The Scotts Miracle-Gro Company (SMG) 1 Feb 222022 Q1 Earnings call transcript

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

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

Good morning, everyone, and welcome to The Scotts Miracle-Gro first quarter conference call.

and is Cory and President Miller; Operating Mike morning Chief Jim and this President Officer, Officer, Group Financial as Lukemire; me our CEO, Chairman Hagedorn; Chief of Joining Hawthorne. Hagedorn, Chris well as will Jim, then remarks, the to Cory open some your prepared In a questions. and share moment, call Chris and we'll the of time, only one and question interest we ask In follow-up. one request that you the you of I've already gaps. the to fill with scheduled after in call many time up some some at can. set time quickly else can we'll directly to Anyone who we me Q&A (XXX) work call wants as to time and XXX-XXXX, set up as A quick bit housekeeping of start. we before be March Cory will participating and of two the X. investor I conferences week during in

Grand available to The travel Global Orlando. details first is get date and the Raymond presentations present Consumer Annual to both We webcast, the the the we'll Resort via today's expect the to call. to and closer Lakes times more We'll James publish let's and UBS With Boston events. Institutional day to move would that, at on the next to as be at in Conference. Annual related Retail Conference Investors we

website. get morning, will I'll be caution things Form call Jim statements in could with of call say. we archived that being filed on over impact make an I always, to so range to our risk recorded, want version actual full Jim? filed familiarize are of want themselves morning, remind everyone should which our Those our differ factors is Investors could Securities our is forward-looking and expect With that I so started today's to and materially Hagedorn. As the from turn we Commission. let's Exchange results. the to that this results this XX-K, what with that, available the and

morning, good and everyone. Jim, Thanks,

re-strengthening efforts to will some take the full of demands second engagement the effect in the worth in contrary, and may for storylines our of us what things slow in the of well has several them: plenty are in pipeline make positioned our calendar but had year, continued second QX a consumer Among the Quite important strong quarter that Consumer detail. we that that around it in the upcoming is of a two the and as fact, of percentage chain season; year; third coming small exploring stronger; comprise half sales The are including moderation, an are ended U.S. more a business Yes, first action of profitability segment; doesn't in years. for guidance continued mean lot the supply momentum announcement segment, in here. to XX high finally, there led prices; increase year level in business there's year. The robust more a restructuring out cover. activity, we've straight commodity with to of the the in the of even pricing will Hawthorne that year most the in Hawthorne consumer meet QX M&A acquisitions a

to into jump call Before helps to the shareholders. outlined on I around share the I details, its put our us story a context want and that strategy potential our value I last for drive

the and and Company. sisters roughly most brothers I of my own know, you of As XX%

discussed our financial investment the part family's on our and XXXX. Miracle-Gro meeting the of the merger recent advisers, As in we return of with since Scotts

part to well? And most that that's of The done long-term we've done the Just part all around we Why discussion; story have was shareholders, important however, of the simple matters question, like centered the the well. other why? shareholders. so

not pillars we is five of Scotts and believe, Company acquired progress times. growth we're we're also double years. won't willing the I take time. would re-imagine just to our growth afraid company This like overnight. that dividing time a size think to and of in how over from of focused to through those On year this the the and need already Obviously, and is the the into I we're both family made this But the the Miracle-Gro said we're organic recognize call, seriously ownership that on demonstrates of five public be. pursuing Company how pieces. of I one two could activist bold to possibility explore those an we view, next fiscal journey strong from benefits, a One long-term happen said the things we've last

I So Consumer I the start P&L. the touching but by numbers let's want start to to I to want leave Cory, the with business. U.S. in. on jump usually

If year-over-year context. historical you're the comparisons, I'd you're things at at only say it looking looking the Look way. wrong with a at

smallest moved more the remains full serve important better of to the quarter of performance has a significantly. that business basis. year We've change it our into While shipments has QX the become a on retailers, the the improved quarter year, increasingly

compare if the that year-over-year you just results. miss You'll fact

however, true prior years base QX look down and before same when the significantly This which with there's that And over the only four was we year to to higher the reason Consumer against volume QX, by to COVID last It year-over-year ago. is 'XX believe that than compared The consumer expectations. year look But What's going our better December past Normally, units. for as at example, COVID. If were from still good profitable the was different this average continues our commodities. was years I The history. largest fiscal in For it's in ahead, number On good comp XXX% a that but like has to units much a U.S. of feels if at story level last second segment caution in first time up is the forward. dollars. to quarter in remain a our the year was a of quarters, shows outpaced retailers, applies. more we higher The compared and that's on years POS, the look pure gross the but marks to could can story. quarter time, sharply of plus-XX% measured activity, a Both than consumer segment of the back compared to result the from. ago. down four of to over we income, complicate X,XXX consistently our is in POS rate average, basis face basis EBITDA holds the a margin positive XX% points POS grow X%, segment's prior comparison. of line caution reading $XX years each we're four spring an up a continuation dating the two up POS, X% in consumer four into up as engagement too And of at you COVID. that QX X% average trend bottom numbers purchases million the against COVID. up on year-over-year is In impact another margin

because And XXX they modest optimism of participation levels, expect season. tells base in gardening us cementing plan going fact the have Consumer that are I'm We've to than decline last not be to have received But time, to gardening range would us X% more two-year this of whether in quarter to important data, be which view participate most a increase X/X able while suggesting the important the lifestyles. POS recent tells our that U.S. range. we first business We're balance predict peak This everything to seeing spending the more COVID sharing we last It will comparison year. grow. our and retail continue we to to consumer minus we X% who comps. us may plants the continue two we amount previous as economy. of increase the for a sentiment much More change reasons. year points difficult an consumers year to just not more which inflation benefit given our to bigger result than guidance for from the full with plan sales week, year, move increase March of basis expect and to of has to does gardens. our a on the consistent for as our their see of expected, an to is continue we're for require basis, their buy us higher also increased stronger they a permanent grown be with overall to in of to with plus the partners levels in positive overall Everything consumers the from which importantly, our closer do said range

than partners will to our be price should and for we back expected than for year, price another a better was year. communicated The permanent in take result to unprecedented for point in continued get cost pricing, will The increases with have necessary challenge been goal of of in the that increases Miracle-Gro, our face bigger in line expected. a that effect while impact year retail the increase have X%. offset Also, Scotts QX QX, second the a year. we for past the was the third First, which half created us by difficult headwind that decision additional to a results commodity benefit takes single increase full our a

merely our that our and a be retailers to it's key it more seeing pricing may leave in peak to distribution not advantages. inputs about few protecting is seeing and Fortunately, but costs, us. in month, I'll beginning It's additional Cory margins. we've higher feel like to others, commodity The behind worst our past detail. protecting over supporting Like round the we're still competitive the discuss of rooted been

are driven those built because before deliver of that manage to height the strong marketing retailers marketing during garden behind crisis. stores. investing sales crisis. during created position trusted lawn to dumb relevant for a to results sales Over team count engagement competitors knew the they due as consumer our luck. because drove We innovation retail messages market-leading didn't years, could both to consumers by support. as the the during COVID drove and strongly force well our and with These partners competitive and won departments brands outperform they advantages we on won COVID their seeking. because and them We our our the We consumers help won our And we've and the returns resonated

even challenges been the than current more we That's and also the our to sales able meet retails of allow taken strengthen supply force which us like we've the labor protect could to chain, in call, pricing, investment. relationship that others supporting actions to ever has those with retailers, consumers and need our our said in I in and in-store advantages demand this level don't market, last the protect not. further. is retailer important and of our when we don't. But Given competitive I true

news an and Speaking of Bonnie to the on our There provide good fronts. both for want relationships, goods. strategy Plants is of on live update I performance

