The Scotts Miracle-Gro Company (SMG) 4 Nov 202020 Q3 Earnings call transcript

Good day and welcome to the Scotts Miracle-Gro Company's Fourth Quarter Earnings Conference Call. At this time, I’d like to turn the call over to Jim King. Please go ahead.

Thank you, operator. Good morning, everyone. Scotts modify quarter call the the are call this to to going structure welcome Miracle-Gro conference fourth We morning. And of the

today follow-up. Officer, we through CEO; me Jim clarity Hagedorn. and as Chief let set cover press will that Lukemire; that expectations. forward one and for or Jim, President questions. am this So participate the to and everyone share remind Chief Hawthorne we tomorrow will guidance Mike Q&A, call question be this go anyone to Marketing around your opportunity morning. up well ‘XX. today as I who all Hagedorn, morning's in mostly questions. Peoples; Coleman, Randy got here our for the we'll some see Operator, one our the I'm morning. I Josh provide CFO; respectfully has additional open lot the in I a of making We've with in and release. forward-looking your Manager, Josh we Chris numbers their time you this and ask outlined the Randy to going And At Chris General later statements thoughts, glad ask about will Fiscal want that point, set

version Jim some will turn and made let's of that things more are results investor.scotts.com. get the I also our differ now in this call with risks press going call opening Exchange actual available in want Commission. over With highlighted variety being be is and website extensively is and Those you materially to which could Jim. for factors. our explained to our this archived that, of and So due to form risk recorded a Securities remarks. filed Hagedorn release remind XX-K, on I'll morning our the

and good everyone. Jim, Thanks, morning

the finish with fourth board XXXX saw in off our setting record strong capped you a quarter. As we across results in our release, the

For the quarter and full year, the of growth both consumer we U.S. and both Hawthorne. saw category the business in every

part announced this Op. through the most my venture news of a We today our to I on goods don't performance most start. stake our place focus ‘XX. and of increase long-term owner, is that's know Farmers of outlook our lost to to in for to guidance want elaborate Co strategy. the XX% want in financial for as in our also joint remarks. We well, want significant plans I'll I get year. you to more Frankly, in with this headlines live around financial my morning its Bonnie Alabama stake time. where I our an is Fiscal for later point next current Plants having right XX/XX And our see focus essential existing a our Bonnie spend this XXXX on in

few And outlook. context. walk some Fiscal which our guidance this the share my I'll of better I'm a demonstrates, turn EPS growth the the to come the and details with a He'll time remainder call Randy colleagues. my highlights of for of and now. over some provide ‘XX XXXX then back through going my projects a for We're XX% things year. in morning, Our going handle little to comments have place entering we're XXXX different that to good so to in some XX%

enter vision as sense the for ‘XX. So we Fiscal business a you'll of our have better

Thanks, everyone. Jim, and hello to

finish said share the essentially know, you $X.XX pre-released As year. expected And expect. for per to about that at we you results XXXX we our we

as the normally our the do. I [panel] this detailed be Given communications through prior this earlier walking I for won't time year, specifics

the like some said, was thoughts consumer we few business XX never I've seen QX. growth sales, my growth a share key to want points. here, growth XX% Jim In everywhere. as in from with the And do quarter. I POS and years the However, highlight had was Starting in

growth retailers soil was and October were rebuild Also We that XX% big a with XX% retail than XX% Gardening end happening inventory food. planning customers similar ended depleted increased thing the aggressively with other of in working driver the the plant [indiscernible] The a of inventory driven to and spring. Full sales by number. increase is Consumer levels, consumer a XX% purchases to year growth in about is shipments. now, and buy at for year what year higher early and XX% big U.S. branded drove a POS ago. in continue that of

control and share Hawthorne And to some Chris In fact, in details we XX% were few products the grafting XX% XX%. [indiscernible] pretty been. much that going of is was a that [XX%] minutes. control lawn fertilizer has

growth than So higher And tell and largest I higher year rates them too. was now. right But go month our for that Hawthorne. it I you the for to was expected ever the expected into won't will sales see translated that September than profitability Hawthorne encouraging

in the segment gross improved full pricing. fixed XX% an profit more On mix next By for in year. the Consumer point was expectations, This U.S. XX and about rate. margin ahead improved the on XXX The margin favorable initial margin posted basis segment business in improvement a line track margin basis us few keeps basis goal XXX gross XX% way, with brand the leverage points for of Hawthorne the importantly, to our of cost points years.

lot at same the reasons half which For are rate run the higher. a of

from approximately margin lower than rate that overall though XX rate what $XX was growth average. up The points. and fastest year You'll full quarter, is notice biggest expense at which in saw. lower increased for with debt full the million year. and leverage company full-term we Interest at levels corporate with was Nevertheless, the SG&A the But the our was our long-term also the in times year QX lower for selling we're than points XX% permitted the which the is to $XX And Hawthorne comp million at percentage the lower with rates, the a benefited That's interest giving]. SG&A covenants. and and only average run is media than lower is to finished X.X XX $X ago. marketing, target year. and compensation, maximum basis EBITDA. debt [indiscernible] we under gross million extremely a debt net lower XX% about than pleased variable leverage higher This driver approximately of [charitable

more flexibility shareholders. invest XXXX enter the to business also cash we tremendous while returning So to with in

for in stock. build was inventory. million were depleted going the it out about retailers will because product you wanted for said I recall after Turning free because we a own door we Instead that soon the to as to to cash replace flow their flow come $XXX may just moment, cash as that looking QX build year

to our many next of have cash than glad about I year. in million I'm in surprises year building came we about any or still So But do question higher million announced $XXX free to of we you what inventory $XXX doubt QX have there terms flow are answer being work today. results. full

always stage So I our guidance, a want from ‘XX transparent with to Jim perspective. the provide shareholders. strategic being some more outlook detail ourselves for of prided We've for and explain to our set

just let me start So there.

