All right. Thank you everyone for attending our 46th Annual Growth Conference. I'm Brian McNamara, one of Canaccord's analysts in the consumer space. We are very excited to have Central Garden & Pet here, and to host CEO, Niko Lahanas, and EVP of Garden Consumer Products, Jason Barnes, and Friederike Edelmann, who heads up investor relations. Niko, let's just kick it off with a quick overview of the business and maybe some key takeaways following your fiscal Q3 results last week. Yeah, we had a really exciting quarter. We've had an exciting year. I think if you look at year to date, we're at record earnings, record EBIT, record EPS. We just did a great acquisition that we announced, at least we signed it. It won't close till January, February of next year. But Garden posted a record quarter. It was probably our second-best EPS ever. We were lapping a really tough comp, but came through quite well. Cash is at an all-time high. We had record cash flow. So, a lot to like. Margins continue to expand. A couple of months ago, we announced the divestiture of our pet distribution business, where we're entering into a JV and taking a 20% stake in that JV. A lot of balls in the air, but all very positive. You've been at the company for 20 years? I think you've been the CEO the last two, after several years as CFO. Yeah. I think I've lost count on how many of your colleagues I've met, whether it be at Global Pet Expo or other industry events. The sense I get is you have a very strong corporate culture. Yeah. Tell us about that, how important that is to driving the results you just mentioned. Yeah, it's hugely important. I've been in the role as CEO for two years, and it was really the first thing that we needed to get right, where we had to get back to our culture. We've had some folks come in from the outside and try to bring a new type of command and control culture, and that got away from our entrepreneurial spirit. We're really a BU-led company. Very entrepreneurial, I would say very hands-on, and we had to get back to that. I think we've done that largely and feels really good because the whole team is sort of operating on the similar cadence and kind of the results sort of are the output of all that, of getting the culture right. That was really important. The company called its shot earlier this year, calling out stabilization in pet. I think some of your competitors were hesitant, but they Yeah basically acknowledged that was the right call. Yeah. COVID saw a big surge in pet ownership, and then you saw that reverse. How did those experiences shape your strategy there? Well, for the last few years, we focused on cost and simplicity, and it forced us to become a more disciplined organization. We've really consolidated our logistics footprint so that you can withstand more volatility in the business. Especially on the pet side, household penetration has declined. We had to rein in our cost envelope with that. If you look at Garden, that's probably been the more dramatic situation where we've really reined in with our Project Horizon to four big distribution centers, kind of hubs all over the country from call it 15 or 18. That is a more consistent business now that can withstand sort of that weather volatility. It was really internally looking at how do we become more efficient? How do we take cost out? How do we focus on what's important? All of those things were things that we looked at and really kind of were forced to look at very early. I think some of the other CPGs out there weren't as quick to react, and I think we're better for it. Last week, you had mentioned this earlier, you announced you had agreed to acquire 80% of TRIXIE. Yeah. This is one of your more sizable deals that you have done. Tell us about that and the opportunities you see there. Yeah, not only sizable, but it represents a big step for the company in that we are now global. We are in Europe. You got FX exposure, which we did not have to deal with before. So in some ways, it represents a lot more complexity, but from what we saw, the opportunity way outweighed that. It was an interesting transaction because it is the largest pet supplies business in Europe by a lot. Then if you combine that with our business, we are really the largest global pet supplies business now, which is kind of cool to say. I mean, we are all pretty excited about that. But you had a founder there that was approaching 80 years of age. His health was not the greatest, and he wants to donate most of the money to charity. So it was sort of like the right time, no heirs in the business. It was really timing was perfect. Assets do not come along all that often, those types of assets. Right. We kind of recognized that and decided to seize the opportunity and one of the things we loved was when we got to know the management team there, getting back to culture, the cultural fit was just amazing. We had our first dinner there, I think it was in December, and I remember we walked out of the dinner and one of the equity holders in TRIXIE looked at us and he said, "It is like we have known each other 10 years." We had known each other maybe eight hours. Right. It was really nice. We think we're just really excited and believe it or not, the multiples in Europe are lower. We think there's a lot of fragmentation there. It's ripe for consolidation. Again, TRIXIE gives Central an amazing beachhead to do a lot more. 140 million households own a pet in Europe. Right. That's a good market. Cat has grown faster than dog over the last few years. Most folks we've spoke to at Global Pet Expo in March were looking for M&A deals in cat. Yeah. That makes me feel like counterintuitively that dog's going to make a comeback. Yeah. Tell us about your current cat exposure and where you'd ideally like that to be. Yeah, it's limited. We'd love more exposure to cat. I think TRIXIE gives us a little bit of that. About 20%-25% of their business is cat, which gives us a really nice beachhead. I would say that if you went out and tried to buy a business that was doing $60 million-$70 million in cat, you'd pay more than what we're paying for TRIXIE. It gives us a leg up in cat. As I've talked to you, we want more exposure there. I think that trend's going to continue. Cats are great pets. They're less maintenance, they're less dependent on the owner. They're more independent, and so you don't have that guilt when you have to run off to the office. We think that trend is going to stay, and so we really do need to get more exposure to cat. Got it. It's a great category. So moving on to garden, you have a few publicly traded competitors. You kind of all do your own thing, though. What are your key brands and core competencies in garden? What makes you different from those competitors? I'll kick it over to Jason on that. He's the expert on garden. Yeah, great. Our biggest competitors in the space would be The Scotts Miracle-Gro Company and Spectrum Brands would be the two biggest public companies. I think the biggest difference for us is the breadth of our portfolio. If you think about the categories that we operate in, take Scotts for instance, we overlap with about 30% of their portfolio. We're in categories like wild bird in particular, live goods, packet seeds. That's some of the biggest players in those categories that they don't operate in. It just helps give us a little bit of balance to the portfolio and helps us to get by some of the weather impacts. Bird is a great example of a business that often runs a little bit counter to typical spring businesses. The cold weather, it actually responds a little bit better in that environment than some of the typical spring businesses do, so it gives us a little bit more ability to hedge that weather risk. So to me, wild bird has been such a pleasant surprise, and I think it really Yeah saw a resurgence Yeah since the pandemic. Can you kind of describe that for us? Yeah, I will kick it off and I will kick it over to Jason. But for me, because I got a lot of questions about that during the pandemic and then after. And the question was, it was running like crazy, and pre-pandemic, it was really a category for older people, right? We were worried, like, gosh, people are going to age out of this. They are just going to die, and no one is going to be feeding the birds anymore. And what happened during the pandemic was a resurgence in the category, both among older consumers, but you had a younger cohort getting into the hobby. And a lot of people asked, "Well, Niko, what do you think? This cannot go on forever, these growth rates, and what category are you worried about the most? Right. My answer was always the same. It was wild bird because it is so discretionary, and I thought, yeah, that is the one probably most at risk, but it has been sticky. It has been sticky. We just rolled out our Feeding Frenzy a year ago at Walmart. It is a new product, new packaging, big digital marketing rollout. I think when you look at share of voice, we have got to be like 90%. For, yeah, higher. Yeah. We have been just taking share in the category, and it has continued. Like I said, it has just been sticky, and you have got the younger cohort in it, and it has been great. It has really been a surprise. I do not know if you want to add. No, I think very well covered. I think we did have some genuine concerns about whether or not millennials would engage in the category, and they are, and in higher rates, in fact, than some other cohorts. Since they are the largest cohort the country has ever seen, it is exciting to see them engage, and it is perfect timing to do things like refresh our brand, relaunch digitally, where most of the younger cohort is looking to find information about these products. We have really had some success with influencers and things like that, helping to keep people in the category and really driving into our brands. As Niko said, we are a dominant share of voice. Yeah. Well, the other thing too was interesting is when we were doing our Feeding Frenzy rollout and trying to understand the consumer insights there, what we found was there's a connection between cat owners and people buying wild bird food. They'll buy wild bird food, they'll have the feeder in the backyard, and it's really designed as entertainment for the cat. So we saw in the share of basket, there was cat food and then also wild bird seed. So there's that connection, too. We've got to figure out really creative ways to connect those two even more. Right. The Garden Segment does roughly 2/3 of your sales in the March and June quarters. Weather patterns, obviously, they play a role in the delta between your reported and your guided results. We'll say weather hasn't been cooperative for probably four or five years now. What type of weather is "good" for your business? Yeah, well, I guess if I could draw it up perfectly for all of our businesses, it'd be mid-70s. It would never rain on the weekends. We would have perfect beautiful weekends for people to plant gardens. It's like San Diego. Right. Yeah. It'd be like San Diego. Clearly we've had to deal with that, and I think you can see in our results, one of the things we're proudest of is the ability to deal with that volatility in the P&L. I think if you look at this season in particular, we had a strong March that kicked off a really strong April. Yeah. The first couple of weeks of April, we were kind of thinking we might blow the doors off of any records we have, which turned into a really tough May. Right. Which was kind of the key business, particularly for our live goods business. Went from a really cold, wet early season to a heat dome that sat on top of the country without a typical spring. I think you can see the results in the P&L that our ability to manage through that lumpiness or volatility is really showing through. Yeah, that's a function of getting the cost envelope right, where the business now is strong enough, focused enough that it can withstand these weather