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ScottsMiracle-Gro (SMG) Puts Out Senior Notes Exchange Offer

The ScottsMiracle-Gro Company SMG recently announced the commencement of a registered exchange offer to exchange any and all of its $500,000,000 total principal amount of 4% Senior Notes due 2031.

These were issued in a private placement on Mar 17, 2021, for an equal principal amount of its 4% Senior Notes due 2031, which have been registered under the Securities Act of 1933, as amended.

The exchange offer is made to fulfill the company’s obligations per a registration rights agreement. The agreement was related to the issuance of original notes, which the company entered into on Mar 17, 2021. It does not represent a new financing transaction and won’t receive further proceeds from the exchange offer.

There is much similarity in terms of the exchange notes and the original notes, barring certain transfer restrictions, registration rights and additional interest provisions that do not apply to the exchange notes. The original notes that are not exchanged in the offer will remain subject to existing transfer restrictions. The company will generally have no further obligation to provide for the registration of those notes under the Securities Act of 1933, as amended.

The exchange offer will expire at 11:59 p.m., New York City time, on Jan 20, 2022, unless extended by the company. Tenders of original notes must be validly made at or before the expiration time and may be withdrawn prior to the expiration time. The exchange offer terms are described in a prospectus dated Dec 22, 2021, and the related letter of transmittal.

Shares of Scotts Miracle-Gro have declined 17% in the past year against a 44.4% rise of the industry.

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Scotts Miracle-Gro, in its last earnings call, stated that it expects sales in the Hawthorne segment for fiscal 2022 to rise 8-12%. U.S. Consumer sales growth guidance is expected to be 0 to -4%. It expects company-wide sales growth of 0-3%.

The gross margin rate is projected to decline 100-150 basis points (bps) year over year. The company also expects adjusted earnings per share in the range of $8.50-$8.90 for the full year.

The company noted that the current over-supply of cannabis is expected to put pressure on its growth rate through the rest of the calendar year and into the second quarter in the Hawthorne segment, at which point it expects a more normal growth rate.

Zacks Rank & Key Picks

Scotts Miracle-Gro currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the basic materials space are Nutrien Ltd. NTR, The Chemours Company CC and AdvanSix Inc. ASIX.

Nutrien has an expected earnings growth rate of 233.3% for the current year. The Zacks Consensus Estimate for NTR’s current-year earnings has been revised 16.3% upward in the past 60 days.

Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters. The company has a trailing four-quarter earnings surprise of roughly 73.5%, on average. The stock has rallied 61.6% in a year. NTR currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chemours has an expected earnings growth rate of 105.1% for the current year. The Zacks Consensus Estimate for CC’s earnings for the current year has been revised 10% upward in the past 60 days.

Chemours beat the Zacks Consensus Estimate for earnings in the last four quarters. The company has a trailing four-quarter earnings surprise of roughly 34.2%, on average. It has rallied 31.3% in a year. CC currently flaunts a Zacks Rank #1.

AdvanSix has a projected earnings growth rate of 194.5% for the current year. The Zacks Consensus Estimate for ASIX’s earnings for the current year has been revised 5.9% upward in the past 60 days.

AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied 142.2% in a year. It currently sports a Zacks Rank #1.


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The Scotts MiracleGro Company (SMG): Free Stock Analysis Report
 
The Chemours Company (CC): Free Stock Analysis Report
 
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Nutrien Ltd. (NTR): Free Stock Analysis Report
 
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