SCOTTS MIRACLE-GRO CO

Previous wording

Trends Affecting our Business

Current wording

Recent Events and Trends Affecting our Business

Previous wording

During the three months ended December 27, 2025, we determined that the Hawthorne business meets the criteria to be classified as held for sale, and we have reclassified the related assets and liabilities as held for sale on the Condensed Consolidated Balance Sheets for all periods presented. We expect the sale of the Hawthorne business to occur within twelve months from the date it met the held for sale criteria. We determined this represents a strategic shift, and therefore, effective in the first quarter of fiscal 2026, we classified our results of operations for all periods presented to reflect the Hawthorne business as a discontinued operation, including the Hawthorne professional horticulture business based in the Netherlands that was sold during the three months ended September 30, 2025. During the three months ended December 27, 2025, we recorded a non-cash pre-tax charge of $104.8 related to a valuation adjustment to recognize the carrying amount of the Hawthorne business at fair value less estimated costs to sell in the “Loss from discontinued operations, net of tax” line on the Condensed Consolidated Statements of Operations.

Current wording

During the three months ended December 27, 2025, we determined that the Hawthorne business met the criteria to be classified as held for sale, and classified the related assets and liabilities as held for sale on the Condensed Consolidated Balance Sheets for all periods presented. We determined this represents a strategic shift, and therefore, effective in the first quarter of fiscal 2026, we classified our results of operations for all periods presented to reflect the Hawthorne business as a discontinued operation. For the three and six months ended March 28, 2026, we incurred pre-tax charges of $29.6 and $134.4, respectively, related to valuation adjustments to recognize the carrying amount of the Hawthorne business at fair value less estimated costs to sell in the “Loss from discontinued operations, net of tax” line on the Condensed Consolidated Statements of Operations.

Previous wording

We continue to monitor the impacts of macroeconomic conditions, including elevated interest rates and the impact of inflationary pressures on input costs and consumer behavior; as well as geopolitical uncertainty, including the duration and resolution of ongoing conflicts, potential escalation of tensions and global supply chain disruptions. We are also continuing to monitor ongoing changes to global trade policies, including the imposition of tariffs. The impact that these events and conditions will have on our operational and financial performance will depend on future developments, which are difficult to predict. For more information about factors that could impact our business, refer to “ITEM 1A. RISK FACTORS” in the 2025 Annual Report.

Current wording

We continue to monitor the impacts of macroeconomic conditions, including elevated interest rates and inflationary pressures on input costs and consumer behavior, as well as geopolitical uncertainty, including the duration and resolution of ongoing conflicts, potential escalation of tensions and global supply chain disruptions, and ongoing changes to global trade policies, including the imposition of tariffs. The impact that these events and conditions will have on our operational and financial performance will depend on future developments, which are difficult to predict. For more information about factors that could impact our business, refer to “ITEM 1A. RISK FACTORS” in the 2025 Annual Report.

Previous wording

Net sales for the three months ended December 27, 2025 were $354.4, a decrease of 3.3% from net sales of $366.6 for the three months ended December 28, 2024. Factors contributing to the change in net sales are outlined in the following table:

Current wording

Net sales for the three months ended March 28, 2026 were $1,459.5, an increase of 5.0% from net sales of $1,389.7 for the three months ended March 29, 2025. Net sales for the six months ended March 28, 2026 were $1,814.0, an increase of 3.3% from net sales of $1,756.3 for the six months ended March 29, 2025. Factors contributing to the change in net sales are outlined in the following table:

Previous wording

•lower sales volume in our U.S. Consumer segment driven by fertilizer, grass seed, plant food and controls products, partially offset by higher sales of soils products; and

Current wording

•higher sales volume in our U.S. Consumer segment driven by soils, grass seed, fertilizer, plant food and controls products, partially offset by lower sales of mulch products;

Previous wording

•decreased net sales associated with the Roundup® marketing agreement;

Current wording

•higher net sales associated with the Roundup® marketing agreement; and

Previous wording

•partially offset by increased pricing in our U.S. Consumer segment.

