MARYSVILLE, Ohio – The Scotts Miracle-Gro Company (NYSE:SMG) recently announced fiscal first quarter results in line with the Company’s expectations and said it is well-prepared for the upcoming 2015 lawn and garden season.
Net sales in the three months ended Dec. 27, 2014 increased 14 percent to $216.2 million, compared to $189.6 million during the same quarter a year ago. The year-over-year increase was primarily due to acquisitions, partially offset by the unfavorable impact of foreign exchange rates. Excluding the impact of foreign exchange, sales increased 17 percent. The first quarter typically accounts for less than 10 percent of full-year revenue and about 5 percent of consumer purchases.
“The combination of new product introductions, continued consumer engagement, strong retailer support, and solid execution by our team leaves us well-positioned for the 2015 season,” said Jim Hagedorn, chairman and chief executive officer. “We are on plan with initiatives designed to drive growth in our Global Consumer and Scotts LawnService segments, as well as to extend into adjacent and emerging categories. We continue to take the right steps to grow the business with a focus on driving total shareholder return.”
By segment, Global Consumer sales increased 18 percent to $163.6 million during the quarter, compared to $138.4 million a year ago, primarily due to the Company’s consolidation of its investment in AeroGrow International, as well as the recent acquisition of Fafard & Brothers in Quebec. Scotts LawnService sales were up 1 percent to $46.7 million in the first quarter, compared to $46.3 million during the same quarter a year ago.
The adjusted company-wide gross margin rate was 13.6 percent in the quarter, compared with 17.9 percent a year ago. The year-over-year change was primarily attributable to negative mark-to-market adjustments of $7.8 million for U.S. Consumer and Scotts LawnService fuel hedges, for which the Company expects to realize offsetting future savings from 2015 fuel purchases.
Excluding mark-to-market adjustments for fuel hedging, the adjusted company-wide gross margin rate would have been 17.2 percent.
“We continue to expect the year-over-year gross margin rate to be flat, benefiting from various cost-out initiatives but offset by modest cost pressures coming from inputs like grass seed and peat,” said Randy Coleman, chief financial officer. “The accounting adjustments related to our fuel hedging program should normalize by the end of the third quarter.”
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