Forensic, Research

Scotts Has Commitment Issues

Dan Mahoney, CFA, CPA, Executive Director of Forensic Research
16 December 2021


The most significant takeaway from our review of SMG’s 10-K filing and 4Q21 (Sept. FYE) earnings is that the Company is taking on increased inventory risk. Inventory at September 2021 was 47% of expected 1H22 revenues. In comparison, inventory at September 2020 was only 24% of revenues recognized in 1H21. As inventory on the balance sheet has increased, purchase commitment disclosures show that SMG’s obligations to make future purchases increased by 90% YoY at 4Q21.

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