Current wording

•increased pricing in our U.S. Consumer segment.

Previous wording

•a decrease in costs associated with the Roundup® marketing agreement.

Current wording

•an increase in costs associated with the Roundup® marketing agreement; and

Previous wording

The decrease in cost of sales for the three months ended December 27, 2025 as compared to the three months ended December 28, 2024 was primarily driven by:

Current wording

The decrease in cost of sales for the six months ended March 28, 2026 as compared to the six months ended March 29, 2025 was primarily driven by:

Previous wording

As a percentage of net sales, our gross margin rate was 25.0% and 24.1% for the three months ended December 27, 2025 and December 28, 2024, respectively. Factors contributing to the change in gross margin rate are outlined in the following table:

Current wording

As a percentage of net sales, our gross margin rate was 41.8% and 39.0% for the three months ended March 28, 2026 and March 29, 2025, respectively, and was 38.5% and 35.9% for the six months ended March 28, 2026 and March 29, 2025, respectively. Factors contributing to the change in gross margin rate are outlined in the following table:

Previous wording

The increase in gross margin rate for the three months ended December 27, 2025 as compared to the three months ended December 28, 2024 was primarily driven by:

Current wording

The increase in gross margin rate for the three and six months ended March 28, 2026 as compared to the three and six months ended March 29, 2025 was primarily driven by:

Previous wording

SG&A decreased $7.5, or 6.6%, during the three months ended December 27, 2025 compared to the three months ended December 28, 2024. Advertising expense increased $3.6, or 20.6%, due to higher media spending in our U.S. Consumer segment. Share-based compensation expense, which excludes certain advertising expenses paid for in Common Shares for the three months ended December 28, 2024, decreased $5.0, or 42.7%, due to lower long-term incentive compensation expense. Other SG&A decreased $9.3, or 12.1%, driven by lower short-term variable cash incentive compensation expense partially offset by higher marketing spend.

Current wording

SG&A increased $21.4, or 12.0%, during the three months ended March 28, 2026 compared to the three months ended March 29, 2025. Advertising expense increased $19.4, or 31.4%, due to higher media spending in our U.S. Consumer segment. Share-based compensation expense, which excludes certain advertising expenses paid for in Common Shares for the three months ended March 29, 2025, increased $5.2, or 40.3%, primarily due to the timing of long-term incentive compensation grants. Other SG&A decreased $2.6, or 2.8%, driven by lower short-term variable cash incentive compensation expense.

Previous wording

Impairment, restructuring and other charges for the three months ended December 27, 2025 were not material.

Current wording

Impairment, restructuring and other charges for the three and six months ended March 28, 2026 were not material.

Previous wording

During the three months ended December 28, 2024, we incurred executive severance charges of $9.5 in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations.

Current wording

During the three and six months ended March 29, 2025, we incurred employee and executive severance charges of $3.0 in our U.S. Consumer segment in the “Cost of sales—impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations. During the three and six months ended March 29, 2025, we incurred employee and executive severance charges of $3.3 in our U.S. Consumer segment and $2.1 and $11.6, respectively, at Corporate in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations.

Previous wording

During the three months ended December 28, 2024, we incurred a non-cash loss of $7.0 in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations related to the exchange of our convertible debt investment in RIV Capital for an investment in FLUENT.

Current wording

During the three and six months ended March 29, 2025, we incurred a non-cash loss of $0.0 and $7.0, respectively, in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations related to the exchange of our convertible debt investment in RIV Capital for an investment in FLUENT.

Previous wording

During fiscal 2022, we began implementing a series of Company-wide organizational changes and initiatives intended to create operational and management-level efficiencies. As part of this restructuring initiative, we reduced the size of our supply chain network, reduced staffing levels and implemented other cost-reduction initiatives. During the three months ended December 28, 2024, we incurred costs of $1.4 in our U.S. Consumer segment in the “Cost of sales—impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations associated with this restructuring initiative.

