Scotts Miracle-Gro Co (SMG) 2023 Q2 法說會逐字稿

Good morning, and welcome to The Scotts Miracle-Gro Company's Q2 2023 Earnings Conference Call. After the speaker presentation, there will be a question-and-answer session. (Operator Instructions) I would now like to hand the call over to Investor Relations lead for Scotts Miracle-Gro, Aimee DeLuca. Please go ahead.

早上好，歡迎來到 Scotts Miracle-Gro 公司的 2023 年第二季度收益電話會議。演講者介紹結束後，將進行問答環節。 （操作員說明）我現在想將電話轉給 Scotts Miracle-Gro 的投資者關係負責人 Aimee DeLuca。請繼續。

Thank you, and good morning. Welcome to The Scotts Miracle-Gro Second Quarter Earnings Conference Call. Joining me this morning are Chairman and CEO, Jim Hagedorn; our President and Chief Operating Officer, Mike Lukemire; Matt Garth, our Chief Financial Officer; and Chris Hagedorn, Group President of Hawthorne. In a moment, Jim, Mike and Matt will share some prepared remarks, and then we'll open the call to your questions.

謝謝，早上好。歡迎來到 Scotts Miracle-Gro 第二季度收益電話會議。今天早上和我一起的是董事長兼首席執行官 Jim Hagedorn；我們的總裁兼首席運營官 Mike Lukemire；我們的首席財務官 Matt Garth；和 Hawthorne 集團總裁 Chris Hagedorn。稍後，Jim、Mike 和 Matt 將分享一些準備好的評論，然後我們將開始通話以回答您的問題。

As always, we expect to make forward-looking statements, so I want to caution everyone that our actual results could differ materially from what we relate today. Please refer to our Form 10-K, which was filed with the Securities and Exchange Commission, so that you may familiarize yourself with the full range of risk factors that could impact our results.

與往常一樣，我們希望做出前瞻性陳述，所以我想提醒大家，我們的實際結果可能與我們今天的結果大不相同。請參閱我們向美國證券交易委員會提交的 10-K 表格，以便您熟悉可能影響我們結果的所有風險因素。

I've already scheduled time with many of you after the call to fill in any gaps. Anyone who'd like further discussion can call me directly at (937) 578-5621, and we'll work to set up some time as quickly as possible. Also, please note that today's call is being recorded, and an archived version of the call will be published on our website at investor.scotts.com.

在電話會議結束後，我已經安排了與你們中的許多人的時間，以填補任何空白。任何想要進一步討論的人都可以直接致電 (937) 578-5621 與我聯繫，我們會盡快安排時間。另外請注意，今天的電話會議正在錄音中，電話會議的存檔版本將發佈在我們的網站 investor.scotts.com 上。

With that, let's get started. I'll turn the call over to Jim Hagedorn to begin. Jim?

有了這個，讓我們開始吧。我會把電話轉給 Jim Hagedorn 開始。吉姆？

Thanks, Aimee. Good morning, everyone. We have plenty to cover. But if I had to narrow it down to a single theme, it would go like this. It's been a hell of a year. As rough as it was, we're in a better place, and we've accomplished it without diluting our shareholders.

謝謝，艾梅。大家，早安。我們有很多東西要講。但如果我必須將它縮小到一個主題，它會是這樣的。這是地獄般的一年。儘管困難重重，但我們處在一個更好的位置，而且我們在不稀釋股東權益的情況下實現了這一目標。

Considering where we started, we've made progress in several important fronts in a very short period of time. It's a trajectory we expect to continue through fiscal '23 and fiscal '24.

考慮到我們的起點，我們在很短的時間內在幾個重要方面取得了進展。我們預計這一軌跡將持續到 23 財年和 24 財年。

The first half of fiscal '23 is a testament to the powerful franchise of our core business. It's a reliable generator of cash that will enable us to materially delever, improve cash flow and invest in growth.

23 財年上半年證明了我們核心業務的強大特許經營權。它是可靠的現金來源，將使我們能夠實質性地去槓桿化、改善現金流並投資於增長。

Just about a year ago, we were looking at free cash flow of negative $1.2 billion. We reported misses in our sales numbers in the Consumer and Hawthorne businesses. We were stacked up with significantly more inventory than we needed. Cost of goods was rising and margin was declining.

就在大約一年前，我們的自由現金流為負 12 億美元。我們報告了 Consumer 和 Hawthorne 業務的銷售數字缺失。我們堆滿了比我們需要的多得多的庫存。商品成本上升，利潤率下降。

Without immediate actions, we were facing near certain busting of our bank covenants. It was a tense and cruel time. But our associates responded, They never wavered or lost their way. They stayed engaged and kept their heads up. They've executed upon our plans with grit and determination. It's what we and our people do best.

如果不立即採取行動，我們的銀行契約幾乎肯定會遭到破壞。那是一段緊張而殘酷的時光。但我們的同事回應說，他們從未動搖或迷失方向。他們保持訂婚狀態，並昂首挺胸。他們以毅力和決心執行了我們的計劃。這是我們和我們的員工最擅長的。

Today, free cash flow was favorable, improving nearly $600 million through our first half. We're reaffirming our guidance of generating $1 billion in free cash flow through fiscal '24. We're living within our credit facility covenants. I do not see leverage compliance issues going forward as we're looking at the low 5x range by fiscal year-end. I will restate that Mike Lukemire and I are pushing to do even better in that time frame.

今天，自由現金流是有利的，上半年增加了近 6 億美元。我們重申我們的指導意見，即通過 24 財年產生 10 億美元的自由現金流。我們遵守我們的信貸安排契約。我認為未來不會出現槓桿合規問題，因為我們正在考慮到財政年度結束時的低 5 倍範圍。我要重申 Mike Lukemire 和我正在努力在那個時間範圍內做得更好。

Cost of goods is improving, too. While we expect commodity costs to be up almost $100 million over fiscal '22, this is about 20% less than we projected as recently as the end of Q1. These improvements will not show up in margin rate until we work through our higher-priced inventory. We expect our gross margin rate to fall slightly below last year before achieving more significant margin recovery in fiscal '24.

商品成本也在提高。雖然我們預計商品成本將比 22 財年增加近 1 億美元，但這比我們最近在第一季度末的預測低約 20%。在我們處理高價庫存之前，這些改進不會體現在保證金率上。我們預計我們的毛利率將略低於去年，然後才能在 24 財年實現更顯著的利潤率回升。

Through the first 6 months, SG&A was down $44 million due to the cost reduction and efficiency work of Project Springboard, which continues to over deliver. Our Springboard annual savings target was $185 million by the close of fiscal '24. We're already 3/4 of the way to that target. And by the end of this fiscal year, we expect to exceed $200 million in annual savings. We'll accomplish this without cutting investments in the most important marketing and R&D initiatives.

在前 6 個月，由於 Project Springboard 的成本削減和效率工作繼續超額交付，SG&A 減少了 4400 萬美元。到 24 財年結束時，我們的 Springboard 年度節省目標是 1.85 億美元。我們已經完成了該目標的 3/4。到本財年末，我們預計每年可節省超過 2 億美元。我們將在不削減對最重要的營銷和研發計劃的投資的情況下實現這一目標。

Our efficiency efforts have extended to Hawthorne, where we have significantly reduced its distribution footprint and brands. And overall, we've worked off over $400 million in inventory.

我們的效率努力已擴展到 Hawthorne，在那裡我們大大減少了其分銷足跡和品牌。總的來說，我們已經處理了超過 4 億美元的庫存。

We're moving into the transition phase of our recovery. We're creating balance and nearing the inflection point where we can shift from operating in a really constrained environment to having a bit more freedom to operate. Ultimately, this will give us greater flexibility to drive growth and long-term shareholder value.

