Good day. Thank you for standing by. Welcome to the Q3 2023 Scotts Miracle-Gro Company conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you need to press star 11 on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Aimee DeLuca, Lead Investor Relations, Scotts Miracle-Gro. Please go ahead. Good morning. Thank you for joining us for Scotts Miracle-Gro's third quarter earnings call. With me this morning, are Chairman and CEO, Jim Hagedorn, President and Chief Operating Officer, Mike Lukemire, Matt Garth, our Chief Financial Officer, and Chris Hagedorn, Group President of Hawthorne. In a moment, Jim and Matt will share some prepared remarks, the operator will open the call to your questions. As always, we expect to make forward-looking statements, so please be aware that our actual results could differ materially from what we share today. Please refer to our Form 10-K, which is filed with the Securities and Exchange Commission, to familiarize yourself with the full range of risk factors that could impact our results. For further discussion after the call, you are invited to email or call me directly at 937-578-5621. We'll work to set up some time as quickly as possible. Lastly, please note that today's call is being recorded. An archived version of the call will be published on our website at investor.scotts.com.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, Aimee, and good morning, everyone. We have three things to discuss. One, the state of the consumer and the performance of our lawn and garden business. Two, the moves we're making to strengthen Scotts Miracle-Gro. Three, the opportunities we're pursuing for shareholder value creation. I'll get to the point. The first half was great. It met our expectations. The execution by our teams in support of our retailers on load-in could not have gone better. It's a challenging time in retail, and we're navigating it with our retail partners. As for the second half, so far, the season is not coming in the way we had expected because of lower consumer takeaway. We think this is attributable to the combined effects of post-COVID sentiment, declining retailer traffic, regional weather extremes, inflationary pressures, and price elasticity. As a result, we will not meet our goal of +10% POS in our Lawns unit. The full year impact will be an $80 million EBITDA miss to our Lawns target. The other businesses perform more or less to expectations. What are we doing about this? We're attacking fall with double the investment in activation dollars, and our retail partners are in, too. Remember, fall is roughly a third of the Lawns business. We're taking out an additional $100+ million in costs under Project Springboard version 3. This work has already started, and our total Springboard savings will now significantly surpass $300 million, and we've amended our credit agreement with our banking partners to get maximum financial flexibility moving forward. We continue to make the tough choices necessary to strengthen the financial position of the company, all without impacting our core franchise. We've improved cash flow by $700 million and remain on target to deliver $1 billion in free cash flow by the end of fiscal 2024. We're directing this cash flow to debt paydown. By fiscal year-end, we will have reduced our debt by nearly $300 million. The current state of our capital structure is not optimal. We are carrying significant debt load without the earnings we expected from our investments in Hawthorne, the cannabis space, and expansion of our operational capacity to capture pandemic-level demand. Our mission is clear: We will pay down debt to achieve net leverage of less than 3.5x as quickly as possible. I think it's valuable to provide context. Our consumer franchise has it all: the best brands, sales force, in-store execution, supply chain, innovation, and high cash flow generating capabilities. We have a major opportunity to get Hawthorne on track in the multi-billion dollar U.S. cannabis industry, along with a great partnership in Bonnie Plants. One thing we are missing is financial flexibility. This obviously will come with debt paydown. The amended agreement gives us the room we need to get through seasonal working capital changes and fully take advantage of margin improvement opportunities. We are maintaining our dividend at current levels, and we do not foresee a need to issue equity. Now, let's dig into the details of what happened this year and what we're doing about it. Overall, consumer retail sales across Lawn and Garden are up through Q3, with consumers spending $117 million more than a year ago. While these increases are largely due to pricing, it demonstrates that people are continuing to invest in their lawns and gardens. This is a reminder of the power of our consumer franchise. We outperformed retailers and competitors. According to major retailers, we gained share and awareness of the Scotts Miracle-Gro and Roundup brands is over 80% across all homeowners, including millennials. No one can drive consumer connection and attachment with lawn and garden better than we can. Lawn and garden as a whole is fundamentally strong. Household penetration is 6% higher than pre-pandemic 2019, a sign that the vast majority of consumers who came into the category during COVID have remained engaged. Consumers who discovered edible gardening during COVID continue to garden, and we know over 10% of those who are gardening in 2023 are new entrants. These gains solidify our confidence that the category will continue to grow. This year, retail traffic at home centers was down 6%. Our marketing and sales team drove people into the stores. We helped savage spring for many retailers. Our POS volume outpaced foot traffic every month, often by double-digit%. Through Q3, gardens had POS gains in both dollars and units across key product lines. Today, we have a $200 million organic gardening business. It's the fastest growing part of the gardens portfolio. This occurred without the full support of all of our top retailers. We believe that our new organic listings will be far superior in fiscal 2024. In Lawns, we've had a mix of good and disappointing results. I want to stress that the Lawns business is healthy. It has been impacted by macroeconomic, weather, and pricing factors. Let me address fertilizers and grass seeds separately. In fertilizers, our branded POS dollars are up 11%, and we've had share gains of more than 5% at major retailers. While total branded POS units are down 3%, the gap between the performance of our products and private label is striking. Private label is down 20% in POS units. Consumers did not trade down, and they spent more on our brands. In grass seed, POS dollars are up 1%, but POS units are down 8%. We've experienced single-digit erosion of share, largely due to the retail pricing at one major retailer. In fiscal 22, we said weather was the main reason for the decline in Lawns. With the benefit of hindsight, we can now say that post-COVID consumer sentiment and inflationary pressures played a role, too. People shifted discretionary spending to other places, specifically experiences. This started in 2022 as part of the post-COVID hangover and extended into 2023. A recent McKinsey report cited that most consumer spending declined in April, right at the start of the lawn season, for the first time since the pandemic. The only areas where it increased were entertainment outside the home and travel. These insights are supported by our consumer research. When asked why they did not engage in lawns, consumers said the economy and budget, spending money elsewhere. They also said their lawns look good enough. This has a lot to do with weather, mostly in the early spring, which is becoming more unpredictable and subject to weather events and extremes that impact our early seasons. We think this is a result of climate change. This year, the weather patterns in the Midwest and Northeast significantly reduced normal dandelion and weed pressures that drive consumers to our Weed & Feed fertilizer product. This lack of weed pressure had a similar impact on our Ortho Selective Weed Killer business, which is down a similar amount in the Midwest and Northeast. Gardens is more insulated from early weather because the consumer is not on a timeline. People plant when the weather is conducive to growing, and our numbers support this. This year, we increased spending on Lawns to engage the consumer early. In March, we launched the National DayLawn Savings campaign, which timed well with favorable weather in the South. It led to significant POS unit lift in Texas, up 79%, in Florida, up 86% at the launch. This initial engagement drove sustained POS activity. For example, Texas, our single largest lawn state, is now up 10% in lawn unit POS year to date. Florida's flat. This was not the case in the Northeast and Midwest, where consumers were still dealing with cold and wet weather during our early national activation. Day Long had virtually no impact on POS there. We know people respond when we market to them at the right time, so here's how we're adjusting. We're looking at weather differently. With spring less reliable, starting in fiscal 2024 and beyond, we will diversify our marketing and promotions