Scotts Miracle-Gro Co., Marysville, Ohio, posted a first-quarter profit for the first time in history. The company historically records a loss for its first-quarter.
Scotts income from continuing operations of $25.2 million ($0.43 per diluted share) for the first-quarter ending Jan. 2, 2021, was up 135 percent over the year-ago loss of $71.3 million ($1.28 per share) for the quarter that ended Dec. 28, 2020. However, due to the company’s financial calendar, first-quarter 2021 included five more days than the year-ago quarter.
First-quarter sales were up 105 percent to $748.6 million from the year-ago $365.8 million.
“While we anticipated a strong start to fiscal 2021, both the U.S. Consumer and Hawthorne segments surpassed our expectations and put us on a good trajectory for the balance of the year,” said Jim Hagedorn, Scotts Chairman and CEO.
“In U.S. Consumer, we are working closely with our retail partners as they prepare for the upcoming growing season. And Hawthorne continues to demonstrate its best-in-class performance within its industry, working with retailers and growers to help drive their success,” he said.
U.S. Consumer profits were up 213 percent to $45.3 million from the year-ago loss of $40.1 million, while sales were up 147 percent, to $408.2 million from $165.5 million.
Hawthorne profits were up 223 percent, to $40.4 million from the year-ago $12.5 million, while sales were up 71 percent to $309.4 million from $180.7 million.
The company has boosted overall fiscal year sales growth projections to 1-6 percent from 0-5 percent. “Our strong start gives us renewed confidence in our full-year outlook although we remain sensitive to the challenges in the second half of the fiscal year against historic comparisons,” Hagedorn added.
“We now believe we have enough visibility, however, to raise our full-year sales growth outlook for Hawthorne to a range of 20 to 30 percent, compared with our previous outlook of 15 to 20 percent. Despite the historically strong start in U.S. Consumer, it remains too early in the season to adjust our outlook for that business,” he continued. U.S. Consumer sales guidance remains at 0 to minus 5.
Scotts reaffirmed fiscal year adjusted earnings per share projections of $8.00-$8.40.
Hagedorn said the company continues to strengthen its relationship with gardeners, including plans for its first commercial especially produced for the Super Bowl. It is expected to run during the second half of the Feb. 7 game. “That kind of reach, coupled with our data-driven and highly targeted approach to social media, is key in our efforts to retain the millions of new consumers who have entered our category over the past year.”
“We’ve been engaging with consumers throughout the winter, spending three times more in media last quarter than we have ever at this point in the year,” Hagedorn said in the company earnings call. “Keeping those consumers engaged and motivated is the goal of the Super Bowl initiative, which is part of an eight-week kickoff to the biggest lawn and garden season ever.”
Hagedorn added that first-quarter results were a bit tempered by increased marketing spending, as well as the impact of emerging input costs. However, the company said it is 75 percent locked in for the year with respect to input costs, and it is looking at building inventory over the second half to better fulfill customer needs.
“So as we are looking to build our own inventory, our forecast went up, which will require more urea, resin, and just internal distribution costs that we originally built into the forecast. Those are the areas where we’re seeing some pressure,” said Cory Miller, Vice President of Finance.