Scotts Miracle-Gro Upsizes & Prices Senior Notes Due 2029

The Scotts Miracle-Gro Company SMG announced the pricing of its offering of $450 million total principal amount of 4.5% senior notes due 2029. The move highlights a $50 million increase in the original offering amount.

Scotts Miracle-Gro is expected to employ the net proceeds from the offering to redeem all of its outstanding 6% senior notes due 2023 under the indenture governing the 2023 notes. It also intends to use a portion of the proceeds for general corporate purposes.

The sale of the senior notes is expected to close on Oct 22, 2019, which is subject to customary closing conditions.

Shares of Scotts Miracle-Gro have rallied 35.1% in the past year against the industry’s 17.2% decline.

In July, the company raised its guidance for fiscal 2019 for the second time. It now expects adjusted earnings per share in the band of $4.35-$4.50 compared with previous expectation of $4.20-$4.40. Per the company, revised guidance for company-wide sales growth of 16-17% assumes that sales in the Hawthorne unit will increase around 90% year over year to $650 million in fiscal 2019. Sales in the U.S. Consumer segment is expected to grow 6-7%.

The company is expected to gain from the synergies of the Sunlight Supply acquisition. The buyout provides the company with modern and cost-efficient supply chain in the hydroponic industry that will benefit retail customers and end consumers. Moreover, the integration of Sunlight Supply is on track. The company continues to expect nearly $30 million in synergies from the transaction by the end of fiscal 2019.

Zacks Rank & Key Picks

Scotts Miracle-Gro currently sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the basic materials space are Kinross Gold Corporation KGC, Royal Gold, Inc RGLD and Arconic Inc ARNC, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross has an expected earnings growth rate of 170% for 2019. The company’s shares have surged 74.2% in the past year.

Royal Gold has a projected earnings growth rate of 82.1% for fiscal 2020. The company’s shares have rallied 74% in a year’s time.

Arconic has an estimated earnings growth rate of 50% for the current year. Its shares have moved up 14.3% in the past year.

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