In its 2016 10-K report, Scotts Miracle-Gro (SMG) stated that over the past three years, it had the following capital expenditure allocations: “70% for expansion and maintenance of existing productive assets; 13% for new productive assets; 10% to expand our information technology and transformation and integration capabilities; and 7% for Corporate assets.”
For 1Q17, analysts estimate Scotts Miracle-Gro’s capital expenditure to stand at $15.8 million, which would be about 7% of 1Q17 revenues. For the full-year 2017, analysts estimate a total capital expenditure of $56.6 million, which would be just about 1.8% of the full-year 2017 revenue. The company stated that in 2017, it expects its “fiscal 2017 capital expenditures to be consistent with our recent capital spending amounts and allocations.”
Capex for acquisition
Lately, acquisitions have become a key revenue driver for Scotts Miracle-Gro. As the company takes on other players in the market (MOO) like Spectrum Brands Holdings (SPB), Seaboard (SEB), and Central Garden & Pet (CENT), acquisitions may continue to be in the cards for Scotts Miracle-Gro in 2017 as well.
The $56.6 million in 2017 capital expenditure would be a slight fall from $58.3 million in 2016, which was about 2% of 2016 revenues. Two years ago, capital expenditure stood at $61.7 million, or 2% of 2015 revenue.
Next, we’ll discuss cash flow growth estimates for SMG in 1Q17.