rate to QX in growth growth higher. sales from probably even have and both that QX enormous see to expect similar major will segments We

for for We given QX year a U.S. will likely facing plans spring. Hawthorne’s be above retailer momentum big also well our target in full

after obvious QX is our much for However, visibility reasons. less

QX comps our addition, are In QX and huge.

For growth for And fiscal for XXXX example, business U.S. comp was POS second our Hawthorne, the major half Consumer XX%. in XX%. September, is

declined share, most explain would a U.S. But would per Consumer roughly points, to why. in we in by $X.XX earn the currently and different two I Hawthorne will hear increase double-digit Hawthorne public ago. business to you basis from our roughly We People's, simply roughly which XXXX. XX% believe recent grows be full we decline see Consumer months from to business flat reality. XX comments Jim, which Josh possible gross growth U.S. versus still year you'll indicated hold climbing If a would As let XX%, is that U.S. even what number share. X them $X the margins with expect be the points, about earnings still I'll is and if

clear increase And consistent for businesses the approach. what in them. with levels And businesses, decline commodities, negative our total XXXX level similar to fuel to SG&A mix, for in further see our XX% a commodity both about plans rates the we X% like historic growth. however, want for finalize likely we resin company happened became for starting flat other rate from companies, need potential XX%. [indiscernible] decline, assuming Hawthorne’s where As recent we our normal at inventory sales impact segment dramatic but key to and for will more both investment about warehousing to in a that resin. get to to from our year, weeks especially with the we're pressure,

some year, expected being will minus cash Our variable to direct-to-consumer million. systems guiding with in expenditures Free level flow higher of a about be those is be $XX compensation capital cash $XXX dollars and defined offset flow plan about marketing investments of efforts. by operating million

during step up get be where working the inventory in work I capital levels would [indiscernible]. and the are the CapEx Fiscal We and to expect to roughly cash million $XXX with expect to used perhaps they to And long ‘XX more. year back we

created will in paying be much settlement has on another larger results based we and bonuses Finally XXXX XXXX. cash

guidance. provide this from other several heard environment to tough is As you've companies, a

to preference range is the not providing outcomes likely continue a see Our it's we what of easy. but

than argue fact, even can In volatile can XXXX. be XXXX more that you

would free also XXXX. of versus for two-year everyone fiscal [indiscernible]. EPS flow year over So you'll earnings this notice our to $XXX raise uncertainty of and had much end of roughly and low fact I’ll our million in is guidance is this in period. XX% days to suggest a earnings wider remind of higher adjusted increase EPS we The $X.XX range cash XXXX reflect the

cash in total the focus increased since December [third] generated $X.X flow. fact we've over shareholder billion the approximately free has project return XXX% In cumulative XXXX,

update Regarding our than investment are this result the in we our insurance the closed. provide will is in nature comes. we've and bond once additional transaction clarity announcement, but time guidance, The including past, [indiscernible] will used will you geography when the JV of in deal we on our different our the in not

be point, do throughout members Regardless, if team But impact we'll business our and will it that guidance. events proves hear the estimates trying and results call global P&L record of that year But for the balance another to from timing of shareholders. Jim [indiscernible], the will true, this our of on to better. be of You current is we're change our to estimate striving the even even impossible. operating our

Jim, that, to with back So you.

Randy. Thanks,

the and Randy's so believe our And provide it right I consumer thoughts why to goes on I well beyond is I want COVID-XX some now. Before business about positioned expand way comment, own my of well changed behavior. it

During began meet. preparation office from years you our second that told is a call, above and about thing my I a Five I ago, dad. opportunity this we learned higher to hangs that quarter something businesses categories drive where We my brands company call of transformation project We door, Tomcat, we focus. through divested an rate Bonnie effort invested shareholder Plants. didn't value. and could new believe in like we had growth Luck with

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approach homeruns. the over two XX% product behind new has to increased overhauling are We them our brands began of All marketing, our spending years. past

has the preparation. exploit We fiscal so, also only focus for work success. been agency Project the preparation. and that us do brought In but help opportunity with table presented ourselves new hard partners us about continued re-imagine XXXX to did Not positioned our to to we we relationship consumers.

believe we more as do, we work Fiscal so capture. more growth And looked ‘XX, to to at there is and

