Scotts Expects Modest Net Sales Growth for Fiscal 2014

CEO Jim Hagedorn outlines conservative approach to business
12/13/2013

MARYSVILLE, Ohio - The Scotts Miracle-Gro Company Dec. 13 said it expects company-wide net sales to increase by approximately 2 to 3 percent in fiscal 2014 on flat unit volume, strategic pricing, the recent acquisition of the Tomcat consumer rodent control business and the continued growth of its LawnService business.

An anticipated improvement in gross margin rate of approximately 100 basis points and an increase in selling, general & administrative expenses (SG&A) of approximately 3 to 4 percent is expected to result in adjusted earnings from continuing operations in the range of $3.05 to $3.20 per share, an increase of 10 to 15 percent, for fiscal 2014.

Operating margin rate is expected to be in the range of 12.5 to 13 percent in fiscal 2014.  Interest expense is forecasted to be lower by $5 to $7 million compared to fiscal 2013.  The effective tax rate for the year is projected to be in a range of 36 to 37 percent.

The Company's operating cash flow is expected to be approximately $275 million in fiscal 2014.

"We remain confident in the strength of our brands and continue to see commitment to the category from consumers and our retail partners," said Jim Hagedorn, chairman and chief executive officer.  "The guidance we have outlined assumes a conservative approach to the business, a philosophy we will continue to employ until we see a stronger macroeconomic outlook."

In addition, the Company is in the final phases of renegotiating its existing credit facility and expects to have it completed by the end of the calendar year. The amendment and extension will extend the facility's maturity through December 2018, decrease pricing and relax certain restrictive covenants. In addition, the Company announced it will exercise its call option on the $200 million of 7.25 percent senior notes issued in 2010. The Company expects the combination of these actions will reduce its overall cost of debt by approximately 60 basis points.

The Company held its Analyst & Investor Day Dec. 13, with a live webcast with presentation slides available on the investor relations section of the Company's website at http://investor.scotts.com.  The replay of the webcast and accompanying presentation slides will be available on the Company's website following the meeting.

With more than $2.8 billion in worldwide sales, The Scotts Miracle-Gro Company is the world's largest marketer of branded consumer products for lawn and garden care.