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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________________
FORM 10-Q
_________________________________
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 2024
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to
Commission File Number: 001-11593
____________________________________ 
The Scotts Miracle-Gro Company

(Exact name of registrant as specified in its charter)
____________________________________________
Ohio31-1414921
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification No.)
14111 Scottslawn Road, Marysville, Ohio 43041
(Address of principal executive offices) (Zip Code)
(937) 644-0011
(Registrant’s telephone number, including area code)
_____________________________________________ 
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Shares, $0.01 stated valueSMGNYSE
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐ 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐ 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒  Accelerated filer☐
Non-accelerated filer☐  Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  
Yes☐No☒
As of August 2, 2024, there were 56,821,100 common shares outstanding.
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THE SCOTTS MIRACLE-GRO COMPANY
INDEX
  PAGE NO.

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PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

THE SCOTTS MIRACLE-GRO COMPANY
Condensed Consolidated Statements of Operations
(In millions, except per share data)
(Unaudited)
 
 Three Months EndedNine Months Ended
 June 29,
2024		July 1,
2023		June 29,
2024		July 1,
2023
Net sales$1,202.2 $1,118.7 $3,138.0 $3,176.8 
Cost of sales850.6 880.1 2,191.4 2,300.7 
Cost of sales—impairment, restructuring and other (2.5)32.7 66.6 161.8 
Gross margin354.1 205.9 880.0 714.3 
Operating expenses:
Selling, general and administrative147.9 128.5 441.4 443.3 
Impairment, restructuring and other(0.8)1.7 (5.9)32.0 
Other (income) expense, net6.9 (1.6)19.6 (2.7)
Income from operations200.1 77.3 424.9 241.7 
Equity in (income) loss of unconsolidated affiliates(23.0)(22.2)6.5 (3.5)
Interest expense38.8 47.1 125.6 138.1 
Other non-operating (income) expense, net1.3 0.4 4.2 (0.2)
Income before income taxes183.0 52.0 288.6 107.3 
Income tax expense 50.9 8.3 79.5 19.0 
Net income $132.1 $43.7 $209.1 $88.3 
Basic net income per common share$2.33 $0.78 $3.69 $1.58 
Diluted net income per common share$2.28 $0.77 $3.64 $1.57 
Weighted-average common shares outstanding during the period56.8 56.2 56.7 55.9 
Weighted-average common shares outstanding during the period plus dilutive potential common shares58.0 56.6 57.5 56.3 

See Notes to Condensed Consolidated Financial Statements.
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THE SCOTTS MIRACLE-GRO COMPANY
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In millions)
(Unaudited)
 Three Months EndedNine Months Ended
 June 29,
2024		July 1,
2023		June 29,
2024		July 1,
2023
Net income $132.1 $43.7 $209.1 $88.3 
Other comprehensive income (loss):
Net foreign currency translation adjustment(1.3)2.7 (0.8)10.9 
Net unrealized gain (loss) on derivative instruments, net of tax1.2 7.2 (0.9)(2.4)
Reclassification of net unrealized gain on derivative instruments to net income, net of tax(3.8)(3.2)(6.2)(15.1)
Net unrealized gain (loss) on securities, net of tax5.1 0.5 3.6 (25.5)
Pension and other post-retirement benefit adjustments, net of tax0.6 (0.6)0.2 (3.8)
Total other comprehensive income (loss)1.8 6.6 (4.1)(35.9)
Comprehensive income$133.9 $50.3 $205.0 $52.4 
See Notes to Condensed Consolidated Financial Statements.

4
THE SCOTTS MIRACLE-GRO COMPANY
Condensed Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
 Nine Months Ended
 June 29,
2024		July 1,
2023
OPERATING ACTIVITIES
Net income $209.1 $88.3 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Impairment, restructuring and other6.4 50.0 
Share-based compensation expense65.7 52.7 
Depreciation48.8 49.6 
Amortization11.8 20.8 
Deferred taxes62.0 (5.9)
Equity in (income) loss of unconsolidated affiliates6.5 (3.5)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable(200.8)(775.9)
Inventories273.4 448.6 
Prepaid and other current assets6.2 (0.7)
Accounts payable73.1 (35.7)
Other current liabilities(3.2)112.5 
Other non-current items(10.2)(8.1)
Other, net0.2 3.0 
Net cash provided by (used in) operating activities549.0 (4.3)
INVESTING ACTIVITIES
Investments in property, plant and equipment(67.4)(73.8)
Proceeds from loans receivable— 37.0 
Investments in unconsolidated affiliates(21.4)— 
Other investing, net8.8 (7.8)
Net cash used in investing activities(80.0)(44.6)
FINANCING ACTIVITIES
Borrowings under revolving and bank lines of credit and term loans648.5 1,296.4 
Repayments under revolving and bank lines of credit and term loans(776.4)(1,183.8)
Dividends paid(113.7)(112.0)
Purchase of Common Shares(5.0)(9.3)
Cash received from exercise of stock options2.4 1.7 
Other financing, net23.1 (4.0)
Net cash used in financing activities(221.1)(11.0)
Effect of exchange rate changes on cash0.1 0.5 
Net increase (decrease) in cash and cash equivalents248.0 (59.4)
Cash and cash equivalents at beginning of period31.9 86.8 
Cash and cash equivalents at end of period$279.9 $27.4 

See Notes to Condensed Consolidated Financial Statements.