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And There we when throughout believe world if we'll did spring right is and good as in it's we and rest who XXXX, I'm of our the consumers the share six in U.S. of have generation them. what in consumers line our next about talking We're And And be That will consumer the I nesting we But for becoming as will of next but enjoy to visit, would and possible should enormous lives. clear be transparent year. you Gardeners. possible next came several be consumer Fiscal mode anyone ‘XX. macro in being simply this the of predicted more generation for this my world economy for homeowners, business. in like about sight want and shareholders. when in not we on other be trying leaves a to history not ago, doubtful the here sluggish whether I look We're says the important greater us focus. on simply company next define of coy. quarters. long-term is goal simply likely. targeted CPD most their a or not of to as And long-term That the next is their a And message actually midst an them gap ‘XX never goal tell mostly can door summer. keep what The bode our many they a short of for We XXXX, clarity. while that's is predict will the well for will the honest, between to months, I'm mission Just American will now. adjust months success necessary. the I the have as year. The still we'll same guidance They for remain grow. I with they view the knocking business companies. several millennials, and millions have largest state is what

bit new for hands been growth a my strongest thoughtful retain we analytical How will goals Officer, up to Josh I also and here our right accomplish he's still build the new People’s. worked of task and to of these He's one the the long. is Josh teams. we've them and his I'm run a Marketing way back had. work lucky here business, oversee time more engaged, has the lawns live during CMO, marketers than years. that invest the we've of at serve heavily ever that confident a And most fall If with consumers marketer junior most can to that too. to ‘XX, Josh? Chief our we of in from see right we So or if but had all the relationship with to person tenure consumers this keep great, the XX brand He's a we

Good morning, everyone.

variety which Gardening Scotts a sense As now I our consumers. of at I've got in just to one I've tap tap and thing the mentioned, that the and But roles. we've a by the is business, Miracle-Gro critical that that good certain deeply and a is [learning] take the to past Jim consumer into more can't learned unique. this used with element every is approach like we of emotion, been of different Understanding years different is What XX emotion truly believe I've and learned most to. going for is needs marketing our that more self-expression gardening for standing our how other products growing need different that be an emotional to of importantly, strengthen over can ourselves recently, that personal. We consumers relationship a between if all two element are we're decades to in There's form way our into categories. is for we about still. consumers. than space talk

not to on Our be have consumers, messages focused us.

most believe and Millennial to ‘XX swell more people continue these continue engaged, only the users X success tremendous in participants Jim new or XXXX. the edible XX% gardening participated in people We us. to in We the new we XXXX. lawn in even and will About new than follow. were can Demographics bring not we said, million into As of users. help lapsed keep of care but more bringing space. estimate years had but about will people homeownership category into

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So me it Jim, back turn you. to let

One point we Josh. turn last to Hawthorne. Thanks, before

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And James. Instructions] question [Operator Please our you. first Joseph go Thank we'll from take ahead. from Altobello Raymond

Thanks. Hi guys, good morning.

just X to is to customers new the in any know million maybe And making million much you [indiscernible]. the born who here. It's for Do as perspective, actually Josh guidance customers, a to but in promotions? know here back then, more target it. a when pretty from X What period for thanks. guys beyond the to this -- likely guys competition have know they'll a obviously them them million category of digital have a you keep get time they X in weekend Looking are, on they target you to live where give a you all question that roughly market you roughly

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am, for Thanks, you. if No And Chris one I could. thank another one guys. I

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you, Got it, great. guys. Thank

Securities. We'll ahead. Tobey question next Sommer go Please take our from [ph] from Truist

morning. good Thanks,

Tobey. Hi,

to Going unit. Hawthorne back

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Yes.

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not the been to Hawthorne I that. hard one we answered still Chris a we're of thing can business talk pretty it do don’t and you mean you than it's do We're quite we're that, down. Hawthorne think down we business. and but the in what different XX can because included be But how how a of very think consumer plans say saying Chris' just try could better Mike's the about. answer you I'm sort consumer trying when expectations to talking himself They're sure we operating [indiscernible] everybody five, got drive remember, And so, talked than on do it's are can But not be to up and so, either this committing question, [indiscernible]. or to of better could than down the

fast. Okay. And of from sort up you there pretty then leverages it and it take

XX%-plus a meeting they're loan of they're think the of growth the lucrative of of and sort range. at for that's think terrible too knows it's had your we're We yesterday do. dealing if please and incentive kind I year, can nothing sort end what nobody happens. say not that so, in when nobody defend hard to I And number, think hard kind a we goals but kind of fair good really if single It's do happens things put I board with of best budget we're year. and you just expected But saying bottom next where we the the

how to question. don’t know answer so, the And I

just realistically driving what business we this definitely finished seen I a the team number I in anybody anything has we that Jim said, think internally, am the by yes towards building. our that half aggressive with have back in past alright. more It's the was Like All said, before. year that ever unlike of

a going So, we're for sure. it's match to challenge that, either

had we've reported numbers this Now that those the the remarks call, week. at the top here of are pretty

the favorably to see expect New seen now and and landing. and are XX we've That others. they Arizona What to XX said, in overnight. a there's from typically going in extremely to the like do these changes result states its, we happen lag being a of happened So, how voted what citizens And happened on as know we We voted know incremental business these election. board. across issues months what Jersey,

it there's legalized, so been Now increase, meaningful us. any there for

So, amount for year. result uptick I this probably a XX, be like it'll a both That of in for us. of business, expect looks a wouldn’t those as significant of more XX, fiscal

