QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
☒ | Accelerated filer | ☐ | ||||||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
Emerging growth company |
Yes | No | ☒ |
THE SCOTTS MIRACLE-GRO COMPANY INDEX | ||||||||
PAGE NO. | ||||||||
Three Months Ended | |||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||
Net sales | $ | $ | |||||||||
Cost of sales | |||||||||||
Cost of sales—impairment, restructuring and other | ( | ||||||||||
Gross margin | |||||||||||
Operating expenses: | |||||||||||
Selling, general and administrative | |||||||||||
Impairment, restructuring and other | ( | ||||||||||
Other expense, net | |||||||||||
Loss from operations | ( | ( | |||||||||
Equity in loss of unconsolidated affiliates | |||||||||||
Interest expense | |||||||||||
Other non-operating (income) expense, net | ( | ||||||||||
Loss before income taxes | ( | ( | |||||||||
Income tax benefit | ( | ( | |||||||||
Net loss | $ | ( | $ | ( | |||||||
Basic net loss per common share: | $ | ( | $ | ( | |||||||
Diluted net loss per common share: | $ | ( | $ | ( | |||||||
Weighted-average common shares outstanding during the period | |||||||||||
Weighted-average common shares outstanding during the period plus dilutive potential common shares |
Three Months Ended | |||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||
Net loss | $ | ( | $ | ( | |||||||
Other comprehensive income (loss): | |||||||||||
Net foreign currency translation adjustment | |||||||||||
Net unrealized loss on derivative instruments, net of tax | ( | ( | |||||||||
Reclassification of net unrealized gains on derivative instruments to net loss, net of tax | ( | ( | |||||||||
Net unrealized loss on securities, net of tax | ( | ( | |||||||||
Pension and other post-retirement benefit adjustments, net of tax | ( | ( | |||||||||
Total other comprehensive loss | ( | ( | |||||||||
Comprehensive loss | $ | ( | $ | ( | |||||||
Three Months Ended | |||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||
OPERATING ACTIVITIES | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Impairment, restructuring and other | |||||||||||
Share-based compensation expense | |||||||||||
Depreciation | |||||||||||
Amortization | |||||||||||
Deferred taxes | ( | ||||||||||
Equity in loss of unconsolidated affiliates | |||||||||||
Other, net | ( | ||||||||||
Changes in assets and liabilities, net of acquired businesses: | |||||||||||
Accounts receivable | ( | ||||||||||
Inventories | ( | ( | |||||||||
Prepaid and other assets | ( | ( | |||||||||
Accounts payable | ( | ||||||||||
Other current liabilities | ( | ( | |||||||||
Other non-current items | ( | ( | |||||||||
Other, net | |||||||||||
Net cash used in operating activities | ( | ( | |||||||||
INVESTING ACTIVITIES | |||||||||||
Investments in property, plant and equipment | ( | ( | |||||||||
Investments in unconsolidated affiliates | ( | ||||||||||
Other investing, net | ( | ||||||||||
Net cash used in investing activities | ( | ( | |||||||||
FINANCING ACTIVITIES | |||||||||||
Borrowings under revolving and bank lines of credit and term loans | |||||||||||
Repayments under revolving and bank lines of credit and term loans | ( | ( | |||||||||
Dividends paid | ( | ( | |||||||||
Purchase of Common Shares | ( | ( | |||||||||
Cash received from exercise of stock options | |||||||||||
Other financing, net | |||||||||||
Net cash provided by financing activities | |||||||||||
Effect of exchange rate changes on cash | |||||||||||
Net decrease in cash and cash equivalents | ( | ( | |||||||||
Cash and cash equivalents at beginning of period | |||||||||||
Cash and cash equivalents at end of period | $ | $ | |||||||||
December 30, 2023 | December 31, 2022 | September 30, 2023 | |||||||||||||||
ASSETS | |||||||||||||||||
Current assets: | |||||||||||||||||
Cash and cash equivalents | $ | $ | $ | ||||||||||||||
Accounts receivable, less allowances of $ | |||||||||||||||||
Accounts receivable pledged | |||||||||||||||||
Inventories | |||||||||||||||||
Prepaid and other current assets | |||||||||||||||||
Total current assets | |||||||||||||||||
Investment in unconsolidated affiliates | |||||||||||||||||
Property, plant and equipment, net of accumulated depreciation of $ | |||||||||||||||||
Goodwill | |||||||||||||||||
Intangible assets, net | |||||||||||||||||
Other assets | |||||||||||||||||
Total assets | $ | $ | $ | ||||||||||||||
LIABILITIES AND EQUITY (DEFICIT) | |||||||||||||||||
Current liabilities: | |||||||||||||||||
Current portion of debt | $ | $ | $ | ||||||||||||||
Accounts payable | |||||||||||||||||
Other current liabilities | |||||||||||||||||
Total current liabilities | |||||||||||||||||
Long-term debt | |||||||||||||||||
Other liabilities | |||||||||||||||||
Total liabilities | |||||||||||||||||
Commitments and contingencies (Note 10) | |||||||||||||||||
Equity (deficit): | |||||||||||||||||
Common shares and capital in excess of $ | |||||||||||||||||
Retained earnings | |||||||||||||||||
Treasury shares, at cost; | ( | ( | ( | ||||||||||||||
Accumulated other comprehensive loss | ( | ( | ( | ||||||||||||||
Total equity (deficit) | ( | ( | |||||||||||||||
Total liabilities and equity (deficit) | $ | $ | $ |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) | ||||||||
(Dollars in millions, except per share data) |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued) | ||||||||
(Dollars in millions, except per share data) |
Three Months Ended | |||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||
Interest paid | $ | $ | |||||||||
Income taxes paid (refunded), net | ( | ||||||||||
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued) | ||||||||
(Dollars in millions, except per share data) |
Three Months Ended | |||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||
Cost of sales—impairment, restructuring and other: | |||||||||||
Restructuring and other charges (recoveries), net | $ | ( | $ | ||||||||
Property, plant and equipment impairments | |||||||||||
Operating expenses—impairment, restructuring and other: | |||||||||||
Restructuring and other charges (recoveries), net | ( | ||||||||||
Total impairment, restructuring and other charges (recoveries), net | $ | ( | $ |
Amounts accrued at September 30, 2023 | $ | ||||
Restructuring charges | |||||
Payments | ( | ||||
Amounts accrued at December 30, 2023 | $ |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued) | ||||||||
(Dollars in millions, except per share data) |
December 30, 2023 | December 31, 2022 | September 30, 2023 | |||||||||||||||
Finished goods | $ | $ | $ | ||||||||||||||
Raw materials | |||||||||||||||||
Work-in-process | |||||||||||||||||
Total inventories, net | $ | $ | $ |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued) | ||||||||
(Dollars in millions, except per share data) |
Three Months Ended | |||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||
Gross commission | $ | $ | |||||||||
Contribution expenses | ( | ( | |||||||||
Net commission | |||||||||||
Reimbursements associated with Roundup® marketing agreement | |||||||||||
Total net sales associated with Roundup® marketing agreement | $ | $ |
December 30, 2023 | December 31, 2022 | September 30, 2023 | |||||||||||||||
Credit Facilities: | |||||||||||||||||
Revolving loans | $ | $ | $ | ||||||||||||||
Term loans | |||||||||||||||||
Senior Notes due 2031 – | |||||||||||||||||
Senior Notes due 2032 – | |||||||||||||||||
Senior Notes due 2029 – | |||||||||||||||||
Senior Notes due 2026 – | |||||||||||||||||
Receivables facility | |||||||||||||||||
Finance lease obligations | |||||||||||||||||
Other | |||||||||||||||||
Total debt | |||||||||||||||||
Less current portions | |||||||||||||||||
Less unamortized debt issuance costs | |||||||||||||||||
Long-term debt | $ | $ | $ |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued) | ||||||||
(Dollars in millions, except per share data) |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued) | ||||||||
(Dollars in millions, except per share data) |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued) | ||||||||
(Dollars in millions, except per share data) |
Notional Amount ($) | Effective Date (a) | Expiration Date | Fixed Rate | |||||||||||||||||
(b) | 1/20/2022 | 6/20/2024 | % | |||||||||||||||||
6/7/2023 | 6/8/2026 | % | ||||||||||||||||||
6/7/2023 | 4/7/2027 | % | ||||||||||||||||||
6/7/2023 | 4/7/2027 | % | ||||||||||||||||||
(b) | 11/20/2023 | 3/22/2027 | % | |||||||||||||||||
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 | $ | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||
Net income (loss) | — | ( | — | — | ( | ||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | ( | ( | ||||||||||||||||||||||||
Share-based compensation | — | — | — | ||||||||||||||||||||||||||
Dividends declared ($ | — | ( | — | — | ( | ||||||||||||||||||||||||
Treasury share purchases | — | — | ( | — | ( | ||||||||||||||||||||||||
Treasury share issuances | ( | — | — | ||||||||||||||||||||||||||
Balance at December 30, 2023 | $ | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||
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 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||
Net income (loss) | — | ( | — | — | ( | ||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | ( | ( | ||||||||||||||||||||||||
Share-based compensation | — | — | — | ||||||||||||||||||||||||||
Dividends declared ($ | — | ( | — | — | ( | ||||||||||||||||||||||||
Treasury share purchases | — | — | ( | — | ( | ||||||||||||||||||||||||
Treasury share issuances | ( | — | — | ||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued) | ||||||||
(Dollars in millions, except per share data) |
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 September 30, 2023 | $ | ( | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | ( | |||||||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive net income (loss) | ( | ( | ( | |||||||||||||||||||||||||||||
Income tax benefit (expense) | ||||||||||||||||||||||||||||||||
Net current period other comprehensive income (loss) | ( | ( | ( | ( | ||||||||||||||||||||||||||||
Balance at December 30, 2023 | $ | ( | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||
Balance at September 30, 2022 | $ | ( | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | ( | |||||||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive net income (loss) | ( | ( | ( | |||||||||||||||||||||||||||||
Income tax benefit (expense) | ||||||||||||||||||||||||||||||||
Net current period other comprehensive income (loss) | ( | ( | ( | ( | ||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | ( | $ | $ | ( | $ | ( | $ | ( |
Three Months Ended | |||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||
Share-based compensation | $ | $ | |||||||||
Related tax benefit recognized |
