SCOTTS MIRACLE-GRO CO

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

The Scotts Miracle-Gro Company (“Scotts Miracle-Gro”) and its subsidiaries (collectively, with Scotts Miracle-Gro, the “Company”) are engaged in the manufacturing, marketing and sale of products for lawn and garden care. The Company’s products are primarily sold in North America. The Company’s North America consumer lawn and garden business is highly seasonal, with more than 75% of its annual net sales occurring in the second and third fiscal quarters.

Prior to April 8, 2026, the Company operated the Hawthorne segment, which provided nutrients, lighting and other materials used for indoor and hydroponic gardening. The Company completed the divestitures of its Hawthorne business in North America on April 8, 2026 and its Hawthorne business based in the Netherlands on September 30, 2025. During the three months ended December 27, 2025, the Company 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 in the Condensed Consolidated Balance Sheets for all periods presented. The Company determined this represented a strategic shift, and therefore, effective in the first quarter of fiscal 2026, the Company classified its results of operations for all periods presented to reflect the Hawthorne business as a discontinued operation. See “NOTE 2. DISCONTINUED OPERATIONS” for further details.

Organization and Basis of Presentation

The Company’s unaudited condensed consolidated financial statements for the three and nine months ended June 27, 2026 and June 28, 2025 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 consolidated subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation. The Company consolidates all majority-owned subsidiaries and variable interest entities where the Company has been determined to be the primary beneficiary. The results of businesses acquired or disposed of are included in the condensed consolidated financial statements from the date of each acquisition or up to the date of disposal, respectively. In the opinion of management, interim results reflect all normal and recurring adjustments and are not necessarily indicative of results for a full year.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted or condensed pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, this Quarterly Report on Form 10-Q for the fiscal quarter ended June 27, 2026 (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, 2025 (the “2025 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, 2025 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.

On March 14, 2025, the Company sold all of the issued and outstanding shares of capital stock of its formerly wholly-owned subsidiary The Hawthorne Collective, Inc. (“THC”) to Bad Dog Holdings LLC (“BDH”) in exchange for a promissory note with a principal amount of $39.0. BDH was formed to hold and manage the investments held by THC and is owned and controlled by a strategic partner of the Company. At the time of the sale, THC held non-voting exchangeable shares of FLUENT Corp. (formerly Cansortium Inc.) (“FLUENT”) (CSE: FNT.U) (OTCQB: CNTMF), a vertically-integrated, multi-state cannabis company, and other minority non-equity investments, with a total book value of $39.0. BDH granted the Company a call option that enables the Company to reacquire all of the issued and outstanding shares of capital stock of THC in exchange for canceling the principal amount of the promissory note and making an additional payment to BDH equal to 5% of any appreciation in the fair value of THC. The Company may, subject to certain restrictions, exercise the call option in its sole and absolute discretion until the earlier of (i) March 14, 2035 and (ii) the date of the consummation of a merger, change in control or consolidation of BDH or a sale, lease, transfer, exclusive license or other disposition of all or substantially all of the assets of BDH. The Company also granted BDH a put option providing BDH with the right to cause the Company to reacquire all the issued and outstanding shares of capital stock of THC in exchange for canceling the principal amount of the promissory note. The Company has determined that it has a variable interest in BDH and that BDH is a variable interest entity. Additionally, based on its assessment of the characteristics of its variable interest in BDH, including the involvement of its de facto agents, the Company has determined it is the primary beneficiary of BDH and, as a result, is required to consolidate BDH in its condensed consolidated financial statements. As of June 27, 2026, BDH had assets of $21.9 that were recorded in the “Other assets” line in the Condensed Consolidated Balance Sheets. BDH also had a $41.4 liability as of June 27, 2026 related to the promissory note due to the Company, which was eliminated in consolidation.

Assets and Liabilities Held for Sale

Assets and liabilities related to a business classified as held for sale are segregated in the Condensed Consolidated Balance Sheets for all periods presented. Upon classification as held for sale, the Company ceases depreciation and amortization and measures the assets (or disposal group) at the lower of carrying amount or fair value less cost to sell. Any resulting loss is recognized in the period in which the held for sale criteria are met. This valuation adjustment (allowance) is adjusted based on subsequent changes in estimates of fair value less cost to sell. During the three months ended December 27, 2025, the Company 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 in the Condensed Consolidated Balance Sheets for all periods presented.

