Scotts Miracle-Gro Co. SMG, -3.91% shares rose 1.2% in Wednesday premarket trading after the lawn and garden care company reported fiscal third-quarter earnings that beat expectations and announced an acquisition. Net income totaled $225.9 million, or $3.94 per share, up from $202.8 million, or $3.55 per share, last year. Adjusted EPS of $3.98 beat the FactSet consensus for $3.52. Sales of $1.610 billion were up from $1.493 billion and ahead of the FactSet consensus for $1.498 billion. The Hawthorne segment of the business, which includes brands like General Hydroponics and Vermicrop Organics, saw a 48% increase in sales. The Hawthorne business has also added Santa Cruz, Calif.-based HydroLogic Purification Systems in a $65 million deal that includes business assets and operations. The acquisition is expected to generate $20 million in annualized sales. Scotts will keep HydroLogic’s Santa Cruz facility. “Even in the face of increasing distribution and commodity costs that are putting pressure on our gross margin rate, we remain on track to deliver the updated full-year guidance we provided in early June, which would result in both record sales and adjusted earnings,” said Jim Hagedorn, Scotts chief executive, in a statement. For the full-year, Scotts is guiding for sales growth of 17% to 19%, and adjusted EPS is expected to be in the range of $9.00 to $9.30. The FactSet consensus is for sales of $4.881 billion, suggesting 18.1% growth, and EPS of $9.25. Scotts stock has slumped 11.2% for the year to date while the S&P 500 index SPX, -0.32% has rallied 17.8% for the period.
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