No. of Options | Wtd. Avg. Exercise Price | Wtd. Avg. Remaining Life | Aggregate Intrinsic Value | ||||||||||||||||||||
Awards outstanding at September 30, 2023 | $ | ||||||||||||||||||||||
Granted | |||||||||||||||||||||||
Forfeited | ( | ||||||||||||||||||||||
Awards outstanding at December 30, 2023 | $ | ||||||||||||||||||||||
Exercisable |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued) | ||||||||
(Dollars in millions, except per share data) |
Expected volatility | % | ||||
Risk-free interest rate | % | ||||
Expected dividend yield | % | ||||
Expected life | |||||
No. of Units | Wtd. Avg. Grant Date Fair Value per Unit | ||||||||||
Awards outstanding at September 30, 2023 | $ | ||||||||||
Granted | |||||||||||
Vested | ( | ||||||||||
Forfeited | ( | ||||||||||
Awards outstanding at December 30, 2023 |
No. of Units | Wtd. Avg. Grant Date Fair Value per Unit | ||||||||||
Awards outstanding at September 30, 2023 | $ | ||||||||||
Granted | |||||||||||
Vested (a) | ( | ||||||||||
Forfeited | ( | ||||||||||
Awards outstanding at December 30, 2023 |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued) | ||||||||
(Dollars in millions, except per share data) |
Three Months Ended | |||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||
Net loss | $ | ( | $ | ( | |||||||
Basic net loss per common share: | |||||||||||
Weighted-average common shares outstanding during the period | |||||||||||
Basic net loss per common share: | $ | ( | $ | ( | |||||||
Diluted net loss per common share: | |||||||||||
Weighted-average common shares outstanding during the period | |||||||||||
Dilutive potential common shares | |||||||||||
Weighted-average common shares outstanding during the period plus dilutive potential common shares | |||||||||||
Diluted net loss per common share: | $ | ( | $ | ( | |||||||
Antidilutive stock options outstanding |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued) | ||||||||
(Dollars in millions, except per share data) |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued) | ||||||||
(Dollars in millions, except per share data) |
Commodity | December 30, 2023 | December 31, 2022 | September 30, 2023 | |||||||||||||||||
Urea | ||||||||||||||||||||
Diesel | ||||||||||||||||||||
Heating Oil |
Assets / (Liabilities) | ||||||||||||||||||||||||||
Derivatives Designated as Hedging Instruments | Balance Sheet Location | December 30, 2023 | December 31, 2022 | September 30, 2023 | ||||||||||||||||||||||
Interest rate swap agreements | Prepaid and other current assets | $ | $ | $ | ||||||||||||||||||||||
Other assets | ||||||||||||||||||||||||||
Other liabilities | ( | |||||||||||||||||||||||||
Commodity hedging instruments | Prepaid and other current assets | |||||||||||||||||||||||||
Other current liabilities | ( | ( | ||||||||||||||||||||||||
Total derivatives designated as hedging instruments | $ | $ | $ | |||||||||||||||||||||||
Derivatives Not Designated as Hedging Instruments | Balance Sheet Location | |||||||||||||||||||||||||
Currency forward contracts | Prepaid and other current assets | $ | $ | $ | ||||||||||||||||||||||
Other current liabilities | ( | ( | ||||||||||||||||||||||||
Commodity hedging instruments | Prepaid and other current assets | |||||||||||||||||||||||||
Other current liabilities | ( | |||||||||||||||||||||||||
Total derivatives not designated as hedging instruments | ( | |||||||||||||||||||||||||
Total derivatives | $ | $ | $ |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued) | ||||||||
(Dollars in millions, except per share data) |
Derivatives in Cash Flow Hedging Relationships | Amount of Gain / (Loss) Recognized in AOCL | |||||||||||||
Three Months Ended | ||||||||||||||
December 30, 2023 | December 31, 2022 | |||||||||||||
Interest rate swap agreements | $ | ( | $ | |||||||||||
Commodity hedging instruments | ( | ( | ||||||||||||
Total | $ | ( | $ | ( |
Derivatives in Cash Flow Hedging Relationships | Reclassified from AOCL into Statement of Operations | Amount of Gain / (Loss) | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
December 30, 2023 | December 31, 2022 | |||||||||||||||||||
Interest rate swap agreements | $ | $ | ||||||||||||||||||
Commodity hedging instruments | ( | |||||||||||||||||||
Total | $ | $ |
Derivatives Not Designated as Hedging Instruments | Recognized in Statement of Operations | Amount of Gain / (Loss) | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
December 30, 2023 | December 31, 2022 | |||||||||||||||||||
Currency forward contracts | $ | ( | $ | ( | ||||||||||||||||
Commodity hedging instruments | ( | |||||||||||||||||||
Total | $ | ( | $ | ( |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued) | ||||||||
(Dollars in millions, except per share data) |
December 30, 2023 | December 31, 2022 | September 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||
Fair Value Hierarchy Level | Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | ||||||||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||||||||||
Cash equivalents | Level 1 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||||||||||||||||||
Investment securities in non-qualified retirement plan assets | Level 1 | |||||||||||||||||||||||||||||||||||||||||||
Convertible debt investments | Level 3 | |||||||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||||||
Debt instruments | ||||||||||||||||||||||||||||||||||||||||||||
Credit facilities – revolving loans | Level 2 | |||||||||||||||||||||||||||||||||||||||||||
Credit facilities – term loans | Level 2 | |||||||||||||||||||||||||||||||||||||||||||
Senior Notes due 2031 – | Level 2 | |||||||||||||||||||||||||||||||||||||||||||
Senior Notes due 2032 – | Level 2 | |||||||||||||||||||||||||||||||||||||||||||
Senior Notes due 2029 – | Level 2 | |||||||||||||||||||||||||||||||||||||||||||
Senior Notes due 2026 – | Level 2 | |||||||||||||||||||||||||||||||||||||||||||
Receivables facility | Level 2 | |||||||||||||||||||||||||||||||||||||||||||
Other debt | Level 2 | |||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||
Fair value at beginning of period | $ | $ | |||||||||
Total realized / unrealized gains included in net earnings | |||||||||||
Total realized / unrealized losses included in OCI | ( | ( | |||||||||
Fair value at end of period | $ | $ |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued) | ||||||||
(Dollars in millions, except per share data) |
Balance Sheet Location | December 30, 2023 | December 31, 2022 | September 30, 2023 | ||||||||||||||||||||
Operating leases: | |||||||||||||||||||||||
Right-of-use assets | Other assets | $ | $ | $ | |||||||||||||||||||
Current lease liabilities | Other current liabilities | ||||||||||||||||||||||
Non-current lease liabilities | Other liabilities | ||||||||||||||||||||||
Total operating lease liabilities | $ | $ | $ | ||||||||||||||||||||
Finance leases: | |||||||||||||||||||||||
Right-of-use assets | Property, plant and equipment, net | $ | $ | $ | |||||||||||||||||||
Current lease liabilities | Current portion of debt | ||||||||||||||||||||||
Non-current lease liabilities | Long-term debt | ||||||||||||||||||||||
Total finance lease liabilities | $ | $ | $ |
Three Months Ended | |||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||
Operating lease cost (a) | $ | $ | |||||||||
Variable lease cost | |||||||||||
Finance lease cost | |||||||||||
Amortization of right-of-use assets | |||||||||||
Interest on lease liabilities | |||||||||||
Total finance lease cost | $ | $ |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued) | ||||||||
(Dollars in millions, except per share data) |
Three Months Ended | |||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
Operating cash flows from operating leases, net | $ | $ | |||||||||
Operating cash flows from finance leases | |||||||||||
Financing cash flows from finance leases | |||||||||||
Right-of-use assets obtained in exchange for lease obligations: | |||||||||||
Operating leases | $ | $ | |||||||||
Finance leases |
December 30, 2023 | December 31, 2022 | ||||||||||
Weighted-average remaining lease term (in years): | |||||||||||
Operating leases | |||||||||||
Finance leases | |||||||||||
Weighted-average discount rate: | |||||||||||
Operating leases | % | % | |||||||||
Finance leases | % | % |
Year | Operating Leases | Finance Leases | ||||||||||||
2024 (remainder of the year) | $ | $ | ||||||||||||
2025 | ||||||||||||||
2026 | ||||||||||||||
2027 | ||||||||||||||
2028 | ||||||||||||||
Thereafter | ||||||||||||||
Total lease payments | ||||||||||||||
Less: Imputed interest | ( | ( | ||||||||||||
Total lease liabilities | $ | $ |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued) | ||||||||
(Dollars in millions, except per share data) |
Three Months Ended | |||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||
Net Sales: | |||||||||||
U.S. Consumer | $ | $ | |||||||||
Hawthorne | |||||||||||
Other | |||||||||||
Consolidated | $ | $ | |||||||||
Segment Profit (Loss): | |||||||||||
U.S. Consumer | $ | ( | $ | ||||||||
Hawthorne | ( | ( | |||||||||
Other | ( | ||||||||||
Total Segment Profit (Loss) | ( | ||||||||||
Corporate | ( | ( | |||||||||
Intangible asset amortization | ( | ( | |||||||||
Impairment, restructuring and other | ( | ||||||||||
Equity in loss of unconsolidated affiliates | ( | ( | |||||||||
Interest expense | ( | ( | |||||||||
Other non-operating income (expense), net | ( | ||||||||||
Loss before income taxes | $ | ( | $ | ( |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued) | ||||||||
(Dollars in millions, except per share data) |
Three Months Ended | |||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||
U.S. Consumer: | |||||||||||
Lawn care | $ | $ | |||||||||
Growing media and mulch | |||||||||||
Controls | |||||||||||
Roundup® marketing agreement | |||||||||||
Other, primarily gardening | |||||||||||
Hawthorne: | |||||||||||
Lighting | |||||||||||
Nutrients | |||||||||||
Growing environments | |||||||||||
Growing media | |||||||||||
Other, primarily hardware | |||||||||||
Other: | |||||||||||
Growing media | |||||||||||
Lawn care | |||||||||||
Other, primarily gardening and controls | |||||||||||
Total net sales | $ | $ |
Three Months Ended | |||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||
Net sales: | |||||||||||
United States | $ | $ | |||||||||
International | |||||||||||
$ | $ |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
(Dollars in millions, except per share data) |
Percent of Net Sales from Continuing Operations by Quarter | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
First Quarter | 14.8 | % | 14.4 | % | 15.2 | % | |||||||||||
Second Quarter | 43.2 | % | 42.8 | % | 37.1 | % | |||||||||||
Third Quarter | 31.5 | % | 30.2 | % | 32.7 | % | |||||||||||
Fourth Quarter | 10.5 | % | 12.6 | % | 15.0 | % |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