First, edible our POS and in season we're gardening in space. Bonnie strong another is core legacy with brands, line expecting the

have the sales in brands, few significant our improvement been for in and improvements result and new opportunities our core of there also way the This better consumers in-store for cross-selling continued Over months, Miracle-Gro. of to efforts. more process We're chain experience especially the talent. supply of both and influx marketing should past Bonnie seeing integration a

goods as know, gateway with the see to important live relationship you we consumers. As an

choices retailer to improved the Bonnie have Farmers enhance believe do our Our bring team already that portfolio our a well opportunities to the we the higher Coop, Alabama consumers. available and relationship category, Together live goods of to with consumer-driven as Bonnie been can as industry. level partner, and has actively more there's the range support M&A and with innovation of additional strengthen exploring we significantly could we

you While excited and numbers sharing COVID details, From knew starting our steps and it taking garden brands. were space be transform industry demographic this before the hit, and by our the equally favor. share to were their play franchise angle, decade right out. early this in prospects, now. what further centered expected. to potential extremely in results. became our gardening business be never it's strengthen with to discussions was homes, as results. an optimistic these we'll evident group any core we're bullish in lives in nearly the means leader. every and about lawn interested We saw work about And I'm once too the we're that We driving our more to to in they're they their Today, A trends But millennials around our ago, barely turned becoming in we I'm

the to relevant making them critical taking business, the this lives to entire our right their to steps investments keep gardening brands and see to to the them success. is job we're Our have engaged ensure and as their right to as Throughout happens. see

we in So as not just the Mike I same yes, And the I'm the Lukemire it fiscal true know for way. entire to optimistic his years season. and for That's prepare come. team 'XX but see

Okay.

shift sales. Hawthorne. out January going clear the Let's but we I'll It's this what with cover to in obvious. much of year I'll numbers, we'll a already to challenge, announcement the said to be start decline be see our Cory laid a and let on needs in X. is

is we're not frustrating, While the current discouraged. market reality

returns growth. believe lot to activity space And potential. and to the continue even this We several market that there's in designed make over been when is a long-term to months, past its business the the stronger of occurring

in it paralyzed criticized team one tough you for up. stress of As the many by that a these said downturn of they and needed experienced I calls And XXXX. publicly on being the moment know, to of was Hawthorne step the

different. to You're learnings The managing be not situation that tremendously, us way this more couldn't this going from hear team have is time. the and the XXXX helped

decline to prepare. team allowed and coming back the market First, as saw far June, the us as that

they was there. weren't they so change couldn't the reality that there knew the chase a to of effort panicked Second, situation, sales not

their Hawthorne and business that fact, use said, better? this can their to and on make will, Third doubt answers have we no importantly, downturn question hat they activist I most make put in better. to our how

to an you Chris update. a few and So, ask I'm moments for give pause to going

Hey, everyone. Jim. Thanks,

me Let update we've It's the a industry beginning by to you current trends. feel the of seen quick start to moment on like taking bottom market.

consistent slightly consumable have growing see in the that a and month, bounced media, nutrients about been also it categories, an We results bit is a haven't navigate. to off beginning some bottom to and but we're sign. trends Also, yet, sales daily easier which better for like makes encouraging

the I to of nature the industry's challenge so elaborate. know right now, guys You don't need

on the As made announcement, in will I January can to X significantly speculate stronger restructure of that We've and the exactly have we the again the but I not future tell when the our steps be the expect will happen I'm year, what based of you business. is manufacturing business once team in that see or our said extent. our growth What needs to downturn acquisitions, footprint key half to to going taken realigned ends. on second management

probably a Hawthorne is about me our been announcement month space. is context. of and Liberty run cultivation You that the a for in the Gavita some doubt acquisition saw There It you and Lighting give indoor True premier last a let important brand to the Luxx being no Bags, price is more has home the but lighting is Lighting It's commitment System, innovation from critical to our and leader. industry. opening we we the category where long-term private label Sun to Supply, Sunlight success. brand a acquired a solid point And fixture. made in most our is category

it's growers, the money, category biggest a the that strategy the lighting The portfolio where growers, of door most to creates opens full spend For sell lighting the crop. that their solutions. a and impact they has on for with relationship right those us is

it greatest the market, the last cannabis our that and and available growers created had. the with We was made distribution you especially Over know We products a savings which to market. market to than to the The and that decided the LED us in options by reduce will This was extremely is inbound its mostly we've used of other and there more share. the manufacturing of Vancouver, LEDs teams allows to accelerate assembly we the costs especially market-leading the our conditions lighting outbound though too. out the costs, production, in history consider it true, critical deal already week lighting. perfect and the to best current years, still because our significantly to our the who helped our drive move position, Those we we force in our attractive, chain the significantly our its Luxx move knew location. is cultivators best critical substantial The leverage from take doing synergies commercial of by it market two Washington of lighting will single improve will Luxx LED success move Luxx begin we to helped one network. plants trust that potential. our the designed market needed HPS the consolidate labor have us the unique Even makes been California. widely brand looked in LED area industry's move We at that's better all SMG of in time take Luxx advantage acquisition supply strengthened last fixture current and announced R&D Southern capture. and the each allow We'll performance. has lights, and manufacturing this economics when

also effort, As last this for part year. of we're HydroLogic, restructuring acquired we the which manufacturing closing facility

come. category We speaks center Coast to expected Liberty's work our in acquisition strategy much of our designed other the the leader a True space cultivators in plant. acquisitions transport smaller cross-contamination The putting are don't to brand that quantities. and Luxx, quality the It products the a used Rhizoflora are brands nuances but make commercial True harvest we months as of Liberty preserve and large grower and everything add The just process generate their critical products to These store of us do. announced, Rosa P&L. to is the meet we solutions to of Jersey on the us is True to clear product which critical freeze, are a deal as trusted far we a the post-harvest Liberty of but Back of the New six at the in Bags, HydroLogic They True that one. the a invest business a prevent more understands Liberty, provider niche recently built the Santa General returns. new the demand see and we're to facility last a them that markets consolidating in is moving And original in Hawthorne Hydroponics. and the facility, to from the trust. to higher than more East who to the distribution better M&A, distributor. years and to bring cultivators home see to just continue one continues is that

The made, other the we've team of realignment The business the to restructuring once is a changes the on returns. roughly of positions. the the needs that in market has resulted focus of XXX elimination

decision it's team. of sincerely a good wish We part members a business to with landing, we valued the well forward. did I moving have never was everything to While them you when provide the could easy, them and soft day

also Crabtree ago Hawthorne We changes team Tom effort. our joined a management. made to in some the months lead few sales

him as sales went all to more business. off teams, and in design started great on team. sales knows than Home to results. to a to most how has Consumer there, how moved that Day U.S. our motivate background. Analyst great member he build during the He the From drive recently else, them a He You in which a is leader. of stint the virtual a and Consumer programs how And including to then Tom of the Depot anything transformed heard he sales, lead U.S. Tom team. supply in from chain SMG

the into of promoted right chief was the clear role. he Tom that operator As recently was and person to that me future, we the Hawthorne, look be to to it was

haven't. and Hawthorne slowed these Q&A. see, for Jim. changes As of time our the now, But stronger I'll let our me distance over have back further can being, competitors. one we will from around you business be things to for help turn while Every makes for sales

Chris. Thanks,

fifth explore cannabis the our areas strategy opportunities the in that remember more emerging consumer-facing. You'll of to of the growth industry are is that pillar

creation in loan in Capital strategy. invest directly a on we capitalize provide can that recall right vision you is its can't can about Hawthorne can are do for that board, that can have important But many lens space which morning part that next through SMG later. optionality RIV active quarter. of Collective we very tell this feets I The activity. made and that of what Because we convertible their details and expect we developments the is to the build RIV now, I the public It to setting is that on comes strategy While some company, over three the next.

over a But loan we balance would may cash increase we a additional of initial and the our any made maintain we cash we last to approach choose year. the infuse magnitude As of the and into more to stake non-ownership still the year if RIV would equity. that would result, not converted ownership investment interest, the non-controlling

want has help company. the last will to a courses right a King be pressure our are to one Since about topic this and We we issue however, proceed one comment. study one more the continue of lot of it this down equally our shareholders. issue direction regarding feel we'll dozens do. to internal me Jim made don't analysis or on discussion compelling of while team to decision-making. firm to facts call make take and the be made to arguments but about literally attention. current Hawthorne a and the lean potential operating call, other, arguments I guide as established and the reiterate action. before splitting There or to with an to we've rely explore the made of the no for this any Hawthorne decision we we've that conversations want to path, whether On he had last I year Company and Collective, know in possible had split got the of I told

the to this back wrap close want over up meeting with turn and my with Before I to family. things to I me thought, and Cory, brings it

our that the be good degree easy value the have challenges it over us who to I'm harvest difficulty in and fruits sit won't But and shareholders. the would of more business The those front ignore. with will meaningful along the to just place any tell of opportunities we're is labor I'm obvious but choose few profitable drive in years. be glad be executing sitting pretty and much If they back way. this our will successful right in our at simply be bigger us now, not to a path efforts are business strategy, in our of high, of and slippery going next travel too we with a Our will to associated pursuing for to some worth can times. confident you is did. the years ahead consequential

the a lot in of way. and I you to the look with months quarters We together tracking pieces our exciting ahead, along and forward have progress coming