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THE SCOTTS MIRACLE-GRO COMPANY
Condensed Consolidated Balance Sheets
(In millions, except per share data)
(Unaudited)
 
June 29,
2024		July 1,
2023		September 30,
2023
ASSETS
Current assets:
Cash and cash equivalents$279.9 $27.4 $31.9 
Accounts receivable, less allowances of $12.7, $22.3 and $15.1, respectively
504.6 717.7 304.2 
Accounts receivable pledged— 442.2 — 
Inventories606.8 884.9 880.3 
Prepaid and other current assets147.1 178.8 181.4 
Total current assets1,538.4 2,251.0 1,397.8 
Investment in unconsolidated affiliates106.8 196.5 91.9 
Property, plant and equipment, net of accumulated depreciation of $805.6, $805.3 and $765.4, respectively
599.0 590.3 610.3 
Goodwill243.9 254.5 243.9 
Intangible assets, net424.9 560.2 436.7 
Other assets576.3 601.9 633.1 
Total assets$3,489.3 $4,454.4 $3,413.7 
LIABILITIES AND EQUITY (DEFICIT)
Current liabilities:
Current portion of debt$52.9 $450.7 $52.3 
Accounts payable316.7 365.7 271.2 
Other current liabilities484.8 512.7 450.2 
Total current liabilities854.4 1,329.1 773.7 
Long-term debt2,436.4 2,628.8 2,557.4 
Other liabilities344.7 361.7 349.9 
Total liabilities3,635.5 4,319.6 3,681.0 
Commitments and contingencies (Note 10)
Equity (deficit):
Common shares and capital in excess of $0.01 stated value per share; shares outstanding of 56.8, 56.1 and 56.5, respectively
360.6 350.5 353.1 
Retained earnings585.8 996.8 490.9 
Treasury shares, at cost; 11.4, 12.0 and 11.6 shares, respectively
(975.7)(1,032.0)(998.5)
Accumulated other comprehensive loss(116.9)(180.5)(112.8)
Total equity (deficit)(146.2)134.8 (267.3)
Total liabilities and equity (deficit)$3,489.3 $4,454.4 $3,413.7 
See Notes to Condensed Consolidated Financial Statements.
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THE SCOTTS MIRACLE-GRO COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Dollars in millions, except per share data)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
The Scotts Miracle-Gro Company (“Scotts Miracle-Gro”) and its subsidiaries (collectively, with Scotts Miracle-Gro, the “Company”) are engaged in the manufacturing, marketing and sale of products for lawn and garden care and indoor and hydroponic gardening. The Company’s products are sold in North America, Europe and Asia.
The Company’s North America consumer lawn and garden business is highly seasonal, with approximately 75% of its annual net sales occurring in the second and third fiscal quarters. The Company’s Hawthorne segment is also impacted by seasonal sales patterns for certain product categories due to the timing of growing patterns in North America during the second and third fiscal quarters, and the timing of certain controlled agricultural lighting project sales during the third and fourth fiscal quarters.
Organization and Basis of Presentation
The Company’s unaudited condensed consolidated financial statements for the three and nine months ended June 29, 2024 and July 1, 2023 are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The condensed consolidated financial statements include the accounts of Scotts Miracle-Gro and its subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation. The Company’s consolidation criteria are based on majority ownership (as evidenced by a majority voting interest in the entity) and an objective evaluation and determination of effective management control. The results of businesses acquired or disposed of are included in the condensed consolidated financial statements from the date of each acquisition or up to the date of disposal, respectively. In the opinion of management, interim results reflect all normal and recurring adjustments and are not necessarily indicative of results for a full year.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted or condensed pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, this Quarterly Report on Form 10-Q for the fiscal quarter ended June 29, 2024 (this “Form 10-Q”) should be read in conjunction with Scotts Miracle-Gro’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023 (the “2023 Annual Report”), which includes a complete set of footnote disclosures, including the Company’s significant accounting policies.
The Company’s Condensed Consolidated Balance Sheet at September 30, 2023 has been derived from the Company’s audited Consolidated Balance Sheet at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements.
Accounts Receivable
On October 27, 2023, the Company entered into a Master Receivables Purchase Agreement (the “Master Receivables Purchase Agreement”), under which it may sell up to $600.0 of available and eligible outstanding customer accounts receivable generated by sales to four specified customers. The agreement is uncommitted and has an initial term that expires October 25, 2024, unless earlier terminated by the purchaser. The receivable sales are non-recourse to the Company, other than with respect to (i) repurchase and indemnification obligations for any violations by the Company of its respective representations or obligations as seller or servicer and (ii) certain repurchase and payment obligations arising from any dilution of, or dispute with respect to, any purchased receivables that arise after the sale of such purchased receivables to the purchaser not contemplated in the applicable purchase price of such purchased receivable. The recourse obligations of the Company that may arise from time to time are supported by standby letters of credit of $70.0. Transactions under this agreement are accounted for as sales of accounts receivable, and the receivables sold are removed from the Condensed Consolidated Balance Sheets at the time of the sales transaction. Proceeds received from the sales of accounts receivable are classified as operating cash flows and collections of previously sold accounts receivable not yet submitted to the buyer are classified as financing cash flows in the Condensed Consolidated Statements of Cash Flows. The Company records the discount on sales in the “Other (income) expense, net” line in the Condensed Consolidated Statements of Operations. At June 29, 2024, net receivables of $477.3 were derecognized. During the three and nine months ended June 29, 2024, proceeds from the sale of receivables under the Master Receivables Purchase Agreement totaled $724.5 and $1,680.0, respectively, and the total discount recorded on sales was $8.7 and $21.6, respectively.
