily to unfavorable product mix due to lower-than-expected lawn fertilizer sales, strength in mulch shipments and the first-year impact of acquisitions.

SG&A increased 3 percent to $698.4 million. The year-over-year increase was driven by acquisitions and offset by strong expense control and the benefits of previous restructuring efforts.

The Global Consumer segment reported a 6 percent increase in operating income to $466.2 million for fiscal 2015, compared to $438.8 million a year ago. Sales in the U.S. increased 8 percent during the year.  Outside the U.S., sales increased 14 percent, excluding the impact of foreign exchange rates; including the impact of foreign exchange rates, sales decreased 1 percent.  Scotts LawnService reported a 10 percent increase in operating income to $33.3 million compared with $30.2 million in fiscal 2014.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $471.8 million, an increase of 14 percent compared with $412.4 million a year ago. Cash flow from operations was $247 million.

“We’re confident that the strong performance we saw throughout our business in fiscal 2015 will carry into the upcoming season,” Hagedorn said. “The discussions we are having with our retail partners about the upcoming season have been encouraging and our entire organization has begun executing plans to make 2016 even stronger.”

Company to host Analyst/Investor Day meeting
ScottsMiracle-Gro will host its annual Analyst & Investor Day on Thursday, December 10th, 2015, at the Grand Hyatt Hotel in New York. Management presentations will begin at 9:00 a.m. EST followed by a luncheon that includes a Q&A session.  The presentations and Q&A session will be webcast live from the Company’s investor relations website at http://investor.scotts.com.

Institutional analysts and investors interested in attending the meeting should register through the Analyst & Investor Day event page also found on the Company’s investor relations website at http://investor.scotts.com or by calling 937.578.5968. Deadline to RSVP is December 1st, 2015.

Conference Call and Webcast Scheduled for 9:00 a.m. ET Today, Nov. 3
The Company will discuss its fiscal fourth quarter and full year 2015 results during a webcast and conference call today at 9:00 a.m. ET. Conference call participants should call 888-727-7725 (Conference Code: 7154087).  A replay of the call can be heard by calling 888-203-1112.  The replay will be available for 30 days.  The live webcast is available 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 12 months.

About ScottsMiracle-Gro
With more than $2.8 billion in worldwide sales, The Scotts Miracle-Gro Company 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®, Fertiligène® and Substral®. For additional information, visit us at www.scottsmiraclegro.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:

• Compliance with environmental and other public health regulations could increase the Company’s costs of doing business or limit the Company’s ability to market all of its products;
• 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;
• Adverse weather conditions could adversely impact financial results;
• The Company’s international operations make the Company susceptible to fluctuations in currency exchange rates and to other costs and risks associated with international regulation;
• The Company may not be able to adequately protect its intellectual property and other proprietary rights that are material to the Company’s business;
• If Monsanto Company were to terminate the Marketing Agreement for consumer Roundup products, the Company would lose a substantial source of future earnings and overhead expense absorption;
• Hagedorn Partnership, L.P. beneficially owns approximately 27% of the Company’s common shares and can significantly influence decisions that require the approval of shareholders;
• The Company may pursue acquisitions, dispositions, investments, dividends, share repurchases and/or other corporate transactions that it believes will maximize equity returns of its shareholders but may involve risks. 

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.

THE SCOTTS MIRACLE-GRO COMPANY
Net Sales and Income (Loss) from Continuing Operations before Income Taxes by Segment
(In millions)
(Unaudited)

The Company is divided into the following reportable segments: Global Consumer and Scotts LawnService®. This division of reportable segments is consistent with how the segments report to, and are managed by, the chief operating decision maker of the Company.

Segment performance is evaluated based on several factors, including income (loss) from continuing operations before amortization, impairment, restructuring and other charges, which is not a generally accepted accounting principle ("GAAP") measure. Senior management of the Company uses this measure of operating profit (loss) to evaluate segment performance because we believe this measure is the most indicative of performance trends and the overall earnings potential of each segment.

Corporate & Other consists of revenues and expenses associated with the Company’s supply agreements with Israel Chemicals Ltd. and the amortization related to the Roundup® Marketing Agreement, as well as corporate, general and administrative expenses and certain other income/expense items not allocated to the business segments.

Contact:
Jim King
Senior Vice President
Chief Communications Officer
937-578-5622

Scotts Miracle-Gro Company