ScottsMiracle-Gro Reports First Quarter Results; Company Well-Positioned for 2014 Lawn & Garden Season

 ScottsMiracle-Gro Reports First Quarter Results; Company Well-Positioned for
                          2014 Lawn & Garden Season

-- First quarter adjusted loss per share improved 6% to $1.05

-- Adjusted gross margin rate increased 270 basis points in the first quarter

-- Overall performance in line with Company expectations

-- Company reaffirms full-year guidance for sales and adjusted EPS

PR Newswire

MARYSVILLE, Ohio, Feb. 6, 2014

MARYSVILLE, Ohio, Feb. 6, 2014 /PRNewswire/ -- The Scotts Miracle-Gro Company
(NYSE: SMG), the world's leading marketer of branded consumer lawn and garden
products, today announced fiscal first quarter results in line with the
Company's expectations and said it is well-prepared for the upcoming 2014 lawn
and garden season.

The Company's first quarter 2014 adjusted loss from continuing operations
improved $3.1 million, or $0.07 per share, compared to the same quarter a year
ago, driven by continued margin expansion and strong control of operating
expenses.

Net sales in the three months ended December 28, 2013 were $196.4 million,
compared to $205.8 million during the same quarter a year ago. The
year-over-year sales decline of 5 percent was primarily due to the timing of
pre-season shipments to retailers.

Sales in the Global Consumer segment were $145.3 million during the quarter,
compared to $153.2 million a year ago. Scotts LawnService sales were up 3
percent to $46.2 million in the first quarter, compared to $44.8 million
during the same quarter a year ago, primarily due to an increase in customer
count. Sales in the fiscal first quarter represent approximately 6 to 7
percent of the Company's full-year sales.

"While most of North America is gripped by winter, our sales, marketing and
supply chain teams are working diligently to ensure a strong start to the lawn
and garden season," said Jim Hagedorn, chairman and chief executive officer.
"In markets where gardening activity is occurring, we see solid levels of
consumer participation, which gives us continued confidence in our plans for
the year."

The adjusted company-wide gross margin rate was 17.8 percent, compared with
15.1 percent during the first quarter a year ago. The 270-basis-point
improvement was primarily attributable to favorable mix from the higher-margin
Scotts LawnService business and continued improvement in the Global Consumer
segment.

Selling, general and administrative expenses (SG&A) were $125.1 million,
compared to $124.5 million a year ago, in line with Company expectations.

The adjusted loss from continuing operations for the first quarter was $65.4
million, or $1.05 per share, which excludes impairment, restructuring and
other charges. That compares with an adjusted loss of $68.5 million, or $1.12
per share, last year. On a GAAP basis, the loss from continuing operations was
$65.6 million, or $1.06 per share, compared with a loss of $68.3 million, or
$1.11 per share, during the same quarter a year ago. Given the seasonal
nature of the lawn and garden category, the Company historically reports a
loss in its fiscal first quarter.

The operating loss for the Global Consumer segment was $67.3 million during
the first quarter, compared with a loss of $68.7 million last year. Scotts
LawnService reported operating income of $2.6 million, compared with a loss of
$0.9 million during the same quarter a year ago. The consolidated company-wide
adjusted loss from continuing operations before income taxes was $103.1
million during the first quarter of 2014, compared to a loss of $105.5 million
during the same quarter a year ago.

Management Reaffirms Full-Year Outlook

The Company reiterated expectations for company-wide net sales to increase by
approximately 2 to 3 percent in fiscal 2014 on flat unit volume, modest price
increases in its Global Consumer segment and the continued growth of its
Scotts LawnService business.

An anticipated improvement in adjusted gross margin rate of approximately 100
basis points and an increase in SG&A of approximately 3 to 4 percent are
expected to result in adjusted earnings for fiscal 2014 in the range of $3.05
to $3.20 per share. In addition, the Company continues to expect operating
cash flow of approximately $275 million for the year.

Conference Call and Webcast Scheduled for 9 a.m. ET Today, Feb. 6

The Company will discuss results during a webcast and conference call today at
9 a.m. Eastern Time. Conference call participants should call 1-888-572-7034
(Conference Code: 8133155). A live webcast of the call will be available on
the investor relations section of the Company's website at
http://investor.scotts.com. An archive of the webcast, as well as any
accompanying financial information regarding any non-GAAP financial measures
discussed by the Company during the call, will remain available for at least
12 months. In addition, a replay of the call can be heard by calling
1-888-203-1112. The replay will be available for 30 days.