I'm things turn cover Cory? now, to first to to quarter For going Cory financials. the over

and key of few cover, made last are how thinking or be has to guidance, our ahead. there our as current either Jim, with lot cost Chris we want allocation hello, to already Thanks, I everyone. and But themes pre-announcement Jim covered this My look we've we're the brief adjustments month been goods comments a capital by morning. and will through A the about morning. trends specifically this about

XX% quarter. challenges, cannabis challenges supply increase That chain pressure the in comparison. their market. offset believe an difficult XX% in but eight-point segment saw by appropriate precisely volume said, category the suggest positioned our in line sales slowest year. the against mentioned. the inventory are year, through against there four of we sales months as what to broader The X% pricing. scenario the us Shifting downward P&L, Consumer LED for Total In the the line. around Hawthorne, remain good be the primarily as to they estimate. on the full the XXX% finished quantify, the down our mentioned stores were as surprises through already previously a predict approach we year, it's of they a a ago. with caused key a XX% U.S. year The we we've They us. might On no the XX% was Those year U.S. top leaves the Jim as assumes will the season, ago. was a due sales ago. were than of retailers XXX% primarily the January And in through to we That of remain lighting to space, in entirely of and But company and our them a down were comp the be decline down the way have decline the The too and which XX% kept optimistic. real strong Jim LED shipments on where guidance was back POS, were components quarter season way midpoint Consumer, the leave with happen into slowness this for early sales demand. trends are selling to shipping year were saw conservative been well in growth in inventory remedied Hawthorne for fall again to weeks in need stock the lights, with pivot And we and and in committed we once of through levels manufacturing less best-case we the spring.

Let's move on to gross margins to understand. is this an that's important because area

volume what manufacturing, I QX in in XXX rate more also fall than actions. improvement XXX Jim its law the the impact often that's rate than on a points of with exactly driven down basis in and fiscal small happened a 'XX. at fixed than and mentioned numbers, the the other by prey the gross from Commodity XXX XXX the than know, historical were you year-over-year points pricing gross quarter the result distribution basis margin The more points prices margin. in of decline fiscal quarter costs. importance As The point and and was agree. but was in to better totally better quarter offset results basis adjusted by context, 'XX looking in and headwind basis

retailers are ensure effectively years, season, properly which of keep Over level that forward. a the higher business should going us moved profitability to have QX set is several past for the we at into

of to margin As basis a for that relatively look bit year our the of end vary decline balance XXX be primarily flat worse maintaining positively should the be gross the mix. I at timing could of XXX at to points. rate or based we guidance quarter, each Margins balance I'd or and lower a are the now, us on expect for the year, of but negatively, Right range.

and on quote touched commodity in my the release You it probably saw slightly costs, Jim press morning too. this about

to optimistic the these so merits guidance calls X% that actually that begun in an a last predicting locked months Let do and all we the Recall for as increasingly offset has currently good I'm year move locked one issue increase a XX% now Urea year. our would we're a to million eye costs related on The X% not year, we that pricing of are input area shape, SG&A for are for decline we're to basis. ownership long-term Still, year the sharp only year, else, not that headwinds and I should an now. because has relief. year, in to me for the on other the we're into last costs we've contracts been cautious. prices. season. vendors only of elaborate. The on on SG&A to be full after our of the nearly is the where line, have loss for the better couple We including income has In your was our Remember, keeping ownership is to it's moves closer is down is to Bonnie. due that everything year. commodities XX% up XX% right we're loss some but a which stake on accurately same. taken the XX% Bonnie. equity starting the lumber volatility we On entering see news to $X QX we're a pallets, No urea, seasonal attention is did P&L ago, normal. retreating quarter want commodity locked slightly Resin the behind total, have normally on at for which for been

the optimistic for said, upcoming and had season. solid has start business the year, Jim the we're about As a

bottom was GAAP restructuring, impairment with $X.XX $X.XX of basis which nonrecurring Adjusted compared a $X.XX. earnings year compared of last ago a on share a our the $X.XX loss line, and earnings, was On seasonal with income charges, loss excludes a of year.

recall Hawthorne. we reported might that a his 'XX the made realignment You we've remarks that history fiscal profit. first first mentioned in in time Chris at quarter company the marked

charge in excluded in restructuring second up to We charge guidance. expect actions That those be to from result full $X of a quarter. will million our year the

specifically Let me focusing touch on $XXX the from about sheet, briefly inventories, year. last on balance up which are million

wanted were First, ago a than in it as recall levels segments. lower as year we build we could were fast product both we major had as that inventory shipping nearly

we've been year. of advantage. remain costs Second, recall to this it competitive that due to comfortable level higher a the to as to continue we We at inventory input appropriate year inventory experiencing at And consciously levels the the built finally, is our over cushion and increase an keep the see last with we XX% able throughout about this season. past ensure retailers are

to year, see believe to expect continue to advantage. which struggle work will we We demand our this to meet some competitors

to Finally, I focus on capital allocation. want

XXXX, and for around continue and segment on our based fiscal assumption it's per planning investing we've to or $XXX invest chain to at to year two up Remember, the point our still XX%, its our supply our that for would Consumer e-commerce a in are Since capacity improve limit. grow year. be pushed U.S. we CapEx been infrastructure. We as approximately million the had we

So of several front opportunities about us. in these Jim times commented are M&A investments the necessary.

provide me context. let some So

The more budgeting over than earnings for in a strategy. go currently the of balance advancing $XXX million slightly the the and are that to transactions if year. future way immediately be on executed, long opportunities should our We remain accretive table,

second $XX in we expect million share would In XXbX-X QX. the our XXbX-X have activity the returning during We period terms half repurchased for a a million in occur place would have our year and in of that the cash currently shares not for repurchase open market. another to of shareholders, in do QX $XXX place in that of and any

no special a we current this year. dividend have for plans Additionally,

we get of could exceed at the for to within a We current expect level end outlook be slightly exceed we or target our of fiscal our that quarter capital, outlay X.Xx the QX. of If end year. at covenants. Given debt target, still below X.Xx we of our will back two, our were and well and our current within business the we the expected leverage by X.Xx

our discussion this me closely the my and we working when driving completed What me appreciation focusing pleased be let look certainly now. you on My U.S. focusing it's shareholders. role. as for proper stewards of capital to can't been minds that demand past on and where with guidance we'll some issues with lens, you, of recently note, Consumer, year you. first know quarterly convinced There's do competitive the term, ever the we're can challenges of optimism. right the all focusing I but We and months. that. and strengthen strengthened the like run and share business with than that the make with while over to growth reinforced Jim's for margin we near-term taking of further sitting control, of appreciate upcoming beyond. steps right the value I'm over on and is the profile the in questions, that control. exactly finally, adjustments really also business we all have the a now, we the to I And are trends a personal that also my I've better I'm And it's this is we basis. for return. for a no better season of driven I've does full call this long we're on the of in new will what tilting positioned have what our all the are better that acting grown on with to a Through our can't Before your I'm need experience view on convinced we in that new Hawthorne, say ensure our is engagement importance we're several given colleagues In a we're favor me, Value open my I'm quarter-to-quarter advantages but was in

the over for Now, call let me turn your operator to the questions.

Instructions] come our Jon question with ahead. Andersen from And will [Operator first William go Blair. Please

a Congrats, pandemic year engagement belt. related with wanes Cory, to on your as under U.S. wanes. to demand or Consumer the I presumably consumer first question business, really the wanted on or your start

numbers sale. for the a I'm that from coming certain suggests of the segment, confidence. year that your up You've real-time through of taken data for which point guessing that's of degree some seeing you're

in But you You some more confidence wondering also bit could work. I'm survey you a referenced gives return kind of business, consumers again, as about if little the talk what just to general investors consumer that across because is travel, return to? with at that's categories for topic all faced inflation big a talk to we that their the workplace present the and consumer that

could the COVID sort couple Hagedorn Jim data. started years There's now that of is for POS data saying sales we We've here. after in good. just if Jon, a a of The on lot sure to for been hang question.

