ScottsMiracle-Gro Announces Record Full Year Results, Outlines 2022 Guidance, Announces Share Repurchases Of $300M

On Wednesday Scotts Miracle-Gro SMG released record full-year financial results driven by a company-wide sales increase of 19% to $4.93 billion, compared with $4.13 billion a year earlier and continued growth in all major operating segments.

Based in Marysville, Ohio, the company also revealed that company-wide sales in the fourth quarter of fiscal 2021 declined by 17% to $737.8 million.

Moreover, U.S. consumer segment sales rose by 11% in fiscal 2021, despite a fourth-quarter decline of 28% to $369.4 million.

"The continued engagement by consumers throughout the lawn and garden season drove full-year U.S. Consumer sales 11 percent higher on a full-year basis on top of last year's 25 percent growth," stated Jim Hagedorn, Miracle-Gro's chairman and CEO, on the financial results.

Q4 2021 Financial Highlights

• Sales for the Hawthorne segment declined 2% to $329.1 million due to declines in the European and Canadian businesses.
• The GAAP and non-GAAP adjusted gross margin rate was 17.1% and 17.4%, respectively, compared with 24.3% in the prior year.
• Selling, general and administrative expenses were $161.2 million, a 21% decrease from 2020.
• Interest expense increased nearly $5 million on a year-over-year basis to $21.6 million.
• The leverage ratio at the end of the quarter was roughly 2.7 times the average debt-to-EBITDA.
• Loss from continuing operations of $48.7 million, or $0.87 per share, compared with income from continuing operations of $4.2 million, or $0.07 per diluted share.
• The non-GAAP adjusted loss in the quarter, which excluded impairment, restructuring, as well as other non-recurring items, was $45.5 million, or $0.82 per share, compared with adjusted net income of $3.5 million, or $0.06 per diluted share in 2020.

Fiscal 2021 Financial Highlights

• Hawthorne sales increased 39% to $1.42 billion due to strong growth in all category segments in both emerging and legacy markets.
• GAAP gross margin rate on a year-to-date basis was 29.8%.
• Non-GAAP adjusted rate was 30.3%.
• Selling, general and administrative expenses were $743.5 million, a 2% decrease from 2020.
• Interest expense was essentially flat at $78.9 million.
• GAAP income from continuing operations was $517.3 million, or $9.03 per diluted share, compared with $386.9 million, or $6.78 per diluted share in the prior year.
• Non-GAAP adjusted earnings, which excluded impairment, restructuring
• as well as other non-recurring items were $527.7 million, or $9.23 per diluted share, compared with $411.7 million, or $7.24 per diluted share a year ago.
• Free cash flow, defined as operating cash flow minus capital expenditures, was $165 million.

Fiscal 2022 Outlook

• Company-wide sales are expected to grow between 0 to 3%.
• U.S. segment sales are expected to be 0 to minus 4%.
• Hawthorne sales are expected to grow roughly 8 to 12% in the last six months of the year.
• Non-GAAP adjusted earnings per share are anticipated to be in a range of $8.50 to $8.90.
• Selling, general and administrative expenses were expected in a range of minus 6 to plus 1%.
• Interest expense is expected to increase by approximately $25 million.

"As we look to fiscal 2022, we have continued confidence in our strategy and ability to drive long-term shareholder value," Hagedorn continued. "We expect to continue pursuing acquisition opportunities throughout the year and remain committed to using our financial flexibility to return cash to shareholders. That is why, in addition to the $113 million of share repurchases in fiscal '21, we plan to repurchase as much as another $300 million in 2022."

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• Scotts Miracle-Gro To Acquire Rhizoflora's Cannabis Nutrients Business For $33.5M

SMG Price Action

ScottsMiracle-Gro's shares moved 2% higher at $149.99 per share during the pre-market session on Wednesday morning.

Photo: Courtesy of Nataliya Vaitkevich from Pexels