Current wording

During fiscal 2022, we began implementing a series of Company-wide organizational changes and initiatives intended to create operational and management-level efficiencies. As part of this restructuring initiative, we reduced the size of our supply chain network, reduced staffing levels and implemented other cost-reduction initiatives. During the three and six months ended March 29, 2025, we incurred costs of $2.3 and $3.7, respectively, in our U.S. Consumer segment in the “Cost of sales—impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations associated with this restructuring initiative.

Previous wording

Other expense is comprised of activities such as the discount on sales of accounts receivable under the Master Receivables Purchase Agreement, royalty income from the licensing of certain of our brand names and foreign exchange transaction gains and losses. Other expense was $2.7 and $4.3 for the three months ended December 27, 2025 and December 28, 2024, respectively.

Current wording

Other expense is comprised of activities such as the discount on sales of accounts receivable under the Master Receivables Purchase Agreement, royalty income from the licensing of certain of our brand names and foreign exchange transaction gains and losses. Other expense was $7.3 and $4.2 for the three months ended March 28, 2026 and March 29, 2025, respectively; and was $10.2 and $8.4 for the six months ended March 28, 2026 and March 29, 2025, respectively.

Previous wording

Equity in loss of unconsolidated affiliates was $13.1 and $9.9 during the three months ended December 27, 2025 and December 28, 2024, respectively. Equity in loss of unconsolidated affiliates associated with Bonnie Plants, LLC was $10.6 and $9.9 during the three months ended December 27, 2025 and December 28, 2024, respectively. We anticipated a net loss for Bonnie Plants, LLC in the first quarter due to the seasonal nature of its business, in which sales are heavily weighted to the spring and summer selling periods. Equity in loss of unconsolidated affiliates associated with FLUENT was $2.6 during the three months ended December 27, 2025, which reduced the balance of this investment to zero as of December 27, 2025, and resulted in the discontinuation of equity method recognition of our proportionate share of FLUENT losses.

Current wording

Equity in loss of unconsolidated affiliates was $4.5 and $5.9 for the three months ended March 28, 2026 and March 29, 2025, respectively; and was $17.6 and $15.8 for the six months ended March 28, 2026 and March 29, 2025, respectively. Equity in loss of unconsolidated affiliates associated with Bonnie Plants, LLC was $4.5 and $15.1 for the three and six months ended March 28, 2026, respectively, compared to $5.9 and $15.8 for the three and six months ended March 29, 2025, respectively. We anticipated a net loss for Bonnie Plants, LLC in the second quarter due to the seasonal nature of its business, in which sales are heavily weighted to the spring and summer selling periods during our third fiscal quarter. During the three months ended December 27, 2025, our investment balance in FLUENT was reduced to zero, and we discontinued equity method recognition of our proportionate share of FLUENT losses.

Previous wording

Interest expense was $27.2 for the three months ended December 27, 2025, a decrease of 19.8% compared to $33.9 for the three months ended December 28, 2024. The decrease was driven by lower average borrowings of $172.8 and a decrease in our weighted average interest rate, net of the impact of interest rate swaps, of 80 basis points. The decrease in average borrowings was driven by our focus on using available cash flow to reduce our debt. The decrease in our weighted average interest rate was primarily driven by lower borrowing rates under the Seventh A&R Credit Agreement.

Current wording

Interest expense was $31.3 for the three months ended March 28, 2026, a decrease of 14.5% compared to $36.6 for the three months ended March 29, 2025; and was $58.5 for the six months ended March 28, 2026, a decrease of 17.0% compared to $70.5 for the six months ended March 29, 2025. For the three months ended March 28, 2026, the decrease was driven by lower average borrowings of $162.1 and a decrease in our weighted average interest rate, net of the impact of interest rate swaps, of 50 basis points. For the six months ended March 28, 2026, the decrease was driven by lower average borrowings of $166.9 and a decrease in our weighted average interest rate, net of the impact of interest rate swaps, of 60 basis points. The decrease in average borrowings was driven by our focus on using available cash flow to reduce our debt. The decrease in our weighted average interest rate was primarily driven by lower borrowing rates under the Seventh A&R Credit Agreement.