Accounts Receivable

The Company is party to a Master Receivables Purchase Agreement, which is uncommitted and expires on September 1, 2026, under which the Company may sell up to $750.0 of available and eligible outstanding customer accounts receivable generated by sales to five specified customers. The receivable sales are non-recourse to the Company, other than with respect to (i) repurchase and indemnification obligations arising from any violations by the Company of its 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. Such dilution or dispute obligations apply only to matters that arise after the sale of the applicable receivables to the purchaser that were not contemplated in the applicable purchase price of the applicable purchased receivable. The recourse obligations of the Company that may arise from time to time are supported by standby letters of credit of $75.0. 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. The Company records the discount on sales in the “Other expense, net” line in the Condensed Consolidated Statements of Operations. At June 27, 2026, June 28, 2025 and September 30, 2025, net receivables derecognized were $312.1, $418.8 and $163.3, respectively. During the three months ended June 27, 2026 and June 28, 2025, proceeds from the sale of receivables under the Master Receivables Purchase Agreement totaled $592.9 and $686.7, respectively, and the total discount recorded on sales was $5.2 and $7.3, respectively. During the nine months ended June 27, 2026 and June 28, 2025, proceeds from the sale of receivables under the Master Receivables Purchase Agreement totaled $1,661.4 and $1,708.9, respectively, and the total discount recorded on sales was $16.5 and $18.5, respectively.

Supplier Finance Program

The Company maintains a supplier finance program which facilitates participating suppliers’ ability to finance payment obligations of the Company with a designated third-party financial institution. Participating suppliers may, at their sole discretion, elect to finance payment obligations of the Company prior to their scheduled due dates at a discounted price to the participating financial institution. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to finance amounts under this arrangement. The payment terms that the Company negotiates with its suppliers are consistent, regardless of whether a supplier participates in the program. The Company’s current payment terms with a majority of its suppliers generally range from 30 to 60 days, which the Company deems to be commercially reasonable. The Company’s outstanding payment obligations under its supplier finance program were $23.7, $18.8 and $13.9 at June 27, 2026, June 28, 2025 and September 30, 2025, respectively, and are recorded within accounts payable in the Condensed Consolidated Balance Sheets. The associated payments were $239.9 and $208.9 for the nine months ended June 27, 2026 and June 28, 2025, respectively, and are classified as operating activities in the Condensed Consolidated Statements of Cash Flows.

Investment in Unconsolidated Affiliates

Equity investments in which the Company has the ability to exercise significant influence, but does not control, are accounted for using either the equity method of accounting or the fair value option. For investments accounted for using the equity method of accounting, the Company’s proportionate share of the earnings and losses of these entities is reflected in the “Equity in income of unconsolidated affiliates” line in the Condensed Consolidated Statements of Operations. The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, an impairment loss is recognized in earnings for the amount by which the carrying amount of the investment exceeds its estimated fair value. Investments accounted for using the fair value option are recorded at fair value in the Condensed Consolidated Balance Sheets, and all changes in fair value are recorded in earnings.

Long-Lived Assets

The Company had non-cash investing activities of $12.6 and $8.4 during the nine months ended June 27, 2026 and June 28, 2025, respectively, representing unpaid liabilities to acquire property, plant and equipment.

Statements of Cash Flows

Supplemental cash flow information was as follows:

Cash and cash equivalents held by the Hawthorne business of $11.6 and $3.8 at June 28, 2025 and September 30, 2025, respectively, are classified as held for sale and are not included in cash and cash equivalents in the Condensed Consolidated Balance Sheets.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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. The new disclosure requirements are to be applied prospectively, with the option to apply retrospectively, and will be included in the Company’s Annual Report on Form 10-K for the fiscal year ending September 30, 2026. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s disclosures.

