Scotts Miracle-Gro Co 8-K, filed Jan 29, 2020

Scotts Miracle-Gro Co (SMG)

8-K 2020-01-29 For: 2020-01-29

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Added on July 04, 2026

About this 8-K

Scotts Miracle-Gro Co filed this 8-K on January 29, 2020.

Items reported

Item 2.02: Financial results
Item 9.01: Financial statements and exhibits

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Ohio	001-11593	31-1414921
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation or organization)	File Number)	Identification No.)



14111 Scottslawn Road	Marysville	Ohio	43041
(Address of principal executive offices)			(Zip Code)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, $0.01 stated value	SMG	NYSE



Exhibit No.	Description
99.1	News release issued by The Scotts Miracle-Gro Company on January 29, 2020

104	Cover Page Interactive Data File (embedded within the Inline XBRL document)



		THE SCOTTS MIRACLE-GRO COMPANY

Dated: January 29, 2020	By:	/s/ THOMAS RANDAL COLEMAN
		Printed Name: Thomas Randal Coleman
		Title: Executive Vice President and Chief Financial Officer


•	Hawthorne segment sales increase 41%; U.S. Consumer segment sales increase 8%


•	GAAP loss of $1.28 per share compared with $1.49 per share


•	Non-GAAP adjusted loss of $1.12 per share versus $1.39 per share


•	Full year guidance for sales, non-GAAP adjusted EPS and cash flow reaffirmed


•	Compliance with environmental and other public health regulations or changes in such regulations or regulatory enforcement priorities could increase the Company’s costs of doing business or limit the Company’s ability to market all of its products;


•	Damage to the Company’s reputation or the reputation of its products or products it markets on behalf of third parties could have an adverse effect on its business;


•	The highly competitive nature of the Company’s markets could adversely affect its ability to maintain or grow revenues;


•	If the Company is unable to effectively execute its e-commerce business, its reputation and operating results may be harmed;


•	Because of the concentration of the Company’s sales to a small number of retail customers, the loss of one or more of, or significant reduction in orders from, its top customers could adversely affect the Company’s financial results;


•	Climate change and unfavorable weather conditions could adversely impact financial results;


•	Certain of the Company’s products may be purchased for use in new or emerging industries or segments and/or be subject to varying, inconsistent, and rapidly changing laws, regulations, administrative practices, enforcement approaches, judicial interpretations and consumer perceptions;


•	The Company’s operations may be impaired if its information technology systems fail to perform adequately or if it is the subject of a data breach or cyber-attack;


•	The Company may not be able to adequately protect its intellectual property and other proprietary rights that are material to the Company’s business;


•	In the event the Third Restated Marketing Agreement for consumer Roundup products terminates, or Monsanto’s consumer Roundup business materially declines the Company would lose a substantial source of future earnings and overhead expenses absorption;


•	Hagedorn Partnership, L.P. beneficially owns approximately 26% of the Company’s common shares and can significantly influence decisions that require the approval of shareholders;


•	Acquisitions, other strategic alliances and investments could result in operating difficulties, dilution and other harmful consequences that may adversely impact the Company’s business and results of operations.



		Three Months Ended
	Footnotes	December 28, 2019			December 29, 2018			% Change
Net sales		$	365.8		$	298.1		23	%
Cost of sales		311.3			261.1
Cost of sales—impairment, restructuring and other		0.3			2.5
Gross profit		54.2			34.5			57	%
% of sales		14.8		%	11.6		%
Operating expenses:
Selling, general and administrative		119.8			116.3			3	%
Impairment, restructuring and other		(2.5		)	3.5
Other income, net		(0.5		)	(0.4		)
Loss from operations		(62.6		)	(84.9		)	26	%
% of sales		(17.1		)%	(28.5		)%
Equity in income of unconsolidated affiliates		—			(1.3		)
Costs related to refinancing		15.1			—
Interest expense		20.0			25.2
Other non-operating income, net		(2.6		)	(2.9		)
Loss from continuing operations before income taxes		(95.1		)	(105.9		)	10	%
Income tax benefit from continuing operations		(23.8		)	(23.3		)
Loss from continuing operations		(71.3		)	(82.6		)	14	%
Income from discontinued operations, net of tax		—			2.9
Net loss		$	(71.3	)	$	(79.7	)
Net (income) loss attributable to noncontrolling interest		(0.1		)	0.1
Net loss attributable to controlling interest		$	(71.4	)	$	(79.6	)

Basic income (loss) per common share:	(1)
Loss from continuing operations		$	(1.28	)	$	(1.49	)	14	%
Income from discontinued operations		—			0.05
Net loss		$	(1.28	)	$	(1.44	)

Diluted income (loss) per common share:	(2)
Loss from continuing operations		$	(1.28	)	$	(1.49	)	14	%
Income from discontinued operations		—			0.05
Net loss		$	(1.28	)	$	(1.44	)

Common shares used in basic income (loss) per share calculation		55.8			55.3			1	%
Common shares and potential common shares used in diluted income (loss) per share calculation		55.8			55.3			1	%

Non-GAAP results:
Adjusted net loss attributable to controlling interest from continuing operations	(3)	$	(62.4	)	$	(77.0	)	19	%
Adjusted diluted loss per common share from continuing operations	(2) (3)	$	(1.12	)	$	(1.39	)	19	%
Adjusted EBITDA	(3)	$	(34.7	)	$	(47.4	)	27	%
Note: See accompanying footnotes on page 8.