writing hard each you sales, like facility I likely all were it analyze a last for I but that. to But bit me we to be is and little gets like and after going be closure Chris. might it's can correct looking our won't trying traditional think But and by off be

had on of I XX%. And with say think they success they we're to we full way innovation finally did were off the a Clearly where go. like these. trying

us. the And I in I think and build think that legalizing, States so, which you're I marketplace in there that's think for the curve were healthy that for out seeing are kind of essence

heard you've the just don’t guy done think New be in he think process. and led hands me I I sort kind that like of sense legislatively up and of mention I'm he threw and who we worker, gigantic could and Jersey, it get an this is here his okay. hired

vision of few being he New So, something in New most center important mine. power York means the to garden real than and has him. with the guy, or Jersey one And guys excellence the state big a of union cultivation for

people improving I did still see look these but that just because if with to we you're LEDs where go are good likely say likes going, there. in don’t to advanced this that one out sell that at a and think and are the occurring in think market do expect. again lights So, certain don’t go And I there's you'd the lot you Jim occurred build out the build is year. of and that add might as thing It's the crew

established lend to going over everybody the an a we and the about me and lot he that too. to market, our California being and country. California like for to versus the renovation, long So, year. we sales run a the knows to tremendous is as a of positive But on California end want had rest of really came replaced are half able that that is did of fact which

you. Thank

bit. the this for color. quicker a thanks be Now One on to second but try the one I'll

guidance. the guidance Randy math I low At I'm at come of do on Looking you consumer U.S. -- think end how your your right. doing this and

X% XXXX. So, it's down in

levels. be XX% be that assume would XXXX XX% revenue versus So would up it the

and volume was of you'd maybe look points a growth normalizing XX like so assuming kind to and for our it's get period. five the way the of two X% I category year you is points thrice So, can help the us a bridge assume that it at right of it? is period a Is is, that two-year

to is then half turn by first and quarter half Let growth. second bridge me

first for they who walk year. to don’t to of continuing going Still to newer that engaged the we what it a growth And what be XXXX doing expect be we're of in or said because QX. That continually you and think back since So, will with that That you basis include have we're new conservative company saw to really beginner on expect to in we U.S. will the we gained ones a through have to may I our to and from that we QX joint a continue they like like can half POS like work continue to go but in building into and people catalogues for five to number people consumers a versus we have tremendous, enjoyed down a get the quarter in confidence it's going retailers because to And it expect I entire be rates QX to basis. people is but what point going rates are that to be on only home. continue live and see about and modified category and this QX. seen beyond engagement days walk will or that QX we third to think to network we've that week. we they've we second assumption expect a be argue half expect and while few

tell, So, get to assumption the will math kind what that we But And us it the the made [indiscernible] to in we the for like be time that's about going on or exactly challenging. books really we're the world. [indiscernible] going that's of in what what's trying to that guidance.

helps that well? you hopefully So,

Yes, you. thank

our take America. from go ahead. William now Reuter We'll from next of Please question Bank

me. Hi, great from numbers. Two questions

for cash regard I the period. I year flow two better. million targets gotten and guess know that to going to in over better $XXX with you a what and leverage at is doing to your plans guess, go leverage are what hard cash are be point? this as continues lower first of result your of plans terms The a you're have

real partnered I'd think this I well and Randy issue. on

start And if come was completely are hand so, -- we I prefer there agreement. and it areas This in to one where we over it the is think of Randy. I'll call, would sort we Then up. the of

that and shareholder to this I with spend it our is we And some active going if out company I where were I'm than if and type think we at taxes company the entire our I of to having people did the with And own more money up very think shareholders. a And years if time personal Bonney it to going honest. visit moment to what's a deal, I we're really pretty and happy that I leverage. be talked us you in election rate understanding leverage or gives the ago. corporate of sort definitely tax special prepared results felt a think base. we on who that crazy, neutral have to lot given rates say of And relatively were options. lot to accretive to probably two income but a but think the and matters about tax haven’t much at our happening Nothing this it's pretty which look want we we

EPS it's leverage actually where and accretive. hardly is So, a and doing we're deal one this line fairly the is moving on

So, think I we that. feel good about

just hard, we're that lot place a on sort looking and of time how the we and evolving place really think I the of board there. spending market hemp Kansas with

I I are to of a what our for projections to commitment us. think to think I that. an do times. we're we the be if But we And but had shareholders that. expect something look absolutely and been our really I sort year-end, like XXXX this friendly continues year end down talking, or think And be X.X at to we to mean like think like happened did to do Randy, good. in I numbers I interest X.X not for have life shareholder goods you has internally at ask intent

point So, at we're flexibility, are way in quickly. committed not we committed and sort we this business. you to to But invest lot of rush feeling any it? to we are capture Did friendly got the shareholder act a since any of

Great.

about talking enough we're here. But

That's I'll thanks very lot, on. helpful, a pass it

from Research. Cleveland We'll ahead. take Bosshard next question our now Eric from go Please

Good morning.

Hi, Eric.

color. business, On curious little a more I'm the for Bonnie just bit

in XX somewhat life last years in the adjacencies really but trying you things For anything aggressive different different have about been never goods. done

And especially the interested changed of the curious if And the relative in sort to in something's business. that have can opportunity this I'm that on Christmas. dynamics so, there you're of runway to money bigger that business, in thinking make the in in that you

get to the how Just want goods changed the you in of business? thinking what sort to get life to

I anything Alright think don’t actually. well, if

again that. I stuff been like and that. call goods, think trying plans I in we've success life a Miracle-Gro And modest it

a some than business which time. sort we that’s don’t growth faster we project focus think the insured. that a five businesses was as stuff X. at the X grow that been core we've beneficial I businesses that. that to thought better to multiple wanted lots And But crazy were think were herbs did look view And not that particularly years grow at winds we it's businesses business Remember and a I beyond number change we've if is that veggies had X to took, whoever higher of X. and could XX approach that's look rate. think that at could and that on not I looking doing of a we us. I than this we but the And And we sell It ago. that to now clearly at time, whole know for long-term lot of of believe

Farmers [ph] And as really as up and of exactly discussions have access them lets to opportunity there go We've I he When over hooked very upgrade AFC with why Coop that. in with. We about Wyoming at management Sutter And the the Bonnie we level AFC sort access, percent reason were so were it sort of their with could that's Was other far we to $X.XX Alabama teams. like think them. encouraging begin with with other opportunities and better. Mike go.

what we were Wyoming could I think And you if better. was business crystallized, it I half hour, would be lot that and be within we and saw the but said been of think think minority looked as I around because a partner. has of within that's of with Randy them, kind sort kind a processes of understood

refit lot you a think of Think that might I he's done those. that.

would go we comfortable back of out. was it But of over have more at So, XX/XX but an think a enough sort big increases with. XX% that more Sutter we to quickly. so at I go to become efforts. versus which average you actually at and up but they -- as write and with remember the business, think the business we're of before, And big this this the kind We here look wanted years happily the there, earnings past is clear to we to know had three it's to write That I super us same you look very place today buy ended profitability that and of when

so a businesses. been than And a to if haven’t I going attractive core today waive interest continue to not guess to our license. we enough. that it Growth more you business. exceed much So, in as business this want clear was. be gardening our consumer rates are And we

buying that those dollars done a an spending like So, clearly business. the we've feel edible Hawthorne integrating or exclusive and like veggie, pieces. nice like two side those goods was our on we they've consumer, areas don’t decision. franchise. really view all in the And Hawthrone been We're job building The as

the not say investing but look heard would kind and of in fair I to very business. You've have of to with board board continue that continuing encouraging for opportunities is the of pricing

is I regard senate taxation shareholder near Its its rest committee you I at And focus And our this look Mike Chris Hawthorne think think the job of my that. I what lease our continued investment of long in sort in shareholder the of I facility of kind at with think but the board. sister of based think term. run on twin the on the And and evaluate continue the those on my something to to for sort of result opportunity and really if the positive and reaction. friendly and and of and election very advocate from and we read that, investment spend we're of Randy in leverage we things would finance by and So, to in term. them that my or continued Randy lots deals pleased and say group the played. is life I where and goods, friendly

we've part. much but to entrusted even optimistic they going better, feeling forward to top was really and us is It's going really and say. say there want a them team four I working been I for enjoyed to with make good You project been for just were where But so. notch I things last that The years.

class you in our below and we Look, basis. about margins U.S. it making life relative on license profit see the on in it's goods, I corporate they're just selling our but wondering below more why might quickie And talk Brought what redundant. color, still what average. we burning our changed or guys a approach. was that but with board look get unit, business Randy a at

that of have good I year rate average been just this profitability So, bring rig. that corporate our XXXX profitability And is optimism have that kind you're as we the like we higher a there's a think maintain beneficiary in on a going now well. casual. changes actually does of to we're record if that But making quite

we is if get average. higher too a year, price much And So, and on another the on would then it board at based that think sector, that right. point, it's to year have here is I we're we and fair paying three

the us tell didn’t like I So, right said you time now.

good, very Okay, you. thank

You're welcome.

go Please Jon take from We'll William Blair. next now Andersen our question ahead. from

Hey everybody. good morning,

Hey.

keeps backward from at just pricing that And customers. or my how bit would actually. buy mentioned of there And you or guess respect of in with extent and XXXX. major XXXX? one pricing what that of play truly a I retail just promoted some little your you my impact talk or Thanks. more were I competitive answered to about you you you Means questions down. been retailers interest, that dynamic benefit thing Jim kind channel that with and what at Most retail in expect of Could phenomenon. you retail, have out up kind expect know

answer. risk question a in footprint was that of of a the their like like how and associates. kind own the think loaded customers good COVID the anybody when And some worried with season. really going large Actually cut. I format of nobody get they're of me head We've You're during the of full peak things a want differentiality our of was it's to of larger top that about trouble the the talked That sick. I'd to sand and get in it to actually lot

think was criticism saw we're got a based what relatively you afraid. Cosco and if smaller lot who happened was less head their on bringing of relatively less really I stores. of or there our so, into Because format And their down people supply -- the retailers, cost

Boku I with friend so low think sort just in a down you of the early tier and And next season risk. our [indiscernible] game saw share

I think think conversations that consider great lot once I have I since June saw happened, you we with sort of then a ones guys friends. of

well on market work advantage next to to sort work along of is innovative of just reaching of those to at drive actually retailers goes the smaller with second So of look really credit marketing those place. season, that the And to teams you market. take lot a really pretty half of they sales business. But who start of sort the it our sort and was deeper to if and

look to going their of and to deserve And so, credit a they're depend lot share. they

we roughly out with of consumer business. $XXX sort million of In threw addition, half sort the and sales and of between one poor number

world, to the think people stuff buy where nobody that lot a products stuff again. I consumer doing a out, and want lost wants to in that's do

they've loss you're therefore, less we our and process. sort you're also I But investing drive see of people actually a want to worked job The marketplace done small head really going and think nice of to And I much very thing. is in and in se try I as And that So, place. retailers see year. customers, to And everybody schedule think I you're they been a right us. of on Walmart, this say market customers, there working now be active that the this that saying well fantastic job out seeing sort for promotional down to got manufacturing large it's Since of the going did to mention think pretty are is whole heavily. stock a fear inside in the it. per

but they a compliment have they been and our while too other in it's were. like they deserve Just leading said this were retailers since space a because we

especially of the pricing, big of promotion, get event. XX% Black I probably the get because one around where lack will because Friday sort pricing the promotion is relative I this but you of wants lack think think most last I high. need benefit area if a we is of little to mean, got of of view our that into heavy year of be retailers Now these retailers bit

a unit advantage that basis relatively almost miss Black we've sort level. with And I plan, is raising I XX%. of valuable they're intensive mean our we the our much have XX% all generally can a it Black these and think promotional. question think and more in But A learnt that of you I whether talk me data is heard lot. have to says our think a doesn’t it. that sensitive the the of deals be of should I lot about quarterly point you marketing just it. on do prices a whole we But what consumers taking couldn’t but approach how were Friday, Friday's guys

All of couple like a its weekends. going of to

but the their with sort store. the this our with so, retailer but benefits of issues costs less and retailers we're significantly walking I safety our dealt And hygiene in they benefit than up think were through was as

pricing to lot of we But spent mean this what does in just of of loss money conversation a trying selling think does space. as was And is that mulch just open. forward lot a does as promotion so, stay I go I to And mean do think of an and what in real it's operations that this this worthy make the sense. in space, their example,

as lot of And of much discussions issue. I personal do is Mike understand think there this. are to with to of his those work So, well. I've on a are senior and some with on who lot had I of friend still think very this management engaged very people a team us And trying

in from So, don’t I get election really 'XX. But really know get those, other in it's And easier I let's that here which 'XX fundamental. not world remember anybody I again, don’t products if remember, all think at steal give where bit results. the a into we each the they of the back look lessons learnt are same like share hope an away,

thinking last pricing you give if reflect they've does what reason I'll 'XX, on it over think But Josh, mean. pricing, to 'XX do years of do corners electric means call Hey there's really the catch kind us a just it on year just what on few craft and think But done. going the is and and here that go so same at perspective we're I old we till to a are to up. you low wonder here, arm on for year next the about you after. of lot [indiscernible] you back always if the at I all there take a

want you we into saw basis about XX price points. our be If XXXX, would

back spinning promotional we So it because and money to did that exit media higher be some to like turned out pull against marketing. We had retailers.

the pricing just higher take pricing, at line the well. than to be So, basis actual we're business. products But mix to the you sold that especially to to is back let's points get and but that's XX end drop in up going there best bottom good

we of realize end get basis. able we just over year enabling X% were to to to close So, the sales how have

We too try a long-term But and we Again into on certainly and the XXXX, try XX basis to how bit we're summer points. we I I every unfold. year about think little the going the not making So, to that of and feel but flex company take reasonable. far basis get play that's sure depending about pricing not can in down or year. up almost our want quantify pricing to ahead [indiscernible] that's things up

for a of is of more book volume that's margin investments is couple keep the that months. gross to 'XX has points over and There broadly. just costs commodity as So, labor which months think XX and up started the cost we increase and That with about to seeing interest cover little sort when are basis bit how we're going some last to about we well. pressure distribution there. Take

rates possibly as think XX continue definitely a ago to talked gross down we But in margin and pricing flag continue months we basis two closer that to versus about. the points. multiyear, quoting well. that that So, have points price And XXXX would see I

That's helpful. really

it ago very the project think cetera. consolidate team In customer aggressive from follow-up. part quick believe Showing years relationships, of one to things. over were of you share I perspective. was Hawthorne, couple I other et a strategy market And Just

in more a of eased any Are I'm off mode half. Hawthorne year wrong, changes that the we I a think maybe last if In kind [indiscernible] a should little on expect and like consumer from pricing? you U.S. do correct bit. expect in? year, we or on there me What you've

So, they're yes clearly quantify, business we and and taking what Hawthrone clearly think means to simplified high to and similar in and so that's we not to anything these all about simplified but want to going that businesses it, We structured a probably be I and deliver U.S. I again that. that we was well. year. we're my lot to expect want to now, with I lost as in pricing And to or four think to there'll and that But of you've most as our business pricing that programs made more. take from in our we Chris think a different will 'XX rebased the way, three be add as on of definitely programs. over might any addition try and and we bought year simplification to just benefits any 'XX. pricing be period But more as I much with. that, their did we're rational all about streamlining is much But don’t that thinking to we you to green don’t if got for retailers a But we're how be But deal trade we're it. large, and get business know rational. how about to new easier by

Yes, --.