(Dollars in millions, except per share data) |
December 30, 2023 | % of Net Sales | December 31, 2022 | % of Net Sales | ||||||||||||||||||||
Net sales | $ | 410.4 | 100.0 | % | $ | 526.6 | 100.0 | % | |||||||||||||||
Cost of sales | 354.0 | 86.3 | 420.6 | 79.9 | |||||||||||||||||||
Cost of sales—impairment, restructuring and other | (5.8) | (1.4) | 10.3 | 2.0 | |||||||||||||||||||
Gross margin | 62.2 | 15.2 | 95.7 | 18.2 | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Selling, general and administrative | 114.8 | 28.0 | 128.5 | 24.4 | |||||||||||||||||||
Impairment, restructuring and other | (7.1) | (1.7) | 8.5 | 1.6 | |||||||||||||||||||
Other expense, net | 1.8 | 0.4 | 0.5 | 0.1 | |||||||||||||||||||
Loss from operations | (47.3) | (11.5) | (41.8) | (7.9) | |||||||||||||||||||
Equity in loss of unconsolidated affiliates | 22.5 | 5.5 | 11.4 | 2.2 | |||||||||||||||||||
Interest expense | 42.8 | 10.4 | 42.7 | 8.1 | |||||||||||||||||||
Other non-operating (income) expense, net | 1.6 | 0.4 | (1.6) | (0.3) | |||||||||||||||||||
Loss before income taxes | (114.2) | (27.8) | (94.3) | (17.9) | |||||||||||||||||||
Income tax benefit | (33.7) | (8.2) | (29.6) | (5.6) | |||||||||||||||||||
Net loss | $ | (80.5) | (19.6) | % | $ | (64.7) | (12.3) | % |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
(Dollars in millions, except per share data) |
Three Months Ended | ||||||||
December 30, 2023 | ||||||||
Volume and mix | (19.2) | % | ||||||
Pricing | (3.1) | |||||||
Foreign exchange rates | 0.2 | |||||||
Change in net sales | (22.1) | % |
Three Months Ended | ||||||||||||||
December 30, 2023 | December 31, 2022 | |||||||||||||
Materials | $ | 175.8 | $ | 224.6 | ||||||||||
Distribution and warehousing | 83.3 | 103.3 | ||||||||||||
Manufacturing labor and overhead | 75.8 | 77.5 | ||||||||||||
Costs associated with Roundup® marketing agreement | 19.1 | 15.2 | ||||||||||||
Cost of sales | 354.0 | 420.6 | ||||||||||||
Cost of sales—impairment, restructuring and other | (5.8) | 10.3 | ||||||||||||
$ | 348.2 | $ | 430.9 |
Three Months Ended | ||||||||
December 30, 2023 | ||||||||
Volume, mix and other | $ | (80.4) | ||||||
Material cost changes | 9.0 | |||||||
Costs associated with Roundup® marketing agreement | 4.0 | |||||||
Foreign exchange rates | 0.8 | |||||||
(66.6) | ||||||||
Impairment, restructuring and other | (16.1) | |||||||
Change in cost of sales | $ | (82.7) |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
(Dollars in millions, except per share data) |
Three Months Ended | ||||||||
December 30, 2023 | ||||||||
Pricing | (3.2) | % | ||||||
Material costs | (2.1) | |||||||
Volume, mix and other | (0.8) | |||||||
Roundup® commissions and reimbursements | (0.3) | |||||||
(6.4) | % | |||||||
Impairment, restructuring and other | 3.4 | |||||||
Change in gross margin rate | (3.0) | % |
Three Months Ended | ||||||||||||||
December 30, 2023 | December 31, 2022 | |||||||||||||
Advertising | $ | 17.4 | $ | 15.3 | ||||||||||
Share-based compensation | 13.4 | 18.8 | ||||||||||||
Research and development | 8.4 | 8.9 | ||||||||||||
Amortization of intangibles | 3.5 | 7.1 | ||||||||||||
Other selling, general and administrative | 72.1 | 78.4 | ||||||||||||
$ | 114.8 | $ | 128.5 |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
(Dollars in millions, except per share data) |
Three Months Ended | ||||||||||||||
December 30, 2023 | December 31, 2022 | |||||||||||||
Cost of sales—impairment, restructuring and other: | ||||||||||||||
Restructuring and other charges (recoveries), net | $ | (5.8) | $ | 7.1 | ||||||||||
Property, plant and equipment impairments | — | 3.2 | ||||||||||||
Operating expenses—impairment, restructuring and other: | ||||||||||||||
Restructuring and other charges (recoveries), net | (7.1) | 8.5 | ||||||||||||
Total impairment, restructuring and other charges (recoveries), net | $ | (12.9) | $ | 18.8 |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
(Dollars in millions, except per share data) |
Three Months Ended | ||||||||||||||
December 30, 2023 | December 31, 2022 | |||||||||||||
U.S. Consumer | $ | 306.7 | $ | 369.0 | ||||||||||
Hawthorne | 80.1 | 131.5 | ||||||||||||
Other | 23.6 | 26.1 | ||||||||||||
Consolidated | $ | 410.4 | $ | 526.6 |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
(Dollars in millions, except per share data) |
Three Months Ended | ||||||||||||||
December 30, 2023 | December 31, 2022 | |||||||||||||
U.S. Consumer | $ | (15.5) | $ | 31.3 | ||||||||||
Hawthorne | (9.7) | (16.2) | ||||||||||||
Other | (5.0) | 1.4 | ||||||||||||
Total Segment Profit (Loss) (Non-GAAP) | (30.2) | 16.5 | ||||||||||||
Corporate | (26.0) | (31.9) | ||||||||||||
Intangible asset amortization | (4.0) | (7.7) | ||||||||||||
Impairment, restructuring and other | 12.9 | (18.7) | ||||||||||||
Equity in loss of unconsolidated affiliates | (22.5) | (11.4) | ||||||||||||
Interest expense | (42.8) | (42.7) | ||||||||||||
Other non-operating income (expense), net | (1.6) | 1.6 | ||||||||||||
Loss before income taxes (GAAP) | $ | (114.2) | $ | (94.3) |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
(Dollars in millions, except per share data) |
Three Months Ended | |||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||
Net cash used in operating activities | $ | (343.2) | $ | (431.6) | |||||||
Net cash used in investing activities | (53.2) | (36.0) | |||||||||
Net cash provided by financing activities | 374.2 | 406.2 |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
(Dollars in millions, except per share data) |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
(Dollars in millions, except per share data) |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
(Dollars in millions, except per share data) |
Notional Amount ($) | Effective Date (a) | Expiration Date | Fixed Rate | |||||||||||||||||
200 | (b) | 1/20/2022 | 6/20/2024 | 0.49 | % | |||||||||||||||
200 | 6/7/2023 | 6/8/2026 | 0.80 | % | ||||||||||||||||
150 | 6/7/2023 | 4/7/2027 | 3.37 | % | ||||||||||||||||
50 | 6/7/2023 | 4/7/2027 | 3.34 | % | ||||||||||||||||
100 | (b) | 11/20/2023 | 3/22/2027 | 4.74 | % | |||||||||||||||
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
(Dollars in millions, except per share data) |
December 30, 2023 | September 30, 2023 | ||||||||||
Current assets | $ | 1,509.3 | $ | 1,212.0 | |||||||
Non-current assets (a) | 1,901.1 | 1,911.2 | |||||||||
Current liabilities | 690.0 | 683.9 | |||||||||
Non-current liabilities | 3,234.5 | 2,833.3 |
Three Months Ended | Year Ended | ||||||||||
December 30, 2023 | September 30, 2023 | ||||||||||
Net sales | $ | 366.6 | $ | 3,203.3 | |||||||
Gross margin | 56.0 | 642.7 | |||||||||
Net loss (a) | (79.8) | (333.2) | |||||||||
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
(Dollars in millions, except per share data) |
Period | Total Number of Common Shares Purchased (1) | Average Price Paid per Common Share (2) | Total Number of Common Shares Purchased as Part of Publicly Announced Plans or Programs (3) | Approximate Dollar Value of Common Shares That May Yet be Purchased Under the Plans or Programs (3) | |||||||||||||||||||
October 1, 2023 through October 28, 2023 | 2,034 | $ | 44.91 | — | N/A | ||||||||||||||||||
October 29, 2023 through November 25, 2023 | — | $ | — | — | N/A | ||||||||||||||||||
November 26, 2023 through December 30, 2023 | 5,301 | $ | 60.56 | — | N/A | ||||||||||||||||||
Total | 7,335 | $ | 56.22 | — |
Incorporated by Reference | ||||||||||||||||||||||||||||||||
Exhibit No. | Description | Form | Exhibit | Filing Date | Filed Herewith | |||||||||||||||||||||||||||
10.1 | 8-K | 10.1 | October 10, 2023 | |||||||||||||||||||||||||||||
10.2 | 8-K | 10.1 | November 1, 2023 | |||||||||||||||||||||||||||||
10.3 | 8-K | 10.2 | November 1, 2023 | |||||||||||||||||||||||||||||
10.4 | 8-K | 10.1 | November 16, 2023 | |||||||||||||||||||||||||||||
10.5 | 8-K | 10.1 | January 24, 2024 | |||||||||||||||||||||||||||||
10.6 | 8-K | 10.2 | January 24, 2024 | |||||||||||||||||||||||||||||
10.7 | 8-K | 10.3 | January 24, 2024 | |||||||||||||||||||||||||||||
10.8 | X | |||||||||||||||||||||||||||||||
10.9 | X | |||||||||||||||||||||||||||||||
10.10 | X | |||||||||||||||||||||||||||||||
21 | X | |||||||||||||||||||||||||||||||
22 | X | |||||||||||||||||||||||||||||||
31.1 | X | |||||||||||||||||||||||||||||||
31.2 | X | |||||||||||||||||||||||||||||||
32 | X | |||||||||||||||||||||||||||||||
101.SCH | XBRL Taxonomy Extension Schema | X | ||||||||||||||||||||||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | X | ||||||||||||||||||||||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase | X | ||||||||||||||||||||||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase | X | ||||||||||||||||||||||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase | X | ||||||||||||||||||||||||||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | X |
THE SCOTTS MIRACLE-GRO COMPANY | ||||||||
Date: February 7, 2024 | /s/ MATTHEW E. GARTH | |||||||
Printed Name: Matthew E. Garth | ||||||||
Title: Executive Vice President, Chief Financial Officer & Chief Administrative Officer |
[Grantee’s Name] | THE SCOTTS MIRACLE-GRO COMPANY | ||||
BY:__________________________________ | BY:__________________________________ | ||||
Date signed: ________________________ | [Name of Company representative] | ||||
[Title of Company representative] | |||||
Date signed:______________________ |
[Grantee’s Name] By: ______________________________ Date signed: ________________________ | THE SCOTTS MIRACLE-GRO COMPANY By: ___________________________________ [Name of Company Representative] [Title of Company Representative] Date signed: ____________________________ |
[Grantee's Name] By: ______________________________ Date signed: ________________________ | THE SCOTTS MIRACLE-GRO COMPANY By: ___________________________________ [Name of Company Representative] [Title of Company Representative] Date signed: ___________________________ |
Metric Weighting | Minimum [___] | Target [___] | Max [___] | |||||||||||
Metric 1 | x% | |||||||||||||
Metric 2 | x% |
NAME | JURISDICTION OF FORMATION | |||||||
1868 Ventures LLC | Ohio | |||||||
Swiss Farms Products, Inc. | Delaware | |||||||
GenSource, Inc. | Ohio | |||||||
OMS Investments, Inc. | Delaware | |||||||
Scotts Temecula Operations, LLC | Delaware | |||||||
Sanford Scientific, Inc. | New York | |||||||
Scotts Global Services, Inc. | Ohio | |||||||
Scotts Live Goods Holdings, Inc. | Ohio | |||||||
Bonnie Plants, LLC1 | Delaware | |||||||
Scotts Manufacturing Company | Delaware | |||||||
Miracle-Gro Lawn Products, Inc. | New York | |||||||
Scotts Products Co. | Ohio | |||||||
Scotts Servicios, S.A. de C.V.2 | Mexico | |||||||
Miracle-Gro Tecnología & Servicios S de R.L. de C.V.2 | Mexico | |||||||
Scotts Professional Products Co. | Ohio | |||||||
