Central Garden & Pet Co (CENTA) 2024 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to Central Garden & Pet's Fiscal 2024 Third Quarter Earnings Call. My name is Robert, and I will be your conference operator for today. (Operator Instructions). As a reminder, this conference is being recorded.

女士們先生們，謝謝你們的支持。歡迎參加 Central Garden & Pet 的 2024 財年第三季財報電話會議。我叫羅伯特，今天我將擔任你們的會議操作員。（操作員說明）。提醒一下，本次會議正在錄製中。

I would now like to turn the call over to your host, Friederike Edelmann, Vice President, Investor Relations. Please go ahead.

現在我想將電話轉給東道主投資者關係副總裁 Friederike Edelmann。請繼續。

Good afternoon, everyone. Thank you for joining Central's third quarter fiscal 2024 earnings call. With me on the call today are Beth Springer, Interim Chief Executive Officer; Niko Lahanas, Chief Financial Officer; J.D. Walker, President, Garden Consumer Products; and John Hanson, President, Pet Consumer Products. In a moment, Beth will highlight our key messages, and Niko will provide more details about our results. After the prepared remarks, J.D. and John will join us for Q&A.

大家下午好。感謝您參加 Central 2024 財年第三季財報電話會議。今天與我一起參加電話會議的是臨時執行長 Beth Springer；尼可‧拉哈納斯，財務長； J.D. Walker，花園消費品總裁；約翰漢森（John Hanson），寵物消費品部總裁。稍後，貝絲將強調我們的關鍵信息，尼科將提供有關我們結果的更多詳細信息。在準備好的發言後，J.D. 和 John 將加入我們進行問答。

Comments made during this call include forward-looking statements that are subject to risks and uncertainties. Our actual results may differ materially from what we shared today. We've described the range of risks in our SEC filings, including in our annual report on Form 10-K and undertake no obligation to publicly update these forward-looking statements.

本次電話會議期間發表的評論包括前瞻性陳述，這些陳述存在風險和不確定性。我們的實際結果可能與我們今天分享的結果有重大差異。我們已在 SEC 文件（包括 10-K 表格年度報告）中描述了風險範圍，並且不承擔公開更新這些前瞻性聲明的義務。

Our press release and related materials, including the GAAP reconciliation for the non-GAAP measures discussed on this call are available at ir.central.com. All growth comparisons made are against the same period in the prior year, unless indicated otherwise. If you have further questions after the call, please don't hesitate to reach out to me.

我們的新聞稿和相關資料，包括本次電話會議中討論的非 GAAP 措施的 GAAP 調整表，請造訪 ir.central.com。除非另有說明，否則所有成長比較均與去年同期進行。如果您在通話後還有其他問題，請隨時與我聯絡。

And with that, I will now turn it over to Beth Springer. Beth?

現在，我將把它交給貝絲·施普林格。貝絲？

Thank you, Friederike, and good afternoon, everyone. Let's begin with the three key messages we would like you to take away from this call. First, recognizing we had record earnings in the third quarter of 2023, we delivered solid third quarter 2024 earnings performance in a challenging environment. GAAP EPS was $1.19 and non-GAAP EPS was $1.32. Unfavorable weather negatively impacted our sales of live plants and continuing softness in durable pet products more than offset our double digit e-commerce growth across the pet and garden categories.

謝謝弗里德里克，大家下午好。首先，我們希望您從這次電話會議中獲得三個關鍵資訊。首先，我們認識到 2023 年第三季的獲利創歷史新高，因此在充滿挑戰的環境下，我們在 2024 年第三季實現了穩健的獲利表現。GAAP 每股收益為 1.19 美元，非 GAAP 每股收益為 1.32 美元。不利的天氣對我們的活體植物銷售產生了負面影響，耐用寵物產品的持續疲軟抵消了我們寵物和花園類別電子商務兩位數的成長。

Second, we further expanded gross margin. Our strategy to simplify our business and improve efficiency across our organization continues to bear fruit. Recent cost and simplicity milestones include our decision to exit the underperforming pottery business over the next fiscal year and the closing of a live plants distribution facility. And third, we are maintaining our outlook for the fiscal year.

二是毛利率進一步擴大。我們簡化業務和提高整個組織效率的策略繼續取得成果。最近的成本和簡單性里程碑包括我們決定在下一財政年度退出表現不佳的陶器業務以及關閉活體植物分銷設施。第三，我們維持本財年的展望。

Given the recent significant decrease in market prices for grass seed, we now anticipate a write-down of approximately $15 million to $20 million in our grass seed inventory in the fourth quarter. While we see a path to delivering our outlook, it is worth noting that we also face continued volatile weather, uncertainty about retailer inventory and the value-seeking consumer.

鑑於近期草籽市場價格大幅下跌，我們目前預期第四季草籽庫存將減記約 1,500 萬至 2,000 萬美元。雖然我們看到了實現前景的途徑，但值得注意的是，我們還面臨持續不穩定的天氣、零售商庫存的不確定性和追求價值的消費者。

Longer term, we believe the consumer trends in the pet and garden industries remain attractive, and our cost and simplicity program will continue to enable us to improve profitability and generate the fuel to make thoughtful investments in our Central to Home strategy. Finally, I want to thank all 6,700 members of Team Central for their hard work and dedication this quarter.

從長遠來看，我們相信寵物和園藝行業的消費趨勢仍然具有吸引力，我們的成本和簡單計劃將繼續使我們能夠提高盈利能力，並為我們的「從中心到家庭」策略進行深思熟慮的投資提供動力。最後，我要感謝 Team Central 的所有 6,700 名成員本季的辛勤工作和奉獻精神。

And with that, let me hand it over to Niko, who will share with you more details. Niko?

接下來，讓我將其交給 Niko，他將與您分享更多細節。尼科？

Thank you, Beth. Good afternoon, everyone. I'll provide more details on our Q3 results, the progress on our cost and simplicity program and our outlook for the year. Now let's start with our third quarter results. Net sales were $996 million or 3% below prior year. Organic net sales also declined 3%.

謝謝你，貝絲。大家下午好。我將提供有關我們第三季業績、成本和簡化計劃的進展以及我們今年的展望的更多詳細資訊。現在讓我們從第三季的業績開始。淨銷售額為 9.96 億美元，較上年下降 3%。有機淨銷售額也下降了 3%。

Non-GAAP gross profit of $326 million was essentially in line with the prior year. Non-GAAP gross margin improved to 32.7%, driven by cost and simplicity projects, including the benefit from last year's consolidation of our cushion business with dog beds and moderating inflation.

非 GAAP 毛利為 3.26 億美元，與去年基本持平。受成本和簡單性項目的推動，非公認會計準則毛利率提高至 32.7%，其中包括去年我們透過狗床整合緩衝業務和通膨放緩帶來的好處。

Non-GAAP SG&A expense of $199 million was 5% above the prior year and non-GAAP SG&A as a percentage of net sales increased by 140 basis points to 19.9%, mainly due to the TDBBS acquisition and increased expense in corporate, primarily due to higher legal costs.

非 GAAP SG&A 費用為 1.99 億美元，比上年增長 5%，非 GAAP SG&A 佔淨銷售額的百分比增加了 140 個基點，達到 19.9%，這主要是由於 TDBBS 收購和公司費用增加（主要是由於更高的法律費用。

Non-GAAP operating income was $127 million and non-GAAP operating margin contracted by 60 basis points to 12.8%. Net interest expense was $10 million compared to $13 million in the prior year quarter, driven by higher interest income from higher cash balances and higher interest rates.

非 GAAP 營業收入為 1.27 億美元，非 GAAP 營業利潤率下降 60 個基點至 12.8%。淨利息支出為 1,000 萬美元，而去年同期為 1,300 萬美元，這是由於現金餘額增加和利率上升帶來的利息收入增加所致。

Non-GAAP net income was $88 million compared to $94 million a year ago. We delivered GAAP EPS of $1.19 compared to $1.25 and non-GAAP EPS of $1.32 compared to $1.40. Note that the prior year EPS was adjusted for the February 2024 stock dividend. Adjusted EBITDA was $156 million compared to $$166 million. Our effective tax rate was 24%, compared to 24.4% in the prior year quarter due to a larger tax benefit related to stock compensation in the current year quarter.

非 GAAP 淨利潤為 8800 萬美元，而一年前為 9400 萬美元。我們的 GAAP 每股收益為 1.19 美元，而非 GAAP 每股收益為 1.25 美元；非 GAAP 每股收益為 1.32 美元，而此前為 1.40 美元。請注意，上一年每股收益根據 2024 年 2 月的股票股息進行了調整。調整後 EBITDA 為 1.56 億美元，去年同期為 1.66 億美元。我們的有效稅率為 24%，而去年同期為 24.4%，因為本季與股票薪酬相關的稅收優惠更大。

Let me add some details on our two segments, beginning with Pet. Pet segment sales increased 1% to 508 million, driven by the recent TDBBS acquisition, our professional business, dog and cat and equine. Organic net sales, excluding TDBBS, decreased 2%, primarily due to continuing declines in durable pet products across our categories, in line with softer new pet adoptions and ongoing macroeconomic pressures, impacting consumer discretionary spending.

