Scotts Miracle Gro Co. Earnings Call Insights: Guidance Start and Comps Discussion
Jon Andersen – William Blair: I guess I wanted to ask about the guidance start, kind of reaffirmed the view that you can hit 1% to 3% for the year, but at the same time you talked about the slow start in the consumer business in the quarter, Europe perhaps softer than anticipated and that continuing and SLS being kind of a 50-50 proposition to hit the full-year target. So, again, just looking for a little more color on what gives you confidence here that given these factors that 1% to 3% is something that’s achievable?
James Hagedorn – Chairman and CEO: I think with pricing, I think it was 1% to 3%. So I think it was zero in units, 1% to 3%. Listen, this, before Barry goes in there, I’d start with from kind of Larry’s and my point of view on the corporate side, and that is that you sort of just have to go with me on this that we have an extremely conservative budget. The team is managing this really hard that the acceleration in our business has been extremely rapid sort of since April 1, and we’ve made up just an absolute ton of ground, and that because of the conservativeness that’s within our budget, I think that both Larry and I are very confident that the operators have a plan to get there. And I’m not sure what more I can say, Barry if you want to add some color to that?
Barry W. Sanders – President and COO: Yeah, I would say Jon, it was a slow start, but I think you’re planning numbers off of last year. Last year was a very good year. We knew it wouldn’t be quite as good, but clearly, the business has shifted probably in a four to five-week range, and what we’re seeing in our sales on a weekly basis now is recovery of that. And so, are we absolutely confident that we’ll get back? The numbers are trending in the right way and we do expect to understand much clear if the weather patterns remain as they are right now through the end of May, we should get pretty close back to where we thought we would be, and so I think when it comes to the end of this month I think we’ll actually think about how we’ll give guidance relative to that in the June timeframe…
Barry W. Sanders – President and COO: I would just add to supplement that a little bit. We watch weather maps a lot and obviously they are going to be what they are going to be, and that will determine a lot, but right now they look good. And we take heart in that and like we said, the activity that we’ve seen in the markets where the weather has been good has been outstanding, and so it gives us cause for encouragement.
Jon Andersen – William Blair: Just one point of clarification or follow-up. When you talk about conservatism in budgets, are you referring to conservatism around top line assumptions, volume and pricing promotion, or are you referring to conservatism on the SG&A line perhaps where your SG&A was down 13% year-over-year during the second quarter and then are you looking for just…?
James Hagedorn – Chairman and CEO: I don’t want to interrupt. I would say on the top line. I think there’s a lot of contingencies and ability to make adjustments in the P&L that probably we’re a little more awkward at in previous years and that we understand the importance of making our numbers. And I think when I say conservative, what I’m saying to you is that that I don’t have to hit budget to get to guidance. That’s truly where I’m at, and so I think that we’ve spent a lot of time going through sensitivities on volume misses to budget, okay, which is not numbers that we share with you guys. And I think that almost in all cases we’re good in our guidance and I think that’s the basis that we feel when we say confidently reaffirm, which I don’t think we’ve ever done before. It basically means that it’s not hollow, put it that way.
Larry Hilsheimer – CFO: In my comments I mentioned that we have multiple continuous declines. One and I also mentioned that part of why we’re – where we are in SG&A through the second quarter is that we pushed back and delayed spend on advertising to try to match it up to the market. And so we’ve got actions that we can take to the extent necessary.
Olivia Tong – Bank of America Merrill Lynch: Maybe you can remind us what comps looked like in April, May and June of last year to help us sort of bridge the gap and how do you get from 9% down POS through early May to sort of back on track and back to getting sort of 1% to 3% sales growth for the full-year?
Larry Hilsheimer – CFO: I’m just going to give you kind of a factoid. We picked up 3% in the last week. So, that tells you how rapidly this stuff can move but – Barry what are the comps were up against?
Barry W. Sanders – President and COO: I’m not going to tell you the numbers that I know off the top of my head, Olivia is that we ended march last year up approximately 30%. I think it was we had our conference call in the first week in May, at that point we were up 8% and we ended the year flat. So, we lost 8% through that period and so the numbers that we are looking at is essentially to be …
James Hagedorn – Chairman and CEO: Yeah, we were essentially flat April, May last year, and then June, July, August, we saw roughly the same kind of performance, fell a little bit and we had a big pickup in the fall; really encouraged both September and October, even in November as we closed out the year. So, Olivia, when we were prepping for this call, positive year-over-year numbers sort of after the middle of April. I think we have one or two positive weeks up until the fall, and then we had sort of an awesome fall, but we’ve got pretty easy comps we’re up against as the bottom line, and if we need to get actual numbers back to you, we’ll make sure that that happens, okay?
Olivia Tong – Bank of America Merrill Lynch: And then touching on earlier question, you obviously reiterated the top line outlook for the full year, what’s coming in better than you expected so far in the last, call it, four to five weeks, because you obviously mentioned that European weakness is probably going to hit the full – it’s coming in worse than you expected, LawnService is sort of 50-50. So, the expectation of course is that there’s something that came in a little bit better over the last four to five weeks in the U.S.?
James Hagedorn – Chairman and CEO: I’ll tell you the big one, lawns. I mean, the Lawn business is doing really, really well, and that’s like – that’s fine margin for us. So we’re doing great in mulch. But the lawn fertilizer business is a business that you know we have been sort of watching carefully over the last couple of years and we are just seeing really good lawn sales and really clean inventory on some of these very seasonal products like (hops). So I would say that, right now, if you would ask me what’s the big sort of headline, we continue to do well in our Turf business and our mulch in particular and the lawn fertilizer business is just doing really pretty fabulous. Jim, would you add anything to that?
Jim King – SVP, IR and Corporate Affairs: No, I’d say that we’ve got 32 straight days of positive POS on ferts and we don’t see that stopping anytime for the balance of the month. If things look good, sales are good, and it’s all north (driven to). Olivia, you should go out to stores. I mean the northeast is honking lady (so far).
Olivia Tong – Bank of America Merrill Lynch: And then just lastly you mentioned a couple of POS numbers earlier in your commentary, Barry, and you said that growing media underperformed relative to some of the other categories like fertilizer and mulch. What was driving the lower growth in growing media?
Barry W. Sanders – President and COO: I’m going to clarify one comment just about mulch. I said we lost share in mulch. It was actually supposed to be March, so we lost a bit of share in mulch, but it was actually March not mulch. But it’s a delay in planting. We looked at – we tried to triangulate on live goods sales and Olivia right now to us the best intelligence we can get right now is because of the weather planting has been delayed by three or four weeks. So when you go back to my script when I said from Mother’s Day through Memorial Day we expect that a large number of the live good sales will catch up in that period and that will pull the growing media along with it, and so we saw a delay in fertilizer from March into April and May, and we think that there is a delay in the growing media really from end of April pushing it more towards the end of May.
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