Scotts Servicios, S.A. de C.V.22 | Mexico | |||||||
Miracle-Gro Tecnología & Servicios S de R.L. de C.V.2 | Mexico | |||||||
SMG Growing Media, Inc. | Ohio | |||||||
AeroGrow International, Inc. | Nevada | |||||||
Hyponex Corporation | Delaware | |||||||
Rod McLellan Company | California | |||||||
The Hawthorne Gardening Company | Delaware | |||||||
Hawthorne Hydroponics LLC | Delaware | |||||||
Hawthorne Gardening B.V. | Netherlands | |||||||
Gavita International B.V. | Netherlands | |||||||
Hawthorne Lighting B.V. | Netherlands | |||||||
Agrolux Canada Limited | Canada | |||||||
Agrolux Nederland B.V. | Netherlands | |||||||
Hawthorne Canada Limited | Canada | |||||||
HGCI, Inc. | Nevada |
________________________ | ||
1 Scotts Live Goods Holdings, Inc.’s ownership is 50.0%. 2 Scotts Professional Products Co. owns 50% and Scotts Products Co. owns 50.0%. |
SMGM LLC | Ohio | |||||||
Scotts-Sierra Investments LLC | Delaware | |||||||
Scotts Sierra (China) Co., Ltd. | China | |||||||
Scotts Canada Ltd. | Canada | |||||||
Laketon Peat Moss Inc.3 | Canada | |||||||
Scotts de Mexico SA de CV4 | Mexico | |||||||
SMG Germany GmbH | Germany | |||||||
SMG Gardening (UK) Limited | United Kingdom | |||||||
The Hawthorne Collective, Inc. | Ohio | |||||||
The Scotts Company LLC | Ohio | |||||||
The Scotts Miracle-Gro Foundation5 | Ohio |
________________________ | ||
3 Scotts Canada Ltd.'s ownership is 50.0%. 4 The Scotts Company LLC owns 0.5% and Scotts-Sierra Investments LLC owns the remaining 99.5%. 5 The Scotts Miracle-Gro Foundation is a 501(c)(3) corporation. |
NAME OF GUARANTOR SUBSIDIARY | JURISDICTION OF FORMATION | |||||||
1868 Ventures LLC | Ohio | |||||||
AeroGrow International, Inc. | Nevada | |||||||
GenSource, Inc. | Ohio | |||||||
Hawthorne Hydroponics LLC | Delaware | |||||||
HGCI, Inc. | Nevada | |||||||
Hyponex Corporation | Delaware | |||||||
Miracle-Gro Lawn Products, Inc. | New York | |||||||
OMS Investments, Inc. | Delaware | |||||||
Rod McLellan Company | California | |||||||
Sanford Scientific, Inc. | New York | |||||||
Scotts Live Goods Holdings, Inc. | Ohio | |||||||
Scotts Manufacturing Company | Delaware | |||||||
Scotts Products Co. | Ohio | |||||||
Scotts Professional Products Co. | Ohio | |||||||
Scotts-Sierra Investments LLC | Delaware | |||||||
Scotts Temecula Operations, LLC | Delaware | |||||||
SMG Growing Media, Inc. | Ohio | |||||||
SMGM LLC | Ohio | |||||||
Swiss Farms Products, Inc. | Delaware | |||||||
The Hawthorne Collective, Inc. | Ohio | |||||||
The Hawthorne Gardening Company | Delaware | |||||||
The Scotts Company LLC | Ohio |
Date: February 7, 2024 | By: | /s/ JAMES HAGEDORN | ||||||||||||
Printed Name: James Hagedorn | ||||||||||||||
Title: Chairman of the Board, Chief Executive Officer & President |
Date: February 7, 2024 | By: | /s/ MATTHEW E. GARTH | ||||||||||||
Printed Name: Matthew E. Garth | ||||||||||||||
Title: Executive Vice President, Chief Financial Officer & Chief Administrative Officer |
/s/ JAMES HAGEDORN | /s/ MATTHEW E. GARTH | |||||||||||||
Printed Name: James Hagedorn | Printed Name: Matthew E. Garth | |||||||||||||
Title: Chairman of the Board, Chief Executive Officer & President | Title: Executive Vice President, Chief Financial Officer & Chief Administrative Officer | |||||||||||||
February 7, 2024 | February 7, 2024 |
* | THESE CERTIFICATIONS ARE BEING FURNISHED AS REQUIRED BY RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934 (THE “EXCHANGE ACT”) AND SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE, AND SHALL NOT BE DEEMED “FILED” FOR PURPOSES OF SECTION 18 OF THE EXCHANGE ACT OR OTHERWISE SUBJECT TO THE LIABILITY OF THAT SECTION. THESE CERTIFICATIONS SHALL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE INTO ANY FILING UNDER THE SECURITIES ACT OF 1933 OR THE EXCHANGE ACT, EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THESE CERTIFICATIONS BY REFERENCE. |
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (80.5) | $ (64.7) |
Other comprehensive income (loss): | ||
Net foreign currency translation adjustment | 3.1 | 7.2 |
Net unrealized loss on derivative instruments, net of tax | (8.2) | (4.8) |
Reclassification of net unrealized gains on derivative instruments to net loss, net of tax | (1.5) | (3.7) |
Net unrealized loss on securities, net of tax | (0.9) | (20.4) |
Pension and other post-retirement benefit adjustments, net of tax | (1.4) | (2.9) |
Total other comprehensive loss | (8.9) | (24.6) |
Comprehensive loss | $ (89.4) | $ (89.3) |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Millions, $ in Millions |
Dec. 30, 2023 |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|---|
Statement of Financial Position [Abstract] | |||
Accounts receivable, allowances | $ 15.9 | $ 15.1 | $ 12.0 |
Property, plant and equipment, accumulated depreciation | $ 760.5 | $ 765.4 | $ 780.6 |
Common shares stated value (USD per share) | $ 0.01 | ||
Common shares outstanding (shares) | 56.7 | 56.5 | 55.9 |
Treasury shares, at cost (shares) | 11.5 | 11.6 | 12.3 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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 months ended December 30, 2023 and December 31, 2022 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 December 30, 2023 (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 financial institution are classified as financing cash flows in the Condensed Consolidated Statements of Cash Flows. The Company records the discount in the “Other expense, net” line in the Condensed Consolidated Statements of Operations. At December 30, 2023, net receivables of $140.1 were derecognized. During the three months ended December 30, 2023, proceeds from the sale of receivables under the Master Receivables Purchase Agreement totaled $199.6. 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 is deemed to be commercially reasonable. The Company’s outstanding payment obligations under its supplier finance program were $30.8, $20.4, and $18.3 at December 30, 2023, December 31, 2022 and September 30, 2023, respectively, and are recorded within in the Condensed Consolidated Balance Sheets. The associated payments were $69.8 and $50.5 for the three months ended December 30, 2023 and December 31, 2022, 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 $8.6 and $19.2 during the three months ended December 30, 2023 and December 31, 2022, respectively, representing unpaid liabilities to acquire property, plant and equipment. Statements of Cash Flows Supplemental cash flow information was as follows:
Cash flow from operating activities for the three months ended December 31, 2022 was impacted by extended payment terms with vendors across the U.S. Consumer and Hawthorne segments for payments originally due in the final weeks of fiscal 2022 that were paid in the first quarter of fiscal 2023. 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. 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.
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INVESTMENT IN UNCONSOLIDATED AFFILIATES |
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Dec. 30, 2023 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENTS IN UNCONSOLIDATED AFFILIATES | 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 restores 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 months ended December 30, 2023 and December 31, 2022, the Company recorded equity in loss of unconsolidated affiliates of $22.5 and $11.4, respectively, associated with Bonnie Plants, LLC. During the three months ended December 30, 2023, the Company recorded a pre-tax impairment charge of $10.4 associated with its investment in Bonnie Plants, LLC in the “Equity in loss of unconsolidated affiliates” line in the Condensed Consolidated Statements of Operations. The estimated fair value of Bonnie Plants, LLC was based upon an equal weighting of the income-based and market-based approaches, utilizing estimated cash flows and a terminal value discounted at a rate of return that reflects the relative risk of the cash flows, as well as valuation multiples derived from comparable publicly traded companies that are applied to operating performance of the investment. The fair value estimate utilizes significant unobservable inputs and thus represents a Level 3 fair value measurement.
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IMPAIRMENT, RESTRUCTURING AND OTHER |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
IMPAIRMENT, RESTRUCTURING AND OTHER | 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:
The following table summarizes the activity related to liabilities associated with restructuring activities during the three months ended December 30, 2023:
As of December 30, 2023, restructuring accruals include $13.8 that is classified as long-term. 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. 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 December 30, 2023, the Company recorded recoveries of $3.7 associated with this restructuring initiative, primarily related to the sale of certain previously-reserved inventory at amounts in excess of estimated net realizable value, partially offset by employee termination benefits and facility closure costs. The Company incurred costs of $2.0 in its U.S. Consumer segment and recorded recoveries of $7.7 in its Hawthorne segment in the “Cost of sales—impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations during the three months ended December 30, 2023. The Company recorded recoveries of $0.8 in its U.S. Consumer segment and incurred costs of $0.3 in its Hawthorne segment and $2.4 at Corporate in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations during the three months ended December 30, 2023. During the three months ended December 31, 2022, the Company incurred costs of $14.5 associated with this restructuring initiative primarily related to employee termination benefits, facility closure costs and impairment of property, plant and equipment. The Company incurred costs of $1.0 in its U.S. Consumer segment and $8.4 in its Hawthorne segment in the “Cost of sales—impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations during the three months ended December 31, 2022. The Company incurred costs of $0.2 in its U.S. Consumer segment, $1.0 in its Hawthorne segment, $0.1 in its Other segment and $3.8 at Corporate in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations during the three months ended December 31, 2022. Costs incurred since the inception of this restructuring initiative through December 30, 2023 were $217.1 for the Hawthorne segment, $46.7 for the U.S. Consumer segment, $1.6 for the Other segment and $25.1 for Corporate. During the three months ended December 30, 2023, the Company recorded a gain of $12.1 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.
