Scotts Miracle-Gro continues to post profit on every line, with revenue and nine-month operating income higher year over year while bottom-line earnings soften on both reported windows amid the Hawthorne divestiture

Bottom line

Across both reported windows, Scotts Miracle-Gro continued to post a profit on every line, but the bottom of the income statement softened versus the prior year while the top line and operating profit moved higher. Diluted earnings per share for the three-month and nine-month year-to-date periods were lower than in the prior-year comparatives, and net income attributable to parent was likewise lower for both the quarter and the year-to-date period. Operating income, by contrast, was higher for the nine months than the prior year and lower for the quarter than the prior year, while revenue from contracts with customers was higher on both a quarter and year-to-date basis. No single cause is offered in the filing evidence for any of these shifts.

The narrative in the cited note focuses on the seasonal nature of the North America consumer lawn and garden business and on a strategic realignment rather than on drivers of period-over-period earnings. Management describes the operating environment as one in which more than half of annual net sales fall in the second and third fiscal quarters. The note also explains that, prior to April in the cited fiscal year, the Company operated the Hawthorne segment providing nutrients, lighting and other materials for indoor and hydroponic gardening, and that during the three-month period ended December in the cited year the Hawthorne business was determined to meet the criteria to be classified as held for sale. Management further explains that this represented a strategic shift, and that effective in the first quarter of the cited fiscal year, results of operations for all periods presented were classified to reflect Hawthorne as a discontinued operation.

Because the Hawthorne segment has been reclassified as a discontinued operation and removed from continuing-operations results for all periods presented, the revenue, operating income, net income, and diluted earnings per share figures cited here should be read on a continuing-operations basis. Under that lens, the continued profitability on every line together with higher revenue and higher nine-month operating income points to a top-line expansion that has not fully translated into higher bottom-line earnings on either a quarter or year-to-date view, with the quarter showing softer operating profit alongside softer net income and diluted earnings per share. The year-to-date divergence between higher operating income and lower net income and diluted earnings per share is a gap the filing evidence does not attribute to any single cause.

The cited note also describes the March sale of all of the issued and outstanding shares of capital stock of the formerly wholly-owned subsidiary The Hawthorne Collective, Inc., with the formation of BDH to hold and manage the related investments, and the recognition of FLUENT Corp. (formerly Cansortium Inc.) exchangeable shares and other minority non-equity investments. Management determined that the Company has a variable interest in BDH, that BDH is a variable interest entity, and that the Company is the primary beneficiary, requiring consolidation in the condensed consolidated financial statements. None of this transaction detail is tied in the filing evidence to the reported movements in revenue, operating income, net income, or diluted earnings per share.

The filing evidence does not attribute the year-over-year movements in revenue, operating income, net income, or diluted earnings per share to any single cause. The filing evidence contains no peer or industry comparison. For a reader evaluating how these figures compare with sector peers or how the strategic-shift realignment affects run-rate profitability, additional disclosures outside this filing would be required.

Financial performance

- Revenue from Contract with Customer, Excluding Assessed Tax was $1,172,100,000 USD for the three months ended June 27, 2026, higher than the prior-year figure of $1,159,300,000 USD for the three months ended June 28, 2025, continuing the same upward direction seen on the year-to-date comparison where revenue of $2,986,100,000 USD for the nine months ended June 27, 2026 outpaced $2,915,700,000 USD for the nine months ended June 28, 2025. - Operating Income (Loss) for the quarter was $169,600,000 USD versus $221,800,000 USD in the prior-year quarter, a softer quarter even though the nine-month operating line moved the other way, improving to $549,700,000 USD from $525,700,000 USD.

- Net Income (Loss) Attributable to Parent printed at $112,200,000 USD for the three-month window, down from $149,100,000 USD a year earlier, and the year-to-date net result of $225,800,000 USD likewise trailed $297,100,000 USD for the comparable nine-month window. 07 per diluted share USD/SHARES, with each period remaining profitable. - The filing evidence does not attribute this change to any single cause.