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THE SCOTTS MIRACLE-GRO COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
(Dollars in millions, except per share data)
Supplier Finance Program
The Company has an agreement to provide a supplier finance program which facilitates participating suppliers’ ability to finance payment obligations of the Company with a designated third-party financial institution. Participating suppliers may, at their sole discretion, elect to finance payment obligations of the Company prior to their scheduled due dates at a discounted price to the participating financial institution. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to finance amounts under this arrangement. The payment terms that the Company negotiates with its suppliers are consistent, regardless of whether a supplier participates in the program. The Company’s current payment terms with a majority of its suppliers generally range from 30 to 60 days, which the Company deems to be commercially reasonable. The Company’s outstanding payment obligations under its supplier finance program were $22.8, $16.6 and $18.3 at June 29, 2024, July 1, 2023 and September 30, 2023, respectively, and are recorded within accounts payable in the Condensed Consolidated Balance Sheets. The associated payments were $218.6 and $157.6 for the nine months ended June 29, 2024 and July 1, 2023, respectively, and are classified as operating activities in the Condensed Consolidated Statements of Cash Flows.
Long-Lived Assets
The Company had non-cash investing activities of $4.5 and $7.6 during the nine months ended June 29, 2024 and July 1, 2023, respectively, representing unpaid liabilities to acquire property, plant and equipment.
Statements of Cash Flows
Supplemental cash flow information was as follows:
Nine Months Ended
June 29,
2024		July 1,
2023
Interest paid$131.6 $143.3 
Income taxes paid (refunded), net3.7 (15.4)
Cash flow from operating activities for the nine months ended July 1, 2023 was impacted by extended payment terms with vendors for payments originally due in the final weeks of fiscal 2022 that were paid in the first quarter of fiscal 2023. The Company also received proceeds of $37.0 during the nine months ended July 1, 2023 related to the payoff of seller financing that the Company provided in connection with a fiscal 2017 divestiture, which was classified as an investing activity in the Condensed Consolidated Statements of Cash Flows.
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2022-04, “Liabilities — Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” This ASU requires disclosure of the key terms of outstanding supplier finance programs and a roll-forward of the related obligations. ASU No. 2022-04 is effective for fiscal years beginning after December 15, 2022, except for the amendment on roll-forward information, which is effective for fiscal years beginning after December 15, 2023. The Company adopted the ASU as of October 1, 2023. The adoption relates to disclosures only and does not have any impact on the Company’s consolidated financial position, results of operations or cash flows.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This ASU requires enhanced disclosures about significant segment expenses regularly provided to the chief operating decision maker that are included within each reported measure of segment profit or loss, and also requires all annual disclosures currently required by Topic 280 to be included in interim periods. ASU No. 2023-07 is to be applied retrospectively for all periods presented in the financial statements and is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s disclosures.
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THE SCOTTS MIRACLE-GRO COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
(Dollars in millions, except per share data)
In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This ASU primarily requires enhanced disclosures and disaggregation of income tax information by jurisdiction in the annual income tax reconciliation and quantitative and qualitative disclosures regarding income taxes paid. ASU No. 2023-09 is to be applied prospectively, with the option to apply the standard retrospectively, effective for fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s disclosures.
NOTE 2. INVESTMENT IN UNCONSOLIDATED AFFILIATES
On December 31, 2020, the Company acquired a 50% equity interest in Bonnie Plants, LLC, a joint venture with Alabama Farmers Cooperative, Inc. (“AFC”) focused on planting, growing, developing, distributing, marketing and selling live plants. During the three months ended December 31, 2022, the Company and AFC amended the joint venture agreement to allow AFC to make an additional equity contribution to Bonnie Plants, LLC, and, as a result of this contribution by AFC, the Company’s equity interest in Bonnie Plants, LLC was reduced to 45%. On November 7, 2023, the Company purchased an additional 5% equity interest in Bonnie Plants, LLC from AFC for $21.4, which restored its total equity interest back to 50%. The Company’s interest is accounted for using the equity method of accounting, with the Company’s proportionate share of Bonnie Plants, LLC earnings reflected in the Condensed Consolidated Statements of Operations.
During the three and nine months ended June 29, 2024, the Company recorded equity in (income) loss of unconsolidated affiliates associated with Bonnie Plants, LLC of ($23.0) and $6.5, respectively, as compared to ($22.2) and ($3.5) during the three and nine months ended July 1, 2023, respectively. During the three and nine months ended June 29, 2024, the Company recorded a pre-tax impairment charge of $0.0 and $10.4, respectively, associated with its investment in Bonnie Plants, LLC in the “Equity in (income) loss of unconsolidated affiliates” line in the Condensed Consolidated Statements of Operations.
NOTE 3. IMPAIRMENT, RESTRUCTURING AND OTHER
Activity described herein is classified within the “Cost of sales—impairment, restructuring and other” and “Impairment, restructuring and other” lines in the Condensed Consolidated Statements of Operations. The following table details impairment, restructuring and other charges (recoveries) for each of the periods presented:
Three Months EndedNine Months Ended
June 29,
2024		July 1,
2023		June 29,
2024		July 1,
2023
Cost of sales—impairment, restructuring and other:
Restructuring and other charges (recoveries), net$(4.8)$28.6 $59.3 $134.3 
Right-of-use asset impairments2.3 3.7 3.3 19.1 
Property, plant and equipment impairments— 0.5 4.1 8.4 
Operating expenses—impairment, restructuring and other:
Restructuring and other charges (recoveries), net(0.8)1.7 (5.9)32.0 
Total impairment, restructuring and other charges (recoveries), net$(3.3)$34.5 $60.8 $193.8 
The following table summarizes the activity related to liabilities associated with restructuring activities during the nine months ended June 29, 2024:
Amounts accrued at September 30, 2023$40.5 
Restructuring charges6.7 
Payments(24.2)
Amounts accrued at June 29, 2024$23.0 
As of June 29, 2024, restructuring accruals include $7.3 that is classified as long-term.

