Shareholders were not happy with the third quarter earnings report from Scotts Miracle-Gro: the fertilizer company reported revenue that missed slightly, and despite a beat on the bottom line and in-line guidance, the stock was punished, sliding 3.5% and down nearly 30% this year.
But whatever disappointment investors may have had over the earnings, it was quickly replaced with amazement, shock and sheer delight during the earnings call when CEO Jim Hagedorn had a rather... "blunt" take on the company's cannabis-growing business during a curse-laden rant on a conference call.
As CNBC first noted, Hagedorn vented his frustration with the poor financial expectations from the company's cannabis subsidiary, Hawthorne Gardening, which is in the process of acquiring Sunlight Supply, which has provoked the CEO's ire as it will fall short of internal targets for growth for the foreseeable future.
First some history: 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. Around the same time, Scotts set a goal of $120 million of segment income for Hawthorne by 2020. However, Scotts CFO Randy Coleman told investors on the call that Scotts no longer expects Hawthorne to achieve that goal, and as a result the company won't combine Hawthorn's results with Sunlight's until "we provide guidance for 2019."
"Let me kind of tell you like the journey a little bit for me and it's real time, which is they're - Hawthorne is on their own long-term plan and they're clearly off their first year" the CEO told analysts.
At this point Hagerdon let loose in what may be one of the most memorable rants, even surpassing Elon Musk's last quarter meltdown. First, the CEO tried to explain why things aren't going quite as expected:
"I went back to Hawthorne and said you guys show us like where you're going. And dude those bastards are gun shy as shit, right now, okay? So, kind of -- 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 so I was like, what the hell, and I think just recognizing the world they're living in which is head down day-to-day, okay?"
Hagerdon was clearly displeased with the development, as he made it quite clear next:
"When people ask me what do you think about those numbers that came back from Hawthorne, I said it's a fucking negotiation -- sorry for the language. it's a fucking negotiation and they're gun-shy at the moment."
But in the end, the CEO was ready to take responsibility:
And Jim and Randy, I think probably more than like anybody in this room are -- and I acknowledge this, which is to not over-commit and that's what they would tell me. Do not over-commit. Our credibility matters"
... even though he is not exactly pleased with how his stock price has performed:
"I get where our stock price is at. Okay? I'm not all freaky on it. Okay?"
Then again, the performance is certainly not a function of the CEO's laziness, as this exchange with an analyst revealed:
Dude, you know what time I get up in the morning? I get up at 2:50 in the morning to come to this wonderful place. So,
I'm tired too.
As CNBC notes, this wasn't the first time Hagedorn drew attention for his colorful language. In a 2013 article in The Wall Street Journal about the merger between Miracle-Gro, which was led by his father, and lawn-care company Scotts, Hagedorn was quoted as saying:
"The idea to merge with Scotts dawned on him after he looked at the company's market value in 1995, he said, so he called his father's tax lawyer to vet the idea. "I said, 'Bob, I got this f— crazy idea. Do you think it'd be f— possible to take over Scotts?'" he recalls, sitting in the Port Washington, New York, office that his father once occupied."