Scotts Miracle-Gro CEO Jim Hagedorn bluntly laid out his take on the company’s cannabis-growing business during a curse-laden rant on a conference call.
He said his frustration was about disappointing financial expectations for Hawthorne Gardening, Scotts’ cannabis subsidiary, which is in the process of acquiring Sunlight Supply. Hawthorne isn’t going to meet Scotts’ internal targets for growth for the foreseeable future, though Hagedorn didn’t disclose how far short of the target the unit was now.
“Let me kind of tell you, like, the journey a little bit for me, and it’s real time,” he told analysts on Tuesday’s call. “Hawthorne’s on their own long-term plan and they’re clearly off their first year.”
Then Hagedorn let loose, saying Hawthorne was not showing him “like, where you’re going.”
“And, dude, those bastards are gun-shy as s— right now, OK,” Hagedorn told analysts on the call. “I’m just telling you real-time, living my life. What do you expect they’re going to throw back at us? So they throw these numbers back at us, and I was like, what the hell?”
In April, Scotts set a goal of $120 million of segment income for Hawthorne by 2020. Scotts CFO Randy Coleman told investors on the call that Scotts no longer expects Hawthorne to achieve that goal. And it won’t combine Hawthorn’s results with Sunlight’s until “we provide guidance for 2019.”
Scotts announced in April it would acquire Sunlight Supply, intending to combine it with Hawthorne in an effort to build its cannabis-grower business. Hagedorn said Wall Street analysts should “bear with” Scotts as “we’re working on” achieving the “synergy” it promised with the acquisition.
Hawthorne’s lack of clarity is not good enough for Hagedorn, however.
“When people ask me what do you think about those numbers that came back from Hawthorne, I said ‘it’s a f—ing negotiation’ – sorry for the language. It’s a f—ing negotiation and they’re gun-shy at the moment,” Hagedorn. “Do not over-commit. Our credibility matters.”
“I get where our stock price is at. OK? I’m not all freaky on it,” Hagedorn added.
Scotts shares fell 3.5 percent in trading Wednesday after the call. They are down more than 28 percent this year.