9
THE SCOTTS MIRACLE-GRO COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
(Dollars in millions, except per share data)
During fiscal 2022, the Company began implementing a series of Company-wide organizational changes and initiatives intended to create operational and management-level efficiencies. These changes and initiatives include reducing the size of the supply chain network, reducing staffing levels and implementing other cost-reduction initiatives. During the second quarter of fiscal 2024, the Company commenced plans to close additional Hawthorne distribution centers. The Company has also accelerated the reduction of certain Hawthorne inventory, primarily lighting, growing environments and hardware products, to reduce its on hand inventory to align with the reduced network capacity. During the three months ended June 29, 2024, the Company recorded net recoveries associated with this restructuring initiative that were not material. During the nine months ended June 29, 2024, the Company incurred costs of $69.7 associated with this restructuring initiative primarily related to inventory write-down charges, employee termination benefits, facility closure costs and impairment of right-of-use assets and property, plant and equipment. The Company incurred costs of $3.7 in its U.S. Consumer segment and $62.9 in its Hawthorne segment in the “Cost of sales—impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations during the nine months ended June 29, 2024. The Company recorded recoveries of $1.2 in its U.S. Consumer segment, and incurred costs of $1.0 in its Hawthorne segment, $0.8 in its Other segment and $2.4 at Corporate in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations during the nine months ended June 29, 2024. Costs incurred from the inception of this restructuring initiative through June 29, 2024 were $288.3 for the Hawthorne segment, $48.1 for the U.S. Consumer segment, $2.3 for the Other segment and $25.1 for Corporate.
During the three and nine months ended July 1, 2023, the Company incurred costs of $34.5 and $185.8, respectively, associated with this restructuring initiative primarily related to inventory write-down charges, employee termination benefits, facility closure costs and impairment of right-of-use assets and property, plant and equipment. The Company incurred costs of $7.1 and $8.2 in its U.S. Consumer segment and $25.7 and $152.6 in its Hawthorne segment in the “Cost of sales—impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations during the three and nine months ended July 1, 2023, respectively. The Company incurred costs of $1.9 and $20.1 in its Hawthorne segment and $0.0 and $4.5 at Corporate in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations during the three and nine months ended July 1, 2023, respectively.
During the three and nine months ended June 29, 2024, the Company recorded a gain of $0.0 and $12.1, respectively, in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations associated with a payment received in resolution of a dispute with the former ownership group of a business that was acquired in fiscal 2022. This payment was classified as an operating activity in the Condensed Consolidated Statements of Cash Flows.
NOTE 4. INVENTORIES
Inventories consisted of the following for each of the periods presented:
June 29,
2024		July 1,
2023		September 30,
2023
Finished goods$281.3 $534.4 $506.2 
Raw materials250.8 271.3 272.5 
Work-in-process74.7 79.2 101.6 
Total inventories, net$606.8 $884.9 $880.3 
NOTE 5. MARKETING AGREEMENT
The Scotts Company LLC (“Scotts LLC”) is the exclusive agent of Monsanto Company (“Monsanto”), a subsidiary of Bayer AG, for the marketing and distribution of certain of Monsanto’s consumer Roundup® branded products in the United States and certain other specified countries. The annual commission payable under the Third Amended and Restated Exclusive Agency and Marketing Agreement (the “Third Restated Agreement”) is equal to 50% of the actual earnings before interest and income taxes of Monsanto’s consumer Roundup® business for each program year in the markets covered by the Third Restated Agreement (“Program EBIT”). The Third Restated Agreement also requires the Company to make annual payments of $18.0 to Monsanto as a contribution against the overall expenses of its consumer Roundup® business, subject to reduction pursuant to the Third Restated Agreement for any program year in which the Program EBIT does not equal or exceed $36.0.
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THE SCOTTS MIRACLE-GRO COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
(Dollars in millions, except per share data)
Unless Monsanto terminates the Third Restated Agreement due to an event of default by the Company, termination rights under the Third Restated Agreement include the following:
•The Company may terminate the Third Restated Agreement upon the insolvency or bankruptcy of Monsanto;
•Monsanto may terminate the Third Restated Agreement in the event that Monsanto decides to decommission the permits, licenses and registrations needed for, and the trademarks, trade names, packages, copyrights and designs used in, the sale of the Roundup® products in the lawn and garden market (a “Brand Decommissioning Termination”); and
•Each party may terminate the Third Restated Agreement if Program EBIT falls below $50.0 and, in such case, no termination fee would be payable to either party.
The termination fee structure requires Monsanto to pay a termination fee to the Company in an amount equal to (i) $375.0 upon a Brand Decommissioning Termination, and (ii) the greater of $175.0 or four times an amount equal to the average of the Program EBIT for the three program years before the year of termination, minus $186.4, if Monsanto or its successor terminates the Third Restated Agreement as a result of a Roundup Sale or Change of Control of Monsanto (each, as defined in the Third Restated Agreement).