No, Randy. I do, pretty I can well. cover it

[indiscernible]. We price, do trade the programs. start revising, in have combat a for taken year the significant he go lots [indiscernible] deal Thinking year. and when out easier on us said, it. can where it simplifying, the we head the understand lot for Like That’s assets rationalizing trade are Pricing Randy these those. branching. is said those retailers to to here are We now for pretty for felt we'll to with with

and out one whole be of think I take There shoulder we few to sort in on is to both this And sold really what consumer even sides, at over also done customer. today we've of That Hawthorne is a one today. thing team. side. we where around. careful know know the Luke this of There things to carries have warning idea one the a We the kind because I the within completely lot. quite something products carry us And consumer of -- is

of think goes one I the not think to the probably the a down to I built line. the have where difficult as year of takes it I And I'll kind anybody some a since we do that servicing kind back and of did demand. who infrastructure COVID it it that. We've I don’t to products do during probably do. mean having to U.S. I retailer in is not me dollars pricing. trying and sort Hawthorne to couldn’t And kind XX, consumer business. But track. bit got be not both you're you But I of them think does powerhouse. under I that This hard to lot of a your infrastructure since stores pricing we my, there so. I saw on easy business, servicing. XX got If want mean, bunch next support lot if now time. is in conversation. with better you're than of very think some personally well little of quarter business of and fulfill to is people partner a to ago. companies paid, And why alone I you know trying make a the too because oh a accessibility that's a into eye don't of business have years did into we not everybody's of which to personal. we can to I right increase good it and couldn’t is consumer doing honest delivery we We've a we're look that And say billion where and one surprises win discussion satisfy I'm and Direct I and be would a I view know? because so

So, ago. were we I thinking was when XX then really back years

that So, winter expenditure it's of because and capability. season, build levels, and to great the a is we supply some that felt next and capital chain not next

Yes, little a a is in this personally, conversation. I to year. this bit of this took really stuff mean, this quadroon regard Mike

as side improvements and this with And what time company national been my for great, supply budgeting could real system I so difficult how was keeping about Randy's side think pretty significant tell trying with let Randy, involve functional, during it's and it. think make the to me to had on was we have I a emergency chain. our that us. you, up the really the And to view we entirely And while budgeting some of a issue I mean, us going were I think numbers

to being And was a of or budgeting it it what the that as growth not a bothered is ourselves, this lot it inability is was saying that end deliver. can't with viewed got Mike's is we us saying, here. this Board, to we view. keep the from sort so It stop people point And because our issue the sour of to And our of that credibility summer guys. unacceptable, view and towards you to up sour

a we to And a pricing where work I so build to are to that with just No, business and an we that, partner, do whatever People want some want do supplier, that have retailer. out make regards easier throw in beep -- vendor, perfect you to absolutely it to okay. business. make can we've you it don't a call got to it to if

on day, it's kind of product, products timeline And give months again, we most his point, himself are done the time, make important I'm back -- them that's stock If to all want sort and we sure just he difficult not We're that U.S. with, our let of the it. a something, when still we've chain focused improving it than Mike, of clear you And be our of in to the to last one -- the enough. out sort like need absolutely have to for deals as harder the way or how has noting somebody dedicated to to our what on XXX% I'm lot they the worth more in two more our a future. asks get me of consume been in supply for time conversation. But, building we're three of of ability inventory flat what info been deliver

things X. to be will we happen. actively to guidance we talked and it's and because on or be There and that we year building we're Hawthorne, to need numbers get about the to looks where second evaluate ahead better XX% to the not like. of half where need but not But, will meet that we And make spring the what up somewhere do we're like on XX% need to point so. be the the need to working a There in we a inventory evaluate of point November

Thanks much of appreciate Good luck. everyone I chiming in. it. all that, so for

Please next take We'll Berenberg. ahead. from Maroccia question from go our Alex

opportunity market Good medical and morning, taking catalyst Thanks states for other Jersey guys. Can you my that Arizona and base established it and to well have in New explain already? question. the user compares how

obviously, I what to a lot think, written of those obviously there's yet from know be in days. we regulation

that an New frankly think went I morning into as lot the because premature subway Jersey, to those guys you both money of with, flowing votes going under Philly I sort particularly saw those particularly New you hold little York one, on Manhattan Jersey a of border their have but Pennsylvania we'll expect the a New and tax trigger a that that guys, states that opinion I But we like New across -- responded across to cannabis that from Number long those river yet. that the easy that border as going look of that think money, the give but size, see states Jersey bucket what take well two we kind said, lottery. it's That opportunity positively. at with lot ride Jersey I with having have into and that don't the a significant there to do not also Jersey being of New for as is those saw is let see offering they're easy So our all it's if well. from think be particularly COVID

numbers, are that building the They We are [Indiscernible]. in positive think and at be that established permissive. absolute with us sales opportunity make up is there Arizona business there and there well in operations Jersey. marketplace you as should Senator that rationally good there'll think that tax again earlier be sales relationships Our way with presence New there, in slowly ground cultivators conversations a we've the us, referenced Sweeney developed will the quite we have that's in off in -- be service think and of been regulated a it's significant retailers. a but encouraging our and states a marketplace we pretty that not team there opportunities large for our already significant terms with

