Scotts Europe is being sold to Exponent Private Equity in a $250m transaction with the deal to go through this summer.
Company-wide sales for the first nine months increased 4 percent to $2.53 billion, compared with $2.43 billion a year ago. Sales in the US Consumer segment decreased 2 percent, to $1.88 billion.
Third quarter Scotts Europe Consumer sales declined 3%, but increased 2% when excluding the impact of foreign exchange rates, to $93.2 million.
The Scotts Miracle-Gro Company's fiscal third quarter financial results ended on July 1, 2017. Company-wide reported net sales were $1.08 billion, compared with $994.1 million for the same period a year ago.
Chairman/chief executive Jim Hagedorn said: "The company now expects to complete the pending sale of its European and Australian businesses in the fourth quarter and anticipates lowering its guidance for Non-GAAP (generally accepted accounting principles) adjusted earnings by approximately $0.20 per share at that time.
"Once this pending divestiture is behind us, the material changes in reconfiguration of our portfolio will largely be behind us. Where appropriate, we will continue to seek tuck-in acquisitions that complement our remaining portfolio, however, our bias going forward will be to return cash to shareholders. We expect to increase our quarterly dividend in the near future and will continue to be an active acquirer of our shares."
He added: "Our US core business had a solid quarter, making up ground from a late break to the season and some unexpected challenges in the mass retail channel. We also continued to see great progress with Hawthorne, which saw comparative organic sales growth of 21 percent in the quarter.
"During the third quarter we made two small acquisitions – one in the core business and one in Hawthorne – and we were opportunistic in our share repurchase activity. Execution across the organization was also strong, resulting in continued improvement in our gross margin rate, expense control and improvements in working capital management. We remain confident in the revised sales and earnings guidance we provided in June and are optimistic that we also will generate more than $300 million in operating cash flow in fiscal 2017."
In the thrid quarter, company-wide sales increased 8 percent to $1.08 billion, or 9 percent excluding the impact of foreign exchange rates. U.S. Consumer increased 5 percent to $792.2 million from $756.7 million. Sales in the other segment increased 36 percent to $192.6 milliondue to the acquisitions of Botanicare and Gavita as well as year-over- year growth within The Hawthorne Gardening Company.
Company-wide sales for the first nine months increased 4 percent to $2.53 billion, compared with $2.43 billion a year ago. Sales in the US Consumer segment decreased 2 percent, to $1.88 billion. The "Other" segment increased 48 percent to $425.2 million due to acquisition and growth activity within The Hawthorne Gardening Company.
The GAAP and adjusted gross margin rate on a year-to-date basis was 38.0 percent, compared with 36.8 percent and 37.0 percent, respectively, a year ago. SG&A was $488.8 million, a 5 percent increase from 2016, primarily related to deal costs and expenses from acquired businesses.
GAAP income from continuing operations was $252.9 million, or $4.17 per share, compared with $273.5 million or $4.40 per share. Non-GAAP adjusted earnings, which excluded impairment, restructuring, as well as the impact of the divestiture of Scotts LawnService, were $269.1 million, or $4.44 per share, compared with $251.2 million, or $4.04 per share a year ago.
A cautionary note was that in the event of termination of the marketing agreement for consumer Roundup products, the company would lose a substantial source of future earnings and overhead expense absorption.