About ScottsMiracle-Gro

With more than $2.8 billion in worldwide sales, The Scotts Miracle-Gro Company
is the world's largest marketer of branded consumer products for lawn and
garden care.The Company's brands are the most recognized in the industry.In
the U.S., the Company's Scotts®, Miracle-Gro® and Ortho® brands are
market-leading in their categories, as is the consumer Roundup® brand, which
is marketed in North America and most of Europe exclusively by Scotts and
owned by Monsanto.In the U.S., we operate Scotts LawnService®, the second
largest residential lawn care service business. In Europe, the Company's
brands include Weedol®, Pathclear®, Evergreen®, Levington®, Miracle-Gro®, KB®,
Fertiligene® and Substral®. For additional information, visit us at
www.scotts.com.

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:

  oCompliance with environmental and other public health regulations could
    increase the Company's costs of doing business or limit the Company's
    ability to market all of its products;
  oIncreases in the prices of raw materials and fuel costs could adversely
    affect the Company's results of operations;
  oThe highly competitive nature of the Company's markets could adversely
    affect its ability to maintain or grow revenues;
  oBecause 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;
  oAdverse weather conditions could adversely impact financial results;
  oThe Company's international operations make the Company susceptible to
    fluctuations in currency exchange rates and to other costs and risks
    associated with international regulation;
  oThe Company may not be able to adequately protect its intellectual
    property and other proprietary rights that are material to the Company's
    business;
  oIf Monsanto Company were to terminate the Marketing Agreement for consumer
    Roundup products, the Company would lose a substantial source of future
    earnings and overhead expense absorption;
  oHagedorn Partnership, L.P. beneficially owns approximately 27% of the
    Company's common shares and can significantly influence decisions that
    require the approval of shareholders;
  oThe Company may pursue acquisitions, dispositions, investments, dividends,
    share repurchases and/or other corporate transactions that it believes
    will maximize equity returns of its shareholders but may involve risks.

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.



THE SCOTTS MIRACLE-GRO COMPANY
Condensed Consolidated Statement of Operations
(In millions, except for per common share data)
(Unaudited)
                                            Three Months Ended
                                            December28,  December29,  %
                                 Footnotes  2013          2012
                                                                        Change
Net sales                                   $  196.4      $  205.8      (5)  %
Cost of sales                               161.5         174.7
Gross profit                                34.9          31.1          12   %
% of sales                                  17.8       %  15.1       %
Operating expenses:
Selling, general and                        125.1         124.5         —    %
administrative
Impairment, restructuring and               0.3           (0.4)
other
Other income, net                           (1.0)         (1.1)
Loss from operations                        (89.5)        (91.9)        3    %
% of sales                                  (45.6)     %  (44.7)     %
Interest expense                            13.9          13.2
Loss from continuing operations             (103.4)       (105.1)       2    %
before income taxes
Income tax benefit from                     (37.8)        (36.8)
continuing operations
Loss from continuing operations             (65.6)        (68.3)        4    %
Income from discontinued         (3)        —             0.6
operations, net of tax
Net loss                                    $  (65.6)     $  (67.7)
Basic loss per common share:     (1)
Loss from continuing operations             $  (1.06)     $  (1.11)     5    %
Income from discontinued                    —             0.01
operations
Net loss                                    $  (1.06)     $  (1.10)
Diluted loss per common share:   (2)
Loss from continuing operations             $  (1.06)     $  (1.11)     5    %
Income from discontinued                    —             0.01
operations
Net loss                                    $  (1.06)     $  (1.10)
Common shares used in basic loss            62.1          61.4          1    %
per share calculation
Common shares and potential
common shares used in diluted               62.1          61.4          1    %
loss per share calculation
Non-GAAP results from continuing
operations:
Adjusted loss from continuing    (4)        $  (65.4)     $  (68.5)     5    %
operations
Adjusted diluted loss per share  (2) (4)    $  (1.05)     $  (1.12)     6    %
from continuing operations
Adjusted EBITDA                  (3) (4)    $  (73.8)     $  (75.4)     2    %
Note: See accompanying footnotes at
the end of the release.



