MARYSVILLE, Ohio, June 16 /PRNewswire-FirstCall/ -- The Scotts Miracle-Gro Company (NYSE: SMG), the world's leading marketer of branded consumer lawn and garden products, today updated its financial outlook for fiscal 2010 based on strong continued demand for its products in the United States. The Company said it expects adjusted earnings for fiscal 2010 to be in a range of $3.25 to $3.35 per share.
The Company expects sales growth to range from 5 to 7 percent for the full year and gross margins to improve by up to 100 basis points. It also reaffirmed its outlook that free cash flow would be at least $200 million.
Consumer purchases of the Company's products in the U.S., as measured by point-of-sale data from its largest retail partners, have increased more than 6 percent on a fiscal year-to-date basis through the first weekend of June. Improvements were posted in every major product category. This growth has been led by consumer purchases of growing media products, which have improved 10 percent year-to-date on the continued strength of gardening activities.
In early May, the Company said it expected earnings to be at least $3.25 per share, compared with adjusted earnings per share of $2.62 a year ago.
"Consumers remain engaged in our category and we continue to believe we are gaining market share," said Jim Hagedorn, chairman and chief executive officer. "Consumer engagement in May remained strong even though year-over-year consumer purchases declined from their exceptionally high levels in 2009. We expected May comparisons to be challenging, however, and now that we have cleared the peak of our season, we believe it is appropriate to establish a tighter range around our outlook."
In addition to the strength of the Global Consumer segment, the Company continues to expect Scotts LawnService to report strong earnings improvement despite lower year-over-year revenue. Global Professional unit volumes continue to trend positive and operating income for the segment is expected to be sharply higher in the second half of the fiscal year. In both Global Professional and Global Consumer, foreign currency issues remain insignificant and are not expected to have a material negative impact on full-year results.
"This has been another robust lawn and garden season and our team has done an outstanding job working with our retail partners and driving consumer engagement," Hagedorn said. "Our outlook suggests adjusted earnings per share growth of at least 25 percent from last year – quite a feat given the sluggishness that remains in other categories. In addition, we are well-positioned with continued strong cash flows and a healthy balance sheet to both invest in future growth while still exploring other shareholder-friendly activities in the months ahead."
With approximately $3 billion in worldwide sales, The Scotts Miracle-Gro Company, through its wholly-owned subsidiary, The Scotts Company LLC, is the world's largest marketer of branded consumer products for lawn and garden care, with products for professional horticulture as well. The Company's brands are the most recognized in the industry. In the U.S., the Company's Scotts®, Miracle-Gro® and Ortho® brands are market-leading in their categories, as is the consumer Roundup® brand, which is marketed in North America and most of Europe exclusively by Scotts and owned by Monsanto. In the U.S., we operate Scotts LawnService®, the second largest residential lawn care service business. In Europe, the Company's brands include Weedol®, Pathclear®, Evergreen®, Levington®, Miracle-Gro®, KB®, Fertiligene® and Substral®. For additional information, visit us at www.scotts.com.
Statement under the Private Securities Litigation Act of 1995: Certain of the statements contained in this press release, including, but not limited to, information regarding the future economic performance and financial condition of the Company, the plans and objectives of the Company's management, and the Company's assumptions regarding such performance and plans are forward looking in nature. Actual results could differ materially from the forward-looking information in this release due to a variety of factors, including, but not limited to:
- The ongoing governmental investigations regarding the Company's compliance with the Federal Insecticide, Fungicide, and Rodenticide Act of 1947, as amended, could adversely affect the Company's financial condition, results of operations or cash flows;
- Compliance with environmental and other public health regulations could increase the Company's costs of doing business or limit the Company's ability to market all of its products;
- Increases in the prices of certain raw materials could adversely affect the Company's results of operations;
- The Company faces risks related to the current economic crisis;
- The highly competitive nature of the Company's markets could adversely affect its ability to grow or maintain revenues;
- Because of the concentration of the Company's sales to a small number of retail customers, the loss of one or more of, or significant reduction in orders from, its top customers could adversely affect the Company's financial results;
- Adverse weather conditions could adversely impact financial results;
- The Company's historical seasonality could impair its ability to pay obligations as they come due, including the Company's operating expenses;
- The Company's substantial indebtedness could limit its flexibility and adversely affect its financial condition;
- The Company's significant international operations make the Company susceptible to fluctuations in currency exchange rates and to other costs and risks associated with international regulation;
- The Company may not be able to adequately protect its intellectual property and other proprietary rights that are material to the Company's business;
- The Company depends on key personnel and may not be able to retain those employees or recruit additional qualified personnel;
- If Monsanto Company were to terminate the Marketing Agreement for consumer Roundup products without being required to pay any termination fee, the Company would lose a substantial source of future earnings and overhead expense absorption;
- Hagedorn Partnership, L.P. beneficially owns approximately 31% of the Company's outstanding common shares on a fully diluted basis and can significantly influence decisions that require the approval of shareholders, whether or not such decisions are in the best interest of other shareholders or the holders of the Company's 7.25% coupon rate Senior Notes due 2018;
- The Company may pursue acquisitions, dispositions, investments, dividends, share repurchases and/or other corporate transactions that it believes will maximize equity returns of our shareholders but may involve risks.
Additional detailed information concerning a number of the important factors that could cause actual results to differ materially from the forward-looking information contained in this release is readily available in the Company's publicly filed quarterly, annual and other reports.
SOURCE The Scotts Miracle-Gro Company