The Scotts Miracle-Gro Co. unveiled results for its fiscal second quarter. It reported adjusted income from continuing operations increased 38 percent and said the results were driven by increased sales, continued margin expansion and strong control of operating expenses.
Moreover, net sales were $1.08 billion for the quarter—an increase of 7 percent compared to $1.01 billion a year ago—due to strong initial sell-in to retailers.
“We remain optimistic about our prospects this season and continue to expect adjusted earnings per share of $3.05 to $3.20 for the full year,” said Jim Hagedorn, chairman and CEO.
Scotts LawnService sales were down 12 percent to $28.9 million in the second quarter, compared to $32.9 million a year ago, primarily due to a delay in the start of the spring season. The segment also reported an operating loss of $20.3 million for the quarter, compared with a loss of $17.0 million during the same quarter a year ago.
For the quarter, the consolidated company-wide adjusted income from continuing operations before income taxes was $211.2 million during the second quarter, compared to $154.2 million a year ago.
The adjusted company-wide gross margin rate was 40.1 percent, compared with 37.4 percent a year ago, and selling, general and administrative expenses (SG&A) increased $6 million to $212.2 million during the second quarter, compared to $206.7 million a year ago.
Adjusted income from continuing operations for the second quarter increased to $136.7 million, or $2.17 per share, which excludes impairment, restructuring and other charges, as well as one-time costs related to financing. That compares with adjusted income of $99.3 million, or $1.59 per share, last year. On a GAAP basis, income from continuing operations was $125.7 million, or $2.00 per share, compared with $99.1 million, or $1.59 per share, a year ago.
Year-to-date details
Net sales for the first six months of fiscal 2014 were $1.27 billion, an increase of 6 percent from $1.2 billion a year ago. The year-over-year change was attributable to increased sales in the global consumer segment, the company reported, primarily due to strong retailer support, targeted pricing and the acquisition of the Tomcat consumer rodent control business. For the first six months of the year, Scotts LawnService sales were down 3 percent, primarily due to a delayed start to the season.
The adjusted company-wide gross margin rate for the first six months increased 290 basis points to 36.8 percent, compared to 33.9 percent a year ago, primarily due to planned cost reductions, targeted pricing and increased sales volume due to strong sell-in to retailers. The increased sales volume drove favorable product mix and improved leverage on fixed costs.
SG&A increased $6 million to $336.6 million for the first six months.
Adjusted income from continuing operations was $71.1 million, or $1.13 per share, for the first six months of the year, compared to $30.8 million, or $0.49 per share, during the same period a year ago. Those results exclude impairment, restructuring and other charges, as well as one-time costs related to financing. Including those items, reported income from continuing operations for the first six months of fiscal 2014 was $59.9 million, or $0.95 per share, compared with $30.8 million, or $0.49 per share, a year ago.
