COLUMBUS, Ohio, MAUMEE, Ohio, BRANTFORD, Ontario – Almost in conjunction with the Feb. 7, 2000, announcement that The Scotts Company is selling its Professional Turf Business units to The Andersons Inc. and Nu-Gro Corporation, the three companies released financial results for their current fiscal quarters. Below are the details of each company’s announcement:
The Scotts Company
The Scotts Company reported Jan. 27 that its first quarter fiscal 2000 net sales were $191.5 million compared to last year’s first quarter of $184.4 million. The company also reported earnings at a net loss of $29.6 million compared to a net loss of $10.0 million last year.
For the company’s North American Professional segment – part of which has now been sold to The Andersons and Nu-Gro – sales were $23.6 million compared to $32.5 million in last year’s first quarter. This segment is comprised of a professional turf and a professional horticulture business. The company stated that the decline in sales was primarily related to difficulties in the transition to the new distribution model adopted last year in the professional turf business. The company will no longer need to worry about that part of the segment as its sale is being finalized.
Statements made by the company explained that the sale of the Professional Turf Business took place to allow the company to focus on its consumer lawn business. From the company’s financial results, it looks as if they may be doing the right thing as North American Consumer first quarter 2000 sales were $101.6 million, an increase of 40 percent over last year’s first quarter of $72.8 million. Within the North American group, sales of consumer lawns increased 23 percent and consumer gardens increased 8 percent.
Charles Berger, Scotts chairman, president and chief executive officer, said "We expect our core North American consumer businesses to produce another year of strong double-digit growth, fueled by the strong category growth in the lawn and garden market over the past three years."
The Andersons
The Andersons announced Feb. 2 a net income of $3.4 million for the fourth quarter of 1999, $1.8 million below the $5.2 million for the comparable period last year. Total revenues of $343.2 million for the period were 6.6 percent below the $367.3 million reported for the fourth quarter of 1998, primarily due to lower grain prices.
The Andersons’ net income for the full year was $8.4 million on revenues of $979 million. In 1998, the company had revenues of $1.1 billion and net income of $9.8 million. A significant portion of the company’s revenue is generated by its grain business and is heavily influenced by grain prices.
The segment of the business that will be impacted by the purchase of the Scotts Professional Turf Business is The Andersons Processing Group. This unit produces granular lawn fertilizer products for major retailers and professional lawn care and golf course markets. It also produces ice-melter products, corncob-based chemical and feed-ingredient carriers and animal bedding and litter products.
The group’s lawn products segment achieved volume and revenue growth in 1999. Operating income declined for both the fourth quarter and the year, however, because of two significant costs – a sizable investment to increase the productive capacity of its Maumee plant and start-up costs associated with the addition of manufacturing and distribution facilities in eastern Pennsylvania and Alabama.
Mike Anderson, president and CEO, said, "The modest decline in our earnings year-to-year was the result of specific decisions to invest for the future, a purposeful down payment on our ability to more productively support growth. … Looking forward, we expect to achieve double-digit earnings growth in 2000."
Nu-Gro Corporation
The Nu-Gro Corporation announced Feb. 9 that its first quarter sales results for the 2000 fiscal year were $19.9 million and its net earnings for the period were $119,000. For the same quarter in the 1999 fiscal year, sales results were $20.5 million and net earnings were $195,000.
Commenting on the first quarter results, John Hill, Nu-Gro president and CEO, said, "The first quarter is traditionally a weak quarter throughout our industry. Based on booking orders, we remain optimistic that we will meet our financial targets for the year."
The company stated that sales in the quarter were down due to a shift in delivery patterns. Despite the decreased sales, gross profit is up due to improved profit margins. Sales and administrative expenses were up due to increased marketing spending to support the CIL® and Wilson® brands and the launch of 38 new consumer products, the benefits of which will be realized during the peak March to June selling season.
With the purchase of the Scotts Professional Turf Business unit, Nu-Gro is expecting sales and earnings to rise. "This acquisition is consistent with our stated strategy of consolidating the Canadian fertilizer market," said Hill. "The high quality products from Scotts will be an excellent addition to Nu-Gro’s existing line of professional turf products which are widely used in Canada today."