- Management frames the period in the context of the Company’s Annual Report on Form referenced in the filing, noting that the Condensed Consolidated Balance Sheet at the September fiscal year-end has been derived from the audited balance sheet but omits the footnote disclosures required for complete financial statements under GAAP. - The accounting narrative highlights the sale of the Hawthorne subsidiary earlier in the fiscal year, with THC’s cannabis-related exchangeable shares of FLUENT Corp. and other minority interests transferred into a newly formed vehicle alongside a call/put option structure tied to future fair-value appreciation.

- The Company ceased depreciation and amortization on the Hawthorne disposal group once the held-for-sale criteria were met, measured the group at the lower of carrying amount or fair value less cost to sell, and recognized any valuation adjustment in the period of classification, with subsequent fair-value changes flowing through the same allowance. - Receivables sold under the Master Receivables Purchase Agreement are treated as sales and removed from the balance sheet at the transaction date, with proceeds reported as operating cash flows and any not-yet-submitted collections on previously sold receivables reported as financing cash flows, while the discount on those sales is recorded in the other expense, net line.

- The supplier finance program is described as not changing the Company’s payment obligations or negotiated terms with participating suppliers, with payment terms generally ranging from a low double-digit window to a slightly longer window that management characterizes as commercially reasonable. - Equity investments in which the Company has significant influence but not control are accounted for using either the equity method or the fair value option, consistent with the disclosure language in the cited note. - The filing evidence does not disclose segment-level detail for this dimension.

- The filing evidence contains no peer or industry comparison. - The filing does not provide forward guidance in this section, so any inference about future quarters would extend beyond the filing evidence.

Operating drivers and segments

At the company level, the only operating metrics the evidence supports for this filing are revenue and operating income for both the three-month period ended the three months ended June 27, 2026 and the nine-month year-to-date period ended the nine months ended June 27, 2026, each shown against its prior-year comparative. Revenue from Contract with Customer, Excluding Assessed Tax was $1,172,100,000 USD for the three months ended June 27, 2026 and $2,986,100,000 USD for the nine months ended June 27, 2026, against $1,159,300,000 USD and $2,915,700,000 USD in the same windows a year earlier, with the only authorized read being that revenue was higher than the prior period on both reported windows.

Operating Income (Loss) was $169,600,000 USD for the three months ended June 27, 2026 and $549,700,000 USD for the nine months ended June 27, 2026, against $221,800,000 USD and $525,700,000 USD for the comparable prior-year windows; the authorized reads are a year-to-date operating profit higher than the prior year-to-date and a quarter operating profit lower than the prior-year quarter, with both periods remaining profitable year over year. S. Consumer versus Hawthorne versus other groupings cannot be written here without inventing a number.

, which means the consolidated revenue and operating income lines above are presented on a continuing-operations basis and the Hawthorne contribution is no longer a current segment driver in the results shown. - Management characterizes Scotts Miracle-Gro as a manufacturer and marketer of lawn and garden care products whose North America consumer business is highly seasonal, with the bulk of annual net sales historically concentrated in the second and third fiscal quarters, so the third fiscal quarter ending the three months ended June 27, 2026 is positioned as the peak selling window of the fiscal year rather than a steady-state run rate.

- Management states that the Hawthorne hydroponic-gardening business was determined to meet held-for-sale criteria during the three months ended in the first fiscal quarter of the year covered by this filing, that this represented a strategic shift, and that results for all periods presented have been recast to show Hawthorne as a discontinued operation; the company also describes the subsequent sale of The Hawthorne Collective, Inc. to a strategic-partner-owned vehicle and the related call and put options and consolidation treatment.

- Management identifies two recently adopted accounting standards referenced in the source narrative — improvements to income tax disclosures and expense disaggregation disclosures — and frames them as enhanced-disclosure items rather than as drivers of the operating results. - Management offers no quantitative bridge between the year-over-year changes in revenue or operating income and any specific cost line, pricing action, volume shift, mix change, or productivity program, and the filing evidence contains no peer or industry comparison that would let an outside reader triangulate the move.

The filing evidence does not attribute this change to any single cause. The filing evidence contains no peer or industry comparison.

Cash flow and capital

Reported facts - The nine-month year-to-date operating cash flow line was positive in both windows, and was lower than the prior-year comparative for the same nine-month span. The nine-month investing cash flow line was negative in both windows, and the current nine-month outflow was smaller than the prior-year nine-month comparative, meaning the company spent less on investing activities than it did in the prior year. The nine-month financing cash flow line was negative in both windows, and the current nine-month financing outflow was larger than the prior-year nine-month comparative. - Capital expenditures, the payments to acquire property, plant, and equipment line on the cash flow statement, were higher in the current nine-month window than in the prior-year nine-month comparative, even as total investing-cash outflow narrowed; the gap between these two reported facts is not reconciled in the quoted evidence. - Share repurchases were lower in the current nine-month window than in the prior-year nine-month comparative, indicating a pullback in buyback activity. Ordinary dividend payments, by contrast, were higher in the current nine-month window than in the prior-year nine-month comparative, continuing the upward trajectory in cash returned to shareholders through the dividend. - On the balance sheet, cash and cash equivalents at carrying value stood at the period-end date, and long-term debt excluding current maturities was also reported at the period-end date. The relationship between the cash balance, the long-term debt stack, and the year-over-year change in net financing flows is not stated in the quoted text.

Management explanations - The filing discusses equity investments in unconsolidated affiliates and notes that equity-method investments are reviewed for impairment when events or changes in circumstances indicate that carrying amounts may be impaired, while fair-value-option investments are remeasured each period with all changes flowing through earnings. This is policy commentary rather than a quantified explanation of the period's investing activities. - Non-cash investing activity disclosure mentions unpaid liabilities to acquire property, plant and equipment at the two nine-month ends; this is presented as a supplemental disclosure of future-period cash settlement rather than a driver of the current period's investing cash flow. - A strategic shift is described in which the Hawthorne business met held-for-sale criteria during the three months ended December of the earlier fiscal year and was classified as a discontinued operation, with a subsequent North American sale to Vireo Growth Inc. that closed in April. The filing notes that Hawthorne cash and cash equivalents were transferred to Vireo on the closing date and were classified within the investing-activities section as net cash disposed of on sale of business. The filing also describes a separate structure in which sale consideration was transferred to Good Dog Holdings LLC in exchange for a promissory note, alongside mutually held call and put options over the underlying investments.

Analyst inference - Read together, the operating, investing and financing moves describe a year in which the company generated operating cash, spent less in net on investing despite higher capex, returned more cash through dividends and less through repurchases, and continued to wind down the Hawthorne business. That combination is consistent with a posture that prioritizes the dividend and reinvestment over buybacks during the reported window. - The divergence between higher capex and a narrower investing-cash outflow cannot be read in isolation from the Hawthorne divestiture proceeds, which the filing places inside the investing-activities line and which therefore mechanically reduce the investing outflow.

Counter-evidence and unknowns - The quoted narrative does not quantify the Hawthorne disposal proceeds, the unpaid property, plant and equipment liabilities, or the supplier payment terms range, and it does not tie any of those items to the specific year-over-year change in operating, investing or financing cash flow. - The cause of the year-over-year decline in operating cash flow is not attributed in the evidence; The filing evidence does not attribute this change to any single cause.. The cause of the larger financing outflow is likewise not attributed; The filing evidence does not attribute this change to any single cause.. The relationship between the period-end cash balance and the period-end long-term debt balance is not described in the quoted text. - The filing evidence contains no peer or industry comparison.

