Scotts's 3Q net income falls 16 pct.; shares slideThe Associated Press
MARYSVILLE, Ohio -- The Scotts Miracle-Gro Co. said Thursday that its net income fell 16 percent in its fiscal third quarter, as the lawn and garden product maker's costs for commodities and freight increased and sales remained essentially flat.
The results fell short of Wall Street's expectations, and shares sank 7 percent in after-hours trading.
Scotts reported net income of $93.3 million, or $1.50 per share, for the three months ended June 30. That compares with net income of $111.6 million, or $1.69 per share, in the same quarter last year.
Revenue totaled $1.06 billion, unchanged from year earlier.
Analysts' consensus forecast called for earnings of $1.93 per share on $1.11 billion in revenue, according to FactSet.
Sales at Scotts' Global Consumer business, its largest segment, rose 1 percent to $960.7 million. The company said U.S. sales rose 6 percent, while international sales fell 12 percent, excluding the impact of foreign exchange rates.
Scotts' LawnService unit saw sales grow 7 percent to $87.8 million.
But higher commodity, advertising, freight and other costs hurt the company's profitability. Selling, general and administrative expenses rose to $197.5 million, up from $192.4 million. The company's adjusted gross margin was 34.5 percent, down from 37.9 percent a year earlier.
Management said purchases of mulch and controls improved compared to a year ago, but fertilizer and growing media categories remained flat and haven't lived to expectations. As a result, the company intends to raise prices and focus on improving its profitability.
Meanwhile, the company declared a dividend of 32.5 cents per share, an increase of 8 percent from the prior quarter. The dividend is payable Sept. 10 to shareholders of record Aug. 27.
Shares added 10 cents to $41.39 in regular trading, then fell $2.84, or about 7 percent, to $38.55 in extended trading.