我們正在進入復甦的過渡階段。我們正在創造平衡並接近拐點，我們可以從在真正受限的環境中運營轉變為擁有更多的運營自由度。最終，這將為我們提供更大的靈活性來推動增長和長期股東價值。

Looking to value creation. Mike Lukemire, Matt Garth and I have agreed on 4 financial targets that include getting leverage down to 3.5x or less, achieving sales growth equal to GDP plus 100 basis points, improving total company gross margin to 30% or more and realizing free cash flow every year of $300 million or more. We also will continue to invest in innovation, marketing and incremental growth within and outside of our core business. This can range from alternative landscapes and natural and organic products to live goods as well as strategic investments in Hawthorne to ensure we prioritize initiatives and approach them in a coordinated and measured manner. Matt is leading a new strategy team that reports to me and will work closely with our business units, brands, management team and the Board.

尋求價值創造。 Mike Lukemire、Matt Garth 和我已經就 4 項財務目標達成一致，包括將槓桿率降至 3.5 倍或更低，實現相當於 GDP 加 100 個基點的銷售增長，將公司總毛利率提高至 30% 或更高，以及實現自由現金流每年 3 億美元或更多。我們還將繼續投資於核心業務內外的創新、營銷和增量增長。這可以從替代景觀和天然和有機產品到生活用品以及對霍桑的戰略投資，以確保我們優先考慮舉措並以協調和衡量的方式處理它們。 Matt 正在領導一個向我匯報工作的新戰略團隊，並將與我們的業務部門、品牌、管理團隊和董事會密切合作。

Now that you have a sense of where we are in our transformation, let's revisit the first half. Q2 was the quarter we needed in our U.S. consumer business, where sales were in line with last year's record second quarter. In March, we had our best shipment month ever. Through 6 months or on par with the strong U.S. consumer sales of the same period last year.

現在您已經了解了我們在轉型中所處的階段，讓我們回顧一下前半部分。第二季度是我們美國消費者業務所需的季度，該季度的銷售額與去年創紀錄的第二季度持平。 3 月份，我們迎來了有史以來出貨量最好的月份。通過 6 個月或與去年同期強勁的美國消費者銷售持平。

Despite concerns over consumer spending in general, our retail partners understand the importance of lawn and garden even in times of economic uncertainty, history shows the consumer still shows up for our category. As a result, our share of shelf makes it obvious we are the market leader.

儘管總體上對消費者支出存在擔憂，但我們的零售合作夥伴了解即使在經濟不確定時期草坪和花園的重要性，歷史表明消費者仍然會出現在我們的類別中。因此，我們的貨架份額表明我們是市場領導者。

Our collaboration with retailers is tighter than ever. We've developed joint promotional campaigns and backed them with thoughtful planning and aggressive early season execution. Our working media budget is up 23% over last year. The work in Q2 led to early season POS lifts in warm weather markets and product promotion attachment rates that are in excess of historic trends.

我們與零售商的合作比以往任何時候都更加緊密。我們開展了聯合促銷活動，並通過深思熟慮的計劃和積極的季初執行來支持這些活動。我們的工作媒體預算比去年增加了 23%。第二季度的工作導致溫暖天氣市場的早季 POS 提升和超過歷史趨勢的產品促銷附加率。

Where the weather is good and our promotions are in place, consumers are showing up and often in bigger numbers. Important early markets like Texas and Florida struggled last year.

在天氣好的地方和我們的促銷活動到位的地方，消費者就會出現，而且人數往往更多。德克薩斯州和佛羅里達州等重要的早期市場去年舉步維艱。

In Q2, we saw significant POS lifts. Bonus S was up nearly 40% in Texas and branded fertilizers were plus 17% in Florida. Overall, Q2 was a good quarter for our core business. Q3 is off to a solid start.

在第二季度，我們看到了顯著的 POS 提升。 Bonus S 在德克薩斯州上漲了近 40%，品牌化肥在佛羅里達州上漲了 17%。總體而言，第二季度對我們的核心業務來說是一個不錯的季度。第三季度開局良好。

In recent weeks, the weather is opening up in key markets. And with well-timed promotions with our retailers, we're seeing POS gains. In mid-April, we achieved an all-time record POS week with our big 3 customers at $198 million, breaking our previous record of $193 million in 2021 and eclipsing our peak week of 2022 by over $30 million.

最近幾週，主要市場天氣轉好。通過我們零售商的適時促銷，我們看到了 POS 收益。 4 月中旬，我們與三大客戶的 POS 週創下了 1.98 億美元的歷史記錄，打破了我們之前在 2021 年創下的 1.93 億美元的記錄，並比 2022 年的峰值周高出超過 3000 萬美元。

Branded lawn fertilizer units across key retailers were positive through April, up 2%, and were taking share. In growing media, the signals are strong. Mulch units are up 10% through April, and Miracle-Gro garden soil units have increased 21% in the same period.

截至 4 月，主要零售商的品牌草坪肥料銷售業績良好，增長 2%，並正在搶占市場份額。在不斷增長的媒體中，信號很強。截至 4 月，覆蓋物單位增加了 10%，Miracle-Gro 花園土壤單位同期增加了 21%。

Our leadership in nonselective and selective weed control remains unchallenged with share gains at key retailers. In the Northeast and Midwest, Roundup is plus 10%. And Roundup's innovation launch, the new dual action formula, is performing above expectations. It has eclipsed $10 million in POS and has unlocked incremental listings at more retailers.

我們在非選擇性和選擇性雜草控制方面的領導地位在主要零售商的份額增長方面仍未受到挑戰。在東北部和中西部，Roundup 增加 10%。 Roundup 的創新產品，即新的雙重作用配方，表現超出預期。它的 POS 收入超過 1000 萬美元，並在更多零售商處解鎖了增量列表。

The consumer reviews are category leading. Here's why I'm not worried about the weather early this season. There will be ups and downs. Just in recent weeks, we've seen great weather in the Northeast and Midwest, followed by cold and rain. Consumers ride the ups and downs.

消費者評論是類別領先的。這就是為什麼我不擔心本賽季初的天氣。會有起有落。就在最近幾週，我們在東北部和中西部看到了好天氣，接著是寒冷和降雨。消費者乘風破浪。

California is an example. In Q2, when heavy rains were dominant, branded fertilizer POS was negative 8% year-over-year. But improving weather has become our friend.

加州就是一個例子。在第二季度，當大雨占主導地位時，品牌化肥 POS 同比下降 8%。但改善天氣已成為我們的朋友。

In the last 4 weeks, branded fertilizer POS hit plus 60% in California. In April, California became the #1 volume state for Roundup at plus 67%. This is a pattern I expect to play out in other regions as we enter May and June when the drumbeat of promotional activity will accelerate. We have the bulk of our media and promotional dollars ahead of us, and we'll shift the spend to where we get the most bang for the dollar.

在過去的 4 週內，品牌肥料 POS 在加利福尼亞州的銷量增加了 60%。 4 月，加利福尼亞州以 67% 的增長率成為 Roundup 銷量第一的州。隨著我們進入 5 月和 6 月，促銷活動的節奏將加快，我預計這種模式也會在其他地區出現。我們有大量的媒體和促銷資金在我們面前，我們將把支出轉移到我們最物有所值的地方。

Looking ahead, the weather outlook is favorable. We've had 3 years of La Niña with extreme weather swings. Now we're shifting to an El Niño that is more in line with historic norms. May looks to be relatively normal in temperatures and precipitation. June forecasts are on a similar track, an indication we can extend the peak lawn and garden season deeper into the summer. These projected weather patterns are similar to 2018, when we crushed POS into the summer. I'm going to ask Mike Lukemire to jump in here with his thoughts.

