Ohio | 001-11593 | 31-1414921 |
(State or other jurisdiction | (Commission | (IRS Employer |
of incorporation or organization) | File Number) | Identification No.) |
14111 Scottslawn Road, Marysville, Ohio | 43041 |
(Address of principal executive offices) | (Zip Code) |
Exhibit No. | Description |
99.1 | News release issued by The Scotts Miracle-Gro Company on February 6, 2013 |
THE SCOTTS MIRACLE-GRO COMPANY | |
Dated: February 6, 2013 | By: /s/ David C. Evans |
Printed Name: David C. Evans | |
Title: Chief Financial Officer and Executive Vice President, Strategy and Business Development |
Exhibit No. | Exhibit Description |
99.1 | News release issued by The Scotts Miracle-Gro Company on February 6, 2013 |
The Scotts Miracle-Gro Company | NEWS |
▪ | Net sales increased 3 percent for the first quarter to $205.8 million |
▪ | Consumer purchases at largest U.S. retailers increased 1 percent |
▪ | Company reaffirms full-year guidance for sales and adjusted EPS |
• | Compliance with environmental and other public health regulations could increase the Company's costs of doing business or limit the Company's ability to market all of its products; |
• | Increases in the prices of raw materials and fuel costs could adversely affect the Company's results of operations; |
• | The highly competitive nature of the Company's markets could adversely affect its ability to maintain or grow revenues; |
• | Because of the concentration of the Company's sales to a small number of retail customers, the loss of one or more of, or significant reduction in orders from, its top customers could adversely affect the Company's financial results; |
• | Adverse weather conditions could adversely impact financial results; |
• | The Company's international operations make the Company susceptible to fluctuations in currency exchange rates and to other costs and risks associated with international regulation; |
• | The Company may not be able to adequately protect its intellectual property and other proprietary rights that are material to the Company's business; |
• | The Company depends on key personnel and may not be able to retain those employees or recruit additional qualified personnel; |
• | If Monsanto Company were to terminate the Marketing Agreement for consumer Roundup products, the Company would lose a substantial source of future earnings and overhead expense absorption; |
• | Hagedorn Partnership, L.P. beneficially owns approximately 30% of the Company's common shares and can significantly influence decisions that require the approval of shareholders; |
• | The Company may pursue acquisitions, dispositions, investments, dividends, share repurchases and/or other corporate transactions that it believes will maximize equity returns of its shareholders but may involve risks. |
Three Months Ended | ||||||||||||||
Footnotes | December 29, 2012 | December 31, 2011 | % Change | |||||||||||
Net sales | $ | 205.8 | $ | 199.6 | 3 | % | ||||||||
Cost of sales | 174.7 | 174.0 | ||||||||||||
Gross profit | 31.1 | 25.6 | 21 | % | ||||||||||
% of sales | 15.1 | % | 12.8 | % | ||||||||||
Operating expenses: | ||||||||||||||
Selling, general and administrative | 124.5 | 122.5 | 2 | % | ||||||||||
Impairment, restructuring and other | (0.4 | ) | 2.4 | |||||||||||
Product registration and recall matters | — | 0.3 | ||||||||||||
Other income, net | (1.1 | ) | (0.6 | ) | ||||||||||
Loss from operations | (91.9 | ) | (99.0 | ) | 7 | % | ||||||||
% of sales | (44.7 | )% | (49.6 | )% | ||||||||||
Interest expense | 13.2 | 15.3 | ||||||||||||
Loss from continuing operations before income taxes | (105.1 | ) | (114.3 | ) | 8 | % | ||||||||
Income tax benefit from continuing operations | (36.8 | ) | (41.2 | ) | ||||||||||
Loss from continuing operations | (68.3 | ) | (73.1 | ) | 7 | % | ||||||||
Income (loss) from discontinued operations, net of tax | (3 | ) | 0.6 | (0.8 | ) | |||||||||
Net loss | $ | (67.7 | ) | $ | (73.9 | ) | ||||||||
Basic income (loss) per common share: | (1 | ) | ||||||||||||
Loss from continuing operations | $ | (1.11 | ) | $ | (1.20 | ) | 8 | % | ||||||
Income (loss) from discontinued operations | 0.01 | (0.01 | ) | |||||||||||
Net loss | $ | (1.10 | ) | $ | (1.21 | ) | ||||||||
Diluted income (loss) per common share: | (2 | ) | ||||||||||||
Loss from continuing operations | $ | (1.11 | ) | $ | (1.20 | ) | 8 | % | ||||||
Income (loss) from discontinued operations | 0.01 | (0.01 | ) | |||||||||||
Net loss | $ | (1.10 | ) | $ | (1.21 | ) | ||||||||
Common shares used in basic loss per share calculation | 61.4 | 60.9 | 1 | % | ||||||||||