Previous wording

The effective tax rates for the three months ended December 27, 2025 and December 28, 2024 were 24.5% and 27.3%, respectively. The effective tax rate used for interim purposes is based on our best estimate of factors impacting the effective tax rate for the full fiscal year. Factors affecting the estimated effective tax rate include assumptions as to income by jurisdiction (domestic and foreign), the availability and utilization of tax credits and the existence of elements of income and expense that may not be taxable or deductible. The estimated effective tax rate is subject to revision in later interim periods and at fiscal year-end as facts and circumstances change during the course of the fiscal year. 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.

Current wording

The effective tax rates related to continuing operations for the six months ended March 28, 2026 and March 29, 2025 were 28.5% and 28.1%, respectively. The effective tax rate used for interim purposes is based on our best estimate of factors impacting the effective tax rate for the full fiscal year. Factors affecting the estimated effective tax rate include assumptions as to income by jurisdiction (domestic and foreign), the availability and utilization of tax credits and the existence of elements of income and expense that may not be taxable or deductible. The estimated effective tax rate is subject to revision in later interim periods and at fiscal year-end as facts and circumstances change during the course of the fiscal year. 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.

Previous wording

Net loss from continuing operations was $47.8, or $0.83 per diluted share, for the three months ended December 27, 2025 compared to $66.1, or $1.15 per diluted share, for the three months ended December 28, 2024. The decrease was driven by a higher gross margin rate, lower impairment, restructuring, and other charges, lower SG&A and lower interest expense, partially offset by lower net sales, higher equity in loss of unconsolidated affiliates and lower income tax benefit.

Current wording

Net income from continuing operations was $263.3, or $4.46 per diluted share, for the three months ended March 28, 2026 compared to $220.7, or $3.78 per diluted share, for the three months ended March 29, 2025. The increase was driven by higher net sales, a higher gross margin rate, lower impairment, restructuring and other charges and lower interest expense, partially offset by higher SG&A and higher income tax expense.

Previous wording

Diluted average common shares used in the diluted net loss per common share from continuing operations calculation for the three months ended December 27, 2025 and December 28, 2024 were 57.9 million and 57.3 million, respectively, which excluded potential common shares of 0.9 million and 1.5 million, respectively, because the effect of their inclusion would be anti-dilutive as we incurred a net loss for the three months ended December 27, 2025 and December 28, 2024. The increase in diluted average common shares was primarily the result of the exercise and issuance of share-based compensation awards.

Current wording

Diluted average common shares used in the diluted net income per common share from continuing operations calculation for the three months ended March 28, 2026 and March 29, 2025 were 59.1 million and 58.4 million, respectively, which included potential common shares of 1.0 million and 0.8 million, respectively. The increase in diluted average common shares was primarily the result of the exercise and issuance of share-based compensation awards.

Previous wording

Loss from operations was $21.8 for the three months ended December 27, 2025, a decrease of 52.4% compared to $45.8 for the three months ended December 28, 2024. The decrease was primarily driven by a higher gross margin rate, lower impairment, restructuring, and other charges and lower SG&A, partially offset by lower net sales.

Current wording

Net income from continuing operations was $215.6, or $3.65 per diluted share, for the six months ended March 28, 2026 compared to $154.7, or $2.64 per diluted share, for the six months ended March 29, 2025. The increase was driven by higher net sales, a higher gross margin rate, lower impairment, restructuring and other charges and lower interest expense, partially offset by higher SG&A and higher income tax expense.

Previous wording

Loss from discontinued operations, net of tax, associated with our Hawthorne business was $77.2 and $3.4 for the three months ended December 27, 2025 and December 28, 2024, respectively. During the three months ended December 27, 2025, we recorded a non-cash pre-tax charge of $104.8 related to a valuation adjustment to recognize the carrying amount of the Hawthorne business at fair value less estimated costs to sell.