展望未來，天氣前景有利。我們經歷了 3 年的拉尼娜現象和極端天氣波動。現在我們正在轉向更符合歷史規範的厄爾尼諾現象。五月的氣溫和降水看起來相對正常。 6 月的預測也有類似的軌跡，這表明我們可以將草坪和花園的旺季延長到夏季。這些預測的天氣模式與 2018 年相似，當時我們將 POS 壓入夏季。我要請 Mike Lukemire 談談他的想法。

Thanks, Jim. We have momentum. It is showing up in the numbers, and there's demand where the weather is just now breaking. Our plan is working because retailers are all in and our team is stepping up. Jim has talked about how we're flatter and leaner. We have awesome talent that's doing more with less. Our next-generation leaders have a now is now mentality and an infectious spirit to attack the opportunities.

謝謝，吉姆。我們有動力。它顯示在數字中，並且在天氣剛剛壞的地方有需求。我們的計劃正在奏效，因為零售商都在參與，我們的團隊也在加緊努力。吉姆談到我們如何變得更扁平和更苗條。我們擁有出色的人才，可以事半功倍。我們的下一代領導人有一種現在就是現在的心態和一種抓住機會的感染力。

I always stress the importance of working as 1 team with 1 goal of delivering the year. I'm seeing us work in a more integrated way internally, and this is extended to our retail partnerships. The coordination between all the teams has never been better. We're loading up the stores and leaning in with consumers and our field salespeople are helping fill gaps caused by labor shortages in lawn and garden centers. Chief Marketing Officer, Patti Ziegler; Head of Tech and Ops, Dave Swihart; and Head of Sales, Josh Meihls deserve credit here.

我總是強調以完成年度目標為目標的團隊合作的重要性。我看到我們在內部以更綜合的方式工作，這擴展到我們的零售合作夥伴關係。所有團隊之間的協調從未像現在這樣好。我們正在裝滿商店並向消費者傾斜，我們的現場銷售人員正在幫助填補草坪和花園中心勞動力短缺造成的空白。帕蒂齊格勒首席營銷官；技術和運營主管 Dave Swihart；和銷售主管 Josh Meihls 在這方面值得稱讚。

Our early focus has increased foot traffic, which coincided with regional campaigns for fertilizer and seed. We overlaid those with Scott for Scotts and the DayLawn Saving National campaign. These contributed to POS list, where weather was favorable, whereas yet to break, it led to some early consumer takeaway.

我們早期的重點是增加客流量，這恰逢地區性肥料和種子運動。我們將這些與 Scott for Scotts 和 DayLawn Saving National 活動疊加在一起。這些有助於 POS 列表，其中天氣有利，雖然尚未打破，但它導致了一些早期的消費者外賣。

The Midwest to Northeast are prime, and California is warming up. The other key piece is mutual investment and optimization of our efforts with retailers. We're not tripping over each other. In April, retailers kicked off spring events that included joint advertising and deals, which are a huge consumer motivator. We're going to put even more gas on the fire. We still have much of our promotional and advertising activity remaining. More events and campaigns are coming.

中西部到東北部是黃金地段，加州正在升溫。另一個關鍵部分是相互投資和優化我們與零售商的努力。我們不會互相絆倒。 4 月，零售商啟動了包括聯合廣告和交易在內的春季活動，這極大地刺激了消費者。我們要火上澆油。我們還有很多促銷和廣告活動。更多活動和活動即將到來。

Expanding into Miracle-Gro and Roundup, a new campaign focused on the newbie gardener called All You Need to Grow is part of the best gardens plan in years. Roundup dual action is supported by the largest campaign in Roundup history.

擴展到 Miracle-Gro 和 Roundup，一個名為 All You Need to Grow 的新活動專注於新手園丁，是多年來最好的花園計劃的一部分。 Roundup 雙重行動得到了 Roundup 歷史上最大的運動的支持。

I'd like to remind people, this isn't a sprint, it's a marathon. We'll maximize the season. We'll pivot media and promotional dollars as necessary. And we'll extend the season deeper into the summer. Everyone understands that. That's why nobody is even thinking about backing off. It's all out in front of us. When we lean into our activities, good things happen. I am absolutely bullish about this season. Back to you, Jim.

我想提醒人們，這不是短跑，而是馬拉松。我們將最大化賽季。我們將根據需要調整媒體和促銷資金。我們將把這個季節延長到夏天。每個人都明白這一點。這就是為什麼甚至沒有人考慮退縮的原因。這一切都擺在我們面前。當我們專注於我們的活動時，好事就會發生。我絕對看好這個賽季。回到你身邊，吉姆。

Thanks, Luke. I'll build on your marathon analogy and say that we've paced ourselves well. We like where we're positioned and we see a clear road ahead. As for Hawthorne, we're looking at it through a different lens. We're aggressively taking action to align Hawthorne with the realities of the cannabis market. There's a widening gulf in the cannabis sector, creating haves and have-nots. It sounds harsh, but it's not all doom and gloom.

謝謝，盧克。我會以你的馬拉松類比為基礎，說我們已經很好地控制了自己的節奏。我們喜歡我們所處的位置，我們看到前方有一條清晰的道路。至於霍桑，我們正在通過不同的鏡頭來看待它。我們正在積極採取行動，使 Hawthorne 與大麻市場的現實保持一致。大麻行業的鴻溝越來越大，造成了貧富差距。這聽起來很刺耳，但也不全是厄運和憂鬱。

All over the cannabis sector, there are folks winning big. They're adopting new technologies, advanced growing techniques and diversified offerings. Many of them are legacy businesses. They are producing high-quality products and getting prices per pound greater than what they were a few years ago. They represent the heart of the cannabis industry. This was evident at a recent summit we organized with leading stakeholders in the cannabis space.

在整個大麻行業，有人贏了大錢。他們正在採用新技術、先進的種植技術和多樣化的產品。其中許多是傳統企業。他們生產高質量的產品，每磅的價格比幾年前更高。它們代表了大麻產業的核心。在我們最近與大麻領域的主要利益相關者組織的一次峰會上，這一點很明顯。

We brought together growers, suppliers and hydro retailers to assess where the industry is now and where it's headed. What we learned is that those at the top want solutions and partners to help them grow and scale. We have the strength to fill this need. We're aligned with the cost and quality advantages they need to help them be successful. We're determined to be the only partner on the supply side to develop and deliver competitive solutions to help them grow.

我們將種植者、供應商和水電零售商召集在一起，評估該行業的現狀和發展方向。我們了解到，高層人士需要解決方案和合作夥伴來幫助他們發展壯大。我們有能力滿足這一需求。我們與他們取得成功所需的成本和質量優勢保持一致。我們決心成為供應方唯一的合作夥伴，以開發和提供有競爭力的解決方案來幫助他們成長。

Along these lines, we've restructured our product line to the 58 brands that are most profitable and important to these players, creating our Hawthorne Signature Plus portfolio. Our R&D is bringing innovation to secure the long-term health of the industry.

沿著這些思路，我們將我們的產品線重組為 58 個對這些玩家最有利可圖和最重要的品牌，從而創建了我們的 Hawthorne Signature Plus 產品組合。我們的研發正在帶來創新，以確保行業的長期健康發展。

Research across multiple controlled environment facilities proves the benefits of our LED fixtures, nutrients and genetics. So far, we have 9 utility patents covering electrical, thermal and optics. Take the Gavita RS 2400e LED, which can change the game for growers. It boost yields by as much as 50% over traditional HPS technologies while minimizing energy inputs and enabling faster crop cycles.

