The Scotts Miracle-Gro Company (SMG) 3 May 222022 Q2 Earnings call transcript

Company Profile

Participants

Jim King	Chief Communications Officer, Executive Vice President & Senior Vice President of Investor Relations & Corporate Affairs
Jim Hagedorn	Chairman & Chief Executive Officer
Chris Hagedorn	Division President
Cory Miller	Executive Vice President & Chief Financial Officer
Mike Lukemire	President & Chief Operating Officer
Chris Carey	Wells Fargo Securities
Joe Altobello	Raymond James
Jon Andersen	William Blair
Peter Grom	UBS
Andrew Carter	Stifel
William Reuter	Bank of America
Eric Bosshard	Cleveland Research
Gaurav Jain	Barclays
Carla Casella	JPMorgan

Call transcript

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Operator

Good day and welcome to The Scotts Miracle-Gro Company's Second 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.

Jim King

Thank you, Madison. everyone. morning, Good and Scotts King to you welcome I'm second I'd quarter The Miracle-Gro earnings to Jim like conference call. me Cory team. as and several This Chief Chris Hagedorn, Operating joining is members of CEO, Lukemire; and morning, Hawthorne; President Jim Officer, Financial Mike Officer, President of Miller; our well other Group as and Chief Chairman Hagedorn; the management we'll questions. Cory moment, share some then Jim and your to and will open a call In remarks the prepared you of after call already scheduled many I've the with in fill of the some time to gaps. can Anyone wants on me who as XXX-XXXX else (XXX) as and calendar work time we you call get directly to at can. quickly we'll the we One bit housekeeping of before begin. IR X. be in Conference I William will and Cory participating on the Blair June in Chicago

know, more used coming business again of and intent of an of to weeks is couple investment our we've the update move that current many With month event and do to of in on this a the on the of to As community May We'll advance. the this critical opportunity you call. state that, details of event as today's date out let's the related historically, time the to publish year.

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

Jim Hagedorn

Thanks, everyone. Jim. morning, Good

Our than morning different will call this be normal.

sandwiched comments a few Cory's high-level Our by prepared shorter be remarks mine. will the start implications I'll guidance. and and will both between thoughts businesses about for our be sharing

in I environment is in on to how the current and half margins impact the line. we More external second it run impacts taking we what first Cory navigated I'll the our numbers. in get Specifically, half, Later we outlook coming the we're the want will see how on Then I'll how discuss call, cover the the outline back the year. the specifically, steps business. to having discuss our

further economy maintain pricing steps towards In addition improve as and to to actions, heads the flexibility financial U.S. sledding. aggressive tough we're some implementing our productivity

had Let our with which me very consistent strong the segment start a sales guidance. and with U.S. quarter second Consumer

in even to replenishment the better were do orders we fact, lousy weather tracking half second in In fewer resulted but of March.

strategy input we what accomplished cover set do out Our to is pricing costs. initially which higher

I seasonality, QX However, was our couldn't resurgent the the call further quarter. the though, the in it prices we makes time and added war end pressure dated. downward elapsed somewhat between solid because know But commodity of cover. this those of a start Ukraine results after Still of

our in dollars. real share retailers. led we'll The entering in is morning, this know XX% from down in April time. some orders fewer POS we to May So what takeaway in consumer slowdown of

year or is year is the an positive As we goal. the X achievable. year's to as low of year of for last plus the a of sales improve X%. against In good of POS Still, the to be territory minus be a clear, is the in double X% the that balance comp we digits year, pretty number first need see our I the flat want end last to from comps That's guidance year-end, through months now result, aggressive From we outcome. admittedly levels. shipments XX%. faced finishing why minus plus

POS that by X need remember least understand seen the guidance. side. register start. the to we right the X a to from are don't our now challenge news you warmer season interesting meteorologist ago. what's retailer key weeks. say and delayed has now most weekend. be our moved In the country, X As last delayed call, down digits off May, in in at biggest have belief on to Southern ago, why going our of over month have upside What's season ago. been respectively, were now. is we'd to The our the I'd the and X weeks response good we had the a momentum weeks. X you is down is products spring encouraging But past growth Southern Midwest. have a year our only weeks A POS and be not were to explosive until is was appears That's in hopeful the Northeast XX% was is through earliest or Easter rough down double far parts to that Not weather where is that promotions markets Entering digits just those that This and weather. just markets the from units XX%, ago mid-single reinforcing would after been

While important into later. that it's well has been in markets, season mid-June and remember lawn sometimes to garden the stretches compressed, these season typically

benefit markets, Luxx value improvement tracking in signs an growers. toward guidance. we're seeing the have trends low the of growers gain yet mode. in our business in we'll in seeing continue already said, And Hawthorne, confident this of us indication acquisition outperform we're expansion the while to and POS see media nutrients At levels still products like our weeks ground that not This demonstrating to are but consumable to experienced this West modest of ahead. of continue growing critical engaged Lighting, the Coast the So brand's we're end commercial That durables. is

Rhizoflora, acquisitions Liberty growth. are strong recent we up True Bags of closed are HydroLogic digits them. showing all triple on all and since fact, In our

on the and an for full to that innovation category meaningful a we year business addition, non-cannabis market, LED a In a and area brought lighting, start growth. lighting strong is European is horticulture pace year the professional the our become Canada. starting critical in business for to significant to had market Europe

We gain opportunities further to continue going to explore forward. ground

start on don't for don't negative on on spring, the issues of because example, So utilization that's we we always lower year basis. what whether an impact want to And fixed if have the consumer. the season in also while product in season and extent we what this into planned accurate to our an line with impacting already just to what accurate other that know what are start read difficult know Because margins. get mix cost an leverage a it can't to had Remember, But of this now, I yet real-time X% know. gross will right late decline of we guidance. the assumed. also from The inflation assessment and expected be we made has impact potential see a rates, impact we of the to to units was baked delayed share

those of our you at share. that or appear trade have to companies and to CPG don't other the year-to-date, we our to to makes enough an price predict most products simply in data informed week, a recently, commodity While down seeing have seeing But be private are we're gaining holding year. elasticity yet with label usual When slightly harder point outlook combine the we any change this know seems view. some to outlook by facts it earnings than not

and things in guess since a us. comments more minutes my few view, We to believe for a front seems weeks me an now. given to way that let an But few too educated right that challenging point earnings comes turn as trading, however, over in adjusted surprise. to now with target? still our there like of you give resume what POS have the we more of is right informed don't I'll $X a has want and the more that of provide anything XX% Cory. don't many stock been moving a accurate Frankly, I need To concluded, pause a of pieces are target. share I simply than you is now a And but do

Cory Miller

hello, deeper on commented little dig Jim on more few Thanks, a color everyone. the seeing. I and Jim several them. especially a and will major want of on I margin issues a of already little issues we're some share to

sales pronounced. weather weeks true over were to door. slightly some slow to of Northeast pleased reordering Frankly, on especially last to where business year's better purchases the as from was site we've patterns in Consumer strong The said, break in line. seen comp keeping posted POS welcome is was Jim a This spring are sales our of Let's as Midwestern the out few the past markets, the do But we expected we consumer interrupted retailers. billion. pace reorders almost U.S. number $X.X that. with most and and the We than the the start top

are we'll into the enough replenishment because deficit year. were entering mid-April, we orders us the reduce into territory May. However, a impacted that by belief well facing to weeks Jim's not but in probably that ahead share for I positive year-to-date deficit get

hope they prove and team XX/X I sales working is to Our us wrong do.

