Good morning, and welcome to the Scotts Miracle-Gro Company's Q2 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. I would now like to hand the call over to investor relations lead for Scotts Miracle-Gro, Aimee DeLuca. Please go ahead. Thank you and good morning. Welcome to the Scotts Miracle-Gro Q2 Earnings Conference Call. Joining me this morning are Chairman and CEO, Jim Hagedorn, our President and Chief Operating Officer, Mike Lukemire, Matt Garth, our Chief Financial Officer, and Chris Hagedorn, Group President of Hawthorne. In a moment, Jim, Mike, and Matt will share some prepared remarks, and then we'll open the call to your questions. As always, we expect to make forward-looking statements, so I want to caution everyone that our actual results could differ materially from what we relate today. Please refer to our Form 10-K, which is filed with the Securities and Exchange Commission, so that you may familiarize yourself with the full range of risk factors that could impact our results. I've already scheduled time with many of you after the call to fill in any gaps. Anyone who'd like further discussion can call me directly at 937-578-5621. We'll work to set up some time as quickly as possible. Also, please note that today's call is being recorded and an archived version of the call will be published on our website at investor.scotts.com. With that, let's get started. I'll turn the call over to Jim Hagedorn to begin. Jim? Thanks, Amy. Good morning, everyone. We have plenty to cover, If I had to narrow it down to a single theme, it would go like this: It's been a hell of a year. As rough as it was, we're in a better place, and we've accomplished it without diluting our shareholders. Considering where we started, we've made progress in several important fronts in a very short period of time. It's a trajectory we expect to continue through fiscal 2023 and fiscal 2024. The first half of fiscal 2023 is a testament to the powerful franchise of our core business. It's a reliable generator of cash that will enable us to materially de-lever, improve cash flow, and invest in growth. Just about a year ago, we were looking at free cash flow of -$1.2 billion. We reported misses in our sales numbers in the consumer and Hawthorne businesses. We were stacked up with significantly more inventory than we needed. Cost of goods were rising and margin was declining. Without immediate actions, we were facing near certain busting of our bank covenants. It was a tense and cruel time, but our associates responded. T hey never wavered or lost their way. They stayed engaged and kept their heads up. They've executed upon our plans with grit and determination. It's what we and our people do best. Today, free cash flow is favorable, improving nearly $600 million through our first half. We're reaffirming our guidance of generating $1 billion in free cash flow through fiscal 2024. We're living within our credit facility covenants. I do not see leverage compliance issues going forward, as we're looking at the low 5 x range by fiscal year-end. I will restate that Mike Lukemire and I are pushing to do even better in that timeframe. Cost of goods is improving too. While we expect commodity costs to be up almost $100 million over fiscal 2022, this is about 20% less than we projected as recently as the end of Q1. These improvements will not show up in margin rate until we work through our higher priced inventory. We expect our gross margin rate to fall slightly below last year before achieving more significant margin recovery in fiscal 2024. Through the first six months, SG&A was down $44 million due to the cost reduction and efficiency work of Project Springboard, which continues to over-deliver. Our Springboard annual savings target was $185 million by the close of fiscal 2024. We're already three-fourths of the way to that target, and by the end of this fiscal year, we expect to exceed $200 million in annual savings. We'll accomplish this without cutting investments in the most important marketing and R&D initiatives. Our efficiency efforts have extended to Hawthorne, where we have significantly reduced its distribution footprint and brands. Overall, we've worked off over $400 million in inventory. We're moving into the transition phase of our recovery. We're creating balance and nearing the inflection point where we can shift from operating in a really constrained environment to having a bit more freedom to operate. Ultimately, this will give us greater flexibility to drive growth and long-term shareholder value. Looking to value creation, Mike Lutkemeyer, Matt Garth, and I have agreed on four financial targets that include getting leverage down to 3.5 x or less, achieving sales growth equal to GDP plus 100 basis points, improving total company gross margin to 30% or more, and realizing free cash flow every year of $300 million or more. We also will continue to invest in innovation, marketing, and incremental growth within and outside of our core business. This can range from alternative landscapes and natural and organic products to live goods. As well as strategic investments in Hawthorne. To ensure we prioritize initiatives and approach them in a coordinated and measured manner, Matt is leading a new strategy team that reports to me and will work closely with our business units, brands, management team, and the board. You have a sense of where we are in our transformation, let's revisit the first half. Q2 was the quarter we needed in our U.S. consumer business, where sales were in line with last year's record Q2. In March, we had our best shipment month ever. Through six months, we're on par with the strong U.S. consumer sales of the same period last year. Despite concerns over consumer spending in general, our retail partners understand the importance of lawn and garden, even in times of economic uncertainty. History shows the consumer still shows up for our category. Our share of shelf makes it obvious we are the market leader. Our collaboration with retailers is tighter than ever. We've developed joint promotional campaigns and backed them with thoughtful planning and aggressive early season execution. Our working media budget is up 23% over last year. The work in Q2 led to early season POS lifts in warm weather markets and product promotion attachment rates that are in excess of historic trends. Where the weather is good and our promotions are in place, consumers are showing up and often in bigger numbers. Important early markets like Texas and Florida struggled last year. In Q2, we saw significant POS lifts. Bonus S was up nearly 40% in Texas, and branded fertilizers were +17% in Florida. Overall, Q2 was a good quarter for our core business. Q3 is off to a solid start. In recent weeks, the weather is opening up in key markets, with well-timed promotions with our retailers, we're seeing POS gains. In mid-April, we achieved an all-time record POS week with our big three customers at $198 million, breaking our previous record of $193 million in 2021 and eclipsing our peak week of 2022 by over $30 million. Branded lawn fertilizer units across key retailers were positive through April, up 2%, and we're taking share. In growing media, the signals are strong. Mulch units are up 10% through April, and Miracle-Gro Garden Soil units have increased 21% in the same period. Our leadership in non-selective and selective weed control remains unchallenged with share gains at key retailers. In the Northeast and Midwest, Roundup is +10%, and Roundup's innovation launch, the new Dual Action formula, is performing above expectations. It has eclipsed $10 million in POS and has unlocked incremental listings at more retailers. The consumer reviews are category leading. Here's why I'm not worried about the weather early this season. There will be ups and downs. Just in recent weeks, we've seen great weather in the Northeast and Midwest, followed by cold and rain. Consumers ride the ups and downs. California is an example. In Q2, when heavy rains were dominant, branded fertilizer POS was -8% year-over-year. Improving weather has become our friend. In the last four weeks, branded fertilizer POS hit +60% in California. In April, California became the number 1 volume state for Roundup at +67%. This is a pattern I expect to play out in other regions as we enter May and June, when the drumbeat of promotional activity will accelerate. We have the bulk of our media and promotional dollars ahead of us, and we'll shift the spend to where we get the most bang for the dollar. Looking ahead, the weather outlook is favorable. We've had three years of La Niña with extreme weather swings. Now we're shifting to an El Niño that is more in line with historic norms. May looks to be relatively normal in temperatures and precipitation. June forecasts are on a similar track, an indication we can extend the peak lawn and garden season deeper into the summer. These projected weather patterns are similar to 2018 when we crushed POS into the summer. I'm