對多個受控環境設施的研究證明了我們的 LED 燈具、營養素和遺傳學的優勢。到目前為止，我們擁有9項實用專利，涵蓋電學、熱學和光學。以 Gavita RS 2400e LED 為例，它可以改變種植者的遊戲規則。與傳統 HPS 技術相比，它可將產量提高多達 50%，同時最大限度地減少能源投入並實現更快的作物週期。

The summit also brought consensus that consolidation is a must. A wicked shakeout is underway, and we expect it will result in the top 25% getting even stronger. Hawthorne is uniquely positioned to thrive. It's an opportunistic time, and that's why Hawthorne is looking to participate in innovative, value-creating noncash deals that advance its scale and capabilities. If we take no action, we'll be left behind.

峰會還達成共識，認為整合是必須的。一場邪惡的洗牌正在進行，我們預計這將導致前 25% 的公司變得更加強大。霍桑擁有蓬勃發展的獨特優勢。這是一個機會主義的時代，這就是為什麼 Hawthorne 希望參與創新的、創造價值的非現金交易，以擴大其規模和能力。如果我們不採取行動，我們就會落在後面。

I do want to comment on the industry challenges that are largely due to 2 factors: the first relates to the growing pains that will be dealt with through consolidation. The other is market instability caused by government legislators and regulators. From failure to adopt Federal SAFE Banking Act or 280E tax reform to well-documented missteps in regulatory approaches in states like New York, the industry has been negatively impacted on multiple levels. We have to remember that tax revenue, job creation and other economic benefits are at stake here. We need governors, legislators and regulators to take proactive actions to stabilize this industry and go even further by not issuing cannabis licenses in excess of what citizens can consume in their states. This has been a significant issue.

我確實想評論主要由兩個因素引起的行業挑戰：第一個與將通過整合解決的成長煩惱有關。另一個是政府立法者和監管者造成的市場不穩定。從未能採用《聯邦安全銀行法》或 280E 稅制改革，到紐約等州監管方法中有據可查的失誤，該行業在多個層面受到了負面影響。我們必須記住，稅收、創造就業機會和其他經濟利益都關係到這裡。我們需要州長、立法者和監管者採取積極行動來穩定這個行業，並通過不發放超過其所在州公民消費量的大麻許可證來走得更遠。這是一個重要的問題。

Oversupply caused by bureaucracy and flawed planning has hurt those who have worked hard and invested heavily to create a healthy, well-functioning industry that benefits everyone and is not subject to wild swings that crush legitimate growth. Hawthorne is very active at the regulatory and political levels, advocating for policy and legislative change. This is another way we're adding important value to this industry.

官僚主義和有缺陷的計劃造成的供過於求傷害了那些努力工作並投入大量資金以創建一個健康、運作良好的行業，造福於每個人並且不受破壞合法增長的瘋狂波動影響的人。霍桑在監管和政治層面非常活躍，倡導政策和立法變革。這是我們為這個行業增加重要價值的另一種方式。

We're leading the way, and it's my hope we begin to see substantial progress in many of these areas in the next year. We're in an enviable position because no one else is doing what we're doing in this space.

我們處於領先地位，我希望我們在明年開始看到其中許多領域取得實質性進展。我們處於令人羨慕的位置，因為沒有其他人在做我們在這個領域所做的事情。

I'll wrap up with this. As I look back in my nearly 3 decades with Scotts Miracle-Gro, this by far has been the hardest period I've experienced.

我會結束這個。當我回顧我在 Scotts Miracle-Gro 工作的近 3 年時，這是迄今為止我經歷過的最艱難的時期。

From a challenge and difficulty point of view, it was way harder than COVID. While the heaviest lifting and the most extreme sacrifices are behind us, there's still more to do. We have an exceptional team, a solid blend of highly experienced and next-generation talent. It's a smaller team, but more empowered. Just as we're becoming more focused on future innovation and growth, people development is a priority at all levels.

從挑戰和難度的角度來看，它比 COVID 更難。雖然最繁重的工作和最極端的犧牲已經過去，但還有更多工作要做。我們擁有一支出色的團隊，匯集了經驗豐富的新一代人才。這是一個較小的團隊，但更有權力。正如我們越來越關注未來的創新和增長一樣，人才發展是各級的優先事項。

The recent addition of executive and senior leaders reflects our commitment to succession planning. We're strengthening an already strong team. I appreciate our associates, our Board of Directors, our retail partners, our banks and our shareholders. Your support has meant the world to me.

最近增加的行政和高級領導反映了我們對繼任計劃的承諾。我們正在加強一支已經很強大的團隊。我感謝我們的員工、我們的董事會、我們的零售合作夥伴、我們的銀行和我們的股東。您的支持對我來說意義重大。

Scotts Miracle-Gro makes a difference in people's lives every day, and that's an obligation, along with the one to our shareholders and associates that drives all of us. Thank you. I'll turn the call over to Matt to walk through the financials.

Scotts Miracle-Gro 每天都在改變人們的生活，這是一項義務，也是我們對股東和員工的義務，這也是我們所有人的動力。謝謝。我會把電話轉給馬特，讓他了解一下財務狀況。

Thanks, Jim, and hello, everyone. We are very pleased with where we ended the first half of the year, as well as with the early spring consumer engagement we are seeing so far.

謝謝，吉姆，大家好。我們對上半年結束的情況以及迄今為止我們看到的早春消費者參與度感到非常滿意。

As we've already announced, net leverage at the end of the quarter came in at 6x versus the covenant max of 6.5x and Springboard is on track to deliver over $200 million in run rate savings by the end of the fiscal year. Consumers are clearly engaged and participating in lawn and garden in regions where weather has been favorable.

正如我們已經宣布的那樣，本季度末的淨槓桿率為 6 倍，而契約最大值為 6.5 倍，而 Springboard 有望在本財年末實現超過 2 億美元的運行率節省。在天氣有利的地區，消費者顯然參與並參與了草坪和花園的活動。

We're seeing strong engagement and as expected, consumers are responding to the promotions that provide them the most value.

我們看到了強大的參與度，正如預期的那樣，消費者正在響應為他們提供最大價值的促銷活動。

Turning to Hawthorne. The state of the cannabis industry remains volatile and our recent restructuring at Hawthorne reflects heightened actions to more quickly improve our profitability.

轉向霍懷恩。大麻行業的狀況仍然不穩定，我們最近在 Hawthorne 進行的重組反映了為更快地提高我們的盈利能力而採取的加強行動。

Now let's walk through the quarter in more detail. Starting with net sales for the U.S. consumer business, second quarter sales were $1.36 billion, just 2% shy of our prior year record. First half sales were above last year and totaled nearly $1.73 billion. Our team has done an outstanding job in executing the first half load in plan with our retail partners, and these results are a reflection of their efforts to deliver for SMG in a challenging environment. Pricing of nearly 10% year-to-date more than offset the impact of lower shipment volumes.

現在讓我們更詳細地了解一下這個季度。從美國消費者業務的淨銷售額開始，第二季度銷售額為 13.6 億美元，僅比我們去年的記錄低 2%。上半年銷售額高於去年，總計近 17.3 億美元。我們的團隊在與我們的零售合作夥伴一起執行計劃的上半年負載方面做得非常出色，這些結果反映了他們在充滿挑戰的環境中為 SMG 交付的努力。今年迄今近 10% 的定價抵消了較低出貨量的影響。

Recall that the lower shipment volumes are related to our expectation for reduced retail inventory levels which are down 6% in units versus the prior year. As noted earlier, the season started soft as a result of the extreme weather patterns that impacted California.

回想一下，較低的出貨量與我們對零售庫存水平下降的預期有關，零售庫存水平較上年下降 6%。如前所述，由於影響加利福尼亞的極端天氣模式，本季開始疲軟。

However, we are encouraged by the strong POS we've seen through April. Consumers are price-sensitive, seeking value, while also remaining loyal to our high-quality trusted brands. To date, we have not seen a significant trade down to private label, and we are seeing strong POS lifts from our promotions and media campaigns, especially in branded fertilizers and growing media.

然而，我們對整個 4 月份的強勁 POS 感到鼓舞。消費者對價格敏感，追求價值，同時也對我們的高品質值得信賴的品牌保持忠誠。迄今為止，我們還沒有看到自有品牌的重大交易，而且我們的促銷和媒體活動帶來了強勁的 POS 提升，尤其是在品牌化肥和種植媒體方面。

To support these trends and to continue driving profitable volume, our media and promotional plans this year will run through the fall. This contrasts with last year when we made limited investments in the back half of the season. As of today, POS units are essentially flat and dollars are up mid-single digits at our largest retailers.

為了支持這些趨勢並繼續推動盈利量，我們今年的媒體和促銷計劃將貫穿整個秋季。這與去年我們在賽季後半段進行的有限投資形成鮮明對比。截至今天，我們最大的零售商的 POS 單位基本持平，美元上漲了中個位數。

Product mix is currently favoring growing media, and we now expect this trend to continue through the full year. Within the lawns category, overall volume is down mid- to high single digits through April. However, our higher-margin branded fertilizers, such as Scotts triple action and Bonus S are currently positive in units at key retailers and outperforming lower-margin private label fertilizers.

產品組合目前有利於成長型媒體，我們現在預計這一趨勢將持續一整年。在草坪類別中，整個 4 月份的總成交量呈中高個位數下降。然而，我們的利潤率較高的品牌化肥，例如 Scotts triple action 和 Bonus S，目前在主要零售商的單位銷量良好，表現優於利潤率較低的自有品牌化肥。

In categories besides lawns and growing media, we continue to trend towards flat units versus prior year. At Hawthorne, the top line remains challenged amid continued market oversupply, limited and costly access to capital and an uncertain regulatory environment.

在除草坪和種植媒體之外的類別中，與去年相比，我們繼續傾向於持平單位。在 Hawthorne，由於市場持續供過於求、融資渠道有限且成本高昂以及監管環境不確定，收入仍然面臨挑戰。

Second quarter and first half sales for the segment were $93 million and $224 million, down 54% and 43%, respectively, versus the same periods last year. North America lighting and growing environment drove the change as large durable investments continue to climb at a greater rate than consumable replenishment. Lighting and growing environment combined were down 66% in the quarter and 53% in the first half year-over-year.

該部門第二季度和上半年的銷售額分別為 9300 萬美元和 2.24 億美元，與去年同期相比分別下降了 54% 和 43%。北美照明和生長環境推動了這一變化，因為大型耐用投資繼續以比消耗品補貨更快的速度攀升。照明和生長環境合計在本季度下降了 66%，在上半年同比下降了 53%。

Together with hardware, total North America durables net sales were 50% of total Hawthorne net sales in the quarter versus 56% in the prior year quarter. We still expect improvement in the back half of the year when the outdoor growing season picks up and our ProHort lighting business converts strong prospects to orders.

連同硬件，本季度北美耐用品淨銷售額佔 Hawthorne 淨銷售額的 50%，而去年同期為 56%。我們仍然預計今年下半年會有所改善，屆時戶外生長季節開始，我們的 ProHort 照明業務將強勁的前景轉化為訂單。

However, given the overall weak market conditions, daily sales rates have yet to improve from the first half of the year, and this may persist. Our focus remains on returning to run rate profitability by the end of the year, and this objective is intact.

不過，在整體疲弱的市況下，日均銷售率較上半年仍有待改善，並可能持續。我們的重點仍然是在年底前恢復運行率盈利能力，這個目標是完整的。

Approximately half of our Springboard savings are from Hawthorne, and the changes to brand and category mix that Jim spoke to will impact gross margin rates favorably when overall volume recovers. However, even though Hawthorne saw a substantial decrease in warehousing costs in the first half, the volume decline paired with higher material and freight costs, has outpaced year-to-date pricing actions to drive the segment's gross margin rate lower.

我們 Springboard 節省的大約一半來自 Hawthorne，Jim 談到的品牌和類別組合的變化將在整體銷量恢復時對毛利率產生有利影響。然而，儘管 Hawthorne 上半年的倉儲成本大幅下降，但銷量下降加上材料和運費成本上升，已經超過了年初至今的定價行動，導致該部門的毛利率下降。

As noted in the press release, Hawthorne sold its Hurricane branded fans business, an action that helps to accelerate distribution cost savings through warehouse closures in Washington, California, Oregon and New Jersey. Related to this restructuring, Hawthorne posted total GAAP charges of $141 million before income taxes, of which $119 million impacted gross margin. These charges are excluded from non-GAAP income for the quarter. Let's take a closer look at gross margin and cost of goods for the total company.

正如新聞稿中所述，Hawthorne 出售了其 Hurricane 品牌粉絲業務，此舉有助於通過關閉華盛頓、加利福尼亞、俄勒岡和新澤西的倉庫來加快分銷成本的節省。與此次重組相關，Hawthorne 公佈的所得稅前 GAAP 費用總額為 1.41 億美元，其中 1.19 億美元影響了毛利率。這些費用不包括在本季度的非 GAAP 收入中。讓我們仔細看看整個公司的毛利率和商品成本。

The adjusted gross margin rate declined 70 basis points for both the quarter and first half, resulting in rates of 34.7% and 31%, respectively. Through the first half, pricing net of trade added nearly 800 basis points to the year-to-date gross margin, more than covering higher material costs. However, the increase was not enough to also fully cover higher conversion costs and fixed cost deleverage, largely driven by the steep volume declines at Hawthorne and lower production volumes in our U.S. consumer business.

調整後的毛利率在本季度和上半年均下降了 70 個基點，分別為 34.7% 和 31%。上半年，貿易定價淨值使年初至今的毛利率增加了近 800 個基點，遠遠超過了較高的材料成本。然而，這一增長還不足以完全彌補更高的轉換成本和固定成本去槓桿化，這主要是由於 Hawthorne 銷量急劇下降以及我們美國消費者業務產量下降所致。

With greater than 85% of our COGS now locked, we have a reasonable line of sight to our full year costs. Other than resins, we are seeing lower prices for most of our major raw materials. However, given our hedging program and remaining high-cost inventory, we expect to recognize these improvements starting in the second half of 2024.

現在我們鎖定了超過 85% 的銷貨成本，我們對全年成本有了合理的預期。除了樹脂，我們看到大部分主要原材料的價格都在下降。然而，鑑於我們的對沖計劃和剩餘的高成本庫存，我們預計將從 2024 年下半年開始認識到這些改進。

Looking at the balance of the year, margins will be slightly pressured based on our revised mix expectations and additional trade investments. The net cost of the changes to pricing and mix will be mostly offset by continued strong productivity gains and moderating material costs.

