The Scotts Miracle-Gro Company (SMG) 3 Aug 222022 Q3 Earnings call transcript

Good day and welcome to The Scotts Miracle-Gro Company's Third 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 Kelly Berry, Vice President of Investor Relations. Please go ahead.

Good morning, everyone. I'd quarter welcome earnings and Scotts to Berry third Miracle-Gro conference Kelly like you to The I'm call. the I've Relations stepped at after Investor company. a long in career in to lead finance has Executive to proud and Officer, Miracle-Gro the career succeed a King, company. retired I'm Vice Scotts from Jim Chief President Communications XX-year at after who Jim to needed. as help to around the over stay agreed transition has next months few of over you meeting had coming already I meeting the I've to you pleasure look all many of the of months. forward and Today's Jim Cory been have remarks and from prerecorded. Q&A. open Once we remarks, prepared conclude the the we'll call to live After the on published the archived Q&A, an version call will website. of be our

Chief Joining the President management is several Officer, Operating Chairman Lukemire; of me Chris Chief of morning other well Financial members this Cory Hagedorn; the for and Miller; Hawthorne CEO, and as and Officer, team. Hagedorn, Q&A Mike Group Jim as President our

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And managing this those aggressively return shortly. time. to are real again discussion We I'll issues in

Cory. my First, details you on want penetration numbers in update segments. level unexpected and though, the at business on around stability I'll XXXX. to and of the our is Despite I customers par performance to I year for U.S. both the leave of challenges comments the keep business. a high enter category. in the XX million this new with Household the remain Consumer this year confident strength our segment, That's products the

enthusiasm those the and Z consumer higher homes younger entering of and years. due consumers forward. better. in influx who importantly, of younger our as we demographics either two of we buying of consumers to More continue this year And look did finally, we partners year kept category. retail a to The of That previous us again than this deal total and the base business gives millennial got are Gen a percentage this continued our great get the

units the in performance we are year-to-date, going X% into POS is down provided with line that guidance total the While year.

volume. pricing to actions, aggressive our we flat expected dollars POS that Given be on initially

with However, POS recent is are down still The X% twofold. but are lower dollars POS XXXX dollars in line levels.

more First, retailers elaborate aggressive a of soil. categories, higher-priced low and are categories and two to because data misinterpret the grass ticket fertilizer XX%. on lawn to units specifically understand and there's year. promoting nearly Meanwhile, easy and categories those it's were want lot like lesser mulch seed I to promoted this down

our we with start initial that included in Let's guidance. the volume fact a decline

elasticity the If It to in than is of decline is share. was products but although that still gap We appears a would possible down units between price If point primary these about opening related elasticity, for POS more be issue, and expected. you that, points decline are see about normalize that above categories minimal. significant some to that lost normal well this to of two market in share didn't. our products was have year. we We expected XX% the

me explain. Let

You'll that will contract in price higher in way that private this year increases label. all a year season. gap four doesn't and branded products. recall set label. It with are holds implemented in once That work year price increases private our Prices price normalize next we

decline. believe the grass including There United share other conditions else we is created are fertilizer than points Western nearly country, impactful also and it March it two eastern rainy and headwind. of which big anything believe markets seed was the a impacts while the sell. States, the issue, season cold and In we entire drove Texas. more most major closely. was factors like early we challenges. April, half drought Weather in we're XX and critical the created currently And not two weather So a decline watching The of

fertilizer the consumers First, store sales. it kept out for April, most our in of important month

fertilizer look wet the conditions In research, see cool for our they lawns and grass this us more seed or May. didn't normal meant consumers than Second, great year. need in told the

it in low year was key work using some that The of retailers they've this as drive in of the promotional done price issue years, highly promotions other didn't and worked previous categories. in tells major lack to us past EDLP Instead adopted traffic, those strategy a not visible Experience activity. two everyday either. an has

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is what let So me happening. explain

categories in on into the stuff. would furniture. selling. walked What May an record. of our just of high was June and was you outdoor products and durable moving? June, grills If Our May and seasonable second POS products highest stores amount like weren't you seen unusually have late in Those

it retail opportunity by in significantly last easy retailers few our the down the seasonal So our be to going and points carrying spring. into inventory year. safety of their replenishment to a is reduce and of from drop will products it less reduce inventory measured their is by of XX% The retail for expect year that today, we orders. stock more here the was further end lower units products inventory Sitting

a retail of ongoing conversations we our sell-in the season. our based with and So predictable start partners, on the at expect strong

retailers to foot likely more drive aggressive at next breaking categories expect using year garden aggressive traffic of start in to be consumable like to be early and more therefore, products We and the are lawn the lawn fertilizer. season

Moving on prices story to inventory due Cannabis remain by to The Hawthorne. has changed not significantly much. cultivators. lower excess produced

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numbers a hopeful growth begin some will modest 'XX. to We to within fiscal months and posting lap low we're start in few

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So the of time earlier. for of I rest now, back to that's of discussion. themes end the want I to coming the the spend my some discussed

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consistently achieve margins the Our business still can XXX%, cash have mid-teens conviction We next also significantly Hawthorne near and we to should high margin year, have be should performance that be teens. better. flow should U.S. a able deliver productivity though the in Consumer not operating free that mid-XXs,

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turn me Cory. to things Let over

Thanks, U.S. the my overview to Jim trends outlook and I'll gave results into give we unfavorable X%, one adjusted the our and were to additional for outlook retailer units the line quarter a mostly full down May. the down units June. since this deeper revised the Jim early commentary. I'll been saying In our sheet while Jim saw area you We Consumer the our quarter dive sales. and take a shift time were expectations. where in year in were insights. we U.S. by results reductions XX%. that gave line in high-level had to the experiencing mentioned Consumer P&L good morning, you to third has with inventory we've use you POS trend that results top our continued the into There during this everyone. account start of sales retail but for to overall, quarter, was shipment the for balance accelerated. were some in focus

down quarter third Our fourth sales now to the outlook similar X%. quarter. in sales XX% X% deeper our or year a decline were down is and expect means we This full

in line at what to that POS results While generally year. units noise remind with XXXX. year there is want I guided of up were we X% clearly in the this numbers the the are in from POS retail beginning actions, inventory and you

that growing levels. June. important The to in oversupply against was the capital less the run quarter. in XXXX decline Hawthorne for in performance delays quarter, originally also It's note indoor with and early we driven by we by in So business slightly in comparing third had XX% were driven results. in slightly expected cannabis year the the line both growers, record outdoor results that in that were our are than provided industry. projects further down the quarter for we for did guidance the rate decline just well behind XXXX this we The means above sales revised

third The of highest the was Hawthorne's XXXX quarter in history. quarter of sales

