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EQUITY | 12 Months Ended
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Sep. 30, 2024
Equity [Abstract] |
EQUITY | EQUITY (DEFICIT) Authorized and issued shares consisted of the following (in millions):
| September 30,
| 2024 |  | 2023
Preferred shares, no par value: |  |  |
Authorized | 0.2 shares |  | 0.2 shares
Issued | 0.0 shares |  | 0.0 shares
Common shares, no par value, $0.01 stated value per share: |  |  |
Authorized | 100.0 shares |  | 100.0 shares
Issued | 68.1 shares |  | 68.1 shares
In fiscal 1995, The Scotts Company merged with Stern’s Miracle-Gro Products, Inc. (“Miracle-Gro”). At September 30, 2024, the former shareholders of Miracle-Gro, including the Hagedorn Partnership, L.P., owned approximately 24% of Scotts Miracle-Gro’s outstanding Common Shares and, therefore, have the ability to significantly influence the election of directors and other actions requiring the approval of Scotts Miracle-Gro’s shareholders. Under the terms of the merger agreement with Miracle-Gro, the former shareholders of Miracle-Gro may not collectively acquire, directly or indirectly, beneficial ownership of Voting Stock (as that term is defined in the Miracle-Gro merger agreement) representing more than 49% of the total voting power of the outstanding Voting Stock, except pursuant to a tender offer for 100% of that total voting power, which tender offer is made at a price per share which is not less than the market price per share on the last trading day before the announcement of the tender offer and is conditioned upon the receipt of at least 50% of the Voting Stock beneficially owned by shareholders of Scotts Miracle-Gro other than the former shareholders of Miracle-Gro and their affiliates and associates. Accumulated Other Comprehensive Loss Changes in AOCL by component were as follows for the fiscal years ended September 30:
|  | Foreign Currency Translation Adjustments |  | Net Unrealized Gain (Loss) On Derivative Instruments |  | Net Unrealized Loss On Securities |  | Pension and Other Post- Retirement Benefit Adjustments |  |  |  | Accumulated Other Comprehensive Income (Loss)
Balance at September 30, 2021 |  | $ | (1.7) |  |  | $ | 10.2 |  |  | $ | (2.3) |  |  | $ | (72.5) |  |  |  |  | $ | (66.4) |
Other comprehensive income (loss) before reclassifications |  | (27.2) |  |  | 40.1 |  |  | (102.0) |  |  | (7.3) |  |  |  |  | (96.4) |
Amounts reclassified from accumulated other comprehensive net income (loss) |  | — |  |  | (9.1) |  |  | — |  |  | 11.7 |  |  |  |  | 2.6 |
Income tax benefit (expense) |  | — |  |  | (7.9) |  |  | 24.6 |  |  | (1.1) |  |  |  |  | 15.6 |
Net current period other comprehensive income (loss) |  | (27.2) |  |  | 23.1 |  |  | (77.4) |  |  | 3.3 |  |  |  |  | (78.2) |
Balance at September 30, 2022 |  | (28.9) |  |  | 33.3 |  |  | (79.7) |  |  | (69.3) |  |  |  |  | (144.6) |
Other comprehensive income (loss) before reclassifications |  | 7.0 |  |  | 5.6 |  |  | (34.9) |  |  | (2.5) |  |  |  |  | (24.8) |
Amounts reclassified from accumulated other comprehensive net income (loss) |  | — |  |  | (23.3) |  |  | 101.3 |  |  | (1.6) |  |  |  |  | 76.4 |
Income tax benefit (expense) |  | — |  |  | 4.5 |  |  | (25.3) |  |  | 1.0 |  |  |  |  | (19.8) |
Net current period other comprehensive income (loss) |  | 7.0 |  |  | (13.2) |  |  | 41.1 |  |  | (3.1) |  |  |  |  | 31.8 |
Balance at September 30, 2023 |  | (21.9) |  |  | 20.1 |  |  | (38.6) |  |  | (72.4) |  |  |  |  | (112.8) |
Other comprehensive income (loss) before reclassifications |  | 0.6 |  |  | (10.6) |  |  | (40.4) |  |  | (2.8) |  |  |  |  | (53.2) |
Amounts reclassified from accumulated other comprehensive net income (loss) |  | — |  |  | (9.7) |  |  | 64.6 |  |  | (2.7) |  |  |  |  | 52.2 |
Income tax benefit (expense) |  | — |  |  | 5.1 |  |  | — |  |  | 1.4 |  |  |  |  | 6.5 |
Net current period other comprehensive income (loss) |  | 0.6 |  |  | (15.2) |  |  | 24.2 |  |  | (4.1) |  |  |  |  | 5.5 |
Balance at September 30, 2024 |  | $ | (21.3) |  |  | $ | 4.9 |  |  | $ | (14.4) |  |  | $ | (76.5) |  |  |  |  | $ | (107.3) |
