The Scotts Miracle-Gro Company 2020 Annual Report SHAREHOLDER INFORMATION World Headquarters Dividends Publications for Shareholders 14111 Scottslawn Road The Scotts Miracle-Gro Company began paying In addition to this 2020 Annual Report, The Marysville, Ohio 43041 dividends in 2005. On August 1, 2019, the Scotts Miracle-Gro Company informs (937) 644-0011 Company announced that its Board of Directors Shareholders about the Company through its had increased the quarterly cash dividend to Annual Report on Form 10-K, its Quarterly www.scottsmiraclegro.com $0.58 per share, which was first paid to Reports on Form 10-Q, its Current Reports on Annual Meeting shareholders in the fourth quarter of fiscal 2019. Form 8-K and its Notice of Annual Meeting of On July 29, 2020, the Company announced Shareholders and Proxy Statement. The annual meeting of shareholders will be held that its Board of Directors had increased the on Monday, January 25, 2021, at 9 a.m. EST. quarterly cash dividend to $0.62 per share, Copies of any of these documents may be The annual meeting will be a virtual meeting which was first paid to shareholders in the fourth obtained without charge on the Company's and shareholders will be able to participate, vote quarter of fiscal 2020. investor relations website at and submit questions during the virtual meeting. http:// investor.scotts.com or by writing to: NYSE Symbol The payment of future dividends, if any, on common shares will be determined by the Board The Scotts Miracle-Gro Company The common shares of The Scotts Miracle-Gro of Directors of the Company in light of Attention: Investor Relations Company trade on the New York Stock conditions then existing, including the 14111 Scottslawn Road Exchange under the symbol SMG. Company's earnings, financial condition and Marysville, Ohio 43041 Transfer Agent and Registrar capital requirements, restrictions in financing agreements, business conditions and other Safe Harbor Statement under the EQ Shareowner Services factors. The Company's credit facility restricts Private Securities Litigation P.O. Box 64874 future dividend payments to an aggregate of Reform Act of 1995 St. Paul, MN 55164-0874 $225 million if the Company’s leverage ratio, Statements contained in this 2020 Annual Shareholder and Investor after giving effect to any such annual dividend Report, other than statements of historical fact, Relations Contact payment, exceeds 4.00. The Company's which address activities, events and leverage ratio was 2.48 as of September 30, developments that the Company expects or Jim King 2020. For further discussion regarding the anticipates will or may occur in the future, Executive Vice President, restrictions on dividend payments, see "NOTE including, but not limited to, information Chief Communications Officer 12. DEBT" of the Notes to Consolidated regarding the future economic performance and Financial Statements included in the Company's financial condition of the Company, the plans The Scotts Miracle-Gro Company 2020 Annual Report on Form 10-K. and objectives of the Company's management, 14111 Scottslawn Road the Company's assumptions regarding such Marysville, Ohio 43041 Stock Price Performance performance and plans, as well as the amount (937) 644-0011 See page 25 for stock price performance. and timing of repurchases of the Company's The Scotts Miracle-Gro Company’s common common shares are "forward-looking shares have been publicly traded since statements" within the meaning of the U.S. January 31, 1992. federal securities laws that are subject to risks and uncertainties. Actual results could differ Shareholders materially from the forward-looking information As of November 20, 2020, there were in this 2020 Annual Report due to a variety of approximately 190,000 shareholders, including factors. Additional detailed information holders of record and the Company's estimate concerning a number of the important factors of beneficial holders. that could cause actual results to differ materially from the forward-looking information contained in this 2020 Annual Report is readily available in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2020, which is filed with the Securities and Exchange Commission. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _____________________________________ Form 10-K _____________________________________ (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-11593 ______________________________________________________________ The Scotts Miracle-Gro Company (Exact name of registrant as specified in its charter) Ohio 31-1414921 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 14111 Scottslawn Road, Marysville, Ohio 43041 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (937) 644-0011 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered Common Shares, $0.01 stated value SMG NYSE Securities registered pursuant to Section 12(g) of the Act: None ______________________________________________________________ Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No þ The aggregate market value of Common Shares (the only common equity of the registrant) held by non-affiliates (for this purpose, executive officers and directors of the registrant are considered affiliates) as of March 27, 2020 (the last business day of the most recently completed second quarter) was approximately $4,116,773,282. There were 55,739,813 Common Shares of the registrant outstanding as of November 20, 2020. ______________________________________________________________ DOCUMENTS INCORPORATED BY REFERENCE: Portions of the definitive Proxy Statement for the registrant’s 2021 Annual Meeting of Shareholders are incorporated by reference into Part III of this Annual Report on Form 10-K. Such Proxy Statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended September 30, 2020. Table of Contents The Scotts Miracle-Gro Company Annual Report on Form 10-K For the Fiscal Year Ended September 30, 2020 Table of Contents Page Part I Item 1. Business 2 Item 1A. Risk Factors 10 Item 1B. Unresolved Staff Comments 21 Item 2. Properties 22 Item 3. Legal Proceedings 22 Item 4. Mine Safety Disclosure 22 Supplemental Item Executive Officers of the Registrant 23 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer 24 Part II Item 5. Purchases of Equity Securities Item 6. Selected Financial Data 25 Management’s Discussion and Analysis of Financial Condition and Results of Item 7. Operations 32 Item 7A. Quantitative And Qualitative Disclosures About Market Risk 52 Item 8. Financial Statements and Supplementary Data 53 Changes in and Disagreements with Accountants on Accounting and Financial 53 Item 9. Disclosure Item 9A. Controls and Procedures 53 Item 9B. Other Information 53 Part III Item 10. Directors, Executive Officers, and Corporate Governance 54 Item 11. Executive Compensation 55 Security Ownership of Certain Beneficial Owners and Management and Related 55 Item 12. Stockholder Matters Item 13. Certain Relationships and Related Transactions, and Director Independence 55 Item 14. Principal Accounting Fees and Services 56 Part IV Item 15. Exhibits, Financial Statement Schedules 56 Item 16. Form 10-K Summary 56 Signatures 57 Index to Exhibits 112 Table of Contents PART I ITEM 1. BUSINESS Company Description and Development of the Business The discussion below describes the business conducted by The Scotts Miracle-Gro Company, an Ohio corporation (“Scotts Miracle-Gro” and, together with its subsidiaries, the “Company,” “we” or “us”), including general developments in the Company’s business during the fiscal year ended September 30, 2020 (“fiscal 2020”).