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INVENTORIES |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES | INVENTORIES Inventories consisted of the following for each of the periods presented:
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MARKETING AGREEMENT |
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Marketing Agreement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MARKETING AGREEMENT | MARKETING AGREEMENT The Scotts Company LLC (“Scotts LLC”) is the exclusive agent of Monsanto Company, a subsidiary of Bayer AG (“Monsanto”), 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. 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:
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DEBT |
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DEBT | DEBT The components of debt are as follows:
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 December 30, 2023, the Company had letters of credit outstanding in the aggregate principal amount of $78.0, and had $660.7 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 9.1% and 6.6% for the three months ended December 30, 2023 and December 31, 2022, respectively. 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) 8.25 for the first quarter of fiscal 2024, (ii) 7.75 for the second quarter of fiscal 2024, (iii) 6.50 for the third quarter of fiscal 2024, (iv) 6.00 for the fourth quarter of fiscal 2024, (v) 5.50 for the first quarter of fiscal 2025, (vi) 5.25 for the second quarter of fiscal 2025, (vii) 5.00 for the third quarter of fiscal 2025, (viii) 4.75 for the fourth quarter of fiscal 2025 and (ix) 4.50 for the first quarter of fiscal 2026 and thereafter. The Company’s leverage ratio was 7.20 at December 30, 2023. 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 first quarter of fiscal 2024 through 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 1.08 for the twelve months ended December 30, 2023. As of December 30, 2023, 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 December 30, 2023, the Company’s indebtedness under the Sixth A&R Credit Agreement and Senior Notes was $3,023.7. 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. 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 2.49 for the twelve months ended December 30, 2023. 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 December 31, 2022, there were $161.0 in borrowings on receivables pledged as collateral under the Receivables Facility, and the carrying value of the receivables pledged as collateral was $178.9. 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 December 30, 2023, December 31, 2022 and September 30, 2023 had a maximum total U.S. dollar equivalent notional amount of $700.0, $800.0 and $600.0, respectively. The notional amount, effective date, expiration date and rate of each of the swap agreements outstanding at December 30, 2023 are shown in the table below:
(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 6.0% and 5.2% for the three months ended December 30, 2023 and December 31, 2022, respectively.
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EQUITY |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY | EQUITY (DEFICIT) The following tables provide a summary of the changes in equity (deficit) for each of the periods indicated:
The sum of the components may not equal due to rounding.
The sum of the components may not equal due to rounding. Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive loss (“AOCL”) by component were as follows for each of the periods indicated:
The sum of the components may not equal due to rounding. Share-Based Awards In January 2024, the shareholders of Scotts Miracle-Gro approved an amendment and restatement of The Scotts Miracle-Gro Company Long-Term Incentive Plan to increase the maximum number of Common Shares available for grant to participants under the Plan by 2.5 million Common Shares. Total share-based compensation was as follows for each of the periods indicated:
Stock Options Stock option activity was as follows:
The weighted-average fair value per share of each option granted during the three months ended December 30, 2023 and December 31, 2022 was $15.16 and $13.67, respectively. There were no options exercised during the three months ended December 30, 2023 and December 31, 2022. As of December 30, 2023, there was $11.7 of total unrecognized pre-tax compensation cost, net of estimated forfeitures, related to nonvested stock options that is expected to be recognized over a weighted-average period of 2.6 years. Cash received from the exercise of stock options, including amounts received from employee purchases under the employee stock purchase plan, was $0.5 and $0.6 for the three months ended December 30, 2023 and December 31, 2022, respectively. The grant date fair value of stock option awards is estimated using a binomial model. Expected market price volatility is based on implied volatilities from traded options on Common Shares and historical volatility specific to the Common Shares. Historical data, including demographic factors impacting historical exercise behavior, is used to estimate stock option exercises and employee terminations within the valuation model. The risk-free rate for periods within the contractual life of the stock option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected life of stock options is based on historical experience and expectations for grants outstanding. The weighted average assumptions for awards granted in fiscal 2024 are as follows:
Restricted share-based awards Restricted share-based award activity (including restricted stock units and deferred stock units) was as follows:
The weighted-average grant-date fair value of restricted stock-based awards granted during the three months ended December 30, 2023 and December 31, 2022 was $48.79 and $50.59 per share, respectively. As of December 30, 2023, there was $18.2 of total unrecognized pre-tax compensation cost, net of estimated forfeitures, related to nonvested restricted stock-based awards that is expected to be recognized over a weighted-average period of 1.9 years. Performance-based awards Performance-based award activity was as follows (based on target award amounts):
(a) Vested at a weighted average of 100% of the target performance share units granted. The weighted-average grant-date fair value of performance-based awards granted during the three months ended December 30, 2023 and December 31, 2022 was $44.86 and $63.61 per share, respectively. As of December 30, 2023, there was $2.2 of total unrecognized pre-tax compensation cost, net of estimated forfeitures, related to nonvested performance-based awards that is expected to be recognized over a weighted-average period of 2.3 years. The total fair value of performance-based units vested during the three months ended December 30, 2023 and December 31, 2022 was $10.6 and $6.0, respectively. During the three months ended December 30, 2023, the Company determined that short-term variable incentive compensation for fiscal 2024 would be provided to certain employees as performance-based awards in lieu of a cash-based program. The program is structured so the fiscal 2024 incentive grant, if any, will be made on or near the incentive payout date, subject to certain performance conditions and a service requirement. The number of performance-based units that are ultimately issued to participating employees will be determined based on a target incentive 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 December 30, 2023, the Company had accrued $2.3 in the “Other current liabilities” line in the Condensed Consolidated Balance Sheets associated with these awards. As of December 30, 2023, there was $17.9 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. The units associated with these awards are excluded from the table above.
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EARNINGS PER COMMON SHARE |
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EARNINGS PER COMMON SHARE | EARNINGS PER COMMON SHARE The following table presents information necessary to calculate basic and diluted income (loss) per Common Share.
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INCOME TAXES |
3 Months Ended |
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Dec. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The effective tax rates for the three months ended December 30, 2023 and December 31, 2022 were 29.5% and 31.4%, respectively. The effective tax rate used for interim reporting purposes is based on management’s best estimate of factors impacting the effective tax rate for the full fiscal year and includes the impact of discrete items recognized in the quarter. There can be no assurance that the effective tax rate estimated for interim financial reporting purposes will approximate the effective tax rate determined at fiscal year-end. Scotts Miracle-Gro or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state, local and foreign jurisdictions. Subject to the following exceptions, the Company is no longer subject to examination by these tax authorities for fiscal years prior to 2020. There are currently no ongoing audits with respect to the U.S. federal jurisdiction. With respect to the foreign jurisdictions, a Canadian audit covering fiscal years 2020 through 2021 is in process. The Company is currently under examination by certain U.S. state and local tax authorities covering various periods from fiscal years 2018 through 2019. In addition to the aforementioned audits, certain other tax deficiency notices and refund claims for previous years remain unresolved. The Company currently anticipates that few of its open and active audits will be resolved within the next twelve months. The Company is unable to make a reasonably reliable estimate as to when or if cash settlements with taxing authorities may occur. Although the outcomes of such examinations and the timing of any payments required upon the conclusion of such examinations are subject to significant uncertainty, the Company does not anticipate that the resolution of these tax matters or any events related thereto will result in a material change to its consolidated financial position, results of operations or cash flows.
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CONTINGENCIES |
3 Months Ended |
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Dec. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | CONTINGENCIES Management regularly evaluates the Company’s contingencies, including various judicial and administrative proceedings and claims arising in the ordinary course of business, including product and general liabilities, workers’ compensation, property losses and other liabilities for which the Company is self-insured or retains a high exposure limit. Self-insurance accruals are established based on actuarial loss estimates for specific individual claims plus actuarially estimated amounts for incurred but not reported claims and adverse development factors applied to existing claims. Legal costs incurred in connection with the resolution of claims, lawsuits and other contingencies generally are expensed as incurred. In the opinion of management, the assessment of contingencies is reasonable and related accruals, in the aggregate, are adequate; however, there can be no assurance that final resolution of these matters will not have a material effect on the Company’s financial condition, results of operations or cash flows. Regulatory Matters At December 30, 2023, the Company had recorded liabilities of $2.6 for environmental actions, the majority of which are for site remediation. The Company believes that the amounts accrued are adequate to cover such known environmental exposures based on current facts and estimates of likely outcomes. Although it is reasonably possible that the costs to resolve such known environmental exposures will exceed the amounts accrued, any variation from accrued amounts is not expected to be material. Other The Company has been named as a defendant in a number of cases alleging injuries that the lawsuits claim resulted from exposure to asbestos-containing products, apparently based on the Company’s historic use of vermiculite in certain of its products. In many of these cases, the complaints are not specific about the plaintiffs’ contacts with the Company or its products. The cases vary, but complaints in these cases generally seek unspecified monetary damages (actual, compensatory, consequential and punitive) from multiple defendants. The Company believes that the claims against it are without merit and is vigorously defending against them. No accruals have been recorded in the Company’s condensed consolidated financial statements as the likelihood of a loss is not probable at this time; and the Company does not believe a reasonably possible loss would be material to, nor does it expect the ultimate resolution of these cases will have a material adverse effect on, the Company’s financial condition, results of operations or cash flows. There can be no assurance that future developments related to pending claims or claims filed in the future, whether as a result of adverse outcomes or as a result of significant defense costs, will not have a material effect on the Company’s financial condition, results of operations or cash flows. The Company is involved in other lawsuits and claims which arise in the normal course of business. These claims individually and in the aggregate are not expected to result in a material effect on the Company’s financial condition, results of operations or cash flows.