Common shares and potential common shares used in diluted loss per share calculation | 61.4 | 60.9 | 1 | % | ||||||||||
Non-GAAP results from continuing operations: | ||||||||||||||
Adjusted loss from continuing operations | (4 | ) | $ | (68.5 | ) | $ | (71.4 | ) | 4 | % | ||||
Adjusted diluted loss per share from continuing operations | (2) (4) | $ | (1.12 | ) | $ | (1.17 | ) | 4 | % | |||||
Adjusted EBITDA | (3) (4) | $ | (75.4 | ) | $ | (84.4 | ) | 11 | % | |||||
Note: See accompanying footnotes on page 8. |
Three Months Ended | ||||||||||
December 29, 2012 | December 31, 2011 | % Change | ||||||||
Net Sales: | ||||||||||
Global Consumer | $ | 153.2 | $ | 149.1 | 3 | % | ||||
Scotts LawnService® | 44.8 | 37.6 | 19 | % | ||||||
Segment total | 198.0 | 186.7 | 6 | % | ||||||
Corporate & Other | 7.8 | 12.9 | ||||||||
Consolidated | $ | 205.8 | $ | 199.6 | 3 | % | ||||
Loss from Continuing Operations before Income Taxes: | ||||||||||
Global Consumer | $ | (68.7 | ) | $ | (69.5 | ) | 1 | % | ||
Scotts LawnService® | (0.9 | ) | (4.6 | ) | 80 | % | ||||
Segment total | (69.6 | ) | (74.1 | ) | ||||||
Corporate & Other | (20.2 | ) | (19.7 | ) | ||||||
Intangible asset amortization | (2.5 | ) | (2.5 | ) | ||||||
Product registration and recall matters | — | (0.3 | ) | |||||||
Impairment, restructuring and other | 0.4 | (2.4 | ) | |||||||
Interest expense | (13.2 | ) | (15.3 | ) | ||||||
Consolidated | $ | (105.1 | ) | $ | (114.3 | ) | 8 | % |
December 29, 2012 | December 31, 2011 | September 30, 2012 | |||||||||
ASSETS | (Unaudited) | (Unaudited) | |||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 115.6 | $ | 127.8 | $ | 131.9 | |||||
Accounts receivable, net | 168.4 | 166.5 | 330.9 | ||||||||
Inventories | 646.7 | 654.8 | 414.9 | ||||||||
Prepaids and other current assets | 126.2 | 148.8 | 122.3 | ||||||||
Total current assets | 1,056.9 | 1,112.2 | 1,000.0 | ||||||||
Property, plant and equipment, net | 424.0 | 391.4 | 427.4 | ||||||||
Goodwill | 314.4 | 309.1 | 309.4 | ||||||||
Intangible assets, net | 303.3 | 316.2 | 307.1 | ||||||||
Other assets | 29.5 | 35.4 | 30.5 | ||||||||
Total assets | $ | 2,128.1 | $ | 2,164.3 | $ | 2,074.4 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Current portion of debt | $ | 4.3 | $ | 8.1 | $ | 1.5 | |||||
Accounts payable | 185.5 | 220.4 | 152.3 | ||||||||
Other current liabilities | 186.6 | 220.6 | 279.8 | ||||||||
Total current liabilities | 376.4 | 449.1 | 433.6 | ||||||||
Long-term debt | 981.9 | 1,026.1 | 781.1 | ||||||||
Other liabilities | 256.0 | 224.9 | 257.8 | ||||||||
Total liabilities | 1,614.3 | 1,700.1 | 1,472.5 | ||||||||
Shareholders' equity | 513.8 | 464.2 | 601.9 | ||||||||
Total liabilities and shareholders’ equity | $ | 2,128.1 | $ | 2,164.3 | $ | 2,074.4 |
Three Months Ended December 29, 2012 | Three Months Ended December 31, 2011 | |||||||||||||||||||||
As Reported | Impairment, Restructuring and Other | Adjusted | As Reported | Product Registration and Recall Matters | Impairment, Restructuring and Other | Adjusted | ||||||||||||||||
Net sales | $ | 205.8 | $ | — | $ | 205.8 | $ | 199.6 | $ | — | $ | — | $ | 199.6 | ||||||||
Cost of sales | 174.7 | — | 174.7 | 174.0 | — | — | 174.0 | |||||||||||||||
Gross profit | 31.1 | — | 31.1 | 25.6 | — | — | 25.6 | |||||||||||||||
% of sales | 15.1 | % | 15.1 | % | 12.8 | % | 12.8 | % | ||||||||||||||
Operating expenses: | ||||||||||||||||||||||
Selling, general and administrative | 124.5 | — | 124.5 | 122.5 | — | — | 122.5 | |||||||||||||||
Impairment, restructuring and other | (0.4 | ) | (0.4 | ) | — | 2.4 | — | 2.4 | — | |||||||||||||
Product registration and recall matters | — | — | — | 0.3 | 0.3 | — | — | |||||||||||||||
Other income, net | (1.1 | ) | — | (1.1 | ) | (0.6 | ) | — | — | (0.6 | ) | |||||||||||
Loss from operations | (91.9 | ) | 0.4 | (92.3 | ) | (99.0 | ) | (0.3 | ) | (2.4 | ) | (96.3 | ) | |||||||||
% of sales | (44.7 | )% | (44.8 | )% | (49.6 | )% | (48.2 | )% | ||||||||||||||
Interest expense | 13.2 | — | 13.2 | 15.3 | — | — | 15.3 | |||||||||||||||
Loss from continuing operations before income taxes | (105.1 | ) | 0.4 | (105.5 | ) | (114.3 | ) | (0.3 | ) | (2.4 | ) | (111.6 | ) | |||||||||
Income tax benefit from continuing operations | (36.8 | ) | 0.2 | (37.0 | ) | (41.2 | ) | (0.1 | ) | (0.9 | ) | (40.2 | ) | |||||||||
Loss from continuing operations | $ | (68.3 | ) | $ | 0.2 | $ | (68.5 | ) | $ | (73.1 | ) | $ | (0.2 | ) | $ | (1.5 | ) | $ | (71.4 | ) | ||
Basic loss per share from continuing operations | $ | (1.11 | ) | $ | 0.01 | $ | (1.12 | ) | $ | (1.20 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (1.17 | ) | ||
