Virus helps Scotts post banner year
Scotts Miracle-gro reported a record year Wednesday, on the strength of a stay-at-home summer and a rising cannabis industry.
Now the question: Can the Marysville lawn and garden company keep it up?
For the year that ended Sept. 30, Scotts saw sales rise to a record $4.13 billion, up 31% from the previous year.
In the fourth quarter of July, August and September, when the country was fully in the pandemic, Scotts sold $497.2 million in consumer products, 90% more than during the same stretch the previous year.
Homeowners stuck at home stocked up on Scotts merchandise, including Miracle-gro Performance Organic products, Ortho Groundclear and Scotts Turf Builder Triple Action, “all of them home runs,” said Scotts Chairman and Chief Executive Officer Jim Hagedorn.
Income for the year rose to $585.2 million, up more than 40% from the previous year. Adjusted for one-time expenses, annual earnings rose from $4.47 a share last year to $7.24 a share.
“The momentum we enjoyed throughout fiscal 2020 accelerated further in the fourth quarter and is carrying into the first quarter of fiscal 2021 as well,” Hagedorn said in a news release.
“The 90% fourth quarter increase in our U.S. consumer segment was driven by continued strong consumer demand and support from our retailers.”
Hagedorn announced that the company would give a $3,000 bonus to nearly all of the 3,000 workers – most of them hourly – who are not in the company’s incentive plans.
“It is appropriate that our associates and our communities also benefit from the historic result we reported this year,” Hagedorn said.
In addition to booming sales of fertilizer, seed and other lawn and garden items, the company’s marijuana division, Hawthorne, had a banner year as that industry starts to mature and a growing number of states legalize some form of cannabis.
Sales at Hawthorne, which makes grow-lights among other items, were up 68% in the fourth quarter over a year ago, and up 61% for the year.
“The growth in Hawthorne also continued to gain steam as September was our highest sales month ever,” Hagedorn said.
As part of its annual report, Scotts announced that it had agreed to buy 50% of Bonnie Plants, the Alabamabased vegetable, herb and flower company that has had a partnership with Scotts for four years. Under the deal, which is subject to regulatory approval, Bonnie would be operated as a 50-50 joint venture between Scotts and Bonnie’s owner, the Alabama Farmers Cooperative.
“There is no gardening without plants,” Hagedorn said in announcing the Bonnie deal. “We are especially enthusiastic about edible gardening, a category that has been growing for years and resonates especially well with mil
lennial consumers.”
Looking forward, Scotts said it expected sales to be up 0% to 5% in 2021 due to a 15% to 20% rise in Hawthorne sales, and earnings to be $8 to $8.40 per share.
One uncertainty lies with Roundup, the weed killer made by Monsanto but
marketed by Scotts. Roundup has been accused of causing cancer and is the subject of multiple lawsuits.
If “Monsanto’s consumer Roundup business materially declines, (Scotts) would lose a substantial source of future earnings,” Scotts noted.
In a conference call with analysts, company officials acknowledged the challenge of making any predictions given the uncertainty of the coronavirus.
“This is a tough environment to pro
vide guidance,” said Chief Financial Officer Randy Coleman, adding, “2021 could be more volatile than 2020.”
However, Hagedorn said things look promising, at least for the first part of the year.
“We believe most consumers will still be in nesting mode next year,” he said. “That bodes well for our business.”
Scotts stock was up about 4% in mid-day trading Wednesday. jweiker@dispatch.com @Jimweiker