fourth new and for business launched vegetable LED flower lighting in the improve to rate in quarter, for a run specifically innovation Europe horticulture driven product in the developed greenhouse the expect applications We We in the the by our recently Hawthorne markets. Canada. and WEGA,

output. it have uses return Early power combined superior The in light the on results. to energy been expectations. cost clear investment optimal LED orders innovations, and who savings Just less appreciate like previous for exceeded with our growers has proposition product space, delivers our the the the

saw in quarter decline gross adjusted the The margin rate Warehousing short year-to-date the volume the miss rate. fewer decline in The year. units basis fixed third included the due margin year. quarter. costs will points to of fixed rate points was decline the full fixed stemming the latest basis spread The our XXX in segments. brings below to quarter. in gross in falling we costs quarter the more an be are margin from the on that term both XXX driver in these in through was gross what cost for quarter. gross year cost aggressive the pullback and higher in was will line quarter bottom to were production to deleverage This over margin on Moving impact than which in fourth behind largely rate deleverage costs prior result and principal the guidance fixed last the in in The primarily the manufacturing is fourth

lower as impact fiscal we sales Three after provide segment lower As for of was This down the drove Ukraine gross offset items pricing Almost will Commodity changes SG&A recovered expected, quarter lessen spikes experienced deleverage our for by in also for recovery has commodities pressures highs in all fiscal quarter, the and relief margin to the the the after commodities new year. recently due on commodities results. heavily rate point the were significantly much The partially helped favorable locked key balance experiencing year this from in spring. from the on pressure in these not in commodities of segment. XX% year. on but primarily the will Urea extreme weighed the mix invasion. XX% next and us quarter. Hawthorne are of extreme our the prior XXXX.

The first compensation. variable was

getting The full the year. is mentioned, Jim no As bonus impact team this worth variable management is compensation one $XX a on approximately year of million.

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spending strong in them. contribute to these quarter. but and identified savings the to center advantages. our the the also cut activities competitive Every company were in reductions maintain that opportunities was we across cost each for we Finally, with a view delay or SG&A further evaluated of spending point aggressive We potential actions drove of on reductions

example, Consumer to businesses full we care our The team. XX%. through for SG&A us the research quarter the the both experienced to from we will down and carry XX% For outlook preserve U.S. and our in in down development took for quarter. to third adjust Prompting to fourth sales year field favorability

industry. the assets. intangible oversupply to related with chain, challenges to we in led segment million, overinvestment to the Hawthorne in a into Hawthorne full in impairment facing adjusted Those been during for charge to per baked now $X goodwill expect the cover to have and combined of now noncash cannabis expectations challenges, related quarter. impairment recognized now, we Jim our we these finish the charges a $X.XX year Shifting and With restructuring covered the EPS, factors I'll at gears the supply the share. $XXX

a inventory $XX write-down we discontinuation Sun of and associated Additionally, Systems retirement with our brand. the recognized million

I earnings borrowing discussed X.Xx higher resulted above higher related asset expense his million in in operating higher business, interest $X a million, a won't and of in higher $XX with in quarter $XX The was detail million benefits quarter further. at efforts topic resulted impairments. good amount fixed of so the leverage on that we borrowing the gave and charges to Those combined line, in by ratio employee Jim lower year-to-date. the driven end. this the elaborate levels. change comments, of Below levels, Lastly, restructuring is termination

year to rate due a discrete We favorable benefit The the items vesting of long-term compensation tax XX% share-based is full adjusted approximately expect to our awards, related year. of this rate a giving be aren't to yet we rate guidance operating we effective below will expect want line. the we headwinds be attention some next facing to I likely year be on to will call equity XXXX, interest as your headwind the well to the we've Tax amendment rates XX% will we on to in will few some credit could from we a higher repurchases pressure as years. rate a as variable to spreads seen be prior rates return higher recent dilution Interest to see headwind share count. closer also due in from face awards. the to to aren't Since normalized more share XXXX, the EPS facility. planning though due

a I $XXX of restructuring $X.XX gears the ago. number share includes compared impairment, was quarter restructuring charges GAAP the other charges a loss I'll we This impairment per Non-GAAP compared per year and inventory now line, sheet of with nonrecurring $X.XX year. and made million ended U.S. that earnings was earnings further had the higher $XX $X.XX in which where On bottom adjusted exclude end at an with Inventory switch last Consumer the from described excludes earlier. $X.XX We've Sun share in some quarter if cash This this time improvement even on we to the progress orders. the was considering balance and we replenishment write-down. our decline second goals, System's quarter reduction year. than last the flow. million

continue production short us on inventory to We the pressure our on rightsizing will quickly put This decision lowered production levels margins CapEx. reductions our throughout acceptable and of expectations manufacturing on will and have back back all will limit level. to rate but term distribution for also in facilities our an allow gross We've pulled our and inventory reduce margin get dramatically network act in to our long-term our aggressive XXXX.

to an million. now planning are We $XXX down about million, from spend of target $XXX original

June. sheet leverage. changes revised into part will to the in built decrease We on that as and flow our we were covered communicated of in further spending The early flat plan the CapEx our I of already CapEx balance lower that just cash guidance XXXX

pressure our Consumer will flow. further in additional put the However, free decline on sales U.S. cash

the year. cash close expecting capital year performance in and reductions tailwind agree. for working higher. We next Reductions million of confidence cash improved negative going to his Jim I $XXX will are flow if in bring and mentioned CapEx now a strong in million, free not forward number full the likely certainly flow $XXX provide year, will

repurchases. will no goal. including are mentioned, we pause, all of of business reducing targets deliver lament There's will Springboard planned has control and share difficult and shareholder our getting Rest to on that our I'm at that working true changes As to forward. normal uses Jim M&A other forging the the that for capital of designed results a creation allocation, and capital is we we establish look our mind quarterly Project year. for are detailed dividend. accountable And ourselves a our in can that leverage assured, quarter. acceptable to we share is this are results. we Without those the as you capital back has seen all no hold profitability value been easy question, be with Instead, confident levels next allocation important our most doubt us. understand be would the of as the that guiding principle. the focused with on path It for squarely strategy been that that and we will plan we in proof the leverage things factors impacted in

over I'll Now questions. operator your turn the to for call the

with Wells [Operator our Instructions] first to we'll go Fargo. Carey from Chris And question

I fiscal 'XX if flow suppose as imply outcome recovery expectations detail the X.Xx review a a leverage I profit you cash does lot for of bit flow significant with But more? expected cash notable appreciate the target, that in well. is maybe achieved we cash generation especially year. Can next the specifically pretty a -- gave

in So clearly, there's the business. confidence

from help capital? just around you year or carrying you that success is season? year go good which 'XX the assumption I then maybe would think would to I mentioned that expect inventory have dimensionalize, fiscal your the a this Or it from key a quick the working so to do number And else some secondly, over. us And understand one, impact gross less you just guess have that can margin follow-up. should you the into I pressure inventory next you Then for current? more anything carrying to Is Or only expect? from real make inventory more be maybe

Cory. Chris, it's

year-on-year of will a So of us normal there. kind next number factors things is flow flow drive year, of at will that the basis that get to see million. we we be cash to we that rate When a of a $XXX cash two see on around for couple out million. look about free $XXX One of kind

generate year of So that cash kind allow next that flow. generate will we level the of think to earnings we'll us normally

end see should 'XX in experience of going second the forward $XXX kind that that which going The flow will cash that what we're we'll the next see after that inventory above year the be reduction be increase million. item of we'll will to around by

get be things but be we the to you $XXX two to able benefit that, from we $XXX So the at still basis get And together, million. roughly that we inventory repeat a then go-forward combining on that after million, normal won't rate. reducing those run should

years, in for gave I that's comments, So I think how said get Jim's next for the of you there. he billion number is kind $X $XXX two million And year.

is Second margin the question part on of pressure. gross

XXX basis basis year, things -- we've felt net points down for we that net have of experienced pressure points out If at the XXX kind about the you of three year-to-date the that this down year. expectation to pressure to you for look and

going products. of the that our into be would -- the inputs cost First into

that. related to pressure So

on because business, just that the distribution volume also cost us and fewer coming run on pressure manufacturing to leverage the across our all network, We down. fixed had cost related our our That footprint affects units. are normal

the that dollars So those two offsetting that is we've offsets which are things the input going pricing biggest on this pressure year incurred taken our the we about pressure, up. costs

pricing So rate yet. the dollars. worse That on a to decreased little we took alone and the cover leverage enough has then the cost fixed the effect rate makes

gross rate are kind that are two year's three pressure. net of to -- those things down the margin things So this

cost year planned pricing. of sold this still and to next We're into increases, even that we the experienced go have we've inputs we the when for to expecting down out. our more more cost costs timing cost we're when come the next average because above also are bought those year inputs get see As year, taking be recently, of though

point. we're looking we're pressure there that that next not it out will forecasted pressure at rate haven't pointing the for a guidance And entire be obviously that's We're yet. So on but the year. year it just we giving

reduction second related reduction on in Consumer jump here just question then just versus that you comes going as back fiscal versus might savings 'XX sustainable do that, Hawthorne. year. sales clarification And of SG&A how this I'll be much back comp Quick U.S. think Okay. cost substantially to much be inventory that of to expectation then pretty is in forward? is going down and in How a like what your

levels inputs If we're Consumer, at U.S. And that inventory you look it higher. level it that X/X modeled we reduction, at about higher have year way in expecting the still in cost the next you of the driving inventory at, out is look assumes X/X Hawthorne. the now end if to

look we've if more portion due to inventory that So increase year every costing the of had at versus a last is cost just you good increase, total with increases. unit

cost Consumer X/X costs side that So mainly right in U.S. producing if sorry, Hawthorne we will X/X -- could market, the decreases it additional hold we're now, inventory coming the looking have year-end. but we're at be the related down down the come Consumer, that's we I'm as Hawthorne, dependent at consumable that U.S. on in on inventory to in

just And on then SG&A?

in of is comments talked this $XX million incentive compensation. are lower the about year this past. than the obviously, in to cost, due SG&A We

back are for looking to comp into add the next year. plan incentive We

be will there related to headwind a that. So cost

our pretty significant in If to back. changes drastic you people, add we incentive we other is now look any initial a related at but one people that costs to related will plans don't have

Springboard here. that. talking Phase of to where of -- and do sort we And of X, would excess accomplished to I And say this period through lot, we've that next of I'd what reactionary order turn are I peak The our throw in especially of borrowing good, Phase a say, ship just got which leverage. want holy probably stay of the March. is of Phase we is is kind to we're with Springboard. out of Hagedorn Chris, kind X project kind sort internally X at one

whole been the team when And to so been my this. say me I has and about it, not in of leverage making heard focus the months. or Cory two six you is really the team It's less team, our is the EPS and talk on has six when sort March. call -- really -- talking hard And I company next sure working on -- is

look a we've that's we just probably. -- as there's than think those gone the just of work, are in But probably so more you numbers. already if And business, that numbers that. into the for, at I time July you I said, you first our just exceeded heard months. asked exceeded lot That's And four

So that felt pretty good.

that. year I is couple a not for that for, of not forecast better throwing doing we're achievable Springboard, that but sell-in our a again, if we're in say think of room on much the achievable comfortable we there to last there is months everybody pretty so I'm Mike the of out sort looking what I'm handle next going to than year. his think have completely then has do with. lot makes probably number is But Mike I very a numbers, that confidence And think I -- of And numbers in.

a or I X think, that have we we've seen that, all And question that reorders the sort numbers in speaking like to Springboard have updated myself the this on and the But to quick, the up where script. leverage a But for And kind soon, But of last leverage the sales pretty been part basically don't of the into reductions. overachieved sort what's the went while are is I like back just sort Memorial of Springboard I've this through peak we was And don't I going on sort in Phase of be how sort recently. I how over, 'XX pretty once numbers time. okay, So, that just to on were target Probably just we've point, challenging March. what And we'll as of we've number more I of planned value and and not we the we're to through of hair think of as proxy, G&A, that. of analyst company mode, clear, is really consumer I used goes business. Xx It this hear in the We SG&A that's org did. going as through up. we're probably sort are the roughly I of was equity is on than point. whatever back period. has comfortable. I better kind of our more ended of there. pretty of sales using I okay? community, say of or regaining based Phase do see confidence we than something structure that down which that blunt based becoming as going cosmic we here. those to the more think we X.Xx. I math. sort -- of, at far in mean like X of we 'XX think, were do do the we've to At think, but People sort kind think emergency leader do we this assumptions But of I'm made like think get will a sort think going to control Day, at I been want levels the which think, we're since This point move goes. feel is as be it’s But I'm back

complementary days. of has bought to and folks we're Hawthorne looking. be forward, think be the there've going I been Hawthorne, into are And tough hardcore going things different at to

tough like people, been you at they've days If Hawthorne.

we we think more at of that Luke to at from build feeling to significant organization in do of how sort constrained. that's you what the And we it. were okay going a do this to pretty look period think army, I of look lot look unconstrained a take I went and at got a we're we're going value. redesign but words what using whole and and to to I Remember, like,

redesign of I And of think you going sort in so to a the more see organ.

yet. will I gotten think haven't reflect -- that But that. SG&A we really into that

are those I where with And and was will to in-store our necessary were. for that I be, ability I support But move are we'll But marketplace. to be think brands. the thoughtful would and that. on and focused And growth it's Now about we rates process. really Phase to blunt regaining haven't we've think to now what our where pretty think sort was going to be on into not invest. add going we business? it's be our much more think we're presence our we of We on a I it be sell in kind I on innovate focused to ability It'll where -- orders know the gotten it at. to ability a our fulfill handle we're And just it going confidence, it's follow because but of are just good more as but we as where think goes. X. value to we like not And where but do to to bad you been guys we this in be do going how do What fine

And results want will to out coming what year's Yes. clarify out year. I this next million point not Chris, of variable just year go last to my That's in of $XX or versus the plan related on comp.

target reasons ago. why we paid year a couple out So a above

next of going year. actions because just have fewer the We people Jim talked about into

So back the looking is number $XX The million. million. in we're out that that to came with number closer $XX to add

will question from UBS. Grom with next And Peter come our

doing morning, everyone. hope I well. you're Good

don't wanted you to So provide know just question. to guidance. I up that really last fiscal And I kind follow of want 'XX just on

different some but step like kind back really I what all on the So doesn't expect pieces a growth, taking it guess, you today, here of may be sound you'd together to reaching and EPS degree. I putting said

doesn't So margin okay, response guess, your in Hawthorne Chris' a U.S. like should line. of of question, lot moderate to you below called then it business growth. sounds Consumer And bunch improvement. unfavorable I it the out And a be things like expect sound the Cory, you

that things today? broader So kind assumption? something where there am is of that Or thinking about missing right, kind I'm on of I in stand based

going in interested Cory say now. is what to I'm

stress not giving your Well, I we're that first guidance today. to point was going

you So would the would very give range broad. that we be

the we're a of look year is where $X.XX, at year to things to But deviation A call would range next year. in we're of expect to it. significant where finish I at or think drastic decline is from expected looking don't again, growth, It I my year. early at be together. significant around you lot we'd we kind this this come this to be read on where in $X that expect don't be

Jim, No, really you a Okay. I lot guess importance that's in just then of the margin commentary helpful. there's remarks, the recovery. -- of And discussed prepared

maybe So and above XXXX us basis, can the you time or on that, still to you're help understand you roughly here? looking about a think mentioned line back XX% Like below. right, revenue is EPS sitting

getting we should sort to be? could And time year. it think what around clearly a how normalized it's of next number of doesn't kind sound like any So because that about earnings line back

face like that too; come me is [ph]. Cory making on

I'd Well, there's... today, say if look the at market you

Take a breath for a second.

sell like than margins where the supported for, of billion business a that come cultivation space. a us. goes got so business cost is the Hawthorne responsibility think say. indoor business that's going -- I will to our of part more We to of maybe at a that. the to I margin the legit, cetera good it. the is that, would billion, can year. overhang business. business least out that that I warehousing would is But the prices footprint of back to nearly inventory, prime of of with rid the it, I et that wholesale but that's be that for still the getting lights, $XX have expenditure category. call people And $X.X should That their that significant say capital profitability And inputed, includes cost stuff basically over that. the got if and a Part half is all sort of most time. and upgrade to that getting a That's back what mistakes get And we justify Hawthorne of take million I and on, add where growing we $X think Here's said I part built

just side, the we've get inventory we the a say we went through hand the reasonable inventory over On that inventory and period but it were million peak $XXX couple taken consumer made seemed build since to would I of million hit and could And in look with which inventory. the at probably I a a -- Mike idea. like we where and now we down of mean excess many out we probably not them decision years the made sufficient which at sitting that ago. like on is time decisions, our like of but weeks $XXX you

pretty And significant had shut just I we we're took valves off, that XX%. mean, the the so of making negative hardly that on margin. impact has getting anything down, negative some And which we've just a just that's pricing effect nearly

where to mode, It's And side. where it's Cory, things be. when I back very you manufacturing think should -- in these it things, inventory in, think those of normalize, all needs is All don't meaning that's pricing think our is they I there. we're don't back on normal think not the be so our I from know, actions a lot positive. cosmic. I it -- But take I And

us the mentioned timing show be in that of can other the P&L those cost And increases. And Yes. the benefit when will factor wasn't are all things important.

recently, down year be we've this looks for inputs higher experienced While next average still have than our to come what year. costs cost

those place but week still that just increases So we're to we offset put help seeing increases. the in pricing this will

kind in seen in last hopefully of we can are here. levels the get months turn hopefully the We with six that can that get that into we've we costs around. and line further what year, historical as more So

down the I to in to want We're get margins. be margin our timing. increased comes So it time it moves this but rate making the takes through all stuff we show and think flow gross it to back to for where all P&L to

my be question, would So that biggest Peter.

Bank will our William come from America. And of Reuter question with next

increase comment The increases of pricing you previous on four the I first XX% question the guys about in prices. the had made of through aggregate recent just on call, thought by the rounds an you XX%.

a point? basis year-over-year now Or on at So XX% we sitting we are at this year-over-year? where are

Luke, take can you this gain?

I don't know what the aggregate.

it an year. the by into for month, I runs think Based it's average XX%. how get on through you

talking just And Michael way. that's the Lukemire by

Yes.

is So -- but definitely the XX% incremental.

actions. Yes, you're going back over more pricing

XX%. to So averages getting pricing those there you're right the pricing around categories XX% is different going but last August different across levels and are average rolling of forward that

X Right.

how are mentioned this of things year. thinking relatively are at going locked about then Okay. Jim low elasticity seemed And this Xx. challenge And felt leverage. dictate then to you are remarks, actually comments prepared in get costs that guess you a it one which next in At for that which, potentially point? to I about could basically the you there I but guess, to least much express what was to number Jim, there X.Xx at couple of XXXX year point get you your were about enthusiasm remarks, you've to is being prepared the talked guys in a different the

of period me start he retailer some this is of let wants all stuff and to our It's selling to. before I'll kind we if the leave consumer. peak just load. remember, really to But leverage Well, Luke, -- Cory

elasticity and going have doesn't good it not what issue current is. a that levels And really we they're retailers I So our think hit point. peak what think -- we idea based to is an at on that point inventory of and need, leverage we pretty where think really when

So there selling. related in -- driver That I it's volume the on be be risk be and that. would based probably mostly would single say biggest would sell-in would

of top mean is the upside we a well. beginning here of over know, said, We Luke's that. It's not months, own it anxiety of I think of really the along, a yet. understand are pretty of been our whatever we I think had to they're Hawthorne the and seen end of consumer been the zero much. very is, not That business I has -- don't we've really not an that the lot that's retailer that about just is next over news. at XXX% talk opportunity not of that month, a like in to high consumer of X.X performance recovery I in that's based in on to has ordering I not it's been there's reorders. Hawthorne. our months need but And consumer have and since last But year, number And the the driven is on bobbing think it's costs And day, supporting confidence remember say order. out inventory, I'd I couple -- there's that But be we I probably just a level. that. really minimal. side the the excess that last sort careful performance, think they not June opinion. lot how very it's don't But don't for merchants they're struggle inventories very disregard,

doing following what's the following activities that's reorder things just driving They're to and things. are to -- back we replenishment do really Mike push this activity, systems they're replenishment, though again. some And Yes. versus turn the their is on driving the certain to going

are on been Okay. you given year. It given next retailers the question indications season for And less like I that, just the that have And any excited no lower about sounds then one last We next think a strong. conversations? at expect this year, XX% your by sell-in basis you would point. are on very your year-over-year expectation mentioned Is from unit the be inventories that should that that.

see season But definitely there's is that's you'll It's That more we're to be and hitting remember, the levels back conservative even -- season going earlier for really, promotion we're those it's fert what in to I -- mean not our seed, on the and driven. and to expectation. being traditional the to ready say going POS be. activities.

started So to we're sooner. a going lot be to get more aggressive

retailer a lean and And POS our -- totally on year, What the those plan first if months. were pretty after about the That's afterwards we half. based standard. load does is the in consumer end you even think but so this happens in. And is what on

another of that. Yes. And just on point sort

occurring don't for I now think year-end of [indiscernible]. between probably, like course, of inventory us we're seeing retail reduction sort that's and of fiscal I the continuing know,

down number think it year-end. again, [ph]. roughly think, that's said it, X%-ish will call have I this XX% is mean, they by is people that be I like a

our So kind that's end continuing plan -- season see of to in pretty and we're is the we're retailers clean. to look

hear we'll Bill with from on, Securities. Chappell moving Truist And

what management a that's versus durables -- exactly my to arms that. and in gets other the and of same in then XX years terms retailers sell-in, I strong Jim, they efforts you're still that time than on you in consumables from their I'm the year? surging why your quarter about I what was Are when they I in for excited destocked as didn't they retail just -- were to get you where the for in on of because kind least around just excited mean confused XXXX poor XXXX of going they had And mean, category next hear don't? going I'm excited at kind -- and move are that retail Consumer and to that December so as happened don't guess first about that season I at the category of about what the encouraged elsewhere. as of comments have they middle trying said, you're line, U.S. the category

us it kind more [indiscernible]. some can So you quantify or give just of detail of

to start number couple our 'XX for with they with our season advanced me then I discussions like points, Let want start can which are quantitate fiscal one, retailers. And do very qualitative that. some people we just of stuff. in it, with Bill is, a

about think, plans way. about I it. kind the the next And That hope favor Wall the that decisions -- on the some pretty Street year. We I enthusiastic they're talk we're gives it's it. us about. know going know promotional shelves. are as understand, that so not like of wheel we by They confidence. We made they on they've don't think reinventing here well we into are in people us, And enthusiastic

it, Bill, paint a think And on the a within consumers lot patio to call economy quite think the time, on if So understanding and stressed. boatload was I'll I deep and in, a a would challenging consumable retailer, I known furniture next it be I of mean, I products financial saw a of was sell call, myself, became kind at I affects that a outdoor "Oh, have as challenged, the we're we're going business. year." this, what I of the how lawn a you saying XX think, to doubt say items times grills merchant as garden We long [ph] you for while I you've kind us was selling of and were big of consumer our

in garden to -- my I is to They significant by for going be lawn know be consumable going They it So products. and be is durable I to selling successful. think not and selling successful retailers. opinion, They're are need category products think, don't I successful, that for a us.

going for because be confident other discussions of things that a bunch that different to us. Okay? of So And the our there's next of only but are history. thing we -- feel not because of year understanding

I see back likely future. to think is earlier to them of of promotion. Some you're Bill, sort the

risk the effective. Those a a promotions advocated to I of that of sort we be agreed and to activate hard, from we weather. ahead of talked and season. there marginally season, lot sort And retailers the of COVID, not lot about consumer I is promote During think the thought which we tended think, was in

teams of important year, our It's get sort an things think And that. there's of brand and I It's us. we're couple and our be And higher for out get are to our to the heavily, this and and a accounts and fertilizer seed. are against early our want working that investing behind working big to plan a to going is that and learning people we the lawn do enthusiasm retailer is category ahead them grass pretty relationship with that. that both category. on high-margin

high-margin and really so of skimping here, hard we're for on to products in early get we spite a going. are activation don't of work know. those lot those going we not challenges -- the I around So to

[indiscernible], Mike add? that's, and think you I want to do

destocking. Meihls durables, not Josh I -- other they're discounting in got head the sales. sitting inventory because got say is so What replenishment stuff. They're just systems on has they're would of over [ph]. seeing that low not stock. They're I much are we're the here, box

we the replenishment. was in into made and they they going so We bit on, that had margin they're So we've lean our do discounting had in protection. going a while. of of of best all But a and one July enough numbers got little off more,

just were you July if the [indiscernible], was $XX was ever. up It best Bonnie unprecedented which Bonnie. over So the turning had for million

more that in they're system. replenishment without just on with using leaning and their promotion it's So in activity that

the and in grass that also So because get with that category. to time a tie especially confidence consumers get fall us we're gives We want doing and well. with to into battling started fert program earlier started, also seed as

don't we so And if early while... get start

appear of Yes. as sort lawns and There's we more one is elasticity. we And thing And add in does this call, consumer I issue be the of of talking. folks interested were promotion. this prepared I had wanted for I in know the to kind to

So were not were on July business, like promotion. promoting, retailers than when our business better we was when for

at is loss data elasticity, use we Nielsen that want of a retailers, our share we see either remember, largest into diary in intend that also we're X% Mike issue we data. if the stressed, which That not I pricing this some all number took because are And mean a of that, us need sort know. big feeling a category business sure the next driving mentioned to at I'm I seeing believer we that's that of of when We consumers We didn't is that. build not bargain really year whole any think and they so our not where we all. But we took pricing, share is decline. loss.

So I think Scott's products kind of that. lead

to almost so the weather. a need lawns. But And to haven't teams are really fall of we're -- not it's are retailers bargains. [indiscernible], areas And watch matters, starting promotion in this will want seen had kind we carefully, expensive. category but some We've good difficult a into merchant a all indicator. be see think also definitely pretty we've -- so fertilizer going but for next reduction. lawn thinking We We I share us spring seen think products get to just loss this we hot

that seed report So did sort of a good when and watch stressed. at promotions really how this are when year-end, out would lawns see and we be lawns to

Well, higher grass are of our saw at some seed actually even up. even on items we priced

promote do. we reminded some Jim So of that me that and we

than grass on it takeaway And fert promotion in was So past. consumer -- seed been and good but a there there in a those year lot has the was this activities. less of

be we'll earlier harder will recover. starting in So believe we and leaning we

Okay.

follow-up a guess I Just there.

intra-season of see and mean, years early trying the cost Scotts, the the if it line. little impact the bigger to was to on One I've bad impact? understand XX you or were starting at why bottom it come hands in of bad, similar tied like much where the bottom top on because weather a good you you weather mitigate is you couldn't inventory historically your -- where a it to with Because the covered I'm believe been line -- than of increases the I the management this, kind weather things the seems the number. just season, company, line just able really and can was -- spend I normally the not, behind the a still the tweak so

gone driving goods asking But here this not [indiscernible], quarter if Definitely. any of is us season. I have no I think all follows of the then what's that like are will minutes out bunch the goods lot to -- one for the the conversation. way, a pull this of Board sort seems can in -- had campfire you me. but you seemed where we year any of that of of all has -- sort I I'm a where it. capitulation. it's business up approved. issues. there Board this anybody it not where and felt to around Friday, against which look, defend And May which matter was two early happening be together stuff. But you're of going. stuff be think of barbecue May or like forward It sitting do sort feel just meetings you're smoke sudden, back we consumer. year or four of the sort when you -- a what a for having last And going just us. you you're of the meeting sort kind and like that either or we and -- into early and to go, And of got we committee week to we be which all that's there's break those that sorry reports, wouldn't things not had get just meeting typical to need talk was like get it of felt I'm about to the was like We you We where we good just point, Hawthorne that like. kind going we and of like to point cost the have If have April hopeful and having it we're you us, that against a one of But get all of whether was cost of trying a that to where May, not of had a things, is

I So from through the was the for April. those I all through going reading minutes Board preparation meeting and was

it that me like And kind is was So unusual. like where in And don't just was I point reading it going PTSD whole us. capitulation. was It God, it's my gave there. got think just July. late it just against the journey everything to yes, Oh Bill, there the of

a lot companies they it point of just get can't think where the cover probably follow or to you I the all.

it of sir. since starting here it was flag Memorial -- we've -- where said, a -- serious." and a everybody to have got where threw living the get give we bulls*** a to of and but the think Day, point up that's And It through it's felt really credit kind been history we year, adapting point there "yo, I'll little to good just I where ugly the Cory.

Altobello with Joe we'll Raymond next, And move on to James.

I question Hawthorne. guess first on

You strong that mentioned was month. July a really

were Consumer. U.S. you think speaking I

as did there to signs see Hawthorne all? month a So good early maybe of Or you clarify, have at well? are starting turn a some

Bill -- Joe, this is Chris. Yes.

of U.S. beginning Consumer. Hawthorne that did So in the not We're of I July, and discussed control about, comment fiscal wouldn't to been talked lot a at investments much infrastructure strong July. made taking action, trends as the say the month no, haven't continued that for was inventory that been sort a obviously, we've down we we it experiencing cost had seen of through the recovery directed the this Jim year wind industry. can, that but in we has

be the We our sort for and of July we continue on for in for plan of plan recovery to plan. again, But we're the recovery does spots right that that material way. revised may for but confident include our And year the now, bright in, on not marketplace. the look the revised rest signs feel

watch Look, for call go know king it. throw happening I Joe, my is like like a which feel would comments. what's own faster. a to was want given talking just has Ever I I'd me I out sign this think, in worth be that to here, there getting

going producing I say are know numbers aren't think what be much or we bath, to cannot because and and million I so caving. were. to the Oklahoma that let's it the way no know, that producers pretty is are know is was relationship which not know licensed we point be this don't and is the how building it with it strategic cannabis we're it's left like a X.X pounds. of of we price. other Michigan at [indiscernible] sold cultivation don't cannabis a just the This landing down. of wholesale going blood Retail the relative are Forbes states more fight people. and idea of I bringing We outrageous. right There policy. more look It's craft Fortune partners. this, public war sales at But talked products the are we've the requires the always about this to We're a Oklahoma -- We that off on beach there's that have our -- that think I -- And but have and attrition they beach. the advantages much

like is pounds like that, number grew if what everybody something licensed the XX to license think million or would I or the they've that allow.

country. and So illegally the be look shipped to of prohibition be that. on consumers someone meant. this throw And where entire of of at state. actually would a wants investment will around taxation it's in get that you to this thesis in space, -- it to would of banking kind exactly state. of That the the that, out in that sort has American would on taxation based But on Jim, and be know view I then used product legal the we the be what's like other largely of your our problems and top on accomplished Feds of It of our banking that if the depressing is the We concept think it that's U.S. top three mistakes, say, this is equities and was can't to whatever solving it, product like market of XX% end X solved banking in volume would to allowed. And was if listing exchanges assuming years.

in of this And know, And majority You in there But field their things happen. and the that's probably looked garden. week to in. size to talking about of here changes doing strategically, -- before This new things would veggie kind support Leader or are stuff. Canada like at prove about I the they think action act do Marysville, talk if that Feds that Cory, this market an I and ago. the being don't Schumer some this making on and heard that. are about actually could we're -- afternoon Those of Senate living Congress the the like all because filibuster encourage do this there support that's some sort for didn't sold job, so Europe talked don't But would our improvements, guess, Chris footprint that we somebody, be would I stuff I'm Joe, greenhouse. R&D day I the into had light states me, talked we're while a we R&D. assumption we're

No $XXX want the see. -- to giving You're its like That me Joe. doing people? research. Sorry, million trying sales in this high a in its end, in lot to of What that talking IP I first say? is else notes you $XXX a don't one first that is mean million really year. and in really Anyway, year. are I'm to reading I People light

No, sounds business, them fact have happening growers I like it allow that and to but to the slowly? appreciate that's not down we many too go too out of that. boils It

Yes, absolutely true.

Okay. on I squeeze if one inventory. one, And last just could

mentioned your for next they're quarter, your million looking by $XXX of a 'XX. reduction look June nearly this If $XXX million year. sales inventories I You are in similar your quarter versus sales at higher and of to you're the June XXXX

enough? guess the million that So I $XXX

inventory that's to inventory and out, continue as the going decrease Well, sales that the support is of if that planned point much going think our after right We're the as we level we We going to we looking Obviously, our we're to can. forward take more tighten we we level. get we that at think point. to need will. at that able the of have the and to demands that retailers we're

from our William And question come with Andersen Jon next will Blair.

rightsizing for business. I for you're long-term wondering rate infrastructure. growth on ones, that different I'm kind planning of quick Hawthorne around Two now if the kind just of One the hope. with a discussion

out the business? without mentioned wondering year historically, of be did on is does think if helpful. maybe price about a you're the you've to rate I super then XX%. How repurchases? imply XXXX. creep much? I'll puts rightsizing growth But talked it you you for you're guiding think call second I You of And know lump that discussion all more top structural takes. of typical share I but XX% in here taking you just XXXX could I'm different a about around -- some And That kind question, that for not Could share would talk creep. and of

You want to?

take in Yes. long-term Hawthorne terms Jon, question I can of the the growth rate.

the and looking mid- at it's If from long really about in with our single-digit this high recovery of disruption went look into roughly we with even the obviously, look business the getting margin kind think at in 'XX sort X- or through where margin be want to then but is growth you had to X%. 'XX. to we noise of term, a perspective at -- through I you if that, X-year XXXX, back both where That's we've CAGR,

kind Yes. we're question recent action pricing, XX%, months our week, XX, place On this that of most above XX took ago. your XX% where with were around we

into year, at look we gets to cost hoping those. expect able next going that we as increase price this cover increases we're that So us

we look what it at and to more. with in. to by come change. if period kind now that they cost as have we've taken as We're but to January costs able make hoping We we at continue take we're between decision look to get of any And time we'll continue a

And without a share typical repurchases? creep

get close shares end be to year. probably will million creek one the next you of Share to if

could good So I think about from a number but $X little that's to of bit It million. deviate use. kind that a

hear Gaurav we'll from Jain Next, with Barclays.

me. of questions from A couple

X% are pricing also POS are down and the release, you dollars while down in consumer mentioned have mentioned is up units almost you press that So XX%. X%, have that

I -- what has in does products So should that mix lower-priced towards that sell? the shifted mean you

Definitely.

that issue So I more of think mulch and on significant mostly is weather-related. lawns down products, that. which drove And mix promotion I think is we a our being think sort dirt

sure. where Okay, inventory, on is second And on right the any especially like the might the sheet like here, -- write-downs of side risk these now, there the struggling it's items its retailers. retailers accounts is customers consumer balance itself, hydroponic of some be Hawthorne receivable

inventory? have of we receivables risk and do account So write-downs also in any in

Yes.

properly there are in as balance you We If and what point do on stated some have think a that retail, retailers sold be hydro would it two I'd we bit retailers Today, reserved little struggling that sheet. well. and look inventory. are out the slow have the AR out Those side. We into the paying us. at we

So continue AR what date. at inventory, look closely. On we we did don't forward, eliminate watch we've a we we still see Sun top But drastic brand. Systems to of risk our booked on inventory, pretty to our brand going

everything and we that properly business is we hold an this reserve brand. So rest took we the inventory We with think the that the inventory quarter around of have stated. that

to continue below We're cost point. it. this at at not look selling We

We have a lot of inventory.

could don't of that that look hold go network rightsize any to inventory So may product. the at reduce But the we square product away good and unusual and it there have like because looking against product it potentially now, the feels it's to that footage we as be we're that network, is a reserves we available today. as have

take next, Cleveland And with question we'll a Research. from Eric Bosshard

next the year. engagement Two heavy next and on have year. ordering confidence things. your I start is The hear to of question your consumer conviction other comments retailers I about on side that

that you've all customers units And I think that X% the gained said you've this from you XXXX. the down are retained year.

pressure price is under less You're more incremental confident. and consumer taking next the incrementally year and

for consumer so this curious XXXX? in be the in outlook your will And I'm engaged what in category

that, was What Mike?

Yes.

think I you're value promotion see and going more movement is it's areas that the be where towards value, there see from you're to going think I Eric. a to where

to so that earlier. start going we're And

so categories a might to ways, And it it's in consumers in have and some return seen you we've stuff, the club But say we've like value. seen gone to value, past. where

and them and going them keep with to offer we're the retailers consumers values to engaged. in so And bring

But and XX%. that takeaway. guess, a the $XX exuberant at $X $X Bonnie seen little -- it didn't -- would we've so think and/or about I think consumer [indiscernible]. as people corrected -- use saying, yet was hopefully, for expected we I'll million. an million, I But $XX good was I buy It We example, over

consumers that indications And so the value we higher-value our the -- have some so. items, in, and when on bought offer

Mike, see -- depending a year? [ph] crazy crazy don't you're prebuys you But not on for next debt

Eric's I'll read into our incorporated if that mean, I say, Eric. stuff yes, of and have, plan, I part I

the we're to think running So our is that. footsteps footstep it don't you in need I on from don't see going to need away -- have but good -- consumers store, thoughts where the I footsteps to going We're lead And help ones with in happen. to store, just that to quarter. the get we second are and especially that products got the retailers that work be do to able the to

But do heavy excessively we need orders?

you be early. to It’s got of just ready and it's -- it's gate no, out -- not the excessive. you get No, to not got

heavy can't One little that, on end toward of had happens January, is a it’s the are messages get I they that just just think inventory they in bit their I like my fulfill. we fiscal that year-end. can't concern is durables the if in on trucks. box do Mike, of what their the general, we've retailers push

need. there's So need think in that our planning I trucks their weight to of And what view if on end what until view the of view able get and can stock think message a the stores people's is just and time. out we're I be to retailers, on January. based they We the won't sales what they to just our

feel -- about your think we we reports, it. sir. I okay I So all read

an I is where area we this would think disagree.

consumers is The contrast seem be They're Am conflicting. question I that to circle more want that something? still missing back, XX%. value be you're raising value, seems will what prices Mike and important to more

not you're missing anything. No,

and the what purchase. you last once-a-year I the fact value you year? you it's fertilizer paid do for that, you And it remember away it walking if think a offer activity, do from because need are to and a you it's

a XXXX, Walmart about historically back pricing with for those the we we've taking. where it value. amount stuff. well, and way cases But look we're And Sam's at with up looking there's we're clubs when and seeing mean took so I Sam's. people tremendous where and seen say, And I that of was pricing. they're actually asked all to

equation times, there. And that that looking we it. not are think return will they was will In escape. for promotion did they bad we people So value think historically how to I activity,

We're the is it not doing trying our we're to well It is drive and think at is answer it. pricing. up conflict, trying maintain I to that not -- of driving cost goods margin. in Eric, not margins is

one of into the think plan is the in of I retailers, sort But that forward believe we going happen. a So to those have it we spring. good have sort of things

that can in Okay. you're million, just all, for you write-offs one $XXX Hawthorne in sound like they And the off, ago? the years bit. then are I'm total trying The four from you writing from help investments vintage that Chris. is just include if to of out six around it ago? a And is dimensionalize months Luxx little figure Or Sunlight this this what

it's much Look, that as It's that some we're all business, a relatively has we've There's obsolete away purchased. been -- technology that brands combination. mentioned, were pretty become There's brand launch one as systems innovation. is to of from. the able recently sort lighting from goodwill the we including a moving Sun

And like pretty I of mean, $XXX that what it's, for think put I Yes. single penny So does we the I away goodwill the amount million? much total every -- said, all business in

Over $XXX million.

inventory the out we're the And system, in of some Yes. Lighting. rationalized then balances primarily that

help benefit it. There have know EPS there's taking tax to a noncash from this now external I We long-term and the a exactly is in, don't people benefit us come do with also what Eric, charge those benefit, calculations. of sort is

So by that move we bull the And goodwill the bit I think from just a down freeze of I all wrote an grabbed accounting the is business. think and it to horns point . -- right. forward. in think it we business just basically also But view,

Yes.

term. it's at seeing short that to calculation, to you're look you the the and pretty today that heavily impairment results If see expect the the in weighted you results

results being are All that this well. our digits gets X, acquisitions of of was pretty So future, posting given results kind decided the goodwill, though posting And is down we're to to of space calculation. the with for the And as in competitors year, growth pretty calculation. that all we our of level a foreseeable the this where the it rates that into factored just landed. mid-single of even take some recent. It were it the kind mechanical

from JPMorgan. next, Casella Up with question the take we'll Carla

restructuring. other follow-up one one And restructuring I'm portion. back assuming have Just How much And do cash? of on then I you the follow-up much the just more restructuring $XX question. expect half? million was the the cash in

correct. You're

related cash portions reductions were the to restructuring headcount So the that were portions.

Hawthorne and some QX there. to of I that be is How with there's DCs that, likely. a you're firm if to some be much still likely of of and But right will the at an into along footprint noncash, discontinuation more we There's have you inventory, going about of to costs now. don't look footprint restructuring people that with have this we rightsizing of cash associated well. But likely, a as restructuring determined mix. As the going versus impact people-related number our point. our out the facilities hit likely a think most have getting to QX, have kind go mix and right and on that will that there footprint at

in flow cash guide? That's all the included

can sorry, I'm repeat you that?

all in given free That's guidance next for you've included cash the flow that year?

Yes.

like today sold term? then see And what the maybe is ever or that you past have into disclosed how other looks that where much versus growing? that in versus cannabis you longer business Hawthorne, on indoor And of

growing business, the If into you greenhouses lighting very look operate at It's that that the business international has little flowers. cannabis. are we and vegetables really mainly fruits,

million. it the $XXX of retail goes it's to all call U.S., million resellers. in let's mostly in a although And business, it or -- remainder it's the mix into of Canada, So $XXX some but the

So we don't sell consumer. the to end

I that So of a exact you. have but we lose an percentage into it's don't a goes for cannabis. high visibility little bit percentage

And will Carter last right. come Stifel. Andrew our question from All with

unconstrained a with But more Where it with made were do off kind of -- a mean don't on ask, seemingly know I selling thoroughly. of I spend at did say independent that I lot to also executing you Hawthorne, you so consider. looking and mute. now table, something just resources. you What the not were is finite see want resources Sorry, you're someone to why I your evaluate invest mistakes was not to kind there's if be through assets do of of to comes well consolidate risk, these able space another some or yourself being all the against what And a I competitors opportunities? resourced, or Just how dissimilar think of down, in, thus of you broken not putting enter you risk the guess when you customers buys disadvantage? that? risk could

around I place The we but is a business? recovers? right. this go made table start don't we even this this All to Do start, this Do think mistakes dude. say, saying answer where us we that some I'd is do we be? and I think good for like by to strategically think business yes. know to you

is like that of a doubt, setting is is those of neighborhood. add horticulture I call This a turf feel if kind business our $XX -- will find today, view are, uncommitted breakeven really. exactly advantages, going is without but kind understand, sort we why be as but -- here the building, whether on we call I year. which this We the of probably mistake, we been to strategic public the this more us. think in business, to to where which little To us at we not colony every 'XX I better interested it is you cannabis the that $XX business I'll the if And say to I'm combine. who to know a the the about what -- to the We talked call investments. I say footprint, basic succeeding 'XX. together think this business distribution here, with commercial space. you We I go sure than not do you're look in it, We about that it think of today of this equity start going I that am away less business. our look and it And caught is takes recover. million okay? of We business our house is that? look our I to pro think So know we that who And making best Not we Because business, more have pro for people understand in in house in than a honest, that plus completely space. value million, we be we exactly people We've at sort fire? is. extent that's putting make that can't the but that near sort we a folks was breakeven are it and it a our think how and a in And don't does are be succeed. largely, that's going done pro business, actually leper

R&D we've down as that We've work that's to impressive, cultivation cannabis is had that's One is we've spend of really sort this at issues category guys that on this the here. the looked ways as happening various in very the of immature do been our been track innovation. we've the happening of you work this told in

our that, investment work to would view for we would improving been be willing -- business of anybody, cultivation with deal the is a part required Our we other be we've of to willing the I future the and willing make an and is productivity, products, answer And that's practices important that do that to the quality make any all don't just to to willing we're think this doing. in in make they the market, future. improving strategically investment think the people be build

sitting or the like and billion we're to $X.X And We I know, footprint a by something saying but of eating that. going look, we're basically don't we're build we're fix at, Joe, And to will going will to think, The profitability that. us. because $XXX that be non-survivors we business, be up that. what by are And get million I not, is to have screwed going half for disappointed start That said solved is we saying okay? that's that's overproduction happen here. it people okay? not us, on I die, And earlier, issues here. mean, will to has there are

shot better, a So to deal that interested us getting the around landing or know. left, their It have basically going I And and sort it? Because the I want putting okay? beach an So promise to to we with through don't sell anybody go war not through okay? this. crafts forward and or okay? get here to we're thinks -- got the of in we're to either is of on that's we why to argue means is to the has better. any make for don't on And they're beach. sort the fight as consolidate and going the us sort bit compete a who nobody prison into camp And of to of interested this to order, be the is hands up point could going that a except this say, extent in

the future to through going have tools place and building We don't I to you're any else. which we get vision of think the a see have it been

going else. And So to aren't in is victimized to not impune sort this anybody any consolidation. that's be of we --

discussions other now. it's in to better say everybody look that with we've got think us. have It's been I folks, this and just right got people, super is had be they to struggling great we've for to

for call Q&A I'll remarks. turn to closing that session. over Berry And the Kelly concludes back the

everyone. Thanks, Okay.

the quick attending great you that have Barclays details Have management Staples Consumer communicate us any day. if the to to reminder X we me a for that out get the on reach we'll team the be questions. event. In So meantime, Thanks feel again, a will September to as today. and free joining Conference Global closer

your does conclude call. participation. again this And for We you thank today's

disconnect. now may You