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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company is exposed to market risks, such as changes in interest rates, currency exchange rates and commodity prices. To manage a portion of the volatility related to these exposures, the Company enters into various financial transactions. The utilization of these financial transactions is governed by policies covering acceptable counterparty exposure, instrument types and other hedging practices. The Company does not hold or issue derivative financial instruments for speculative trading purposes. Exchange Rate Risk Management The Company uses currency forward contracts to manage the exchange rate risk associated with intercompany loans and certain other balances denominated in foreign currencies. Currency forward contracts are valued using observable forward rates in commonly quoted intervals for the full term of the contracts. The notional amount of outstanding currency forward contracts was $112.5, $159.9 and $123.1 at December 30, 2023, December 31, 2022 and September 30, 2023, respectively. Contracts outstanding at December 30, 2023 will mature over the next fiscal quarter. Interest Rate Risk Management The Company enters into interest rate swap agreements as a means to hedge its variable interest rate risk on debt instruments. Net amounts to be received or paid under the swap agreements are reflected as adjustments to interest expense. The Company has outstanding 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 rate swap agreements are valued based on the present value of the estimated future net cash flows using implied rates in the applicable yield curve as of the valuation date. Swap agreements that were hedging interest payments as of December 30, 2023, December 31, 2022 and September 30, 2023 had a maximum total U.S. dollar equivalent notional amount of $700.0, $800.0 and $600.0, respectively. Refer to “NOTE 6. DEBT” for the terms of the swap agreements outstanding at December 30, 2023. Included in the AOCL balance at December 30, 2023 was a gain of $10.3 related to interest rate swap agreements that is expected to be reclassified to earnings during the next twelve months, consistent with the timing of the underlying hedged transactions. Commodity Price Risk Management The Company enters into hedging arrangements designed to fix the price of a portion of its projected future urea and diesel requirements. Commodity contracts are valued using observable commodity exchange prices in active markets. Included in the AOCL balance at December 30, 2023 was a loss of $3.3 related to commodity hedges that is expected to be reclassified to earnings during the next twelve months, consistent with the timing of the underlying hedged transactions. The Company had the following outstanding commodity contracts that were entered into to hedge forecasted purchases:
Fair Values of Derivative Instruments The fair values of the Company’s derivative instruments, which represent Level 2 fair value measurements, were as follows:
The effect of derivative instruments on AOCL, net of tax, and the Condensed Consolidated Statements of Operations for each of the periods presented was as follows:
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FAIR VALUE MEASUREMENTS |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The following table summarizes the fair value of the Company’s assets and liabilities for which disclosure of fair value is required:
Changes in the balance of Level 3 convertible debt investments carried at fair value are presented below. There were no transfers into or out of Level 3.
The amortized cost basis of convertible debt investments was $225.9, $223.0 and $225.8 at December 30, 2023, December 31, 2022 and September 30, 2023, respectively. At December 30, 2023, December 31, 2022 and September 30, 2023, gross unrealized losses on convertible debt investments were $140.9, $131.9 and $140.0, respectively, and there were no gross unrealized gains. These investments have been in a continuous unrealized loss position for greater than 12 months as of December 30, 2023. The allowance for expected credit losses was $101.3, $0.0 and $101.3 at December 30, 2023, December 31, 2022 and September 30, 2023, respectively. At December 30, 2023, the period until scheduled maturity of the Company’s convertible debt investments was between 3.7 years and 5.7 years.
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LEASES |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | LEASES The Company leases certain property and equipment from third parties under various non-cancelable lease agreements, including industrial, commercial and office properties and equipment that support the management, manufacturing, distribution and research and development of products marketed and sold by the Company. The lease agreements generally require that the Company pay taxes, insurance and maintenance expenses related to the leased assets. At December 30, 2023, the Company had entered into operating leases that were yet to commence with a combined total expected lease liability of $23.3. From time to time, the Company will sublease portions of its facilities, resulting in sublease income. Sublease income and the related cash flows were not material to the condensed consolidated financial statements for the three months ended December 30, 2023 and December 31, 2022. The Company leases certain vehicles (primarily cars and light trucks) under agreements that are cancellable after the first year, but typically continue on a month-to-month basis until canceled by the Company. The vehicle leases and certain other non-cancelable operating leases contain residual value guarantees that create a contingent obligation on the part of the Company to compensate the lessor if the leased asset cannot be sold for an amount in excess of a specified minimum value at the conclusion of the lease term. If all such vehicle leases had been canceled as of December 30, 2023, the Company’s residual value guarantee would have approximated $5.2. Supplemental balance sheet information related to the Company’s leases was as follows:
Components of lease cost were as follows:
(a)Operating lease cost includes amortization of right-of-use assets of $18.2 and $19.0 for the three months ended December 30, 2023 and December 31, 2022, respectively. Short-term lease expense is excluded from operating lease cost and is not material. Supplemental cash flow information and non-cash activity related to the Company’s leases were as follows:
Weighted-average remaining lease term and discount rate for the Company’s leases were as follows:
Maturities of lease liabilities by fiscal year for the Company’s leases as of December 30, 2023 were as follows:
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LEASES | LEASES The Company leases certain property and equipment from third parties under various non-cancelable lease agreements, including industrial, commercial and office properties and equipment that support the management, manufacturing, distribution and research and development of products marketed and sold by the Company. The lease agreements generally require that the Company pay taxes, insurance and maintenance expenses related to the leased assets. At December 30, 2023, the Company had entered into operating leases that were yet to commence with a combined total expected lease liability of $23.3. From time to time, the Company will sublease portions of its facilities, resulting in sublease income. Sublease income and the related cash flows were not material to the condensed consolidated financial statements for the three months ended December 30, 2023 and December 31, 2022. The Company leases certain vehicles (primarily cars and light trucks) under agreements that are cancellable after the first year, but typically continue on a month-to-month basis until canceled by the Company. The vehicle leases and certain other non-cancelable operating leases contain residual value guarantees that create a contingent obligation on the part of the Company to compensate the lessor if the leased asset cannot be sold for an amount in excess of a specified minimum value at the conclusion of the lease term. If all such vehicle leases had been canceled as of December 30, 2023, the Company’s residual value guarantee would have approximated $5.2. Supplemental balance sheet information related to the Company’s leases was as follows:
Components of lease cost were as follows:
(a)Operating lease cost includes amortization of right-of-use assets of $18.2 and $19.0 for the three months ended December 30, 2023 and December 31, 2022, respectively. Short-term lease expense is excluded from operating lease cost and is not material. Supplemental cash flow information and non-cash activity related to the Company’s leases were as follows:
Weighted-average remaining lease term and discount rate for the Company’s leases were as follows:
Maturities of lease liabilities by fiscal year for the Company’s leases as of December 30, 2023 were as follows:
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SEGMENT INFORMATION |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | SEGMENT INFORMATION The Company divides its operations into three reportable segments: U.S. Consumer, Hawthorne and Other. U.S. Consumer consists of the Company’s consumer lawn and garden business in the United States. Hawthorne consists of the Company’s indoor and hydroponic gardening business. Other primarily consists of the Company’s consumer lawn and garden business in Canada. This identification of reportable segments is consistent with how the segments report to and are managed by the chief operating decision maker of the Company. In addition, Corporate consists of general and administrative expenses and certain other income and expense items not allocated to the business segments. The performance of each reportable segment is evaluated based on several factors, including income (loss) before income taxes, amortization, impairment, restructuring and other charges (“Segment Profit (Loss)”). Senior management uses Segment Profit (Loss) to evaluate segment performance because the Company believes this measure is indicative of performance trends and the overall earnings potential of each segment. The following tables present financial information for the Company’s reportable segments for the periods indicated:
The following table presents net sales by product category for the periods indicated:
The following table presents net sales by geographic area for the periods indicated:
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
3 Months Ended |
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Dec. 30, 2023 | |
Accounting Policies [Abstract] | |
Nature of Operations | 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.
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Organization and Basis of Presentation | Organization and Basis of Presentation The Company’s unaudited condensed consolidated financial statements for the three months ended December 30, 2023 and December 31, 2022 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 December 30, 2023 (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.
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Supplier Finance Program | 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 is deemed to be commercially reasonable.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Dec. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Supplemental Cash Flow Information | Supplemental cash flow information was as follows:
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IMPAIRMENT, RESTRUCTURING AND OTHER (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedules of Impairment, Restructuring and Other Charges, and Activity Related to Liabilities | The following table details impairment, restructuring and other charges (recoveries) for each of the periods presented:
The following table summarizes the activity related to liabilities associated with restructuring activities during the three months ended December 30, 2023:
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INVENTORIES (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Inventories | Inventories consisted of the following for each of the periods presented:
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MARKETING AGREEMENT (Tables) |
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Dec. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketing Agreement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Commission and Reimbursements Earned Under Marketing 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:
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DEBT (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Long-Term Debt | The components of debt are as follows:
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Schedule of Interest Rate Swap Agreements | The notional amount, effective date, expiration date and rate of each of the swap agreements outstanding at December 30, 2023 are shown in the table below:
(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.
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EQUITY (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Changes in Equity | The following tables provide a summary of the changes in equity (deficit) for each of the periods indicated:
The sum of the components may not equal due to rounding.
The sum of the components may not equal due to rounding.
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Schedule of Accumulated Other Comprehensive Loss | Changes in accumulated other comprehensive loss (“AOCL”) by component were as follows for each of the periods indicated:
The sum of the components may not equal due to rounding.
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Schedule of Share-Based Compensation | Total share-based compensation was as follows for each of the periods indicated:
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Share-Based Payment Arrangement, Stock Appreciation Right, Activity | Stock option activity was as follows:
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Schedule of Weighted Average Assumptions for Stock Options | The weighted average assumptions for awards granted in fiscal 2024 are as follows:
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Schedule of Restricted Share-based Award Activity | Restricted share-based award activity (including restricted stock units and deferred stock units) was as follows:
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Schedule of Performance-based Award Activity | Performance-based award activity was as follows (based on target award amounts):
(a) Vested at a weighted average of 100% of the target performance share units granted.
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EARNINGS PER COMMON SHARE (Tables) |
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Information to Calculate Basic and Diluted Earnings (Loss) Per Common Share | The following table presents information necessary to calculate basic and diluted income (loss) per Common Share.
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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Outstanding Derivative Contracts | The Company had the following outstanding commodity contracts that were entered into to hedge forecasted purchases:
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Schedule of the Fair Values of Derivative Instruments | The fair values of the Company’s derivative instruments, which represent Level 2 fair value measurements, were as follows:
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Schedule of the Effect of Derivative Instruments on AOCI and Statements of Operations | The effect of derivative instruments on AOCL, net of tax, and the Condensed Consolidated Statements of Operations for each of the periods presented was as follows:
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FAIR VALUE MEASUREMENTS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements, Recurring Basis | The following table summarizes the fair value of the Company’s assets and liabilities for which disclosure of fair value is required:
Changes in the balance of Level 3 convertible debt investments carried at fair value are presented below. There were no transfers into or out of Level 3.
