MARYSVILLE, Ohio, June 04, 2018 (GLOBE NEWSWIRE) -- The Scotts Miracle-Gro Company (NYSE:SMG), the world’s leading marketer of branded consumer lawn and garden as well as hydroponic growing products, today announced it has completed the acquisition of the assets of Sunlight Supply, Inc., enhancing the ability of SMG’s wholly-owned subsidiary, The Hawthorne Gardening Company, to drive improved performance while meeting the needs of the rapidly evolving hydroponic products marketplace.
“This is an important and transformational moment for Hawthorne, for Sunlight and for hydroponic retailers and vendors everywhere,” said Jim Hagedorn, chairman and chief executive of ScottsMiracle-Gro. “This combination reinforces our confidence in the future of hydroponic growing and creates unique competitive advantages for Hawthorne that we believe will take the industry to a new level.”
In fiscal 2018, the transaction is expected to be dilutive by $0.30 to $0.40 per share on a non-GAAP adjusted basis. The majority of the dilution is attributable to non-cash purchase accounting adjustments with the balance largely due to estimated deal costs, and increased interest expense.
The Company also announced it has formally launched ‘Project Catalyst,’ which it expects will achieve $35 million in annual synergies for Hawthorne by the end of calendar 2019. Benefits from the transaction are expected to improve year-over-year non-GAAP adjusted earnings by $0.60 to $0.80 per share in fiscal 2019.
“We will move with both focus and urgency to achieve the synergies we have outlined and strengthen Hawthorne’s financial performance,” said Randy Coleman, chief financial officer. “We remain bullish on the long-term prospects for the hydroponic growing industry and Hawthorne’s strengthened leadership position, but we also know we must deliver improved results as a result of the capital that has been dedicated to this effort. I am confident Project Catalyst will help us achieve our operating margin goal of 17 to 18 percent for this business while also positioning Hawthorne to adapt to the opportunities in the hydroponics industry.”
Forward Looking Non-GAAP Measures
The Company regularly provides an outlook for non-GAAP adjusted EPS. The Company does not provide a GAAP EPS outlook, which is the most directly comparable GAAP measure to non-GAAP adjusted EPS, because changes in the items that the Company excludes from GAAP EPS to calculate non-GAAP adjusted EPS, described above, can be dependent on future events that are less capable of being controlled or reliably predicted by management and are not part of the Company’s routine operating activities. Additionally, due to their unpredictability, management does not forecast the excluded items for internal use and therefore cannot create or rely on a GAAP EPS outlook without unreasonable efforts. The timing and amount of any of the excluded items could significantly impact the Company’s GAAP EPS. As a result, the Company does not provide a reconciliation of guidance for non-GAAP adjusted EPS to GAAP EPS, in reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K.
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:
- 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;
- 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;
- Disruptions in availability or 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;
- Climate change and unfavorable weather conditions could adversely impact financial results;
- Certain of our 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 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 Restated Marketing Agreement for consumer Roundup products terminates, we 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.
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.
Senior Vice President
Investor Relations & Corporate Affairs
Scotts Miracle-Gro Company