	Three Months Ended December 28, 2019												Three Months Ended December 29, 2018
	As Reported (GAAP)			Impairment, Restructuring and Other			Costs Related to Refinancing			Adjusted (Non-GAAP)			As Reported (GAAP)			Discontinued Operations		Impairment, Restructuring and Other			Adjusted (Non-GAAP)
Gross profit	$	54.2		$	(0.3	)	$	—		$	54.5		$	34.5		$	—	$	(2.5	)	$	37.0
Gross profit as a % of sales	14.8		%							14.9		%	11.6		%						12.4		%
Loss from operations	(62.6		)	2.2			—			(64.8		)	(84.9		)	—		(6.0		)	(78.9		)
Loss from operations as a % of sales	(17.1		)%							(17.7		)%	(28.5		)%						(26.5		)%
Loss from continuing operations before income taxes	(95.1		)	2.2			(15.1		)	(82.2		)	(105.9		)	—		(6.0		)	(99.9		)
Income tax benefit from continuing operations	(23.8		)	0.5			(4.4		)	(19.9		)	(23.3		)	—		(0.5		)	(22.8		)
Loss from continuing operations	(71.3		)	1.7			(10.7		)	(62.3		)	(82.6		)	—		(5.5		)	(77.1		)
Net loss attributable to controlling interest	(71.4		)	1.7			(10.7		)	(62.4		)	(79.6		)	2.9		(5.5		)	(77.0		)
Diluted loss per common share from continuing operations	(1.28		)	0.03			(0.19		)	(1.12		)	(1.49		)	—		(0.10		)	(1.39		)



Calculation of Adjusted EBITDA (3):	Three Months Ended December 28, 2019			Three Months Ended December 29, 2018
Net loss (GAAP)	$	(71.3	)	$	(79.7	)
Income tax benefit from continuing operations	(23.8		)	(23.3		)
Income tax expense from discontinued operations	—			2.0
Costs related to refinancing	15.1			—
Interest expense	20.0			25.2
Depreciation	14.8			14.0
Amortization	7.6			8.3
Impairment, restructuring and other charges (recoveries) from continuing operations	(2.2		)	6.0
Impairment, restructuring and other charges (recoveries) from discontinued operations	—			(4.9		)
Interest income	(1.9		)	(2.5		)
Expense on certain leases	—			0.9
Share-based compensation expense	7.0			6.6
Adjusted EBITDA (Non-GAAP)	$	(34.7	)	$	(47.4	)

Note: See accompanying footnotes on page 8.
The sum of the components may not equal due to rounding.


(1)	Basic income (loss) per common share amounts are calculated by dividing income (loss) attributable to controlling interest from continuing operations, income (loss) from discontinued operations and net income (loss) attributable to controlling interest by the weighted average number of common shares outstanding during the period.


•	Impairments, which are excluded because they do not occur in or reflect the ordinary course of the Company’s ongoing business operations and their exclusion results in a metric that provides supplemental information about the sustainability of operating performance.


•	Restructuring and employee severance costs, which include charges for discrete projects or transactions that fundamentally change the Company’s operations and are excluded because they are not part of the ongoing operations of its underlying business, which includes normal levels of reinvestment in the business.


•	Costs related to refinancing, which are excluded because they do not typically occur in the normal course of business and may obscure analysis of trends and financial performance. Additionally, the amount and frequency of these types of charges is not consistent and is significantly impacted by the timing and size of debt financing transactions.


•	Discontinued operations and other unusual items, which include costs or gains related to discrete projects or transactions and are excluded because they are not comparable from one period to the next and are not part of the ongoing operations of the Company’s underlying business.


•	The Company recognized insurance recoveries of $5.0 million related to the previously disclosed legal matter In re Morning Song Bird Food Litigation for the three months ended December 29, 2018 in the “Income from discontinued operations, net of tax” line in the Condensed Consolidated Statements of Operations.


•	The Company recognized a charge of $0.5 million for a probable loss on the previously disclosed legal matter In re Scotts EZ Seed Litigation for the three months ended December 29, 2018 in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations.