The Scotts Miracle-Gro Company (SMG) 5 May 212021 Q2 Earnings call transcript

Good day, and welcome to The Scotts Miracle-Gro Company's Second Quarter Earnings Conference Call.

As a reminder today's conference is being recorded. At this time, I would like to turn the conference over to Jim King, please go ahead. Please go ahead.

Good morning, everyone. I'd quarter welcome earnings and Scotts to King, second Mircle-Gro’s conference Jim like you to the I'm call.

as bit Financial again Joining to of as Chairman after me up gaps. me Mike Hawthorn. call Cory Lukemire; Cory Chief President Hagedorn, Operating virtual held In up and William our our Miller; many with Officer, of time CEO, Blair Jim and some and this Hagedorn; our in Officer, event. to time morning Q&A Chief well fill we some as call housekeeping, is Group President directly will Chris participating the Interim time, early at to quick in your a scheduled who will once Conference we'll open then to set A can. prepared set remarks questions. June, the wants and in I've moment, In you work of the (XXX) be and one Jim quickly can you and already which Cory will be we interest question to Growth XXX-XXXX the one time of call keep some to I Anyone and ask share a we'll follow-up. as as Stock and the

We'll everyone As opportunity coming I everyone to business out make many that, a always, expect Web this filed call, range materially our to on move are from say, remind statements, full today's results our the is of more to recorded should which used on want is could let's and that of actual so differ published I on as started. an that, form and the being version familiarize securities risk related weeks filed in and With the date commission. state K, factors could let’s want you exchange that themselves with and month those details our of advance. today's that With our in an of XX couple the time the of May. what of know, caution site. impact event also investors we to forward-looking event to update be of to results the community of as publish historically, we've will critical get the the archived investment the call call we

turn call Jim. the And to I'll Hagedorn. so Jim over

this weeks don't Jim morning, Thanks, and I'm our morning. themes shared need for I rest only good pretty outlook team. that analyst a ago, repeat to minutes and a to the the heard few of going a meeting everyone. from speak during key comprehensive few We day the day you

environment. again. to on that's swell. the year's as the raise thing to take recent are and great giving distance peak begun helping last our competition. control, our only once ever to day April, half talked the in first morning's about this record our and sales be year to the sales the the announcement remains continues negative swing Hawthorne, put we we're to US news trends and business, and extremely posted highly results. The XX% the enter this and as throughout consumer beyond roughly enter been more garden our segment, encouraging Hawthorne for four weeks in cost continuing and the between seeing May related we we from we've our seen season. business The us analyst Here's guidance force lawn driving build comp just to and biggest week POS continues a saw has full up retailers is issues about we record and remain during from and another innovation month main to momentum our in this us we is as away the confidence optimism call; supportive we strong At In consumers weeks against of

in Just to like about inflation continue every other company that commodities. most following, are of significant navigate you we

want just I and then each of actually there talk to minutes. my to begin few the businesses a transition about remarks So for

You'll implementing fiscal hear we're in in address price business action our from we're high the margins our we're more quarter, that mid And expected. downward pressure Cory Effective on digit release, into in taking took as our increase aggressive than that similar you will increase a US at saw XXXX. to seeing fourth to we consumer single press We a Hawthorne. carry it.

increases so, or Usually, in a of XX material us we're we planned. more to are it's nurturing increases materially a costs locations all I'm every but proficient process business, and higher, the higher at this to few price level technically instead ensure all, not I at change allowed consumer said, continue a impact implementing levels years selling at and has invest allowed to of to like this raw marketing, Hawthorne, prefer innovate, we're our at had like about the and us organization. increase elasticity I more create don't it's not That the we're points. buying just people in to steady on level, a that. in now worried is than Distribution us Over has Hawthorne an XXX the we've basis cost right That summer. order too. taken our small years. at I'll allowed than price But pricing say past less and volume. it's pricing in

and in leader should be in need maintain structure keep of like we're So advantages. real business our that to to business resilient we industry to have remarkably We're differentiated an need to what competitive businesses We're behave. categories. to going we the healthy behave do to fortunate the tools clearly with two fortunate protect to order margin the

we these as price our business. disruption along the pass increases to value products, committed no delivering consumer I our ago. who pivot and able US us little we as a remain giving the be revised we'll for to just continue our with let's business long expectations, So to exceed people believe to is With to to because use upside we about month guidance talk own potential our which to the that,

During last we X% US our to our Analyst XX% range the growth. a year's after sales guidance of for X% business consumer moved Day meeting, to

it's However, as already estimate consumers was too beginning to look like behaving now, exactly they if Right would. told conservative. almost us that are they

they of back. consumers enter the category be last told would Going who year us into season XX% the

of the POS after million last with week Day kept our we of when top XX% our The POS would ever event, higher even at level in impact More up did our full so was retail their April the comp first Northeast a of they prior. On four difficult Midwest consumers $XXX a importantly, homes two even basis, thirds year. of week Analyst extremely and and late gauge an them, the they the of last the partners. that an than in month week week about blast winter in factoring month, weather in posted

As of last year, gardening activity to our XX%. saw consumer Entering up we continues roughly purchases are way. lead soils the May,

up seed year in date entering with May. we our retailer. third is year was XX% more Entering every double as May, business of region is the fertilizer major country straight to grass digit from seed long This the Controlled we grass benefit XX%. than team. and digit of in Our XX% double up R&D approximately tremendous to remain the of every products efforts up up continue lawns’ are growth

front June. all year is we up see us the this so some back gains. We're of we some expectations. of critical volume a POS numbers have on we're retail expect year still and resetting but not business that the But sales consumer against full are reset year provide the again to continue most engagement Because and our we business. of for expecting our us, that balance simply in the a upside as channels. may in give is to an we comp this continues better and going than retail first in basis. engagement level know, additional number May as of we morning, you is early But We outperform to confidence of Hawthorne of will the again of high morning to update of much the the half a level is all Remember, the though, were tough giving

marked quarter up now straight is fifth in on fiscal business XX% reported The growth. second sales which basis. the The XX% Hawthorne year-to-date at a least

in We see lighting continue a to strong minutes. will all growth in categories, North few America. Hawthorne the details cover especially in Cory

business on way want the the the operating now. they're However, I right team to do commend

Our innovation and commitment a as is distinct competitive manifesting itself selling XXX our advantage. process to

We the standard. competition are growth from to continuing distance driving only set industry the and but not ourselves

see confident this Hawthorne growers advantage the to as share in closely is it see our quantify While working market clear competitors. continuing space. retailers this we're and we're outpacing difficult in leader Hydro of the with space, are commercial us to clear

shared viewed not to you the month, to go encourage you've our Web them. and site If watch IR we presentations I'd last

how why geographies. Hawthorne all quickly so in You'll continues and The growth business is this understand performing well. at

compared quarter. XX% we seven saw to where second growth market, XXX% year's Michigan And largest in the up triple California, last grew was XX%. Our quarter. the in digit business states, rose Oklahoma, including

on for aspects now, to remember strategy tremendous that, just optimistic clearly, building growth. reform time. including see growth markets the addition create several great at not there team the cover in our we and know momentum the shareholders the M&A the won't pipeline been financials. drive cultivation over right business, more potential to years have go team have administration is but has Whether simply the convinced being right let either ahead, eight at capture business saying wings In anything Consumer And for the with or success two more And Hawthorne this advantages I'm level space. but or since current I'm to know or right US on The three We With of cannabis can't our got want cylinders. it months, in our about remain see marketplace, The the allowed further solidify markets granted. turn of in I to first a now. more down. taking that. states, is opportunity it. financial existing continue to that we'll not not, lots to in we firing expanded we're are for out I our competitive Cory our the the years this I strong. open the see we out November, all this flexibility. leadership We'll I've spread to know we do place to opportunities this and their past me and have state future. federal and into we convinced for lap. and We've slowing our All Whether fall

and Analyst on I top quarter I role. line my Jim, in numbers And am quarter I've a fortune of update time Obviously, again another the new our spoken once businesses. I've had everyone. this hello, strong joked the up remarks Thanks, continues I good and on every to during calling strong again reporting publicly position that the focus here our Day to on took nearly positive this news guidance. growth both in since

we However, than to pressure we're starting see margin more a bit expected.

our continue with that wide quarter halfway said, Jim me in up we quarter. XX% year of sales up up this Consumer at XX% likely the but the year-to-date. The will level Company is the discussion and of said start XX% those US we'd in up expectations. be begin the through were but year QX and to exceeding As the to get quarter year-to-date. were XX% the ahead and the a We was business at out. then bit margin I'll in in point, sales full that is start guidance let

percentage retailers of quarter segment, at POS normally season, overall continued the growth growth year-over-year which the benefit spend don't Canadian is We start as the the our from rate building on business. of the to time though in the well. Other We inventory primarily matched

year-to-date. XX% was in XX% and business quarter up that the However,

to the the very not much stay So quarter as was the the The retailers profitability in as we well. their line million. with continue season. segment are of Canada falling ahead much story levels that the US. line. engaged, are than highly the of segment. in throughout potential and the growth April. is dramatically demand upside of The really Other year is bottom consumer more We're investing recently this for It's revised worth is Back consumer is demand. more pretty the inventory worth $XX so up increasing in in business, US Retailers cleanly noting to strong guidance orders in said, the after the numbers our to the place to to they expect we to continue the Jim posted that aggressively seeing upside balance

Given guidance. we to us case in we want release. March not adjustments to Hawthorne. comps the more any That's you we XX% the in press May, tough before close helped make record obviously the a have We had POS have the clarity in the with growth sales post to our saw quarter, which month

year XX% confidence to full US raise XX% lighting a than XX%, April, growth and nutrients. to Though XXX%. gave our products and than into quarter, and was by sales led which to range on us in growing well, again of as another growth momentum of the That's nearly the strong During start more more us XX% basis. a up sales improved Consumables increased guidance carried media XX% were gives record strongly Hawthorne month by to QX. what in growing environment a

being, make in guidance. when status the update For not adjust we EPS US. We'll adjustment company-wide of US another did the our we time Consumer June segment. likely

getting As Hawthorne. said, expected, we is margin more upside of we're we're from Jim seeing offsetting which pressure than much the downward

points rate on year On XXX higher Hawthorne the year. was we basis, on in fact, margin with a gross down wide of an on impact gross rate basis having business an compared more XX.X% the is through the March quarter the our lower than into In XX.X%. Company earlier. were margins to of rate margin coming planned XX.X% a basis growth adjusted the year-to-date

is mix the and volume is on higher rate is that in fixed pressure considerable has The more a commodity our margin through XXX QX, costs. chain. year on than rate the benefit running pressure cost to the factor XXX a offsetting which basis to now basis. likely segment decline, This big issue Hawthorne biggest gross expect the we of in full decline been While been the a distribution why points we've is to leverage is supply continue

As we've increase price been position Jim and us and as These significant in with we in year US increases we'll our to put begin aggressive already later will us should better Hawthorne, help a as in said, pricing the our in business obviously take develop Consumer price our continued well. decisions and then fiscal entered segment to increase took 'XX. business in worth we as our 'XX It's US Consumer noting a plans But more in take for fiscal to an climb, fiscal through that 'XX. negotiating prices effect we August aggressive after planned commodity run even posture. a

to expect. leader the to the responsibility retail invest industry would in business and continue engagement. innovate way in make and As to embraced invest this a our to efforts in allows takes our continue investments, margin to those partners we marketing decision us It consumer that category, the in drive to

higher and Let's P&L pay. and The our well compensation to with effect increase I reverse benefit our are year-over-year when of now, based to still combined projects want note be a X%. SG&A to a which right decline however, move pay will as months. the on quarter of as marketing for which accruals or was and of year to The XX% media in variable $XX not begin in guidance full first we six in SG&A, up stock is to also the that lower more. higher should changing planned X% million XX% due costs, through variable QX,

into I the to not off but the of want to we SG&A We as not go P&L future There's help of US of to use Consumer the However, current years the Q&A. brands. further potential our investments if it business, materializes in to rest as the those our we and to drive that between in upside so strengthen some news with line, it invest you year, in consumers to begin the lot and well. bottom expect likely a look us cover to business see as at relationship pay continue in through unless would we're won't

million Our or This per share $X.XX exclude year are or items and to share. guidance basis were and our $X.XX million non-GAAP earlier. restructuring, adjusted nonrecurring impairment of per which compares $XXX.X a earnings, $XXX.X the

for I earnings is we're which in would full than $X just mark leaving per As of that place share. EPS range doubling year range adjusted now, two a to in The end a high a of more said, our $X.XX of guidance year period. time our

to quickly quarter Moving the times ratio with EBITDA. debt of balance We the finished to a sheet. leverage X.X

right while also in are returning opportunities cash now, pipeline we shareholders. you investments a we quite month, want CapEx As we more there but have the and to make increasing capacity M&A told than last to our enough the few

to you raise and debt ahead, some turn at may see term in to Looking capital rates. long again market lock current bond us once the the

this will a if term the higher While short effect, these the run have money horizon long higher may rates on locking we assume in beneficial at in do. be believe dilutive we are you as rates

Finally, you that of investment you'll the year CapEx majority to our $XXX Historically, last true and million that again the of I expect running notice second year, with year. month. investment the in Jim to million discussed $XXX behind comes is every half we which be the this would CapEx

I guidance which I'll as track of we So flow operating in keeps minus with few our cash what cash moments Jim ago. us flow, define a on approximately $XXX couldn't deliver that to said free agree close revised million by more saying CapEx.

position planning my in opportunity operating are as I XXXX. better we as for With even the is well putting fiscal year and control, the the I'm guidance. commodity during I've here. which great company believe as see prices, XX process tenure we're do confident seen in beyond our to our exception of the a business begin the extremely

for to things back your up So questions. with open operator, we'll the turn the and call that, I'll

Andersen from our Blair. William first take Jon with question We'll Instructions] [Operator

to wanted first I Hawthorne. start about

think is I out, consecutive quarter the pointed growth of XX%. Jim fifth this above

outlook of you've about talked You expectation now been now. kind taking what couple times as of has previously your for a the some exceeding time. long term quite growth And a

You good that go will probably the to next Hawthorne seem next years. XX XX to for meaningful online portend would have months, live which the the over several also over which states in the new prepared a come comments November, since mentioned more in things way

the we Hawthorne of why out recently business? So you've sustainable growth rate three at years? how more to putting continue are see that you about been next couldn't two of the thinking up to growth the over And that kind

Well, I do.

just a talking which don't see think is when time happened. for followed XX a couldn't you're those we why why I said XX% a have Speakers], sort one got on I I But a that of I of made on, I people I was whispering who thing long for said, while, Cory's of Now growth kind think sustain it's if and the remember, then -- it like by [Multiple guys the business, of mistake this us I was bunch committing rates. to you one time hooey. crushed sort like then And for

where actually up we the I put the to and so which sort the we you, that my live -- and while pricing really number and actually getting is point -- Chris X% a can to advantages, remind a our Hawthorne point and it, serious honest. the pleased the view, building our been we're couple of How was along goods, where pick think into Consumer American live partners. of to my of of of to the with in to X% I you rate become sustainability but Hawthorne any with we core XX%. that committing to true. due that Mike back guys competitive looking I is business that's kind the that everybody that push this a all growth, sort that to I these asked business X going be at that hate growth so word weeks think just the at ago. really to to I'm and described as said think kind here path of, these vendor, of at I of of our fair and go you to you think are Xx this there's think, time, if be at not perfect but creating like resistance agree I we a The looked we And of and I his business and years, And we I to of say here that and the with into North so business actually due five lot a try think real have team work -- work of we're question vendor, Chris, I far said sort good value -- we to goods

but we chain, think I But business exceeds Cory think of. to Cory I have building out, would Cory, that the a bringing -- the I Speakers] he So comfortable proud want question. ahead. saying. probably kind is really [Multiple number if don't to a I lines really some answers good sort view. selling, to example innovation lighting ways technical what we the of if to wants should additional has of Chris business, product it with carrying. ought think throw know of we we something. innovation, Maybe if be I to But are a think which all still that don't the at point I go we Supply that go. be business, look be think I me you of say

to to add April, just on buildings as month facilities of and larger new our a output, I'll of into we've we've well. the our two new opened during transitioned increase And facility that, that

have going the than out the forward more to we ship in our to growth supply trying us future. chain the to And up allow in we're past. So ramp we see product

record great April or prepared quarter end a comments month. March said, and As to the was a the -- was a way quarter record

looking our going facility record that month increase, each we're have we So time allow to to this like forward. and out a another shipments open

is… growth the So

look that. at there's ways to Yes, two

just supply Mike a of I do we're maybe a chain say, of of a sort settling of But was thinking footprint stressful. a sort And generation on three it two need just finding probably business grows. and bigger And generation working. because again. think Jon, not like this think would mistake, as I mistake, that's think, I that of sort We it's leaving facility sales lot on we're we're bit not the out in to down a table. was

continue So keeping you I to honest. on know, think, of we said, to, are goes Mike, chain time to But lot supply would I from And don't what credit chain we a you businesses, be good if both say? of vendor delivery people for I a up. a kind in supply think full. on

were we I’d say getting better.

you would us? how But grade

I'd us B minus. a probably give

I that facility we sales, it's leaving deliver. while up sales true think open pick on couldn't in and part up So because we Cory what table we a were when think I says, we the

more a having part is system I actually that out to of part and is don't anything door. growth getting at is Chris, it in? want throw So of fulfillment successful the know, you it product

it. I Yes, a that you levels, not I satisfied and level of at a service hit personally do our with. Luke covered frankly, Cory guys I'm on -- think are think lot have

I the agree. retailers they'd right think unfortunately, we of call and some now I have probably our suspect, on listening

give putting and than the better standard hold a and be good chain. sort lot competition can if into ourselves Now as of a as of to slap unfettered thought resources thoughts, able commit to we Jim, my we I'd pretty improving that I were still effort supply number on and Like rapidly Cory to. We're being not improving for. would our probably me that

the from But to not going the I'm do extremely of going that. bullish I'm about to hesitate business. I'm So -- outlook

we about bottleneck, will year. in fiscal be to service extremely and improve forward are continue closing for some some pipeline we key that the I'm should moving think brand this our our fill biggest product that gaps which think us within that I portfolio We've excited I got levels, frankly. M&A

about excited really business. I'm So this

working And hard I get around improve we've again, to it. That's of and our But of continue own been think can and a competitiveness think get we competitors. around we've, our to think strength underestimate we're in to I to way that. worst we're own and extent, I not the that. working enemy large standing been our to kind hard

Just a quick Have US digit? do already priced similar them to you expect in to follow? high follow-up single you Hawthorne? mid at leader, for And commentary. described to you as on Consumer, levels what it follow the have the pricing competition Is seen you or

already it's We've so pricing, seen about we month for a our taken volume. on any now, in market haven't impact been

the it's been picking On up. contrary,

more and that than very of portfolio. take allows should can. competitors we man, really one leave kind saying, much areas we you're like the sort in leverage a breadth pricing precise categories this have have and we and can So something our that's the And we from think more us certain of untouched way taken pricing perspective, our areas we the chance. is of to of It

suit lag As to suit, a from we will closely. be is we'll do see we Typically, month of expect major competitors very it follow do. or competitors in follow what we've most to seen that our us two

I any kind that yet time the seen the market believe just where frame hit we'd of we've [Technical it expect but we're don't to So Difficulty]… to getting be

We're taking Truist our Chappell next Securities. from question Bill with

by had I of the pricing. happen Xth. think for and said pricing Consumer the US to the more August July guess going the season I it's and largely the first done with timing July, on kind you question guess, I of business,

or Or sales that fully you're lower maybe you're that see next something understand, to and this it promotions so sales? year hedged for May June and action impact of you need something will you could most is sooner just trying your for in Just take already year? trying like terms that, to

honest. I you're be are sensitive I lower margins don't now, think going to retailers see to to think do right promotions.

some I seeing of talking The I is to as months But field for all we've on summer increase the [Technical sort Difficulty] for pricing place in something any the don't and product think themselves. any action build. that about think pressure lines. they're the seen the been our over now we've changes promotion at

that are their I think Mike headed think, aware forward pulling to actions retailers, pricing. I all way. of our asked I the are consider

looked -- pricing. do that I big other a the we while didn't here people maybe a don't level this XX I understand in been kind historically number It's we think a of really that. It's he sort I want past I in here. that why. think us. think we've the years have have time in with of of choice to ever my time one pretty to have at seen relative what

Mike, when attitudes and mean said, typical the to go out I've that. hedging think, And position we retailers think to have of have been people's depending I'm the But become I us on we're that hedged. who we're of see we he's of see to some I add? limited largely given, the like pretty think, had we I the for take watering now, regard front, Mike's okay the for that benefit do happening to more pretty end it been and I where But anything again. it's you summer, of not still sort Mike, want relaxed with but on doesn't commodities, exposed, could seeing. with has on what the to toward with we're hedging, to follows I discussions think I In want we've everybody think eye it increases

number and taken what to shape and route. chose on up, an produce. August had for that good pretty the we we've to We're in retailers we I think I left with think go agreement No, have we pricing

like at If higher of is in any causing the you're some little costs level, higher in -- we so certain categories, are earlier. are are seeing coming overselling the bit that buying in that a plant you're a pressure soils

between looked that's that and net we money to So facing. just at that would that. pressure But and there we're the August me, with the gap we wasn't May out much

to August. chose we stay with So

at what year the And was elected be were as happening pricing a people pretty retailers of clear, position during any I result of that think and to I think, to going And of in to were, that add, knowing that, kind take thing not aware we was pricing much another to all very is COVID a year so taking not we year. required. are benign significant regard just last last kind

of well. as up this part So is catch

about think here. two of years’ pricing it worth as Yes,

And recovery are pricing half. companies the I the I'm to I guess in of that, understand so get second many what CPG taking is saying

You're your fiscal kind taking it of quarter. fourth in

more So this that 'XX. really is -- make for a of fiscal difference… much the a recovery prices about I because you're [Multiple Speakers] that mean today talking the Is of right

sets like, I segment running that up once, Miracle-Gro answer at time, the Again, like like Yes, leader, was I It's showed right when we think yes. I is, think was simple. I a so the I and maybe retailers took retail it's pricing and the to level pandemonium, take just season, the mid season. to but a that. in it to pricing But I off do disruptive this of business pretty think in ton resistance

trouble it's is So worth not couple weeks should they But told Mike I that to think couple forward. months a of it I pull the good going of a ago, I we cause. think made arguments

your of with Andersen's question business, to of little lot Hawthorne, on do And having lighting which just follow replacement maybe great. is lighting a different ask question from. guidance it, growth way a the Jon where from the customers. My existing is that on up you're was coming to know comfortable I without

just that you of year. lighting Some fill that last even business was couldn't stuff from

just you're a existing customers? still more Is from newer, it more customers recent of of recent So that just of mix seeing. states, kind it being driven is or replenishment kind by

I don't if you out. start, saying right. trick dude, I Listen and you're think that's And like Chris, way to -- come some -- don't is I'm But not hold friend. on. really a that I'll mind.

now, I LED. the dollars business in business XX% the think of is if I at look think you

is transformation there's business in from. major Gavita benefiting this So that largely technical occurring a gigantic. It's

innovation lot if the I clearly, with. the there's guys story. of I There may So a think think play are known state to converting. sort people you look here. But A at room play there's business, you more of major have

were around everybody what the came that to other we you're buy that to probably Porter with And now. this Business by And when of way. his told past, you'll just we're follow were And bunch you going the we because have Mike there. others looking to stuff the if the of And closely use Porter he and had stunned assemble technology at Chris right that to was he went a this money And I guys most And get very back. saying people's said, ever we -- kind team, dude, Mike happened that was world. from business came the back you School. Michael get lavatory, we here? followers, said, that all parts Harvard be the work think sell business kind I've Lukemire of up you and

for flying I'm not he says, platform investor am I LED and the the not got pipeline I view to And this. very lot think think, a said innovation really ask I've them time. long they've and and the end done, a back Porter you're I virtual the business industry. we've I like reaction, to finest strategic Christopher meeting. to important but of as is to on this so the going in how drive with a us And got going think of week at far I So the us said, meeting fixtures to going this lighting he work for caused in my the of this by -- you're proud where

people some fill this And of think and bigger. market not bunch could customers are like had old is -- just a of buying little so we lights. the new we orders a bit matter I And being a are

we anybody you here down invitation, progress meet come you show winds it's so I as innovator strategic vendor as in that with doing, of can us visit kind think what we I have COVID to who -- impressive. wants -- in much meet think can but a we have or Oregon lighting an I'm and and saying open made and we're

you So the this. or Mike answer one to deserve -- Christopher,

really across our continues online outpace every means We're replacement of I mean and Oklahoma in I lot do think like expectations. we're I really a outfitting certainly both and state that places for seeing new there's it. coming facilities you mix a good board the new newbuilds. think us, so of growth those. covered Yes, to a of lot

the month this had fact, one In actually Michigan. first outpaced past that Oklahoma was

growth but XXX% to and there those are say explosive is newbuilds. want the majority. So the I vast

a -- the for for California, are to XXXX to have mount. newbuilds fixture as Gavita That a fixture, we're of HPS we've to make continue easier said, possible. we one or Gavita for to designed it LEDs, easier swap replacement and That's directly cost be easier our going service, designed manufacture, fixture. also selling new old up, to high our line an of lot to like one lights, be particularly on heck Now still a in but still sodium our able our product is places we as customers a being that pressure innovate effective easy more

board. So the in really hard across particular seeing one growth to area. it we're It's peg

And just are LEDs business, XX% lighting business. about about are add total North I'd if think XX%. you of our our on And that America LEDs of

comes next Joe Altobello question from Raymond James. The with

as dollar structure offset you of to questions, fiscal margins. the to head on into basis you Are we cost couple do expect Just on margin for guys first pricing 'XX? your increase maintain a a had or dollar

our margins in our to looking we're make today, price look margin. sure you we've if a decline We're at structure. And margin little to maintaining seen

than Consumer a business. related wide Hawthorne The declines enterprise mix lower Some a to being margin business little segment US that's of as the the bit. grows faster margin

we're to structure. of the So within business's to maintain businesses, that price trying margin each

margin I in lower place correctly, probably here, you if see Difficulty] the 'XX pricing that's the from hedges gross sounds interpret so in [Technical and to for it coming unlikely the like? that have August, [drift] given outlook your And we're

our The to we see where this to year. we're similar cost the we think increases. plan in kind are very right plan now, We'll margins maintain additional a ballpark where continue is and if will are where continued structure through commodities there's based be right we pressure now, the of that given that looking go and they're But on to have. heading,

shift take to longer to that think you you how for X% is I could know a the if we're XXXX, term. do two business in step strong anticipate just over years US what year? a back thinking grower next business after know little the still are to and be And the Consumer. gears much XXXX but you business guys about XXXX? appears very I But I year in that very bit X% next might

Well, I backwards. never say would go

June. But had lot XXXX. I've So I about even think conversations learn retailers, to they're the we're going May with a and here in bullish

activities so bring getting they're earlier, they're marketing in. continue is to we of part longer. And in So where this want staying consumers to

expect to looking because zero. yet number out going would at I above they're I'm say would there not a I so… So all me put be to

Well, could we put the get I we virtual think a people conference be that there. think a on if negative think I year. they nauseated there did, in -- next implied But that I retrenchment

I wouldn't by So surprised be that.

we that I want be we're responsible. think to to be true, I that to no think evidence show Mike would say trying doesn't but have So

that, I think. how Joe, so know take you to And

So Mike is more aggressive this like? than sounds Jim it at point,

the Mike two been of the Lukemire. last predictor years, the for has most accurate business think, I

a barometer there. come back to he think? of properly, was you when his Mike, what he that say, trust believed and do he Mike couldn't that said times then forecast team the out Randy own think I sort accurate bunch he'd think I tell is me And most to of finance

be a had point from weather I looking recently wall It May. think weather for time me. got of to here the wet cool crappy Mike talk just and ho tends we because to I optimistic. of a at kind down trying seems I'm it's -- year to that of and of at safety gung It Xth sort like and that view lot the clock him beginning half. May, says spent my haven't way feels like we've of a just like

in conservative trying I enough talking are see to What And way. still by stock. weather I'm in about about meet Mike we're So numbers is sort really people think or chain, supply what we our to what I by we've guys outcome that here, is guys. that don't our negatives we're don't this to mean exceed before, back -- get our ability no of an there's are tired. And that we the I keep from our you you reset the telling getting are talked that this

up. a square of of so up bit as pilot corners as keep with In now lightens And long fighter I can harder And controlled, things actually we pain sort business, hurt. angular They a Difficulty]. [Technical I positiveness little think end I the think weather changes. always are Luke's

now how as inventory we for scary pretty Mike's our more do attitude not and of So at what But pretty Because I -- I and me But And view. the what the and forecasts what positive. at he's from think it's right we're good look we'll year outlooks actually seeing moment. that see to feels just think guys' overrun? we your next far I've the It's where year. of of us manufacturing talk important date June, is, our go -- or the for point next bit, sort through through just to what this conference guys at up, beginning year is a end. results kind investor moderate mostly really a the numbers about not of June Luke told we you I'm Mike that is inputting now right actually is bringing little to And trying down. at look that

consumer But will 'XX, year the and what of how we'll then takeaway in know half back and that's the -- affect the more.

down slows strong it's then at could see. happens If start So if I to positive. what 'XX in think to it's it's really look we

Eric We're Research. Bosshard next taking our with question Cleveland from

things. of couple A

for in point? the which this about on is ex segment up XX% at wanted outcome year, thinking gross should for or be 'XX given with First what the your margin 'XX of on terms clarity mix, margin to assumed line Is we 'XX, gross comment the assumed was just of in again, all, is in 'XX next recover to I understand.

our We're current with at 'XX. in currently looking line expectations for to be 'XX

-- a right? no back And point recovery the recovery so that of there's there's in Is give not 'XX. of

two to recovery the potentially at period. year come over look We

look balance pricing what's the in As 'XX. those recovery can of have commodities, we drive going are with at we the to place, of we amount have items the of happening kind that in that two

And secondly… then

throw Luke. just in it there, Let's

is No, the assuming mix same. the

same. the From a mix segment the segment is mix, assuming

difficult. That's where gets it

company? the different If you're the are think about. recover then to segment? looking I margins looking those And we may across the Yes. Hawthorne's he's Is That talking mix what for That's vary. growth. total company, overall by

the I in nobody appreciate transparency and May will what of like June. look numbers the Secondly, for sure knows

the implies range. May what implies June doing I the in of guidance in set the kind down guidance months? Am right and those POS Your terms the of math to XX% just level

Yes.

Our current digits, is kind upcoming months guidance would and say are that the of full year flattish. of kind mid-single

you question, different new I'd or the last the and the And to and new upside that which you better then love or the markets, expected markets better didn't. But the one is is know markets? than in it Hawthorne established if answer expectation, both. upside want -- I in than most notably California -- the your

to Cory or to. want first. answer elaborate Luke obviously, or Jim I'll welcome Well, there, if And

and to markets, commercial me. continued business, a cultivators out surprise we and existing pleasant of for both consumers think really of more us. growth really We continued kind that legacy new to been see is of guys. surprise of newer us. California to pleasant surprise It's good pretty performance the for to out bigger be expect explosive The to me, I a be

more So in standout been of than my opinion. markets, say has that I'd a the new

do Chris, you that's And why happening? think

of it's continued cultivators. the, out explosive refer pretty growth what I we again, think as legacy to

in not rollout yet maturity in see of Colorado. infancy, place recreational market it's well as probably has I as state lot but think in adolescent in that's is I'd think probably in market the years. like it a kind a I driving you a like it's of not of what's reached just its say, The still, California recreational the

So legacy continuing as larger in those from we're that accounts really, well retail the growth activity those commercial just services strong as to all California really primarily just see growers.

our out, of even year. think I that's Street throw uncomfortable, have double the think to of my I declines we rest just correct? Eric, just if want meet we kind Is digit here the team that to numbers correct. make for I still

I correct. is what So much said pretty you think

Not all. that see Now it bad, think don't we I by the at way.

the high. of continue positive that because rest just to hurdles year the we therefore, for not the So be are

helpful. that's Okay,

said, by way. And with Chris I what the agree

at real a lot you sort states, the to Michigan, big really if that the our established legacy states, drive Just performance two, and California, and be of look in those one number business. continue just of just states, positive number

taking William We're of next America. from our Reuter with question Bank

would With another markets, at your that be looking potentially all then, around Hawthorne the of side. going would of to this that to businesses? be point comment seeing types assume then comments lots this you're size you're I high going what for yield regard I multiples at? on what And to back about guess M&A those the that guess, be the and I the is

goods the as been. I think at I of on well. is the on they have side, Hawthorne but we're slightly Hawthorne be probably higher Multiples, to think, continue what most interested are side looking in than live we

We be range. of not the on continue to think sort historical that multiples overpay. determined consumer to sort And in I side X-ish are of

So would Hawthorne. the deal at favors, kind say unit I in of favors probably least mix volume,

strengthen and we outspoken our solidify think the I to have been of sort and desire continue continue to Bonnie Although business. of

for are give to opportunities then regard the us sense. me. that? that's EBITDA, Just either with And a large like out that size, terms little something how there, M&A a bit in of are sales, all of to And just

we than money spend. More could

I've that, And further Investor of And kind we've there's probably it. been for in have of quite value. have Day clear segment. a many this as capacity virtual sort choice the on have to very of time. unlimited And on through bit that as robust choice, a we therefore, we choose. enough that can don't we afford ground a there is I kind given which with opportunity hold out to that we choices folks to we multiple I and areas, build and thematic our went business volume think interesting ever is It was, key it's think of I seen think, therefore, opportunities we have with as is

plus, So size, that. lot a huge goods, spend deals. money. I you so bigger, think they're core XXX Hawthorne, these just Live like aren't more something could But

from JPMorgan. next question our from Casella Carla taking We're

to much on are other What guys you margin or any to potential you read pullback pressure hikes. be will price these [indiscernible] offset ask was seeing acceptance as perhaps level had if times the early in by few a you know we it hikes, earlier, volume I guys of the sort alluded any of this quarter? gross wanted price how

Mike, have to It's let of point Mike because of I'll from start simple thing I'll these to my the with put view. But negotiable. bed. not sort

journal accepted consumed Remember, without any at of materials. money point took DIY of think I gone said, where being If was don't We of this we're is spent, and the is sort of of of you on of nothing manufacture in guys has money is pricing who it's different look raw consumer pressure different call The side a buying in a And you nonending And sort -- kind being if vendors think quarters probably environment that and saying sort you already. of look at really know the And my front other on bit three from and -- it anything business. retail page pressure last year. of, you it, how people effectively the on I already Hawthorne hardware. it's view. orders. the much

what don't looking we So we're greedy any This I paying that. don't hope because is get is at for. just in not value thing. some I threatened see This

And not the mean, any have. negotiable. But we're verbal, will of kind it push so interferes to probably we business. I suspect I really don't get back. it's with going I think and significant

the of Mike, for I that's zero. you're probability doing that think the responsible is low not but it. one

this have actually first I probably time this. is we the No, mean to do

And with higher. work already so that And if be the again, up it could on to we've program. we'll indicated commodities go retailers the were

to negotiations. well, the historic trying work for it volume they're solve game. together and This get get get a resolved. lot those This we're a So real as into issue of but than all together we'll it problem is us facing and and not and is issues different

think discussions this so at good point. And I the are

Maroccia Alex from question next from our take Berenberg. We

New Hawthorne from the California learned It and is lot The to York how in sounds new tough rollout going tax. one they're a like first on markets. in

from start So more market be was. the bit the successful it I California could than mean, a

However, until 'XX. this market QX won't come online

later do markets trying I So in where year? for on a a calendar the guess, Hawthorne growth few how and spike think early material in business new 'XX scenario out a there's comps light bit the just to generally, the the looks been I'm you then tough see in figure quarters. you have past

markets California New at look is it have much are states perspective. come XXX just individual the York, much, of New new we in to that like smaller. like online, As put York size times the

So as on it's in the some happens, road rollout small very, a but there be how rolls bumps base. could that the out, on very

continued in see have to So results. be we on new state, noticed because we legal kind in the growth new of just it's even our be something we did start operating there we don't don't XXXX after percentage like But market already. to the established won't the growth in and California really large pain in way a a place that those But expect everything in gets getting we strong really, in that increase markets. in of

in of a than just those roll because different way So it's earlier states out to going size. the

you'd anything add there? Chris,

think covered it. I Cory No,

monster New that York market for a take a but time it to develop. going to us, is little be will for

think see don't we'll I lightness there. So

us. upside I New incremental think for growth in York the is

say to table, of it's think us across for when of have said, to goes that's what Chris them think first Hawthorne. assume back I we is of the to is ever that. XX% hard do remember, you And rate. growth goes tell a whispered what that even to you're us And XX%. and define gotten for sort number. growth think say kind burned. But kind I hear you going I going don't to question, be Cory light, the sustained It rate which