In November 2024, the FASB issued ASU No. 2024-03, “Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This ASU requires disaggregated disclosures on an annual and interim basis, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the statement of operations. ASU No. 2024-03 is to be applied prospectively, with the option to apply the standard retrospectively, effective for the Company’s fiscal year ending September 30, 2028, and interim periods within the fiscal year ending September 30, 2029. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s disclosures.

In September 2025, the FASB issued ASU No. 2025-06, “Intangibles — Goodwill and Other — Internal-Use Software: Targeted Improvements to the Accounting for Internal-Use Software.” This ASU amends the accounting for and disclosure of software costs. ASU No. 2025-06 is effective for the Company’s fiscal year ending September 30, 2029 and interim periods within that fiscal year, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s consolidated financial statements and disclosures.

NOTE 2. DISCONTINUED OPERATIONS

During the three months ended December 27, 2025, the Company 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 in the Condensed Consolidated Balance Sheets for all periods presented. The Company determined this represented a strategic shift, and therefore, effective in the first quarter of fiscal 2026, the Company classified its results of operations for all periods presented to reflect the Hawthorne business as a discontinued operation.

On April 8, 2026, the Company completed the sale of its Hawthorne business in North America to Vireo Growth Inc. (“Vireo”) (CSE: VREO; OTCQX: VREOF) in exchange for non-cash consideration with an initial fair value of $97.0, consisting of 213.0 million common shares of Vireo, which represented approximately 14% of Vireo’s total outstanding common shares as of the closing date, and a warrant with afive-year term to acquire 80.0 million additional common shares of Vireo at a strike price of $0.85 per share (collectively, the “Vireo Equity Securities”). The sale proceeds are subject to post-closing adjustments that are expected to be finalized during fiscal 2026. On the closing date, the Hawthorne business held cash and cash equivalents of $35.0 that was transferred to Vireo as part of the sale, which was classified as an investing activity in the “Net cash disposed of on sale of business” line in the Condensed Consolidated Statements of Cash Flows. Additionally, in connection with the transaction, the Company entered into a contract manufacturing agreement and agreed to provide Vireo with up to $20.0 of manufacturing services over atwo-year period for no cost. The obligations associated with this agreement have been accrued in the “Other current liabilities” and “Other liabilities” lines in the Condensed Consolidated Balance Sheets.

Pursuant to an agreement executed on April 8, 2026, the Company transferred the sale consideration received to Good Dog Holdings LLC (“GDH”) in exchange for a promissory note. GDH was formed to hold and manage the investments transferred to it by the Company and is owned and controlled by a strategic partner of the Company. GDH granted the Company a call option that enables the Company to reacquire all of the investments held by GDH in exchange for canceling the principal amount of the promissory note. The Company may, subject to certain restrictions, exercise the call option in its sole and absolute discretion until April 8, 2036. The Company also granted GDH a put option providing GDH with the right to cause the Company to reacquire the investments held by GDH in exchange for canceling the principal amount of the promissory note. The Company has determined that it has a variable interest in GDH and that GDH is a variable interest entity. Additionally, based on its assessment of the characteristics of its variable interest in GDH, including the involvement of its de facto agents, the Company has determined it is the primary beneficiary of GDH and, as a result, is required to consolidate GDH in its condensed consolidated financial statements. As of June 27, 2026, the only assets held by GDH were the Vireo Equity Securities, which are recorded in the “Other assets” line in the Condensed Consolidated Balance Sheets, and its only liability was the promissory note due to the Company, which was eliminated in consolidation.

GDH and Vireo are also parties to an investor rights agreement executed on April 8, 2026 which allows GDH to nominateone member to the Vireo board of directors. Pursuant to this right, Christopher J. Hagedorn, Executive Vice President of the Company, has been elected to Vireo’s board of directors.

For the nine months ended June 27, 2026, the Company recorded a loss of $101.8 related to the sale of the Hawthorne business in North America. During the three months ended June 27, 2026, the Company recorded a $32.6 reduction to the cumulative pre-tax loss driven by the closing date valuation of the non-cash sale consideration. Income tax expense from discontinued operations was $24.8 for the three months ended June 27, 2026 and includes the impact of a valuation allowance recognized against certain deferred tax assets associated with the former Hawthorne business in Canada.