to work around weather extremes and elongate the lawn season. We will not give up on spring as it is our main activation point, but we will invest more in summer and fall for sustained growth. I've challenged the team to drive 10% more Lawns business into the fall. As for Q4 this year, I said earlier that we will attack this fall, which is an ideal time to fertilize and seed. Retailers are joining us in fall campaigns to drive consumer takeaway and right-size their inventories. I look forward to reporting the results of this effort during our fiscal 2024 Q1 earnings call. We've also determined that pricing, especially grass seed, was an issue for consumers. There have been unhealthy price gaps between our products, competitors, and private label. Some consumers took the cheaper option. We are addressing this by decreasing prices on certain targeted SKUs.... These special programs with retailers will result in incremental volume lists and expanded shelf opportunities this fall and into fiscal 2024. Looking to the future, innovation is important in lawn and garden. Last month, we held our annual field day at our Marysville research facilities, where we showcase new products for our senior leaders and board of directors. The pipeline is impressive. In Lawns, we're developing products to simplify lawn care and creating combo products to make it easier for consumers to DIY with awesome results. We're also mindful of weather extremes with drought-tolerant solutions and turf alternatives. These products will launch in 2024. In gardens, organics, natural products, and live goods are more important to consumers. Next year, we'll expand our robust line of Miracle-Gro organic solutions. Now, let's turn to Hawthorne. There has been a stabilization in this business in Q3. It held the line, and the daily sales run rate has improved slightly quarter-over-quarter. It's a small win, but a sign there are pockets of recovery in this industry. I've said I want to get Hawthorne to profitability by fiscal year-end. We believe it's achievable, especially as we know that many seasonal professional horticultural sales come late in the fiscal year. We also continue to actively explore non-cash partnerships with other industry leaders. We will only make such deals if they bring scale and expanded capabilities that contribute to Hawthorne's and the industry's long-term growth. Our discussions are ongoing with several interested parties. My objective is to move Hawthorne into a partnership or separate entity from Scotts Miracle-Gro, one in which we maintain the controlling interest. I hope to report more progress on this front soon. Moving to our total company outlook for 2024, we have tailwinds coming our way that will contribute to margin improvement as we work our way through high-priced inventory and realize the benefits of lower commodity prices and easing of consumer inflationary pressures. Urea exceeded $900 at its peak. It's now in the mid $300s. Other commodity costs like resins, corrugate, and pallets have come down, and freight rates continue to moderate. They're down mid-to-high single digits this year, and we expect further declines in 2024. All this points to margin improvement opportunities and the ability for us to remain flexible in our targeted pricing reductions for consumers. We've been down this road before, and we've emerged in a better place. That's how I see this playing out now. The trajectory of our fundamentals is strong. We're improving cost structure, paying down debt, generating cash flow, and investing appropriately in our brands, marketing, sales, R&D, and supply chain. I very much appreciate the support of JP Morgan, CoBank, and all of our banking partners. They've displayed tremendous trust in us, and we will not let them down. I also want to praise the work of our financial team. As we've restructured and optimized to align to today's realities, we've had to make difficult decisions. That includes having to break ties with good and loyal people. We've sought to take care of them. We wish them the very best in the future. It's equally important that I acknowledge the grit of our leadership team and associates. They are talented, battle-tested, and world-class. Their commitment to winning and delivering exceptional shareholder returns is unparalleled. Thank you. I'll turn the call over to Matt to discuss the financials. Thanks, Jim. Good morning, everyone. As Jim noted, we started the year with record level first half load-in. In the third quarter, it became apparent that second half consumer takeaway will run behind expectations, resulting in longer than anticipated margin recovery and therefore a different deleveraging path. A credit agreement amendment was pursued as a result. We believe this agreement appropriately reflects SMG's core strengths and strong free cash flow while providing flexibility to maximize value going forward. Now on to the financial review. Third quarter total company sales of $1.12 billion were 6% lower versus last year, primarily related to a 39% volume decrease at Hawthorne. Net sales in U.S. Consumer were $916 million, an increase of $12 million over third quarter last year. The 1% increase is attributable to both POS growth in the quarter and higher ending retailer inventories. Specifically, the most significant increase was from our Growing Media business, with nearly $100 million in higher shipments in the quarter than a year ago, driven by consumer demand for appealing and productive gardens throughout the growing season. As I shared on our last earnings call, we entered May with POS units at our largest retailers, essentially flat, and dollars up mid-single digits, with mix favoring growing media. POS trends entering August are consistent with these results as gardening season is in full swing. We expect a more favorable POS mix in the fourth quarter as we launch our fall season media and retailer-supported promotions focused on our branded fertilizers and grass seed. While total units are behind our original projection, they remain ahead of 2019 pre-pandemic levels, giving us confidence in our consumers' desire to engage in the category in the face of the dynamic environment Jim outlined earlier. From a retailer inventory perspective, units are up approximately 3% versus prior year entering August. Retailers are expected to continue to lower seasonal inventories, which will reduce our shipments. As a result, we now expect full year net sales in the U.S. Consumer business to end the year 2%-4% lower than the prior year. At Hawthorne, industry challenges continue, we are seeing early signs of stability on the top line. There's still a 40% decline from prior year. Third quarter net sales improved slightly from second quarter to $93.4 million. Customers are seeking value, and we have supported improved demand signals with targeted pricing actions. Looking ahead, fourth quarter sales in the North American hydroponics business are expected to remain relatively flat to third quarter. We will see significant growth in the Pro Horticultural Lighting division, driven by seasonality and the continued shift by growers from HPS to LED. For the full year, while total Hawthorne net sales are expected to decline 30%-35% from prior year, the outstanding work the team has done to rightsize Hawthorne's cost structure will help deliver run rate profitability by fiscal year-end. Moving on to total company gross margin rate, there are several important drivers at play this quarter. The adjusted gross margin rate in the quarter fell 420 basis points below prior year to 21.3%, bringing the year-to-date rate lower by 200 basis points to 27.6%. For the full year, we now expect a year-over-year gross margin rate decline of 275-300 basis points. The rate decline is driven by these five factors: First, the largest was an approximate 190 basis point decrease from the write-down of pandemic-driven excess inventories in the U.S. Consumer business that was $20 million higher than our expectations. On a full year basis, those write-downs will drive a 120 basis point decline in gross margin rate. I view this as one time in nature and would therefore add this back to the margin calculation when estimating underlying performance. While commodity costs have continued to moderate, the benefit of the lower costs will be more fully realized in the back half of fiscal 2024, given higher channel inventories and lower production volumes. Material costs account for gross margin rate declines of 175 basis points for the quarter and 430 basis points year-to-date. On a full year basis, material costs are approximately 95% locked and are expected to drive a 350 basis point margin rate decline year-over-year. As previously detailed, we are running operations at lower levels to reduce inventories. Lower production volumes account for nearly 130 basis points of rate decline in the quarter and 300 basis points for the full year. These headwinds are partially offset by favorability from Project Springboard and net pricing. Net pricing equated to 130 basis points for the quarter and approximately 560 basis points year to date. Recall that last year's pricing actions will anniversary this month. For the full year, net pricing, inclusive of a higher than planned volume rebates and promotional programs, is expected to drive 500+ basis points of gross margin rate improvement versus the high single digits net pricing we originally anticipated. Finally, for the quarter, unfavorable product mix has somewhat been offset by favorable segment mix, giving greater volume declines in the lower margin Hawthorne business. For the full year, mix will lower the rate by 60-70 basis points. Our path back to gross margin rates above 30% is clear, with a return to normalized volumes, continued moderation in commodity costs, targeted net pricing actions, more favorable mix, and the full benefit of right-sized warehousing and inventories in both major businesses. Through our latest actions on Project Springboard, we'll achieve greater than $300 million in savings. Even with the impressive improvements our associates have delivered through Springboard, achieving our targeted margin levels will progress into fiscal 2025, consistent with the viewpoint we shared last quarter. Our progress on Project Springboard is also evident on the SG&A line. Total company SG&A for the quarter was $129 million, 5% lower than third quarter last year and 34% lower than two years ago. It is important to note that these cuts were made without sacrificing our core strengths. For example, U.S. Consumer media advertising, essential to driving consumer engagement, will be up 25% this year versus last year. As a percentage of sales, we still anticipate sustaining SG&A in a range of 15%-16% of net sales going forward. Based on lower expected sales this year, we may end the year closer to the higher end of the range. Taking all of these factors together, we now expect operating income in a range of 7%-7.5% of net sales for the fiscal year and adjusted EBITDA about 25% lower than prior year. Non-cash adjustments to EBIT are anticipated to be $10 million-$20 million higher than last year, largely related to increased share-based payments. Below the operating line, we now anticipate a full year tax rate in the 28%-29% range due to lower pre-tax earnings. Interest expense will increase $60 million over prior year on higher average borrowing costs. It should be noted that this quarter will end the year-to-date trend of higher average debt levels. Average debt by the end of the fiscal year will be around $200 million lower than prior year. Equity income from the Bonnie business is expected to improve $5 million-$10 million versus last year. On the bottom line, non-GAAP adjusted earnings for the quarter, which exclude impairment, restructuring, and other non-recurring items, were $66 million, or $1.17 per diluted share, compared with $110 million, or $1.98 a year ago. Note that the EPS impact of the one-time inventory write-off that ran through U.S. Consumer profitability is roughly $0.25 per share. Let's turn to free cash flow. Free cash flow improved greater than $700 million year to date over the first three quarters of 2022, as we continued to drive down inventory. We continue to anticipate strong free cash flow generation of approximately $1 billion through fiscal 2024, and $300 million per year on average going forward. Let me elaborate a bit further on our recent credit facility amendment. The amendment allows for increases to our debt leverage maximums, modifications to adjusted EBITDA to better reflect underlying performance, and adds a new fixed charge coverage covenant. Given the lower Hawthorne sales levels, we have agreed to reduce the size of the resolving credit facility by $250 million to $1.25 billion. The amendment also raises our borrowing costs in our revolver and Term Loan A by 25 basis points, with an additional 25 basis points when net leverage is above 6 times. We ended the quarter with leverage at 6.15 times adjusted EBITDA, including $41 million of allowable increases to adjusted EBITDA for non-recurring E&O and warehouse closure costs. The maximum net leverage glide path going forward provides ample room and flexibility to navigate seasonal working capital, weather, and POS swings. The first two quarters of 2024 are the most acute periods in the outlook based on normal seasonal ordering patterns, and we have proper headroom to manage any outside swings. We remain committed to driving leverage below 3.5x as soon as possible so that we can return to a more balanced capital approach, maintaining balance sheet flexibility and delivering increasing direct shareholder returns. Until then, our cash flows remain earmarked for debt paydown. Without a doubt, it has been a dynamic time for the company. I will stress that the results and guidance we've shared today reflect near-term conditions. 2024 will be upon us quickly, and we have laid out expected high points in the year ahead: broadened retailer partnerships, gross margin improvement, continued benefits from Project Springboard, significant free cash flow generation, and improving financial flexibility. As Jim stated, we are accountable for improving our results. I am extremely motivated to create value at the levels commensurate with our market-leading positions. I am inspired by the joy our products bring to our consumers, the pride our associates have in shaping the future of some of the world's greatest brands, and the commitment to excellence across every facet of the organization. Our priorities are clear, and we are executing urgently against them. With that, I'll turn the call back to the operator so we can answer your questions. Operator? Thank you. We will now conduct the Q&A session. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please wait while we compile the roster. Our first question comes from Joseph Altobello from Raymond James. Thanks. Hey, guys, good morning. Hey, Joe. You know, a few questions on, on pricing. You mentioned price elasticity in the press release and also in, in the, in the call this morning. Is this the first time that you're really seeing that, you know, come to the fore, if you will? How do we think about, you know, pricing next year? Obviously, commodities coming down, could we see pricing down next year? I think you're gonna see pricing down on certain SKUs, for, for sure. Joe, it's not an easy... You know, this is something we've been spending a ton of time. If you look at my whiteboard in here, we've been kind of all over what's happening. You know, you look at the lawn fertilizer business, okay? Where, we gained, like, five share points, and we think that's a pretty conservative number. Certain of the retailers, we gained a lot more than that. We just sort of dumbed the numbers down a little bit, just so it didn't, like, mess with our own heads. No doubt, we gained share on the fertilizer side, but the category declined. You know, so you see private label, we talked about being down, I think the number was 20%. You know, call, call our units roughly flat. You know, I think they're up a little bit on the branded side. You know, there's one where we didn't lose share, but the category declined. Now, I'm not that nuts about that, because when you go back and you look back during the financial crisis, we took the same kind of pricing. Units declined after things recovered, but we made a ton of money. So I, I think the future story for Lawns, we, we need to fight this and work units up, largely because we had such a large decrease last year, that... you know, if you, if you look back at sort of units sold over a decade, and, and we were looking at those kind of numbers, they are actually pretty flat, you know, maybe up a little bit, you know, during COVID, but they didn't get the giant COVID increase that, like, gardening got. Pretty flat. This big decline last year, and we very much said, you know, if you looked at Texas drought, California drought, really historically crappy weather in the Midwest, Northeast, we basically said, "It's a weather event." We look at it now, and while for sure there was weather and, you know, that this is, I could talk for an hour on this one, I think. I won't. No, I think they don't want me to here. There's one where, we think that the category is down, in part because the pricing of products, has gotten high, even though we didn't lose share, we did the opposite, we gained share. Now, if you look at grass seed, it's a little bit like the opposite, and driven by one retailer, mostly. That was where, you know, we would typically see kind of a 30% difference between our products and private label, and a lot of the private label we do. Between us and the merchants, you know, we, we- There's kind of a sweet spot there, where, you know, retailers need the private label, where they make higher margins to, to be he- healthy. We're cool with that. I think compared to a lot of other marketing companies, we, we participate in the private label and think that's a healthy thing for us to do. One of the retailers we have, which is a, a major retailer, that differential, you know, they sold our grass seed, up, and because they wanted the margin up, above our recommended retail, and the price gap then on the private label was about 50%. There we lost share there. I think there's one where, you know, when you have a delta like. They're not gonna repeat that, so that's part of what we're doing when we talk about sort