period, you depends guys of look I there. you that you are which if is where York's Coast, New got state, But would to Jersey, what think the over New Rex just of and can at on on a online a Rex look East long year is sort I come now it be couple term, if hope you good. they Pennsylvania, fully that's that's So like is kind do, which a California state. Say of

looking you is I we're think rate are at Hawthorne sort what we're of commit to likely when that we're a it. said made good growth like of so far on like because -- on sort seriously, guys one that's this or how number. think input we the it in guys to I felt And felt a as speaking the on And burned I do -- think it a a end, I long guys is are quickly. your mistakes half, rate mistake number. like, you that seeing, I've think I safe think, to. But the as XX% then -- largest I react a to it low the and into two biggest think to it's for way, I that a was Because hard what good be going just like, can because But time year within back looking to year you I've models too, is years I now, should growth you'd like not made of put say, what I willing was we maybe committing that pretty that's got too with

investor that think down I was conference in at Florida. an

look forward only now. look back. Don't We

back one. No, I that on look do

creating look if say and growing essential you partner you think the to a we're sort So of I long term business, cultivators.

we significant corporate the basically better the therefore, bit of getting Hawthorne you you'll than we of sharper, together than think anything our long other point our And is term, to I -- our say to partners, lot Board of dealing a us It's just that been, just see put implementing all is sort been from essential plus partner our the which getting bigger, has make real of view, if stuff a So margin strategy with management rate Board Hawthorne this cultivator a so tools as very has lower fun. that map met, quite than the of whole team. is business but of -- it's hard I while and margin kind if and been the entering issues, it respectful supportive, very think the average, been. on around that improvement. there's And developed Hawthorne strategy

pretty people look if that think, again, you parts we the I that of Scotts the guys. But the so you -- the on four or business it's sort underlying maybe And investing foundation, consumer and Hawthorne worth if the to just three you strength is business a think of and I parts, the at introduced, team then in. but big management of business business, the cool

Where the like in synergies be would with layering questions. Bonnie, previous different the just and then is Bonnie to second businesses, on M&A based of these one one on lie geographies? do businesses And on

don't like out has think I and business guess, I very of service a it Bonnie is I'll I owns with with has But start anybody a plants lot good there. business, Bonnie. for Bonnie think the Bonnie a starts unique and model, that. and distribution branded really a by what sort proxy brand. is saying, there of don't unique but There's a

most most while suits in think is it's largest I well. valuable of unique us sort the space, and the I Bonnie not and So think the the business green

if than season knows in things able of we've thousand couple got I And if there. at in do. at, we're Bonnie better I include numbers that. Mike So want to a to probably stores, -- be you that we'd these got think you looking look like X,XXX, has say But people something

X,XXX…

day with all trouble putting people North all invoices, in Scotts goes …people Everybody which taking learn trucks, in these nobody in wants from and four four together stores. stores. the like that that was that. is putting what back forklifts, the did America, four salespeople, we them is businesses And

we to a kind -- been it's to idea a mine it So able synergies I focusing it's of Lowes, been on dream and has a But or a here. mine. full I'm have ability say in really great to The driving know Mike? so be synergy for if -- of getting road time of could our closer. is for don't a us a we team with dream think around still. Depot and store do partnering The And store ability It that and with us here. I I to that, store? just stuff closer management. be look read to deals the if never on able think, again, to is

agree. make solution got of less I think help store goods I you've and But you in it the those areas. effectiveness and stores more how And about over be space. And to effective. space in we more the growth not effective space can No, with fighting live the the think the actually means

we're ones do Bonnie, are be but one may you I -- with of our I'll that think to on not to think well, -- show that the in I offer the able the can And there has out that only horsepower, going that side. to synergies be actually we're one only throw starting there of dollars, I'm kind that

Just think to -- about I'm to me of the operations want King, was going synergy in up is shut this effectiveness here. store of sure

But footprint that own the say -- think a of like do there benefit in that in kind a they that and competitive marketing because tell you is of we else is thing Scotts offers retailers would people vendors, ability the one store, me tell guys I is lumber, can into like and seeing having if of think kind It's I'll Let who other it's into you very power see to be us say can very which a powerful put I the of where the stores lot business, one the we retailers, to the in to into get programs, us this we do vendor you're you amount you, tremendous buying know to lack this particularly Paint. having think retailer issue. army year, and a non in don't any Behr you maybe of are thing other our our partners group do. own store, retailer I that small we is, store. anybody gigantic of I call have incredible -- that of I We're the able parts can concrete the of talk the and an just put work labor. own advantage of And to in set. bought extend who into

And to so is execution I the gigantor. think the retailers benefit

further to no King, there Mr. any time. additional closing or the remarks. It you for appears turn are questions at this call I'd like to back

joining this for everybody, us morning. Thanks,

If details June things updating (XXX) got William of follow-up will out the with in at than a at outset, talk or just release we on at want chance our didn't be press and associated questions I directly me a we conference, again, I event. that the XXX-XXXX. Cory to that the at couple weeks to as release the said, the get a status and address, the And you've about business Conference. more make of early We'll of not, issue likely comments Blair a that press call issuing

point. Thanks So otherwise, have for great joining today, everybody. at up we'll us spring, a hang and this

See you guys.

call. participation. This Thank for concludes your today's you

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