Current wording

Loss from discontinued operations, net of tax, associated with our Hawthorne business was $24.7 and $3.2 for the three months ended March 28, 2026 and March 29, 2025, respectively; and was $102.0 and $6.7 for the six months ended March 28, 2026 and March 29, 2025, respectively. During the three and six months ended March 28, 2026, we incurred pre-tax charges of $29.6 and $134.4, respectively, related to valuation adjustments to recognize the carrying amount of the Hawthorne business at fair value less estimated costs to sell.

Previous wording

As a result of the classification of the Hawthorne business as a discontinued operation, our reportable segments for the fiscal quarter ended December 27, 2025 differ from prior periods. The prior period amounts have been reclassified to reflect the removal of Hawthorne as a reportable segment. Segment performance is evaluated based on several factors, including income (loss) from continuing operations before income taxes, amortization, impairment, restructuring and other charges (“Segment Profit (Loss)”), which is a non-GAAP financial measure. We believe this measure is indicative of performance trends and the overall earnings potential of each segment.

Current wording

As a result of the classification of the Hawthorne business as a discontinued operation, our reportable segments for the three and six months ended March 28, 2026 differ from prior periods. The prior period amounts have been reclassified to reflect the removal of Hawthorne as a reportable segment. Segment performance is evaluated based on several factors, including income (loss) from continuing operations before income taxes, amortization, impairment, restructuring and other charges (“Segment Profit (Loss)”), which is a non-GAAP financial measure. We believe this measure is indicative of performance trends and the overall earnings potential of each segment.

Previous wording

The following table sets forth Segment Profit (Loss) as well as a reconciliation to loss from continuing operations before income taxes, the most directly comparable measure prepared in accordance with GAAP:

Current wording

The following table sets forth Segment Profit (Loss) as well as a reconciliation to income from continuing operations before income taxes, the most directly comparable measure prepared in accordance with GAAP:

Previous wording

Cash used in operating activities totaled $370.4 for the three months ended December 27, 2025, a decrease of $74.9 compared to $445.3 for the three months ended December 28, 2024. This decrease was driven by the timing of inventory production and lower payments to customers related to promotional programs, partially offset by higher short-term variable cash incentive compensation payments.

Current wording

Cash used in operating activities totaled $150.4 for the six months ended March 28, 2026 compared to $257.2 for the six months ended March 29, 2025. The decrease was driven by higher sales and the timing of inventory production, partially offset by higher short-term variable cash incentive compensation payments and higher SG&A.

Previous wording

Cash used in investing activities totaled $21.8 for the three months ended December 27, 2025, a decrease of $1.5 compared to $23.3 for the three months ended December 28, 2024. Cash used for investments in property, plant and equipment during the first three months of fiscal 2026 and 2025 was $20.0 and $29.3, respectively, driven by the timing of spending on capital projects. During the three months ended December 27, 2025 and December 28, 2024, we had net other investing cash (outflows) inflows of $(1.8) and $6.0, respectively.

Current wording

Cash used in investing activities totaled $45.4 for the six months ended March 28, 2026 compared to $34.7 for the six months ended March 29, 2025. Cash used for investments in property, plant and equipment during the first six months of fiscal 2026 and 2025 was $38.6 and $37.6, respectively. During the six months ended March 28, 2026 and March 29, 2025, we had net other investing cash (outflows) inflows of $(6.8) and $2.9, respectively.

Previous wording

Cash provided by financing activities totaled $366.8 for the three months ended December 27, 2025 compared to $407.7 for the three months ended December 28, 2024. During the three months ended December 27, 2025, we had net borrowings on our debt instruments of $422.5 due to our seasonal working capital build. We also paid dividends of $38.3, financing and issuance fees of $8.6 and repurchased Common Shares for $8.3 (which represents cash paid to tax authorities to satisfy statutory income tax withholding obligations related to share-based compensation). During the three months ended December 28, 2024, we had net borrowings on our debt instruments of $464.8, paid dividends of $39.2 and repurchased Common Shares for $15.6 (which represents cash paid to tax authorities to satisfy statutory income tax withholding obligations related to share-based compensation).