of specialized programs to deal with certain SKUs. We're not gonna see that big a difference. I think they recognize the, the sort of, I'm gonna say, the damage they did by having that big a differential, so that's not gonna occur again. There's one where we, we do think the grass seed, probably got more expensive than it should be. The good news is, the commodities are down on both the lawn fertilizer side and on the grass seed side, that allow us to, correct these, these prices. I don't know, Mike, would you add anything on this? No, I think we, it's, it's a balance of, you know, units and the right price for consumers, and we work with the retailers, and we, we all get the. I mean, we've seen in one adjustment, we've made already a 40% lift in units. And so we, we wanna drive units, and we wanna do it in a margin-accretive way. I think that's a very important point, that, that margin-accretive way. Absolutely, Mike, because, and Jim just said it, you're seeing commodities come down. You're seeing us manage our cost structure, I think, expertly in bringing our average cost down. That's margin accretive. So we're, we're going to stay ahead of the selected price reductions that we're giving, with cost outs and cost position to look to 2024. It's still early days, looking at 2024, for that to be margin accretive. Yeah, I mean, Joe, this, this is again, something that is, is fresh, but these price adjustments we're taking are not free. We're not just offering across-the-board changes on grass seed or fert or anything else. What we're saying is, in exchange for cost outs, we're going into that because we kind of think that it's a good idea anyway. In exchange, we get incremental listings and promotion that we did not have going into this year. We are working very closely and carefully, and I, and I think in a really positive way, with retailers to offer opportunities for cost outs, that focuses on certain SKUs that we believe have become expensive, in exchange for other concessions from them on incremental business. That's... You know, this is, as we were preparing for this call, this is just this morning, Mike was telling us about the benefit in the supply chain of... Yeah that incremental load. Fully, fully, full utilization of your supply chain, which brings it, the cost and balance and so, and, you know, the effectiveness of our field service teams and, and, and really, it's a win-win for retailers and us. We, we want the halo effect of our products. You're not just going in to buy a promotion, 1 promotion, you're getting multiple products, and that, and that's what we wanna get back to, fundamentally. There you go, Joe. Very helpful, guys. Thank you. James, do you wanna take, Chris next? Yes. Christopher Carey, please go ahead. Hi, can you hear me? Yeah, yeah, we can. We had a little party here right now. Yeah. Go ahead, Chris. Couple. Yeah, just, you know, a couple maybe, well, I don't know if it's quick ones, but here goes. You know, from, so, you know, this, it's a pretty big earnings reset, right? You know, I think the obvious debate today is just what the earnings power of this organization will be, specifically into next year. I think that maybe it gets to, you know, 2 maybe key debates, right? First, and I know it's been touched on, you know, a little bit, but, like, what's your visibility that the excess inventory that, you know, you still have, will be clear going into next year? Said another way, is, is there any way you can frame the ability to enter next year clean from an inventory standpoint? That'd be question 1. you know, question two would just be: do you think there's a dynamic where, because you had such good load in, you know, this year, you're, you're really building through next year? I realize these are hard questions because we're, we're so far from that outcome, you know, given the reset today, all our eyes are already on next year, you know, getting a little bit of, maybe visibility on inventory and, you know, phasing, I think, might help people today. Just any thoughts you might have on that would be helpful. Thanks. Look, I'll start and then hand to Matt. This is something, comparabilities are going to be hard, I think, because, you know, the last year has been one of sort of making quarters and dealing with leverage targets. That's created, I think, sales within quarterly periods that where we've sort of incented to make numbers. You know, for those of us who've lived it, you know, it was very much kind of week to week, day to day work where we'd start a quarter looking at, you know, how we want to end and kind of what we had to do to sort of get there. Coming out of that and going to a more natural flow, I think, is probably will result in, you know, discontinuities. I'm not saying they're negative, by the way. I'm just saying that it'll create comparables that are. I think COVID did that by itself. I think, you know, our behavior through 2023 probably will make it even more challenging to read. I, I don't think that. You know, if you look at our inventories and sort of retail inventories, I think by and large, there's not a giant retail inventory issue. You know, decisions we made, Chris, you know, that when you look at how we are sort of talking about end of the year, because remember, we're not there. We're still sort of working our, our fall season right now. you know, I think for us to have come in below 4.5 times leverage, next spring, so I think it was, like, the end of Q2, was kind of when that our leverage went back under the old agreements, went down back to 4.5 times. It would have required a pretty exceptional year, for us to get there. I, I think we talked about it. For sure, we talked about it internally and with the board. It was a very much a different dynamic going back to the bank saying, "We made a ton of progress, but 4.5 is going to be challenging." you know, we made this quarter, and I'm not going to argue whether we could have or couldn't have made Q4. That's not kind of where we were. Once we basically said: Look, we're, we're going to be going back to the banks for Q1 or Q2, anyway, and again, that's something we had talked about previously, you know, for sure with management and the board. Then we just said, with the shortness in, in Lawns, we're doing that. I waited then for, you know, a recommendation from Matt and Mike, how they wanted to pursue the year. If we said the pressure is off on trying to sort of make a certain number, for a leverage count, how do we want to naturally allow the year to end? What I wouldn't do is try to read too much into that because, we were-- the recommendation I got from the two of them was, "Let's just let the, let's just let the quarter naturally end, Q4, and we'll build an operating plan to that." I'm not-- this doesn't make anybody's job easier, but when you talk about the earnings power of the company, you know, we could have struggled through Q4 and made a better number. There's no doubt that we, we could have done that, and retailers were to work with us. We made a decision to sort of allow, you know, since we're going to the banks anyway, let's just allow this thing to naturally sort of unwind. I, I think it's a healthy thing, and, you know, actually, but, you know... Yeah, Matt, go. All right, Chris. Let's, let's frame this up this way. Let's start in the 3rd quarter. You got $1.17. The inventory question, you saw us take a $20 million write down on some inventory here in the 3rd quarter. It's worth $0.25 a share. To me, I take the $1.17, I add the $0.25, I'm at $1.42. That's the underlying earnings in Q3. As you step forward into Q4, everything that Jim just said is tactically and strategically how we're moving forward. That allows us to unwind inventory. The fall programs that we are putting into place, Mike and his team are executing to drive down inventories, to clear out high cost inventories as we go into 2024. What I've said about 2024 is that it's going to be kind of another transition year of getting margin back, and I'll, I'll talk about that in one minute. Let me finish on Q4. If you look at the full year in 2023, Chris, frankly, you just said it, and I think we're in the same place. We're already looking at 2024. The numbers coming out of Q4, we know that that's a weak quarter for us, just seasonally. You're probably looking with our guidance around $1-$1.25. Again, I'm adding that $0.25 back in to the underlying earnings of the company. That's the full year. As you look at 2024, everything that we're doing is around motivating gross margin accretion, and that's probably gonna come in in excess of 100 basis points. SG&A will stay tight. Everything that we're doing around driving costs out of the company are going to be supportive, but that inventory overhang is probably gonna come through still in the first half. So you're really now looking at a 25, 2025, where you have hundreds of basis points in margin as you release those high-cost inventories fully into the system. As Mike said, you're getting efficiencies through the whole system. What does that mean for 2024? There's a pathway back here in 2024, where we see $3.50-$4 a share in earnings, where we see EBITDA in excess of $600 million, and where we see completing the free cash flow of about $1 billion over two years, that's gonna be directed to debt paydown. That will end up with the 2025, improved margins, continued growth, given the share and shelf positions that we've gained over the prior 2 years, and $300 million plus in free cash flow. That, again, will go to strengthen the balance sheet. Can't really give you an EPS view on 2025 yet. Also the caveat for everyone, these are early days. We know the conversation is very much about 2024 at this point. That's why I'm giving you a little bit of a preview. That was a really comprehensive answer. I won't ask another question, just to clarify a couple of things that I just heard. You're gonna be, you know, still working down inventory into the front half. That might limit some gross margin expansion, which really accelerates into fiscal 2025. On fiscal 2024, did you say the gross margins would be up 100 basis points, or you're just saying they would be, you know, a bit more under pressure confirming, you just kind of said 350-400? I don't know if you're talking about a multi-year or if that was in reference to what you think the earnings power could actually be in fiscal 2024. Thanks, Randy, just clarifying on that, I'll get back in. Chris, I was very deliberate in what I said. I practiced it for three days. The 100 basis points is what you're looking at going 2024 versus 2023, okay? There's a lot of activity that's left to go after for us to really point to what that's gonna be. Mike and the team, through the power of Project Springboard, plus all the optimizations that they are doing, that feels good. Plus, what Jim spoke about, growing those shelf positions, increasing our volume, that will all contribute. That will yield with the other potential items that we have in place, a 2024 view that says you kinda have $3.50-$4 a share in place. A lot to execute on, it's early days, but that's what we need to be targeting, and that's what we're going after. That then would lead to a 2025 of another opportunity for increased margin expansion as the full deflationary impacts in our cost structure move through, our inventories are aligned with the much lower raw material costs we have now, and that will help us move forward. By the way, all of that is kind of what I was speaking to directly in that margin bridge discussion and the prepared notes. That's, that's helpful, guys. Thanks a lot. Our next question comes from Peter Grom, from UBS. Thanks, everyone. Good morning. I hope you're doing well. I guess I just wanted to ask about... You provided a lot of color on the 2024, but I guess I wanted to get some color on the Hawthorne commentary that you intend to move Hawthorne into a partnership or separate it from Scotts. It's been talked about for some time, but, you know, previously it was kind of talked about from a position of strength versus where we stand today. Jim, can we maybe just talk about that decision and why, you know, now is the appropriate time? Okay. Sure. I think we all, we all feel this way, by the way. We've made a ton of progress in stripping costs out of, of Hawthorne. On pretty conservative numbers, that business gets back to profitability, call it, you know, this year. You know, I don't know. I think that's what we said in the script. My, my issue with, with that business is that, you know, when it had a great valuation within our equity, when it was earning, like, nearly $150 million of EBIT, you know, it, it was good. I think without a kind of significant recovery in that space, and everything we're talking about here, you know, I'm just kind of going back to the previous questions a little bit. You know, we're just working our initial operating plan for next year right now. I think for everybody who's got questions, the, the bank plan and the sort of initial operating plans are pretty darn conservative, okay? On purpose, because of where we are, and we're not sort of gonna try to continue to lead with, with our chin here. Let's say Hawthorne makes reasonable progress. They will. We're already seeing, you know, I'm gonna call it modest recovery in, in that business. I just don't think that it's... You know, with the assumptions we, we put in there, which I think are reasonable, it's so impressive that it can stay the way it is. I think it just looks like a kind of marginal part of the Scotts portfolio. You know, when you look at it and you say, you know, it's created a lot of beta, you know, in our earnings, you know, we, we haven't really talked about... I'm sort of, you know, escape and evading around this, this, this question. It means I'm not trying to go away from it. If you look where we are, we got Hawthorne making negative earnings, and we had deployed, like, $1 billion into inventory and other capital areas. That's the issue, you know, that we're fundamentally dealing with. You can call it about 50/50. A lot of what we're doing in the operating side of the business is slash and burning on inventory, on the capital stuff that we invested in, on capacity, on both Hawthorne and Scotts, and wiping that out. We're still operating with, you know, more than $1 billion, you know, significantly more than $1 billion invested in it, earning, you know, jack shift, okay? It's a good business. Now, I want to get to this part, that is, we've talked about hooking up with other people, and, you know, this is not new for me to create this sort of Ellis Island approach, you know, which is there are some really good companies out there that were worth multi-billions of dollars, that are now worth 0. A lot of that is investor sentiment, it's the challenges the business has had, it's the inability to bank. I mean, there's just so many things you can throw out there that are sort of negatives on that space right now. We're, we're not gonna shut it down. We've invested the money. As we've talked to people, you know, you all need to know that this is a very unique property, probably the best piece of that business. When we talk to other partners, all of whom are worth zero, including us, on this part of the business, Hawthorne has so much, you know, we really. We collected well in that space. You know, the problem is, nobody's making money on the cultivation spot, and nobody's spending money on capital, and that's fundamentally, you know, the issue. There's a lot of reasons for that. I've seen good reports even today on why that. I think, I don't know, Amy, who wrote that report that I saw this morning, but it's right, you know? We spent the money. We could just walk away from it. I think that's wasteful. We did this for one reason: growth. You know, we looked at lawn and garden. We had a, you know, like, a 30% increase during COVID, in lawn and garden. But before that, we were seeing a couple percent growth. We looked at live goods, and we looked at, you know, cultivation supply in the cannabis side and said, "These are growing at a rate of multiples of ours." We invested that, and I think we, you know, we continue, and within our numbers, to have, I don't know what the number is, but call it $15 million of R&D spend, in innovation spend behind the Hawthorne business today, you know, and we could walk away from that. This is really the difference between the future and, and not. We could, we could cut that money and not spend that. When we talk to partners, people recognize people in the industry recognize the power of what Hawthorne has, and everyone is in the same boat. The question is: Could you take people, like, more than one company, more than Hawthorne, and put people together? And create a business that has enough scale and enough earnings, that it's capable of being kind of a standalone business. Whether that's within Scotts or outside of Scotts, but I would make the argument that that business needs to be north of $100 million of EBITDA or EBITA, you know, I think was the terms we use in the operating side. I, I just don't see Hawthorne in the near term getting to that, and I see a lot of other people out there with really good, exceptional businesses also floundering, where getting together offers scale, and it offers strategic impact that I think we're not gonna get alone. I think for the Scotts shareholders, I think the beta we've introduced into our earnings as a result of this investment, is, is probably not healthy. We know one thing about Scotts. Scotts is a high cash flow business, and we've got to find ways to sort of strengthen the Hawthorne platform, and offer, I think, other people who are in exactly the same boat, and you all know who they are, okay? Create something that strategically is important. I, I just, I don't think that we can get there by our, ourselves. There are opportunities, and when we talk to those people, unlike maybe a little bit the conversation we would have with you guys on the phone today, where you say, you know, nobody else is saying that. Everybody else is saying, "No, no, you guys really put something great together." Chris, you, you got something to say? Yeah, no, I just. It's your baby. Yeah, no, it is. Look, it's, it's tough, you know, going through what we've been through. Look, understanding what, what the investments on this side of the industry have, have done to the, to the core business, sacrifices that the