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Scotts Miracle-Gro (SMG) Beats Q4 Earnings & Sales Estimates

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The Scotts Miracle-Gro Company (SMG - Free Report) reported loss from continuing operations of $48.7 million or 87 cents per share in fourth-quarter fiscal 2021 (ended Sep 30, 2021) compared with a profit of $4.2 million or 7 cents per share in the year-ago quarter.

Barring one-time items, adjusted loss was 82 cents per share against an earnings of 6 cents a year ago. The figure was narrower than the Zacks Consensus Estimate of a loss of 85 cents.

Net sales went down 17.1% year over year to $737.8 million and beat the consensus mark of $673.8 million.

Company-wide gross margin rate (as adjusted) was 17.4% compared with 24.3% in the year-ago quarter.

The Scotts MiracleGro Company Price, Consensus and EPS Surprise

 

The Scotts MiracleGro Company Price, Consensus and EPS Surprise

The Scotts MiracleGro Company price-consensus-eps-surprise-chart | The Scotts MiracleGro Company Quote

 

Segment Details

In the fourth quarter, net sales in the U.S. Consumer division declined 28% year over year to $369.4 million. The segment reported a loss of $18.9 million against a profit of $46 million in the prior-year quarter. 

Net sales in the Hawthorne segment declined 2% year over year to $329.1 million in the reported quarter. The segment’s profits declined 20% year over year to $30.1 million.

Net sales in the Other segment fell 5% year over year to $39.3 million. The segment reported a loss of $2.4 million, narrower than a loss of $3.2 million a year ago in the year-ago quarter.

FY21 Results

Earnings (as reported) for fiscal 2021 were $9.03 per share compared with $6.78 per share a year ago. Net sales increased around 19% to roughly $4.93 billion.

Balance Sheet

At the end of the fourth quarter, the company had cash and cash equivalents of $244.1 million, up nearly 15-fold year over year. Long-term debt was $2,236.7 million, up 53.7% year over year.

Outlook

The company expects sales in the Hawthorne segment for fiscal 2022 to rise 8-12%. U.S. Consumer sales growth guidance is expected to be 0 to -4%. It expects company-wide sales growth of 0-3%.

The gross margin rate is projected to decline 100-150 basis points (bps) year over year. The company also expects adjusted earnings per share in the range of $8.50-$8.90 for the full year.

The company noted that the current over-supply of cannabis is expected to put negative pressure on its growth rate through the rest of the calendar year and into the second quarter at Hawthorne, at which point it expects a more normal growth rate.

Price Performance

Shares of Scotts Miracle-Gro have declined 7.2% in the past year against a 66.5% rise of the industry.

Zacks Investment ResearchImage Source: Zacks Investment Research

Zacks Rank & Key Picks

Scotts Miracle-Gro currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Nucor Corporation (NUE - Free Report) , The Chemours Company (CC - Free Report) and Olin Corporation (OLN - Free Report) .

Nucor has a projected earnings growth rate of around 583.5% for the current year. The company’s shares have soared 130.9% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chemours has an expected earnings growth rate of around 86.9% for the current year. The company’s shares have gained 30.6% in the past year. It currently carries a Zacks Rank #2 (Buy).

Olin has an expected earnings growth rate of around 740% for the current year. The company’s shares have surged 192.3% in the past year. It currently flaunts a Zacks Rank #1.