THE SCOTTS MIRACLE-GRO COMPANY
Net Sales and Income (Loss) from Continuing Operations before Income Taxes by
Segment
(In millions)
(Unaudited)
The Company is divided into the following reportable segments: Global Consumer
and Scotts LawnService®. This division of reportable segments is consistent
with how the segments report to and are managed by the chief operating
decision maker of the Company.
Segment performance is evaluated based on several factors, including income
(loss) from continuing operations before amortization, impairment,
restructuring and other charges, which is not a generally accepted accounting
principle ("GAAP") measure. Senior management of the Company uses this measure
of operating profit (loss) to evaluate segment performance because we believe
this measure is the most indicative of performance trends and the overall
earnings potential of each segment.
Corporate & Other consists of revenues and expenses associated with the
Company's supply agreements with Israel Chemicals Ltd. and the amortization
related to the Roundup® Marketing Agreement, as well as corporate, general and
administrative expenses and certain other income/expense items not allocated
to the business segments.
                      Three Months Ended
                      December28,           December29,           %
                      2013                   2012
                                                                    Change
Net Sales:
Global Consumer       $    145.3             $    153.2             (5)    %
Scotts LawnService®   46.2                   44.8                   3      %
Segment total         191.5                  198.0                  (3)    %
Corporate & Other     4.9                    7.8
Consolidated          $    196.4             $    205.8             (5)    %
Income (Loss) from
Continuing Operations
before Income Taxes:
Global Consumer       $    (67.3)            $    (68.7)            2      %
Scotts LawnService®   2.6                    (0.9)                  389    %
Segment total         (64.7)                 (69.6)
Corporate & Other     (21.6)                 (20.2)
Intangible asset      (2.9)                  (2.5)
amortization
Impairment,
restructuring and     (0.3)                  0.4
other
Interest expense      (13.9)                 (13.2)
Consolidated          $    (103.4)           $    (105.1)           2      %



THE SCOTTS MIRACLE-GRO COMPANY
Condensed Consolidated Balance Sheets
(In millions)
                                     December28,  December29,  September 30,
                                     2013          2012          2013
ASSETS                               (Unaudited)   (Unaudited)
Current assets:
Cash and cash equivalents            $  124.6      $  115.6      $  129.8
Accounts receivable, net             167.5         168.4         313.3
Inventories                          605.7         646.7         324.9
Prepaids and other current assets    117.9         126.2         113.0
Total current assets                 1,015.7       1,056.9       881.0
Property, plant and equipment, net   447.5         424.0         422.3
Goodwill                             335.0         314.4         315.1
Intangible assets, net               320.0         303.3         284.4
Other assets                         41.2          29.5          34.4
Total assets                         $  2,159.4    $  2,128.1    $  1,937.2
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of debt              $  229.7      $  4.3        $  92.4
Accounts payable                     230.8         185.5         137.7
Other current liabilities            188.4         186.6         279.7
Total current liabilities            648.9         376.4         509.8
Long-term debt                       652.3         981.9         478.1
Other liabilities                    236.9         256.0         238.8
Total liabilities                    1,538.1       1,614.3       1,226.7
Shareholders' equity                 621.3         513.8         710.5
Total liabilities and shareholders'  $  2,159.4    $  2,128.1    $  1,937.2
equity



THE SCOTTS MIRACLE-GRO COMPANY
Reconciliation of Non- GAAP Disclosure Items (4)
(In millions, except per common share data)
(Unaudited)
               Three Months Ended December 28,      Three Months Ended December 29,
               2013                                 2012
               As         Impairment,               As         Impairment,
                          Restructuring Adjusted               Restructuring Adjusted
               Reported   and Other                 Reported   and Other
Net sales      $ 196.4    $   —         $ 196.4     $ 205.8    $   —         $ 205.8
Cost of sales  161.5      —             161.5       174.7      —             174.7
Gross profit   34.9       —             34.9        31.1       —             31.1
% of sales     17.8     %               17.8     %  15.1     %               15.1     %
Operating
expenses:
Selling,
general and    125.1      —             125.1       124.5      —             124.5
administrative
Impairment,
restructuring  0.3        0.3           —           (0.4)      (0.4)         —
and other
Other income,  (1.0)      —             (1.0)       (1.1)      —             (1.1)
net
Loss from      (89.5)     (0.3)         (89.2)      (91.9)     0.4           (92.3)
operations
% of sales     (45.6)%                  (45.4)   %  (44.7)%                  (44.8)   %
Interest       13.9       —             13.9        13.2       —             13.2
expense
Loss from
continuing
operations     (103.4)    (0.3)         (103.1)     (105.1)    0.4           (105.5)
before income
taxes
Income tax
benefit from   (37.8)     (0.1)         (37.7)      (36.8)     0.2           (37.0)
continuing
operations
Loss from
continuing     $ (65.6)   $   (0.2)     $ (65.4)    $ (68.3)   $   0.2       $ (68.5)
operations
Basic loss per
share from     $ (1.06)   $   (0.01)    $ (1.05)    $ (1.11)   $   0.01      $ (1.12)
continuing
operations
Diluted loss
per share from $ (1.06)   $   (0.01)    $ (1.05)    $ (1.11)   $   0.01      $ (1.12)
continuing
operations
Common shares
used in basic  62.1       62.1          62.1        61.4       61.4          61.4
loss per share
calculation
Common shares
and potential
common shares
used in        62.1       62.1          62.1        61.4       61.4          61.4
diluted loss
per share
calculation
Calculation of
Adjusted
EBITDA:
Loss from
continuing     $ (65.6)                             $ (68.3)
operations
Income tax
benefit from   (37.8)                               (36.8)
continuing
operations
Income from
discontinued   —                                    0.6
operations,
net of tax
Income tax
expense from   —                                    0.3
discontinued
operations
Interest       13.9                                 13.2
expense
Depreciation   13.0                                 13.6
Amortization
(including     3.1                                  2.7
Roundup)
Impairment,
restructuring  —                                    (0.4)
and other
Mark-to-market
adjustments on (0.4)                                (0.3)
derivatives
Adjusted       $ (73.8)                             $ (75.4)
EBITDA
Note: See accompanying footnotes at the
end of the release.