讓我添加一些關於我們的兩個部分的細節，從寵物開始。受最近收購 TDBBS、我們的專業業務、狗、貓和馬的推動，寵物細分市場銷售額成長 1%，達到 5.08 億美元。不包括TDBBS 的有機淨銷售額下降了2%，這主要是由於我們各個類別的耐用寵物產品持續下降，這與新寵物收養疲軟和持續的宏觀經濟壓力一致，影響了消費者的可自由支配支出。

Importantly, our POS outperformed shipments. Branded pet products once again outperformed our private label products, demonstrating the strength of our brands, and we expanded market share in flea-and-tick small animal, aquatics and wild bird.

重要的是，我們的 POS 表現優於出貨。品牌寵物產品再次超越自有品牌產品，展現品牌實力，擴大跳蚤蜱類小動物、水生動物、野鳥市場佔有率。

Let me highlight just a few of our recent product and marketing innovation. Our aquatics line, Aqueon, introduced the France first app, BlueIQ for smart and easy aquarium care. Using our Coralife smart LED lights, salt water and freshwater fish keepers can now control their aquarium lights with the WiFi and Bluetooth-enabled app and will be notified when a light is on too long or it's time for a filter replacement.

讓我重點介紹我們最近的一些產品和行銷創新。我們的水族產品系列 Aqueon 推出了法國首款應用程式 BlueIQ，用於智慧、輕鬆地照顧水族箱。使用我們的 Coralife 智慧 LED 燈，鹹水和淡水魚飼養者現在可以透過支援 WiFi 和藍牙的應用程式控制他們的水族箱燈光，並且當燈亮的時間過長或需要更換過濾器時會收到通知。

Our outdoor patio cushion brand, ARDEN, launched its first favorites collection together with Country Music Singer-Songwriter Alexandra Kay, the fade-resistant textiles are eco-friendly, featuring ARDEN's new earth fiber material, a blend of bamboo, viscose and polyester.

我們的戶外露台坐墊品牌ARDEN 與鄉村音樂歌手兼詞曲作家Alexandra Kay 合作推出了首個最愛系列，防褪色紡織品環保，採用ARDEN 的新型地球纖維材料，由竹子、粘膠纖維和聚酯纖維混合而成。

And our Equine brand, Farnam, went live with its innovative everything for the ride campaign, featuring the country music Trio, The Castellows, resulting in over [28 million] impressions, achieving engagement rates well above benchmarks and driving strong conversion rates. Our e-commerce business outpaced the market, growing high single digits and representing approximately 28% of our pet sales.

我們的Equine 品牌Farnam 推出了創新的一切騎行活動，以鄉村音樂三重奏The Castellows 為特色，產生了超過[2800 萬] 的展示次數，實現了遠高於基準的參與率並推動了強勁的轉化率。我們的電子商務業務跑贏了市場，實現了高個位數成長，約占我們寵物銷售額的 28%。

Leveraging our online capabilities, we improved conversion rates, driving share growth online in several key pet categories. Pet segment operating income improved 39% to $83 million and operating margin expanded by 450 basis points to 16.4%, driven by gross margin expansion.

利用我們的線上能力，我們提高了轉換率，推動了幾個關鍵寵物類別的線上份額成長。在毛利率擴張的推動下，寵物部門的營業收入成長了 39%，達到 8,300 萬美元，營業利潤率成長了 450 個基點，達到 16.4%。

Pet segment adjusted EBITDA was $94 million compared to $84 million a year ago. We expect consumable pet products to continue to grow but sustained pressure on durables through this fiscal year. We anticipate household penetration and buy rates will be fairly stable.

寵物部門調整後的 EBITDA 為 9,400 萬美元，而去年同期為 8,400 萬美元。我們預計本財年寵物消費品將持續成長，但耐久財將面臨持續壓力。我們預期家庭滲透率和購買率將相當穩定。

Longer term, we expect that consumer trends, including premiumization and humanization, pet health and wellness and growing share of e-commerce and a shift to younger generations will support pet industry growth.

從長遠來看，我們預期消費趨勢，包括高端化和人性化、寵物健康和保健、電子商務份額的不斷增長以及向年輕一代的轉變，將支持寵物行業的成長。

Switching now to Garden. Garden segment sales were $488 million or 6% below the prior year. Organic net sales declined 4%. Recall that the independent garden channel distribution business we sold last fiscal year represented approximately 5% of our garden sales; this year the cold and wet weather in April and May, followed by record heat in June, negatively impacted sales across almost all garden categories, particularly the sell-through of our live plants, more than offsetting sales growth in grass seed.

現在切換到花園。花園部門銷售額為 4.88 億美元，比上年下降 6%。有機淨銷售額下降 4%。回想一下，我們上一財年出售的獨立花園通路分銷業務約占我們花園銷售額的 5%；今年四月和五月的寒冷潮濕天氣，以及六月創紀錄的高溫，對幾乎所有花園類別的銷售產生了負面影響，特別是我們活植物的銷售，遠遠抵消了草籽銷售的增長。

Non-GAAP Garden segment operating income was $74 million compared to $88 million a year ago. Non-GAAP Garden segment operating margin declined to 15.1% due to lower sales in live plants, one of our key businesses. Garden segment adjusted EBITDA was $85 million, compared to $99 million in the prior year.

非 GAAP Garden 部門營業收入為 7,400 萬美元，而去年同期為 8,800 萬美元。由於我們的主要業務之一——活植物的銷售額下降，非公認會計準則花園部門的營業利潤率下降至 15.1%。花園部門調整後的 EBITDA 為 8,500 萬美元，而前一年為 9,900 萬美元。

Household penetration and buy rate have remained essentially in line with the prior year and well above 2019 levels, demonstrating consumers are staying engaged in the garden category. While boomers historically comprise 50% of the category spend, that is beginning to shift to younger cohorts, supporting future growth. However, foot traffic in our largest home center customers was below prior year and the pre-COVID baseline.

家庭滲透率和購買率與前一年基本保持一致，遠高於 2019 年的水平，這表明消費者仍然熱衷於花園類別。雖然嬰兒潮世代歷來佔該類別支出的 50%，但這一比例開始轉向更年輕的群體，從而支持未來的成長。然而，我們最大的家居中心客戶的人流量低於去年和新冠疫情爆發前的基線。

Our targeted investments in consumer insights, branding and digital capabilities supported our growth, particularly online. We increased return on ad spend and drove conversion, resulting in share gains and double-digit e-commerce growth across categories and retailers and e-commerce sales now represent 7% of total Garden sales.

我們對消費者洞察、品牌和數位能力的有針對性的投資支持了我們的成長，特別是在線上成長。我們提高了廣告支出回報率並推動了轉化，從而實現了各個類別和零售商的份額增長和兩位數的電子商務增長，電子商務銷售額目前佔花園總銷售額的 7%。

Turning now to the balance sheet and cash flows. Our balance sheet remains strong, and our team stayed focused on decreasing inventories, in particular, on the garden side, with total inventories now $81 million lower despite the added inventory from TDBBS. Cash and cash equivalents at the end of the third quarter were $570 million, compared to $333 million a year ago. Net cash provided by operations was $286 million for the quarter compared to $325 million.

現在轉向資產負債表和現金流量。我們的資產負債表仍然強勁，我們的團隊繼續專注於減少庫存，特別是在花園方面，儘管 TDBBS 增加了庫存，但目前總庫存減少了 8,100 萬美元。第三季末現金和現金等價物為 5.7 億美元，去年同期為 3.33 億美元。本季營運提供的淨現金為 2.86 億美元，去年同期為 3.25 億美元。

This quarter, we invested $14 million of CapEx, mostly in the maintenance and productivity initiatives in our dog and cat business, small animal, grass and wild bird. Total debt of $1.2 billion was in line with the prior year. Our gross leverage ratio was 3 times at the end of the quarter, compared to 3.1 times a year ago. We had no borrowings under our credit facility at the end of the third quarter. Depreciation and amortization for the quarter was $23 million compared to $22 million.

本季度，我們投資了 1400 萬美元的資本支出，主要用於狗和貓業務、小動物、草和野鳥的維護和生產力計劃。債務總額為 12 億美元，與前一年持平。截至本季末，我們的總槓桿率為 3 倍，而去年同期為 3.1 倍。截至第三季末，我們的信貸安排下沒有借款。本季的折舊和攤提為 2,300 萬美元，而上年同期為 2,200 萬美元。

We continue to make progress on our journey to reduce cost and simplify our business. The savings generated from strategic projects across procurement, manufacturing, logistics, portfolio optimization and administrative costs are allowing us to create the capacity to invest and offset sustained cost increases.

