ScottsMiracle-Gro Reduces Outlook for Gross sales and Non-GAAP Adjusted EPS Regardless of Sturdy Restoration in Client Garden & Backyard Participation

MARYSVILLE, Ohio, June 08, 2022 (GLOBE NEWSWIRE) — The Scotts Miracle-Gro Firm (NYSE: SMG), the world’s main marketer of branded shopper garden and backyard in addition to indoor and hydroponic rising merchandise, stated shopper purchases of its core garden and backyard manufacturers surged in Could with unit quantity now trending in the direction of the Firm’s authentic assumptions for the season. Nonetheless, a wide range of elements prompted the Firm to decrease its outlook for each gross sales and adjusted earnings for fiscal 2022.

Client purchases on the Firm’s largest retail companions had been at near-record ranges in Could, leading to year-to-date POS that’s roughly 6 p.c decrease in {dollars} and 9 p.c decrease in models than a 12 months in the past. The year-over-year decline on the finish of Could was half of what it had been coming into the month on account of robust leads to all main markets within the Midwest and Northeast.

“The latest enchancment in shopper engagement has POS models trending towards our preliminary expectations and we anticipate additional beneficial properties because the 12 months continues,” stated Jim Hagedorn, chairman and chief govt officer. “POS {dollars}, nonetheless, will doubtless fall in need of our preliminary assumption of flat from 2021 ranges due primarily to above common declines in garden fertilizer and grass seed, which command larger costs and margins but additionally are usually extra vulnerable to poor spring climate. Whereas there stays sufficient time within the 12 months to see continued enchancment in our controls and gardening classes, that’s not prone to be the case with a lot of the merchandise in our garden care portfolio.

“Additionally, whereas it’s encouraging that customers have demonstrated garden and backyard exercise stays an essential a part of their way of life, we didn’t see the replenishment orders we anticipated from our retailer companions since mid-Could. In truth, retailer orders had been greater than $300 million beneath our plans for the month within the U.S. Client section alone. This shocking development has put considerably better stress on our mounted price construction that, when coupled with the commodity price will increase we’ve got skilled for the reason that begin of the struggle in Ukraine, will trigger us to fall nicely in need of the revised monetary targets we established in March.”

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Adjusted earnings per share are actually anticipated in a variety of $4.50 to $5.00. U.S. Client gross sales are anticipated to say no 4 to six p.c. Hawthorne gross sales are actually anticipated to say no 40 to 45 p.c for the 12 months ending September 30, 2022. Coming into Could, Hawthorne gross sales had begun to indicate indicators of strengthening however momentum within the enterprise slowed once more in the course of the month as anticipated enchancment in out of doors cultivation has been gradual to materialize.

“The adjustments we’ve got seen since our final public feedback in early Could are clearly not what we’d have anticipated,” Hagedorn stated. “The revised steering we’re offering is our greatest estimate of the place issues at present stand in a fluid and quickly evolving market. Whereas we’re striving to ship the most effective end result for fiscal 2022, our focus is shifting towards the long run. We’re dedicated to taking decisive steps to enhance our margins and money circulation in fiscal 2023 and get the enterprise again to a stage of efficiency that our shareholders rightfully anticipate.”

The Firm additionally stated it’s engaged in extremely productive discussions with its lenders to acquire a brief improve within the leverage ratio allowed below a revised credit score facility.

“We’ve got acknowledged for years that our consolation zone for leverage is 3.5 occasions debt-to-EBITDA and present facility permits for leverage as much as 4.5 occasions,” stated Cory Miller, govt vice chairman and chief monetary officer. “Given the exterior elements at present impacting the enterprise, we’re searching for to regulate our debt covenants to permit for as much as two further turns of leverage within the near-term to take care of the suitable stage of flexibility in navigating the present market circumstances. Clearly, we’re centered on implementing aggressive plans to enhance money circulation, cut back debt, and return leverage to our goal ranges as rapidly as doable.”

Over the previous month, the Firm additionally has moved aggressively to cut back full-year SG&A by way of a collection of organizational adjustments that created operational and management-level efficiencies.

“The decisive steps we’ve got taken to cut back bills will lead to a year-over-year decline of 12 to 13 p.c in SG&A for fiscal 2022,” Miller stated. “We’d anticipate to incur restructuring prices in each the third and fourth fiscal quarters on account of these actions which we’d take away from our adjusted earnings for the 12 months, according to our long-held practices associated to those non-recurring prices.”

