The Scotts Miracle-Gro Company (NYSE:SMG) has announced that the company has had a strong first quarter increasing sales by 35% following a strong performance in consumer business in the U.S. and the acquisition of Hawthorne segment.
The loss in the first quarter
The company had GAAP operating loss of $1.49 per share compared to the $0.35 per share in FY2018 when the company had a $42 million net tax benefit as a result of the 2018 federal tax reform. The adjusted non-GAAP loss was $1.39 per share relative to last year’s $1.08 and the year-over-year decline is was a result of operating items anticipated to reverse at the end of the year and also the positive non-operating items that impacted negatively in a loss quarter.
Since the garden and lawn category is seasonal the company normally reports a loss in the first quarter of each year and therefore the EPS guidance of the company relies on adjusted non-GAAP results.
Jim Hagedorn, the CEO, and Chairman stated that the company’s operating results were within the expected line and that they were encouraged with the engagement level with the largest retail partners as the company prepares for the garden and lawn season in 2019.
Looking forward to the season the CEO indicated that their strong retail support combination and ground-breaking innovations such as the Ortho GroundClear and the Miracle-Gro Performance Organics as well as an increase in investment gives them a chance to have a productive year.
Similarly, the Hawthorne performance is very encouraging as the company looks to leverage the growing Hydroponics business in the U.S. in the first half of Q1. The company indicates that the sunlight acquisition integration is on track and coupled with cost-saving gives them the confidence to continue their bullish outlook.
Q1 2019 sales were 35% up and the company reported $298.1 Million up from $221.5 million last year. The Hawthorne segment was up 84% at $140.8 million largely due to the acquisition of sunlight supply. The non-GAAP and GAA gross adjusted margins were 12.4% and 11.6% respectively.