Scotts looks ahead as earnings disappoint

Scotts Miracle-Gro is ready to turn the page on 2018.

The Marysville-based lawn and garden giant reported a loss of $130.6 million for its fourth quarter, about three times the $42 million loss the company reported a year ago. Scotts’ business is seasonal and the company typically reports a loss in its fourth and first quarters.

Sales for the full year were $2.66 billion compared to $2.64 billion a year ago. Although overall sales ticked up a bit, net income for the full year came in at $127 million, compared to $198 million for 2017, a 35 percent reduction. Earnings per share were $2.23 for the year, compared to $3.29 last year.

“There is little doubt that fiscal 2018 was one of our most challenging years in recent memory,” CEO Jim Hagedorn said in a press release.

Scotts blamed bad weather for a late start to the lawn and garden season, holding down sales. That, coupled with a regulatory quagmire in California’s cannabis market, scuttled the company’s expectations. Hawthorne, the company’s cannabisfocused division, reported a sales increase of 20 percent year-over-year, but all of that came through acquisitions. Without recent acquisitions, Hawthorne saw a decline in sales of 27 percent, which reflects the difficulties of the massive California cannabis market.

Hawthorne and the legal and medical marijuana markets have been a boon to Scotts in recent years and were expected to fuel growth again this year. But 2018 turned out to be a year of transition for the industry as California worked through regulatory changes that hampered marijuana operations across the state. Scotts has invested more than $1 billion in acquiring a host of businesses focused on growing cannabis.

“While we are obviously disappointed by the performance of Hawthorne in 2018, we expect to return to growth in 2019 and remain bullish on the long-term prospects for this business,” Scotts chief financial officer Randy Coleman said in a press release.

The company’s outlook for 2019 is rosy. Scotts expects sales growth of 10 to 11 percent and earnings per share in the $4.10 to $4.30 range.