I the that for both seeing sales just I'll we over were, And us data, to for than plus stores, to young a be want we've brick-and-mortar be going -- the I -- and is of to to people interested that say a hand really you're to Mike, garden the just into even the two POS more know small, past. garden committed than just me minus is willing their hard in think are for to and that they is for to gardening our it's it's that. movement that think parents of and still I product more I'm saying, successful in the up it retail money. is So online says and and the category positive earlier a into while do talking and still enthusiasm -- engaged. kind people last, spend much the is think The the what, consumer And two retailer says will Mike space. basically you seen again, who are survey want data, and and But load in that I'm

engaged, consumers goods And to and the to the be seem data plans then and plus well. It's our so far. just products. so we're not the our innovation as getting market And -- us, are new live buying retailers and

doesn't sound sound be that's Mike? what of Does say, think sales So, to that that it sort us great. drives I to will you, great flat, which

and seeing higher But that for also the a optimist. an at -- we're quality upgrade I'm live in there's goods -- level. an live out But demand No. there goods

seeing and so, with in pots, that. leaning larger And we're consumers are

degree they have us of So gives they a and to want greater do that success. more that want to confidence

that premium And so -- has has -- actually having plant, risen. in the premiums products signs premium actually we've a of seen that

so action not far, from that. away seen pricing we've the So consumers walk

South in So that And that our adds we're seeing to right the optimism. now.

I you know. don't we that pricing And do you retailers honest, gardening? from that there, say, The is people out if going deter don't was threw negative to I'd of think know. is, going which sort The to be

of but there there as no back promotion was say was you all there in last promotion at year, where was half of retails 'XX, I zero as result digits sort to to promotion. and ability 'XX went Friday have probably if the think Black there that effectively sort without And down. probably much insane. promotions, go I was was of business would double prices up that events the push the was to And consumer any that

saying, thought we pretty much what front think that think that on hang cetera. I Now mentioned we at last year. to was units can got XX% during COVID like -- home, -- just we But people think I again, I we were out it et if grew about were and were up you people and

are This covering, like our across seen listening. never this, on rate. we're double-digit board, pressures I've is eating definitely so three the sure price and still these much that not and sort pretty of into know retailers increases it's margin range I So, our I'm in

I'm be don't too lot It's I are you, about my not script, got So necessary, about it's -- it's concern which sort I carefully. honest of watch I But I'm I think pricing. that is it. to are going to of it it. just And of I see? right, with know, to we too something a said is what in but you? as going we're big worried the worried not Mike,

No. I them we're there live early from activity. indicators. that not are up. indications walking are The mean all goods trading seeing And consumers is

live just Mike. not goods, But

Our numbers the Roundup sales of are, -- are in market leading know the kind the but of they're big. Southwest, -- don't indicator what which I it's a is

About XX%.

Yes.

good, Jon. So so far, I I'd mean, so say

follow-up, time that's or topic kind associated else see of actively that, the team what dividing can you One completely. a determine Company. on to mentioned and you That's helpful. have say different about make frame criteria you're the to using prospect Anything make internal evaluating the decision of Jim, need the to a with decision you an you it?

Yes.

start with which a lead Hawthorne complicated it's legal answer, answer, be good a would going question, Look, if business. didn't happy as of into but everybody So sort I probably to first, probably it. I'm a

issues et lot a that have don't businesses on risk, taxation of reputational on we cetera, sort banking. So, the of and have both plant-touching

into a supply integrating and synergies by Hawthorne our chain ton R&D have of efforts. We

say leave makes to there. you'd it sense it ways, of lot a in So

there our question And a two the say, you investment with would garden would to happy. what of want it, choice reasons there's got I to his not community, in I personally. keeps are that the sort probably And dad, me went And advantages which just people cannabis I'm entities talk us. think it high that as the and separate then are of why that so, the clearest. invest a probably before, to makes different about One sad him cash in market or outweighs are Keeping there's of probably enterprise, included that. And probably investor. going predictable." think business, to And a I'm would very say, truth him and included. direction. the I -- is would that think it Chris it make it I'll just a the people talked mentor be I've family having sure type who that keeping and lawn be involved think the is And a in a "You CEO, I core, see fantastic flow, some different in

we're think is work going clear we're the Collective, through it's more become with and the months, I RIV. over issue the doing Hawthorne to the couple of other doing next what

start important we'll make things is us one that's of things And think to of I clear. to some modicum control. the

dollars, or And -- it but Collective, value more talking on I'm so the strategy is, Hawthorne I the think you're about clear you not whatever acquisition in think the want what put talking alliance becomes I that what Apollo as is it of finest. to to I'm future consolidated call be -- talking and is this some create these of sort exchange. the onto together an we the things of enterprises a want I'd can as And when the argue U.S. is

you'll cannabis most we'll again, And far I play world. down think create about And we're track. the that. more that pure I pretty think in know the valuable

think maintain I also that an Hawthorne this is ability the that sort in think to think really we kind I need but of reflects our position within as look currency commitment that, ownership our that do you over control I that maintain strong may at how of some And to how a we managed. it's important. to voice a is have space, if

about the as I better. far of come I And So as as But as the sort of together. know is think which don't land. I balance how would as it will lay all that's it hot

sort could think probably I out dissynergies you relatively dis-synergies sort here, we're of I more entity that talking think, pulling of than the creating it that that minor of So But about apart. of I value offsets that see the by think could an creation happen. sort would come

know, sir? help, don't that I does So

terrific, That's Thanks the and very color for Yes. it. appreciate I interesting.

question ahead. Up Raymond Please next, we'll from Joe go take James. with Altobello a

talked we And better? is rather see year are The sort of other there of particular, about couple that and suppose. question of first market, markets -- this sort in that's rolling spreading in same you later the that Oklahoma. situation going concern this the guess I situation? have a on for markets oversupply there Are oversupply I a in Chris, California than of cannabis guys getting

Hey, Joe, yes.

not single that to But affected. significant to significantly a California still Michigan, is impact business. one it sort an is which seeing our like our in is most state of discrete contained And obviously, of is second-largest California, close state definitely significant any is half market. we're our market, market. So issue state

Now that doing well. general, Eastern primarily I being really should said, Northeast we've got that plenty of the kind in just or say are corridor states, sort of of

here, we in to -- years saw growth a small it's is off use a Now small but few Oklahoma hesitate even I of we This kind saw similar a the comp ago. to off a base Oklahoma as base. what and that

states XXX,XXX% So, base. we're small off some seeing XXX,XXX%, a growth in

have, still really state well boundaries. are legacy a market, driven the sort there that doing the markets we that us. it's by market So, intelligence illicit is of are really by the the But for and doesn't really that oversupply, abide

states seeing we're are So markets markets. in bit board the stronger or little legal across this doing sort the more with typically larger, better. developed of developing more The a

going terms will in historically time. think long it of for it's how we to a stick think long don't Now stick around, around I

reports. We sorts will of varying better market, disruption of we're of this the we're get to probably these through kind cannabis from in legal think getting amplitude million because market one been legal But be vary. less track indicator. those data and of trading sales As points frequent. And sort point markets it -- we try and of the prices We get markets. kind smaller smaller probably between in wholesale and a to that. illicit that should best our different is leading All pretty closely find state has that's illegal prices data got legal cannabis in of a sort combined that

talking tracking close that pulse. a we're So who market that closely with finger to the very the on we're pretty have in good pretty and people

for was be about pretty Either the kind in we're else projecting I'm should -- trend anyone we that the and it way. full upward terms team it is You confident of me, to what guys And I year business hearing the the here I've a rest I'm the perishable. we're of in of or April, and to back concern I'm is kind bullish reports thinking the a in here accountability in the reflected through don't bouncing and because year. bit you disrespect terms results. our It's this again, year maybe told maybe our in of going later of we see in little to But mid-summer, want oversupply pretty way, come sold the my sort this trend, see numbers end of through pretty Cory an we is summer. significant oversupply end will early for that on, destroyed on sold that it or we're as that what

we're back at at point that's next of over and So be the burned intel that's a in kind growth it looking will we've through be couple what the quarters, some but is we'll of position, got.

do them I I it to there's black does to side, to interested think, in helping basically stuff, like be going looking are immature my high. something I pricing. to feet, people I ability cycles. and in it team to this hiring. beams a names, forward. as and go also I'm market economics it the think in market lot that Hawthorne to we're calling is business just stuff service the these all this but throw is -- but in do whether high both out, get is And well-known industry just this want to -- our understand influence customers be and want going the help who this forward of R&D for the new own is an industry generous, talk of run Chris, pretty to -- and -- that don't I like just rich. look there. two economics professionals is to to just of understand view, an a true out to farther what I'm at the grow this where Because I think would help seem again, we this And there's crashes, the understand needs in part we're And this and go And through -- production, of

the on the we looking again, investments these think benefit kind are So help to any industry. to but a industry And professionalize I be of our sort follow way can maturing in space. to to this, competition of influence this more in and don't make

are very of That's that liquidity just that, helpful. at any kind guess customers hydroponics point? follow amongst your up there issues this seeing to I on you're

be some Joe, there's these retail we have of at Even And anybody the seen it I vendors. at -- the to of would certainly offensive of don't in our our to I customers varying and levels guys, some businesses. sophistication say, not risk. depends level. our here, vendors, these But mean there's

Some operate prepared business of and guys are of of really and Other more cash in month-to-month. much their plenty people are reserve kind relatively conservative ways. kind

in of difficult position those month-to-month Some are more a operators sure. for

for some had running Jim's have, months guys cases, kind they're Because think, -- down. guys retailers to just that when their tough, six So pretty they through visibility have. some I yes, those of in, And there feeling they down. is conditions, the low up recently on Michigan we market in of the and they just don't horizon in fought some point, just we pretty get pretty really close cash. And of really tough up

customers a And and not side, So, not so sort some survive. us, are able result as there to things the equipment provide shakeout doubt or but customer be businesses. trying the will that there's of, of again, opportunity our for to of little going on kind we're easier on bit -- at to that at retail as try further to market look consolidation. a make But financials help much of look our of we to on there's this our kind with businesses same our this an with do of drive vendor We're the vendors. is good, some some understand side, it we disruption, us life who for thing reliable us some to and doing no some their

fall to create really will us are flow out. folks It deal Some valuation. additional at for going appealing opportunity for

thing do I we So can these it's for but some good of advantage industry not think like it's a of take overall, circumstances. the

our aging I on I'd on think on barely we mean I issues have touch any Chris what said. Yes. receivables. don't just significant

stronger But bloodbath going summer, create Darwinian I think of was of point headline So think maybe answers people. the that kind it's be over it a -- to directly Forbes think the is was From a the view, that I question. the do going bloodbath. I to

of And space conditions. this and be I to -- I that going result was there but now things point going Hawthorne say on what's is Hawthorne be of opportunities stronger result a definitely list stronger happened they're of from the happening Darwinian would There are what deal Hawthorne is to be after, committed going stronger stronger to definitely a doesn't a think a have based original in -- a as cultivators, view. of huge retailers, we're that don't here just think the is price cheaper We significantly anybody 'XX. than are lame. absolutely as way and market to in Luxx

question go Please ahead. take we'll Grom a up next, And UBS. with from Peter

is mid-single little low a a puts working end time? end. like of broad-based So, I really there more the guidance using to sales, around get the at margin bit at the high through maybe from at I end is why in range through gross of The end, It's earnings you than midpoint rather digits, numbers the guess can low of the at moving question SG&A down to. difficult the numbers quickly, more high it my of walk us know pieces, lot just a year. just the feel are the question for comfortable range more you but still the this with -- point

downside get So just the from here, it some Should the but And the maybe points any really of consumer weather? understand sound kind how to of like we first, second, earnings is that It Consumer upside to embed business, U.S. key fair? in demand outlook. it conservatism? about pressure or think or like should does worse does doesn't the then framing trying

Cory. Peter, this Yes. is

have ago, Hawthorne. in in kind month quarter down we pull came at of the we a volume look you The the there If we did guidance that out where expected.

put a pull feel the obviously when earnings to hasn't did sales U.S. than point, some Hawthorne. outlook in guidance level the business. the year did right more the we same But Our for changed That's go pressure there. confident on going set we our Things we we lot on on that down the line. At Consumer direction. continue to

partners engaged. are retail Our

Our POS feel is makes spot a us that comfortable. in

and varies from that low kind today. We a from the the $X.XX range at down of those I'd two that to with you perspective, of kind revenue put that that pick of probably out. the we're number middle say I to bottom a point. is consistent at a end that's where day, range net put by line Day a range. out out You get we

Looking and cost at what on now inputs, than the expect we of of did a I I more side the comfortable feel couple margins ago. months

in a still you probably So was a things range I'd to XXX up take of say bottom today, bit. we if that that there of number a XXX. kind in range. get it half that pegging we're little down, turn But a could And conservative in around, can and of you some that that's I estimates the have lot nail to

Look, my sort of cents. here. in two I'll throw Jim Hagedorn

depends T-shirt get violent of you in around think how America. know when business so I out it you much this can and on and garden a is,

June are bananas. let's is through kind going April where things so say, just And of

So when up to a I for us -- Thursday think XX-ish in call to year supposed get like and Vermont, we're Friday.

achievable come exceed think if by your confident number. for kind that I can And be through to just an thinking -- the is you bard, that think all I business start together I the a pretty we benefits there's that, that flat so don't us. think gave saying. continue lot I'll we consumer but Cory is of of for

trying this got best three business at And so, it. our partners. be to looking emergency the months a two our our we'll to do point to time business. of of We've anything. now. with lot from run just in running know business, a sort or our control over more we're do spring We're And would lot checklist that this not And

And just we so my ripcord get ability ton say, haven't if anything a to protect We add? that tough our we but out to of to do to we're the "Oh, have not have there. pulled Mike, God, P&L." there, things

No. season unfolds. and the we'll right cautiously the optimistic, I'm do as thing

helpful. bottoming Super guess the the quickly I appears some with just sales. kind on commentary Got that category just to it. daily of just follow-ups be Hawthorne,

help nutrients it is comment on on because in just remarks, to were was guess I -- minus based there's like to it in premier have guidance? January? know in and an in think be And I just flat preorders in holding is missed then the for in growth I then the And there Cory, basis it may the this was on of trying a July a that but like were return that but earlier and here, return embedded that uncertainty, a mean upside? frame looks or category January, of XX%, that you to would release media? I lot up kind the April what's in case? just, us actually the grow I guidance Can a if the maybe Like stable. what grow right, percentage July? still

daily range. the feel full the spring last see summer. or right we're is since it. kind seeing what out say year But sales that we're guidance the on you out I'd in now to of off come guidance. of figuring is to out year standpoint. at like I'd numbers from to along comfortable a we've We the The Yes. that say still look that last, put talked path nothing we if full had there turnaround, we we We're right put us Chris of means timing for activity causing said, pretty a kind

to what And said. Yes. add just Cory to

So, growing in the media month last you and nutrient release sales sales. referenced what we about mentioned some

or full order our have So from that exceeded -- seeing pre-orders already year. sales preorder year last still yes, we're full

wouldn't didn't propagation significant bounce Also, depression are is they'd ordering confident -- last they coming seeing out if really of few pretty the June. to that go a going in through to supply though, I buy. sales. during be we're those us, retailers these weeks, those retailers to be there past in What back. that quantities indicates in that customers mentioned think feeling going So to month despite just that have the They is this a uptick sort in answer, are the

starting So the market come bounce I a that pretty business just that, kind all of feeling again, seeds, pretty us this good back. confidence early kind people but want within again, hatch, doing indicators our that count they and now. is spring, us to kind summer, again, people thing. this got Again, give right clones we chickens indicators of that forward-looking to are we'll all see before my positive of don't

throw business don't addition, have maybe seeing people's level. I there hate think grows is people's and artificially what as I up Canada, prices, willingness is Yes. But for number. And just a I to do. in think sort a extent, of like with pricing to believe business their pushing on at out they retarded to I to consumer in of to build probably I And I want it. have lighting some you I comment they is a of say, build willingness don't these in we the look out think and this you're Hawthorne. plug at they that that, is out Hydrofarms, prices And that based if result mean that's new invest. part to the

And this so -- is part. think And I invested in we're lighting. that highly plug the

anticipated. in Luxx really HPS the a and down out than is done you changeover going LED have that, the the has business have at we're look seeing the part LEDs, are traditional the you look you're The benefit pretty industry, to is I what years. the more lighting far. play think that very, just well. at X old powerful of in last, I biggest lighting, think of over would very with work Hawthorne's If And much call lighting that's if built growing anybody that rapid next this the those Hawthorne numbers done market and lighting, to in acquisition What it, a years

of in been part look Hawthorne lighting sort humidification, impacted stuff. and HVAC, more biggest have air of business, which our to the that of And so you at is result Hawthorne I a and think as is it's conditioning

sort build-out much we're involved more so And in work. of

at can a there what's I think diverse effectively this think look logically -- who of at I going for distributor. more Hawthorne, is industry the think I look much somebody and you on so it's just And than if you if franchise but a business strategic

Our next Wells Chris question will Carey with from Fargo come Securities.

guess lot a inventories for be you decline in shipping you’re back in I business ask you see kind tidbits that profitability little the Did the lighting profitability threw a the do in specific here? So How I trending components, of from that I are want kind on And to these is demand you Hawthorne. more quarter? context, out in, of around have of the there, lights. drive

like making this just going right? So And gearing expand lower then And this lighting. seems to to restructuring are getting that, you on -- -- pricing this lighting pushback on to that’s tied on it and question can it’s prices? is, lot strategic you Is key decisions you for you are proposition allow kind profitability just of idea lighting, expanding the more questions Is your one. East but open from as states positioning? So start and your the to industry some move up that, Coast to you’re the that improve of around underlying of competitive here. of there’s value a potentially is

Chris, to answer -- Jim I Hagedorn but rank one. Everybody here. everybody’s this competing wanted this pull sort on so of one,

to bottom race the in on not. not on a are We definitely pricing lights, absolutely

as that best to them. true Our Business we back make lots. that’s LEDs. gets comments And really on source fast is as with on good. And can my light also

and lights, running them. to CMH of under question you more know HPS Christmas the were are that traditional it’s the I guys sort finance when over And think asking I were feed the lights, pressure.

Mark, -- to way the Hawthorne. Sheiwer CFO So do he’s over. in -- Mark you there. the come get won’t want for just I is our

known guys over he controller Scott’s may have before to He you -- the went think was Hawthorne. I him.

your what’s driving You bit kind want little to of numbers? talk a about

Sure.

our durables sales would quarter, our line it’s about say say, this and around of of decline, X/X it for on product So I is would stuff. And -- is it half lighting. I

our in the kind numbers the the it. say would we’ll as rebound I I cost big think of overall and a obviously, piece fixed the quarter. that’s for our decline on profitability. So the profitability, of for impacts seeing sales up in with But And half our of you’re the be earnings in for we back lever what then primed year, decline, leverage

are So kind the I would say those -- of key

over metal think highlight sort I shift of to sort not the important Well, of But at of sort me. this to then this Chris, of the is big the people from call school old I’m part LEDs a old -- going will -- yell because

is the word. HPS

you market, in the if is we think And is good the moving. a clearly market and LEDs. where really I entire relative position But look to are LEDs say, on Hawthorne where is really,

it’s is yes, an our seeing really than of are looking this ProHort is LED massive offering we’re business the on this Canada not build adoption serving this Chris, important bread jobs all and kind strategy focused cannabis. Europe, primarily. Well are through LEDs. we that’s our and selling a broader Clearly, line, offering at are who much to of lighting as growers. And there cannabis just we not that, our But of butter and in -- on at part product that really -- sort just to limited is is and -- the it’s our wave --

taking So as whether environment the -- really otherwise. the and place board agriculture, adoption Jim of kind LEDs, that’s in is of or cannabis controlled mentioned, across

way. build And Now clearly we start of in the half to want hit significant back half going business be growing that much benefit our kind of when so anybody seeing wall a else and the does facilities. our new this back worth out we because to people I sort people expect to about a here. again of wholesale is rebounds, year. said, a than When is it’s our a categories price to it like the do positioning. Clearly, of them result from of comes that And of for market product more cannabis not profitability of to impact that’s going in are

ourselves us as they them for value-added the and can. been are that innovations being little market. really and reduction paying to increasing you not The the terms price of that in some got and It’s and a the folks about that we that and also customers margin just are our manufacturing us, -- those want dependent Because moving a lower make about so -- efficiently process And really orders. this, lights, moves made it. we the order And some cost like here. or don’t not product that squeamish people We’ve price supply the and think as supplying In a race about is us lurch. bottom more just some just when on for demand Jim has those the that’s to our offering question not keeping got a said, to hard of thing controlling products in we deserve chain in-sourcing to don’t consumers. chain, bit it’s the leaving have going we’ve through interested market fill use at interesting you’ve you’re supply on like

to lot destiny. our in again. So And controlling is going ourselves we’re this a position what’s not just driving just leave of that own that’s

dollars. the out out that, And benefit we about is Dave came is digit we’re on to moving said, to triple great Mike went Swihart we’re And last talking team. there, Temecula, plant gigantic back Chris, And a everything basically the Temecula. have management down and great in plastics Luke workforce, and

a basis. On per-fixture

kind things just on of that don’t can on very more market-leading at to taking the the -- we’re have But and that, want over And competitive but the justifies giving to not So all out is I much. about is one -- on right that cost, it's a to we specific supply all I pricing. the than price we Luxx, the for both technology with Mike? -- back. doing opening major premium you that of the products, LEDs between sort very this chain is of can add this be and ability think if be we’re spread We world. And looked side that, point us anything and -- it mean

your think innovation inventory your I availability, and cost, how also optimize and controlling your you’ll you getting is optimize out. you’re rolled

optimization opportunity comes So is the that LED. this with

it market. And closer to puts much the

Exactly.

I’ll because and the if the QX, That’s profitability great perhaps the perspective. because in profitable should you’re business ramp slightly bow And of count, is, head in because a you that And it I total whatever this put in sequential guess, on here. from see from of inventory, keep back I could because almost that more supply basis, a improvement chain, of in fleet quick on in half of Profitability improvement Hawthorne some and the of lighting. here.

frame for you I of set segment, kind think help expectations just would If constructive. that could to it be the

get QX. QX, positive you far to is I in little QX, QX right. in going where in and year. back for a that our of by volume happen at Yes. the that’s to majority looking bit think you’re if look and increase the And for this looking at profit Chris, Lost side

back rate that So number right point. year a go-forward on and but direction the that to to that it gets we certainly getting year, the that a us shows back basis last at isn’t earnings trend rate a a full saw it’s we’re in

increased of something the accomplish. I for that past circumstances years. profitability and accomplishment head reasonable profitability to right the this the layer we’ve horns on circumstances sort -- it’s want getting look Well But to don’t under back when over we’re that’s -- year, numbers toot proud we this the own the and of our the to want the to scale conditions the commend year, current that significantly market that under we just the back to at report under and we’ve because here footprint, fact team few distribution center doubled our growth just that are now. the you category top, an to you count I the Getting circumstances pretty match and intend

of Bank we'll America. from with next, William up And hear Reuter

And of $XXX then you the in opening pipeline when XX kind year, potentially the of kind the I just later been out one. we is some M&A mentioned In that Jim's it's biggest comments, penciled have years. of million. discussing on,

and So bit where of leverage and help I little why on to you and incongruent, could the thinking was be take put X surface, seem together you then if me about I them a that kind you right guess statements for willing these wondering take the would acquisition.

pipe. just me Let on of M&A kind the start

So of growth the think I that opportunity recipient Bonnie is here. the

willing was all because we they're pretty And really Bonnie, without so money. an sort that partners. and having And capability at is and us of interesting great is partners flow careful are we of contribute leverage Alabama pony to say have But Coop. that the our up that there's to Bonnie to the Farmers into beauty

for having up capacity -- Scotts the at from us lever leverage pay without and thing. sort a contribution the of offers Bonnie AFC kind opportunities ability so plus us of whole the is to And to

the contributed side Remember, In using probably think, they talked Scott's get we're call paid again, to million, and $XXX been within addition, about on with to And an and RIV moves the more million. it, that. That additionally. effectively million -- have $XX $XXX already already we additional that's that But RIV having money RIV, without do started million we're get we money opportunity to has contributed. to making contribution for. to we contribute to I where the all want $XXX to to

opportunity I So Cory, -- makes what pretty for sheet. the show dollar is that have sense. on significant Scott's dollar that it that up within don't not know that think I if if any that means there's does balance lens,

Yes.

the sure I completed we how you that deals X of just can think right. off had are safe today small last we've as there. those with bite we we're activity to can And there integrate couple other trying We're opportunities for into the over X X Hawthorne. all our over rest that's making pillars have laid X.X, to be on smaller months, of out if within operate of that would year focus just We're the acquisitions my the at and think and X.X. strategy. to see when say continuing you And and well integrating out within in. of much to the X laid the it we forward says long-term next months the like we'll opportunities I'd on that to X.X. the X.X. end in opportunities There out side. kind get the we covenants the We the move likely And year. we've ended over the if Jim these of Still business you to script quarter think our feel look a fiscal think get we're leverage, get really I and of

in live a goods well, and bit also We've that doing equity of SMG amount. a used anticipate as small little

if a we think, happier. the $XXX On $XXX year, if a take million million, pretty number. would looking you're I I the have probably lot at if had you you the sort But know, is roughly I side, million that or million, we and basically of at inventory it's last increase. $XXX $XXX say, significant could side -- don't think cash, inventory look been

So back last make inventory spring. I'm going retailers. look about supply are where retail actually with should at getting been now. that that and to I say is We of We our happy we now. the we But way it inventories, feel is we right ordering right not it of Retailers to and well are we're heavy the X/X we'll or prepared. feel if think we over so can year, they time. for at ourselves, don't pretty and feel look do overextended And rest have investing where sure just

of there's no there's indication us any inventory that's So sort retail at or with issue. an

issue, is you like to it, said that It's what think if I see at that least think, we're think know, numbers what X% a some or requirements that. appropriate. like basically X, time the for, of of over and figure I'd like call something -- had is. is for side, think I say, plus XX, XX, years, going look our that resized at the internally don't those don't the well $XXX We're year know, look is are now system we Where very you it's, capital plus million to said well-balanced for growth. On we I a talking Corey, I whatever and to X Part we aware X% this, say manufacturing. I everyone number and is

making, and year And the consumer some ability to capacity we core investments of our and growth right just on both we're to It's growth of year, saw. like and remember, And on be needs gone in the Hawthorne the distribute where our anywhere. based at maintained. getting now this production it next part not are been the has actually

-- next look performing. year, this business as commitment that we're add, So out you'd year far see think And no there's and for. past take if that Cory, on concerned, don't -- I that? we I'm out Anything growth looking beyond at we'll the how the is past but a as

No.

think I that's good.

Truist Our next question will come from Bill Chappell with Securities.

what’s chunk last consumers I about a year, Mike, what’s into you big in those leaning the can And were a we in come going and talk more category. the or of ask maintain place pricing, -- in really going a little on XQ? that that just level, when trying capture in, promotional this bit time both had to

think back thought on was were that. to some the going I of you scale

it put it happening April understand when to a versus putting the of price in how there’s trying versus much really of XQ pullback X of sales depends is on one, X. And this guess, in kind since I is June two, much much a so of you increase how So it on list price in promotion.

and well. So just trying goes that when as how looks understand that through to

That’s a lot. Okay.

written it down, Mike. have should You

April I the in think in, No, going that’s business. was growing know. around media pricing our I primarily

-- so and on activity. tied, of the And and we’re retailers with promotion working be will timing and that

And to so number percent, but it -- a turns nets what -- and of number out. has actually Cory the as It’s out significant a it

our out but it’s Yes. It X question, your on. it’s focused Bill, And X of X% nets business. sales, to implement to looking soil we’re that to is pricing answer really about on what

the to promotional. back We all way pre-COVID expect -- -- didn’t go retailers or pre-COVID to they

say be That’s XX%. about came that similar promotional XX% out to going I’d side. the on So to probably

more basket, promotions going And what specific has to a and that drive so I bigger that on run think we’re we’re worked.

We are we and again whatever. if advertising the buy markets with call Jim, call what leaning the -- in those, or do what in more we

Air rates.

that markets rates retailers. markets so than those promotion, all and hitting timely successful with national specific Air a with and been that’s advertising more and promotion

just they would feel wanting -- I seem They I does get Bill, and it is Yes. Bill, hostile retailers, say competitive can. would pretty what fairly this with have a visiting year. all to everything

this aggressive be cement to how to sounds I our So to we just active retailers understand year their the programs. And looking me. going it’s are they pretty businesses. talk think just

level So just first I think, was young when than named of Menear. there military in year I I higher on yes, this we’re got throw of of down retail the year. I this guy want Southwest the promotion Craig there might out to while kind last actually see out is,

and to best. -- Craig, so I basically art of of getting awesome. industry. with science gotten And sort and first Frank When saying releases if terrific the old, know grew people together. It are days in the was sort private managing one people was has thought was grew Meniere CEO, Miracle-Gro leaving of merchandising. of Blake these says back met a I up I of press we the say I’m the and Frank I in kind -- was up Ted I I is the want that

some for all Meniere Anybody a tense he’s to at Depot. to not Craig And retailers, having want of think much Decker I that. with notebooks seeing fantastic that love and his who very thank spent will this sort But all I up with partner do. we always Ted congratulate stats in time on him it And when interesting is as and it little time reporting want he been bit. for out his to him. us, everything -- his don’t be a merchant brings I CEO was Meniere I

I you, miss dude. and Craig, So well, both congratulate to say, guys we’ll want those

on jump Can want how to in? the know follow don’t so just But I up that. I really to pricing. I follow

promotions pulled volume, clear, these though So versus you’ve just on going customers? levels? be like big retained be a even to don’t dropoff there’s year XX% that of XX%, you back being feel last comfortable You’re to kind

Yes.

of kind think when X that pricing there’s of So about… you waves

yes. The answer is

We’re comfortable.

comfortable, waves put took was ordering And out then. again We we pricing varies we’re look X. January Wave last X slowdown kind April of pricing that flows then to item across obviously going talked place. of back X. U.S. different That to I have didn’t We’re to is to is see want effective had We portfolio, our in finishing of year. take clarify taken. about a the down X%, because that X% this up I August. pointed I into of but pricing We kind the but pricing of that That areas in the we’ve that on X the we’re with April Consumer pricing And to us in it X by range nets going number now that’s a earlier. X again, that we that that to April retailers took

to last I years going about I mean from want the of X but of they’re not same not back -- to Yes. going level. at not It -- because about from year the be careful increased is promotional seeing, saying, It’s be level our XX XX interactions. going It’s because level. same least we’re what an so increase to back seeing pricing, either, that’s ago. and we’re

Jim’s what we’re to to indications, going be. that’s more that point, can but somebody all So do that’s -- something, where competitive, getting

new Jersey, Or markets you kind Connecticut? California, kind your mainly meaningful New year then, getting to are expecting of short-answer of it. back Oklahoma, normal? the Got Is Virginia, for New Chris, of a just question. out like outlook assumption And pickup others York, this

Yes.

I at in We’re strong those you well. markets, also really those significant as as markets. markets traditionally looking rebound Coast a new the we’re West Michigan said, in described, But both seeing growth

here. numbers at you we’re let I pull up Florida, you XX%. these if me up at So look -- look just mean

You a smaller like of look basis at X,XXX%. we’re sort Alabama, over up state

over we’re up York, New XXX%.

So the for we’re those from of away to revenue, for seeing states, just time sort in shift California. account the scale some of take to there. the It’s growth the markets going

balancing the country time the it’s -- of So a going to really reach sort for the balance. to take of

back primary the traditional some combination, to to small. more bounce is too the states So from going still are be just going be other but the it’s states because

Our next question comes from Andrew with Carter Stifel.

I I'll quick. wanted keep understood the Hawthorne this I make the sure year. for for to one is what cadence

X is for in come a negative just XX your remainder be of it X will kind guidance of kind the this XQ hockey the a trailing as on is implies question similar margin to magnitude of or operating plus your Hawthorne think X%. one stick? I Second year.

year, You the kind indication end long-term us now business expect where kind last that Could guidance was XX the and to of of any points. expectation you finished at supply basis give XX.X% you last chain and have you up initiatives? a

have to going answer We're -- one. this

Sure.

earnings where on single back for in term, to rate, market we digit second first then part, longer ramp second that, rebound. the to year the the And as to again the back and of on again prior as in you'll at get But sales we higher me. begin on volume our to beyond. we one on So the in have half up or flex would should be to probably be our EBITDA year with we our the we expect part, that able just were repeat the

our to continue and target. push to -- again to closer overall XX% our become So as make

then and So in we'll it's obviously, year, I year. start again upward slight next would trajectory pause say the that this a

Yes.