Peer and historical context

- The filing evidence contains no peer or industry comparison, so any read-across to rivals or to the wider lawn-and-garden category has to be left out of this section; the only yardsticks available are the issuer's own prior-period windows disclosed in the filing. - With year-to-date revenue higher than the prior period and operating income also higher than the prior period, the operating line's direction diverges from the bottom line, where both year-to-date and quarterly net income moved lower than the prior-year comparatives while still reporting a profit; that gap is the main internal-historical tension worth flagging for readers. - Operating income for the quarter moved lower than the prior-year quarter while remaining profitable, which partially offsets the stronger year-to-date operating reading and suggests the quarter itself softened even though the nine-month operating line improved. - Year-to-date cash from operations moved lower than the prior year while remaining positive, so the stronger year-to-date profit-and-loss profile is not fully mirrored in cash generation, and the Hawthorne discontinued-operations treatment, the GDH consolidation mechanics, and the contract-manufacturing commitment to Vireo add non-operating noise that could partly explain that gap The filing evidence does not attribute this change to any single cause..

Looking only at the issuer's own historical track, the year-to-date window shows revenue higher than the prior year and operating income higher than the prior year, with both lines remaining profitable; the quarter itself repeats that top-line pattern, with revenue higher than the prior-year quarter. Against that, both net income for the year-to-date period and net income for the quarter came in lower than the prior-year comparatives while still being reported as a profit on a transition profit to profit basis, so the profitability signal from the operating line and the bottom-line signal are not aligned within the filing's own windows The filing evidence does not attribute this change to any single cause..

Operating income for the quarter is the one operating-line exception, moving lower than the prior-year quarter while remaining profitable, which tempers the otherwise constructive read on the operating trend. Year-to-date operating cash flow also moved lower than the prior year while staying positive, so the stronger year-to-date operating result is not echoed one-for-one in cash generation The filing evidence does not attribute this change to any single cause.. Readers who want a cross-issuer data point should treat this filing as a self-contained historical comparison only; the broader peer set is not present in the filing evidence, and any external benchmarking would have to be sourced elsewhere, such as a separate write-up covering a comparable issuer like the Covista twelve-month profit and revenue comparison referenced in the surrounding coverage.

Scenario analysis

- Reported facts: Revenue from Contract with Customer, Excluding Assessed Tax sits at $1,172,100,000 USD for the three-month period the three months ended June 27, 2026, against the prior-year comparative of $1,159,300,000 USD for the three months ended June 28, 2025; the year-to-date line shows $2,986,100,000 USD versus $2,915,700,000 USD for the nine months ended June 28, 2025. Net Income (Loss) Attributable to Parent is reported at $112,200,000 USD for the three months ended June 27, 2026 and $225,800,000 USD for the nine months ended June 27, 2026, against prior-year comparatives of $149,100,000 USD and $297,100,000 USD. - Management explanations: The filing narrative centres on the Vireo equity transfer, the consolidated variable interest entity GDH, and unconsolidated affiliate mechanics; the cited note Note 11 anchors the equity discussion. - Analyst inference: The base case treats both reported windows as profitable on the bottom line and roughly flat in trajectory, with revenue holding positive on both windows; no segment-level drill-down is authorised from this filing. - Counter-evidence: None cited within the excerpt. - Unknowns: The filing evidence does not disclose segment-level detail for this dimension.

- Reported facts: Same revenue and net-income anchors apply — quarter revenue $1,172,100,000 USD, year-to-date revenue $2,986,100,000 USD, and net-income comparatives $112,200,000 USD versus $149,100,000 USD, plus $225,800,000 USD versus $297,100,000 USD. - Management explanations: The upside framing leans on the FLUENT-to-Vireo share exchange narrative and the GDH call option as described in the cited note Note 11, which the filing positions as optionality the Company may exercise. - Analyst inference: An upside path requires the optionality in the cited note to monetise alongside a continuing year-to-date revenue base that exceeds the prior-year comparative, while keeping net income positive on both windows. - Counter-evidence: The closing of the FLUENT-Vireo transaction is conditional on shareholder, court and regulatory approvals, tempering the upside read. - Unknowns: The filing evidence contains no peer or industry comparison.

- Reported facts: The downside still anchors to the same revenue comparatives — quarter revenue $1,172,100,000 USD versus $1,159,300,000 USD and year-to-date revenue $2,986,100,000 USD versus $2,915,700,000 USD — alongside net-income readings of $112,200,000 USD against $149,100,000 USD and $225,800,000 USD against $297,100,000 USD. - Management explanations: The cited note Note 11 documents the GDH put right flowing back to the Company and the consolidation requirement, both of which constrain any unilateral unwind. - Analyst inference: A downside path is consistent with both windows remaining profitable on the bottom line while revenue softness persists and the put-style mechanics force reconsolidation decisions back onto SCOTTS MIRACLE-GRO CO. - Counter-evidence: The prior-year comparatives are themselves positive on both revenue and net income, so the downside here describes continued slippage rather than a crossover to loss. - Unknowns: The filing evidence does not attribute this change to any single cause.

For readers modelling the spread, the Covista Inc. Reports Higher Revenue, Operating Income, Net Income, and Diluted EPS Across the Twelve-Month Period Versus the Prior-Year Comparative, With Each Line Remaining Profitable Year Over Year insight offers a contrasting year-over-year setup where every line stayed profitable and rose, which frames the asymmetry investors may want to test alongside this filing.

Risks and what to watch

This section flags what the filing does not disclose, where the reported trajectory could reverse, and which line items deserve attention when the next period is published.

Reported facts - Revenue was $1,172,100,000 USD for the three-month period the three months ended June 27, 2026, versus $1,159,300,000 USD for the three months ended June 28, 2025; year-to-date revenue was $2,986,100,000 USD for the nine months ended June 27, 2026, versus $2,915,700,000 USD for the nine months ended June 28, 2025. - Net income attributable to parent was $112,200,000 USD for the three months ended June 27, 2026 and $225,800,000 USD for the nine months ended June 27, 2026, versus $149,100,000 USD and $297,100,000 USD in the prior-year comparative windows.

Management explanations - The notes describe an exchange of THC's convertible debt investment in RIV Capital Inc. during the three months ended December of the prior fiscal year that was treated as a non-cash investing and financing activity and produced a loss booked to the "Impairment, restructuring and other" line. - Management states that THC's investment balance in FLUENT was reduced to zero during that same three-month window and that the company discontinued equity-method recognition of its proportionate share of FLUENT losses, without any contractual obligation to fund further losses. - Management also discloses a pending transaction in which Vireo will acquire FLUENT, with THC expected to receive a stated number of Vireo common shares upon closing, subject to shareholder, court, and regulatory approvals.

Analyst inference - Because the FLUENT investment was reduced to zero and a transaction is pending, the realised-versus-recorded value of that holding could shift if the Vireo closing terms differ from the expected share count; this remains a discrete, lumpy exposure rather than a recurring operating driver. - Year-to-date revenue is higher than the prior-year window while net income is lower, which is consistent with margin compression rather than top-line softness, but the filing does not break out segment-level revenue or cost detail that would let an outside reader isolate where the gap opened.

Counter-evidence - The year-to-date direction for revenue is upward, which runs against any narrative that consumer demand in the company's core categories has rolled over during the reported window; readers should not assume the decline in net income reflects a contracting top line. - The diluted EPS comparison for both reported windows shows the same direction as net income, reinforcing that the bottom-line softness is not isolated to a single non-operating item on the face of the income statement.

Unknowns - The filing does not provide segment-level revenue, cost, or margin detail for the reported periods. The filing evidence does not disclose segment-level detail for this dimension. - The filing does not provide peer or industry benchmarks against the company's reported lines. The filing evidence contains no peer or industry comparison. - The filing does not attribute the net-income decline to any single cause. The filing evidence does not attribute this change to any single cause.

Metrics to watch next period - Whether year-to-date revenue remains higher year over year and whether that is achieved with stable or expanding gross margin, since the current period shows higher revenue alongside lower net income. - Whether the Vireo-FLUENT transaction closes, and the timing of any resulting recognition in the company's investment line, given the expected share consideration disclosed in the notes. - The equity-method outcome for Bonnie Plants, LLC, since that joint venture remains on the books and continues to flow through the income statement on a lag. - Cash-flow lines tied to the nine-month window, which the filing characterises as not material for discontinued operations in the relevant period, but which should be re-checked if the corporate shape changes.