The following represents the major components of the financial results of the Hawthorne business for each of the periods presented:

The following represents the major classes of assets and liabilities that have been classified as held for sale in the Condensed Consolidated Balance Sheets for each of the periods presented:

The Condensed Consolidated Statements of Cash Flows do not present the cash flows from discontinued operations separately from cash flows from continuing operations. Cash provided by (used in) operating activities related to discontinued operations was not material for the nine months ended June 27, 2026 and June 28, 2025. Cash used in investing activities related to discontinued operations totaled $35.0 for the nine months ended June 27, 2026 and wasnot material for the nine months ended June 28, 2025.

NOTE 3. INVESTMENT IN UNCONSOLIDATED AFFILIATES

Bonnie Plants

The Company holds 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. The Company’s interest is accounted for using the equity method of accounting, with the Company’s proportionate share of Bonnie Plants, LLC earnings reflected in the Condensed Consolidated Statements of Operations. During the three and nine months ended June 27, 2026, the Company recorded equity in income of unconsolidated affiliates associated with Bonnie Plants, LLC of $29.2 and $14.2, respectively, compared to $27.2 and $11.4 during the three and nine months ended June 28, 2025, respectively.

FLUENT

During the three months ended December 28, 2024, THC exchanged its existing convertible debt investment in RIV Capital Inc. (“RIV Capital”) for an investment in FLUENT. This exchange, a non-cash investing and financing activity, resulted in a loss of $7.0 that was recorded in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations during the three months ended December 28, 2024. As of June 27, 2026, THC holds 153.1 million common shares of FLUENT, which represents approximately 25% of FLUENT’s total outstanding common shares. THC and FLUENT are also parties to an investor rights agreement which allows THC to nominate up totwo members to the FLUENT board of directors. This investment was previously accounted for using the equity method of accounting, with THC’s proportionate share of FLUENT earnings subsequent to December 18, 2024 reflected in the Condensed Consolidated Statements of Operations on a one quarter lag. During the three months ended December 27, 2025, the Company’s investment balance in FLUENT was reduced tozero, and the Company discontinued equity method recognition of its proportionate share of FLUENT losses. The Company does not have any contractual obligations or other commitments to fund losses of FLUENT. On April 30, 2026, FLUENT announced that it entered into a definitive agreement pursuant to which Vireo will acquire all of the issued and outstanding common shares of FLUENT in exchange for common shares of Vireo. Pursuant to the terms of the agreement and as adjusted for the Vireo 30-for-1 share consolidation completed effective June 5, 2026, THC expects to receive approximately 0.4 million common shares of Vireo upon closing of the transaction. The closing of the transaction is subject to various conditions, including shareholder, court and regulatory approvals.

Refer to “NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” for further details related to the Company’s sale of THC to BDH on March 14, 2025. BDH is a variable interest entity that is consolidated by the Company.

NOTE 4. 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 for each of the periods presented:

The following table summarizes the activity related to liabilities associated with restructuring activities during the nine months ended June 27, 2026:

As of June 27, 2026, restructuring accruals include $2.8 that is classified as long-term.

During the three and nine months ended June 27, 2026, the Company recorded employee and executive severance charges of $1.0 and $1.7, respectively, in the “Cost of sales—impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations primarily related to its U.S. Consumer segment; and $21.5 and $21.7, respectively, in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations primarily related to Corporate. During the three and nine months ended June 28, 2025, the Company recorded employee and executive severance charges of $2.0 and $5.0, respectively, in the “Cost of sales—impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations primarily related to its U.S. Consumer segment. During the three months ended June 28, 2025, employee and executive severance charges recorded in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations were not material. During the nine months ended June 28, 2025, the Company recorded employee and executive severance charges of $13.5 in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations, including charges of $1.9 in its U.S. Consumer segment and $11.6 at Corporate.

During the three and nine months ended June 27, 2026, the Company recorded a non-cash charge of $8.7 for expected credit losses related to a seller financing loan in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations.

During the three and nine months ended June 27, 2026, the Company recorded a non-cash charge of $7.9 for expected credit losses related to a convertible debt investment in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations.