The elements of the net commission and reimbursements earned under the Third Restated Agreement and included in the “Net sales” line in the Condensed Consolidated Statements of Operations are as follows:
 Three Months EndedNine Months Ended
 June 29,
2024		July 1,
2023		June 29,
2024		July 1,
2023
Gross commission$31.5 $12.3 $80.9 $70.9 
Contribution expenses(4.5)(4.5)(13.5)(13.5)
Net commission27.0 7.8 67.4 57.4 
Reimbursements associated with Roundup® marketing agreement
27.4 23.5 75.5 65.9 
Total net sales associated with Roundup® marketing agreement
$54.4 $31.3 $142.9 $123.3 
NOTE 6. DEBT
The components of debt are as follows:
June 29,
2024		July 1,
2023		September 30,
2023
Credit Facilities:
Revolving loans$— $145.1 $88.3 
Term loans887.5 937.5 925.0 
Senior Notes due 2031 – 4.000%
500.0 500.0 500.0 
Senior Notes due 2032 – 4.375%
400.0 400.0 400.0 
Senior Notes due 2029 – 4.500%
450.0 450.0 450.0 
Senior Notes due 2026 – 5.250%
250.0 250.0 250.0 
Receivables facility— 398.0 — 
Finance lease obligations19.7 17.4 16.9 
Other— 0.8 0.4 
Total debt2,507.2 3,098.8 2,630.6 
Less current portions52.9 450.7 52.3 
Less unamortized debt issuance costs17.9 19.3 20.9 
Long-term debt$2,436.4 $2,628.8 $2,557.4 
11
THE SCOTTS MIRACLE-GRO COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
(Dollars in millions, except per share data)
Credit Facilities
On April 8, 2022, the Company entered into a sixth amended and restated credit agreement (the “Sixth A&R Credit Agreement”), providing the Company and certain of its subsidiaries with five-year senior secured loan facilities in the aggregate principal amount of $2,500.0, comprised of a revolving credit facility of $1,500.0 and a term loan in the original principal amount of $1,000.0 (the “Sixth A&R Credit Facilities”). The Sixth A&R Credit Agreement will terminate on April 8, 2027. The Sixth A&R Credit Facilities are available for the issuance of letters of credit up to $100.0. The terms of the Sixth A&R Credit Agreement include customary representations and warranties, affirmative and negative covenants, financial covenants, and events of default.
Under the terms of the Sixth A&R Credit Agreement, loans bear interest, at the Company’s election, at a rate per annum equal to either (i) the Alternate Base Rate plus the Applicable Spread (each, as defined in the Sixth A&R Credit Agreement) or (ii) the Adjusted Term SOFR Rate for the Interest Period in effect for such borrowing plus the Applicable Spread (all as defined in the Sixth A&R Credit Agreement). Swingline Loans bear interest at the applicable Swingline Rate set forth in the Sixth A&R Credit Agreement. Interest rates for other select non-U.S. dollar borrowings, including borrowings denominated in euro, Pounds Sterling and Canadian dollars, are based on separate interest rate indices, as set forth in the Sixth A&R Credit Agreement.
On June 8, 2022, the Company entered into Amendment No. 1 to the Sixth A&R Credit Agreement (“Amendment No. 1”). Amendment No. 1 increased the maximum permitted leverage ratio for the quarterly leverage covenant until April 1, 2024. Amendment No. 1 also increased the interest rate applicable to borrowings under the revolving credit facility by 35 bps and the term loan facility by 50 bps, and increased the annual facility fee rate on the revolving credit facility by 15 bps, in each case, when the Company’s quarterly-tested leverage ratio exceeded 4.75.
On July 31, 2023, the Company entered into Amendment No. 2 to the Sixth A&R Credit Agreement (“Amendment No. 2”). Amendment No. 2 (i) reduces the revolving loan commitments by $250.0; (ii) increases the maximum permitted leverage ratio for the quarterly leverage covenant until the earlier of (a) October 1, 2025 and (b) subject to certain conditions specified in Amendment No. 2, the termination by the Company of such adjustment (such period, the “Leverage Adjustment Period”); (iii) replaces the interest coverage covenant with a fixed charge coverage covenant; (iv) increases the interest rate applicable to borrowings under the revolving credit facility and the term loan facility by 25 bps for each existing pricing tier and adds a pricing tier applicable to periods when the leverage ratio exceeds 6.00; (v) limits the amount of certain incremental investments, loans and advances to $25.0 during the Leverage Adjustment Period; and (vi) adds the Company’s intellectual property (subject to certain exceptions) as collateral to secure its obligations under the Sixth A&R Credit Agreement. Additionally, Amendment No. 2 limits the Company’s ability to declare or pay any discretionary dividends, distributions or other restricted payments during the Leverage Adjustment Period to only the payment of (i) regularly scheduled cash dividends to holders of its Common Shares in an aggregate amount not to exceed $225.0 per fiscal year and (ii) other dividends, distributions or other restricted payments in an aggregate amount not to exceed $25.0. Amendment No. 2 also subjects the Company’s ability to make certain investments to pro forma compliance with certain leverage levels specified in Amendment No. 2. Pursuant to Amendment No. 2, the Sixth A&R Credit Agreement is secured by (i) a perfected first priority security interest in all of the accounts receivable, inventory, equipment and intellectual property (subject to certain exceptions) of Scotts Miracle-Gro and certain of its domestic subsidiaries and (ii) the pledge of all of the capital stock of certain of Scotts Miracle-Gro’s domestic subsidiaries and a portion of the capital stock of certain of its foreign subsidiaries.
At June 29, 2024, the Company had letters of credit outstanding in the aggregate principal amount of $78.0, and had $1,172.0 of borrowing availability under the Sixth A&R Credit Agreement. The weighted average interest rates on average borrowings under the credit facilities, excluding the impact of interest rate swaps, were 9.0% and 7.3% for the nine months ended June 29, 2024 and July 1, 2023, respectively.
On August 6, 2024, the Company used available cash on hand to make a repayment on the term loan of the Sixth A&R Credit Agreement in the amount of $200.0, which was applied to the outstanding principal amount.
