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Scotts Miracle-Gro Beats Expectations in Q1 as Hydroponics Unit Generates 41% Sales Growth

By David Jagielski - Jan 30, 2020 at 10:11AM

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The company's shares climbed 6% on Wednesday.

Scotts Miracle-Gro's (SMG -0.38%) fiscal first-quarter results, released on Wednesday, showed that growth in the cannabis industry is continuing to pay off for the gardening company. Its hydroponics business, Hawthorne, generated the large majority of its significant sales growth.

Quarterly revenue of $365.8 million was up 23% from the prior-year period, which beat analysts' consensus expectation of $342 million. In hydroponics, Hawthorne's revenue of $198.8 million was up 41% from $140.8 million. As cannabis companies ramp up their production of marijuana, demand for hydroponics equipment, which is used to grow plants indoors, year-round, and without soil, goes up. 

Cannabis greenhouse.

Image source: Getty Images.

Scott's U.S. consumer segment, which is dominated by its lawn and gardening business, grew at a more modest rate of 8%. The company is optimistic that during its peak summer months, the results from both businesses will remain strong.

CFO Randy Coleman said in the earnings release: "The momentum in Hawthorne and the strong listing support with our retail partners give us confidence in both major reporting segments as we prepare for the most critical months of the fiscal year."

Bottom line also did well, despite seasonality

The company recorded a net loss during fiscal Q1, a typical result for it at this time of year. But that loss was $1.12 per share, which was still better than the $1.27 per share loss analysts were expecting. It was the second time in the past four quarters that Scotts posted a loss.

However, investors were pleased with the results; the stock was up as much as 9% on Wednesday, and closed the day around 6% higher.

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