THE SCOTTS MIRACLE-GRO COMPANY
Footnotes to Preceding Financial Statements
    Basic income (loss) per common share amounts are calculated by dividing
(1) income (loss) from continuing operations, income (loss) from discontinued
    operations and net income (loss) by the weighted average number of common
    shares outstanding during the period.
    Diluted income (loss) per common share amounts are calculated by dividing
    income (loss) from continuing operations, income (loss) from discontinued
    operations and net income (loss) by the weighted average number of common
    shares, plus all potential dilutive securities (common stock options,
(2) stock appreciation rights, performance shares, performance units,
    restricted stock and restricted stock units) outstanding during the
    period. Since there is a loss for the three months ended December 28, 2013
    and December 29, 2012, potentially dilutive securities were not included
    in the calculations for those periods because to do so would have been
    anti-dilutive.
    In the fourth quarter of fiscal 2012, the Company completed the wind down
    of the Company's professional seed business. As a result, effective in
(3) its fourth quarter of fiscal 2012, the Company classified its results of
    operations for all periods presented to reflect the professional seed
    business as a discontinued operation.
    The Reconciliation of Non-GAAP Disclosure Items includes the following
    non-GAAP financial measures:

    

(4) Adjusted income (loss) from continuing operations and adjusted diluted
    income (loss) per share from continuing operations - These measures
    exclude charges or credits relating to impairments, restructurings,
    discontinued operations and other unusual items such as costs or gains
    related to discrete projects or transactions that are apart from, and not
    indicative of, the results of the operations of the business.
    Adjusted EBITDA - This measure is calculated as net income (loss) before
    interest, taxes, depreciation and amortization as well as certain other
    items such as the impact of the cumulative effect of changes in
    accounting, costs associated with debt refinancing and other
    non-recurring, non-cash items affecting net income. We believe this
    measure provides additional information for determining our ability to
    meet debt service requirements. The presentation of adjusted EBITDA herein
    is intended to be consistent with the calculation of that measure as
    required by our borrowing arrangements, and used to calculate a leverage
    ratio (maximum of 4.00 at December 28, 2013) and an interest coverage
    ratio (minimum of 3.50 for the twelve months ended December 28, 2013). The
    Company was in compliance with the terms of all debt covenants at December
    28, 2013.
    The Company reports its financial results in accordance with U.S.
    generally accepted accounting principles (GAAP). However, management
    believes that certain non-GAAP financial measures used in managing the
    business may provide users of this financial information additional
    meaningful comparison between current results and results in prior
    operating periods. The Company believes that these non-GAAP financial
    measures are the most indicative of the Company's ongoing earnings
    capabilities and that disclosure of these non-GAAP financial measures
    therefore provides useful information to investors and other users of its
    financial statements, such as lenders. Non-GAAP financial measures should
    be viewed in addition to, and not as an alternative for, the Company's
    reported results prepared in accordance with GAAP.



SOURCE The Scotts Miracle-Gro Company

Website: http://www.scotts.com
Contact: Jim King, Senior Vice President, Chief Communications Officer, (937)
578-5622
 
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