The sum of the components may not equal due to rounding. Share Repurchases On February 6, 2020, Scotts Miracle-Gro announced that its Board of Directors authorized the repurchase of up to $750.0 of Common Shares from April 30, 2020 through March 25, 2023. There were no share repurchases under this share repurchase authorization during fiscal 2023 through its expiration on March 25, 2023. During fiscal 2022, Scotts Miracle-Gro repurchased 1.1 million Common Shares under this share repurchase authorization for $175.0. Treasury share purchases also include cash paid to tax authorities to satisfy statutory income tax withholding obligations related to share-based compensation of $5.1, $9.3 and $82.9 for fiscal 2024, fiscal 2023 and fiscal 2022, respectively. Share-Based Awards In January 2024, the shareholders of Scotts Miracle-Gro approved an amendment and restatement of The Scotts Miracle-Gro Company Long-Term Incentive Plan. As of September 30, 2024, the Company is authorized under this plan to grant up to approximately 7.9 million Common Shares, which includes an estimate of the number of Common Shares subject to outstanding awards under the plan that terminate, expire, or are cancelled, forfeited, exchanged, or surrendered without having been exercised, vested, or paid. At September 30, 2024, approximately 3.6 million Common Shares were not subject to outstanding awards and were available to underlie the grant of new share-based awards. Common Shares held in treasury totaling 0.3 million, 0.4 million and 0.9 million were reissued in support of share-based compensation awards under this plan and employee purchases under the employee stock purchase plan during fiscal 2024, fiscal 2023 and fiscal 2022, respectively. Subsequent to September 30, 2024, the Company awarded stock options representing 0.3 million Common Shares to associates with an estimated grant date fair value of $9.8. Total share-based compensation was as follows for each of the periods indicated:
| Year Ended September 30,
| 2024 |  | 2023 |  | 2022
Share-based compensation | $ | 79.8 |  |  | $ | 68.1 |  |  | $ | 30.3 |
Related tax benefit recognized | 14.8 |  |  | 15.6 |  |  | 4.9 |
Excess tax benefit (tax deficiency) related to share-based compensation was $(3.0), $(1.5) and $14.8 for fiscal 2024, fiscal 2023 and fiscal 2022, respectively. Stock Options Stock option activity was as follows:
| No. of Options |  | Wtd. Avg. Exercise Price |  | Wtd Avg Remaining Life |  | Aggregate Intrinsic Value
Awards outstanding at September 30, 2023 | 1,191,183 |  |  | $ | 76.64 |  |  | 6.6 years |  |
Granted | 1,356,698 |  |  | 53.75 |  |  |  |  |
Exercised | (35,027) |  |  | 58.52 |  |  |  |  |
Forfeited | (135,182) |  |  | 55.69 |  |  |  |  |
Awards outstanding at September 30, 2024 | 2,377,672 |  |  | 65.03 |  |  | 7.5 years |  | $ | 71.4 |
Exercisable | 493,832 |  |  | 108.97 |  |  | 2.6 years |  | 8.9 |
The weighted average fair value per share of each option granted during fiscal 2024 and fiscal 2023 was $15.25 and $14.25, respectively. There were no options granted during fiscal 2022. The total intrinsic value of options exercised during fiscal 2024 was $0.6. There were no options exercised during fiscal 2023 or fiscal 2022. As of September 30, 2024, there was $9.4 of total unrecognized pre-tax compensation cost, net of estimated forfeitures, related to nonvested stock options that is expected to be recognized over a weighted-average period of 2.0 years. Cash received from the exercise of stock options, including amounts received from employee purchases under the employee stock purchase plan, was $3.8, $2.3 and $3.3 for fiscal 2024, fiscal 2023 and fiscal 2022, respectively. The weighted average assumptions used in the estimation of fair value for awards granted in fiscal 2024 are as follows:
Expected volatility | 38.8 | % |  |  |
Risk-free interest rate | 4.7 | % |  |  |
Expected dividend yield | 4.1 | % |  |  |
Expected life | 6.1 years |  |  |