我們在降低成本和簡化業務的道路上不斷取得進展。採購、製造、物流、產品組合優化和管理成本等策略項目所產生的節省使我們能夠創造投資能力並抵消持續的成本成長。

As part of our ongoing network optimization, we closed the manufacturing facility in California and moved the remaining production of our organic fertilizer called Alaska Fish to our garden manufacturing facility in Missouri.

作為我們正在進行的網路優化的一部分，我們關閉了加州的製造工廠，並將剩餘的稱為阿拉斯加魚的有機肥料生產轉移到密蘇裡州的花園製造工廠。

Our next-gen plant science center operates research farms and facilities across the country with a focus on developing new and innovative grass seed and controls products. We recently announced the opening of a new research location in Texas, which will reduce our reliance on third-party testing as well as consolidate our current grass seed breeding farms in Oregon.

我們的下一代植物科學中心在全國各地經營研究農場和設施，專注於開發新型創新草種和控制產品。我們最近宣佈在德克薩斯州開設一個新的研究地點，這將減少我們對第三方測試的依賴，並鞏固我們目前在俄勒岡州的草種育種農場。

In line with rightsizing our logistics footprint and simplifying our work processes and fulfillment strategy, we closed the live goods distribution center. The consolidation of 4 Garden distribution locations across Georgia, Alabama and Virginia, into a new fulfillment center is well underway, and we recently started shipping out of the new Georgia based facility. We expect the new center to improve in-season on-time service and support future growth in the Southeast region.

為了調整我們的物流足跡並簡化我們的工作流程和履行策略，我們關閉了生鮮商品配送中心。將喬治亞州、阿拉巴馬州和維吉尼亞州的 4 個 Garden 配送地點整合為新的履行中心的工作正在順利進行，我們最近開始從喬治亞州的新設施發貨。我們預計新中心將改善旺季準時服務並支持東南地區的未來成長。

Optimizing our portfolio and shifting to higher-margin businesses, we started winding down our underperforming pottery business, including taking out the remaining inventory, which was held in 7 locations across the country.

為了優化我們的產品組合併轉向利潤率更高的業務，我們開始縮減表現不佳的陶器業務，包括清理分佈在全國 7 個地點的剩餘庫存。

As a result of our cost and simplicity projects, we incurred an $11 million of onetime costs in the quarter, largely related to the pottery exit, including $8.6 million in cost of goods sold and $2.5 million in SG&A, the majority of which was noncash.

由於我們的成本和簡化項目，我們在本季度產生了 1,100 萬美元的一次性成本，主要與陶器退出有關，包括 860 萬美元的銷售成本和 250 萬美元的銷售管理費用，其中大部分是非現金。

Our 6,700 members of Team Central have rallied behind our multiyear cost and simplicity program, and we will continue to provide quarterly updates on our progress. The pipeline of projects to leverage our scale and deploy our capabilities across our two segments remain strong.

我們的 Team Central 的 6,700 名成員團結起來支持我們的多年成本和簡單性計劃，我們將繼續每季提供進度更新。利用我們的規模並在兩個細分市場部署我們的能力的專案管道仍然強勁。

As in the past, we believe there will be plenty of opportunity to reduce cost ahead of us. And last but not least, turning to our fiscal '24 outlook, we are maintaining our outlook for the fiscal year of non-GAAP EPS of $2 or better despite several challenges.

與過去一樣，我們相信我們將有很多降低成本的機會。最後但並非最不重要的一點是，談到我們的 24 財年展望，儘管面臨一些挑戰，我們仍維持本財年非 GAAP 每股收益 2 美元或更好的預期。

Due to a recent significant decrease in market prices for grass seed, based on our current analysis, we anticipate a write-down of approximately $15 million to $20 million in our grass seed inventory in the fourth quarter. While we are confident in our ability to meet our fiscal goals, we must acknowledge the ongoing risks and uncertainties, including continued volatile weather, uncertainty around retailer inventory levels and a consumer base that is increasingly focused on value.

由於近期草籽市場價格大幅下跌，根據我們目前的分析，我們預計第四季草籽庫存將減記約 1,500 萬至 2,000 萬美元。雖然我們對實現財政目標的能力充滿信心，但我們必須承認持續存在的風險和不確定性，包括持續不穩定的天氣、零售商庫存水準的不確定性以及越來越注重價值的消費者基礎。

Additionally, we assume moderating inflation, softer consumption in a number of categories, lower foot traffic in key home center customers and an environment of macro and geopolitical volatility. Looking ahead, we continue to believe in the competitive strength of Central, our Central to Home strategy and the positive long-term consumer trends, enabling growth in our 2 industries.

此外，我們假設通膨溫和、多個類別的消費疲軟、主要家居中心客戶的人流量減少以及宏觀和地緣政治波動的環境。展望未來，我們繼續相信 Central 的競爭實力、我們的 Central to Home 策略以及積極的長期消費趨勢，從而促進我們兩個行業的成長。

Thanks to our financial position, coupled with the amount available on our credit facility, we remain on the lookout for growth and margin accretive acquisition targets in Pet and Garden that can add scale to our businesses enable us to enter adjacent categories or ad capabilities, for example, in digital and e-commerce.

由於我們的財務狀況，加上我們的信貸額度，我們仍在尋找寵物和花園領域的成長和利潤成長收購目標，這些目標可以擴大我們的業務規模，使我們能夠進入相鄰的類別或廣告能力，例如，在數位和電子商務領域。

As always, our outlook excludes the impact of any restructuring activities undertaken during the fourth quarter, including any projects under the cost and simplicity program.

像往常一樣，我們的展望不包括第四季度進行的任何重組活動的影響，包括成本和簡化計劃下的任何項目。

And with that, let me turn it back to Beth for a final comment. Beth?

說到這裡，讓我把它轉回給貝絲，徵求最後的評論。貝絲？

Thank you, Niko. I would like to provide an update on CEO succession. As you know, our Board of Directors has been working to identify our next Chief Executive Officer. We have shared on prior calls that we've been pleased with our progress, and we are now in the final stages of our work. We expect to make an announcement soon, which could be as early as the end of our current fiscal year and certainly before our Q4 earnings release.

謝謝你，尼科。我想提供有關首席執行官繼任者的最新資訊。如您所知，我們的董事會一直在努力確定下一任執行長。我們在之前的電話中表示，我們對我們的進展感到滿意，現在正處於工作的最後階段。我們預計很快就會發佈公告，最早可能在本財年結束時，當然也是在我們第四季財報發布之前。

We'd now like to open the line for questions.

我們現在想開通提問熱線。

Thank you. At this time, we'll be conducting a question-and-answer session. (Operator Instructions)

謝謝。此時，我們將進行問答環節。（操作員說明）

Brad Thomas, KeyBanc Capital Markets.

Brad Thomas，KeyBanc 資本市場。

Yes, hi. Good afternoon, a couple of questions, if I could. First, I wanted to start off with the Garden segment, and I know we're coming off of the most important quarter in the year for the segment and so going forward, a little less important seasonally. But I guess just as we reflect on the last few months, I was hoping you could talk a little bit more about the underlying trends versus the impact of weather versus the impact of pricing? And just how you're thinking about the overall health of the category as we look out to next year?

是的，嗨。下午好，如果可以的話，有幾個問題。首先，我想從花園部分開始，我知道我們即將迎來該部分一年中最重要的季度，因此展望未來，季節性的重要性會降低一些。但我想，正如我們回顧過去幾個月一樣，我希望您能多談談潛在趨勢、天氣影響和定價影響？當我們展望明年時，您如何看待該類別的整體健康狀況？

Hi, Brad. It's J.D. Thanks for the question. I'll take that. First of all, it was a bit of a challenging quarter, which Niko referenced in his script. The consumption for the quarter heading into the quarter, we were encouraged most of the season still in front of us. We had had a pretty decent first six months of the year, including in our live goods business was up 17% for the first six months of the year.

嗨，布拉德。我是 J.D。我會接受的。首先，這是一個充滿挑戰的季度，尼科在他的劇本中提到了這一點。進入本季後，我們對本季的消費感到鼓舞，本季的大部分時間仍然在我們面前。今年前六個月我們的業績相當不錯，其中活貨業務今年前六個月增長了 17%。

As you know, that's a business that is largely dependent on third quarter. That's when most of the consumption takes place. And then really across all of our businesses, that's true. But we were most profoundly impacted by our live goods business in Q3, unfavorable weather there. I think Niko said it well, wet and cold weather in April and the first part of May and then followed by intense heat through the month of June.

