The Scotts Miracle-Gro Co., Marysville, Ohio, reported a huge boost in net income and revenues for the second quarter ending March 30, 2019. Net income was $396.4 million ($7.09 per diluted share) on revenues of $1.19 billion, up from the year-ago $149 million ($2.59 per share) and $1.01 billion, respectively.
Scotts said the sales increase was company-wide, and was driven by the acquisition of Sunlight Supply and volume growth in both major business segments. Consumer purchases of its core lawn and garden products at its largest retailers in the U.S. increased by 13 percent.
The quarter also benefited from $259.8 million from the company’s divestiture of its minority stake in TruGreen (GM March 22, p. 27). In addition, Scotts said it recently sold its ownership stake in a joint venture of a professional U.S. industrial, turf, and ornamental herbicide company to Bayer for $37 million. Also, after the quarter, it said Bayer agreed to reimbursements of $20 million related to incremental expenses that the company has incurred and will incur later this year related to its Roundup business.
“Consumers came flying out of the gate compared with last year to get a head start on the lawn and garden season,” said Scotts Chairman and CEO Jim Hagedorn. “We’ve seen strong consumer engagement in every region, in every channel of retail, and in nearly every product category in which we compete. Innovation has helped drive double-digit increases in lawn food, grass seed, and growing media products, while retailer support led to over a 30 percent increase in consumer purchases of mulch. In addition, consumer purchases of non-selective weed control also are well ahead of last year, including a more than 20 percent increase in Roundup purchases.
“In Hawthorne, shipments increased double digits on a comparative basis in every month of the quarter, and again in April,” said Hagedorn. “We’re seeing consistent growth in both durable and consumable products, and solid performance in both new and established markets.
“Our strong start in both businesses gives us increased confidence in our full-year guidance and increases the probability that sales growth for the full year could exceed our original guidance range of 10 to 11 percent,” Hagedorn added.
The company reaffirmed annual adjusted earnings per share guidance of $4.10-$4.30.
The company told analysts that it has locked in 90 percent of this year’s commodity purchases, and that they have come in as expected.
Second-quarter U.S. Consumer profit was up 12 percent, to $320 million on sales of $993.5 million from the year-ago $286.2 million and $920.2 million, respectively. Hawthorne profit was $10.3 million on sales of $144.1 million, up from a year-ago loss of $4.8 million and $41.8 million, respectively.
Six-month net income was $316.8 million ($5.67 per share) on revenues of $1.49 billion, compared to the year-ago $127.8 million ($2.20 per share) and $1.23 billion, respectively.
Six-month U.S. Consumer profits were $277 million on sales of $1.13 billion, up from $248.3 million and $1.05 billion, respectively. Hawthorne profits were $14.7 million on sales of $284.8 million, up from a year-ago loss of $3 million on sales of $118.5 million.