從今年的餘額來看，根據我們修改後的組合預期和額外的貿易投資，利潤率將略有壓力。定價和組合變化的淨成本將大部分被持續強勁的生產率提高和緩和的材料成本所抵消。

Overall, for fiscal 2023, we still expect the total company gross margin rate decline near 100 basis points. Looking to fiscal '24 and beyond, we see ample opportunity to improve our gross margins through volume and mix recovery, commodity cost moderation and our warehouse restructuring and other cost-out initiatives.

總體而言，對於 2023 財年，我們仍預計公司總毛利率下降近 100 個基點。展望 24 財年及以後，我們看到了通過數量和組合恢復、商品成本節制以及我們的倉庫重組和其他成本削減計劃來提高毛利率的充足機會。

We continue to show progress on the SG&A line without sacrificing our aggressive media plans for the year. In fact, working media spend is expected to be up 23% year-over-year. As a percentage of sales, SG&A is down from 16% in the first half of last year to 15.3% this year, reflecting our significant progress from Project Springboard. We expect to maintain these savings moving forward, yielding SG&A between 15% and 16% of net sales for the full year. Now I'll highlight a few more expected adjustments to our guidance.

在不犧牲我們今年積極的媒體計劃的情況下，我們繼續在 SG&A 方面取得進展。事實上，工作媒體支出預計將同比增長 23%。作為銷售額的百分比，SG&A 從去年上半年的 16% 下降到今年的 15.3%，反映出我們在 Project Springboard 方面取得了重大進展。我們希望在未來保持這些節省，使 SG&A 產生全年淨銷售額的 15% 至 16%。現在，我將重點介紹對我們的指南的一些預期調整。

While we remain enthusiastic about our full year prospects and the great work on cost control so far this year, the near-term pressure on gross margin rates and the headwinds at Hawthorne on the whole lead us to adjust our full year operating income guidance to a mid-single-digit percentage decline and our full year adjusted EBITDA guidance to a low single-digit percentage decline from fiscal 2022. This revised EBITDA guidance keeps us comfortably within our net leverage covenant for the remainder of the year, and the team will be working diligently to meet Jim and Mike's target below 5x.

雖然我們對今年迄今為止的全年前景和成本控制方面的出色工作仍然充滿熱情，但毛利率的近期壓力和 Hawthorne 的整體逆風導致我們將全年營業收入指導調整為中個位數百分比下降，我們的全年調整後 EBITDA 指導值從 2022 財年開始下降個位數百分比。這一修訂後的 EBITDA 指導方針使我們在今年剩餘時間裡輕鬆地遵守我們的淨槓桿契約，團隊將努力工作以實現吉姆和邁克低於 5 倍的目標。

I'll finish up the review with a few comments on taxes, interest expense and the balance sheet. Our adjusted tax rate through the second quarter was 26.7% versus 21.7% through the second quarter of last year, largely driven by a onetime benefit in fiscal 2022 from the vesting and exercise of certain long-term executive compensation.

我將用一些關於稅收、利息支出和資產負債表的評論來結束審查。我們第二季度的調整後稅率為 26.7%，而去年第二季度為 21.7%，這主要是由於某些長期高管薪酬的歸屬和行使在 2022 財年帶來的一次性收益。

Additionally, we expect our tax rate to fall in the range of 27% to 28% for the full year. Quarterly interest expense is up $20 million or 71% versus prior year, and expected interest expense for the full year is unchanged at an increase of $60 million. The increase was mostly driven by higher average borrowing rates of 5.3%, up nearly 2 percentage points from a year ago, mainly due to higher underlying SOFR through a combination of long-term fixed rate senior notes and interest rate swap arrangements, 61% of our debt is at fixed borrowing rates as of the end of the quarter.

此外，我們預計全年的稅率將在 27% 至 28% 的範圍內下降。季度利息支出比上年增加 2000 萬美元或 71%，全年的預期利息支出保持不變，增加 6000 萬美元。增長的主要原因是平均借貸利率上升了 5.3%，比一年前上升了近 2 個百分點，這主要是由於通過長期固定利率優先票據和利率掉期安排的組合提高了基礎 SOFR，其中 61%截至本季度末，我們的債務採用固定借款利率。

Continuing on the balance sheet. We are making strong headway improving our inventory balances. We've pulled back on production volumes, and we are selling through higher cost inventory. As of the end of the quarter, Inventory was $467 million lower than the same time last year. While the improving inventory position will drive significant free cash flow, the net change in total working capital with offsets in accounts payable and other areas is expected to deliver closer to $200 million of favorability in each of fiscal '23 and fiscal '24, together with approximately $300 million in operating cash flow each year, we are on track to deliver our targeted $1 billion in free cash flow over 2 years.

繼續資產負債表。我們在改善庫存餘額方面取得了很大進展。我們已經縮減了產量，我們正在通過更高成本的庫存進行銷售。截至本季度末，庫存比去年同期減少 4.67 億美元。雖然庫存狀況的改善將推動顯著的自由現金流，但總營運資金的淨變化加上應付賬款和其他領域的抵消預計將在 23 財年和 24 財年每年帶來近 2 億美元的優惠，連同每年大約 3 億美元的運營現金流，我們有望在 2 年內實現 10 億美元的自由現金流目標。

As I stated last quarter, we will maintain a tightly disciplined capital allocation approach. We are funding our quarterly dividend and the balance of our free cash flow will be used to pay down debt. Let me wrap up the financial overview with this.

正如我上個季度所說，我們將保持嚴格遵守紀律的資本配置方法。我們正在為季度股息提供資金，我們的自由現金流餘額將用於償還債務。讓我用這個來總結財務概覽。

More than 55% of our expected POS remains. It is still early. We will know much more by mid-June as to how the season is progressing, and we will provide an update on our progress at that time.

超過 55% 的預期 POS 仍然存在。現在還早。到 6 月中旬，我們將更多地了解本賽季的進展情況，屆時我們將提供最新進展。

One final note. I'm extremely excited to work with Jim to reconstitute SMG's strategy team and contribute meaningfully to long-term planning and value creation for our stakeholders. The team is already diving deeply into the noncash opportunities for Hawthorne that Jim mentioned and refreshing our longer-range plans to protect and build on the core lawn and garden business. And now I'll turn it back over to Jim.

最後一點。我非常高興能與 Jim 一起重組 SMG 的戰略團隊，並為我們的利益相關者的長期規劃和價值創造做出有意義的貢獻。該團隊已經深入研究吉姆提到的 Hawthorne 的非現金機會，並更新了我們保護和建設核心草坪和花園業務的長期計劃。現在我會把它轉回給吉姆。

Thanks, Matt. Latif, if we could go to the Q&A session now, that would be great.

謝謝，馬特。 Latif，如果我們現在可以參加問答環節，那就太好了。

(Operator Instructions) Our first question comes from the line of Chris Carey of Wells Fargo. Your question, please.

（操作員說明）我們的第一個問題來自富國銀行的克里斯凱里。你的問題，請。

Can you maybe just help frame why guidance was lowered, your gross margins seem intact, your POS running flat year-to-date in U.S. consumer seems actually quite a better outcome than the prospects a month ago. U.S. consumer margins came in quite strong with the gross margin over delivery. And so can you just frame how your expectations have changed for the garden business relative to Hawthorne. On -- at first blush, it feels like Hawthorne is the key change here and you're just not yet ready to call for the garden business offsetting Hawthorne given you still have a lot of POS still ahead. But I don't know if I'm reading that situation wrong. And if you could just comment on how you feel retailer inventories are at this point in the year relative to your expectations?

