ScottsMiracle-Gro Updates Financial Outlook for Fiscal 2011; Duration and Breadth of Unfavorable Weather Limits Consumer Activity

MARYSVILLE, Ohio, June 14, 2011 /PRNewswire-FirstCall/ -- The Scotts Miracle-Gro Company (NYSE: SMG), the world's leading marketer of branded consumer lawn and garden products, today updated its financial outlook for fiscal 2011 to reflect the continued challenges of unfavorable weather in most of the United States. The Company said it is now anticipates reporting sales in line with its performance in fiscal 2010 and adjusted earnings per share of $3.10 to $3.20 per share.

On a year-to-date basis, consumer purchases of the Company's products at its major U.S. retail partners are down 4 percent from a year ago. On May 3, the Company announced that consumer purchases had declined during the critical March and April timeframe due to significant weather issues in much of the U.S. At the time, ScottsMiracle-Gro said it could achieve its original sales and earnings outlook given a double-digit rebound of consumer activity for the balance of the year. The Company said it believed a robust rebound was achievable assuming weather was favorable to lawn and garden activity. Consumer purchases have increased only 3 percent since that announcement.

"We needed to see a double-digit increase in consumer purchases in May and June but through mid-June we are still below last year's levels in nearly every major market in the northern and western United States." said Jim Hagedorn, chairman and chief executive officer. "Weather has been the primary driver for the shortfall all the way through May. We also were impacted by a more promotional retail landscape and changes in certain retailer strategies within the mass merchandise channel."

Gross margin rate is now expected to be roughly in line with 2010 levels. The increased price promotional environment, combined with unfavorable product mix and lower-than-planned absorption rates of fixed overhead, will lead to a gross margin rate lower than previously expected. SG&A is expected to modestly increase with, among other items, higher media and marketing expenses almost entirely offset by lower variable compensation costs.  Interest expense is expected to be $8 to $10 million higher than the prior year as the Company completes the execution of its new long-term financing structure.

While the overall category has been challenged this season, Hagedorn stressed that the fundamentals of the business remain solid. When weather cooperated, consumer purchases were frequently up double-digits from 2010 levels.

"Clearly, we're disappointed with how the season has turned out.  The breadth and length of the unfavorable weather patterns has been unusually challenging and we simply don't have enough time left in the season to offset that impact," Hagedorn said. "Despite the short-term challenges, we remain confident in both the fundamentals of our business and current strategic direction. The pipeline of new products remains promising and we are taking the right steps to drive our business with consumers."

ScottsMiracle-Gro is currently scheduled to report is third quarter results on August 2, at which point it will provide a more detailed outlook on the balance of fiscal 2011.

About ScottsMiracle-Gro

With approximately $3 billion in worldwide sales, The Scotts Miracle-Gro Company, through its wholly-owned subsidiary, The Scotts Company LLC, 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:

• The ongoing governmental investigations regarding the Company's compliance with the Federal Insecticide, Fungicide, and Rodenticide Act of 1947, as amended, could adversely affect the Company's financial condition, results of operations or cash flows;
• Compliance 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;
• Increases in the prices of raw materials could adversely affect the Company's results of operations;
• The highly competitive nature of the Company's markets could adversely affect its ability to maintain or grow revenues;
• Because 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;
• Adverse weather conditions could adversely impact financial results;
• The Company's international operations make the Company susceptible to fluctuations in currency exchange rates and to other costs and risks associated with international regulation;
• The Company may not be able to adequately protect its intellectual property and other proprietary rights that are material to the Company's business;
• The Company depends on key personnel and may not be able to retain those employees or recruit additional qualified personnel;
• If 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;
• Hagedorn Partnership, L.P. beneficially owns approximately 30% of the Company's common shares and can significantly influence decisions that require the approval of shareholders;
• The 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.

SOURCE The Scotts Miracle-Gro Company

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