Research Update: The Scotts Miracle-Gro Co. Outlook Revised To Stable From Negative; Ratings Affirmed

U.S.-based The Scotts Miracle-Gro Co. overcame several headwinds including inflation, disruptions in the hydroponics business, and unfavorable media coverage of Roundup herbicide litigation. We expect the lawn-and-garden company will report a material improvement in credit statistics for fiscal 2019 (ending Sept. 30), including adjusted leverage below 3.5x. We are affirming all of our ratings on Scotts, including our 'BB' issuer credit rating and 'B+' senior unsecured notes rating, and revising the outlook to stable from negative. The recovery rating on the notes remains '6', indicating that creditors could expect negligible (0%-10%; rounded estimate: 0%) recovery in the event of a payment default. The stable outlook reflects our expectation that Scotts will maintain moderate momentum in the core U.S. consumer business

...- U.S.-based The Scotts Miracle-Gro Co. overcame several headwinds including inflation, disruptions in the hydroponics business, and unfavorable media coverage of Roundup herbicide litigation. - We expect the lawn-and-garden company will report a material improvement in credit statistics for fiscal 2019 (ending Sept. 30), including adjusted leverage below 3.5x. - We are affirming all of our ratings on Scotts, including our '##' issuer credit rating and 'B+' senior unsecured notes rating, and revising the outlook to stable from negative. The recovery rating on the notes remains '6', indicating that creditors could expect negligible (0%-10%; rounded estimate: 0%) recovery in the event of a payment default. - The stable outlook reflects our expectation that Scotts will maintain moderate momentum in the core U.S. consumer business (subject to fair weather conditions), continue to invest in the higher-growth hydroponics sector, and increase shareholder returns in 2020 while managing adjusted...

Research Update