ScottsMiracle-Gro Clarifies Comments Made During First Quarter Conference Call

Rhea-AI Summary

The Scotts Miracle-Gro Company (SMG) has clarified statements regarding its Hawthorne segment's expected performance for Q2. President Chris Hagedorn mistakenly indicated that sales would remain flat; however, the company anticipates a decline in sales for this segment compared to the previous year, with potential growth later in the year. Despite the sales drop, profitability is projected to reach break-even in Q2. Scotts Miracle-Gro generates around $4.9 billion in sales and is a prominent player in lawn and garden care products.

Positive

• Expected profitability is set to reach break-even levels in Q2.
• Potential for sales growth in the second half of the year.

Negative

• Sales for the Hawthorne segment are anticipated to decline in Q2 compared to last year.
• Management's communication error regarding sales forecasts may impact investor confidence.

MARYSVILLE, Ohio, Feb. 01, 2022 (GLOBE NEWSWIRE) -- The Scotts Miracle-Gro Company (NYSE: SMG), issued a clarification following its first quarter earnings conference call with the investment community regarding the expected performance of the Hawthorne segment in the second fiscal quarter.

During the question-and-answer portion of the call, Hawthorne division president Chris Hagedorn inadvertently said sales for the Hawthorne segment would be flat in the second quarter compared with a year ago. Consistent with its previous guidance, the Company expects sales for the segment to decline in the second quarter with growth returning at some point during the second half of the year.

“In providing a response related to our expected profitability later in the year, I misspoke and used the word ‘sales’,” Hagedorn explained. “To be clear, while sales are expected to decline in Q2, we would expect our segment profitability to begin to reach break-even levels in the second quarter before accelerating later in the year.”

About ScottsMiracle-Gro
With approximately $4.9 billion in sales, the Company is one of the world’s largest marketers of branded consumer products for lawn and garden care. The Company’s brands are among the most recognized in the industry. The Company’s Scotts®, Miracle-Gro® and Ortho® brands are market-leading in their categories. The Company’s wholly-owned subsidiary, The Hawthorne Gardening Company, is a leading provider of nutrients, lighting and other materials used in the indoor and hydroponic growing segment. Another wholly-owned subsidiary, The Hawthorne Collective, has been established to invest in emerging areas of the cannabis industry. For additional information, visit us at www.scottsmiraclegro.com.

Cautionary Note Regarding Forward-Looking Statements 
Statements contained in this press release, other than statements of historical fact, which address activities, events and developments that the Company expects or anticipates will or may occur in the future, including, but not limited to, information regarding the future economic performance and financial condition of the Company, the plans and objectives of the Company’s management, and the Company’s assumptions regarding such performance and plans are “forward-looking statements” within the meaning of the U.S. federal securities laws that are subject to risks and uncertainties. These forward-looking statements generally can be identified as statements that include phrases such as “guidance,” “outlook,” “projected,” “believe,” “target,” “predict,” “estimate,” “forecast,” “strategy,” “may,” “goal,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “should” or other similar words or phrases. Actual results could differ materially from the forward-looking information in this release due to a variety of factors, including, but not limited to:

• The ongoing COVID-19 pandemic could have a material adverse effect on the Company’s business, results of operation, financial condition and/or cash flows;
• Compliance with environmental and other public health regulations or changes in such regulations or regulatory enforcement priorities could increase the Company’s costs of doing business or limit the Company’s ability to market all of its products;
• Damage to the Company’s reputation or the reputation of its products or products it markets on behalf of third parties could have an adverse effect on its business;
• If the Company underestimates or overestimates demand for its products and does not maintain appropriate inventory levels, its net sales and/or working capital could be negatively impacted;
• If the Company is unable to effectively execute its e-commerce business, its reputation and operating results may be harmed;
• 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;
• Climate change and unfavorable weather conditions could adversely impact financial results;
• Certain of the Company’s products may be purchased for use in new or emerging industries or segments and/or be subject to varying, inconsistent, and rapidly changing laws, regulations, administrative practices, enforcement approaches, judicial interpretations and consumer perceptions;
• The Company’s operations may be impaired if its information technology systems fail to perform adequately or if it is the subject of a data breach or cyber-attack;
• The Company may not be able to adequately protect its intellectual property and other proprietary rights that are material to the Company’s business;
• In the event the Third Restated Marketing Agreement for consumer Roundup products terminates, or Monsanto’s consumer Roundup business materially declines the Company would lose a substantial source of future earnings and overhead expense absorption;
• Hagedorn Partnership, L.P. beneficially owns approximately 26% of the Company’s common shares and can significantly influence decisions that require the approval of shareholders;
• Acquisitions, other strategic alliances and investments could result in operating difficulties, dilution and other harmful consequences that may adversely impact the Company’s business and results of operations.
  

Additional detailed information concerning a number of the important factors that could cause actual results to differ materially from the forward-looking information contained in this release is readily available in the Company’s publicly filed quarterly, annual and other reports. The Company disclaims any obligation to update developments of these risk factors or to announce publicly any revision to any of the forward-looking statements contained in this release, or to make corrections to reflect future events or developments.

Contact:
Jim King
Executive Vice President
Investor Relations & Corporate Affairs
(937) 578-5622

FAQ

What is the expected sales performance of the Hawthorne segment for Q2 2022 for SMG?

The Hawthorne segment is expected to see a decline in sales for Q2 2022 compared to the previous year.

Who clarified the sales expectations for SMG's Hawthorne segment?

Chris Hagedorn, the president of the Hawthorne division, clarified the sales expectations.

What is the projected profitability for SMG's Hawthorne segment in Q2 2022?

The Hawthorne segment is expected to reach break-even levels in profitability during Q2 2022.

What are the implications of the sales decline for SMG's shareholders?

The expected decline in sales may affect investor confidence, though profitability is projected to improve.