Current wording

Cash provided by financing activities totaled $168.2 for the six months ended March 28, 2026 compared to $237.9 for the six months ended March 29, 2025. During the six months ended March 28, 2026, we had net borrowings on our debt instruments of $241.0 due to our seasonal working capital build. We also paid dividends of $77.8, financing and issuance fees of $8.7 and received cash from the exercise of stock options of $3.3 (which also includes amounts received from employee purchases under the employee stock purchase plan). During the six months ended March 29, 2025, we had net borrowings on our debt instruments of $321.2, paid dividends of $78.0 and received cash from the exercise of stock options of $10.0 (which also includes amounts received from employee purchases under the employee stock purchase plan). During the six months ended March 28, 2026 and March 29, 2025, we repurchased Common Shares for $11.6 and $18.3, respectively (which includes cash paid to tax authorities to satisfy statutory income tax withholding obligations related to share-based compensation). In addition, during the six months ended March 28, 2026 and March 29, 2025, we had other financing cash inflows of $22.0 and $3.0, respectively, primarily related to collections of previously sold accounts receivable not yet submitted to the buyer.

Previous wording

On December 19, 2025, the Company’s Board of Directors authorized a share repurchase program, with no expiration date, for the repurchase of up to $500.0 of Common Shares. There have been no share repurchases under this authorization as of December 27, 2025.

Current wording

On December 19, 2025, our Board of Directors authorized a share repurchase program, with no expiration date, for the repurchase of up to $500.0 of Common Shares. There have been no share repurchases under this authorization as of March 28, 2026.

Previous wording

We are party to a Master Receivables Purchase Agreement, which is uncommitted and expires on September 1, 2026, under which we may sell up to $750.0 of available and eligible outstanding customer accounts receivable generated by sales to five specified customers. Transactions under the Master Receivables Purchase Agreement are accounted for as sales of accounts receivable, and the receivables sold are removed from the Condensed Consolidated Balance Sheets at the time of the sales transaction. Proceeds received from the sales of accounts receivable are classified as operating cash flows and collections of previously sold accounts receivable not yet submitted to the buyer are classified as financing cash flows in the Condensed Consolidated Statements of Cash Flows. We record the discount on sales in the “Other expense, net” line in the Condensed Consolidated Statements of Operations. At December 27, 2025, December 28, 2024 and September 30, 2025, net receivables derecognized were $220.3, $236.7 and $163.3, respectively. During the three months ended December 27, 2025 and December 28, 2024, proceeds from the sale of receivables under the Master Receivables Purchase Agreement totaled $254.6 and $274.0, respectively, and the total discount recorded on sales was $2.9 and $3.3, respectively.

Current wording

We are party to a Master Receivables Purchase Agreement, which is uncommitted and expires on September 1, 2026, under which we may sell up to $750.0 of available and eligible outstanding customer accounts receivable generated by sales to five specified customers. Transactions under the Master Receivables Purchase Agreement are accounted for as sales of accounts receivable, and the receivables sold are removed from the Condensed Consolidated Balance Sheets at the time of the sales transaction. Proceeds received from the sales of accounts receivable are classified as operating cash flows and collections of previously sold accounts receivable not yet submitted to the buyer are classified as financing cash flows in the Condensed Consolidated Statements of Cash Flows. We record the discount on sales in the “Other expense, net” line in the Condensed Consolidated Statements of Operations. At March 28, 2026, March 29, 2025 and September 30, 2025, net receivables derecognized were $654.1, $598.2 and $163.3, respectively. During the three months ended March 28, 2026 and March 29, 2025, proceeds from the sale of receivables under the Master Receivables Purchase Agreement totaled $813.8 and $748.2, respectively, and the total discount recorded on sales was $8.5 and $7.9, respectively. During the six months ended March 28, 2026 and March 29, 2025, proceeds from the sale of receivables under the Master Receivables Purchase Agreement totaled $1,068.5 and $1,022.2, respectively, and the total discount recorded on sales was $11.4 and $11.2, respectively.