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LEASES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted-Average Remaining Lease Term and Discount Rate and Supplemental Balance Sheet Information Schedule | Supplemental balance sheet information related to the Company’s leases was as follows:
Weighted-average remaining lease term and discount rate for the Company’s leases were as follows:
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Lease Cost Components and Supplemental Cash Flow Information and Non-Cash Activity For Company's Leases Schedules | Components of lease cost were as follows:
(a)Operating lease cost includes amortization of right-of-use assets of $18.2 and $19.0 for the three months ended December 30, 2023 and December 31, 2022, respectively. Short-term lease expense is excluded from operating lease cost and is not material. Supplemental cash flow information and non-cash activity related to the Company’s leases were as follows:
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Maturities of Operating Lease Liabilities by Fiscal Year Schedule | Maturities of lease liabilities by fiscal year for the Company’s leases as of December 30, 2023 were as follows:
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Maturities of Finance Lease Liabilities by Fiscal Year Schedule | Maturities of lease liabilities by fiscal year for the Company’s leases as of December 30, 2023 were as follows:
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SEGMENT INFORMATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Segment Financial Information | The following tables present financial information for the Company’s reportable segments for the periods indicated:
The following table presents net sales by product category for the periods indicated:
The following table presents net sales by geographic area for the periods indicated:
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
Oct. 27, 2023 |
Sep. 30, 2023 |
|
Line of Credit Facility [Line Items] | ||||
Percentage of annual net sales | 75.00% | |||
Noncash investing activities for unpaid liabilities incurred | $ 8.6 | $ 19.2 | ||
Accounts Receivable, Held-for-Sale | $ 600.0 | |||
Net receivables derecognized | 140.1 | |||
Proceeds from sale of receivables | 199.6 | |||
Supplier finance obligation | $ 30.8 | $ 20.4 | $ 18.3 | |
Supplier Finance Program, Obligation, Statement of Financial Position [Extensible Enumeration] | Accounts payable | Accounts payable | Accounts payable | |
Supplier finance obligation, settlement | $ 69.8 | $ 50.5 | ||
Minimum | ||||
Line of Credit Facility [Line Items] | ||||
Payment terms | 30 days | |||
Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Payment terms | 60 days | |||
Standby Letters of Credit | ||||
Line of Credit Facility [Line Items] | ||||
Senior secured credit facilities, maximum borrowing capacity | $ 70.0 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Supplemental Cash Flow Information (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Accounting Policies [Abstract] | ||
Interest paid | $ 49.6 | $ 48.8 |
Income taxes paid (refunded), net | $ 0.8 | $ (23.9) |
INVESTMENT IN UNCONSOLIDATED AFFILIATES (Details) - USD ($) $ in Millions |
3 Months Ended | ||||
---|---|---|---|---|---|
Nov. 07, 2023 |
Dec. 30, 2023 |
Dec. 31, 2022 |
Sep. 30, 2023 |
Dec. 31, 2020 |
|
Investments in and Advances to Affiliates [Line Items] | |||||
Investment in unconsolidated affiliates | $ 90.8 | $ 181.5 | $ 91.9 | ||
Equity in loss of unconsolidated affiliates | (22.5) | $ (11.4) | |||
Bonnie Plants | |||||
Investments in and Advances to Affiliates [Line Items] | |||||
Equity ownership percentage | 50.00% | 45.00% | 50.00% | ||
Ownership percentage increase (decrease) | 5.00% | ||||
Payments to acquire equity interest | $ 21.4 | ||||
Non-cash impairment | $ (10.4) |
IMPAIRMENT, RESTRUCTURING AND OTHER - Impairment, Restructuring and Other Charges (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other charges (recoveries), net | $ (7.1) | $ 8.5 |
Total impairment, restructuring and other charges (recoveries), net | (12.9) | 18.8 |
Restructuring and other charges (recoveries), net | Operating expenses | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other charges (recoveries), net | (7.1) | 8.5 |
Restructuring and other charges (recoveries), net | Cost of sales—impairment, restructuring and other | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other charges (recoveries), net | (5.8) | 7.1 |
Property, plant and equipment impairments | Cost of sales—impairment, restructuring and other | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other charges (recoveries), net | $ 0.0 | $ 3.2 |
IMPAIRMENT, RESTRUCTURING AND OTHER - Activity Related to Liabilities Associated with Restructuring (Details) $ in Millions |
3 Months Ended |
---|---|
Dec. 30, 2023
USD ($)
| |
Restructuring Reserve [Roll Forward] | |
Amounts accrued for restructuring and other, beginning balance | $ 40.5 |
Restructuring charges | 3.6 |
Payments | (10.1) |
Amounts accrued for restructuring and other, ending balance | $ 34.0 |
INVENTORIES (Details) - USD ($) $ in Millions |
Dec. 30, 2023 |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|---|
Inventory Disclosure [Abstract] | |||
Finished goods | $ 770.6 | $ 506.2 | $ 1,045.0 |
Raw materials | 298.1 | 272.5 | 360.6 |
Work-in-process | 100.9 | 101.6 | 120.3 |
Total inventories, net | $ 1,169.6 | $ 880.3 | $ 1,525.9 |
MARKETING AGREEMENT - Additional Information (Details) $ in Millions |
Aug. 01, 2019
USD ($)
|
---|---|
Restated Marketing Agreement | |
Marketing Agreement [Line Items] | |
Percentage of program earnings | 50.00% |
Annual payments | $ 18.0 |
Third Restated Agreement | |
Marketing Agreement [Line Items] | |
Minimum annual EBIT required to avoid reduction of contribution payment | 36.0 |
Minimum EBIT | 50.0 |
Brand decommissioning event payable | 375.0 |
Termination fee payable | $ 175.0 |
Minimum termination fee payable multiple | 4 |
Minimum termination fee payable threshold | $ 186.4 |
MARKETING AGREEMENT - Net Commission Earned Under Marketing Agreement (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Marketing Agreement [Line Items] | ||
Contribution expenses | $ (354.0) | $ (420.6) |
Restated Marketing Agreement | ||
Marketing Agreement [Line Items] | ||
Gross commission | 8.8 | 9.6 |
Contribution expenses | (4.5) | (4.5) |
Net commission | 4.3 | 5.1 |
Reimbursements associated with Roundup® marketing agreement | 19.1 | 15.2 |
Total net sales associated with Roundup® marketing agreement | $ 23.4 | $ 20.3 |
DEBT - Senior Notes (Details) - Senior notes - USD ($) $ in Millions |
Mar. 17, 2021 |
Oct. 22, 2019 |
Dec. 15, 2016 |
Dec. 30, 2023 |
Sep. 30, 2023 |
Dec. 31, 2022 |
Aug. 13, 2021 |
---|---|---|---|---|---|---|---|
Debt Instrument [Line Items] | |||||||
Debt Instrument, Covenant, Interest Coverage Ratio, Minimum | 2.00 | ||||||
Debt Instrument, Covenant, Interest Coverage Ratio | 2.49 | ||||||
5.250% Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate of debt (percentage) | 5.25% | 5.25% | 5.25% | 5.25% | |||
Proceeds from issuance of unsecured debt | $ 250.0 | ||||||
4.500% Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate of debt (percentage) | 4.50% | 4.50% | 4.50% | 4.50% | |||
Proceeds from issuance of unsecured debt | $ 450.0 | ||||||
4.000% Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate of debt (percentage) | 4.00% | 4.00% | 4.00% | 4.00% | |||
Proceeds from issuance of unsecured debt | $ 500.0 | ||||||
4.375% Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate of debt (percentage) | 4.375% | 4.375% | 4.375% | 4.375% | |||
Principal amount of debt | $ 400.0 |
DEBT - Receivables Facility (Details) - USD ($) $ in Millions |
Apr. 07, 2017 |
Dec. 30, 2023 |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|---|---|
Debt Instrument [Line Items] | ||||
Long-term debt | $ 3,043.5 | $ 2,630.6 | $ 3,427.3 | |
Accounts receivable pledged | 0.0 | 0.0 | 178.9 | |
Receivables Facility | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | $ 0.0 | $ 0.0 | $ 161.0 | |
Master Repurchase And Framework Agreements, The Amendments | ||||
Debt Instrument [Line Items] | ||||
Financing receivable, before allowance for credit loss | $ 400.0 | |||
Line of credit facility, maximum amount outstanding during period | $ 160.0 |
DEBT - Interest Rate Swap Agreements (Details) - USD ($) $ in Millions |
Dec. 30, 2023 |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|---|
Instrument 1 | |||
Derivative [Line Items] | |||
Derivative, notional amount | $ 200.0 | ||
Fixed Rate | 0.49% | ||
Instrument 2 | |||
Derivative [Line Items] | |||
Derivative, notional amount | $ 200.0 | ||
Fixed Rate | 0.80% | ||
Instrument 3 | |||
Derivative [Line Items] | |||
Derivative, notional amount | $ 150.0 | ||
Fixed Rate | 3.37% | ||
Instrument 4 | |||
Derivative [Line Items] | |||
Derivative, notional amount | $ 50.0 | ||
Fixed Rate | 3.34% | ||
Instrument 5 | |||
Derivative [Line Items] | |||
Derivative, notional amount | $ 100.0 | ||
Fixed Rate | 4.74% | ||
Derivatives designated as hedging instruments | Interest Rate Swap | |||
Derivative [Line Items] | |||
Derivative, notional amount | $ 700.0 | $ 600.0 | $ 800.0 |
DEBT - Weighted Average Interest Rate (Details) |
Dec. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Debt Disclosure [Abstract] | ||
Weighted average interest rate (percentage) | 6.00% | 5.20% |
EQUITY - Dividends (Details) - $ / shares |
3 Months Ended | |
---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Equity [Abstract] | ||
Dividends declared (USD per share) | $ 0.66 | $ 0.66 |
EQUITY - Share-Based Awards Narrative (Details) shares in Millions |
Jan. 31, 2024
shares
|
---|---|
Subsequent Event | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares available for grant (in shares) | 2.5 |
EQUITY - Total Share-based Compensation (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Equity [Abstract] | ||
Share-based compensation | $ 16.0 | $ 20.9 |
Related tax benefit recognized | $ 2.6 | $ 4.7 |
EQUITY - Schedule of Aggregate Stock Option Activity (Details) - Options - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Dec. 30, 2023 |
Sep. 30, 2023 |
|
No. of Options | ||
Awards outstanding at beginning of period (shares) | 1,191,183 | |
Granted (shares) | 1,287,402 | |
Forfeited (shares) | (18,381) | |
Awards outstanding at end of period (shares) | 2,460,204 | 1,191,183 |
