General Hydroponics Results Please New Parent Scotts Miracle-Gro

GenHydro

Scotts Miracle-Gro (NYSE:SMG), the Ohio-based lawn and garden company that acquired cannabis industry supplier General Hydroponics earlier this year for $130mm, reported its 4th-quarter earnings for the year ending September 30th on November 3rd.  The company will be hosting an Analyst & Investor Day in New York City on December 10th, so it was a bit hesitant on the conference call (see transcript provided by Seeking Alpha) to discuss too many details.

The company has been relatively quiet with respect to the acquisition, and the Scotts Miracle-Gro corporate website makes no mention of the new unit, nor does the General Hydroponics website discuss the new ownership.  The company never announced the deal, which closed in March, via press release.  Instead, the details were revealed through newspaper reports. Today’s press release made no mention of the contribution of the new unit to the overall results.   On the call, though, CEO Jim Hagedorn talked about the acquisition, one of eight during the year and the largest since the late 90s.  In his prepared remarks, he said:

We’re particularly encouraged by what we’re seeing in General Hydroponics. Sales and profit for that business, which is part of Hawthorne Gardening Company actually finished the year ahead of our expectations, and our plans for 2016 indicate continued above average growth in this business.

In response to a question from an analyst, CFO Randy Coleman implied that General Hydro sales are about $50mm per year. The company reported sales of $3 billion, so considering that not all of the General Hydro sales are cannabis-related, the actual cannabis exposure of the company isn’t that great.  Still, General Hydro is one of the larger companies serving the cannabis industry with its nutrients, supplements, growing media, and systems. To the extent Scotts Miracle-Gro is successful with this ancillary investment in the cannabis industry, other large corporations may become encouraged to participate.

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Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online communities 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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