During the three and nine months ended June 27, 2026, the Company recorded a charge of $4.0 in the “Impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations associated with a settlement agreement to resolve a dispute with former shareholders of a business that was acquired in fiscal 2021.

During the three and nine months ended June 28, 2025, the Company recorded 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 its convertible debt investment in RIV Capital for an investment in FLUENT. Refer to “NOTE 3. INVESTMENT IN UNCONSOLIDATED AFFILIATES” for further details.

During fiscal 2022, the Company 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, the Company reduced the size of its supply chain network, reduced staffing levels and implemented other cost-reduction initiatives. During the three months ended June 28, 2025, costs associated with this restructuring initiative were not material. During the nine months ended June 28, 2025, the Company recorded costs of $3.6 in the “Cost of sales—impairment, restructuring and other” line in the Condensed Consolidated Statements of Operations associated with this restructuring initiative.

NOTE 5. INVENTORIES

Inventories consisted of the following for each of the periods presented:

NOTE 6. MARKETING AGREEMENT

The Scotts Company 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 orfour 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:

NOTE 7. DEBT

The components of debt are as follows:

Credit Facilities

On November 21, 2025, the Company entered into a Seventh Amended and Restated Credit Agreement (the “Seventh 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 $2,000.0, comprised of a revolving credit facility of $1,500.0 and a term loan in the original principal amount of $500.0. The Seventh A&R Credit Agreement also provides the Company with the right to seek additional committed credit under the agreement in an aggregate amount of up to $500.0 plus an unlimited additional amount, subject to certain specified financial and other conditions. The Seventh A&R Credit Agreement provides for the issuance of letters of credit up to $100.0 and will terminate on November 21, 2030. The terms of the Seventh A&R Credit Agreement include customary representations and warranties, affirmative and negative covenants, financial covenants and events of default.

Borrowings under the Seventh A&R Credit Agreement bear interest at variable rates derived from the prevailing U.S. Prime Rate, Federal Reserve Bank of New York Rate, Secured Overnight Financing Rate, Euro Interbank Offered Rate, Canadian Prime Rate or Canadian Overnight Repo Rate Average (all as defined in the Seventh A&R Credit Agreement), based on the Company’s election, plus a spread that depends on the Company’s quarterly-tested leverage ratio.

At June 27, 2026, the Company had letters of credit outstanding in the aggregate principal amount of $93.2, and had $1,381.8 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 6.4% and 7.7% for the nine months ended June 27, 2026 and June 28, 2025, respectively.

The Seventh 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 the Seventh A&R Credit Agreement (“Adjusted EBITDA”). The maximum permitted leverage ratio is 5.00. The Company’s leverage ratio was 3.78 at June 27, 2026. The Seventh A&R Credit Agreement also contains 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, 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. The Company’s interest coverage ratio was 5.67 at June 27, 2026.

The Seventh A&R Credit Agreement allows the Company to make unlimited restricted payments (as defined in the Seventh A&R Credit Agreement), including dividend payments on, and repurchases of, Common Shares, as long as the leverage ratio resulting from the making of such restricted payments is 4.00 or less. Otherwise, the Company is limited to restricted payments in an aggregate amount for each fiscal year not to exceed $225.0.

Senior Notes

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”). 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. At June 27, 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.

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 (collectively, the “Senior Notes”).

Interest Rate Swap Agreements

The Company enters into interest rate swap agreements with major financial institutions that effectively convert a portion of the Company’s variable-rate debt to a fixed rate. Interest payments made between the effective date and expiration date are hedged by the swap agreements. Swap agreements that were hedging interest payments as of June 27, 2026, June 28, 2025 and September 30, 2025 had a maximum total U.S. dollar equivalent notional amount of $450.0. The notional amount, effective date, expiration date and rate of each of the swap agreements outstanding at June 27, 2026 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 4.9% and 5.4% for the nine months ended June 27, 2026 and June 28, 2025, respectively.

NOTE 8. EQUITY (DEFICIT)

The following tables provide a summary of the changes in equity (deficit) for each of the periods indicated:

Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss (“AOCL”) by component were as follows for each of the periods indicated:

Share Repurchases

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 June 27, 2026.