Restricted share-based awards Restricted share-based award activity (including restricted stock units and deferred stock units) was as follows:
| No. of Units |  | Wtd. Avg. Grant Date Fair Value per Unit
Awards outstanding at September 30, 2023 | 611,838 |  |  | $ | 89.10 |
Granted | 363,264 |  |  | 55.12 |
Vested | (77,826) |  |  | 182.87 |
Forfeited | (130,892) |  |  | 59.40 |
Awards outstanding at September 30, 2024 | 766,384 |  |  | 68.54 |
The weighted-average grant-date fair value of restricted stock-based awards granted during fiscal 2024, fiscal 2023 and fiscal 2022 was $55.12, $59.48 and $109.10 per share, respectively. As of September 30, 2024, there was $9.9 of total unrecognized pre-tax compensation cost, net of estimated forfeitures, related to nonvested restricted stock-based awards that is expected to be recognized over a weighted-average period of 1.7 years. The total fair value of restricted stock units and deferred stock units vested during fiscal 2024, fiscal 2023 and fiscal 2022 was $4.6, $11.2 and $28.2, respectively. Performance-based awards Performance-based award activity was as follows (based on target award amounts):
| No. of Units |  | Wtd. Avg. Grant Date Fair Value per Unit
Awards outstanding at September 30, 2023 | 544,790 |  |  | $ | 76.85 |
Granted | 240,677 |  |  | 74.57 |
Vested (a) | (181,791) |  |  | 59.88 |
Forfeited | (194,246) |  |  | 65.89 |
Awards outstanding at September 30, 2024 | 409,430 |  |  | 86.61 |
(a)Vested at a weighted average of 100% of the target performance share units granted. The weighted-average grant-date fair value of performance-based award units granted during fiscal 2024, fiscal 2023 and fiscal 2022 was $74.57, $66.00 and $132.74 per share, respectively. As of September 30, 2024, there was $7.6 of total unrecognized pre-tax compensation cost, net of estimated forfeitures, related to nonvested performance-based award units that is expected to be recognized over a weighted-average period of 2.1 years. The total fair value of performance-based award unit vested during fiscal 2024, fiscal 2023 and fiscal 2022 was $10.6, $17.4 and $182.5, respectively. During fiscal 2024, the Company granted performance-based award units with a three-year vesting period that include a performance target based on the Company’s total shareholder return relative to a Company selected peer group, among other financial targets. Details of the assumptions used in the estimation of fair value for these awards are as follows:
Expected volatility | 36.6 | %
Risk-free interest rate | 4.5 | %
For fiscal 2024, the Company is granting short-term equity incentive compensation awards to certain associates in the form of performance-based award units in lieu of cash-based annual incentive awards. Subsequent to September 30, 2024, awards representing 0.3 million Common Shares were granted and vested on the incentive payout date. The number of performance-based award units that the Company ultimately issued to participating associates was based on the incentive payout amount determined for each employee that was then converted into a variable number of performance-based award units based on the fair value of the Common Shares on the grant date. The awards were classified as liability awards and, as of September 30, 2024, the Company had accrued $20.2 in the “Other current liabilities” line in the Consolidated Balance Sheets and there was $0.0 unrecognized pre-tax compensation cost associated with these awards. The units associated with these awards are excluded from the table above. Restricted shares issued to vendor During fiscal 2024 and fiscal 2023, the Company issued 0.3 million and 0.8 million restricted shares, respectively, with a weighted-average grant date fair value of $69.88 and $52.44 per share, respectively, out of its treasury shares to a vendor in exchange for advertising services. As of September 30, 2024, there was $20.0 of total unrecognized pre-tax compensation cost related to these restricted shares that is expected to be recognized during fiscal 2025, when the services are performed.

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