12
THE SCOTTS MIRACLE-GRO COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
(Dollars in millions, except per share data)
The Sixth A&R Credit Agreement contains, among other obligations, an affirmative covenant regarding the Company’s leverage ratio determined as of the end of each of its fiscal quarters, calculated as average total indebtedness, divided by the Company’s earnings before interest, taxes, depreciation and amortization, as adjusted pursuant to the terms of Amendment No. 2 (“Adjusted EBITDA”). Pursuant to Amendment No. 2, the maximum permitted leverage ratio is (i) 6.50 for the third quarter of fiscal 2024, (ii) 6.00 for the fourth quarter of fiscal 2024, (iii) 5.50 for the first quarter of fiscal 2025, (iv) 5.25 for the second quarter of fiscal 2025, (v) 5.00 for the third quarter of fiscal 2025, (vi) 4.75 for the fourth quarter of fiscal 2025 and (vii) 4.50 for the first quarter of fiscal 2026 and thereafter. The Company’s leverage ratio was 5.46 at June 29, 2024. Pursuant to Amendment No. 2, the Sixth A&R Credit Agreement also contains an affirmative covenant regarding the Company’s fixed charge coverage ratio determined as of the end of each of its fiscal quarters, calculated as Adjusted EBITDA minus capital expenditures and expense for taxes paid in cash, divided by the sum of interest expense plus restricted payments, as described in Amendment No. 2. The minimum required fixed charge coverage ratio is (i) 0.75 for the third quarter of fiscal 2024 and (ii) 1.00 for the fourth quarter of fiscal 2024 and thereafter. The Company’s fixed charge coverage ratio was 1.15 for the twelve months ended June 29, 2024.
As of June 29, 2024, the Company was in compliance with all applicable covenants in the agreements governing its debt. Based on the Company’s projections of its financial performance for the twelve-month period subsequent to the date of the filing of this Form 10-Q, the Company expects to remain in compliance with the financial covenants under the Sixth A&R Credit Agreement. However, the Company’s assessment of its ability to meet its future obligations is inherently subjective, judgment-based, and susceptible to change based on future events. A covenant violation may result in an event of default. Such a default would allow the lenders under the Sixth A&R Credit Agreement to accelerate the maturity of the indebtedness thereunder and would also implicate cross-default provisions under the Senior Notes, as defined below, and cause the Senior Notes to become due and payable at that time. As of June 29, 2024, the Company’s indebtedness under the Sixth A&R Credit Agreement and Senior Notes was $2,487.5. The Company does not have sufficient cash on hand or available liquidity that can be utilized to repay these outstanding amounts in the event of default.
As part of its contingency planning to address potential future circumstances that could result in noncompliance, the Company has contemplated alternative plans including additional restructuring activities to reduce operating expenses and certain cash management strategies that are within the Company’s control. Additionally, the Company has contemplated alternative plans that are subject to market conditions and not in the Company’s control, including, among others, discussions with its lenders to amend the terms of its financial covenants under the Sixth A&R Credit Agreement and generating cash by completing other financing transactions, which may include issuing equity. There is no assurance that the Company will be successful in implementing these alternative plans.
Senior Notes
On December 15, 2016, Scotts Miracle-Gro issued $250.0 aggregate principal amount of 5.250% Senior Notes due 2026 (the “5.250% Senior Notes”). The 5.250% Senior Notes represent general unsecured senior obligations and rank equal in right of payment with the Company’s existing and future unsecured senior debt. The 5.250% Senior Notes have interest payment dates of June 15 and December 15 of each year.
On October 22, 2019, Scotts Miracle-Gro issued $450.0 aggregate principal amount of 4.500% Senior Notes due 2029 (the “4.500% Senior Notes”). The 4.500% Senior Notes represent general unsecured senior obligations and rank equal in right of payment with the Company’s existing and future unsecured senior debt. The 4.500% Senior Notes have interest payment dates of April 15 and October 15 of each year.
On March 17, 2021, Scotts Miracle-Gro issued $500.0 aggregate principal amount of 4.000% Senior Notes due 2031 (the “4.000% Senior Notes”). The 4.000% Senior Notes represent general unsecured senior obligations and rank equal in right of payment with the Company’s existing and future unsecured senior debt. The 4.000% Senior Notes have interest payment dates of April 1 and October 1 of each year.
On August 13, 2021, Scotts Miracle-Gro issued $400.0 aggregate principal amount of 4.375% Senior Notes due 2032 (the “4.375% Senior Notes”). The 4.375% Senior Notes represent general unsecured senior obligations and rank equal in right of payment with the Company’s existing and future unsecured senior debt. The 4.375% Senior Notes have interest payment dates of February 1 and August 1 of each year.
Substantially all of Scotts Miracle-Gro’s directly and indirectly owned domestic subsidiaries serve as guarantors of the 5.250% Senior Notes, the 4.500% Senior Notes, the 4.000% Senior Notes and the 4.375% Senior Notes.
13
THE SCOTTS MIRACLE-GRO COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
(Dollars in millions, except per share data)
The Senior Notes contain an affirmative covenant regarding the Company’s interest coverage ratio determined as of the end of each of its fiscal quarters, calculated as Adjusted EBITDA divided by interest expense excluding costs related to refinancings. The minimum required interest coverage ratio is 2.00. The Company’s interest coverage ratio was 3.15 for the twelve months ended June 29, 2024.