Share-Based Awards

On January 26, 2026, the shareholders of Scotts Miracle-Gro approved an amendment and restatement of The Scotts Miracle-Gro Company Long-Term Incentive Plan which, among other changes, increased the maximum number of Common Shares available for grant to participants under the Plan by 2.75 million Common Shares.

Total compensation cost and the related income tax benefit associated with share-based awards included within net income from continuing operations was as follows for each of the periods indicated:

Restricted share-based awards

For fiscal 2026, the Company is granting short-term equity incentive compensation awards to certain associates in the form of restricted share-based award units in lieu of cash-based annual incentive awards. The program is structured so the fiscal 2026 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 restricted share-based award units ultimately issued to participating associates will be based on each associate’s incentive payout amount converted into a variable number of restricted share-based award units based on the fair value of the Common Shares on the grant date. The awards are classified as liability awards and, as of June 27, 2026, the Company had accrued $12.0 in the “Other current liabilities” line in the Condensed Consolidated Balance Sheets associated with these awards. As of June 27, 2026, there was $4.8 of total unrecognized pre-tax compensation cost related to these nonvested restricted share-based award units that is expected to be recognized over the remainder of fiscal 2026.

NOTE 9. EARNINGS PER COMMON SHARE

The following table presents information necessary to calculate basic and diluted net income (loss) per common share for the periods indicated:

NOTE 10. INCOME TAXES

The effective tax rates related to continuing operations for the nine months ended June 27, 2026 and June 28, 2025 were 30.2% and 27.9%, 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 period. 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.

The completion of the sale of the Hawthorne business during the three months ended June 27, 2026 resulted in an ordinary taxable loss that will allow the realization of deferred tax assets to reduce cash taxes paid over the next several fiscal years, and resulted in a decrease in net deferred tax assets recorded in the Condensed Consolidated Balance Sheets.

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 2022. There are currently no ongoing audits with respect to the U.S. federal jurisdiction. With respect to 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.

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes, among other provisions, changes related to bonus depreciation, the deductibility of domestic research and experimental expenditures and the calculation of the limitation on deductible business interest expense. The legislation has multiple effective dates, with certain provisions effective in fiscal year 2025 and others implemented through fiscal year 2027. The Company does not anticipate that these tax law changes will have a material impact on its condensed consolidated financial statements.

NOTE 11. CONTINGENCIES

Management regularly evaluates the Company’s contingencies, including various judicial and administrative proceedings and claims arising in the ordinary course of business, relating to, among other things, 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 are adequate, both individually and in the aggregate; 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 June 27, 2026, the Company had recorded liabilities of $2.4 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 complaints vary but 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. The Company has not recorded any accruals in its condensed consolidated financial statements as the likelihood of a loss from these cases is not probable at this time. The Company does not believe a reasonably possible loss would be material to the Company’s financial condition, results of operations or cash flows. In addition, the Company does not believe 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.

Beginning in June 2024, purported shareholders filed lawsuits in the United States District Court for the Southern District of Ohio on behalf of proposed classes of purchasers of Common Shares. The lawsuits were consolidated by the court as In re The Scotts Miracle-Gro Company Securities Litigation (Case No. 2:24-cv-03132). The amended consolidated complaint was filed on May 9, 2025 on behalf of a proposed class of purchasers of Common Shares between May 5, 2021, and August 1, 2023, and asserts claims under Section 10(b), Rule 10b-5 and Section 20(a) of the Exchange Act against the Company and certain of its current and former officers based on alleged misstatements about the Company’s inventories, sales and business prospects. The action seeks, among other things, unspecified monetary damages, reasonable costs and expenses and equitable/injunctive or other relief as deemed appropriate by the Court. The Company believes that the claims asserted are without merit and intends to vigorously defend the action. On April 22, 2026, the Court granted in part and denied in part the defendants’ motion to dismiss.