Previous wording

We have an agreement to provide a supplier finance program which facilitates participating suppliers’ ability to finance our payment obligations with a designated third-party financial institution. Participating suppliers may, at their sole discretion, elect to finance our payment obligations prior to their scheduled due dates at a discounted price to the participating financial institution. Our obligations to our suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to finance amounts under this arrangement. The payment terms that we negotiate with our suppliers are consistent, regardless of whether a supplier participates in the program. Our current payment terms with a majority of our suppliers generally range from 30 to 60 days, which we deem to be commercially reasonable. Our outstanding payment obligations under our supplier finance program were $30.7, $26.7 and $13.9 at December 27, 2025, December 28, 2024 and September 30, 2025, respectively, and are recorded within accounts payable in the Condensed Consolidated Balance Sheets. The associated payments were $68.0 and $72.7 for the three months ended December 27, 2025 and December 28, 2024, respectively, and are classified as operating activities in the Condensed Consolidated Statements of Cash Flows.

Current wording

We have an agreement to provide a supplier finance program which facilitates participating suppliers’ ability to finance our payment obligations with a designated third-party financial institution. Participating suppliers may, at their sole discretion, elect to finance our payment obligations prior to their scheduled due dates at a discounted price to the participating financial institution. Our obligations to our suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to finance amounts under this arrangement. The payment terms that we negotiate with our suppliers are consistent, regardless of whether a supplier participates in the program. Our current payment terms with a majority of our suppliers generally range from 30 to 60 days, which we deem to be commercially reasonable. Our outstanding payment obligations under our supplier finance program were $42.9, $32.1 and $13.9 at March 28, 2026, March 29, 2025 and September 30, 2025, respectively, and are recorded within accounts payable in the Condensed Consolidated Balance Sheets. The associated payments were $154.7 and $153.1 for the six months ended March 28, 2026 and March 29, 2025, respectively, and are classified as operating activities in the Condensed Consolidated Statements of Cash Flows.

Previous wording

Our cash and cash equivalents were held in cash depository accounts with major financial institutions around the world or invested in high-quality, short-term liquid investments having original maturities of three months or less. The cash and cash equivalents balances, including cash and cash equivalents classified within current assets held for sale, of $11.3, $9.8 and $36.6 as of December 27, 2025, December 28, 2024 and September 30, 2025, respectively, included $7.2, $6.1 and $4.2, respectively, held by controlled foreign corporations. As of December 27, 2025, we maintain our assertion of indefinite reinvestment of the earnings of all material foreign subsidiaries.

Current wording

Our cash and cash equivalents were held in cash depository accounts with major financial institutions around the world or invested in high-quality, short-term liquid investments having original maturities of three months or less. The cash and cash equivalents balances, including cash and cash equivalents classified within current assets held for sale, of $9.1, $16.9 and $36.6 as of March 28, 2026, March 29, 2025 and September 30, 2025, respectively, included $4.8, $9.4 and $4.2, respectively, held by controlled foreign corporations. As of March 28, 2026, we maintain our assertion of indefinite reinvestment of the earnings of all material foreign subsidiaries.

Previous wording

At December 27, 2025, we had letters of credit outstanding in the aggregate principal amount of $93.2, and had $979.8 of borrowing availability under the Seventh A&R Credit Agreement. The weighted average interest rates on average borrowings under the credit facilities, excluding the impact of interest rate swaps, were 7.0% and 8.5% for the three months ended December 27, 2025 and December 28, 2024, respectively.