in of organic line of sales While what we our still expected. the XX% Hawthorne with outside decline were essentially was sales guidance,

have Let Once been but sales after until begin expected happened was strong. been would owning X hold to have hold caused was it to Luxx issue provided. me business We selling of we us after had ship those Luxx able mentioned remedied. QX, end to of If guidance products to on roughly we in targets the day it the been us manufacturing shipments in that of product addressed us which explain. cause had lights quarter, with Jim the range -- we

month to guidance starting the While that strong as is frequency risk low increase to see not end does in in We of now, happen, over coming of news progresses. the some improvement order on order market. the however, our short steadily sales year expect the of If revised of right that case would best we the outlook. the seen that days is those our days we're indicate good number a past we've the Hawthorne

adjusted largely basis have largely rate of successful through offsetting see higher The X was we the The months. broader actions in Let's lower move been and below in basis say quarter of to us to gap points leaving our developing XXX XXX costs. on margin pricing points implemented March. last cost started I because gross year, we in the rate goods. a discussion

my the In our last war, worst felt our not changed risk to it of guidance. comments us. on $XX early we said of at and that call, remember about I amount doubled moved included after the highs their start increased risk earnings war the from in were has key our Ukraine. That Since the like decline time. I said in then, behind had dollar risk to from public million commodities $XX You'll the starting was was reality. That has in to and shortly March, with million

to to still commodities we our are $XX largest the our Diesel a $XX between XX% the be shortfall the the to year, in of rate likely pricing We now with and of a see the Right unhedged Business locked have Hawthorne margin about end benefit million need the for now, sales. segment including actions we XX% due by to of turning mix is year. million pallets lower out areas costs urea. the of to about remain us exposure.

comp We're next QX is discretionary emerging to issues, no However, spending factor margin in into than that year to X than gross was There's explain SG&A. expect likely will related final months be in to it I share shape the Jim say next SG&A balance not some rate. X/X remains could Also, last that planning this and largest minute. would and decisions unknown margin U.S. the decline also the it in year. number of pull we which for a and other offset though, we've of some benefit P&L hiring on lower. to the further variable the of volume over lot year decided and back Consumer will the what more is carry that possibly we year. actions to To expected a will the gross

operating is line, comp and tool, with was million retention important $X the variable was quarter The the performance. align levels. it also and higher to has expense $XX While year-to-date. in higher driven Below an by reward borrowing interest higher change million

that, had I Of the quarter the Our with on On $X.X suggested have a a recently line recent leverage with debt facility. an X.X%. term locked our balance completed bond we being in X/X new note, interest is end Combined billion at was a credit with the loan. of our of rate of ratio X.Xx, billion $X.X related our now our about at what revolver call. last issuances, we average

press the $X.XX. the number in was $X.XX in compared and with noted at balance you the sheet. Taking adjusted release, with per As look quick earnings the $X.XX compared was $X.XX a last remains story GAAP quarter The million the quarter. business. higher lower last Consumer within and this year. higher same U.S. the the Hawthorne volume, drivers is time costs as Inventory Again, than $XXX particularly at are share

initially been to to planned and building we that inventory Hawthorne, demand. relates year had it had meet As growth the double-digit assuming

In inventory as been to with purchased. able we partners. in seeing with of U.S. we Consumer the build of are is season. our had the production ahead we meet and, some to business, the who forecast, we of Indeed, flush position stress our of to While be competitors signs ceased are cases, better competitive slowed retail our needs are a of not inventory, much our or while lowered already sales the built in goal some

slow While now see in in what shipments what year due manufacturing levels our we season. the we the do, and are their on we the ahead, March to normal. decide earlier out the set weeks than of April Depending to in of retailers volume some as may than expected we we accomplished inventory with break slow adjusted down to higher

While this gross accelerate will an on inventory P&L it improvement. help a impact rate, has margin

move at with month. of to time year. them provide visibility goal the lot great in a cover William want uncertainty higher more there to I'm The for the Jim Q&A over have event topics right As normally this other are King a there the we us as you when a Blair is Jim. update an next have the now I'll of can I than to in sure you pieces May. see, -- and back of through moving at and we they discuss are deal call level would appear story and We'll now, the to I'm But turn session. glad leave

Jim Hagedorn

Cory. Thanks,

of none gotten XXXX it of 'XX, our a businesses, in With the inventory without in future, and we past In our had enough change all of whipsaw in do next meant service know future that half I'll we've we're I business, strong. the the As issue the industry are we admit is and capacity saw more lack XXXX far, step over oversupply more at in of could for known growing core term in sat the in I'm a one with leaned to weather the us hold few in our outset, so long pleased year. as would capacity what the markets consumer control the we by us the partners. both been right. the the what needs The seeing matters. years: said about and can't where media we seasons. predicted consumer first our especially behavior over making also performance and businesses, We'll has the we on Coast in activity, If of momentum it to address But reinforces been we've bullish East category had short the of but we growth Hawthorne, weeks. But been progress build And together relates bit remain to issue. we hard. and ensure we term it's X have encouraged in left to retail

the again. make cannabis the space. business was the same the we'd had time, tremendous doubled there Hawthorne, at and the facts at Given a And period and decisions in X-year hydro in enthusiasm

build As those we had markets there. serve Coast, expensive believe meant Developing the we to we East were also more footprint expanding to on needed physical the footprint inventory markets.

more the roughly chain them. and By supply up And there is it. which reduce a we the thought business, to deal of own of with year, start we to Consumer building in and physical challenge the still like have going Mike is But cash. what we basis again, U.S. rapid this that more pricing will not double-digit was Even will changed. a years other the taking just sustainable, knew than sucks. truth the cost is at were term one we'll the inventory has we've that increases. the to end our we X points That Hawthorne, units, steps aggressive. to turn back prices. we're years we and lot we're take long we into be not it never us related the of claw of seen. it's fourth in team more simply just margin price Although needed quarter given chasing despite gross immediate is XXX challenge none people. anticipated margin and it, inventory control and level And we've to few inventory a built taking In we're his aggressive of commodity it likely source lost. of are the that growth commodities Clearly, reversal if But ease,

we'll businesses our -- inefficiencies. our Consumer At set to processes We've of overhead be of redundant we'll the effective will the supply other we're So issues levels. roughly an that and before taking and areas an today network reduce to get centers, effort by our of of XX% back reduce structure In decisive all SG&A chain The mindful run target start profitability. structural to lead other the fiscal skinnier level can the of appropriate company a actions realign business. and business, be to 'XX. staffing and the roles, more and corporate shrink U.S. size also in Hawthorne, cost our reduce appropriate

