Scotts Miracle-Gro (NYSE: SMG) reported Q3 EPS of $3.80, $0.43 better than the analyst estimate of $3.37. Revenue for the quarter came in at $1.49 billion versus the consensus estimate of $1.31 billion.

• Company-wide third quarter sales increase 28% including Hawthorne growth of 72%
• U.S. Consumer sales increase 21% in Q3; Retailer POS up 23% year-to-date
• Q3 GAAP EPS increases 13% to $3.57; Non-GAAP adjusted EPS up 22% to $3.80
• Guidance for fiscal 2020 company-wide sales growth increased to a range of 26 to 28%
• Fiscal 2020 non-GAAP adjusted EPS guidance raised to a range of $6.65 to $6.85
• Non-GAAP free cash flow guidance increased to approximately $400 million
• Board of Directors approves $5 per share special dividend; increases regular quarterly dividend payment by 7%

“Our results this year continue to exceed our most optimistic expectations and are a testament to the critical nature of the categories in which we compete, the commitment of our retail partners, and the loyalty of the consumers and cultivators who rely on our products for their success,” said Jim Hagedorn, chairman and chief executive officer. “As we enter the final weeks of fiscal 2020 and prepare for the start of our next fiscal year, we remain optimistic about the strength of our business as well as our ability to continue to enhance shareholder value.

“As we enjoy a year of unprecedented success, it is appropriate for our associates, communities and shareholders to reap the benefit as well. With the support of our Board, we have decided to make special one-time payments later this year to nearly 3,000 hourly and salaried associates who do not participate in our bonus plans, but played a critical role in our success this year. We also will enhance bonus payments to another nearly 1,500 eligible associates who do participate in incentive plans. In addition, we plan to double our charitable contributions to benefit the communities we serve.

“Shareholders also will benefit from a special dividend payment of $5 per share, which is consistent with our long-standing commitment to return cash to shareholders as well as the Board’s decision to increase our regular quarterly dividend.”

GUIDANCE:

Scotts Miracle-Gro sees FY2020 EPS of $6.65-$6.85, versus the consensus of $5.79.

The Company’s newly revised sales guidance of 26 to 28 percent growth assumes the U.S. Consumer segment grows 20 to 22 percent in fiscal 2020 and Hawthorne sales increase 55 to 60 percent. Entering June, the Company said it expected U.S. Consumer sales to increase 9 to11 percent in fiscal 2020 and Hawthorne to increase 45 to 50 percent.

The revised guidance for non-GAAP adjusted earnings per share of $6.65 to $6.85 compares with the June forecast of $5.65 to $5.85 per share. The Company said it expected non-GAAP free cash flow of approximately $400 million, up from approximately $350 million earlier.

“The growth we saw in June and July clearly exceeded our expectations as we have seen unprecedented levels of consumer engagement later in the summer than normal,” said Randy Coleman, executive vice president and chief financial officer. “The entire team has done a tremendous job all year navigating these unusual times. In addition to our better-than-expected operating results, we’ve also further strengthened our balance sheet, giving us the financial flexibility to return cash to shareholders and pursue investments in future growth while also keeping our leverage in line with our long-term targets.”

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