Beginning in July 2024, purported shareholders filed a series of shareholder derivative lawsuits in state and federal courts in Ohio against certain of the Company’s current and former directors and officers. The lawsuits include allegations that generally mirror those asserted in the securities lawsuits described above and assert claims for breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement and waste of corporate assets. The federal lawsuits also assert claims under the Exchange Act. The actions seek a judgment in favor of the Company for unspecified damages, disgorgement, interest and costs and expenses, including attorneys’ and experts’ fees.

The Company is involved in other lawsuits and claims which arise in the normal course of business relating to advertising claims, securities matters, employment disputes, product complaints and the enforcement and defense of intellectual property rights. These claims individually and in the aggregate are not expected to have a material effect on the Company’s financial condition, results of operations or cash flows.

NOTE 12. 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.

The fair values and amounts of gains and losses recognized in earnings and AOCL associated with derivative instruments did not have a material impact on the Company’s condensed consolidated financial statements for the three and nine months ended June 27, 2026 and June 28, 2025.

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 $139.3, $146.1 and $100.4 at June 27, 2026, June 28, 2025 and September 30, 2025, respectively. Contracts outstanding at June 27, 2026 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 June 27, 2026, June 28, 2025 and September 30, 2025 had a maximum total U.S. dollar equivalent notional amount of $450.0. Refer to “NOTE 7. DEBT” for the terms of the swap agreements outstanding at June 27, 2026. Gains and losses included in the AOCL balance at June 27, 2026 related to interest rate swap agreements that are expected to be reclassified to earnings during the next twelve months are not material.

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. Gains and losses included in the AOCL balance at June 27, 2026 related to commodity hedges that are expected to be reclassified to earnings during the next twelve months are not material.

The Company had the following outstanding commodity contracts that were entered into to hedge forecasted purchases:

NOTE 13. 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 investments carried at fair value are presented below. There were no transfers into or out of Level 3.

On December 18, 2024, THC exchanged its convertible debt investment in RIV Capital for an investment in FLUENT. Refer to “NOTE 3. INVESTMENT IN UNCONSOLIDATED AFFILIATES” for further details.

The amortized cost basis of convertible debt investments was $46.5, $44.4 and $44.4 at June 27, 2026, June 28, 2025 and September 30, 2025, respectively. At June 27, 2026, June 28, 2025 and September 30, 2025, gross unrealized losses on convertible debt investments were $22.5, $16.9 and $19.8, 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 June 27, 2026. The allowance for expected credit losses was $9.8 at June 27, 2026, and was $1.9 at June 28, 2025 and September 30, 2025. At June 27, 2026, the weighted-average period until scheduled maturity of the Company’s convertible debt investments was 3.1 years.

On April 8, 2026, the Company completed the sale of its Hawthorne business in North America to Vireo in exchange for the Vireo Equity Securities, which had an initial fair value of $97.0 on the April 8, 2026 closing date of the sale. Concurrent with the closing date, the Company elected the fair value option to measure the Vireo Equity Securities at fair value on a recurring basis. The Vireo Equity Securities are recorded in the “Other assets” line in the Condensed Consolidated Balance Sheets and all changes in fair value are recognized in the “Other non-operating expense, net” line in the Condensed Consolidated Statements of Operations. Management elected the fair value option because these investments are non-core to the Company’s continuing operations and are managed to maximize eventual realization value, with fair value measurement best reflecting the economic reality of the asset’s performance and liquidity profile.

The fair value of the warrant to purchase additional common shares of Vireo is estimated using a Black-Scholes model. Expected market price volatility is based on an analysis of the historical volatility of the common shares of Vireo and other comparable companies. The risk-free rate is based on the U.S. Treasury yield curve. The valuation model and related assumptions require significant judgment. The assumptions are impacted by economic conditions and may change in the future based on period specific facts and circumstances.

Vireo completed a 30-for-1 share consolidation effective June 5, 2026. As of June 27, 2026, after adjusting for this share consolidation, the Company, through GDH, holds 7.1 million common shares of Vireo and a warrant to acquire 2.7 million additional common shares of Vireo at a strike price of $25.50 per share. As of June 27, 2026, the fair value of the Vireo Equity Securities was $81.3. During the three and nine months ended June 27, 2026, the Company recorded unrealized losses on the Vireo Equity Securities of $15.7 in the “Other non-operating expense, net” line in the Condensed Consolidated Statements of Operations. Refer to “NOTE 2. DISCONTINUED OPERATIONS” for further details related to the sale of the Hawthorne business, as well as further details related to GDH, which is a variable interest entity that is consolidated by the Company.