QX. charges sure restructuring clear want our anticipate should the and strategy. committed to QX to make I'm am you I So X pillars I in here. of

opportunity. opportunities expertise. core also our remains and growing category still of At provider the more use the the the start move product can cannabis thanks with to do still provide and emerging very hydro potential ahead. Our real offer finally, with we efforts the And brands as we opportunity Growers the only our be more will areas We will our of and live e-commerce will goods growth technical Hawthorne, relationship strengthen are strong. real. again of choice, category to and offering in consumers

Our consumer Collective creation run. the Hawthorne Capital a investment Collective, and In to for provides Pursuing driving we we back, margins cannabis and both entire and pillars execute. the to subsequent of value RIV opportunity us requires the market The have leadership as back in chain throughout to grower Hawthorne in wait the we The financial value expands. opportunity and be see our from the the substantial long position could within a create long-term give to market commodity while. If sit for these firepower to waiting

move wait. swiftly going going make changes success. not to we're position to We're So for to and us better

to well-known weeks other In a ago. realities economists us most in of for economy U.S. saying and telling only looming. with the A addition also country. economists recession broader be require been worked months is to started what over the past proactive. the closely have respected year We've commodities, they the of And few the us some

we our can Scotts in a choose We X surely choices: how of can wait have latter. we the is the get coming way, storm. and we great Miracle-Gro headwinds front Given gets windy or it and react the see then company. economic

enjoys. competitive other advantages few in CPG We of industry frankly, the of that them have one else And regardless set no category, enjoy companies either. a our

those our of competitive people. One advantages is

as message your because know ask want moment associates many I'd them So to I to a deliver a our patience of for listening. are I

and we future. to colleagues return the today does, to our and too. years our for jolting. of know have mostly informed make us strengthen suited to and also drive transparency impact that. human turn on you right time I know our thank better health. views evolving will business said company. so strong Our is I to the earlier, flexibility of give to a know our there we'll the I organizational But Q&A with this you changes guidance. fundamentals the will we be long-term your and doing are well how a that a steps our track make of friends. undertaking you want and let's the probably result here this have business, maintain deserve stronger things of better session. want But The the this in investment. best remain level, we decision a over for ensure our shareholders, impact. on questions, our value in ahead. were also changes senior get the business financial sudden you designed But strong to I week are is an team I we're will to And no operator the we back Every concern your start see effort making about work the we're what of the The morning. working company, into people to moves my for announcing structure deserve these are at some We a member you have on we financial They lot What the every I regret will is day. to

Operator

from We'll with Wells Carey Chris go take Securities. question and [Operator ahead Fargo our first Instructions]

Chris Carey

range. I you the for So in calling market challenges the June out U.S. to of the expectations the of POS in guidance updating ahead. so track practice you're guiding Consumer Certainly, to low much still end a appreciate but with have

coming clarify, year? in kind the number be POS range? that thing actually you're that's I does taking are down you second so then And said question this you we related that imply volumes far as Consumer for fiscal wanted than and should full Consumer pricing better about that X% in pricing do the and of QX the So U.S. And to factor on profit. range the sounds It can And you expand just you like on lack you're bit mentioned the I in higher-margin some just expect, commodities. any here. early on a season is categories with lack still around profit? mix within also then visibility additional catching line, of know around that but visibility of unhedged be a ending which maybe there's on of Jim, one the if commentary as to not these U.S. as you as the XX% XX% think to up would expect helpful profit seems

those for U.S. X thanks So on Consumer.

Jim Hagedorn

I'll it. part got it what is first the You of was take, I think, which pricing.

in probably the on Now sort think you're dollars. of volume I units not -- correct the side in or

we're to sort not us of give pricing higher a So on number. counting

of we guidance I pricing. pricing double in the near without the But don't be I the I digits, know, fourth think is, quarter gave think. sort would

Chris Hagedorn

It's double digits.

Jim Hagedorn

what just seeing got to regard profitability, what add? you get Cory, that's want of to based we to overall just And we're on costs In sort doing.

Cory Miller

as more expected to have discussions what talked us understanding of hit just to early kind I commodity to our in We March. lot of here When profitability publicly a commodities. business. an all we Costs of of We all the last to we've in what our think board. of started. what just the now it board. over in commodities means that had We front defined of on internally and a March, Ukraine continue we were is have see been war unhedged kind months than on pressure that in we've meant and been about and the the trying had couple get profitability Yes, face over on the

more the earnings this to that the So the do want that's have to consumers want buy We a how know number X the also to bottom have remaining that's products. more that here reaction leading down we nail see and that our point nets because lot some what XX% in to X, line point as hedged a we around that leading to accurately. That's And at we'll weeks we at allow pricing. our see all not uncertainty us little of will out. this to commodities that just see

Jim Hagedorn

we'll was very I are like, preparing had say involved it." it -- asked that but private our mix. But Board concerned This they're operating but bad a -- the be I stuff there's seeing -- where not room in all guidance be with guidance changed it's next just -- consumer. we in right think visibility. trying that meeting, We'll just I the last in as view because understand much specific meeting ending. listen, "Dude, that consumers of mean of, And to don't into to year it largely And doesn't cost -- too that are where When for on really going they now. happen this of side people we've Board wouldn't We're we Friday. lot we lack to conference sort we just label. about just year but critical. don't were I want went I not well. like $X.X, aren't of more have happens And year. do of be range this a if for June, buying twice like It's were seeing as I as Look, not I'm wrong going we're not a I/we give a you I don't pushing think already again. like the to I operators on our much moving super the

fact, label. like private virtually In we're share to relative gaining -- think everywhere, so I

because a number. you want don't here think for of just give flex bit asking just And safe. to we're think I little a I we're wrong to I So be just trying

Cory Miller

to add that. Yes. I'd And just

X last pretty the improvements. breaking year-to-date seeing POS our season think changes are you in X about later, dramatic over weekends weeks the If and we're the dramatic

a to that really So getting weeks weeks. later how breaking see that's the look plays a few things to X more for It's of we and want out point just season good. back

Jim Hagedorn

Yes. I days. about, is the XX in talking like of it deficit, mean before Chris, which disappeared we were call started like like the X/X sales of

keep of track weather. We on a business that pretty the good So just right sort now. to is need

will Our rest the comps help. are year that pretty easy and of the for really

Chris Carey

of do commodities, and inventory just any very to that Cory, then your there year. talked promotions can maybe going big in with urea, clear to exposure back the about in That's diesel to COGS? being elevated. picture, just you Hawthorne into expect -- potential for you inventory of That's way your me. the move to a And improve maybe, your levels it half profit elevated perhaps percentage Would frame as overall helpful. resin, the is now Jim,

Cory Miller

Yes. Chris, I'll answer the first question.

resins, include a we're commodities what fiscal our be. and commodities If year total urea, forecasting when COGS, is of I would XX% you look about at percentage to want were compare of to our as to this 'XX COGS. we're that diesel And which XX%

definitely period. So commodities on increase COGS. increase total pretty look when That's driving in that at of the... dramatic our the you Two, think, an X-year in the percentage is I was

Jim Hagedorn

I Chris like remember, I this remember. he's excited all looks about Yes. one. taking

