ScottsMiracle-Gro: First Quarter Results, Increases Full-Year Sales Outlook for U.S. Consumer Segment

Scotts Miracle-Gro Company SMG announced financial results for its fiscal first quarter highlighted by a profitable quarter in the U.S. Consumer segment for only the second time in company history.

Company-wide sales in the quarter decreased 24% to $566.0 million, consistent with a pre-announcement of expected results issued on January 4. For the quarter ended January 1, 2022, the company reported a seasonal loss from continuing operations of $0.90 per share. The non-GAAP adjusted loss – which is the basis of the company’s guidance – was $0.88 per share.

“The U.S. Consumer segment continues to exceed our expectations and got off to a good start, especially given the difficult comparison from the 147 percent growth the segment reported in the first quarter a year ago,” Jim Hagedorn, chairman and chief executive officer stated. “Consumer purchases at our largest retail partners increased 3 percent in units for the quarter and 9 percent in dollars against 40 percent growth for each measure a year ago. The continued level of consumer and retailer support leaves us optimistic about the strength of the segment as we prepare for the upcoming lawn and garden season."

First Quarter Higlights
For the fiscal first quarter, the company reported sales of $566.0 million, down 24% from $748.6 million a year ago. First quarter sales for the Hawthorne segment decreased 38% to $190.6 million. The decline, which was against growth of 71% for the same period a year ago, had been previously announced and was driven primarily by an over-supply of cannabis grown in state-authorized markets that has led to a temporary decline in commercial cultivation activity. Supply chain disruptions also contributed to the decline. The segment reported a loss of $5.3 million in the quarter compared to income of $40.4 million a year ago.

U.S. Consumer segment sales decreased 16% to $342.4 million. The decline was better than expected given the 147 percent revenue growth in the first quarter a year ago. The segment reported income of $10.7 million, compared with the record result of $45.3 million a year ago. The result marked only the second time the segment has recorded a profit in the first quarter.

The Company said the better-than-expected result in U.S. Consumer, coupled with additional pricing actions that will take effect in the third quarter, is allowing it to increase full-year sales guidance in the segment to a range of plus 2 percent to minus 2 percent. This compares to a previous range of flat to minus 4 percent. The improved guidance does not require the Company to adjust its outlook for the balance of the lawn and garden season but allows it to maintain guidance for adjusted earnings per share despite its recently revised reduction in the full-year sales outlook for Hawthorne.

Hawthorne Restructuring
Separately, Scotts MiracleGro announced plans to consolidate U.S. lighting manufacturing for Hawthorne into a single location and to close another recently acquired assembly facility and move those operations to its Santa Rosa, California facility. A restructuring charge of up to $5 million is expected to be recorded in the second quarter and will be excluded from the Company’s full-year adjusted results.

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