Scotts Miracle-Gro Q3 Profit Down, Lifts Outlook - Update

(RTTNews) - Lawn-care products maker Scotts Miracle-Gro Company (SMG), Tuesday reported a drop in profit for the third quarter, as sales slipped 2 percent and gross margins declined. Moving ahead, the company lifted its sales outlook for the full year and expects earnings to be at the higher-end of its forecast.

The Marysville, Ohio-based company's third-quarter profit dropped to $121.7 million or $1.95 per share from $148.2 million or $2.37 per share in the prior year.

Excluding impairment, restructuring and other charges, adjusted income from continuing operations declined to $2.34 per share from $2.45 per share last year. On average, 12 analysts polled by Thomson Reuters expected earnings of $2.26 per share for the quarter. Analysts' estimates typically exclude special items.

The company's sales for the third quarter dropped 2 percent to $1.12 billion from $1.14 billion last year. Analysts estimated revenues of $1.12 billion for the quarter.

The company-wide adjusted gross margin rate dropped to 37.9 percent from 38.9 percent a year ago.

"The second half of the lawn and garden season has been extremely strong, with positive consumer purchases against the double-digit increases we posted a year ago," said CEO Jim Hagedorn. "Our momentum is carrying into the fourth quarter with consumer purchases in July at an all-time high and our European business on track to have its most profitable year ever."

Sales in the Global Consumer segment decreased 3 percent to $1.01 billion, while Scotts LawnService sales improved 3 percent to $92.8 million.

Moving ahead, the company now expect adjusted earnings to meet or exceed the high-end of its outlook of $3.05 to $3.20 per share. The company now expects full year sales to increase 1 to 2 percent year-over-year, compared to prior outlook of flat sales. Analysts currently anticipate earnings of $3.19 per share on sales growth of 0.40 percent for the year.

SMG is currently trading at $54.95, up $1.55 or 2.91%, on the NYSE.