Scotts Miracle-Gro Board Hikes Dividend, Approves Share Buyback - Quick Facts

While reporting its third-quarter financial results today, Scotts Miracle-Gro Co. (SMG) said its board of directors approved an increase in the quarterly dividend and also approved an additional $500 million share repurchase authorization.

The company's board approved a 6 percent increase in the quarterly dividend to $0.50 per share for each of the issued and outstanding common shares. The dividend is payable on Friday, September 9, 2016 to shareholders of record on Friday, August 26, 2016.

The Board also approved a share repurchase authorization of$500 million that is incremental to the company's existing authorization, which has roughly $400 million remaining.

During the third quarter, the company completed its contribution of the Scotts LawnService business into a joint venture with TruGreen. The company noted that the integration of the two businesses is progressing well.

However, expected earnings dilution from the transaction is likely to be slightly higher than expected in fiscal 2016 as the closing of the joint venture was delayed by about two months.

With the aid of cash received from the joint venture, Hawthorne Gardening Company has acquired a 75 percent stake in Gavita, a Netherlands-based manufacturer of lighting and related equipment for hydroponic gardening, for $136 million. The transaction is expected to be accretive to earnings per share in fiscal 2017.

In recent weeks, Hawthorne also has signed a definitive agreement to acquire Botanicare, an Arizona-based market-leading manufacturer of plant nutrients, plant supplements and growing systems used for hydroponic gardening.

The company did not disclose terms of the transaction, which is expected to close by the end of the calendar year. Once the transaction closes, Scotts Miracle-Gro anticipates that Hawthorne will become its own reporting segment.

Looking ahead to fiscal 2016, Scotts Miracle-Gro said that due to slower than expected shipments in April and early May and a greater than expected impact from foreign exchange rates, it now expects full-year sales growth of roughly 2 percent, most of which will be driven by acquisitions.

Due to lower sales and the incremental current year dilution from the Scotts LawnService transaction, the company expects pro forma adjusted earnings will likely be on the bottom of the current guidance range of $3.75 to $3.95 per share.

On average, analysts polled by Thomson Reuters expect earnings of $3.85 per share for the year. Analysts' estimates typically exclude special items.

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