Scotts posts $22 million loss

The Scotts Miracle-Gro Company reported sales gains in the fourth quarter and full fiscal year, as well as a satisfactory report on its strategic growth plan progress.

The growth, says Scotts, was driven by ongoing consumer demand for core products, margin improvement and double-digit growth in hydroponics.

“This was an outstanding season and a giant step forward in the execution of our long-term strategic plan,” said Jim Hagedorn, chairman and CEO. “Not only did our core business have an exceptional recovery after weather-related challenges at the peak of the season, we also completed the joint venture between Scotts LawnService and TruGreen, closed on two major hydroponics acquisitions and created a new partnership with Bonnie Plants."

"As we enter Year 2 of ‘Project Focus,’ we will continue with the reconfiguration of our portfolio to add emphasis on our core U.S. consumer business and emerging high-growth opportunities under the Hawthorne Gardening Company umbrella," added Hagedorn.

Net sales were up 7% in the fourth quarter ended Sept. 30 to $402.3 million.

However, Scotts reported a net loss of $21.9 million, which is a slight improvement over the year-ago quarter's $24.6 million loss.

“The only area of disappointment in the quarter was related to operating results from our joint venture with TruGreen,” Hagedorn said. “Lower-than-expected sales caused a higher level of dilution than we had expected, however, the business remains on track to achieve the cost synergies outlined when the JV was announced.”

For the full year, net sales were up 4% to $2.84 billion, and positive net income of $319.8 million was up from the previous year's $158.7 million.

Meanwhile, company-wide full-year gross margin improved 180 basis points

The company issued its 2017 guidance, which anticipates adjusted EPS of $4.10 to $4.30 on sales growth of 6% to 7%.

“Overall, we remain optimistic about our company-wide growth prospects for 2017 and remain on track to achieve our long-term operating margin goal of 18%,” said Hagedorn.