North American business has had to make to, to, to support Hawthorne through what it's been through. I just wanted to just quickly touch on, you know, when you said, you know, making this decision from a, you know, in the past, you've talked about it from a position of strength, and now it's different. Look, clearly, I, I recognize the, maybe the irony in what I'm saying. Look, strength's a relative thing, and clearly, Hawthorne is not the business it was. The industry is not the industry it was at the time being. Hawthorne, still within the industry, operates from a position of relative strength. I think that that's giving us, in partnership conversations, a really good position to negotiate and work from. As Jim said, there's a lot of really good businesses out there that have fundamentally strong assets. If we can put those things together with Hawthorne... When Jim talks about partners that see this, he's not just talking on the cultivation side where we operate, but when customers of ours, I mean, the people who are actually using our products, come to see what we do here at Hawthorne, come to Marysville here and see R&D and innovation, all the work that goes into that side of the business, people are really impressed, and they're extremely optimistic about not just the long-term outlook of the industry, despite where we are, but the presence and the contributions that Hawthorne can provide to it. Look, I know things are tough right now. We are gonna make a move. The work that the team has done to get the business back to a place where profitability is really within our reach, has been tremendous. It has not been easy for anybody. Again, I think, I think we are in a position of relative strength compared to a lot of the other folks in the industry, and we, we wanna, we wanna go this not alone, but together. There's a lot of- I wanna talk just a little bit, Chris, about the cost of that strength. Some of the people we've talked to theoretically know how they can cut expenses. We have absolutely blood all over us here as a result of what we're doing. You know, dude, there was a whole another round of layoffs this week here, okay? As we have sort of proactively dealing with our self-help, okay? When we talk to some of these partners, some of the partners are living in the same world on Chris's side, and they have made some of the changes. With us, we show up with absolute certainty in our numbers because they are created through blood, and that blood has been let, okay? So, you know, getting Hawthorne back to profitability is something that was, you know, shotguns and knives. We've done it already, unlike some of our partners who say, "Well, I could do this and that." We've already done it. Part of the strength in these discussions is from the certainty of we've already done it, you know? I, I don't know, Peter, if that helps at all. No, it, it, it does a lot. I, I appreciate all that color. I mean, then, Matt, I, I appreciate all the color you provided to Chris's question on, on 2024. Maybe just a couple points of clarification because it just to get the $3.50 to $4.00 just seems like a substantial increase in earnings, given what we're kind of what's implied for this year. Maybe first, on the 100 basis points of gross margin expansion, is that incremental on top of what you would get back from the, from cycling the write-downs? Because I think you mentioned that's 120 basis points. Is that a total number? Whatever, taking 270 to 300, you just add 100 to it, and that would, would get you there. Then I guess what I'm trying to understand within that is just, you know, maybe what's assumed for leverage and, and kind of i- interest expense? Like, I, I think it would be helpful to kind of just maybe bridge us to $3.50, to $4 with, with 100 basis points of gross margin expansion. I just think that would be helpful. Thanks. Yeah, no worries. I do think, one, you have to take into account there's top line growth next year, right? Kind of out of the gates, everything that Jim and Mike have spoken about is growing mid-single digits in U.S. Consumer next year, which with the margin also going up kind of that 100 basis points. By the way, that's kind of a year-end, full year 2023 to a full year 2024 as I'm looking at it. That's coming through, like I said, additional volume, additional cost outs, additional expansion of capability, that we are bringing onto the shelf with innovation. All of that is going into play. That leaves you with a pathway to, to growth margin, EBITDA, again, growing, commensurate. As you move to sort of, lower in the P&L, yes, you're right. We are going to do what we've done this year. You'll see a, a, a consistent debt paydown, of about $300 million next year. That obviously will, will work towards the net leverage calculation on an average of about $200 million. Commensurate with that will be an interest, expense reduction. You can do the math there. You're kind of averaging 5.25% right now. Next year, you're probably gonna be in that range, 5.25%-5.50%. So I'll leave you to do some math. But albeit on a lower debt level, and then tax rate will probably improve a little bit next year. Right, you know, this year, we're, we're, we're seeing a higher effective tax rate as earnings are a bit lower. As earnings grow higher, some of those fixed tax items get, get more coverage, your effective tax rate will move lower. Kind of moving back into that 25%-26% range is, is what I'm thinking. Therefore, you put all that together, that's what helps drive the PS growth year-over-year. Got it. Thanks so much. I'll pass it on. All right, our next question comes from Eric Bosshard from Cleveland Research. Good morning. A couple things. Jim, I'm, I'm curious what's pricing, the experience this year and your thinking for next year. I'm just curious where, where that goes and, and what your, your strategy is within that. You've, you've talked a little bit about it. I just would love to understand a bit more. Are you at the point where you feel like the consumers have pushed back on price, where in order to have volume growth, in order to have mid-single digit revenue growth next year, the pathway there is, is a notable change in your pricing strategy? Just help us understand that a little bit. Listen, I'd start with what's notable is, we're not taking pricing next year. Let's start with, with that one. I, Eric, I'm not sure we've seen, we've seen consumer pushback. You know, I, I said with grass seed, I, I think we all think we have. I'm not sure that we understand that well. Look at, look at the Lawns business. You gained 5 share points, again, I said that was conservative. You know, the category got smaller. I think that's maybe the pushback. If you look at that research data we had, that people said they were just kind of watching their pocketbook, I don't think it's just us. I think it's all, all kinds of products. You know, I think that grass seed was a pretty unique situation where we had a retailer actually price, like our Sun & Shade, above recommended retail and offer a private label product 50% below us. That, that one, the consumer did vote. That is a very unique situation that's not gonna happen again. You know, I, I think we started on pricing, and Mike, you can jump in at some point here, is we're not taking pricing. I don't think the retailers would be real tolerant of it, and I think we do feel like some of our products, some of our products have gotten pretty darn expensive. Those really were lawn ferts. You know, the combo products, they tend to be expensive anyway, and, and grass seed. You know, we had conversations with retailers, you know, the last 2 months that are, you know. I think, you know, you, you can start with, with Depot, who is publicly, I think, when Ted's talked, looking for cost outs within their system, and they're talking to vendors about participating, and they talk to us about that. You know, I think within that, the underlying part of the conversation is we, we actually were sensitive to pricing on lawn ferts and grass seed, where how we could participate with them, which I ultimately, I guess, a cost out is a price reduction. We've sort of targeted these reductions in exchange for concessions on listening and promotional support that's incremental to anything we have now. I-- You know, Eric, seriously, I, I'll view this as a conversation. It's a little different than what you're saying. You guys finally saw there was pushback from the consumer? Not, not really. We basically said, we're not pricing because we thought our stuff's gotten expensive. You know, the thing is, agricultural products, you know, food, you know, we see it early 'cause you're dealing with a lot of the same stuff. You're dealing with, you know, agricultural commodities, urea, various, you know, other nutrients, you know, chemistry that goes into the products, you know, pallets, plastic, transportation, all this stuff, really pricing up. We've seen a lot of giving the price back on that. I think for us to sort of assume we could get pricing, I, I don't think we would have thought it was good for the business, and maybe that gets to what you wanted to say. But the ability to participate in cost outs with retailers in exchange for volume increases that were incremental to what we, and I mean, truly incremental to what we have today, I think. Which, you know, this is a whole question we had, I had this morning as I was talking to Mike about this, as we were sort of anticipating questions. These are margin, margin positive for us. Not only dollar margin positive, they're margin% positive, as. Remember, we, we overbuilt our supply chain as we were in COVID, not unlike other people. As we've seen slack in that system, where the demand really hasn't been there, and again, we saw this year, to have incremental business that further loads our supply chain, is actually super beneficial for us on a, on a margin percent. It, it even pays for itself, in a percent basis. I, I don't know, Eric, what do you, what do you think of the answer? Like, we, we can talk about it, but I'm not trying to be stupid here. like, it's always good to talk to you, Eric. I mean it. Yeah. I'm just, I'm just trying to figure out how you connect the dots where your, your, your customer, The Home Depot, wants to cost out. Your consumer has said, "Like, my lawn is good enough at that price." The units are negative. Your comment is, "It's great to load volume." It sure seems like all that says, like, one, one path is to lower the price to solve all those things. Well, I guess effectively, we're doing that. I think you're misreading what I said in my prepared comments, okay? Which is, my lawn's good enough for the price. For those of us who live in the Midwest and the Northeast, you saw a kind of real wet, early spring, and lawns looked really great. They were not parched out. I think that it was, like to save the money, and my lawn looks good enough. A lot of that, from our point of view, good enough, was weather-related, in that my lawn looks pretty green without doing anything, and that was true this spring. Don't misread the data. Mike, anything you- No, I mean, you look at Texas, I mean, we over-indexed. The weather was, was right. We did the promotions and the advertising. We were super... I mean, what was the percentage early on? It was like 90% low, and we were really optimistic about it. Eric, I think in dollars, in Texas. Yeah. We're, we're up, like, 25 plus% year to date. Our largest single lawn market is Texas, and it's up in dollars, like 25%. I don't know what we said, like, it's more than 10% in, in units... Right. -up year to date. So I-- listen, it's one of those things where I actually don't know what it all... I, I wish I could say I, I, I know exactly what it means. Matt and I spent a ton of time this week on saying we need to actually have an answer here. You know, Eric, one of the things, this is really for everybody. We become-- our spring season has become very much a Weed & Feed season. When you look at that early Day-Long Savings program we did, which coincided really well with Southern weather, and I've, I've just-- I know this data really well now. It worked really well, where the weather was good. We talked about it before, where the weather's not good and you promote it, it doesn't do much. You know, we didn't see, like, the needle even move for Day-Long Savings, which was a national promotion. It got a lot of load in, which was good, you know, even in the north, retailers were prepped. Then since you saw nothing really happened in DayLawn in the northern markets, it really became like a Black Friday, a single Black Friday event where the peakiness of the lawn season in, like, the Northeast was 1 week, okay? Is when the stuff was on promotion. That's partially our fault. We, together with the retailers, have got very focused on Weed & Feed. Then you say, "What is it that the people really want? Do they want green, or do they want weeds dead?" Lawns took this position, the brand people at Lawns, saying, "Dude, the weed season was just kind of screwed up in, in the Northeast." We said, "Yeah, you know, so you say," okay? I think we sound a little bit like you, so you say. Then we went back and pulled the Ortho data, and it basically was exactly the same. Ortho selective weed, almost exactly the same. I, I think part of what's happened in Lawns is we've become very much in the spring season, not a halt, plus weed, you know, plus dandelion. It's become Turbo plus two, one big mondo promotion, and if the weather interferes with that, it's just, it's pretty disruptive. So I think that's a little bit how we look at these, the differences in the country, because you have the biggest state in the union, you know, from a lawn point of view, like +$25, +10 units, and pretty bad numbers in the Northeast. So how do you get to this whole issue of pricing, where you got 1 state, the number-- it's, but it goes bananas, and then we get into this whole weed thing, and then we look at Ortho, and it's the same numbers. Eric, I, I don't know what it all means except to say that we're not chancing this because I think the retailers believe, and I know you have a great relationship with them. I think the retailers believe pricing was a factor, so we're, we're dealing with that. We're dealing in a way of, I'm gonna say, strength, meaning we will work with you on this in exchange for XYZ, which is all incremental. I think what will happen is next... Look, first of all, nobody has anything to go on with Spec and Central other than their first half numbers, and they sucked, okay? Not our first half, okay? That's part of what we're talking about here, okay? Is the work we did and the friendships we had with our retailers really helped our load, and that helped our share, okay? The... I'm not gonna say concessions, the actions we're taking to deal with seed and lawn prices are going to have effect on our shelf presence and our promotional sort of percentages. I think you'll see that next year. Those programs are being put to bed now, but I think we're very confident in what's coming out of them. Okay. Second thing, probably maybe a little bit easier. Just from an inventory perspective, you commented about you've managed this year a little bit quarter to quarter for the covenant, which makes sense, and now you've created breathing room around that. Doing that obviously involved some pushing inventory to retail. You've talked about this bigger bet on fall lawns. I, the question is, like, is the risk that you end this year with more inventory of retail than there should be, and that's a limiting factor for next year, or am I connecting the dots incorrectly? Yeah, I don't, I don't listen, I don't think it's a limiting factor. I, I do think that, to people where we fell short on our lawn numbers, there probably is higher lawn inventories. You know, I, I personally have had conversations with retailers, not that there's a problem, but, you know, they bring it up. Fall is pretty important, I think, to, to everybody. You know, I, I don't know the exact percentages, Eric, but our spend for marketing in the fall is, you know, nearly 250% higher than it was last year. We're not just talking... The big fall promotional items that happen is grass seed, lawn ferts, and Tomcat, our rodenticide line. They're all gonna get pushed hard. I wish I could tell you next quarter, we can tell you what the answer is, but a lot of these occur in that transition between the fiscal year. A lot of this happens in November. Our first quarter numbers should say how successful we've been in both POS, our sales, and also in Tomcat. I don't know. Mike, anything? No, I think you're, you're gonna see retail inventories down versus the previous year, Eric. The question is, is how far down based on that, that fall program. Yeah, I think that's an important thing to remember. We ended last year not saying we had inventory problems. We said inventory was, I think, either lower or about where it should be. Right. This year, inventory is gonna be lower, okay? Yeah, it's gonna be lower. Just how much and what's the promotion, and what falls in the fourth quarter versus the first quarter on shipments? Those were retailer inventories, absolutely. Yeah. From our inventory position, Eric Bosshard, you know, we did say part of that $1 billion in free cash flow over 2 years, $400 million of it was related to excess inventory. The plan is and was to take about half of that this year, half of that next year. As Mike Lukemire detailed earlier, trying to gain some momentum here in the fall will help bring in some of that inventory reduction into 2023. As Jim Hagedorn just pointed to, a lot to report on kind of Q1 of 2024 on how this is all gonna play out. If I could just ask one last one. Obviously, everything was on the table. You added to the restructuring. You're talking about, I think, a notable change with Hawthorne. You made a change with the debt covenant, and the board decided to keep the dividend, even though you're not gonna earn the dividend this year or probably through the first half of next year. Why? Why, why that position or strategy around the dividend? Listen, I think we... I'll speak from it with two hats, okay? Start with the family hat, and that's not because it's more important, it's just the easier one to say. While the dividend does matter to the family, my oldest sister, Susan, who's the chairman of the limited partnership, we have. Sue and I have been real tight on this, and our view is, whatever best for the company is the right answer, okay? Let's just put that one, which is, was not some weirdo move by the family to, to keep the dividend. As we looked at this from other companies who have either suspended or cut the dividends, the destructive effect on the value of the equity is so striking that it was something that in the discussions that Matt and I have had, and we have all had with our banking partners, it just didn't seem like it was worth it. It was really seemed like it was a kind of third rail issue, it doesn't really move the leverage numbers enough to sort of take the risk on the signal it would send to our equity partners, okay? I don't know, Matt. No, no, no, 100%. In the first year that you cut the dividend, it's kind of worth 0.1, maybe 0.15. Second year, yeah, it aggregates to, like, a 0.3 on the impact to net leverage, Eric. So it's, it's not gonna move the needle in 2 years versus what we're gonna do in the denominator of the net leverage calculation, and also on the cash flow side of what we're going to be able to achieve and direct that to debt paydown. The other thing is, and Jim sort of glanced off of it, in our conversation with our top shareholders, everyone is agreed that they highly appreciate the dividend, our commitment to the dividend, and keeping it in place as we manage through this. I'll use the direct quotes. Don't solve a near-term issue with a long-term structural impact," and impacting the equity in the short term to the significance that you've seen with some of the other companies that have cut their dividend would be significant. Great. Helpful. Thank you. Our next question comes from c Hey, good, good morning. I'm sorry if this has been already addressed a couple of times, but I do want to see if I can get some more clarity on the 2024 commentary that Matt gave. Maybe if you can just walk us through again the, the thinking or the baseline assumptions around sales growth and in particular on gross margin. Is that 100 basis points of year-on-year improvement, is that on an adjusted basis, meaning, is it excluding one-time adjustments in both years, such as the inventory write-downs this year? Then again, how much debt reduction are you assuming in 2024 relative to 2023? I guess lastly, I think I heard EBITDA referred to at $600 million in 2024. Did I hear that right? Is that the, you know, what, what's implied by the EPS of $3.50-$4? Thanks. All right. A lot to, to go through. One, early days looking at 2024. The reason that we are talking about 2024 is to give you all a viewpoint on how we think we can navigate over the next year, okay? Things will change, but these are kind of the waypoints that we're laying out. Mid-single digits growth. You heard Mike and Jim talk about our broadening relationships with retailers. All of the factors that are going into that to improve our positions across the shelf, to improve our positions with the consumer so that they are activated and that they are motivated to continue to participate in the space. Mid-single digits volume growth. On the gross margin line, and I think Eric hit it directly, we are managing what is in our control. Another $100 million of cost outs, that is incremental, and as Jim said, that's already started, so that will be in next year's earnings. On the pathway to all of that, that means that we are getting more efficient. That means that there is additional profitability to come out. We told you this year, we're about $100 million behind in U.S. Consumer. That will come back next year on top of the efficiencies that we are gaining. That's where you get the delta in kind of your low four-ish type, $400 million-ish EBITDA this year to getting back to that $600 million type EBITDA next year. From there, you look at the balance sheet and what we're able to do. Considering that this $1 billion over 2 years, we've said is kind of gonna be equal weighted between 2023 and 2024. This year, we're gonna pay down $300 million of debt. I think it's good to assume next year we'll pay down $300 million of debt. You can then, what I've said, is use an average interest rate in 5.25-5.50 land, can work that through on the EPS side. Took a look at the tax rate and said, "Hey, this year we're running a little bit higher. Next year, pathway to 25%-26%." All of that contributes to an EPS delta that gets you to that kind of $3.50-$4 range. One thing that I didn't answer, your gross margin rate. I look at things on an adjusted basis. Let's get back to what is happening. There is $20 million in this quarter that is running through our P&L in the U.S. Consumer business. To me, it's a restructuring item, and I know that I am the accountant here, but at the end of the day, I don't. The true underlying power of the earnings of this company, you remove that. It's one time, it's a write-down. I do that. I got $1.42 in earnings in the, in Q3. I think that's just off of where the consensus was. I look at the $20 million add back to gross margin, and I build from there. It would be incremental when you add that back. By the way, Sorry, the margins that we report and talk about are adjusted. Very helpful. Thank you. Our next question comes from Andrew Carter from Stifel. Hey, thanks. Good morning. just real quickly, taking holistically, thinking about this year, there's been a lot of weather headwinds. There's been loads, channel loads. You mentioned what you consider an isolated incident around grass seeds. Do you feel like you still have the position of strength with your retail partners and, like, you know, in terms of kind of the category leadership, and, or, or has that gone backwards? Kind of remind us on private label, at the retailer level, do they make more margin dollars than your branded product? What's the trade-off there for influencing private label? Thanks. Okay, I'll I'm gonna leave the, how much do they make on private label and our products? I, I'm quite sure it's more on ours, but I'll, I'll leave that to people who know better than I. Let's, let's talk about our position of partnership or authority in, in the relationship with our retailers. You have no idea how much stronger it is as a result of what we have all been through. I'm, I'm talking about at the most senior levels of our biggest retailers. You know, I view them all as kind of personal friends, and it's not because we, we don't matter, it's because we all matter to each other. You know, I, I, I'll just put it this way, not I expect anybody to feel sorry for me. It, it has been a really long kind of year and a few months, like, really long. Like, one of the few people I can actually talk about this is senior execs at our retail partners. When we are trying to make quarters, we I have to go visit them, and so does Mike. You know what we learned? Not only are we, like, personal friends with these folks, but they need us, and we need them, and they view us as not less important, more important. When we're talking about the selective price adjustments we're making, that will result in incremental listings at our top retailers, you do know what that means. Doesn't mean diminishing power. Means increasing relationships with our most important partners and the biggest retailers in the world. You know, I, I would say right off the bat, as we have really, Mike and I have had to make sales calls this last year, it has been one of the really great experiences of my life, and I want to thank any retailer who's listening. To be able to sit with them and share what's happening at this business and how we needed their help, and they gave it without having to really beg. I can't tell you how much Mike and I appreciate it, but that is not a sign of a diminishing or weaker relationship. Mike, anything? No, I would say the relationship is even stronger than ever, and so we're dependent on each other, and we're gonna work together, so we both win. I think that's. You know, I, I think if you look. Look, I, I'd have to go with the numbers. I think if you look over the last five or six years, so my data is dated, and between sales and finance, who are all in here, they can probably answer this question better. Over time, we have definitely been taking share in, I think, all categories we participate in. You know, if you look over, like, the last decade, my numbers are a little dated, but I think if you looked and said, what would be pretty typical would be, you know, maybe 50/50 in units. Within that 50/50 in units, probably 60+% of the dollars are branded products within that mix. They make a bigger margin%, for sure, on that, but I'm sure on the dollars, it's, it's the branded side where they make their, a lot of their money. You know, I think those numbers are, are pretty right, you know, which is, call it 50/50 units. That's probably 60+% our business, and 40%, you know, private label dollars. The margins are better, but the dollars, I'm, I'm quite sure, are higher in our, our space, and they're all nodding yes to that, Andrew. I don't know if that answered your question. Yeah, it did. Thank you. I'll go ahead since it's late, pass it on. Okay, thanks. This concludes today's conference call. Thank you for participating. You may now dis-disconnect.