Scotts Miracle-Gro (SMG) risk factors, 2024 10-K

Other

1. 01Cautionary Note Regarding Forward-Looking Statements

Risks Related to Our Business

1. 02If we underestimate or overestimate demand for our products and do not maintain appropriate inventory levels, our net sales and/or working capital could be negatively impacted
2. 03An economic downturn and economic uncertainty may adversely affect demand for our products
3. 04Disruptions in availability or increases in the prices of raw materials, fuel or transportation costs could adversely affect our results of operations
4. 05Because of the concentration of our sales to a small number of retail customers, the loss of one or more of, or a significant reduction in orders from, any of our top customers, or a material reduction in the inventory of our products that they carry, could adversely affect our financial results
5. 06We may not successfully develop new product lines and products or improve existing product lines and products
6. 07Our marketing activities may not be successful
7. 08The highly competitive nature of our markets could adversely affect our ability to maintain or grow revenues
8. 09Our manufacturing operations, including our reliance on third-party manufacturers, could harm our business
9. 10Our business is subject to risks associated with sourcing and manufacturing outside of the U.S. and risks from tariffs and/or international trade wars
10. 11Our reliance on a limited base of suppliers may result in disruptions to our business and adversely affect our financial results
11. 12A significant interruption in the operation of our or our suppliers’ facilities could impact our capacity to produce products and service our customers, which could adversely affect revenues and earnings
12. 13In the event of a disaster, our disaster recovery and business continuity plans may fail, which could adversely interrupt our operations
13. 14Disruptions to transportation channels that we use to distribute our products may adversely affect our margins and profitability
14. 15Climate change and unfavorable weather conditions could adversely impact financial results
15. 16Our business could be negatively impacted by corporate citizenship and sustainability matters - including climate change - and/or our reporting of such matters
16. 17Product recalls or other product liability claims could materially and adversely affect our business, financial condition and results of operation
17. 18If the perception of our brands or organizational reputation are damaged, our consumers, distributors and retailers may react negatively, which could materially and adversely affect our business, financial condition and results of operations
18. 19Certain of our products may be purchased for use in new and emerging industries or segments and/or be subject to varying, inconsistent, and rapidly changing laws, regulations, administrative practices, enforcement approaches, judicial interpretations, and consumer perceptions
19. 20If we are unable to effectively execute our e-commerce business, our reputation and operating results may be harmed
20. 21Our operations, financial condition or reputation may be impaired if our information or operational technology systems fail to perform adequately or if we are the subject of a data breach or cyber-attack
21. 22Our insurance coverage may not be sufficient to avoid or effectively mitigate the material impact on our financial position or results of operations resulting from claims or liabilities against us, and we may not be able to obtain appropriate insurance coverage in the future
22. 23Our international operations make us susceptible to the costs and risks associated with operating internationally
23. 24In the event the Third Restated Agreement for Monsanto’s consumer Roundup® products terminates or Monsanto’s consumer Roundup® business materially declines, we would lose a substantial source of future earnings and overhead expense absorption
24. 25In the event that the Third Restated Agreement terminates or Monsanto’s consumer Roundup® business materially declines, we would lose all, or a substantial portion, of the significant source of earnings and overhead expense absorption the Third Restated Agreement provides
25. 26We may not be able to adequately protect our intellectual property and other proprietary rights that are material to our business
26. 27Our success depends upon the retention and availability of key personnel and the effective succession of senior management
27. 28Our workforce reductions may cause undesirable consequences and adversely affect our business and results of operations
28. 29We are involved in a number of legal proceedings and, while we cannot predict the outcomes of such proceedings and other contingencies with certainty, some of these outcomes could adversely affect our business, financial condition, results of operations and cash flows

Risks Related to Our M&A, Lending and Financing Activities

1. 30Our indebtedness could limit our flexibility and adversely affect our financial condition
2. 31Significant or prolonged periods of higher interest rates may have an adverse effect on our results of operations, financial condition and cash flows
3. 32Global economic and capital market conditions may limit our access to capital and/or increase the costs of such capital
4. 33Acquisitions, other strategic alliances and investments could result in operating difficulties, dilution, and other harmful consequences that may adversely impact our business and results of operations
5. 34Changes in credit ratings issued by nationally recognized statistical rating organizations (NRSROs) could adversely affect our cost of financing and the market price of our Senior Notes
6. 35A failure to dispose of assets or businesses in a timely manner may cause the results of the Company to suffer
7. 36Our lending activities may adversely impact our business and results of operations
8. 37Our hedging arrangements expose us to certain counterparty risks
9. 38Our postretirement-related costs and funding requirements could increase as a result of volatility in the financial markets, changes in interest rates and actuarial assumptions

Risks Related to Regulation of Our Company

1. 39Compliance with environmental and other public health regulations or changes in such regulations or regulatory enforcement priorities could increase our costs of doing business or limit our ability to market all of our products
2. 40Unanticipated changes in our tax provisions, the adoption of new tax legislation or exposure to additional tax liabilities could affect our profitability and cash flows

Risks Related to Our Common Shares

1. 41The Company’s decision to maintain, reduce or discontinue paying cash dividends to our shareholders or repurchasing our Common Shares could cause the market price for our Common Shares to decline
2. 42Hagedorn Partnership, L.P. beneficially owns approximately 24% of our Common Shares and can significantly influence decisions that require the approval of shareholders