The Scotts Miracle-Gro Company (NYSE:SMG) Q1 2023 Earnings Call Transcript

But that’s where we are. The business is capitalized and we are going to see this through and we think, ultimately, it’s worth doing. But we are not required to put more money up and we are not chasing it to the extent where we don’t think. It’s actually — they are actually moving ahead like we want. If the state of New York would actually come out with their rules and listening to people and try to give the — not just us but the other MSOs who have invested billions of dollars in their footprints in New York, some advantage here for the amount of money that’s been invested, that would be helpful, but it’s frustrating, but it’s worth doing. And I think every time we say to ourselves and plus we are in. So it’s like there’s no here for us to go.

They are not in default. They have got the money to see this through and we are going to hang in there and be with them. Actually, Chris, anything you want to add on this?

Chris Hagedorn: Sure. Yeah. I think you said most of it. But look, RIV, which — and it’s a business that I pay a great deal of attention to and I am on the Board of that company. RIV has one of, if not the strongest and most unique balance sheets in the cannabis industry. As Jim touched on, they don’t need further investment, at least not for some time. And New York, yeah, look, it’s right now, I think, anyone who walks down the street in Manhattan and steps into a corner bodegas sees that there’s a thriving illicit market there. That is not something we expect to persist over the course of many years. When the legal market there becomes the standard, which it will, we believe resonate are positioned to be really just to be — not — I wouldn’t say dominant in the state, but to take more than their fair share of the market, just because of the resources they have at their disposal.

So it’s something we remain really enthusiastic about as the last year had a discouraging moments, of course, it has and anyone who’s been involved in the cannabis industry, I think, knows that has experienced it. But the commitment on our side certainly on my side remains pretty firm and I think the upside that we have seen, it’s pushed out a little bit, but the end thesis is still in place.

Bill Chappell: Great. Thank you.

Operator: Thank you. Our next question comes from Gaurav Jain with Barclays. Your line is open.

Gaurav Jain: Hi. Good morning. I have a few questions. So one is on the leverage of the company and the bonds, so they are trading at $0.85 to the dollar, so you can literally retire like $1.2 billion of debt with this $1 billion of free cash flow you will generate in the next two years and accelerate the deleverage and I understand you have restricted payment restrictions because of higher leverage. But is that an option you can look at and I think that you can buy about $25 million per quarter when it comes to this bond sort of buying it in the open market. So are those options you are looking at?