gonna ask Mike Lukemire to jump in here with his thoughts. Thanks, Jim. We have momentum. It is showing up in the numbers. There's demand where the weather is just now breaking. Our plan is working because retailers are all in and our team is stepping up. Jim has talked about how we're flatter and leaner. We have awesome talent that's doing more with less. Our next generation leaders have a now is now mentality and an infectious spirit to attack opportunities. I always stress the importance of working as one team with one goal of delivering the year. I'm seeing us work in a more integrated way internally. This is extended to our retail partnerships. The coordination between all the teams has never been better. We're loading up the stores and leaning in with consumers. Our field salespeople are helping fill gaps caused by labor shortages in lawn and garden centers. Chief Marketing Officer Patti Ziegler, Head of Tech and Ops Dave Swihart, and Head of Sales Josh Meihls deserve credit here. Our early focus has increased foot traffic, which coincided with regional campaigns for fertilizer and seed. We overlaid those with Scotts 4 Scotts and the Day Lawn Saving national campaign. These contributed to POS lists where weather was favorable. Where it is yet to break, it led to some early consumer takeaway. The Midwest and Northeast are prime, and California's warming up. The other key piece is mutual investment and optimization of our efforts with retailers. We're not tripping over each other. In April, retailers kicked off spring events that included joint advertising and deals, which are a huge consumer motivator. We're gonna put even more gas in the fire. We still have much of our promotional and advertising activity remaining. More events and campaigns are coming. Expanding into Miracle-Gro and Roundup, a new campaign focused on the newbie gardener called All You Need to Grow is part of the best gardens plan in years. Roundup Dual Action is supported by the largest campaign in Roundup history. I'd like to remind people this isn't a sprint, it's a marathon. We'll maximize the season, we'll pivot media and promotional dollars as necessary, and we'll extend the season deeper into the summer. Everyone understands that. That's why nobody's even thinking about backing off. It's all out in front of us. When we lean into our activities, good things happen. I am absolutely bullish about the season. Back to you, Jim. Thanks, Luke. I'll build on your marathon analogy and say that we paced ourselves well. We like where we're positioned, and we see a clear road ahead. As for Hawthorne, we're looking at it through a different lens. We're aggressively taking action to align Hawthorne with the realities of the cannabis market. There's a widening gulf in the cannabis sector, creating haves and have-nots. It sounds harsh, but it's not all doom and gloom. All over the cannabis sector, there are folks winning big. They're adopting new technologies, advanced growing techniques, and diversified offerings. Many of them are legacy businesses. They are producing high-quality products and getting prices per pound greater than what they were a few years ago. They represent the heart of the cannabis industry. This was evident at a recent summit we organized with leading stakeholders in the cannabis space. We brought together growers, suppliers, and hydro retailers to assess where the industry is now and where it's headed. What we learned is that those at the top want solutions and partners to help them grow and scale. We have the strength to fill this need. We're aligned with the cost and quality advantages they need to help them be successful. We're determined to be the only partner on the supply side to develop and deliver competitive solutions to help them grow. Along these lines, we've restructured our product line to the 58 brands that are the most profitable and important to these players, creating our Hawthorne Signature Plus portfolio. Our R&D is bringing innovation to secure the long-term health of the industry. Research across multiple controlled environment facilities proves the benefits of our LED fixtures, nutrients, and genetics. Far, we have nine utility patents covering electrical, thermal, and optics. Take the Gavita Pro RS 2400e LED, which can change the game for growers. It boosts yields by as much as 50% over traditional HPS technologies while minimizing energy inputs and enabling faster crop cycles. The summit also brought consensus that consolidation is a must. A wicked shakeout is underway, and we expect it will result in the top 25% getting even stronger. Hawthorne is uniquely positioned to thrive. It's an opportunistic time, and that's why Hawthorne is looking to participate in innovative, value-creating, non-cash deals that advance its scale and capabilities. If we take no action, we'll be left behind. I do want to comment on the industry challenges that are largely due to two factors. The first relates to the growing pains that will be dealt with through consolidation. The other is market instability caused by government legislators and regulators. From failure to adopt Federal SAFE Banking Act or 280E tax reform to well-documented missteps in regulatory approaches in states like New York, the industry has been negatively impacted on multiple levels. We have to remember that tax revenue, job creation, and other economic benefits are at stake here. We need governors, legislators, and regulators to take proactive actions to stabilize this industry and go even further by not issuing cannabis licenses in excess of what citizens can consume in their states. This has been a significant issue. Oversupply caused by bureaucracy and flawed planning has hurt those who have worked hard and invested heavily to create a healthy, well-functioning industry that benefits everyone and is not subject to wild swings that crush legitimate growth. Hawthorne is very active at the regulatory and political levels, advocating for policy and legislative change. This is another way we're adding important value to this industry. We're leading the way, and it's my hope we begin to see substantial progress in many of these areas in the next year. We're in an enviable position because no one else is doing what we're doing in this space. I'll wrap up with this. As I look back on my nearly three decades with Scotts Miracle-Gro, this by far has been the hardest period I've experienced. From a challenge and difficulty point of view, it was way harder than COVID. While the heaviest lifting and the most extreme sacrifices are behind us, there's still more to do. We have an exceptional team, a solid blend of highly experienced and next generation talent. It's a smaller team, but more empowered. Just as we're becoming more focused on future innovation and growth, people development is a priority at all levels. The recent addition of executive and senior leaders reflects our commitment to succession planning. We're strengthening an already strong team. I appreciate our associates, our board of directors, our retail partners, our banks, and our shareholders. Your support has meant the world to me. Scotts Miracle-Gro makes a difference in people's lives every day, That's an obligation, along with the one to our shareholders and associates that drives to all of us. Thank you. I'll turn the call over to Matt to walk through the financials. Thanks, Jim, and hello, everyone. We are very pleased with where we ended the first half of the year, as well as with the early spring consumer engagement we are seeing so far. As we've already announced, net leverage at the end of the quarter came in at 6 x versus the covenant max of 6.5 x. Springboard is on track to deliver over $200 million in run rate savings by the end of the fiscal year. Consumers are clearly engaged and participating in lawn and garden. In regions where weather has been favorable, we're seeing strong engagement, and as expected, consumers are responding to the promotions that provide them the most value. Turning to Hawthorne, the state of the cannabis industry remains volatile, and our recent restructuring at Hawthorne reflects heightened actions to more quickly improve our profitability. Now let's walk through the quarter in more detail. Starting with net sales for the U.S. consumer business, Q2 sales were $1.36 billion, just 2% shy of our prior year record. First half sales were above last year and totaled nearly $1.73 billion. Our team has done an outstanding job in executing the first half load and plan with our retail partners. These results are a reflection of their efforts to deliver for SMG in a challenging environment. Pricing of nearly 10% year-to-date more than offset the impact of lower shipment volumes. Recall that the lower shipment volumes are related to our expectation for reduced retail inventory levels, which are down 6% in units versus the prior year. As noted earlier, the season started soft as a result of the extreme weather patterns that impacted California. However, we are encouraged by the strong POS we've seen through April. Consumers are price-sensitive, seeking value, while also remaining loyal to our high-quality, trusted brands. To date, we have not seen a significant trade down to private label, and we are seeing strong POS lifts from our promotions and media campaigns, especially in branded fertilizers and growing media. To support these trends and to continue driving profitable volume, our media and promotional plans this year will run through the fall. This contrasts with last year when we made limited investments in the back half of the season. As of today, POS units are essentially flat and dollars are up mid-single digits at our largest retailers. Product mix is currently favoring growing media, and we now expect this trend to continue through the full year. Within the lawns category, overall volume is down mid to high single digits through April. Our higher margin branded fertilizers, such as Scotts Turf Builder Triple Action and Bonus S, are currently positive in units at key retailers and outperforming lower margin private label fertilizers. In categories besides lawns and growing media, we continue to trend towards flat units versus prior year. At Hawthorne, the top line remains challenged amid continued market oversupply, limited and costly access to capital and an uncertain regulatory environment. Q2 and first half sales for the segment were $93 million and $224 million, down 54% and 43% respectively versus the same periods last year. North America Lighting and Growing Environment drove the change as large durable investments continued to decline at a greater rate than consumable replenishment. Lighting and Growing Environment combined were down 66% in the quarter and 53% in the first half year-over-year. Together with hardware, total North America Durables net sales were 50% of total Hawthorne net sales in the quarter versus 56% in the prior year quarter. We still expect improvement in the back half of the year when the outdoor growing season picks up and our ProHort lighting business converts strong prospects to orders. Given the overall weak market conditions, daily sales rates have yet to improve from the first half of the year, and this may persist. Our focus remains on returning to run rate profitability by the end of the year, and this objective is intact. Approximately half of our Springboard savings are from Hawthorne, and the changes to brand and category mix that Jim spoke to will impact gross margin rates favorably when overall volume recovers. However, even though Hawthorne saw a substantial decrease in warehousing costs in the first half, the volume decline, paired with higher material and freight costs, has outpaced year-to-date pricing actions to drive the segment's gross margin rate lower. As noted in the press release, Hawthorne sold its Hurricane branded fans business, an action that helps to accelerate distribution cost savings through warehouse closures in Washington, California, Oregon, and New Jersey. Related to this restructuring, Hawthorne posted total GAAP charges of $141 million before income taxes, of which $119 million impacted gross margin. These charges are excluded from non-GAAP income for the quarter. Let's take a closer look at gross margin and cost of goods for the total company. The adjusted gross margin rate declined 70 basis points for both the quarter and first half, resulting in rates of 34.7% and 31% respectively. Through the first half, pricing net of trade added nearly 800 basis points to the year-to-date gross margin, more than covering higher material costs. The increase was not enough to also fully cover higher conversion costs and fixed cost to leverage, largely driven by the steep volume declines at Hawthorne and lower production volumes in our U.S. consumer business. With greater than 85% of our COGS now locked, we have a reasonable line of sight to our full year costs. Other than resins, we are seeing lower prices for most of our major raw materials. Given our hedging program and remaining high cost inventory, we expect to recognize these improvements starting in the second half of 2024. Looking at the balance of the year, margins will be slightly pressured based on our revised mix expectations and additional trade investments. The net cost of the changes to pricing and mix will be mostly offset by continued strong productivity gains and moderating material costs. Overall, for fiscal 2023, we still expect the total company gross margin rate to climb near 100 basis points. Looking to fiscal 2024 and beyond, we see ample opportunity to improve our gross margins through volume and mix recovery, commodity cost moderation and our warehouse restructuring and other cost add initiatives. We continue to show progress on the SG&A line without sacrificing our aggressive media plans for the year. In fact, working media spend is expected to be up 23% year-over-year. As a percentage of sales, SG&A is down from 16% in the first half of last year to 15.3% this year, reflecting our significant progress from Project Springboard. We expect to maintain these savings moving forward, yielding SG&A between 15% and 16% of net sales for the full year. I'll highlight a few more expected adjustments to our guidance. We remain enthusiastic about our full year prospects and the great work on cost control so far this year, the near term pressure on gross margin rates and the headwinds at Hawthorne on the whole lead us to adjust our full year operating income guidance to a mid-single digit percentage decline and our full year Adjusted EBITDA guidance to a low single digits percentage decline from fiscal 2022. This revised EBITDA guidance keeps us comfortably within our net leverage covenant for the remainder of the year, and the team will be working diligently to meet Jim and Mike's target below 5 x. I'll finish up the review with a few comments on taxes, interest expense, and the balance sheet. Our adjusted tax rate through the Q2 was 26.7% versus 21.7% through the Q2 last year, largely driven by a one-time benefit in fiscal 2022 from the vesting and exercise of certain long-term executive compensation. Additionally, we expect our tax rate to fall in the range of 27-28% for the full year. Quarterly interest expense is up $20 million, or 71% versus prior year, and expected interest expense for the full year is unchanged at an increase of $60 million. The increase was mostly driven by higher average borrowing rates of 5.3%, up nearly 2 percentage points from a year ago, mainly due to higher underlying SOFR. Through a combination of long-term fixed rate senior notes and interest rate swap arrangements, 61% of our debt is at fixed borrowing rates as of the end of the quarter. Continuing on the balance sheet, we are making strong headway improving our inventory balances. We've pulled back on production volumes and we are selling through higher cost inventory. As of the end of the quarter, inventory was $467 million lower than the same time last year. While the improving inventory position will drive significant free cash flow, the net change in total working capital with offsets and accounts payable and other areas is expected to deliver closer to $200 million of favorability in each of fiscal 2023 and fiscal 2024. Together with approximately $300 million in operating cash flow each year, we are on track to deliver our targeted $1 billion in free cash flow over two years. As I stated last quarter, we will maintain a tightly disciplined capital allocation approach. We are funding our quarterly dividend and the balance of our free cash flow will be used to pay down debt. Let me wrap up the financial overview with this. More than 55% of our expected POS remains. It is still early. We will know much more by mid-June as to how the season is progressing, and we will provide an update on our progress at that time. One final note: I'm extremely excited to work with Jim to reconstitute SMG's strategy team and contribute meaningfully to long-term planning and value creation for our stakeholders. The team is already diving deeply into the non-cash opportunities for Hawthorne that Jim mentioned and refreshing our longer range plans to protect and build on the core lawn and garden business. Now I'll turn it back over to Jim. Thanks, Matt. Latifa, we could go to the Q&A session now. That'd be great. As a reminder, to ask a question, you will need to press star one one on your telephone. Again, that's star one one on your telephone to ask a question. Please stand by while we compile the Q&A roster. Our first question comes from the line of Chris Carey of Wells Fargo. Your question, please, Chris. Hi. Good morning. Hi, Chris. Can you, maybe just help frame why, you know, guidance was lowered. You know, gross margins seem intact. You know, POS running flat year-to-date in U.S. consumer seems actually, you know, quite a better outcome than in the prospects a month ago. U.S. consumer margins came in, you know, quite strong with the gross margin over delivery. Can you just frame how your expectations have changed for the Garden business relative to Hawthorne? On, you know, at first blush, it feels like, you know, Hawthorne is the key change here, and you're just not yet ready to call for, you know, the Garden business offsetting Hawthorne, given you still have a lot of POS still ahead. You know, I don't know if I'm reading that situation wrong. And if you could just comment on, you know, how you feel, you know, retailer inventories are at this point in the year relative to your expectations. Thanks. I know Garth would like to go first here, but I'm gonna sort of cut him off at the pass. Look, I have to say that, you know, I came in this morning and talked to Matt and said, "You know, I should have called you last night and pulled that release." 