Chris Hagedorn

Chris, I'm other this Yes. not is Chris. excited. that

So look, number of we're Hawthorne. long in a at categories

holding different last what retailers We still are bunch a year. from is of seeing that kind of promotions. are the fiscal But inventory we're we've got exploring of end

now. promotions us there's right only for So in do the so can that much category work

some at inventory some inventory. looking to some also try nontraditional move with pretty channels experimenting with different we're to long retailers around. So to some move We're programs

deal into some a other We're seeing announced business sort recently and product we we places. can networks. separated So of That has strong Australia distribution Cyco. Australian if move with a

bleed they inventory won't that Promotions of lot be level down. things part part. a only the exploring be different it, will of we're to So

Jim Hagedorn

good there stories. the It's -- are

customers companies, I I some think happen think, that our West things starting on Coast. of the good to are partner see,

I good path, way results guys a Coast The different which seeing near good think, and seeing a high-end also kind East that really is the is of good seeing Some of are some reseller business our saying results. qualified with, of work results. we that's direct

a it's a I think lot that weeks X sort think we're decent drift wholesale California. have customers prices is of starting I at of by which from saying, to indicator. of looking leading again, and you're actually is they kind we're a pretty see hearing last this decent But up driven had

is also -- through take pretty now. inventory So which to is the the high which is how right it long question work trade does

kick that glimmers So too to the -- to the don't within have but there of you see. hard story rocks goodness are

think I sort at work are looking through that. takes that It's a California seriously down, it of while misleading. and when Michigan pretty just to that So just don't it's you're

Operator

take [Operator go Altobello Instructions] James. with Raymond and our question Joe ahead from next We'll

Joe Altobello

you me okay? Can hear

Jim Hagedorn

Yes.

Joe Altobello

Okay. Great.

first question, overall U.S. is number right, sales I So you to secondly, guess expect do the if you how today, price my that's year? talked guys X I guess, Consumer math about year? And pricing to this increase QX this much contribute that

Cory Miller

the in this increase is Yes. Joe, of the third It months. we've price fourth will taken year. this one XX that, the fiscal be first part

So our we your what's again? of part took -- And second question the last August of XX months. first was the

Jim Hagedorn

about pricing -- much throughout Joe, contribute we're think X% that to up now. seeing, year? will how I will much How have contributed the

my People So X phasing it would depends year on kind maybe the -- say or couch. on I you. are on the QX. would X we're nodding know, But point in. of don't Thank I fiscal be for

I'd add probably -- so something that, another X, Joe. like or think point I

call around XX%. So, it,

Joe Altobello

That's secondly Does your a on this helpful. it environment more guess, big question picture make the timing Hawthorne. of maybe of thinking business? or And and of does long-term impact the potential business? or likelihood question separation you current And importantly, at opportunity that on I the all attractiveness

Jim Hagedorn

-- he's I'm than I guy I would been say related younger, am. a since nicer Well, less drama. He's he's boss, through to the

feel seemed this that like you everything a so And see pretty can not I genius. and of enjoying is then. journey. he's idea The He when of sort happy great

too I dumbest think think dude warn people, because on don't you're much the I price earth. the you'll the bad, at when it's stock -- look

So say no. -- I would the

me last growth in last in looking didn't that long bumpy give think, it's own is me it promoted a To at of job father But growth are look time at back the crazy have angry. I doing it make feel of the years not -- if in back excuses. X of dealing a very CEO. a the have President a had me, chest I'll for I I footprint, things XXX% bath that's in be ride. someday what at I'm and be and some expanded my think thought says, we we'd to work time. you We a those with I company and year. take honest I volume little to XX I'm in one roughly sign happened, COVID. year. who was else. Jimmy, that happened But great the unit our years job my X fault." when We had of we great beat gained what I we ago. "Horace I And responsible, just your anybody think, Hawthorne. And gave I'm if people consumer didn't. will we all to probably We a that bit. And credit not our XX%, And this years. for partners do so

the I just say, were And 'XX. the we've not think the to -- think volatile, is year looking to back -- more think a basically the is and than looking do opportunity I lot think sort team me point this where there. But on I business. business of separating is we of pillars. the of enable ultimately helpful. I My which sort it's I think had to would sort probably our business I it's X now I consumer and still gets our pull know

it I understand federal people little and a be until more people volatile. of then -- a into that business, much could the side can law that sort the have community investment think You high more of I flow business, that cash at that creeps business of the that steady-Eddie well. real more And understand maturity sort cannabis least assume

banking it's is did what's continue to volatile all in us something this I in -- -- and that And and down being being think job, in think? "Do dollars and with please." we -- time particularly by XXXE space the already goddamn X off. billions bit of as mind I to proud a like yelled at -- weeks is is There's senators chain unusual. We've I the don't work little business. to little in of I drag longer. think what think what -- real dump don't addition market. we're really COVID. do LED all So that Joe, and being I I I a We see know, the that supply durable separation. do side toward a a of farther bit. And it working I the this your others. just I'm invested said, went, the ago on of The and like, business, D.C. done

to I'm I are make of wholesale powerful the are sure horticultural Very sort this that high lot I we business. starting the everybody to what lighting who when Now done at LED times people have leader it money the here -- prices world. market again, to of to to we're see global the we're technical think the done and as the a I we're be well chosen through longer of in "I can't we vulnerable create pretty creep in lead a proud of the people more does in up think But vulnerability temporarily." saying, very a has downturn period. the said, business. the friendly and us the end But have of with side market make little

No. it? regret So

damn a a here." I think It's Chris So started, it's it. was the -- call is helpful. don't if I of Joe, ride I finger. that been "God, said, know, a before bit raising

Chris Hagedorn

like something. add I'd No, to Yes.

mean, posting bit see front through business obviously is you're elaborating what is over said, despite the is conditions. the up I lot to long these growth quarters and look Mexico, reinvesting phone Everybody when Hawthorne, we guess, who the beginning long XX% business from at a become long for us. all right kind see in here, than from California So now in emerging kind on us. is XXX%. it But over. really reaches at guy less without think, that of the said, a just, has sell are little over start current as the we've going fun kind that it I when think, when over and markets results. the their said, still goes of market He disruption running their a That, positive tail enthusiastic of the in around, I the -- to optimistic they small on bases, there's one preeminent cultivators then California when spent a Jim with saying. on here of is a kind I turn you're finally industry been through consecutive look, time. -- of when I and pretty got being And Pennsylvania, opportunity about time New the businesses start That the look, is to retail still up Jim we New is see cannabis Again, XXX%, businesses Mexico players and of

think, Oregon. So traditional little market bit lot of a Michigan, more and there's markets still I the like runway of a rebalances, as here California from kind away

I advantageous can business more to positive much it's think, the I us that's -- business. and run fact businesses and invest make about tough some excited we're forces long-term it more prices. that make us for the love have still to get And I So wish super by for just we think really we at to we managing this continue we're outlook the optimistic; decisions we to didn't efficiently through is reinforced but the because

Operator

Joe We'll with go our Blair. ahead Andersen William and take from next question

Jon Andersen

I POS you wanted the that of trend ask about far. so about kind in to trends talked

as how your And that do home of in -- that around a times. spend is kind to weather to there's up ability being and wondering that? mentioned and And away engagement You've kind thinking you factor. travel time number and versus from dynamic about support you're a and could products that consumer locked major there of consumer discern returning affecting that. well? year Is kind where this buying of been experiences how be you a that behavior year a more clearly, think home, of has I'm a the

Mike Lukemire

we're I would more seeing weekend. -- to that the return say

going week. people We're During not during saw seeing -- during COVID, it they're buying weekend. hot, yet. the is and the away But we're not we weather the necessarily

in index done Usually, of early It's engage that's having still the product like we're some the the market last of preventer. March. as so fertilizer crabgrass week. And on people highest

that you Jon. So is the really tells good, season that

Jim Hagedorn

we're I think, little this -- had instead -- X -- consumers they last doing people like who like it the stuff went started bit because just Jon, it's ask the And it's a trying we we're and like year. of if of absence especially a basically, question, clearly, May and Remember, data, in masks very like more fair ourselves, to year. April wearing X, choices it feels call up. seems stopped

to looking sort garden. not are homeowners maintaining their less spend of that says research and Our time in yard

that we early. just and think don't I pretty it's know So

Mike Lukemire

before buy like it Yes. tendency to for But we seeing are was sure. weekends That's COVID. more on a

we still -- that -- love research walked they but says consumers haven't haven't and the [indiscernible]. So seen

Jim Hagedorn

spent on years rate products. of price rate your And early -- telling events. I X issues. Jon, retailers of these it's guys our lots hard part hit back of of wet, hit these it lot And a looked promotional to part weather late them, just on -- in you the were of like people you our is we mean, on XX% them if just promotions. sort retailers, I and We or the with stores, X aren't -- cold March, get were remember at will push matter big worked there on really were no the April to and spending -- them of before when we've dollars to -- agree COVID Black Friday that probably what

Depot big last So event Friday Black was, the think, week. I first And...

Mike Lukemire

X weeks -- right after Easter.

Jim Hagedorn

mean, maybe -- ahead. lawn I what was I I garden think, was And biggest go with day was their like told, single and

Cory Miller

A week.

Jim Hagedorn

our biggest The they've history week had with them. in

say stuff hardware a standing a say, just to hard I it? in line last at like he store, STEPX. this had only and it very there's bag variables had You guy's nice. got is -- it was bag it's -- he was out So register, super of that what of make weekend. STEPX, of lot And $XX.XX Massachusetts, out could of well, a the a a there I bunch was

say, and So the me, the of first?" But seem "Dude, And watching you his and was like mean, "No, if looked But label, not me ahead the "You pleasant think like shift I'm you're say I STEPX." way at what for I I single was want want when seeing I bothered. said, Scotts didn't to a was pricing. face look the of hell has happened a at I he go it I $XX He -- was go." even to said, to private of to you he we're on down door. But bag not. to expecting out CEO

And worry of about. could you a things there's so it's -- lot

the you April "Dude, May believe us I think I And it's before said, that hard we going is to it's the like said, Mike if sort saying And push to and on, be year. in thing behind, started, think they call I biggest because just we're were we X." were X the trying of call weeks Mike, it, year.

Mike Lukemire

XX wants this for June until I I've Finance wouldn't XX to years. the it reforecast. Well, call always year. doing call to Yes. been

it's In higher-priced early fact, look because I And... it's later gives than what's now I volatility. we're and season me right and that items And year, different at a stuff And reforecast the sign. this yet on so ever. our selling so much wouldn't over-indexing there's

Jim Hagedorn

Cory in if live Mike a He cut thing, looking I was that this there's done -- guys and world, make in to important Yes. aggressively it. am serious. gets of just going Look, sort to doing That's last acting think Mike. ultimately. And this was coming inventory it done, down. But me. of been role that I get -- Cory Not the Mike between wouldn't I pretty road sort you stuff have on And same week. right are kind I all to want very now expenses, appreciate was of to from orders the

a the And Mike's doing so about lot much the think a the relaxed to It's And work not I'm I of -- We half middle early think view half behind. been are continual is operators are and an reforecasting, do things my it. operator, year. when as is in it Board view had meeting. the time, more season, has the these the of I especially of

done you this we're happen, on getting could that think that again, if is inputs now. was Cory. acting then right of so sort And from what said, I've is I And it basically

I there's sort grim. bit. as guys them to up a you Friday, And both the meeting. going because on We're so came pretty hired know, a exactly Larry pretty I of of is "Oh, but you we've the company. comes of for we're now, a these we've he decisions up they're me to middle have this but And them just be fast the are so a dealing And it hope head the And of aggressive at little of are Lindsey predict of -- And operating economy. of And last I'm right, sales the that out aggressively. look sort started acted to it's got But ago just buy-in we that of think we it. America are I'm the the how sure briefing North at right that morning. to the on with it's that's be use. looking this safe And and with the kind and we -- make overreacted. right safe and Board car say are That's the Board year changes at think week. I sort both say, future right people And Cory I'm help action. complete Larry Summers if where we bulls***." and said, the reason have wreck American there's economists not seriously haven't and who we hard taking -- for numbers us over level trying

road. but number. what we're And the Cory acting. call all we're part so serious And of "Careful." that's And to bottom the behind. gets the you're And not that's up Mike's And week. to in catch is starting why line our saying, have last we're middle you economists willing hearing. on of Season

got is that And see us this X, point, give you've issue the imagine okay? -- April Just again, to X. not May at

Jon Andersen

to sense. care -- through spring gardening, gardening? late separately? makes separate the is the you -- one more late mid-season if that the to season, little -- start maybe that follow-up. of Yes, in there the product really correlation -- If you do a softer driven a area, they have lawn of and in is One made simplification early kind more carry quick season bit season lawn Or that bifurcated are a you and kind see do care to typically I

Jim Hagedorn

very say would I separate. much

commitment season. I of I a it what would if they're the start had think a bumpy retailers in to the telling But extremely of that is be stay concern, with us positive.

goods least this to back in our garden, business. of super we're it's not Now plant. are seeing in we're like And these things, that expensive I a buy when weakness you issue remember, the live -- think same seeing at

domicile for frost that plants this out -- main was that already and telling he's those his think Carolinas. and me they -- is I King people had put the damage some at point

Vermont week. You in anything put like snow can't had -- last we in

separate. much So I back pushed is is think season very I the just think it's that but gardening

you for there like I love -- lot what a not people, -- for the of Dandelions I -- dandelions are in I'm means live it those are call on business. seeing not suburbs. this You're that our because who sure, do mean,

just here dandelions even You're not really seeing popping out yet.

like not we're So behind. it's maybe

T-shirts say, We're so do -- behind to is gardening just want We I and dude, think and markets kind the basically I pickup couple of of of don't that's which Southeast you short-sleeved in then all. you don't and behind, promise give getting "Hagedorn a just And a means are weather what weeks, under the working. pretty a us [indiscernible]." bunch like business. just -- is is in sort you of But hooey I full is guys seeing of that's are to people get want wicked

Chris Hagedorn

Yes.