如您所知，這項業務很大程度上依賴第三季。那是大部分消費發生的時候。對於我們所有的業務來說，確實如此。但我們受到第三季直播商品業務影響最深的影響，那裡的天氣不利。我認為尼科說得很好，四月和五月上半月的天氣又濕又冷，然後整個六月都是酷熱的天氣。

So just taking live goods alone, up 17% for the first six months of the year, Q3, down 6%, and that's when most of the consumption takes place. The month of May which is the peak month for that business down 13% and that's something that we just couldn't recover from. If you don't sell the goods there, you have high scrap rates.

僅就生鮮商品而言，今年前六個月成長了 17%，第三季下降了 6%，而這正是大部分消費發生的時候。5 月是該業務的高峰月，下降了 13%，我們無法從中恢復過來。如果你不在那裡銷售貨物，廢品率就會很高。

And really, if we separate live goods from the rest of the business, the rest of the business, the underlying metrics for the business were quite healthy. Consumption wasn't bad at all, and our financials would have been -- ex live goods would have been strong, solid, I should say. So year-over-year, the comparison doesn't look great, but it's really driven by one of our businesses.

事實上，如果我們將直播商品與業務的其他部分分開，那麼業務的其他部分，業務的基本指標就相當健康。消費一點也不差，我應該說，我們的財務狀況本來會很強勁，很穩定。因此，與去年同期相比，這種比較看起來不太好，但它確實是由我們的一項業務推動的。

And that's a seasonal business that weather is hard to predict. So it's to draw long-term conclusions from that, I'd say that that's a challenge to do. I think that we're working on some of the underlying fundamentals there. We're still encouraged about the future. There's a lot to feel good about. Niko referenced cost and simplicity initiatives. We're making great progress in that.

這是一項季節性業務，天氣很難預測。因此，要從中得出長期結論，我認為這是一個挑戰。我認為我們正在研究一些基本原理。我們仍然對未來感到鼓舞。有很多值得感覺良好的事。Niko 提到了成本和簡單性措施。我們在這方面正在取得巨大進展。

A number of different facilities that we are optimizing right now, optimizing our footprint, gaining more efficiencies. We've gained share and share in a couple of our categories, including grass and outdoor insecticides, e-commerce is growing nicely.

我們現在正在優化許多不同的設施，優化我們的足跡，提高效率。我們在包括草和戶外殺蟲劑在內的幾個類別中獲得了份額和份額，電子商務成長良好。

Household penetration is stabilizing, younger cohorts are entering our categories. So to answer your question, we feel good about the overall dynamics of the business. We have one business that clearly underperformed for the quarter, and that affected our entire lawn and garden business.

家庭滲透率正在穩定，年輕族群正在進入我們的類別。因此，為了回答你的問題，我們對業務的整體動態感到滿意。我們有一項業務在本季度表現明顯不佳，這影響了我們整個草坪和花園業務。

That's very helpful, J.D. Thanks so much. Niko, I was hoping you could talk a little bit about the margin opportunity looking forward as we reflect on this current year with 1 quarter left, Central has done a very good job of supporting margins in a difficult environment.

這非常有幫助，J.D. 非常感謝。Niko，我希望您能談談未來的利潤率機會，因為我們回顧了今年還剩 1 個季度的情況，Central 在困難的環境中在支持利潤率方面做得非常好。

Could you talk a little bit more about what opportunity you have ahead of you? And maybe in broad strokes, what the puts and takes maybe as you look out to fiscal 2025, again, knowing that you haven't given formal guidance yet, but just so we think about things in broad strokes?

能多談談您面臨的機會嗎？也許從廣義上講，當您展望 2025 財年時，可能會考慮什麼看跌期權和看跌期權，因為您知道您尚未給出正式的指導，但只是為了讓我們從廣義上考慮問題？

Yes. Sure, Brad. It's going to be more of the same really. We have our cost and simplicity initiatives ahead of us. We've got a nice pipeline of initiatives that we plan on executing well into '25 and beyond. There's also portfolio optimization that you're going to see. This last quarter, we announced the wind down of the pottery business.

是的。當然，布拉德。真的會更相似。我們面臨著成本和簡單性的倡議。我們已經制定了一系列良好的計劃，計劃在 25 年及以後很好地執行這些計劃。您還將看到投資組合優化。上個季度，我們宣布結束陶器業務。

That business was underperforming both from a top line as well as a margin standpoint. So we're going to be pretty ruthless in terms of looking at the portfolio as well as cost out projects that we can continue to do. I would say too that just to pile on to what J.D. said, the live goods business was just devastating to Garden and even the company.

從營收和利潤率的角度來看，該業務的表現均不佳。因此，我們將非常無情地審視投資組合以及我們可以繼續做的項目的成本。我還要說的是，只是為了補充 J.D. 所說的，直播商品業務對 Garden 甚至公司來說都是毀滅性的。

And you look at margins would have expanded both garden and total company had that business just somewhat underperformed. It, in fact, contracted by 1,200 basis points, which is really tough to overcome. But getting back to your question, yes, we have every intention of continuing this journey on taking cost out, becoming more simple, focusing in on higher margin businesses.

你會發現，如果該業務表現稍差，那麼花園和整個公司的利潤率都會擴大。事實上，它收縮了 1,200 個基點，這確實很難克服。但回到你的問題，是的，我們完全有意繼續這趟旅程，降低成本，變得更加簡單，專注於利潤率更高的業務。

So I think it's just going to be more of the same. We'll obviously give a lot more color in late November when we lay out our guide and our plans for '25, we're kind of in the middle of putting those together. But I would say more of the same. It's a big push for the company.

所以我認為情況會更相似。顯然，我們會在 11 月下旬制定我們的指南和 25 年的計劃時提供更多的色彩，我們正在將這些內容放在一起。但我想說更多同樣的事情。這對公司來說是一個很大的推動。

And Niko, I'd say that we're still in the early innings of the cost and simplicity initiative, right? And we still have a lot of runway still in front of us.

Niko，我想說我們仍處於成本和簡單性計劃的早期階段，對吧？我們面前還有很長的跑道。

We really do. We really do. And getting back to that example out in Covington, the warehouse we did there. We took out four warehouses, consolidated them into that. Plus we had some ancillary other sort of surge warehouses that we're able to close down.

我們確實如此。我們確實如此。回到我們在卡溫頓的倉庫的例子。我們拿出四個倉庫，將它們合併到其中。另外，我們還有一些輔助的其他類型的臨時倉庫，我們可以關閉它們。

And then when you do a big project like that, it has a domino effect where it opens up space in other areas, too, that we can leverage. So a lot more to come there. And I think it's one of the benefits of growing through acquisition where you have a little bit of a longer runway in terms of really integrating and optimizing businesses.

當你做一個這樣的大專案時，它會產生骨牌效應，它也為其他領域開闢了我們可以利用的空間。所以還有很多事情要去那裡。我認為這是透過收購實現成長的好處之一，在真正整合和優化業務方面，你有更長的跑道。

That's great to hear. Thanks so much.

很高興聽到這個消息。非常感謝。

Bill Chappell, Truist Securities.

比爾‧查普爾 (Bill Chappell)，Truist 證券公司。

Good afternoon. Just to just to follow up on Garden and maybe you can help us parse through exactly what's going through on grass seed. And I think you have a write-off -- and more, I guess, specifically, Scott's talked about on their call that in lawns, they gained 700 basis points of market share, but they're going to do some heavy discounting because there was a glut of grass seed in the fourth quarter.

午安.只是為了跟進花園，也許你可以幫助我們準確地解析草籽的情況。我認為你有一個註銷 - 我想，具體來說，斯科特在他們的電話會議上談到，在草坪上，他們獲得了 700 個基點的市場份額，但他們將進行一些大幅折扣，因為那裡第四季草籽供應過剩。

And so I'm just trying to understand, it seems like you said excluding live goods, everything was fine. But according to at least your largest competitor, you're getting trounced and the grass seed business looks terrible. So any clarification there would be helpful?

所以我只是想理解，好像你說除了直播貨，一切都很好。但至少根據你最大的競爭對手的說法，你正在被打敗，草籽業務看起來很糟糕。那麼任何澄清會有幫助嗎？

Trounced? Trounced, is a strong term, Bill. And I'd say that they called out not to speak about the competition too much. But I think they call that strength in their lawns, which is a few different categories in grass seed, I don't believe that they called out any particular strength there. We know that we took share in grass seed. Grass seed has performed well for us.

慘敗？比爾，「慘敗」是一個很強烈的詞。我想說的是，他們呼籲不要過度談論競爭。但我認為他們在他們的草坪上稱之為力量，這是草籽中的幾個不同類別，我不相信他們在那裡召喚了任何特定的力量。我們知道我們分享了草籽。草籽對我們來說表現良好。

But let me explain a little bit about some of the market dynamics, what's happened over the last few years. We've seen some wild fluctuations in supply and demand over the last few years. And I'll speak to kind of from 2021 to 2024.