shocks. Honestly, it was really, really volatile. We were midway through April, and we were thinking we could blow the doors off the quarter. Right. May just took a dump. But these guys just run such a great business, and they still had a record quarter irrespective of that. Right. Really good to see. You exited your garden distribution business a couple of years ago. You mentioned you put your pet distribution business in a JV earlier this year when you retained 20%. Yeah. Despite having lower margins, there are obviously merits to owning these businesses. Yeah. What are they, and why do you feel comfortable exiting those or having much less skin in the game? Well, it really gets back to our thesis on wanting to simplify the business. If you look at the pet distribution business, for instance, you had a ton of customers because you are servicing the pet independent channel. So you are going to mom-and-pop pet stores, small chains. The SKU count was approaching 40,000, depending on who you ask. Right. You are doing all that. You have got high fuel exposure. You have got trucks. You have got high workman's comp insurance. All these things going on, and for what? For very little margin. So we took the view that access is better than ownership. So we retained 20%. We still have access to the channel, so we can see what is going on because there is a lot of innovation that takes place in that independent channel. You see a lot of companies get their start. So we can still mine it for M&A ideas, but we do not want to consolidate it in our financials. So it is going to flow through other income. The other part, too, is we had to be honest about the channel. The independent channel, we have talked about this a lot, is under a lot of stress. You have got food, drug, mass taking share. You have got e-com taking share. You've got the convenience factor, subscription models, all that stuff is really taking it out of the specialty channel. And where we landed was there's going to be room for maybe one or two players. We want to be that one or two players. We thought the best thing to do for the business was to JV it with an even larger distributor, and we think we can become that 800 lbs gorilla collectively in the channel. But to try to go it alone was going to be a lot of work, and I think the payoff really was a big question mark for us. Revenue growth this year is stronger, right? Yeah. The last few years have been more of a struggle, right? Yeah. You've endured a whole host of challenges. But throughout all of this, your profitability has gotten better. Yeah. And I think a big reason for that is your cost and simplicity program. It seems seemingly wringing out cost endlessly. Is this company structurally more profitable today than it was a few years ago? Without a doubt. Without a doubt. The other thing that we are doing that we just talked about is really portfolio optimization, is really getting after the businesses that are not performing, where we do not have a right to win, or where there is a structural change that we are seeing where we just need to get out of a certain channel. We are going to continue to do that. We have got a couple more to go, but it is just changing the P&L, and you can see now the pet business has a gross margin that has a four in front of it, and we are looking at 19% EBITDA on the pet side, at least. Garden in season would be similar. We are structurally changing the business. We are simplifying it. It still cash flows like crazy, which we love. Then there is the M&A piece, where now we can go out and buy more accretive type of businesses and really transform the company. It is pretty exciting, really. Yeah. Yeah. The company was founded in 1980. It has been a roll-up story since the late 1990s. Yeah. Why is M&A an important part of your corporate fabric, and what is the company currently looking for in the market, obviously, outside of TRIXIE? Yeah. It has just been part of our DNA. So Bill Brown, the founder of the business, he is a serial deal junkie. And we have done over 60 deals in 40 years, and we are pretty good at it. We like to think we are pretty good at it. Not all companies are good at it. And it is just something we are going to continue to do, and it helps juice your growth. And it is the quickest way to change the playing field in a given category. We are not in the fastest-growing categories. We are in very mature categories that, with the pandemic, have undergone some changes, some structural changes. And so having the capability and the willingness to do M&A really helps to drive that growth and frankly, brings a level of excitement to the investment proposition. As far as I know, TRIXIE, your deal there does not prohibit you from looking at other stuff. No. It seems like there is plenty of dry powder. Yeah. Can you talk about that and the opportunities? Yeah. We ended the quarter, Q3, with just shy of $1 billion in cash. We've not tapped into our ABL, so it's approaching about $2 billion in dry powder. TRIXIE is going to be, call it, over $400 million U.S. at the end of the day. I'm assuming they'll hit some of the earn-out. If we did nothing else, and we were sitting here next year, we would be close to $1 billion again in cash. Right. I always say deals beget deals. I think we're getting a lot more activity based off of the TRIXIE announcement, a lot more inbounds now. We think there's going to be a lot more to do in terms of M&A. We're showing a willingness to be very active. Pet multiples went insane during the pandemic. Yeah. The deal environment was really quiet last year, obviously, because of tariffs. Can you kind of characterize the bid-ask spread and how hopefully it's narrowed? It has. Especially the assets that are sponsor-owned, I think they're starting to see what the new normal looks like, and a lot of those are levered up. They're kind of coming to a point where they need to make decisions, and these decisions are a lot more rational and realistic. We're