who both about Jersey, good the actually I it's cannabis higher going feel not that we to out Connecticut, west, its the way whoever those plays per so New Northeast in past, drive research how the northeast we Jersey positive, for potential, it but California. this is the So than think we've kind road and area exciting that extremely only market, talked and Pennsylvania, meets which the of see the consumption of New done have is was about we've relative New a just to more states, think we'll that consumers rest capita York,

you're talked So, minutes combine those similar market number you we for should when have at largest businesses, expect for or thing about to of just about need we're state a our individuals, to California. different and us states. is about $XX a it One California expect, half of we like we that or be is, states should our note it total just because California it so, talking far to by three something

the California online; California tri as northeast the grown a is that expect comes as We and in the in market state lot believe area. illicit deemphasize to of the product to serve basically, we is

state markets, fields flow kind So a the country California to the for as domestic replace for and those expect them those kind us. states business now. we their increasingly in across business of legal own have And in of

in follow we retail know environment Yes, standpoint, of how aggressive its acquisition you has current can one Because relationships? Hawthorne? the consolidation think been months the should retailers from that makes recent that industry so and about explain an I on a in impact And up, sense. then as

retailer That the larger the Northern been ago have I industry I a is There's that -- a assume they for that pretty were they've advisors the customer. think Miracle-Gro they aggressive is is aggressive D&A good retail They sure. they continue [Indiscernible] And of expect They've consolidation, referencing chains grow. probably California, working definitely Depot to customer. of our with retailers And as even consistently them. in retail the brought that's former one forborne country. large chain Home retail them to generation, announced Scotts out [Indiscernible] also aggressive fact loyal they relationship you're two it's in been a days strong and in loyal watching executives we worth and positive with the very something acquired relationship largest with California acknowledging been at

I being is. And their that too. think objective familiar it's clear it's we're what one partners with

us. So we been their good, negativity They've with a that. We've from don't great got Executive expect to any and strong Team. partner relationship a [Indiscernible]

guys. Thank Understood. you,

from JP last our from question we'll Morgan. Casella go And Carla Please take ahead.

Thank of This Clark And Sarah next see managing expect also you capital, increase morning. how an you It in. you been do apologies going that seen much do But you inventory this. for fitting so in Casella. COVID? that addressed of if to is into on days. your Carla some out working and normalizing coming good on and like Hello for us you've look looks year? How payable

one. this pick I'll Randy. it’s Sure,

the inventory. where So shipped in were finished At manufacture we more mentioned the door. like business September out or depending remarks, could I'd we less about buy $XXX the talking another we're have me the of was probably year. about. product scripted ‘XX, product, inventory working It But, on our being capital, let things start we would had ideally, of versus million of with end

up our will of trying don't high, demand be that it's trying so year, a fourth to even get consumer be inventory factors in will QX, we many trying quarter what cash year. at we continue this things fourth like looks for things lot the far even need to And well. we'll can and how looking things. hope end QX get you We be I little it finish the if go into when expect some to as SG&A were so ahead quarters QX But, the to a now, at and And are look And ahead to in working what looks would as to be QX, the when free gas. meet of flow well typically from And good, keep and be because expect the QX because as third and to an have in year. build a what we'll going rollout the of you point and drag half bit. of we'll that as that quarter to just we're whether forecast like like you there been still But higher, of phased decide spring against those flexibility need to like inflection sales projects to accurately said, months and put on of a to payables receivables point up is that, really that would and that how for of were since back and that lot we think we So more we work, out additional think we what capital than do but were next too. I could demand on foot depend things investing. we'll an be there's as SG&A XX now the and about like a even trying keep demand at I significantly there, lot build our internally, next higher do

So if have things slow of we need flexibility. to we all the down,

interesting answer that's just your we're to there's because to perfectly, now. so So much going But the uncertainty be it's thinking right question way about.

Yes Thank extremely that was question. our And then you. helpful. last

third about versus talked that's And now? congrats M&A. also now. seen quarter. and on you the Thank a change for bit How valuations little have pre-COVID you, You

Sarah. Sure

was the ago. on four the from paying the buy years multiple, deal On we're pre-negotiated side, M&A

there times that and so current based EBITDA trailing change through years marketplace. X on not it's -- lot a would going on So

in or things pursuing we're deals it's But the now, the still early; cash I are world the based what's the that, looking about COVID. of we downward we're next use few upward probably deal, think be necessarily a that lot. hasn't after tuned. don't changed now. quarter the after will the we the to quarter stay talk there say on it Bonnie very the the in at things right that, For comes quarter or there right But commit can’t in there so that when other to I happening around beyond would that whole And pipeline a driven

Great, thanks.

our And And closing call session. King to question-and-answer remarks. does conclude that would I over like Jim back additional the turn any to for or

you. Thank

me follow results up XXX-XXX-XXXX. For those additional you my who we call people to Right now, at QX have directly, want be reach tentatively for XX. on released you can are if January office to scheduled

and of plans then and great active Thanks participating we We you for kind it between have day. there. so talk no everybody to today hope on calendar have put now and to your IR

conclude does that for And participation. today's Thank you your call.

You disconnect. may now