但讓我解釋一下一些市場動態，以及過去幾年發生的事情。過去幾年，我們看到供需出現了一些劇烈波動。我將談論 2021 年至 2024 年的情況。

First of all, at the beginning of that period, there was a drought that had a pretty significant impact on the harvest, so supply was low going into the pandemic, then we saw unprecedented demand for grass seed during the pandemic and consequently, rapid cost inflation as a result of that. And some of our varieties like turf-type tall Fescue, K31, Bermuda, Perennial Ryegrass, all of those saw significant increases.

首先，在那段時期之初，發生了一場乾旱，對收成產生了相當大的影響，因此在大流行期間供應量很低，然後我們看到大流行期間對草籽的需求空前，因此成本迅速上升由此導致的通貨膨脹。我們的一些品種，如草坪型高羊茅、K31、百慕達草、多年生黑麥草，所有這些都出現了顯著的增長。

Some of those doubled in cost and which is versus historical standards really unusual, really unprecedented. And the higher cost led farmers to start planting more acreage for grass seed. And then in the post-pandemic period, what we've seen is over the last 1.5 years or so, higher retail costs have forced the consumers to think otherwise.

其中一些成本翻了一番，與歷史標準相比，這確實不尋常，確實是前所未有的。成本上升導致農民開始種植更多面積的草籽。然後在疫情後時期，我們看到的是在過去 1.5 年左右的時間裡，更高的零售成本迫使消費者做出不同的想法。

So we've seen demand soften. We've seen unit declines, and that's exacerbated the situation. As we see this year's harvest coming in, we're coming off record prices a year ago that we paid. This year's harvest coming in with a solid crop. Supply chain is heavy everywhere, not just in our barns, but across every manufacturer that we're aware of, all retailers, and it's not just a domestic issue, it's international as well. So we're seeing heavy inventories.

所以我們看到需求疲軟。我們已經看到單位數量下降，這加劇了情況。當我們看到今年的收成即將到來時，我們的價格將低於一年前的記錄。今年的收成是豐收。供應鏈無所不在，不僅在我們的穀倉，而且在我們所知的每個製造商、所有零售商中，這不僅僅是一個國內問題，也是一個國際問題。所以我們看到庫存大量。

Therefore, prices have dropped significantly. And I'm talking about really this is new news in the last month or so, we've seen significant price drop, and that's what we're reacting to here.

因此，價格大幅下降。我說的是，這確實是上個月左右的新消息，我們看到價格大幅下跌，這就是我們在這裡做出的反應。

And we have to take a look at the net realizable value of that inventory, and that's really the reason the driving force behind the write-down.

我們必須看看該庫存的可變現淨值，這確實是減記背後的驅動力。

And I have another question on pet, but just to clarify, like does the grass seed go bad? Or you're just choosing to burn it up to take some supply out of the market?

我還有一個關於寵物的問題，但只是為了澄清一下，例如草籽會變質嗎？或者您只是選擇燒掉它以從市場上奪取一些供應？

Our grass seed can go bad over time if it sits too long, the germination rate will drop on grass seed. That's not so much of the case here. What we're doing here is marking to market, right? The market has dropped. So therefore, we have to lower the cost of our inventory.

如果放置時間太長，我們的草種子會隨著時間的推移而變質，草種子的發芽率會下降。這裡的情況並非如此。我們在這裡所做的就是以市場定價，對嗎？市場已經下跌。因此，我們必須降低庫存成本。

Got it. I understand. And then on pet, just kind of trying to understand both from the consumable and durable side, like how the category performed versus your expectations this year? And whether you see kind of the light at the end of the tunnel in terms of as we move into '25 kind of returning to a growth category as it's been historically.

知道了。我明白。然後在寵物方面，只是試圖從消耗品和耐用品方面了解，例如今年該類別的表現與您的預期相比如何？當我們進入 25 世紀，你是否看到隧道盡頭的曙光，就像歷史上那樣回歸成長類別。

Bill, I can comment on that. This is John. I would say drillable have been a bit softer than what we had planned as we entered the year. Now keep in mind that 80% of our business is consumables and 20% is durables. And we're growing consumables, I think mid-single digits and durables continue to decline, I think, low double digits.

比爾，我可以對此發表評論。這是約翰。我想說的是，可鑽的情況比我們進入今年時的計畫要軟一些。現在請記住，我們的業務 80% 是消耗品，20% 是耐用品。我們正在增加消耗品，我認為中等個位數，耐用品繼續下降，我認為低兩位數。

So Niko talked about softening pet ownership, macroeconomic environment. We're also seeing low-priced imports coming in via the e-comm channel. We can't really measure that in terms of we don't have good syndicated data, but we know it's having an impact, right? And we're staying really close to it. Long term, we see these categories growing low to mid-single digits, for sure. But short term, this durable headwind, we just got to stay close to it and work our way through it as we've been.

因此，尼科談到了寵物所有權的軟化和宏觀經濟環境。我們也看到低價進口商品透過電子商務管道進入。我們無法真正衡量這一點，因為我們沒有良好的聯合數據，但我們知道它正在產生影響，對嗎？我們離它非常近。從長遠來看，我們肯定會看到這些類別的成長幅度為低至中個位數。但從短期來看，這種持久的逆風，我們只需要保持接近它並像以前一樣努力克服它。

Yes. And I think that's right what John said is spot on. And we're seeing, again, on top of the category somewhat softening, because you're seeing adoption rates that are down and also the penetration down, particularly in dog, cat has remained a little more stable. We have seen some low-cost competitors coming in from Asia and really taking some share, both via Amazon, but also some of the other online Asian competitors.

是的。我認為約翰說的很對。我們再次看到，該類別的頂部有所軟化，因為您看到採用率下降，滲透率也下降，特別是在狗方面，貓的滲透率仍然保持穩定一些。我們看到一些來自亞洲的低成本競爭對手透過亞馬遜以及其他一些亞洲線上競爭對手確實佔據了一些份額。

And so we have to figure out what that's doing to the category, is the category actually up and just losing share to some of the Asian competitors or is the category still down. But some work to do there. I think what you're going to see in the future is obviously a portfolio that's more skewed towards consumables. And I think that's where we need to be.

因此，我們必須弄清楚這對這個類別產生了什麼影響，這個類別實際上是在上升，只是失去了一些亞洲競爭對手的份額，還是這個類別仍然在下降。但那裡還有一些工作要做。我認為你將來會看到的顯然是一個更偏向消費品的投資組合。我認為這就是我們需要做到的。

Yes. And just to add on that, our e-com business, as Niko said, is very healthy. We gained share. It's 28% of our pet business now. We're going to continue to lean into that channel. That is the fastest-growing channel. And pet specialty remains a bit soft. We're managing through that as well.

是的。除此之外，正如 Niko 所說，我們的電子商務業務非常健康。我們獲得了份額。現在它占我們寵物業務的 28%。我們將繼續傾向於該管道。這是成長最快的管道。寵物專業仍然有點疲軟。我們也在解決這個問題。

Great. Thanks for the color.

偉大的。謝謝你的顏色。

Jim Chartier, Monness, Crespi and Hardt.

吉姆·查蒂爾、蒙尼斯、克雷斯皮和哈特。

Hi. Thanks for taking my question. Excluding the write-down in fourth quarter, can you just talk about some of the other margin dynamics maybe that we should consider?

你好。感謝您提出我的問題。排除第四季度的減記，您能否談談我們可能應該考慮的其他一些利潤動態？

Yes. I mean, I'll just start from the beginning. If you look at on a non-GAAP basis year-to-date through Q3, a year ago, we were at $2. This year, we're at $2.31. So we feel really great about the business. We feel like we've put together three solid quarters. We had this come up with grass seed, and we have to deal with it. It gets back to the net realizable value of that inventory. We have to do the right thing.

是的。我的意思是，我將從頭開始。如果你以非公認會計準則為基礎，從年初至今到第三季度，我們的股價是 2 美元。今年，我們的價格為 2.31 美元。所以我們對這項業務感覺非常好。我們感覺我們已經完成了三個堅實的季度。我們拿出了草籽，我們必須處理它。它回到該庫存的可變現淨值。我們必須做正確的事。

I would add to that, what J.D. had mentioned, we had a very, very challenging year in live goods. So we sort of have those two businesses that are out there that are a little bit of a drag.

我想補充一點，正如 J.D. 所提到的，我們在直播商品方面度過了非常非常具有挑戰性的一年。因此，我們的這兩項業務有點拖累。

Overall, though, if I reflect back on Q3, our Garden sales were actually up double digits. Our grass seed sales were up double digits. So we actually had a pretty good quarter in grass in Q3. And then across the business, the margins still continue to expand, really due to two forces. One is our cost and simplicity program and then also moderating inflation and those two things are contributing to some really nice margin expansion.

但總的來說，如果我回顧第三季度，我們的花園銷售額實際上成長了兩位數。我們的草籽銷售量成長了兩位數。所以我們實際上在第三季的草地上有一個相當不錯的季度。然後在整個業務中，利潤率仍在繼續擴大，這實際上是由於兩股力量。一是我們的成本和簡單性計劃，然後是溫和的通貨膨脹，這兩件事正在為一些非常好的利潤擴張做出貢獻。

Okay. And then you talked about some new innovations coming to market and then some marketing. I guess how do you feel about kind of the innovation pipeline coming into next year? And how are you thinking about advertising spend? And what are you doing to kind of drive the business?

好的。然後您談到了一些即將上市的新創新以及一些行銷。我想您對明年即將推出的創新管道有何看法？您如何看待廣告支出？您正在做什麼來推動業務？

I mean, I'll give some overarching comments, and I'll kick it over to J.D. and John, I think you can never have enough innovation and great ideas. So that's an area where we feel like we can really improve and there is an effort to improve on that to bring new fresh ideas to the market. It's great for the consumer and great for the retailer. We're pretty pleased with where we are, but we feel like we can do a lot better.

我的意思是，我會給出一些總體評論，然後我會把它交給 J.D. 和約翰，我認為你永遠不會有足夠的創新和偉大的想法。因此，我們覺得這是一個我們真正可以改進的領域，並且正在努力改進，以便為市場帶來新的想法。這對消費者和零售商都有好處。我們對自己的現狀感到非常滿意，但我們覺得自己可以做得更好。

And I think on top of that, not only do we want those to come organically, but they're going to come through M&A as well by bringing new DNA into the company, new thought partners, fresh ideas. So those are the areas that we really want to go after. And then we want to go after areas where we have a right to win. So as we mentioned earlier, we really want to be in consumables on the pet side.

我認為最重要的是，我們不僅希望這些有機地出現，而且還透過併購為公司帶來新的 DNA、新的思想合作夥伴和新的想法。這些才是我們真正想要追求的領域。然後我們想要追求我們有權利獲勝的領域。正如我們之前提到的，我們真的很想涉足寵物方面的消耗品。

On the garden side, we want to also be in consumables, we're divesting pottery. So I think we can get better. We've got a long ways to go, but I think we've made some really nice progress. And I'll kick it over to John and J.D. to give any details.

在花園方面，我們也希望進入消費品領域，我們正在剝離陶器。所以我認為我們可以變得更好。我們還有很長的路要走，但我認為我們已經取得了一些非常好的進展。我會將其交給 John 和 J.D. 提供詳細資訊。

Yes. Just to jump in on pet, Niko hit the nail on the head, right? Our focus really is pet consumables. We continue to build our capability and innovation and insights. And I think you can never have enough, but our pipeline certainly hasn't improved, and we feel good about it as we head into fiscal '25. On the marketing side, we've really pivoted to digital. And the investment behind that, the capability that we've built behind that is really improved. And I think you see it showing up in our market shares on e-comm, and we'll continue to do that.

是的。只是為了加入寵物，尼科擊中了要害，對吧？我們的重點確實是寵物消耗品。我們繼續增強我們的能力、創新和洞察力。我認為永遠都不夠，但我們的管道肯定沒有改善，當我們進入 25 財年時，我們對此感覺良好。在行銷方面，我們確實已經轉向數位化。這背後的投資，我們在這背後建立的能力確實得到了改善。我認為您會看到它出現在我們的電子商務市場份額中，我們將繼續這樣做。

Yes. And then similar story on the garden side as well, Jim. We feel good about the innovation pipeline. It's building nicely. We've made nice progress over the last couple of years. We still have a ways to go. We're in the process right now of landing our 2025 listings with our customers, finalizing line review results from the past several months, and we feel good about where we are.

是的。吉姆，花園那邊也有類似的故事。我們對創新管道感覺良好。它建設得很好。過去幾年我們取得了很大進展。我們還有很長的路要走。我們目前正在與客戶一起確定 2025 年的清單，最終確定過去幾個月的生產線審核結果，我們對目前的情況感到滿意。

I think we'll see nice growth in our branded portfolio for next year. I don't want to show too many of my cards right now, but I do think that we'll see SKU store combinations, total distribution points grow for next year. So we're encouraged by that. And I think that speaks to a building innovation pipeline.

我認為明年我們的品牌組合將會出現良好成長。我現在不想展示太多的卡片，但我確實認為明年我們會看到 SKU 商店組合、總分銷點增長。所以我們對此感到鼓舞。我認為這涉及建立創新管道。

Similar to John, our marketing tactics will be focused more on lower funnel type conversion type tactics. And I think that that's appropriate to this type of a business environment where the consumer is seeking value.

與約翰類似，我們的行銷策略將更專注於下漏斗類型的轉換類型策略。我認為這適合消費者尋求價值的這種商業環境。

Great. Thank you

偉大的。謝謝

Bob Labick, CJS Securities.

拉比克 (Bob Labick)，CJS 證券公司。

Hi. This is Will on for Bob. Maybe you can add some color to the components necessary for a return to revenue for Garden going forward?

你好。這是鮑伯的威爾。也許您可以為花園未來恢復收入所需的組件添加一些色彩？

Will, can you give me a little more color on that question?

威爾，你能給我更多關於這個問題的資訊嗎？

can you talk more about the components necessary for a return to revenue for garden going forward? I know you're talking about the innovation pipeline? And then maybe you can talk about --

您能多談談花園未來恢復收入所需的組成部分嗎？我知道你在談論創新管道？然後也許你可以談談--

You mean growth?

你說成長？

Yes, growth.

是的，成長。

Okay. I think it largely speaks to what I was just addressing. Some of that is new distribution, which we are working on right now, finalizing line review results. I think we'll see nice gains in distribution. Of course, in a seasonal business, weather would be nice. It's tough to plan on. So we think about -- Will, we think about the controllable causal factors, things like distribution, things like our investment and lower funnel marketing activities, execution at retail. We feel good about all of those things. What we need also is some participation from Mother Nature in the weather standpoint. And if we get that next year, then I feel very good about this business getting back on profile from a revenue standpoint.

好的。我認為這很大程度上說明了我剛才所說的內容。其中一些是新的發行版，我們現在正在研究，最終確定生產線審查結果。我認為我們會在分銷方面看到不錯的收益。當然，對於季節性業務來說，天氣會很好。很難制定計劃。所以我們會考慮——我們會考慮可控的因果因素，例如分銷、我們的投資和下漏斗行銷活動、零售執行等。我們對所有這些事情感覺良好。我們也需要大自然在天氣上的一些參與。如果我們明年能做到這一點，那麼從收入的角度來看，我對這項業務重新建立形象感到非常高興。

We actually came out with some new packaging this year in our controls business that was extremely successful, both online and in brick-and-mortar. And then the other thing I would add to J.D.'s point as far as controls go, the weather actually has cooperated, it's hot and wet, which brings all the bugs out. And so we've had a very nice control year so far. And largely, in many ways, driven by the packaging as well as very good weather for bugs.

實際上，今年我們在控制業務中推出了一些新包裝，無論是在網路上還是在實體店都非常成功。然後我想補充一下 J.D. 的觀點，就控製而言，天氣實際上很配合，又熱又濕，這使得所有的蟲子都出來了。到目前為止，我們已經度過了非常好的控制年。在很大程度上，在很多方面，都是由包裝以及非常適合蟲子的天氣推動的。

All right. Great. Thank you.

好的。偉大的。謝謝。

Brian McNamara, Cannacord Genuity.

布萊恩·麥克納馬拉，Cannacord Genuity。

Hey, good afternoon. Thanks for taking our questions. Most of our questions have already been answered, but I'd like a little more clarity on the pet durables. I think last quarter, you said they were still double digits but kind of improved sequentially. I think you said that they were down low double digits this time. Is that -- I'm assuming that's a further improvement. It just seems like it's been a long grind here.

嘿，下午好。感謝您回答我們的問題。我們的大多數問題已經得到解答，但我想更清楚地了解寵物耐用品。我想上個季度，你說它們仍然是兩位數，但有所改善。我想你說過這次他們的股價下跌了兩位數。我認為這是進一步的改進。看來這裡已經磨練很久了。

Yes. It has been a long, you're right. I would agree with that. As Niko said, softening pet ownership, the macroeconomic headwinds and products coming in from imports coming in from Asia via e-com. That last one has really gotten on our radar over this last quarter, and we're trying to really quantify the impact relative to the category in our business.

是的。已經很久了，你說得對。我同意這一點。正如尼科所說，寵物擁有量的減少、宏觀經濟的逆風以及透過電子商務從亞洲進口的產品。最後一個問題在上個季度確實引起了我們的關注，我們正在嘗試真正量化相對於我們業務類別的影響。

The category still remains soft. I wouldn't call it an improvement from quarter-to-quarter. I'd probably call it kind of a stabilization from quarter-to-quarter. And we're just going to stay really close to it, manage it appropriately. But yes, it's been a long burn here for sure.

該類別仍然疲軟。我不會稱之為逐季度的改進。我可能會將其稱為逐季度的穩定。我們將密切關注它，並對其進行適當的管理。但是，是的，這裡肯定經歷了很長時間的燃燒。

And there's also more commoditization going on with durables. They become brand is less important for the most part, and there's a lot of commoditization going on and a little bit of a race to the bottom. So it's not something that we're eager to participate in, which, again, is why we're going to probably focus on more consumables, where we can build brand and really connect with our customers and consumers.

耐久財的商品化程度也越來越高。在大多數情況下，它們變得品牌不再那麼重要，並且存在大量商品化和一些逐底競爭。所以這不是我們渴望參與的事情，這也是為什麼我們可能會關注更多的消費品，在那裡我們可以建立品牌並真正與我們的客戶和消費者建立聯繫。

Yes. And just to build on that, we are -- like I said before, 80-20 consumable to durable, and Niko is right, a lot of durable categories are heavily private label. Categories that have been or are being commoditized a bit. Yes.

是的。在此基礎上，我們——就像我之前說過的那樣，從 80-20 種消費品到耐用品，Niko 是對的，很多耐用品類別都是自有品牌。已經或正在商品化的類別。是的。

All right. Great. And then secondly, I mean, we've heard a whole host of consumer companies talking about the consumer weakening. A lot of companies actually saying July has been a really weak month. I'm curious what you're seeing there. And then just relative to -- you throw that into kind of maybe the struggles we're seeing in pet ownership from maybe a cyclical standpoint? Like I mean we have the humanization trend all that stuff that's kind of supportive, but it feels like those old reliable kind of structural trends are weakening there. So how should we think about that maybe a potential weakening macro environment?

好的。偉大的。其次，我的意思是，我們聽到很多消費品公司都在談論消費者的疲軟。事實上，許多公司都表示 7 月是一個非常疲軟的月份。我很好奇你在那裡看到了什麼。然後，相對於——從週期性的角度來看，你將其歸類為我們在寵物飼養方面看到的困境？就像我的意思是，我們有人性化趨勢，所有這些都是支持性的，但感覺那些舊的可靠的結構趨勢正在減弱。那我們該如何看待宏觀環境潛在的疲軟呢？

Yes. I mean I would say that we are seeing value-seeking behavior by the consumer. We see that in our business. The good news is, in many of our categories, we have good, better, best. So we will see the consumer just buying good as opposed to the more premium product that we have in the category. So we are somewhat covered off there, which is great.

是的。我想說的是，我們看到了消費者的價值追求行為。我們在我們的業務中看到了這一點。好消息是，在我們的許多類別中，我們都有好的、更好的、最好的。因此，我們將看到消費者只購買優質產品，而不是我們該類別中更優質的產品。所以我們在那裡得到了一些保護，這很好。

On the pet side, our largest customer is Costco, which I would submit is a real big value play. People go there for value. That's why the pack sizes are bigger. We do very well there. And so I think in many ways, we sort of hit the sweet spot of that value-seeking behavior, but we also need to get better and recognize that, that's an ongoing trend. I would say, overall, what we're seeing on the pet side is really the boomers are kind of a wildcard. You're seeing some of their pets as they pass away, they're not re-upping with new pets. And I think that's been probably the biggest area of weakness.

在寵物方面，我們最大的客戶是 Costco，我認為這是一個真正的大價值遊戲。人們去那裡是為了價值。這就是包裝尺寸更大的原因。我們在那裡做得很好。因此，我認為在很多方面，我們都達到了價值追求行為的最佳點，但我們也需要變得更好，並認識到這是一個持續的趨勢。我想說，總的來說，我們在寵物方面看到的是嬰兒潮世代確實是一種通配符。你會看到他們的一些寵物去世後，他們不會再養新寵物。我認為這可能是最大的弱點。

On the positive side, we're seeing Gen Z and millennials really get into the category as well as on the garden side, we're seeing a younger cohort come into these hobbies and categories. So that bodes well for the future. I think we were going through a little bit of a rough patch, and it should sort itself out soon, and we can get more back into a more normalized sort of growth type of trajectory.

從積極的一面來看，我們看到 Z 世代和千禧世代真正進入了這個類別，而從積極的一面來看，我們看到更年輕的一代進入了這些愛好和類別。所以這對未來來說是個好兆頭。我認為我們正在經歷一段艱難的時期，它應該很快就會自行解決，我們可以更多地回到更正常化的成長類型軌跡中。

Great. Thanks.

偉大的。謝謝。

Shovana Chowdhury, JP Morgan.

肖瓦娜‧喬杜里，摩根大通。

Hi. Thanks for taking our question. I have a couple questions. With the cash of like about $570 million on your balance sheet, can you give us more details on what you're seeing in the market in terms of M&A? And I think you mentioned you're also looking M&A into digital and e-commerce. If you could please add a little bit more color?

你好。感謝您提出我們的問題。我有幾個問題。您的資產負債表上有大約 5.7 億美元的現金，您能否向我們詳細介紹一下您在市場上看到的併購情況？我想你提到你也在考慮數位化和電子商務領域的併購。如果可以請添加一點顏色嗎？

Sure. Yes, we're very proud of our cash balance. We feel like it makes us a very good buyer. We can get to speed to close much quicker because we've got that amount of cash. And again, we're looking in the garden and pet categories. My bias right now is to lean more into pet given the fact that we did the four Garden acquisitions back in 2021 and then more importantly, pet consumables.

當然。是的，我們對我們的現金餘額感到非常自豪。我們覺得這讓我們成為一個非常好的買家。我們可以更快地完成交易，因為我們有這麼多現金。我們再次關注花園和寵物類別。鑑於我們在 2021 年收購了四家 Garden，而且更重要的是寵物消耗品，我現在的偏見是更多地傾向於寵物。

So those are the areas we're looking at. I would say, overall, right now, the climate is a little bit slower on the M&A front. I think the reason is a lot of the businesses that have been bought by sponsors, where a lot of the sponsors sort of overpaid. They paid higher multiples. They're a little remiss to come out and try to sell because multiples have come down. And so I think they're taking a little bit more of a wait-and-see attitude at the moment. So we aren't seeing quite as many deals as we did, call it, two, three years ago. But that's going to be our primary use of cash right now is M&A.

這些就是我們正在關注的領域。我想說，整體而言，目前併購方面的氣氛有點緩慢。我認為原因是很多企業都被贊助商收購了，而許多贊助商支付的費用有點過高。他們支付了更高的倍數。由於市盈率已經下降，他們出面嘗試出售有點失職。所以我認為他們目前採取的是觀望態度。因此，我們看到的交易數量不如兩三年前那麼多。但目前我們現金的主要用途是併購。

Secondarily, we want to invest in the business, and that's through as well as digital capabilities. And also on the M&A front, we do look at digital and e-comm type of acquisitions and capabilities, because we see that as the fastest growing channel right now in both pet and garden. And it's an area where we frankly do need to get better up our game and really set us up for lots of success in the future.

其次，我們希望透過數位能力投資業務。在併購方面，我們確實關注數位和電子商務類型的收購和能力，因為我們認為這是目前寵物和花園領域成長最快的管道。坦白說，在這個領域我們確實需要改進我們的遊戲，並真正為我們未來的成功做好準備。

Another quick question. In your commentary, you mentioned in the pets, the POS outperform shipments. So does that mean -- was there any retailer inventory pressures? Or is inventory in a good shape exiting the quarter? If you could add more color. Thanks.

另一個快速問題。在您的評論中，您在寵物中提到，POS 的表現優於發貨。那麼這是否意味著零售商存在庫存壓力？或本季庫存狀況良好？如果你可以添加更多的顏色。謝謝。

Yes. This is John. I can take that one. Our pet retail inventory has been in a good position throughout the year. That doesn't change the fact that across the industry, there is a focus to tighten inventory. So are we going to see some customers being a little more successful and having new programs against it? Absolutely. As we continue to want to tighten inventory on our end as well. But I think our inventory position is in good shape. You also do see some changes quarter-to-quarter, and that might be very well what we're seeing right here. But we also feel good that POS is outpacing ships.

是的。這是約翰。我可以接受那個。我們的寵物零售庫存全年都處於良好狀態。這並沒有改變整個產業都在關注收緊庫存的事實。那麼我們是否會看到一些客戶取得更大的成功並針對它制定新的計劃？絕對地。因為我們也繼續希望收緊庫存。但我認為我們的庫存狀況良好。您還確實看到了季度與季度之間的一些變化，這可能正是我們在這裡看到的。但我們也很高興看到 POS 的發展速度超過了船隻。

On the pet side, we don't have a lot of overhang in the market right now at retail. We feel really good about our inventories.