你能不能幫助解釋一下為什麼降低了指導，你的毛利率似乎完好無損，你的 POS 年初至今在美國消費者中運行持平似乎實際上比一個月前的前景要好得多。美國消費者的毛利率高於交付，因此相當強勁。因此，您能否簡單地描述一下您對花園業務相對於 Hawthorne 的期望發生了怎樣的變化。乍一看，感覺 Hawthorne 是這裡的關鍵變化，你還沒有準備好要求花園業務抵消 Hawthorne，因為你還有很多 POS。但我不知道我是否讀錯了這種情況。如果您可以評論一下您對今年此時零售商庫存相對於您的預期的感覺如何？

Yes. I know Garth would like to go first here, but I'm going to sort of cut him off at the pass. Look, I have to say that I came in this morning and talked to MAT and said, I should have called you last night and pulled that release because I think the naming matter, trying to sort of balance sort of expectations coming out of the call. And I'll give them credit for that.

是的。我知道加思想在這裡先走，但我會在傳球時打斷他。看，我不得不說我今天早上來和 MAT 說，我應該在昨晚給你打電話並撤下那個版本，因為我認為命名很重要，試圖平衡電話會議帶來的各種期望.我會為此讚揚他們。

I know it's for the sort of common good. But I felt a little bit like you're saying now yesterday when the press release was sort of running around for approvals and my quotes were being approved by me. I think you're right that the big negative here is just Hawthorne. And I wouldn't say it's a huge negative, and more, I would say, more than covering it with consumer.

我知道這是為了某種共同利益。但我覺得有點像你昨天說的，當時新聞稿正在四處徵求批准，而我的報價正在被我批准。我認為你是對的，這裡最大的負面影響只是霍桑。而且我不會說這是一個巨大的負面影響，而且我會說，不僅僅是用消費者來掩蓋它。

So I think there's MAT mainly trying to sort of deal with expectations. There is negativity on Hawthorne, which is, I think, basically top line driven. Now let's get back to consumer. I think we feel really great about consumer. And my view is standby for violence. We had kind of like 1.5 good weeks in April, and the numbers were truly stunning.

所以我認為 MAT 主要是為了解決預期問題。 Hawthorne 存在負面情緒，我認為這基本上是頂線驅動的。現在讓我們回到消費者。我認為我們對消費者感覺非常好。我的觀點是為暴力做好準備。我們在 4 月份度過了大約 1.5 個好星期，而且這些數字確實令人驚嘆。

And if you look at the forecast, like for this weekend, it's just exactly what's needed at exactly the right time. So -- and we've got crazy ammo going into this battle on the marketing and promotional side. So the retailers are locked and loaded.

如果你看一下預測，比如本週末，它正是在正確的時間需要的。所以 - 我們在營銷和促銷方面有瘋狂的彈藥進入這場戰鬥。因此，零售商被鎖定並加載。

We are -- so I expect -- I think, MAT name, you're going out probably a month from now, we'll have to figure out how they're going to communicate sort of market update to you. But we're planning to somehow, I don't know that, that's done yet because I think people aren't going to be at that normal conference that we talk at in about a month just because people are going to be out of town. But what I expect is some really interesting data.

我們——所以我預計——我想，MAT 的名字，你可能一個月後就要出去，我們必須弄清楚他們將如何向你傳達某種市場更新。但是我們計劃以某種方式，我不知道，這已經完成了，因為我認為人們不會參加我們在大約一個月後舉行的正常會議，因為人們將要出城.但我期望的是一些非常有趣的數據。

And when you look at what's sort of happening think about California and Texas, Florida, the numbers that I passed to you guys today, those are really great. And a lot of what happened is we never had a real spring. It didn't get decent. And for those of you who are East Coast based, you'll know that last year, just the weather, no (expletive), really just (expletive). And we never really had a Midwest and Northeast season until sort of after the fourth of July. And then Texas was super droughty, California super droughty. I'm talking like giant states down like 30%.

當你看看加利福尼亞州和德克薩斯州、佛羅里達州正在發生的事情時，我今天傳遞給你們的數字，這些數字真的很棒。發生的很多事情是我們從未有過真正的春天。它沒有得到體面。對於住在東海岸的那些人，您會知道去年，只是天氣，不（髒話），真的只是（髒話）。直到 7 月 4 日之後，我們才真正擁有中西部和東北部的季節。然後德克薩斯超級乾旱，加利福尼亞超級乾旱。我說的是像大州一樣下降了 30%。

When you see the data, I mean, the rain in California has been wicked and our friend, okay? I mean not only great for fertilizers, but great for herbicides because people got a lot of weeds. And you look at certain markets like Arizona, they're just big weed markets as people have kind of these desert gardens and they want to keep the weeds out.

當你看到數據時，我的意思是，加利福尼亞的雨下得很大，我們的朋友，好嗎？我的意思是不僅對肥料很好，而且對除草劑也很好，因為人們有很多雜草。你看看某些市場，比如亞利桑那州，它們只是大型雜草市場，因為人們擁有這些沙漠花園，他們希望將雜草拒之門外。

So they've always been important Roundup markets. But the Roundup numbers are also really stunning. And then you look at like the lawn fertilizer numbers for Texas, just real positive. Same for Florida. And so I think we've got a really good start to the season, really good integrated program.

所以它們一直是重要的 Roundup 市場。但 Roundup 的數據也非常驚人。然後你看看德克薩斯州的草坪肥料數量，非常積極。佛羅里達州也一樣。所以我認為我們本賽季的開局非常好，綜合計劃非常好。

And another thing I just want to -- Mike said it in his comments. But Mike's team on consumer has just really killed it. The first half was really, really important for us to avoid covenant health. We didn't expect. It was not -- it's -- we didn't expect more than we had agreed with the retailers. All we needed the retailers to do is get the load in that we had pre-agreed to get done, that it's not excessive in units. So we accomplished that.

還有一件事我只想說——邁克在他的評論中說過。但是 Mike 的消費者團隊真的把它搞砸了。上半場對我們避免盟約健康來說真的非常重要。我們沒想到。它不是——它是——我們並沒有期望比我們與零售商商定的更多。我們需要零售商做的就是完成我們預先同意完成的工作，單位不要過多。所以我們做到了。

There was a lot of worry, I think, on Matt's team. Could we get it done as we were kind of looking at the last weeks of the quarter. People did it, and they couldn't have done it without the work that Patti and the marketing team had done to get the retailers into the promotional plans.

我認為 Matt 的團隊有很多擔憂。當我們在看本季度的最後幾週時，我們能否完成它。人們做到了，如果沒有 Patti 和營銷團隊為讓零售商參與促銷計劃所做的工作，他們就不可能做到。

So the first half really came well together. And I would say the season so far, where the weather has been our friend, which let's just talk Southern markets, California has been really good. And now we have weather that's our friend in the Midwest and Northeast, which is like this weekend. And the forecast on my tool that I use [this takes us out] looking warm and kind of normal precip for the Midwest and Northeast for the entire month.

所以上半場真的很順利。我想說這個季節到目前為止，天氣一直是我們的朋友，讓我們談談南部市場，加利福尼亞真的很好。現在我們的中西部和東北部天氣很好，就像這個週末一樣。我使用的工具的預測 [這讓我們出局] 整個月中西部和東北部看起來溫暖而正常。

So I feel really good about it. The retail inventories, I think that was another part of your question, I think, are reasonable. I wouldn't read too much into sort of unit volume in retail being down. I think that's more of a -- just a crazy amount of units that happen in sour soils. They're just coming in sort of at the right time.

