S&P drops Scotts Miracle-Gro

Standard & Poor's said it lowered its ratings on Scotts Miracle-Gro Co. to BB- from BB.

The outlook is stable.

The agency said that Scotts had about $1.1 billion in reported debt outstanding at Dec. 27.

"The downgrade reflects its belief that credit measures over the next year will not meet its prior expectations to maintain the BB rating," said S&P credit analyst Christopher Johnson, "including adjusted average debt to EBITDA of about 3.5x."

S&P said it expects Scotts' EBITDA margin improvement to be constrained by some pricing pressure from consumer trade-down and the company's elevated input costs, which are roughly 70% hedged for the coming year at higher costs, and higher sales and marketing costs.

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