'Cause I, I think that Amy and Matt are, you know, trying to sort of balance sort of expectations coming out of the call. You know, I'll give them credit for that. I know it's for the sort of common good. But I, you know, I felt a little bit like you're saying now, yesterday when the press release was sort of running around for approvals, and my quotes were being approved by me. I think you're right that the big negative here is just Hawthorne. I wouldn't say it's a huge negative, and we're more, I would say, more than covering it with consumer. I think there's Matt and Amy trying to sort of deal with expectations. There is negativity on Hawthorne, which is I think basically top-line driven. Let's get back to consumer. I think we feel really great about consumer. You know, my view is, you know, stand by for violence. You know, we had kind of like 1.5 good weeks in April, and the numbers were truly stunning. You know, if you look at the forecast, like for this weekend, it's just exactly what's needed at exactly the right time. We've got crazy ammo, you know, going into this battle on the marketing and promotional side. The retailers are locked and loaded. We are. You know, I expect. You know, I think Matt and Amy are going out probably, you know, a month from now. You know, we'll have to figure out how they're gonna communicate sort of market update to you, but we're planning to somehow, I don't know that that's done yet, because I think people aren't gonna be at that normal conference that we talk at in about a month, just 'cause people are gonna be out of town. What I expect is some really interesting data. You know, when you look at what's sort of happening, think about California and Texas, you know, Florida. The numbers that I passed to you guys today, those are really great. You know, a lot of what happened is we never had a real spring. It didn't get decent. For those of you who are East Coast based, you'll know that last year, just the weather, no shi, really just sucked. We never really had a Midwest and Northeast season until sort of after the Fourth of July. Texas was super drough, California, super drough. I'm talking like giant states down like 30%. When you see the data, I mean, the rain in California has wicked been our friend, okay? I mean, not only great for fertilizers, but great for herbicides 'cause people got a lot of weeds. You know, you look at certain markets like Arizona, they're just big weed markets. You know, as people have kind of these desert gardens, and they want to keep the weeds out. They've always been important Roundup markets, but the Roundup numbers are also really stunning. You look at like the lawn fertilizer numbers for Texas, just real positive. Same for Florida. You know, I think we've got a really good start to the season, really good integrated program. Mike said it in his comments, but Mike's team on consumer has just really killed it. The first half was really, really important for us to avoid, you know, coven and hell. We didn't expect, you know, more than we had agreed with the retailers. All we needed the retailers to do is get the load in that we had pre-agreed to get done that's it's not excessive in units. We accomplished that. There was a lot of worry, I think, on Matt's team, you know, could we get it done as we were kind of looking at the last weeks of the quarter. People did it, and they couldn't have done it without the work that Patty and the marketing team had done to get the retailers into the promotional plans. The first half really came well together, and I would say the season's, the season so far where the weather has been our friend, which let's just talk southern markets, California has been really good. Now we have weather that's our friend in the Midwest and Northeast, which is like this weekend, and the forecast on my tool that I use just takes us out looking warm and kind of normal precip for the Midwest and Northeast for the entire month. I feel really good about it. The retail inventories, I think that was another part of your question, I think are reasonable. I wouldn't read too much into sort of unit volume in retail being down. I think that's more of a just a crazy amount of units that happen in sort of soils. They're just coming in sort of at the right time. If you look at sort of major promotional events that happen with the retailers that drives inventory into the store, that it's just hard to look at it. I think, you know, what I, Mike, what I would say is the consumer market is about where it needs to be. I wanna also thank our retail partners for, you know. I'm going on too long, but I'm trying to get a lot of stuff that I would say anytime out on this question. You know, I think to the retail partners, based on our sort of needs to get the volumes we had pre-agreed in, we were a little whinier than normal. I wanna thank our partners for putting up with our kind of whininess as we needed to make sure that we executed against the plans we had pre-done with them. Really great friendships. You know, this is one where I know a lot of you guys were sort of forecasting doom and gloom for us. maybe not you, but people were forecasting, you know, covenant busts. our retailers knew we needed them, and they came through for us bigger than Dallas, and I wanna thank them all for working with us. I don't know, Mike, anything you wanna talk about this season so far? No, I think every promotion or activity when we have weather is over-indexing far beyond what we expected it to be. We expect more as we go into good weather in the season, and we're very bullish about hitting what we said we were gonna do. Jim's right, there's a lot of buy on, so it would occur 'cause we will adjust to markets as we see fit. Then last, I guess, is just Hawthorne. Hawthorne is working toward breakeven. That's our mission, okay? You know, there's an element where, you know, if you were to sort of talk to me... You know, we had a board meeting last Monday and Friday. I think Monday and Friday, Tuesday and Friday, whatever the hell it was, but Friday. My whole attitude of sort of Hawthorne and cannabis really changed a lot as we were gathering intel kind of for what's happening out there. You know, the sales results are kind of based on a couple things, you know. Number one is our big category is durables, you know. In an environment where it's very challenging to make money and there's a lot of people barely hanging on, our dominance in lighting is gonna work against us, especially when you compared to the amount of money we invested in the business. Fair enough, people wanna be critical. The more I studied, the more Chris was out on the road, that was why those changes happened in my script. I mean, you know, I don't know, we were like version 14 by the time we finished. There is a lot of good stuff happening in the industry. It's, you know, you tend to think everybody's failing here. It's an environment where it's like regional banks. You know, the weak ones are in trouble, and there's a lot of people in trouble in this space. The people who are good at it, and there's quite a few of them, are really doing well. Guess what they're running? Our best and most expensive lights, okay? They're getting the results out of those lights, you know, which are no joke. We're doing, like, all this research. I don't think anybody is doing this kind of work where you're seeing sort of 50% increase in outputs. The cost of lights doesn't matter when you're seeing that kind of increase, but you gotta have the money, and if you're barely hanging on, you ain't buying it. That's where I say there's gonna be winners and losers in this space, and there's a wicked shakeout underway. We have to see that through. So this is one where there's a lot of good stuff happening. I would say even on the RIV side, there's a lot of pressure to get New York fixed by people in the government in New York. It's embarrassing, frankly, what's happening there. There's a lot of changes that are gonna, I think, very much benefit RIV and the investment we made in New York. There's just a lot of good things happening, and you just don't see it in the sort of What do they call it when there's just... There's a word for it, just dead bodies everywhere. There's a lot of good stories within the battlefield. Anyway, we're not really running Hawthorne for top line now. We're running it really for bottom line. While it did slip, I think we are still confident that we get to break even by year-end, and we are seeing positiveness there. We're seeing with those people who are doing well, we're seeing value per pound up there as high as it's ever been with the people who are using our product and know what they're doing. Chris, a real long answer, but I can talk less after this. Thank you, Jim. That was, you know, true to form and helpful. It's always, you know, helpful to get the big take. I only used one bad word. Yep. Yeah. Well, it's... Hey, I'm only the first question in the earnings call. You got plenty of time to catch up. Hey, just, maybe just really simply put, and then I'll get back in. Number one, have your volume expectations changed at all in U.S. consumer for the year? Number two, you mentioned 30% gross margins. Is that how we should be thinking about fiscal 2024? Thanks so much. I'll let Matt do the, the margin side of that. Remember what we said is, you know, partly what I don't wanna be in the business of is dealing with you guys. I don't mean this in a bad way. I mean, I mean that, you know, I don't wanna be sort of captive to sort of what you all think. All I can be captive is to what commitments we've made. We said flat +10% on lawns. I think Mike and I felt that those were super easy relative to the investments we're making, and I still feel that. You know, what do I think? When you say that Mike and I are working toward, you know, leverage in the 4s, it sort of assumes not a lot of positiveness out of Hawthorne and more positiveness out of the consumer business. You know, where I live, as I was driving in last night, you know, our birch trees don't even have leaves on them yet. I, you know, I put this. Now, it's New England, but I would say, I put this as real early in the season and a lot of stuff still to do. I think we like the weather forecast. We like the programs. We like the marketing efforts. I personally don't think there's any evidence that the consumer is not gardening or staying away from our product line. you know, I think Mike and I are expecting positiveness of flat plus 10 for lawns. That we're really gonna be able to tell you that, you know, in July or something like that when the season is kind of 80% through. Yeah, Chris, from a margin perspective, I think Jim talked around it. You heard it in my prepared notes a little bit. The objectives that we're putting out for growing top line GDP plus 100 basis points, getting back to 30-plus% margins, maintaining SG&A in that 15-16% range, also delivering free cash flow year in, year out around $300 million, all of those are formative. Getting there in 2024, I think we check off a number of those things. The margin, in particular, we're coming from sort of a full year perspective in the mid to high twenties here in 2023. As you know and as we've talked about, there is a significant impact from raw material inflation and other inflationary items that have impacted our margin that we've fully offset in pricing, but that is margin dilutive. If you just take a look at the sheer math here, it's kinda like 800 basis points up in pricing. You see that in our pricing lifts that we show you in the press release tables. That's been offset with really about 700 basis points, 800 basis points if I round up in inflationary factors. You're still not getting the margin lift yet. As we talked about, some of those commodity factors are starting to weaken. That will run through. We have higher cost inventories that Jim and I both spoke about that we are working through, and we are trying to work those through at a faster rate. Mike and his team have been integral in doing that. That could bring margin in faster. All of this right now, the mechanical math tells you this is going to happen towards the end of 2024. 2025 is where we would start to see those 30%+ margins for the year come back into play. Yeah. Listen, sorry for everybody that wants questions because, you know, this is one where pricing is gonna matter for us. You know, it's clear that throughout this whole deal of inflation, that we did price for the dollars. It was dilutive, I don't know, at least 500 basis points. Clearly, the reason that I put that stuff in my script, which was not the original plan, was to sort of make sure that my team understands that we have goalposts- ... that we're operating on for sort of improvement to the P&L. Gross margin is our jet fuel. You know, it's what we use to operate the business and build our brands, and it really matters. You know, today's Journal has this article about some companies that priced in excess and were able to do that. We either didn't or couldn't. Remember, we are not like some of these companies that they threw in there, the, like, building materials, which was highlighted in the article this morning in the Journal. You know, we're dealing with three or four big retailers, I mean, who are the dominant players in lawn and garden in America. You know, I think we probably pushed them on pricing about as hard as we could, and we weren't shy about it, but we were losing margin every time we did that. My team needs to understand that gross margin is our jet fuel, and we need that to war here. I mean, I don't think we're final on what we do with pricing. I think it's gonna depend on conversations we have sort of now and the next month or so with our retail partners for them to understand. You know, a lot will be just how does the business look? How did brand do? Did we lose share? We there's no obvious share loss here. Just I'll throw out there, a little sensitivity on our most expensive grass seed, where we're looking at this. So I think we're pricing that sort of in market right now. I think we do need pricing, and we can get gross margin back where we need it to be if the retailers and the operating team are willing to say pricing is just a faster way to get there than wait for the commodities to come down, which they are. Okay? Wait, why don't we move to Andrew Carter? Thank you. Our next question comes from the line of William Carter of Stifel. Your question, please, William. Hey, thanks. Yes, Andrew Carter. Thanks. Can you hear me? We can. We can. Okay, great. I'm just gonna simplify your question. It sounds like you said the guidance change today is all the bad, but none of the good. Specifically to Hawthorne was worse than we expected, but you did reiterate the break-even or run rate. Is that a fair question to kind of characterize the overall guidance? I think it is. I think what you're looking at is a few things in how we walk through this. First of all, what Mike and the team have been able to do is absolutely outstanding, and the level of connectivity in the company today is extremely high. We are on top of all of this, and the message should read like this to you. We've seen very good performance on the load-out. That's booked in the first half. POS so far, you heard Jim and Mike both go through that. We have seen a little bit of a mix change where our brand ed fertilizer is performing extremely well, private label fertilizers, okay. We've seen great mulch performance. That is a mix change from what we had expected that keeps POS plus 10% in the lawns and ferts lawns area and then sort of flat over the rest. That mix is gonna change as we move through the year because we're expecting now sort of mulches, soils to come up a little bit. You may see lawns come down a little bit and growing media come up a little bit. There's some mix movement there in margin, but the bigger piece, you're absolutely right, is all with Hawthorne. Now, the piece here that's extremely important with Hawthorne is like Jim said, we are navigating many different obstacles in terms of revenue generation, but all of the delta in terms of underlying performance is coming from our cost outs. That's why we took a restructuring in the quarter to further realign our position and reform it with where the overall revenue is. We've taken out 4 warehouses to be able to do that brings cost out with it. The trajectory now is to keep us on track for break-even performance by the end of the year. Okay, great. Second question, I wanted to drill in just you did say POS was you expected POS to come in line with your expectations. I just wanna drill down on that statement because March obviously started behind the eight ball. That was a weaker month. April was strong. What I would ask is, are you in line with your original expectations through April, therefore kinda upside to your old estimate? Or is this kind of guidance for full-year in line, kinda predicated on weather kinda staying the same in May and June? Thanks. Yeah, there's a lot going on there. I was gonna say, I'll kick off. We can go straight to Mike. Go ahead, Mike. No, I think we're in line with our current expectations. Mix, we'll adjust based on greater takeaway based on the timing of the season. There's so much POS ahead of us that, we're not changing anything as far as our guidance. We're just running various models based on how POS comes out. Yeah, Andrew, I do think that, at least from my point of view, you're overthinking it. You know, I think what's clear is Garth did not wanna see the numbers go up coming out of this call. I don't think we're sitting around reforecasting every week on what we see in North America. I think people are just running the business right now. I think it's a positive season so far, is there any disappointment in the season? No. I mean, it's always lumpy, and, you know, we got 50% of our POS still ahead of us. There are the ups and downs of weeks. We've had fabulous weeks, we've had weather weeks. We constantly make adjustments, but we're staying with our guidance on where we're going on the U.S. business, so we've not called any. That would be Andrew, that would be typical. We typically would not be calling up or probably down our numbers, this early in the year. Well, generally, I don't talk to the finance guy about any number till after May 31st. It is just the way how the season rolls out. By region and by weather effects. Everything that we've done promotionally this year, and timing with retailers is actually beyond our expectations. Luke isn't messing around. I think we generally do not want to spend a lot of time rebudgeting at this point in the season. I think we just run the business, and I think we feel, I would say neutral to positive about the consumer business. Yeah. We'll blow it out this weekend. Great. I'll pass it on. Thanks, Andrew. Hey, thanks, guys. Thank you. Our next question comes from the line of Joe Altobello of Raymond James. Your line is open, Joe. Thanks. Hey, guys. Good morning. I guess staying on POS for a second, you know, flat through April, given where you were 3 months ago, sounds pretty positive. Can you remind us what your compares look like in the back half of this year so we can kind of put that into context? Super easy. Yeah. They're very soft comps. Do we have any... I'm looking at the sales guy over here. No, he's in his computer, though. He's not ready, obviously. You're looking at balance of the year, low single digits to negative double digits comps. We've got a negative comp for balance of the year. Yeah. Okay. Helpful. Secondly, on the SG&A guide, if my math's correct, I think you're guiding somewhere in the, in the neighborhood of about $570 million this year. Obviously, it's well below what you spent the last, you know, few years here. How much of that is temporary, and how much of that might come back, I guess, in 2024? Should we kinda stay at that, call it mid-15s% of sales? Yeah, that's why we've been very diligent about giving that guidance because I think we had a lot of questions earlier in the year about that. You're exactly right, sort of mid-15, as I'm saying, between 15 and 16%. That's down from that 19% level. Again, we've detailed for you where we've come from, which was a much larger revenue trajectory. Through Project Springboard, we've realigned our SG&A spend. We think in between 15 and 16% is a good way to look at that moving forward. As revenues grow, Joe, we'll bring back some spend, but we're keeping that pretty locked in. You know, Joe, we've known each other a long time. It was crazy painful around here, okay? I mean, it was. You know, I think I told people it's gonna be a long goddamn winter, and it was. We let a lot of people go, a lot of people we had basically just hired. You know, we went from kind of, we can do anything, you know. I think, what was it we called it, Mike? Unconstrained? Unconstrained. To super constrained, in a, in a real short period of time, and that hurt. I would invite you know, Joe, you've been a friend for a long time. I would say, come visit with us. You know, maybe we can set up an event where you can actually meet the sort of operating team. There's fewer people, pretty diverse crowd, but really enthusiastic. They didn't get down. You know, and it would've been really easy to kind of lose our way and everybody be down. We got a bunch of young warriors, who are running this business, and I'm really proud of them. I would say we should find a way for you and others to meet some of the team. It's a smaller team, but they're super engaged, and they're kind of rocking and rolling. While the numbers are down and it hurt, I do think that the surviving team is super on top of their game, and you'd like it if you met them. Appreciate that, Jim. I'll try to take you up on that. Thank you. Thank you. Our next question comes from the line of Bill Chappell of Truist Securities. Your question please, Bill. Thanks. Good morning. Hi, Bill. Hey, just one, I guess first quick one, not quick, but on Hawthorne business. I mean, help me understand what gives you confidence that you've cut enough to get a good profitability. It seemed like you implied that the kind of the daily sales numbers hasn't really picked up as you would expect it to by this point. You know, I know there's not a whole lot of visibility to that industry in general. You know, what guideposts are you looking at that feel like, okay, we're gonna on that path to break even, on that path to improving just with the assumption that top line is not gonna improve and maybe stays as weak, if not weaker, for the foreseeable future? Well, I don't know. I'm gonna I'm looking at Chris and Matt on sort of trajectory on sort of operating profit, I guess, is how we talk about that. I would say, you know, we've been talking about where we're gonna start seeing, you know, industry bottoming out. I think that within the Hawthorne crew, and with the industry people we've talked to, I think people are viewing like we're either been there or we are there. I do think that that's part of this, is that, it feels like there's starting to be enough positive signs, on sort of value per pound, I think, you know, and consumption of product with people who know what they're doing, that we're sort of at that inflection point. On the cost side, I don't know. You know, when we talk about cutting expenses here, like on a annual rate of like nearly a quarter billion bucks, Hawthorne was like half of that. That has been, you know, I give credit to everybody there that, you know, whatever Mike and I have done, Chris has done, like about the same amount of money. So it's been very challenging. I do think, you know, you heard comments about we gotta do something. You know, part of what I'm looking at is there gets to be a point beyond break even that depending on the sales volume and the mix that you just say, "Is this a place we can stay?" You know, we're not giving up on this market. I think if you look at just consumption, by Americans, you know, of pot, those numbers are okay to good. I don't think that Mike or Matt or Chris or me would look and say that we just wanna be a North American consumer business. You know, I think we get back to where we have been in the past, you know, before we started making these investments of saying of the five pillars that, you know, do we need live goods? Do we need Hawthorne? I think the answer is yes. We like the growth characteristics of that, and we still believe in both of those. I do think that at the volume numbers we're talking here, we're gonna need to hook up with other people who are in a similar situation who need scale. That's what you should read from the hints that we threw out there. Chris, I don't know where you are just on the business, and then Matt, I think we talk about sort of the operating profit. Hey, Bill. Chris. Yeah, so just a little bit more detail on why we've got some confidence in the second half here. You know, Jim mentioned, I think we are starting to see some tailwinds materializing in the industry, and they may take, you know, another month or two to hit us, just where we occupy kind of the value chain in the industry. That once those end producers do see some price recovery for their products, that'll work its way through to us. There's a little bit of... You know, there's inventory in retailers and all sorts of things that work its way back. We're also expecting just a pretty standard seasonal lift that we see kicking in in Q3 and into Q4 with outdoor grows in places like California. We expect that as well. And we've also got a number of pretty high upside, what we believe are high upside East Coast states, places like New York, you know, Maryland. I know Missouri is not an East Coast state, but it's an emerging market for us that we expect to start to see some velocity in. Then we've got a, we've got a ProHort business that in spite of everything that's going on in the, in the North American cannabis market, the ProHort business for us, which is primarily the Agrolux brand, is doing extremely well. Those are sales due to the