Receivables Facility
On April 7, 2017, the Company entered into a Master Repurchase Agreement (including the annexes thereto, the “Repurchase Agreement”) and a Master Framework Agreement, as amended (the “Framework Agreement” and, together with the Repurchase Agreement, the “Receivables Facility”), under which the Company could sell a portfolio of available and eligible outstanding customer accounts receivable to the purchasers subject to agreeing to repurchase the receivables on a weekly basis. The eligible accounts receivable consisted of accounts receivable generated by sales to three specified customers. The eligible amount of customer accounts receivables which could be sold under the Receivables Facility was $400.0 and the commitment amount during the seasonal commitment period that began on February 24, 2023 and ended on June 16, 2023 was $160.0. The Receivables Facility expired on August 18, 2023.
The sale of receivables under the Receivables Facility was accounted for as short-term debt and the Company continued to carry the receivables on its Condensed Consolidated Balance Sheets, primarily as a result of its requirement to repurchase receivables sold. As of July 1, 2023, there were $398.0 in borrowings on receivables pledged as collateral under the Receivables Facility, and the carrying value of the receivables pledged as collateral was $442.2.
Interest Rate Swap Agreements
The Company enters into interest rate swap agreements with major financial institutions that effectively convert a portion of the Company’s variable-rate debt to a fixed rate. Interest payments made between the effective date and expiration date are hedged by the swap agreements. Swap agreements that were hedging interest payments as of June 29, 2024, July 1, 2023 and September 30, 2023 had a maximum total U.S. dollar equivalent notional amount of $500.0, $600.0 and $600.0, respectively. The notional amount, effective date, expiration date and rate of each of the swap agreements outstanding at June 29, 2024 are shown in the table below:
Notional
Amount ($)		 Effective
Date (a)		Expiration
Date		Fixed
Rate
200 6/7/20236/8/20260.80 %
150 6/7/20234/7/20273.37 %
50 6/7/20234/7/20273.34 %
100 
(b)
11/20/20233/22/20274.74 %
150 
(b)
9/20/20249/20/20294.25 %
(a)The effective date refers to the date on which interest payments are first hedged by the applicable swap agreement.
(b)Notional amount adjusts in accordance with a specified seasonal schedule. This represents the maximum notional amount at any point in time.
Weighted Average Interest Rate
The weighted average interest rates on the Company’s debt, including the impact of interest rate swaps, were 5.9% and 5.3% for the nine months ended June 29, 2024 and July 1, 2023, respectively.
14
THE SCOTTS MIRACLE-GRO COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
(Dollars in millions, except per share data)
NOTE 7. EQUITY (DEFICIT)
The following tables provide a summary of the changes in equity (deficit) for each of the periods indicated:
 Common Shares
and Capital in
Excess of Stated
Value		Retained
Earnings		Treasury
Shares		Accumulated Other
Comprehensive Loss		Total
Equity
(Deficit)
Balance at September 30, 2023$353.1 $490.9 $(998.5)$(112.8)$(267.3)
Net income (loss)— (80.5)— — (80.5)
Other comprehensive income (loss)— — — (8.9)(8.9)
Share-based compensation11.7 — — — 11.7 
Dividends declared ($0.66 per share)
— (38.0)— — (38.0)
Treasury share purchases— — (3.1)— (3.1)
Treasury share issuances(15.2)— 15.9 — 0.7 
Balance at December 30, 2023349.6 372.4 (985.7)(121.7)(385.4)
Net income (loss)— 157.5 — — 157.5 
Other comprehensive income (loss)— — — 3.0 3.0 
Share-based compensation12.4 — — — 12.4 
Dividends declared ($0.66 per share)
— (38.1)— — (38.1)
Treasury share purchases— — (1.7)— (1.7)
Treasury share issuances(8.3)— 9.6 — 1.3 
Balance at March 30, 2024353.7 491.8 (977.8)(118.6)(250.9)
Net income (loss)— 132.1 — — 132.1 
Other comprehensive income (loss)— — — 1.8 1.8 
Share-based compensation8.3 — — — 8.3 
Dividends declared ($0.66 per share)
— (38.1)— — (38.1)
Treasury share purchases— — (0.2)— (0.2)
Treasury share issuances(1.4)— 2.2 — 0.8 
Balance at June 29, 2024$360.6 $585.8 $(975.7)$(116.9)$(146.2)
The sum of the components may not equal due to rounding.

15
THE SCOTTS MIRACLE-GRO COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
(Dollars in millions, except per share data)
 Common Shares
and Capital in
Excess of Stated
Value		Retained
Earnings		Treasury
Shares		Accumulated Other
Comprehensive Loss		Total
Equity
(Deficit)
Balance at September 30, 2022$364.0 $1,020.1 $(1,091.8)$(144.6)$147.7 
Net income (loss)— (64.7)— — (64.7)
Other comprehensive income (loss)— — — (24.6)(24.6)
Share-based compensation20.8 — — — 20.8 
Dividends declared ($0.66 per share)
— (37.5)— — (37.5)
Treasury share purchases— — (0.8)— (0.8)
Treasury share issuances(17.2)— 35.9 — 18.7 
Balance at December 31, 2022367.6 917.9 (1,056.7)(169.3)59.5 
Net income (loss)— 109.4 — — 109.4 
Other comprehensive income (loss)— — — (17.8)(17.8)
Share-based compensation37.2 — — — 37.2 
Dividends declared ($0.66 per share)
— (37.0)— — (37.0)
Treasury share purchases— — (5.6)— (5.6)
Treasury share issuances(30.4)— 22.3 — (8.1)
Balance at April 1, 2023374.3 990.3 (1,040.0)(187.1)137.5 
Net income (loss)— 43.7 — — 43.7 
Other comprehensive income (loss)— — — 6.6 6.6 
Share-based compensation(5.8)— — — (5.8)
Dividends declared ($0.66 per share)
— (37.2)— — (37.2)
Treasury share purchases— — (2.8)— (2.8)
Treasury share issuances(18.0)— 10.8 — (7.2)
Balance at July 1, 2023$350.5 $996.8 $(1,032.0)$(180.5)$134.8 
The sum of the components may not equal due to rounding.