The Firm will present extra commentary tomorrow, June 9, when it participates within the William Blair 42^nd Annual Progress Convention in Chicago. A webcast will probably be accessible at http://investor.scotts.com starting at 1:40 p.m. EDT.

About ScottsMiracle-Gro
With roughly $4.9 billion in gross sales, the Firm is among the world’s largest entrepreneurs of branded shopper merchandise for garden and backyard care. The Firm’s manufacturers are among the many most acknowledged within the trade. The Firm’s Scotts ®, Miracle-Gro® and Ortho® manufacturers are market-leading of their classes. The Firm’s wholly-owned subsidiary, The Hawthorne Gardening Firm, is a number one supplier of vitamins, lighting and different supplies used within the indoor and hydroponic rising section. One other wholly-owned subsidiary, The Hawthorne Collective, has been established to put money into rising areas of the hashish trade. For extra info, go to us at www.scottsmiraclegro.com.

Cautionary Be aware Relating to Ahead-Wanting Statements
Statements contained on this press launch, apart from statements of historic truth, which tackle actions, occasions and developments that the Firm expects or anticipates will or could happen sooner or later, together with, however not restricted to, info concerning the long run financial efficiency and monetary situation of the Firm, the plans and targets of the Firm’s administration, and the Firm’s assumptions concerning such efficiency and plans are “forward-looking statements” throughout the which means of the U.S. federal securities legal guidelines which might be topic to dangers and uncertainties. These forward-looking statements typically may be recognized as statements that embody phrases comparable to “steering,” “outlook,” “projected,” “imagine,” “goal,” “predict,” “estimate,” “forecast,” “technique,” “could,” “purpose,” “anticipate,” “anticipate,” “intend,” “plan,” “foresee,” “doubtless,” “will,” “ought to” or different related phrases or phrases. Precise outcomes may differ materially from the forward-looking info on this launch on account of a wide range of elements, together with, however not restricted to:

• The continuing COVID-19 pandemic may have a cloth hostile impact on the Firm’s enterprise, outcomes of operation, monetary situation and/or money flows;

• Compliance with environmental and different public well being laws or adjustments in such laws or regulatory enforcement priorities may improve the Firm’s prices of doing enterprise or restrict the Firm’s potential to market all of its merchandise;

• Injury to the Firm’s fame or the fame of its merchandise or merchandise it markets on behalf of third events may have an hostile impact on its enterprise;

• If the Firm underestimates or overestimates demand for its merchandise and doesn’t keep applicable stock ranges, its internet gross sales and/or working capital could possibly be negatively impacted;

• If the Firm is unable to successfully execute its e-commerce enterprise, its fame and working outcomes could also be harmed;

• Due to the focus of the Firm’s gross sales to a small variety of retail prospects, the lack of a number of of, or vital discount in orders from, its high prospects may adversely have an effect on the Firm’s monetary outcomes;

• Local weather change and unfavorable climate circumstances may adversely influence monetary outcomes;

• Sure of the Firm’s merchandise could also be bought to be used in new or rising industries or segments and/or be topic to various, inconsistent, and quickly altering legal guidelines, laws, administrative practices, enforcement approaches, judicial interpretations and shopper perceptions;

• The Firm’s operations could also be impaired if its info expertise techniques fail to carry out adequately or if it’s the topic of a knowledge breach or cyber-attack;

• The Firm could not have the ability to adequately shield its mental property and different proprietary rights which might be materials to the Firm’s enterprise;

• Within the occasion the Third Restated Advertising and marketing Settlement for shopper Roundup merchandise terminates, or Monsanto’s shopper Roundup enterprise materially declines the Firm would lose a considerable supply of future earnings and overhead expense absorption;

• Hagedorn Partnership, L.P. beneficially owns roughly 26% of the Firm’s widespread shares and may considerably affect selections that require the approval of shareholders;

• Acquisitions, different strategic alliances and investments may lead to working difficulties, dilution and different dangerous penalties which will adversely influence the Firm’s enterprise and outcomes of operations.

Extra detailed info regarding quite a lot of the essential elements that might trigger precise outcomes to vary materially from the forward-looking info contained on this launch is available within the Firm’s publicly filed quarterly, annual and different studies. The Firm disclaims any obligation to replace developments of those danger elements or to announce publicly any revision to any of the forward-looking statements contained on this launch, or to make corrections to mirror future occasions or developments.

Contact:

Kelly Berry
Vice President, Investor Relations
937-578-1598