在寵物方面，我們目前的零售市場上沒有太多庫存。我們對庫存感覺非常好。

And I think on the garden side, it's in aggregate, we exited the quarter with inventories up mid-single digits. And -- but that, of course, is -- that's in aggregate. If you look at it more on a category basis, I said earlier that our grass inventory and most companies grass inventories on the high side. So it's lumpy. But having said that, in aggregate, we're not in a bad position at all. With the season still ahead of us, so we still have a fall season, we should be able to burn through some of that inventory and be in a good position in advance of the season next year.

我認為在花園方面，總的來說，我們在本季結束時庫存上升了中個位數。而且——當然，這是——總體而言。如果你更從品類的角度來看，我之前說過，我們的草庫存和大多數公司的草庫存都偏高。所以是塊狀的。但話雖如此，總的來說，我們的處境一點也不差。由於季節仍在前方，所以我們還有秋季，我們應該能夠消耗掉一些庫存，並在明年的季節之前處於有利位置。

One last question, if I may. Given that, if I'm not mistaken, this is the third year in a row that you have had bad luck with weather and of course, it's uncontrollable. So given that the Garden segment, fiscal third quarter is the biggest business for live plants. Are you thinking of any other businesses or anything else you might be looking into, to somehow offset, let's say, the live business in future fiscal years should there be another bad luck with weather?

最後一個問題，如果可以的話。有鑑於此，如果我沒記錯的話，這已經是你連續第三年遭遇糟糕的天氣了，當然，這是無法控制的。因此，考慮到花園業務，第三財季是活植物的最大業務。您是否正在考慮任何其他業務或您可能正在研究的任何其他業務，以某種方式抵消未來財政年度的活躍業務（如果天氣再次出現壞運氣）？

Yes. We are always looking at that. In fact, that's why when I spoke a little bit earlier about M&A, we were probably a little more biased on the pet side, because that has much less seasonality to it and can help offset some of the lumpiness that we see on the garden side. So that's the reason for pivoting a little bit more over to pet.

是的。我們一直在關注這一點。事實上，這就是為什麼當我早些時候談到併購時，我們可能對寵物方面有更多的偏見，因為它的季節性要小得多，並且可以幫助抵消我們在花園方面看到的一些塊狀情況。這就是我們更多地轉向寵物的原因。

Great. Thank you. I'll pass that on.

偉大的。謝謝。我會把它傳遞下去。

William Reuter, Bank of America.

威廉·路透，美國銀行。

Hi. Good afternoon. When you were responding about M&A being one of the larger uses of cash, you mentioned there's fewer opportunities out there. Are there opportunities out there almost entirely tuck-ins, or could there be larger M&A opportunities?

你好。午安.當您回答併購是現金的較大用途之一時，您提到那裡的機會較少。是否存在幾乎完全包含在內的機會，或者是否存在更大的併購機會？

Yes. I mean all of the above, the larger ones obviously take longer to do. They're a little bit harder to do. So we're really looking at both. We have a two-pronged approach in terms of M&A. We have a team actually is dedicated to the larger deals. And then we have also another team that's focused on the bolt-ons and the tuck-ins. So we're looking at both.

是的。我的意思是上述所有內容，較大的人顯然需要更長的時間才能完成。他們做起來有點難。所以我們確實在考慮兩者。我們在併購方面採取雙管齊下的方法。我們有一個團隊實際上致力於更大的交易。然後我們還有另一個團隊專注於螺栓固定和折疊。所以我們正在考慮兩者。

Got it. And then you moved out of this California facility. You also have this four DC consolidation into one. Are there any facilities that are going to be up for sale that have meaningful value that are going to change the complexion of your balance sheet?

知道了。然後你搬出了加州的這個工廠。您也可以將這四個 DC 合併為一個。是否有任何即將出售的設施具有有意義的價值，會改變您的資產負債表的結構？

No. I mean not materially. We have a lot of cash already. So it's not going to. And then anything, obviously, that we would sell, we would non-GAAP that. So we're really not in the real estate business. So yes, I don't see anything that's of any sort of magnitude.

不。我的意思是不是物質上的。我們已經有很多現金了。所以它不會。顯然，我們要出售的任何東西，我們都會按照非公認會計準則出售。所以我們確實不從事房地產業務。所以是的，我沒有看到任何規模的事情。

Okay. And then in response to one of the earlier questions on the call, I think you mentioned 1,200 basis points. I think that was the margin for the live good component of the lawn and garden business?

好的。然後，在回答電話會議中之前的一個問題時，我認為您提到了 1,200 個基點。我認為這就是草坪和花園業務的優質部分的利潤？

Yes, that was the contraction of live goods.

是的，那就是活貨的收縮。

Which is like 17% of the quarter typically. Is that right?

通常相當於該季度的 17%。是這樣嗎？

I'm not tracking on how much of the quarter is. I was only speaking to the live goods business vis-à-vis the prior year, how much the margins had contracted. I just was trying to give an order of magnitude on the degree to which it had gone down and why it affected not only garden, but the whole company.

我沒有追蹤該季度的時間。我只是談論直接商品業務與前一年相比，利潤縮水了多少。我只是想給出一個數量級，說明它下降的程度，以及為什麼它不僅影響花園，而且影響整個公司。

Have you shared how much live goods typically is in your third quarter before?

您之前是否分享過您的第三季直播商品通常有多少？

No. We don't call out the BUs that specifically in a quarter. I would say that we said this pretty consistently. Live goods is very Q3 specific. So it is doing a massively disproportionate amount of its volume in that quarter. So it's a very important quarter.

不。我們不會在一個季度中專門提及這些業務單位。我想說，我們說得非常一致。直播商品非常具有第三季的特色。因此，該季度的銷量與其銷量大得不成比例。所以這是一個非常重要的季度。

Okay. That's all for me. Thank you.

好的。這就是我的全部。謝謝。

Carla Casella, JPMorgan.

卡拉‧卡塞拉，摩根大通。

Hi. You've already taken some questions on the subject. But in terms of international freight, shipping, kind of what you're seeing there and just wondering what you're seeing there in terms of costs? And then do you have any goods that at this point are exposed to tariffs or could be exposed if we get a more robust tariff regime?

你好。您已經就該主題提出了一些問題。但就國際貨運、運輸而言，您在那裡看到了什麼，只是想知道您在成本上看到了什麼？那麼，目前是否有任何商品面臨關稅，或者如果我們制定更強有力的關稅制度，可能會面臨關稅？

Yes. We haven't been impacted too much by ocean freight. It's fairly stable. We're less than like 8% of our goods are coming in from Asia. We still would have some exposure to tariffs, but it's probably a lot lower than what it was during the first Trump regime, if I'm going to go there when the tariffs were first put in place. So yes, it's not going to have a huge impact, but it will have an impact.

是的。我們並沒有受到海運太大的影響。是相當穩定的。我們不到 8% 的貨物來自亞洲。我們仍然會面臨一些關稅風險，但如果我要在關稅首次實施時去那裡，那麼它可能比第一個川普政權期間要低得多。所以，是的，它不會產生巨大的影響，但它會產生影響。

And can you say when it first happened in the last regime, what were the best mitigants? Was it -- how much of it would you say you would you had to do in pricing or move production? And what are the best opportunities now to mitigate these cycles?

您能否說一下，當這種情況在上屆政權中首次發生時，最好的緩解措施是什麼？您認為您必須在定價或轉移生產方面做多少工作？現在緩解這些週期的最佳機會是什麼？

Yes, it was like a three-pronged approach where we started looking for other places to source the goods. So other countries in Asia, I think a lot of folks were doing that. In many cases, we had some of our vendors in Asia assume some of the risks. So they would give us a break on price to help offset the tariff.

是的，這就像一個三管齊下的方法，我們開始尋找其他地方來採購貨物。我認為亞洲其他國家很多人都在這樣做。在很多情況下，我們讓亞洲的一些供應商承擔一些風險。因此，他們會給我們價格優惠，以幫助抵消關稅。

And then third was flat out pricing, which is a little bit more blunt where you just go out and take a price increase because of the tariff. And then third was Flatout pricing, which is a little bit more blunt, where you just go out and take a price increase because of the tariffs.

第三是平價定價，這有點生硬，你只是因為關稅而採取價格上漲。第三種是 Flatout 定價，這種定價有點生硬，你只是因為關稅而採取價格上漲的方式。

Okay, great. Thanks a lot.

好的，太好了。多謝。

This was our last question. Thank you everyone for joining our call today. The IR team is available to answer any additional questions you may have. Turning it back to Rob now.

這是我們最後一個問題。感謝大家今天加入我們的電話會議。IR 團隊可以回答您可能有的任何其他問題。現在把話題轉回羅布身上。

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.

今天的會議到此結束。此時您可以斷開線路，我們感謝您的參與。