16
THE SCOTTS MIRACLE-GRO COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
(Dollars in millions, except per share data)
Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss (“AOCL”) by component were as follows for each of the periods indicated:
Three Months Ended
Foreign Currency
Translation Adjustments		Net Unrealized Gain (Loss)
On Derivative Instruments		Net Unrealized Gain (Loss)
On Securities		Pension and Other Post-Retirement
Benefit Adjustments		Accumulated Other
Comprehensive Income (Loss)
Balance at March 30, 2024$(21.4)$15.7 $(40.1)$(72.9)$(118.6)
Other comprehensive income (loss) before reclassifications(1.3)1.6 5.1 — 5.4 
Amounts reclassified from accumulated other comprehensive net income (loss)— (5.1)— 0.8 (4.3)
Income tax benefit (expense)— 0.9 — (0.2)0.7 
Net current period other comprehensive income (loss)(1.3)(2.6)5.1 0.6 1.8 
Balance at June 29, 2024$(22.6)$13.1 $(35.0)$(72.3)$(116.9)
Balance at April 1, 2023$(20.7)$11.8 $(105.7)$(72.6)$(187.1)
Other comprehensive income (loss) before reclassifications2.7 9.7 0.6 — 13.0 
Amounts reclassified from accumulated other comprehensive net income (loss)— (4.3)— (0.8)(5.1)
Income tax benefit (expense)— (1.4)(0.1)0.2 (1.3)
Net current period other comprehensive income (loss)2.7 4.0 0.5 (0.6)6.6 
Balance at July 1, 2023$(18.0)$15.8 $(105.2)$(73.2)$(180.5)
The sum of the components may not equal due to rounding.
Nine Months Ended
Foreign Currency
Translation Adjustments		Net Unrealized Gain (Loss)
On Derivative Instruments		Net Unrealized Gain (Loss)
On Securities		Pension and Other Post-Retirement
Benefit Adjustments		Accumulated Other
Comprehensive Income (Loss)
Balance at September 30, 2023$(21.9)$20.1 $(38.6)$(72.4)$(112.8)
Other comprehensive income (loss) before reclassifications(0.8)(1.2)3.6 — 1.6 
Amounts reclassified from accumulated other comprehensive net income (loss)— (8.3)— 0.3 (8.0)
Income tax benefit (expense)— 2.4 — (0.1)2.3 
Net current period other comprehensive income (loss)(0.8)(7.1)3.6 0.2 (4.1)
Balance at June 29, 2024$(22.6)$13.1 $(35.0)$(72.3)$(116.9)
Balance at September 30, 2022$(28.9)$33.3 $(79.7)$(69.3)$(144.6)
Other comprehensive income (loss) before reclassifications10.9 (3.2)(33.5)— (25.8)
Amounts reclassified from accumulated other comprehensive net income (loss)— (20.3)— (5.1)(25.4)
Income tax benefit (expense)— 5.9 8.0 1.3 15.2 
Net current period other comprehensive income (loss)10.9 (17.5)(25.5)(3.8)(35.9)
Balance at July 1, 2023$(18.0)$15.8 $(105.2)$(73.2)$(180.5)
The sum of the components may not equal due to rounding.
17
THE SCOTTS MIRACLE-GRO COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
(Dollars in millions, except per share data)
Share-Based Awards
Total share-based compensation was as follows for each of the periods indicated:
Three Months EndedNine Months Ended
June 29,
2024		July 1,
2023		June 29,
2024		July 1,
2023
Share-based compensation$21.0 $(5.8)$65.0 $52.2 
Related tax benefit recognized4.5 0.6 11.7 11.4 
During the three months ended July 1, 2023, a cumulative adjustment was recognized to share-based compensation expense for certain performance-based award units to reflect management’s assessment of a lower probability of achievement of performance goals.
Performance-based awards
For fiscal 2024, the Company is granting short-term equity incentive compensation awards to certain employees in the form of performance-based units in lieu of cash-based annual incentive awards. These awards will be granted on or near the incentive payout date, subject to certain performance conditions and a service requirement. The number of performance-based units that the Company will ultimately issue to participating employees will be determined based on a target payout amount for each employee adjusted up or down based on actual performance compared to the performance conditions, and then converted into a variable number of performance-based award units based on the fair value of the Company’s Common Shares on the grant date. The awards are classified as liability awards and, as of June 29, 2024, the Company had accrued $14.0 in the “Other current liabilities” line in the Condensed Consolidated Balance Sheets associated with these awards. As of June 29, 2024, there was $5.9 of total unrecognized pre-tax compensation cost related to these nonvested performance-based awards that is expected to be recognized over the remainder of fiscal 2024.
NOTE 8. EARNINGS PER COMMON SHARE
The following table presents information necessary to calculate basic and diluted net income per Common Share for the periods indicated:
 Three Months EndedNine Months Ended
 June 29,
2024		July 1,
2023		June 29,
2024		July 1,
2023
Net income $132.1 $43.7 $209.1 $88.3 
Basic net income per common share
Weighted-average common shares outstanding during the period56.8 56.2 56.7 55.9 
Basic net income per common share$2.33 $0.78 $3.69 $1.58 
Diluted net income per common share
Weighted-average common shares outstanding during the period56.8