Operator

from to with question We next our ahead can and Peter go move UBS. Grom on

Peter Grom

well. I hope doing you're

spring I POS first seen you've said -- to of but time of May of seen probably So second, latest the lack exiting is U.S. of it's help start kind it's then target. not appreciate hit visibility frame what And the a late I low needs you know end their start. probably just can you've the you to the but Consumer be this

maybe help of able historically? the from are than to So May, If can be versus is sales in kind year seen seen a the in you where original kind you point some you've frame permanently of those in weather you what May And improves for kind perspective you've what April offset to more lose weakness guess the I season? even plan? weather of the just us key for the of

Jim Hagedorn

get warm weather. green The out in There's Ohio here. Listen, lawns we the -- saw especially on I rainy, happening cool for is -- That's coming everywhere. the what we the I'm okay, really now If leaves be to sort are right I kind honestly, bloom. of of not a starting fairly there. is and it happy now, want out, lot what's of are want, weekends. what just right and the be kind here would in to flowers mean we too

we think, minus what us. our X% to plus of comp are and X, kind like like is ahead right these more. against. comps X% what XX%, we're I we to comps friend Remember, to up We had super of now, like made have deficits comping We May is easy against up compared have --

numbers. So we easy have

the dealing think we'd minus of that. of the like of is kind now and comps. something I double-digit end. But what numbers of, and weeks between June, it, now kind X% middle sort At kind least you the we're see. with in season like call That's what big of probably again, between need

to a And global week, it little So said, crazy deficit in Like I we've a and over a it's it do. X/X. seen hard just we cut not before. took into

And shell-shocked were people weekends very that's just looking very, pretty helpful. X -- here. good So was

Mike Lukemire

XX%. tried make... And POS number -- where a accounts put we big leaning of I'd number have but look I it. I've we on well. in to Yes. couldn't as that's but around are And guys, a you the other you X, give say, we'll plus a that at Because lot

Jim Hagedorn

dynamic is season another the affect I season go affecting that, the think, That's will forward. and

accident. until of bad after really been is the have teams you on we not thing, it merchant a with now. by promotions say that which And If working all a Easter years was It pushed was for have couple advice thing. a good not

pretty hard are retailers and playing a You more COVID, and seeing, win. to lawn lot garden looking since in

And there's internal else's. I think to for be footprints on they're versus footprint more retail business the somebody share garden where their a promoting competition into within so the their lot own lawn for and going getting

which place think right competitive there now I actually is for the helpful it's And a so there's pretty out -- business.

Mike Lukemire

people and more in lawn than garden There's now just traditionally.

always to So our big traditional season. numbers cautious our X you I'm total at use when look

some are approaching that there's so be you that top in are not the to think And of. actually X what

So...

Operator

Stifel. and next get question Andrew our We'll go with from ahead Carter

Andrew Carter

That's I could your wanted you will right second understand just said in original year? guidance EPS Does you're not that basis, on where suggesting XX question. guidance to the my pressure year-over-year first be giving number $X.XX-ish frame but the half. the for to I understand this or go to mean trailing I and pressure pressure a believe, number,

Cory Miller

back Still that we've season. most the coming we're pressure to But put got We're out -- commodities cost recent guidance say gave round a And pressure about, the pressure, there's now. runway clawing of we've huge seeing that ahead pressures that start late Cory. March. is I'd we been that a of on it's lot guidance the us. that our against Andrew, as beginning there. last of of talked

Andrew Carter

Okay.

appreciate $XXX in New higher over last Capital, going the you're be bought and RIV it's the action on million the all year's York I month. just making. quick But just investment They just speaking just Etain backing I up think and Second question, to level commitment. uncertainty behind

you but want be something you want Hawthorne something to wrong that commitments, doubt, require standalone and Just did off capital subsidation difficult that might you do? I a -- us a [ph] still use now right the capital of further therefore, do. but understand the for pushed as to mention help to Etain would Am separation, that better no business think

Jim Hagedorn

RIV/Etain. is in, back talk try I think, around and it $XXX all is I saying capital things just to number. that, it attractive. about found of about strategy go and had without sort believe going there. one what out I $XXX is I freaking like just And bankers RIV's go lawyers to right want And to I'm We've in remember, the why will to the of to we Okay. be think let's -- contributed, something they million million do or

we we're we I what in to that a today part I'm space. is leadership like the off United look and can we're But build the which want have as who's make So I seen. happen which only the just my of of to And Mark the they possibly see -- develop lot math, We before, side at eventually, I'm believe eye will think when that's my to we sort the -- hopefully, this Congress space. And of believe confident in for on this pretty think And Strategy. start happens. products eye seats that house intent footprint God, consumer But exaggerating to the they We democrats And who's that Senate, what okay? the modestly missed RIV, finest "Oh, the ever it, I Etain, implications lose will the money the invest do mean, of tax maybe And we, acquisition to of industry that. is the them, major and I D.C. branded that with clear are don't to -- at I I use happen, think, at RIV money head that and of when deal was language banking with dealing to of will issues York. XXXE our with that and New we the with SAFE money world have the States has of money," Republicans And the capital banking earned mean pot it Senate acquisition make XXXE, taken is. people CEO that it. will a believe it that? not Sims, can Banking the it of I and but opportunity wicked a not what consumer actually Let's in at ass. with SAFE branded we even did, think with their Head matures, of -- But made that sort bad that. for they get Banking my in also RIV I it's the they but want need they'll folks regardless, make -- do be the sort to what our in or interested with bunch made say, company

worth that's million community we And of long being level build the pretty the to RIV, coming start We develop not the that's not seeing trying that's more out things defocused banking I those hope you'll $XXX exchanges that, that soon, we're things the this. it that. and all for say, is seeing so build. have you is This in term right, and And "All a I and at the than different start in And why ever problem, more the not view I in as you'll see to think, is is believe world as the -- really put think time understand yet it. it's which U.S. space. family and my happen. the happen, strategy you're intend are think you'll finest We like to to fine, we what company listed, that to our the the we're open general we're one to I and things companies it. and of that that with we we you stuff. and to investment place being to see to which is fully -- guys consumer And convert people So why you we'd of we do to And once that's -- intend participate want once pot And has pot convert. part happens seen. in serious the investment about space branded do our

And really the got that's space, that wanted. prove out." is right, good going We think got keep you we that -- New RIV a not until my to it You're advice state we I York. chasing to

This is the up X to all we cultivation can of make We work. from Prove XX all distribution won processing, through legacy New have it the in vertical York. permits. way way the retail. We

give the tools the you will get and this all to tools done. have they We

more what think If we're lamebrains. than it's just of we a -- screwed I bunch it's happen. to we see think? You'll do But because either don't think because coming. or we up, are up it I way it But harder screw things going those I

see now, Etain the and parts other United we're of to to is from now, we've New a to But doing that deal. year you'll They from you'll on what limited see done get X.X this what are fully this capitalized York think we done. are I years extendable States. that

to American future. do issues is be the this the want need to to which You'll sort States stuff this category. the of thing what legal more people I intend see Congress for We the fix the in of United for whole combined.

there go. So you

Operator

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

William Reuter

made want segments. business Hawthorne's First comments is to to were active there be were about continuing in that some

commentary on recession. may also pretty to have economists outlook about view grim then a referred have your in there they the M&A. terms the was how But of think I

term? leave in does your the So of you interest that I how guess in in near terms M&A