seeing that. The other thing I would say is we got TRIXIE at a great multiple. It's in the eights. If you include synergies and the step-up in basis, it's in the sevens. We feel great about that. The other thing is, what we've noticed is the European multiples, there's some great businesses over there, they're a lot lower. Right. The market is more fragmented. We think there could be more opportunity there. TRIXIE could play sort of a platform role and then bolt on other things there, and you could have a nice sizable pet business in Europe. Over here in the States, we think multiples will continue to come down. I think we're a little ways away from really transacting in a meaningful way, but we're starting to see people find religion. Tell me about your capital allocation priorities outside of M&A. You guys bought back a lot of stock last year. Yeah. At obviously pretty good prices Yeah given where the stock is today. Yeah. Kind of talk about that. Yeah, we're going to continue to do that. When we see the stock drop, we'll be in there to support it. Sometimes when we look at the M&A pipeline, the best deal is our own stock, and that's where we were last year. The multiples were still pretty high, and we were trading at a lower multiple, and so we went all in on the stock. I think we did over $150 million of buybacks. We've got the dry powder to do that as well as M&A, and we've said as much. It's also investing in the business, right? It's consolidating, it's future-proofing the logistics network. Right now, we're in the middle of a big investment in data and AI to sort of AI-enable our data warehouse because we have grown through acquisition, and we haven't done a good job of integrating our data. And we think our data can be a real valuable tool in terms of winning in the marketplace. There's going to be an investment there over the next few years on the AI front, and then the other part will be continued investment in our logistics network around AI as well as robotics. That's going to be the next thing. We haven't talked about e-commerce yet, but that's been a really nice growth area- Yeah in both businesses. I think Garden had a really great quarter there. Where are you today in terms of e-commerce penetration in both Pet and Garden, and where can that kind of grow to? Yeah. Pet's at 26%. It's obviously heavier developed in e-com. You've got Chewy out there, Amazon. Garden is at about 10%, but growing really quickly. We're seeing that really take off. And we've participated in that. Garden guys did a great job with grass seed. You can maybe fill in on Garden e-com probably better than I could. We made the acquisition of Do My Own Pest Control a number of years ago, which was a small direct-to-consumer professional-grade pest control company. It's really unlocked our ability to fulfill small parcel direct to consumer. We expect another 200 basis points of expansion on penetration this year in Garden and expect that to continue. We've got a great team there that's really executing well, both in pure play but also in omni-channel. If you think about our biggest retail partners, they're doing a great job of developing their own sites, and we're executing well. That growth is actually exceeding what we're seeing on pure play. Yeah. Just good multifaceted growth in e-com and Garden. It's a big growth vector for us, both Garden and Pet. Again, that's where the data piece comes into play and all the AI tools. If your data's not organized and in the right place, you can't use a lot of the AI tools. Right. If we can't use those, then it could become an existential problem in the long run. We see a lot of urgency around that. Because we're competing, in many cases, in many categories with competitors that are a lot smaller than we are, we feel like we have a real right to win. The last question we are asking all of our consumer-focused companies is kind of on consumer health. Yeah. How healthy is your consumer today compared to a year ago, and how do you see consumer spending shaping up as we head into the back half and into 2027? Well, I will probably sound like a broken record. I think consumers are really hardwired towards value. I think in our own portfolio, when we have gotten that value equation right, we have done extremely well, and we need to do more of that. So one example on the pet side would be our Bully Hide product that is much cheaper than a bully stick. It is a wonderful product that we actually have patented, and it has done over $100 million in sales over the last few years already. Just the consumer uptake has been amazing because it is hitting that price point, and it is a high-quality product. We have done a really nice job there of driving value to the consumer. Then I do not know if you want to talk about the Garden side, The Rebels, or any of the other products. I think The Rebels probably is the perfect example. As you have got a consumer that is pressured and is staying home, taking fewer trips, doing less big capital projects, we are seeing them engage in our categories because it is a low-ticket option to- Rebels is a grass seed, by the way. We have a brand called Rebels, which sits in a value tier. It is a really high-quality product but trades at about 10%-12% below some of the other national brands. It gives the consumer a great option to have a really nice lawn at a value. We are seeing great engagement there. But in general, as people travel less and those types of things, we see better engagement in Garden as total. We see the consumer, even though they are somewhat pressured in our categories, that can be a benefit for us in Garden. There is stress on the low end, right? Right. That is where we are seeing. You talk about the K-shaped economy and all that, but we definitely see the stress on the low end. But again, it is really up to us to find that perfect value proposition for the consumer. Great. Yeah. We will wrap it up there. Thank you guys so much for joining us. Thank you. Appreciate it.