Credit losses on convertible debt and other investments are measured based on the present value of expected future cash flows compared to amortized cost. Credit impairment losses are recognized through an allowance and recoveries of previously impaired amounts are recorded as an immediate reversal of all or a portion of the allowance. In addition, the allowance for expected credit losses cannot cause the amortized cost net of the allowance to be below fair value. A progression of the allowance for expected credit losses on convertible debt and other investments is shown below:

NOTE 14. 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 June 27, 2026, there were no material operating leases that the Company had entered into that were yet to commence. 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 and nine months ended June 27, 2026 and June 28, 2025.

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 $16.9 and $50.2 for the three and nine months ended June 27, 2026, respectively; and $16.4 and $48.4 for the three and nine months ended June 28, 2025, 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 June 27, 2026 were as follows:

NOTE 15. SEGMENT INFORMATION

As a result of the classification of the Hawthorne business as a discontinued operation, the Company’s reportable segments for the three and nine months ended June 27, 2026 differ from prior periods. The prior period amounts have been reclassified to reflect the removal of Hawthorne as a reportable segment and from results of continuing operations. The Company hastwo operating segments: U.S. Consumer and Other; andone reportable segment: U.S. Consumer. Management has chosen to organize the entity primarily around differences in geographic areas. U.S. Consumer consists of the Company’s consumer lawn and garden business in the United States. Other primarily consists of the Company’s consumer lawn and garden business in Canada and does not meet any of the quantitative thresholds requiring separate reportable segment disclosures. This identification of operating segments is consistent with how the segments are managed by the Chief Executive Officer, who has been determined to be the chief operating decision maker (“CODM”) of the Company. The Company is not managed on a consolidated basis. In addition, Corporate consists of general and administrative expenses and certain other income and expense items not allocated to the Company’s operating segments. The accounting policies of the segments are the same as those described in the Company’s summary of significant accounting policies.

The CODM uses Segment Profit (Loss), which is defined as income (loss) from continuing operations before income taxes, amortization, impairment, restructuring and other charges (“Segment Profit (Loss)”), to evaluate segment performance, monitor actual results as compared to plan and inform resource allocation decisions. The Company believes this measure is indicative of performance trends and the overall earnings potential of each segment. Asset information and capital expenditures by segment are not provided to the CODM and they are not utilized for the purposes of assessing performance or allocating resources, and therefore such information has not been presented.

The following table presents net sales by segment and a reconciliation to the Company’s consolidated net sales for the periods indicated:

The following table presents Segment Profit (Loss), including the significant segment expenses provided to the CODM, and a reconciliation to income from continuing operations before income taxes for the periods indicated:

(a)“Adjusted cost of sales” is defined as cost of sales excluding intangible asset amortization, and does not include activity classified as impairment, restructuring and other.

(b)“Adjusted selling, general and administrative” is defined as selling, general and administrative expenses excluding intangible asset amortization, and does not include activity classified as impairment, restructuring and other.

(c)Other segment items consist 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 the Company’s brand names and foreign exchange transaction gains and losses.

(d)The Company incurs costs attributable to corporate functions such as corporate finance, human resources, legal, communications, corporate affairs, corporate travel and corporate executive costs which are considered corporate costs of the Company and not allocated to the segments.

(e)Total impairment, restructuring and other is comprised of the activity classified within the “Cost of sales—impairment, restructuring and other” and “Impairment, restructuring and other” lines in the Condensed Consolidated Statements of Operations. Refer to “NOTE 4. IMPAIRMENT, RESTRUCTURING AND OTHER” for further details.

The following table presents certain other segment disclosures for the periods indicated:

(a) Includes certain advertising expenses paid for in Common Shares for the three and nine months ended June 28, 2025.

The following table presents net sales by product category for the periods indicated: