Marysville, Ohio — Scotts Miracle-Gro Co. net sales were up 4 percent in the second quarter ending March 31, 2012, to $1.17 billion, up from the year-ago $1.13 billion;
however, net income was off 28 percent to $127.2 million ($2.05 per diluted share), compared to the year-ago $177.6 million ($2.63 per share). Adjusted EBITDA was off 11 percent, to $236.7 million from $267.3 million. “We are well positioned as we conclude the peak weeks of the lawn fertilizer season and move into the peak of gardening activity,” said Jim Hagedorn, Scotts chairman and CEO. “We have seen strong consumer engagement across the U.S. whenever the weather has cooperated, as evidenced by the 20 percent increase in consumer purchases for the second quarter.” Hagedorn said the company is on track to deliver full-year sales growth of 6-8 percent and earnings per share of $2.65-$2.85. He stressed to analysts that the company makes all of its money in the second half of the year, and that the company is ahead of internal targets. Six-month earnings were off 51 percent, to $53.3 million ($0.88 per share) on sales of $1.38 billion from the year-ago $109.7 million ($1.66 per share) on sales of $1.36 billion. Adjusted EBITDA was off 21 percent, to $152.1 million from $192.3 million. Wall Street was not impressed. Scotts shares fell 16.1 percent to close at $46.14 on May 8, the day of the earnings announcement, to a four-month low. It closed May 7 at $55.00. The company said demand in the last two weeks in March was “explosive,” and Hagedorn said the company was “barely hanging on” in order to meet demand. He said the company incurred some higher than expected distribution expenses to meet the early spike in demand. The company also saw disproportionate growth of some of its lower margin products, like mulch. He said the first week of May was the second biggest week in company history.
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