seasonality of their customers, which are professional, you know, ProHort, a lot of veggie growers and that kind of thing, in Europe and Canada. Their season, they wanna buy product at the end of our year. Those are sales we expect to see kicking in Q4, but they're big numbers. We're optimistic. You know, look, if the market continues to have struggles, we'll continue to make moves, whether they're large strategic moves, as Jim mentioned, or the type of internal moves we continue to make. I think there's a lot of signs out there in spite of the headlines, that are making us optimistic. I think just to come on from a position of trajectory and profitability. The top line we're being pretty conservative about and how we're talking about it today. I think Chris and Jim both shed a light on there could be potential improvements. There is positivity pretty much in every product line that we're talking about. Specific to how we're talking to you about it, the profit trajectory is based on the actions that we've already taken. As Jim said, Project Springboard, half of that was coming from Hawthorne. That's built into the recovery trajectory. The restructuring that we took, also is directed at Hawthorne. That takes out a significant amount of warehousing costs. In and of itself, that is the major delta between today and the end of the year. Don't necessarily need a revenue change to help us get to that profitability point. It's really on us, and we've already taken the big actions, and now it's just working it through the next couple of months. Great. Just one follow-up, back on consumer POS and just maybe, hopefully, this is a short answer question, but I get that, you know, you're pleased with how the market or how the business is reacting when the weather's good. Clearly, weather in March was bad, and I think you said there was only 1 and a half good weeks in April. Historically, in the years that I've covered it's been rare where you could kinda make up those March and April sales in May, June, July, in the southern half of the country. Is your expectation and your kinda optimism for the POS that the northern half or the other markets that haven't broken are gonna be better than expected? Do you actually expect, you know, consumers who, for weather reasons, didn't show up in March or April are gonna still show up later in the season and make the equal amount of purchases because you're gonna go deep into the season? Well, I don't expect. I don't see us being that far behind. I'd say we're gonna make up, we're gonna deliver what we said we're gonna do, and then we're gonna execute against it. I would tell you that we've actually been a lot more aggressive early, like with fertilizer. Given the weather, we actually saw in markets where it wasn't weather-related, that we were actually flat to slightly up in units because we got consumers out. I'm actually more bullish than what we have out there. I don't. You don't think the weather's been that much of an issue? No, it's not been that, as big as it's historically been. In fact, I think it's probably, in some cases, better than I thought. Okay. Bill, you know. Yeah. If you look at. If you went back two weeks ago, I know Luke was at that point saying, "You know, we've got this. You know, we're gonna run supply chain out of product." We get, like, two shity weekends, and there's two bad words now. You know, people are looking concerned. This is over, like, a couple of bad weekends. Look at the weather forecast right now. Like, again, mine goes out, like, 14 days. Just looks really great. I think there has been a move in our business toward, you know, May, June, honestly. I think if somebody said to me, you know, "You're going to get April showers, are you worried about it?" I would say, "Not really." you know, I don't think we don't need a lot to happen. I expect a lot to happen. I don't think we need a lot to happen. I expect POS to be there. It's a question of where we end in inventories and those types of things, not a POS issue. I think people are hanging on POS too much more than saying, "What are retail inventories at the end and the timing of shipments? Yeah, Bill, I think two things. Yeah. That's what Luke wants to see if retail inventories not crash. You know, retail inventories are down a lot. Right. We wanna keep retailers in the game. I think what this, what this weekend and next, like, week and a half will do was we'll be forcing retailers to buy product from us. Right. That's a good thing. Got it. They never wanna be long on inventory. I think that the early to get POS pull-off is helpful. As far as POS being there, I'm really we're trending towards, like, 2018. We kinda blew it away on POS. I think people over, say, POS tied to shipments more than they're done. By the way, in 2018, the POS was May, June. Yeah. Right? That's why we come-. According to him. Yeah. Yeah. We're not good at short answers. Yeah. No. We're talking to ourselves now. I can always try. Thank you. Our next question comes from the line of Eric Bosshard of Cleveland Research Company. Your question please, Eric. Thanks. I have 2 questions, I guess 1 for Matt and 1 for Jim. To start with Matt on the numbers 1. On consumer, it's clear today that the bias is upside, the sales and consumer, and I appreciate the outlook and the clarity on that. On the gross margin side, what I'm trying to understand is, do you have that same sort of sightline to progress? I didn't totally understand why the gross margin didn't start to improve till the second half of next year. What are the moving pieces in gross margin that influence that, both near term, it seems like pricing holds in and the promotional budgets are set for this year, but are there moving parts within gross margin as well in consumer that we should be thinking about in both the near term and into 2024? Yeah. Thanks for framing it up that way because pricing does hold. Promotions are working. You just heard the whole volume story, and how we're looking at that through the rest of the year. The biggest piece in margin formation, and by the way, margin degradation from the 30s, has been the inflationary impact. What we've done, and you know this, we've pretty much locked up this year. We have 90% of our COGS locked up in 2023. We've begun to layer in in 2024. We do that both from a supply assurity perspective and also a price perspective on our COGS, so that we have that visibility to work with our retailers on. That being said, in addition, we also have high-cost inventories that we're continuing to work through. Remember, we came into this year with in the neighborhood of about $1 billion of excess inventory between both of the businesses. We're working through a significant amount of that, and that is some of the, if not all of the inventory release that we're gonna get over the next 2 years, is that higher cost inventory. The activities that Mike spoke about to bring those in faster, we're looking at. You have those 2 phenomenon, which is prices being locked in, inflationary factors coming down. At the same time, we're already locking in 2024. Then you have the high-cost inventories that we're working through and trying to do that more quickly. On the backside of that, you'll get back to that natural in the 30s for U.S. consumer type margin. Nothing else at play. By the way, that's why Jim talked about we have other levers, right? We've done great work on the SG&A side. We continue to drive out operational efficiency throughout the entire organization. There is additional pricing to go should we need to go for it. Okay. That's helpful. Then Jim, you talked about early in your script about this being the base or foundation. I don't even know if you said that, but you talked about a transition now to growth for the company. I'm curious, you talked about reforming the strategy team and this transition to growth. I'm curious what that looks like strategically. I guess I also was surprised to hear that Hawthorne was mentioned in that, considering, you know, the path that's been laid with Hawthorne. And I appreciate Chris's comments that there's tailwinds growing in that business. Help me understand when you talk about transition to growth, what that looks like or what's on that menu. Okay. Well, let's just start with innovation. You know, dollars that Patti has. I think if you look at the dollars that the marketing group had going into this year, I think they had, I'm not gonna say unlimited dollars, but I think they had kind of what they wanted on their core brands. I think if you're in kind of a secondary or tertiary brand, I think those were pretty tight. I think if you look at R&D, the R&D budgets were fairly intact. I think if you look compared to the sacrifices that happened all over this business, R&D was relatively immune to that, not completely. I think we talked about on these past calls that if something had a sort of marginal payout or a payout that was farther down the road, we either eliminated the program, or we put it in, you know, we put it in the refrigerator till later to deal with it. Not let it go bad, but take it out later. I do think that as we You know, I think we Eric, we basic. You know, I would say we see light at the tunnel. You know, the winter, again, I, I don't know how to say it any differently, it really sucked. We. You know, we're talking about islands. It felt like an island here. We believed in ourselves. I'm not sure everybody else believed in us. I think this company deserves a ton of credit for doing what was required, both in making sales numbers and getting expenses out. You know, for us, north of $200 million of sustainable savings coming out of the business, that is some amazing stuff, and heroic. Nobody was sitting around really talking about growth, okay? Now, as we're looking at light at the end of the tunnel, it's not really survival, it's how do we grow out of this? I think we're starting to queue up investments. I think the strategic team, you know, we Amy ran our strategy group, and that group was eviscerated in, like, a day. What's clear is that in corporate, and we're basically repurposing existing high-end thinkers into Matt's group. What's clear is that corporately, we need to think through a bunch of these opportunities, not really burden the operating team with this, but partly come up with metrics that we can use as guideposts for the business going forward, but also to make the investment choices that will drive growth in both sales and margin here in the company. That's what I meant by it, is that, I think we're seeing light, and we're basically saying, you know, growth is gonna become something that matters, and how do we thoughtfully get there? I didn't say that we're free, but I think we see a view of this less burdened than it was. Okay. That makes sense. Thank you. I think it makes sense. You gonna make those, Mike? Thank you. Our next question comes from the line of William Reuter of Bank of America. Your question, please, William. William Reuter, your line is open. Hi, good morning. Hey. You've mentioned taking additional pricing. Is the expectation that you would consider doing that mid-season, or is this more in reference to when you have shelf space resets at the end of the season? Well, it's not really shelf space resets. The negotiations with our largest retailers for next year are happening now. This is a current discussion, and I haven't taken pricing off the table. I, I think probably there's pressure not to take pricing. partly what I'm passing to my team and to our retail friends who are listening to this call, is that our gross margin really matters. The ability to grow out of this, which everybody needs, us and our retailers, is going to be, do we have enough ammo to run the business? We've come out of a period where it's pretty tight. If we need pricing to get us back to historical margins, because that's all we're talking about, then as far as I'm concerned, that's a tool that's in our tool bag. Do you accept that, Mike? I accept that. Okay. We're first trying to get there and get units out and get cost in alignment with our retail partners to not have to do that unless we need to. Understood. That helps a lot. The $200 million of run rate cost savings by the end of the year, I can't remember if you provided the breakdown of what percentage of that is in SG&A versus COGS. Is there kind of a rough outline for me to think about? I think last time we spoke about it was roughly a third SG&A and then two-thirds in COGS. Oh, sorry, the other way around. Two-thirds in SG&A, a third in COGS. Perfect. Just lastly for me, I was curious if you could share any changes that you have in terms of your long-term plan for Hawthorne. When you've been asked about this historically, I know you basically said, "Look, this is not an opportunistic time to do anything. We need to fix the business." Jim, in an earlier response, you mentioned that your perspective on cannabis has changed a little bit, so I was wondering if that maybe has changed strategically how to think about the asset. Well, look, I'm. You know, the strategy of going to cannabis was something that, you know, is about 10 years old at this point and was highly supported both at the board level. I think with the investor community at the time, it was. Maybe people have amnesia now. I led it. You know, I think Luke and I and Matt believe in this business. I, you know, I know we said that we're sort of pulling off the table any sort of view of kind of spinning or any merger that would kind of result in a spin into a different equity. That is and was true. I think what's changed in the last, call it months, is that as we look at this industry and just look at the sort of devastation out there with some really good companies that I think we have a little bit of an Ellis Island view of, you know, bring us... What was it, Chris? I think you're poor and you're huddled masses. In our case, yearning to be profitable. You know, I think we're looking out and there's other people in good companies in the same situation as us. We're looking really hard at saying what combinations could there be where everybody kind of throws their businesses into a new business that has the scale to sort of get to a place that we're not making excuses all the time and they survive. I think, you know, within that sort of line of discussion. We're really confident in what we own, which are really the best brands in the supply space, very dominant. That there's other people that add things to it that make both companies better, and we're open-minded to those combinations. I think that's what's important, is that I do think that staying where we are, is tough. It's just because, you know, I think when you have a business that is earning, I don't know, $10 million, $15 million, $20 million, whatever the number you wanna throw out there, I think it's one of those things that, you know, just it's a lot of work. It just doesn't feel like it's constantly trying to find money. I think we need to be sort of with a business that is north of $1 billion in top line and sort of north of $100 million on the bottom line before it starts to feel like it's really strategic, a market leader that is sustainable. I think we've got a great business to sort of go to Ellis Island with, but I think we need some more immigrants to huddle masses to join us. Chris, I don't know what you'd say. Yeah. Look, I think Jim said a lot of it. My personal, I'm not gonna say optimism here, but I'll say just my confidence in the space is, you know, we put a lot of time, a lot of money into this space, as you guys know. We put a lot of pain into it over the past 18 months. This, you know, Jim mentioned the contributions that the Hawthorne team has made towards overall cost reduction within Scotts. You know, I wanna call out Tom Crabtree in particular. He's here in the room. Tom is really who led the day-to-day work on getting those numbers down for Hawthorne. It was tough work, that I know was hard on Tom and everybody at the team. I wanna make a big shout-out and just express my gratitude and appreciation and respect for all the people that did that. We didn't do that work for no reason. We didn't do it to get out. We did it to make this business sustainable, to sort of reinforce its fundamental soundness and prepare us for the next phase here. You know, the business is going through disruption. Everyone recognizes that. It's frankly, it sucked to have to lead it through that and to feel responsible for it. There are transactions to be done here that we see that I think would be accretive in pretty much every regard. There are some good players that are out there. Look, I think we've got an obligation to explore those opportunities, not only because we need to find a way to realize synergies and get that business, as Jim mentioned, to a place where it's profitable at a level that we can really be proud of. But aside from that is there's such incredible opportunities now where, you know, if that falling knife of Cannabis valuations hasn't hit the floor yet, it's awful close. We think there's gonna be opportunities here to create partnerships and alliances that may not exist in the future. We got an obligation just as kind of hunters in the space to take a shot right now, so. Can I just reemphasize one thing that both of you have said, which is this is about value creation. We do have an extremely unique position with Hawthorne, providing the complete solution. As Chris said, that has a significant value for our customers. As we look at consolidation, Jim said it, Chris said it, this can be done in a non-cash way that is formative to how we move forward, and honestly, puts us in a stronger position for any decision that we make going forward on where this entity resides. Very helpful perspective. Thank you. Thank you. Ladies and gentlemen, that does end the Q&A session and conclude today's conference call. Thank you for participating. You may now disconnect.