Diluted loss per share from continuing operations | $ | (1.11 | ) | $ | 0.01 | $ | (1.12 | ) | $ | (1.20 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (1.17 | ) | ||
Common shares used in basic loss per share calculation | 61.4 | 61.4 | 61.4 | 60.9 | 60.9 | 60.9 | 60.9 | |||||||||||||||
Common shares and potential common shares used in diluted loss per share calculation | 61.4 | 61.4 | 61.4 | 60.9 | 60.9 | 60.9 | 60.9 | |||||||||||||||
Calculation of Adjusted EBITDA: | ||||||||||||||||||||||
Loss from continuing operations | $ | (68.3 | ) | $ | (73.1 | ) | ||||||||||||||||
Income tax benefit from continuing operations | (36.8 | ) | (41.2 | ) | ||||||||||||||||||
Income (loss) from discontinued operations, net of tax | 0.6 | (0.8 | ) | |||||||||||||||||||
Income tax expense (benefit) from discontinued operations | 0.3 | (0.4 | ) | |||||||||||||||||||
Interest expense | 13.2 | 15.3 | ||||||||||||||||||||
Depreciation | 13.6 | 12.9 | ||||||||||||||||||||
Amortization (including Roundup) | 2.7 | 2.7 | ||||||||||||||||||||
Impairment, restructuring and other | (0.4 | ) | — | |||||||||||||||||||
Mark-to-market adjustments on derivatives | (0.3 | ) | 0.2 | |||||||||||||||||||
Adjusted EBITDA | $ | (75.4 | ) | $ | (84.4 | ) | ||||||||||||||||
Note: See accompanying footnotes on page 8. |
(1) | Basic income (loss) per common share amounts are calculated by dividing income (loss) from continuing operations, loss from discontinued operations and net loss by the weighted average number of common shares outstanding during the period. | |||||
(2) | Diluted income (loss) per common share amounts are calculated by dividing loss from continuing operations, income (loss) from discontinued operations and net loss by the weighted average number of common shares, plus all potential dilutive securities (common stock options, stock appreciation rights, performance shares, performance units, restricted stock and restricted stock units) outstanding during the period. Since there is a loss for the three months ended December 29, 2012 and December 31, 2011, potentially dilutive securities were not included in the calculations for those periods because to do so would have been anti-dilutive. | |||||
(3) | In the fourth quarter of fiscal 2012, the Company completed the wind down of the Company's professional seed business. As a result, effective in its fourth quarter of fiscal 2012, the Company classified its results of operations for all periods presented to reflect the professional seed business as a discontinued operation. | |||||
(4) | The Reconciliation of Non-GAAP Disclosure Items includes the following non-GAAP financial measures: Adjusted loss from continuing operations and adjusted diluted loss per share from continuing operations - These measures exclude charges or credits relating to impairments, restructurings, product registration and recall matters, discontinued operations and other unusual items such as costs or gains related to discrete projects or transactions that are apart from, and not indicative of, the results of the operations of the business. | |||||
Adjusted EBITDA - This measure is calculated as net loss before interest, taxes, depreciation and amortization as well as certain other items such as the impact of the cumulative effect of changes in accounting, costs associated with debt refinancing and other non-recurring, non-cash items affecting net income. We believe this measure provides additional information for determining our ability to meet debt service requirements. The presentation of adjusted EBITDA herein is intended to be consistent with the calculation of that measure as required by our borrowing arrangements, and used to calculate a leverage ratio (maximum of 3.50 at December 29, 2012) and an interest coverage ratio (minimum of 3.50 for the twelve months ended December 29, 2012). The Company was in compliance with the terms of all debt covenants at December 29, 2012. | ||||||
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures used in managing the business may provide users of this financial information additional meaningful comparison between current results and results in prior operating periods. The Company believes that these non-GAAP financial measures are the most indicative of the Company's ongoing earnings capabilities and that disclosure of these non-GAAP financial measures therefore provides useful information to investors and other users of its financial statements, such as lenders. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP. |