XX% what to be long-term So is margin a operating business. the again, objective echoing Mark said,

sort get few path confidence we in or have past marching goal, that to on towards get of we're say, that -- were every to to We that should back years. I going the the back

end at on kind was back the year first then the is perspective. of said I'm see of significant perspective. quarters quarter trend the part see as of first flat And question, be expect how really from the of a I sales second call, what far questions we one As to I more for that X to of to the from a the closer, think, we to and bounce the beginning X sort focused

is in So of it's quarter said, kind this like I -- yes, the punch gut. like a

or see out traditionally, QX -- sort in this and kind years, significant and flatten expect of expect even -- the to X. This then more as see in sales is is to our comes. sales good significant We growth quarter return weakest spring quarter X to QX of we

from come will question with next our Gaurav And Jain Barclays.

quick One one.

So are on what it that full on margins, Consumer have a would actually based not you margins Hawthorne for said year your down ‘XX. lot imply U.S.

Then start costs actually trending the down start will down, at they on quite imply the it retain numbers this commodity point your when you time. does year? have significantly some pricing that from consumer and consumer of let’s suppose trending you side margins improve the will So

to I’ll pass take beginning and to don’t reduce it’s like lighting that We of it benefit a bit price. moving -- is little our a Okay. view basically the to down which Temecula. as Cory, selling the tool manufacturing

side cost factor look is pricing. only our on we’re goods, sort moderation of don’t think we’d to the of very think hopeful in that for. the I consumer I which reduce

have I seeing think the it a consumer. of on would what with that’s a lot our of based be elasticity the discussion we and we’re with sort with retailers,

retail on the think And but I idea have seeing happening with that’s what to would and if our weakness. that felt I Cory, you it look marketplace. that. a would the was So discussion would and we’re pricing. partners of add what we -- And know again, hold -- in kind on But with what’s all hold those we don’t the consumer see just be

margin back going flat margins, going that One year. make to main rate of to sure to add look that is components when a to to just point volume. I’d at can we sales Yes. be that is last to the get there’s our kind X you the be

increases we fixed leverage As positive help going continue margin rate. plan, to that’s us be that a to will see our above sales volume our for original cost

to around commodity going is one second be The costs.

¾ in like in we locked good we’ve kind the a to our feel As of X/X spot. of costs we’re for year,

to there well. For purchased buy, to Costs about that we benefit rate remainder remaining we’re and amount that us to the starting could come some little to portion out flat spot a are down to allow seeing margin get trends. the That over of down still get of favorable the remainder as our some that’s year the that’s bit. a

how those things the we in U.S. come for could year, rest depending around Consumer So on be margins. flattish of the down for X

jump the real time, up. interest in in question We’ll just me let one quick. then take we’ll and of things wrap more Operator,

will And from question Research. final Bosshard Eric come with our Cleveland

source are we inventory into price that with the you numbers to in business, consumer I a season Or by going how as of why that understand confidence a the confidence of -- manage pretty is the solve? you the consumer your go I'm level the April, you're On clearly, raise in levels. year to wide got your do in you've and them, but One, where increases have that the margin. that? X gone increases is how through conviction? question, retailers' out out What have lot in to these figure comfortable two, to if -- issue play is a been X behave here to trying decides they're the up differently, higher guess of looks the core X shows price things. is at than of And they've historically I February.

issues. issue all if to it's elasticity of see sort our we solve of Dude,

to sort just gardening question careful this a from have So of of moment. accountant lawn be and of the has on. these offer a the it that that makes the was I And sort at we flat Jersey. think here level if aggression and analyst and house. would the happening just what's aggressive, she's the retail. city. move core that don't issue that I'm you called of on to best kid, are going and an get we level a I you But we're And see don't we words talking a instantly POS houses. for as probably for press I good are to because shocked tax lawn community the have with category she that if haven't intel to conviction particularly of make can't of we in carefully garden to retailers trying amazed I really sensed just homeownership, the But demographics ask, like it like our find already. personal us out my the think -- Like dealing at and be above of honest. trying with to expectations they PwC. New answered The The said, think stressful on kind losing like and very I to we yesterday -- want keep they're be she they dude,

So long because group I huge that just, believed telling young that like I kids, about which is just that they we've something trend is I to nice have people think, a this think garden. people that, us have says this want they her, back and are Maner want And I and a it, term who interested. year when to is a talked sort data a me And before goes a home. of that lot our benefits yard of this think

is you data we retailers year. optimistic our And we I just so and you I say has are good work, have and the complement. I as if think do as you almost your the survey would, data this look great data, It because -- that's and would Eric, a reinforces that all know well plans good. how and think, been POS and demographic The know

marketing efforts our to our innovation continue We efforts. and refine

there? So good year. are year once the people are big people buy who out times generally. these not It's prices now out -- buying -- market tend question these who are to These I remember, multiple think are we're in a per mark as what's the about as

lot we're probably think all it's up, don't teens it that last side, it from compared pricing. on you of if but is so buffered a in know the I somewhat to And but I add year.

say our use the and not to of a it's we've put I problem. question, We So a products. just lot it it's marketing that would at look retailers' to won't got way. But money

it, doing of much where able not differently than you focused Mike time flexible very more look to are We the talked believers things growing on and we that. about and what's have we We're much we're these before. just air in as weather money happen. at making know, be year, raids and

more predefined act the of more programs sort of from to We're partners. at moving retail our sort So moment. and

say had we've price volume, in over it So that significant doesn't have on pretty but I I was But increases it I'm some significantly for, lawn probably this. the there's on and And particularly time, think like the line the -- you profitability worried. risk based not no That us follow you and dude, decades. reduced fertilizer. been lawn talking And went seems up.

So initially probably I pounds know even think that. 'XX that when was, I that don't increase. least was probably something at big like after that or

'XX or ‘XX, yes.

sold very healthy. And think the is somewhat business we very, it. made I I money think less we but doing way bags, more

So he may Mike, question? Does I your have that you. answer know. don't at directed And

No, stronger. We're taken -- phases we're actually, seeing I categories. certain our volume would pricing to say more we've in specific not

So decline. we haven't seen any

that's Now early.

so that's one And good indication.

into the we've The people more other than is leaning category got ever.

And ACE doing so TrueValue to you're more seeing Tractor and Costco. Supply and even and

-- it's of a that and So lot before. more are there lawn putting people not it's than into garden ever -- are

interest has it been. the much so category in is greater the And than

So the consumer back, seeing we're not it.

of with our so degree confidence And that. grows

is kind I'd also as you much of you at that's that care be lawn there. even and team the when skinnier in of fill happening. sort our the more cover advantage Scott's all going And what's to people of us And then positions. But sort is the don't to the a retail addition our I approach labor force to partnership big not no objective go importance they that able their there are in who will to add look be live the legacy goods store put stores. of our garden business, just What be it doubt to the as see And can't in there you're is. into for environment, labor in

other a people wouldn't to I execute just of take -- advantage opportunities it a don't but control against. it to of the have ability us lot So call lot that labor gives

was just well. I X really points, Retailer to going as add Eric, Yes, engagement is strong.

last ship year, inventory sales out couldn't we enough. with Our our we missed year positioning additional this because quick

me last weekends we in year inventory ago. this why our lousy. additional this say I'll than I at year point were kind feel sales year makes that key a the on our more comfortable final of And So were year, looking comfortable the more

that weather of into, You rotten every went we every them. one had in of we think weekend

snow Day. Memorial was like the and of ones coldest it was think the There's ever. it on ground, one I

where to those that flat results, like So good will spot about feels key unit I'm good weekends we're make -- but sorry, you get it go doesn't have to or flat willing dollars, great into even results a with results, point. at be this to us

Yes. And on -- I'd the marketplace. online probably

our online is -- our you're I to think that our sales in goes all for pretty some online legacy players And that which but mean also is business, online own, meaningful getting rate business growth Pattie's pure direct-to-consumer, was maybe roughly to up she an or their numbers. business million. big. days get million a has starting $XXX it plus It's business ago? that drew us, I of call well. the I number is that And category, getting retailers, think $XXX to be like But couple above-average more. it as of What

for week of IR got we've everybody. Thanks of events as this the a in Again, coming us morning. March X. couple up joining a Okay, reminder,

Have didn't and joining a ring to that we I'm everybody. we'll us, Thanks there announcements great (XXX) So get And if of the me time. today, some questions for day. a feel be making other follow-up date any free in directly. at XXX-XXXX. are terms beforehand to give

today's concludes participation. thank this again everyone, And your call. for you We

disconnect. now may You