Awards Exercisable, No. of Options (shares) | 399,223 | |
Wtd. Avg. Exercise Price | ||
Awards outstanding at beginning of period (USD per share) | $ 76.64 | |
Granted (USD per share) | 53.46 | |
Forfeited (USD per share) | 50.40 | |
Awards outstanding at end of period (USD per share) | 64.70 | $ 76.64 |
Awards Exercisable, Wtd. Avg. Exercise Price (USD per share) | $ 66.24 | |
Awards Outstanding, Wtd. Avg. Remaining Life | 8 years 2 months 12 days | 6 years 7 months 6 days |
Awards Exercisable, Wtd. Avg. Remaining Life | 1 year 10 months 24 days | |
Awards outstanding, aggregate intrinsic value | $ 21.9 | |
Exercisable, aggregate intrinsic value | $ 0.9 |
EQUITY - Stock Options Narrative (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Cash received from exercise of stock options | $ 0.5 | $ 0.6 |
Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted average fair value (USD per share) | $ 15.16 | $ 13.67 |
Cost not yet recognized | $ 11.7 | |
Cost not yet recognized, period (years) | 2 years 7 months 6 days |
EQUITY - Stock Options Weighted Average Assumptions (Details) - Options |
3 Months Ended |
---|---|
Dec. 30, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected volatility | 38.80% |
Risk-free interest rate | 4.70% |
Expected dividend yield | 4.10% |
Expected life | 6 years 1 month 6 days |
EQUITY - Restricted Stock-based Award Activity (Details) - $ / shares |
3 Months Ended | |
---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Wtd. Avg. Grant Date Fair Value per Unit | ||
Granted (USD per share) | $ 48.79 | $ 50.59 |
Restricted Stock Units (RSUs) | ||
No. of Units | ||
Awards outstanding at beginning of period (shares) | 611,838 | |
Granted (shares) | 204,249 | |
Vested (shares) | (11,620) | |
Forfeited (shares) | (18,362) | |
Awards outstanding at end of period (shares) | 786,105 | |
Wtd. Avg. Grant Date Fair Value per Unit | ||
Awards outstanding at beginning of period (USD per share) | $ 89.10 | |
Granted (USD per share) | 48.79 | |
Vested (USD per share) | 79.38 | |
Forfeited (USD per share) | 67.76 | |
Awards outstanding at end of period (USD per share) | $ 79.27 |
EQUITY - Restricted Stock-based Awards Narrative (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted (USD per share) | $ 48.79 | $ 50.59 |
Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted (USD per share) | $ 48.79 | |
Cost not yet recognized | $ 18.2 | |
Cost not yet recognized, period (years) | 1 year 10 months 24 days |
EQUITY - Performance-based Awards Activity (Details) - $ / shares |
3 Months Ended | |
---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Wtd. Avg. Grant Date Fair Value per Unit | ||
Granted (USD per share) | $ 48.79 | $ 50.59 |
Performance Shares | ||
No. of Units | ||
Awards outstanding at beginning of period (shares) | 544,790 | |
Granted (shares) | 11,146 | |
Vested (shares) | (181,791) | |
Forfeited (shares) | (184,799) | |
Awards outstanding at end of period (shares) | 189,346 | |
Wtd. Avg. Grant Date Fair Value per Unit | ||
Awards outstanding at beginning of period (USD per share) | $ 76.85 | |
Granted (USD per share) | 44.86 | $ 63.61 |
Vested (USD per share) | 59.88 | |
Forfeited (USD per share) | 64.31 | |
Awards outstanding at end of period (USD per share) | $ 99.60 | |
Vested average percentage of target performance of shares granted | 100.00% |
EQUITY - Performance-based Awards Narrative (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Granted (USD per share) | $ 48.79 | $ 50.59 |
Performance Shares | ||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Granted (USD per share) | $ 44.86 | $ 63.61 |
Cost not yet recognized | $ 2,200,000 | |
Cost not yet recognized, period (years) | 2 years 3 months 18 days | |
Units vested, value | $ 10,600,000 | $ 6,000,000.0 |
Accrued award liability | 2,300,000 | |
Unrecognized pre-tax compensation cost | $ 17,900,000 |
EARNINGS PER COMMON SHARE - Additional Information (Details) - shares shares in Millions |
3 Months Ended | |
---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Earnings Per Share [Abstract] | ||
Weighted-average common shares outstanding during the period plus dilutive potential common shares (in shares) | 56.7 | 55.5 |
Number of anti-dilutive potential common shares excluded from the calculation (in shares) | 0.5 | 0.2 |
INCOME TAXES (Details) |
3 Months Ended | |
---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Income Tax Disclosure [Abstract] | ||
Effective tax rate related to continuing operations | 29.50% | 31.40% |
CONTINGENCIES (Details) $ in Millions |
Dec. 30, 2023
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Accrual for environmental actions | $ 2.6 |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Additional Information (Details) - USD ($) $ in Millions |
Dec. 30, 2023 |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|---|
Not Designated as Hedging Instrument | Currency forward contracts | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative, notional amount | $ 112.5 | $ 123.1 | $ 159.9 |
Designated as Hedging Instruments | Interest rate swap | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative, notional amount | 700.0 | $ 600.0 | $ 800.0 |
Gain (loss) related to interest rate swap agreements expected to be reclassified | 10.3 | ||
Designated as Hedging Instruments | Commodity hedging instruments | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Gain (loss) related to commodity hedges expected to be reclassified | $ (3.3) |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Outstanding Commodity Contracts (Details) |
3 Months Ended | ||
---|---|---|---|
Dec. 30, 2023
T
gal
|
Sep. 30, 2023
T
gal
|
Dec. 31, 2022
T
gal
|
|
Urea (in tons) | |||
Derivative [Line Items] | |||
Outstanding commodity contracts, mass | T | 18,000 | 52,500 | 27,000 |
Diesel (in gallons) | |||
Derivative [Line Items] | |||
Outstanding commodity contracts, volume | 2,226,000 | 1,974,000 | 2,058,000 |
Heating Oil (in gallons) | |||
Derivative [Line Items] | |||
Outstanding commodity contracts, volume | 1,008,000 | 966,000 | 1,092,000 |
FAIR VALUE MEASUREMENTS - Narrative (Details) - Convertible debt investments - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
Sep. 30, 2023 |
|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Cost basis of investment | $ 225.9 | $ 223.0 | $ 225.8 |
Gross unrealized loss | 140.9 | 131.9 | 140.0 |
Debt Securities, Available-for-Sale, Allowance for Credit Loss | $ 101.3 | $ 0.0 | $ 101.3 |
Minimum | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Debt term | 3 years 8 months 12 days | ||
Maximum | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Debt term | 5 years 8 months 12 days |
LEASES - Additional Information (Details) - USD ($) $ in Millions |
Dec. 30, 2023 |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|---|
Lessee, Lease, Description [Line Items] | |||
Total lease liabilities | $ 311.2 | $ 296.5 | $ 292.9 |
Residual value of leased asset | 5.2 | ||
Not Yet Commenced | |||
Lessee, Lease, Description [Line Items] | |||
Total lease liabilities | $ 23.3 |
LEASES - Supplemental Balance Sheet Information Schedule (Details) - USD ($) $ in Millions |
Dec. 30, 2023 |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|---|
Leases [Abstract] | |||
Operating lease right-of-use-assets | $ 282.6 | $ 262.6 | $ 281.2 |
Operating lease current lease liabilities | 77.2 | 76.4 | 76.5 |
Operating lease non-current lease liabilities | 234.0 | 220.1 | 216.4 |
Total operating lease liabilities | 311.2 | 296.5 | 292.9 |
Finance lease right-of-use assets | 14.8 | 14.5 | 16.4 |
Finance lease current lease liabilities | 2.1 | 1.9 | 1.9 |
Finance lease non-current lease liabilities | 15.2 | 15.0 | 16.6 |
Total finance lease liabilities | $ 17.3 | $ 16.9 | $ 18.5 |
LEASES - Components of Lease Cost Schedule (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Leases [Abstract] | ||
Operating lease cost | $ 22.0 | $ 22.2 |
Variable lease cost | 6.6 | 6.5 |
Amortization of right-of-use assets | 0.6 | 1.4 |
Interest on lease liabilities | 0.2 | 0.3 |
Total finance lease cost | 0.8 | 1.7 |
Operating lease amortization of ROU assets | $ 18.2 | $ 19.0 |
LEASES - Supplemental Cash Flow Information and Non-Cash Activity Schedule (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Lease, Cost [Abstract] | ||
Operating cash flows from operating leases, net | $ 24.3 | $ 22.2 |
Operating cash flows from finance leases | 0.2 | 0.3 |
Financing cash flows from finance leases | 0.5 | 1.3 |
Right-of-use assets obtained in exchange for lease obligations, operating leases | 33.5 | 16.5 |
Right-of-use assets obtained in exchange for lease obligations, finance leases | $ 0.8 | $ 0.0 |
LEASES - Weighted-Average Remaining Lease Term and Discount Rate Schedule (Details) |
Dec. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Leases [Abstract] | ||
Operating leases, weighted average remaining term (in years) | 5 years 6 months | 4 years 8 months 12 days |
Finance leases, weighted average remaining term (in years) | 9 years 1 month 6 days | 9 years 10 months 24 days |
Operating leases, weighted average discount rate (percent) | 5.50% | 3.60% |
Finance leases, weighted average discount rate (percent) | 4.50% | 4.40% |
LEASES - Maturities of Lease Liabilities by Fiscal Year Schedule (Details) - USD ($) $ in Millions |
Dec. 30, 2023 |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|---|
Operating Leases | |||
2024 (remainder of the year) | $ 71.0 | ||
2025 | 81.4 | ||
2026 | 62.5 | ||
2027 | 38.7 | ||
2028 | 29.8 | ||
Thereafter | 81.7 | ||
Total lease payments | 365.1 | ||
Less: Imputed interest | (53.9) | ||
Total lease liabilities | 311.2 | $ 296.5 | $ 292.9 |
Finance Leases | |||
2024 (remainder of the year) | 2.1 | ||
2025 | 2.8 | ||
2026 | 2.3 | ||
2027 | 2.0 | ||
2028 | 1.7 | ||
Thereafter | 10.2 | ||
Total lease payments | 21.1 | ||
Less: Imputed interest | (3.8) | ||
Total lease liabilities | $ 17.3 | $ 16.9 | $ 18.5 |
SEGMENT INFORMATION - Net Sales by Geographic Area (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Segment Reporting Information [Line Items] | ||
Net sales | $ 410.4 | $ 526.6 |
United States | ||
Segment Reporting Information [Line Items] | ||
Net sales | 365.8 | 465.0 |
International | ||
Segment Reporting Information [Line Items] | ||
Net sales | $ 44.6 | $ 61.6 |
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