Current wording

At March 28, 2026, we had letters of credit outstanding in the aggregate principal amount of $93.2, and had $1,155.6 of borrowing availability under the Seventh A&R Credit Agreement. The weighted average interest rates on average borrowings under the credit facilities, excluding the impact of interest rate swaps, were 6.4% and 7.8% for the six months ended March 28, 2026 and March 29, 2025, respectively.

Previous wording

The Seventh A&R Credit Agreement contains, among other obligations, an affirmative covenant regarding our leverage ratio determined as of the end of each of our fiscal quarters, calculated as average total indebtedness divided by our Adjusted EBITDA. The maximum permitted leverage ratio is 5.00. Our leverage ratio was 4.03 at December 27, 2025. The Seventh A&R Credit Agreement also contains an affirmative covenant regarding our interest coverage ratio determined as of the end of each of our fiscal quarters, calculated as Adjusted EBITDA divided by interest expense, as described in the Seventh A&R Credit Agreement. The minimum required interest coverage ratio is (i) 3.00 for each of the fiscal quarters within fiscal 2026, (ii) 3.25 for each of the fiscal quarters within fiscal 2027 and (iii) 3.50 for fiscal quarters thereafter. Our interest coverage ratio was 5.05 at December 27, 2025.

Current wording

The Seventh A&R Credit Agreement contains, among other obligations, an affirmative covenant regarding our leverage ratio determined as of the end of each of our fiscal quarters, calculated as average total indebtedness divided by our Adjusted EBITDA. The maximum permitted leverage ratio is 5.00. Our leverage ratio was 3.71 at March 28, 2026. The Seventh A&R Credit Agreement also contains an affirmative covenant regarding our interest coverage ratio determined as of the end of each of our fiscal quarters, calculated as Adjusted EBITDA divided by interest expense, as described in the Seventh A&R Credit Agreement. The minimum required interest coverage ratio is (i) 3.00 for each of the fiscal quarters within fiscal 2026, (ii) 3.25 for each of the fiscal quarters within fiscal 2027 and (iii) 3.50 for fiscal quarters thereafter. Our interest coverage ratio was 5.62 at March 28, 2026.

Previous wording

On December 15, 2016, Scotts Miracle-Gro issued $250.0 aggregate principal amount of 5.250% Senior Notes with a maturity date of December 15, 2026. The 5.250% Senior Notes represent general unsecured senior obligations and rank equal in right of payment with our existing and future unsecured senior debt. The 5.250% Senior Notes have interest payment dates of June 15 and December 15 of each year. At December 27, 2025, the $250.0 aggregate principal amount of the 5.250% Senior Notes was reclassified to the “Current portion of debt” line in the Condensed Consolidated Balance Sheets as it is payable within one year. We intend to repay the 5.250% Senior Notes during fiscal 2026 using a combination of cash flow from operations and available borrowing capacity under the Seventh A&R Credit Agreement.

Current wording

On December 15, 2016, Scotts Miracle-Gro issued $250.0 aggregate principal amount of 5.250% Senior Notes with a maturity date of December 15, 2026. The 5.250% Senior Notes represent general unsecured senior obligations and rank equal in right of payment with our existing and future unsecured senior debt. The 5.250% Senior Notes have interest payment dates of June 15 and December 15 of each year. At March 28, 2026, the $250.0 aggregate principal amount of the 5.250% Senior Notes is classified in the “Current portion of debt” line in the Condensed Consolidated Balance Sheets as it is payable within one year. We intend to repay the 5.250% Senior Notes during fiscal 2026 using a combination of cash flow from operations and available borrowing capacity under the Seventh A&R Credit Agreement.

Previous wording

(a)Includes amounts due from Non-Guarantor subsidiaries of $43.9 and $11.4, respectively.

Current wording

(a)Includes amounts due from Non-Guarantor subsidiaries of $92.3 and $11.4, respectively.

Previous wording

(a)Includes intercompany income (expense) from Non-Guarantor subsidiaries of $(1.1) and $5.9, respectively.

Current wording

(a)Includes intercompany income from Non-Guarantor subsidiaries of $2.9 and $5.9, respectively.