Jim Hagedorn

think in door. out ton of don't I Well, we're going money a interested the

limited So team I'll be that told sort Would think to for start returns for I've M&A. with my don't do normal actually me. pretty wartime I that. have already we strategic. it have of highly No, in of a appetite sort

we returns And we've that looking looking at highly we're minimum are. anything I them very done on just been we've got get have don't appetite been, me. think small to think I we're of with strategic and all -- would through deal, So don't deals I deals as XX%. at on it pretty requirement the door much say on point non-cash. was we Cyco be just a I limited Right But point. do for And And now, successful. M&A. that our probably out this the a would where very our I'm this for told we going completed IRR planning. XX% deal to say, that inputted have the Anything cash

William Reuter

does still And earlier, been secondly in was comment it discussing having with you it view. Then timing that for of Hawthorne, When you from regard guess analyst guess, timing the your sense terms Perfect. where that? of then to that the referring is leave to that there I were continues earlier interest Jim, we another to you about should how just off. a the me. -- in what and make pushed of, I separation acknowledged think

Jim Hagedorn

Look, would which we're what I That's words. I is say would stand on is for say working it. what by

to is by would words. everybody doing engaged But I just in sees and for advantages think it. this say stand the I

Operator

We'll move next Bosshard to from Research. our Eric Cleveland on question with

Eric Bosshard

things. Two

you're trying to In talking just terms the restructuring of on consumer, about. I'm get perspective

You've Today, built to a talking lot of capacity. adding restructuring inventory. A some you're degree. about about year you ago, talked

start different also Or commodity this to a understand related context that to is prices? view demand understand if to is the continue consumer's and just to costs. the this and trying to trying willingness slow to of of related So pay higher a in

Jim Hagedorn

right. All

business, careful, inventory. behind. abrupt behind started be at I and I out America "Yo, honest. the we're it's Hawthorne does think the on a and like week I but think to the bit former, it Mike about seem I door. $XXX and us is -- just North some is say, plus dude." driving to mean, The sitting that's million I saying, look, think so want really ago expenses looking I And a in

happened what's And is like plus was X% our sort the were if business out saying like sucks XX%, extent, To I experience had of we we through it COVID that -- our remember, think in I was that inventory. at a to being look think build on the business X%. -- tight years, you Eric, last to some X.X footprint. the

more capital, expand are distribution natural. expand that we So footprint, sort our I think of inventory read and made manufacturing our choices footprint add I pretty think, the to it, to

expensive now we're going have is years that shrink of a our is of it, ago. And at X.X back." looking at some not call lot do saying, what it the more was, pull you manufacturing to a we're it think but And inventory. "Yo, wise. than I look way we I of inventory, not mean lot is if it

know get I'm because And of to view we're sort excess don't a go-forward of don't our down -- be rate. low in we I what we that inventory part growth developed I single-digit back of that point -- view need. really Mike of going the attack it's and I have I a to fair, aggressively so whether listen, And asking think to in think

are to trying journal interesting in a were are what some a it. the about at are and market says where in in And if housing that. lot to Atlanta thing space Or interest you we've United think our not want look -- It -- want I in which at Jim homes. to And live one they they keeps are trying young don't I and getting to inside of is hot. know who housing going rates these King's that house making the the articles to about about going do them -- places buy condos really just talked There's is kids just But still to one is, least beltways? anything, States do last or there and people and week a people going it. that homes?" "Are is bids of lot

who do more right but think come last still big or we've expensive? is homes about say, good it a thought the housing the we'd feel positive on and is and be how it glommed X% demographics with been a is there. to the want really Is I And actually garden kids. year. dog a don't they X%? we've have growth Now that's want a of of or on and But we harder talked young plus get off mortgage? is voted about XX%? it to ride We to and sort now or future X% X% it And I people we've this down that

good know but to developed we as where it's don't I that answer are. say So as an you'd I probably have like that's

Eric Bosshard

you Just you have expect too you inventory now did sell excess Or had much planned? of inventory, to make and a too -- if my originally less question. then you point Hawthorne than clarity The do much?

Jim Hagedorn

both. would I'd I what That's say. say

Mike Lukemire

items out time China. in lead longer have You

making a you're So bet.

our is of actually chain in that. improvement flex assembly be And we're going part to U.S. able we'll supply and to the -- So more

Eric Bosshard

But you're talking Hawthorne now?

Mike Lukemire

become build -- because for be part frankly, U.S. capacity capacity some Same nimble. more Hawthorne. reason left of materials talking that was flex the have adding Quite but we I'm been to of capacity the the on We've it sales availability is we table.

Jim Hagedorn

I to Yes. of the we consumer. year they we Eric, were we we're we blame missed think we yelled like a trying look But $XXX product. it's number -- think live thing Last is, missing -- tighter get I world on X retailers, to were million back look at this. by ourselves -- of stuff. you $XXX put retail COVID, Hawthorne like if bit in even a a in it, back than little want although said and like of a don't have ago sales we don't of for the hell. and of we lot million And year, didn't Year

and fatter decision Mike a we on just run think supported and it. I said we I that was inventory that should made

is... and up. to I we're a now to product without wish Mike less look we're screw had you trying hardcore year the say, pretty to there I out behind bit But know, And You tighten I next get want to "I screws that be and what little down that's, there." willing

Mike Lukemire

it we -- back right balance. got that get just to Well, in

suppliers. X it weeks raw some get to were, can more getting and rightsize look or just getting better time supply supply our hit materials. reliable Remember, So numbers chain, frame we again, in cases, we materials We from We're look convert. at on to capacity I couldn't raw material as X get behind chain. the right. a to but we're trying where the at inventory yearly We

So...

Jim Hagedorn

happened And that's really going the interesting point everybody on lighting side. we're LEDs. -- and a businesses from it's horticultural fast from is the has and we going And the both the thing on non-cannabis But Hawthorne Europe not is Eric, LEDs leader to how something to Canada, lot lead in expensive. just there, side. But of it's is are in changeover bought long sort another the my too, of longer. be even pretty people in those so world going changeover the is said, -- oh, This this and items in this. to it's these view

long So just is changeover that to And items. part Part pretty the chain. -- on these supply the of fat of I of LEDs. length it think we're this is lead that

Mike Lukemire

about Yes. the LED made I first mean $XX light, enough. bet to an wasn't XXXX when million we out, that our make and came a investment

of So be next innovation we heavy. a more we said aggressive generation we'd little when brought the out and

So...

Chris Hagedorn

much in well. seeing Well, as LED of ProHort we're we right year. And that get We The governor that now mean They've the deliver it. our with results. phenomenal on than way some can the the growers. cannabis fixtures growers a their and of some make the kind those business them is of innovation. end really just before I is innovation delivered run different gave different business It's use the We them now, type light. how

hit. So when out the innovation to we get there, tends it

Mike Lukemire

you and right, we we we -- bet sometimes have bet then So wrong. sometimes bet to make a

you gets. better inventory control And so the more your that you can can convert, be it flexed on your capacity where you and do

So...

Jim Hagedorn

All right.

You were headed to Hawthorne, sir?

Eric Bosshard

Yes. pretty side, Hawthorne And on then the conviction commitment your and obvious. is

You've acquisitions made in X the year. last

be investors have Or to business investors leaving of of do the that. margin beyond [indiscernible]. business I the XX% about standpoint, about conviction all is to? from talked this that I you standpoint, year a marginally this you margins. is business interesting. deal, it's for is understand be profitable. -- should expectations this holding for return comment to your But year? at acquisitions. of or talked look on is XX% should margin mean a a a X% this You path or I an from on But RIV XX% maybe profit investor getting what year about expectation is think going us The spin business that next

Jim Hagedorn

this the But like of But significant south I on with go people to what And of I through not say want for to beyond the we beam maybe careful want to would Eric, XX%, going do as -- business? there's because are year yet at be not term kind haven't it. now, make -- that business year laser And next eyes. say want say, not we relatively through a I north just change that to in building is And have a what people into on next we're looking to what that sure don't point be -- we're But are year. there's And XX%. is saying -- that. want event emotional don't we margins I so time. I next happening the I much want -- are point a because I'm would planning we with into short to the to going get make that going next And next means which at the would people a result business of I building it's but impossible for -- it's just emotional today want the to lot want community. work on event I'm to sure going not at this get my seen folks, said don't I I -- I'm cultivation say, year. Look, of year that distributor. is lot if of a significant you to because decide partnership

I going on that Eric, we take and what's So are to that depends a numbers but of think, of XX% who north are get to there. the lot it

sir. XX%, So yes, I plus say would

Operator

go from Jain question ahead and take with And next Gaurav we'll Barclays. our

Gaurav Jain

of my had share have repurchases. questions on quick a answered. just question Most been I

that economy quite a be won't a assume repurchases the share time? considerable So now period you're could we any car given of the comments the crash preparing for should there for and worst, that be

Jim Hagedorn

that share pretty do what The that think keep But options. reasonable to thing trying only probably we would at possibly the just up be -- I count would to that's be generally, only constant? would we'd saying, assumption. think answer the exception do got our keep X. a think from just dilution low to to we I say I look is to do share I with

Cory Miller

of Yes. on Nothing done of QX $XXX we've line year. the million planned and Through QX comments. the this for QX, end Jim's

Gaurav Jain

like, that, bearish out, Larry too Jim, And look, out Summers, got get last unfold And company sort acknowledged economist bearish And he's the might a there. a risk question you of how sort here? now pointed too another most is have that things of bullish just follow-up you on probably that you to year. as there --

Jim Hagedorn

Yes, yes.

Gaurav Jain

X And how a judge for -- for to workforce difficult you the that to and also years you and something -- company for do thing line? how I that like could it's plan trying what X, the So you mean, do I'm what happen ensure and this? you your understand to down that is plan construct

Jim Hagedorn

if in real. is how this real justify head, it. Here's I it's don't -- know I but my it's

think to and terrible help Mike say, and is world out more we've and in get will Will we're better going and coming right now recessions. think at us take to the us up corrections going the They're the the of if through it world sort it make to we look I of can that I in decision-making? remember, not company leadership inventory balance What team least at of through for our that do sheet lawn a rest help need got trim? I garden and lot clean the the experience and grim, less us. fighting do and business a get forward?

home and and less groups if $XXX. X X looked centers: XXXX, were were at that lawn there were products paint I things, you at of of think projects sort selling garden, that than

I but recession-proof believe I So recession-resistant. we're say we're do wouldn't

looking and who've really snappy of we'll of company. at is some younger got better young more that overcorrecting, feel people decision-making think lot more Mike do group culture we're to important in a some think that will have that impressive that will parts what about I people have that the a if is created I we've more and opportunities in very be stuff a I responsibility Now business for to our

I Mike, bad especially know, So it, as if don't sales say -- if like is aren't all the Cory thinks? this as you worth

Mike Lukemire

a much -- doing were commodity investing. Well, the I think and as we growth willing until were it we just -- up unconstrained lot of operating

and took me I We're gave it's think and as job, flatlined time rebuild. flatline, COO basics, kind the and I back had built -- recalibrate, go going a we run. organization of over to first back. When That's... reset we Jim we the great

Jim Hagedorn

I I least take, is all the when this we're involves tree. it I business, that looking a creeps I do would say, sadness even I decision-making within it getting the think? though Yes. positive, a when to -- in And what as I you're some view And growth. mean of think -- think out this of at would layer

while I out people, I see a involves think decision-making getting and we rid of advantages of it, hard coming do lot think of that. it's

get the of not And be wrong flexibility just And so to we're And things. we to the take of trying things everything chasing advantage is we can chase here. build the want resources a on gauntlet. to and -- side be to

Operator

take next and Carla ahead with question Casella go JPMorgan. from We'll our

Carla Casella

How You somewhat arms pricing of But lot versus help the question that questions accounts versus increase considerably. give you about then inventory is to my revolver -- mean I a much our could up us also, second just is answered I'm of volume -- was us Hawthorne are versus receivable and in And inventory. around your facility? of borrowings related. consumer. short-term much wondering get if how

Cory Miller

this Carla, is Cory.

to it's X/X at U.S. half up of It's in businesses, the those X/X up, look about And math units, in in Hawthorne cost. half, you we'll million If and up about make and easy. each we're it, inventory, call Consumer. $XXX

is cost driving of each in commodity increase in the So businesses. total the cost inventory up about our X/X the of the of

short-term are up short-term Second inventory is question of borrowings on part up. is why your borrowings -- part of borrowings. Short-term are the the reason

debt revolver. closed The So the business. is sure that's the love sized the on appropriately the was that and we're we wanted the that we banks why utilizing to facility that revolver just a aspect mainly revolver. we short-term utilizing had our make for of We're

it's So the short term, revolver usage. at when look mainly you

Carla Casella

then I peak? are we we -- Okay. you Or season? mean, peak the are -- And start should that past coming are at

Cory Miller

about peak We're now. peak sell-in kind as of high. right is happening the Inventory is

start start down the we to to happening on get we'll the balance now, of end paying revolver normally are that we collecting at As where that are down the sales year.

Jim Hagedorn

inventory system. the And out drive

Cory Miller

inventory out. drive And

Jim Hagedorn

Yes.

Carla Casella

the And so you that is get rid some accounts receivable did facility? as of of well? Or drawn

Cory Miller

rid still we with in amount I year how right haven't we've got to is No, is it very past. the used here It drawn. being of the but don't have used compared it. consistently it last being

Operator

Mr. further to time. appears at are the would for questions It additional any to you right. no this conference turn like King, there All remarks. back or I closing

Jim King

Thank directly June Blair More And will Thanks any the a us. joining us you have me Madison. not, William you, with, call advance communication that Again, Have of garden. the Bye. in Thank can on and great everybody, I morning. X, in joining if event, right. as than day this (XXX) reminder, in Go a likely be will a probably for help day. at again the Cory public event. for before. you, please have that questions XXX-XXXX. you at I All Chicago we meantime,

Operator

call. today's participation. all Thank concludes this you your And for

now may You disconnect.

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