所以我感覺很好。零售庫存，我認為這是你問題的另一部分，我認為是合理的。我不會過多地解讀零售業的單位銷量下降。我認為這更多的是 - 只是在酸性土壤中發生的大量單位。他們只是來得正是時候。

And there's -- if you look at sort of major promotional events that happen with the retailers that drives inventory into the store, that it's just hard to look at it. So I think, Mike, what I would say is the consumer market is about where it needs to be. And I want to also thank our retail partners for -- I'm going on too long, but I'm trying to get a lot of stuff that I would say any time out on this question.

還有——如果你看看零售商發生的推動庫存進入商店的重大促銷活動，那就很難看。所以我想，邁克，我想說的是消費市場是它需要的地方。我還要感謝我們的零售合作夥伴——我講的時間太長了，但我正試圖得到很多關於這個問題的時間我會說的東西。

I think to the retail partners, based on our sort of needs to get the volumes we have pre-agreed in, we were a little whinier than normal. And I want to thank our partners for putting up with our kind of whininess as we needed to make sure that we executed against the plans we had pre-done with them.

我認為，對於零售合作夥伴來說，基於我們對獲得預先商定的數量的需求，我們比平時更抱怨。我要感謝我們的合作夥伴容忍我們的抱怨，因為我們需要確保我們執行了我們與他們預先制定的計劃。

So really great friendships. This is one where I know a lot of you guys were sort of forecasting doom and gloom for us. Maybe not you, but people were forecasting covenant busts. Our retailers knew we needed them, and they came through for us bigger than Dallas. And I want to thank them all for working with us. I don't know, Mike, anything you want to talk about the season so far?

所以真的很棒的友誼。這是一個我知道你們很多人都在為我們預測厄運和陰鬱的地方。也許不是你，但人們在預測聖約半身像。我們的零售商知道我們需要他們，他們為我們帶來了比達拉斯更大的幫助。我要感謝他們與我們一起工作。我不知道，邁克，到目前為止你想談談這個賽季嗎？

No, I think every promotion or activity when we have weathers over-indexing far beyond what we expected it to be. So -- and we expect more as we go into good weather in the season, and we're very bullish about hitting what we said we were going to do. So -- and Jim is right, there's a lot of violence so. [That will occur] because we will adjust the markets as we see fit.

不，我認為每次促銷或活動時我們的天氣指數都遠遠超出我們的預期。所以——隨著我們進入本賽季的好天氣，我們期待更多，我們非常樂觀地實現我們所說的我們要做的事情。所以 - 吉姆是對的，所以有很多暴力。 [那將會發生]，因為我們將按照我們認為合適的方式調整市場。

And then last, I guess, is just Hawthorne. Hawthorne is working toward breakeven. That's our mission, okay? And there's an element where if you were to sort of talk to me, we had a Board meeting last Monday and Friday -- I think Monday and Friday -- Tuesday and Friday, whatever the (expletive) it was, but Friday.

最後，我想，只是霍桑。霍桑正在努力實現收支平衡。這是我們的使命，好嗎？還有一個要素，如果你要和我談談，我們在上週一和周五舉行了一次董事會會議——我想是周一和周五——週二和周五，不管是什麼（髒話），但周五。

My whole attitude of sort of Hawthorne and cannabis really changed a lot as we were gathering intel kind of for what's happening out there. The sales results are kind of based on a couple of things. Number 1 is our big category is durables. And in an environment where it's very challenging to make money, and there's a lot of people barely hanging on, our dominance in lighting is going to work against us, especially when you compare to the amount of money we invested in the business. And fair enough, people want to be critical.

我對 Hawthorne 和大麻的整體態度真的發生了很大變化，因為我們正在收集關於那裡發生的事情的情報。銷售結果基於幾件事。第一是我們的大類是耐用品。在一個賺錢非常困難的環境中，很多人都勉強堅持下去，我們在照明領域的主導地位將對我們不利，尤其是當你與我們在該業務上投入的資金進行比較時。公平地說，人們想要批評。

The more I studied, the more, Chris, was out on the road. That was why those changes happened in my script. I mean, I don't know. We were like version 14 by the time we finished. There is a lot of good stuff happening in the industry. It's -- you tend to think everybody is failing here. It's an environment where it's like regional banks. The weak ones are in trouble. And there's a lot of people in trouble in this space.

我學得越多，克里斯就越在路上。這就是我的腳本中發生這些更改的原因。我的意思是，我不知道。完成時我們就像第 14 版一樣。這個行業發生了很多好事。它是——你傾向於認為這裡的每個人都失敗了。這是一個類似於地區性銀行的環境。弱者有難。在這個領域有很多人遇到麻煩。

The people who are good at it, and there's quite a few of them, are really doing well. And guess what they're running? Our best and most expensive lights, okay? And they're getting the results out of those lights, which are no joke. We're doing like all this research. I don't think anybody is doing this kind of work where you're seeing sort of 50% increase in output.

擅長這方面的人，而且他們中的很多人，真的做得很好。猜猜他們在跑什麼？我們最好最貴的燈，好嗎？他們正在從這些燈中獲取結果，這可不是鬧著玩的。我們正在做所有這些研究。我認為沒有人在做這種你會看到產量增加 50% 的工作。

The cost of lights doesn't matter when you're seeing that kind of increase. But you got to have the money. And if you're barely hanging on, you ain't buying it. And that's why I say there's going to be winners and losers in this space and there's a wicked shakeout underway. And we have to see that through.

當您看到這種增長時，燈的成本並不重要。但你得有錢。如果你勉強堅持下去，你就不會買它。這就是為什麼我說這個領域將有贏家和輸家，並且正在進行一場邪惡的洗牌。我們必須看到這一點。

And so this is one where there's a lot of good stuff happening. I would say even on the RIV side, there's a lot of pressure to get New York fixed by people in the government in New York. They -- it's embarrassing, frankly, what's happening there. And there's a lot of changes that are going to, I think, very much benefit RIV and the investment we made in New York.

因此，這是一個發生了很多好事的地方。我想說，即使在 RIV 方面，紐約政府的人也面臨著很大的壓力來修復紐約。他們——坦率地說，那裡發生的事情令人尷尬。我認為，有很多變化將使 RIV 和我們在紐約的投資受益匪淺。

And so there's just a lot of good things happening. And you just don't see it in the sort of (inaudible), what did they call it when there's just -- there's a word for it, just dead bodies everywhere. But there's a lot of good stories within the battlefield.

所以有很多好事正在發生。而且你只是看不到它（聽不清），他們怎麼稱呼它，當它只是 - 有一個詞，到處都是屍體。但是戰場上有很多好故事。

And anyway, so we're not really running Hawthorne for top line now. We're running it really for bottom line. And while it did slip, I think, we are still confident that we get to breakeven by year-end, and we are seeing positiveness there. And we're seeing with those people who are doing well, we're seeing value per pound up there as high as it's ever been with the people who are using our product and know what they're doing. Anyway, Chris, a real long answer, but I can talk less after this.

無論如何，我們現在並沒有真正將 Hawthorne 作為收入來源。我們真的是為了底線而運行它。我認為，雖然它確實下滑了，但我們仍然有信心在年底前實現收支平衡，而且我們在那裡看到了積極的一面。我們看到那些做得很好的人，我們看到每磅的價值與使用我們產品並知道他們在做什麼的人一樣高。不管怎樣，克里斯，一個很長的答案，但在這之後我可以少說話了。

That is -- thank you, Jim. That was true to form and helpful. It's always helpful to get the big take. Yes.

那就是——謝謝你，吉姆。這是真實的形式和幫助。獲得大收益總是有幫助的。是的。

I only used one bad word...

我只用了一個壞詞...

Yes. Well, it's -- hey, I'm only the first question in the earnings call. You've got plenty of time to catch up. So just maybe just really simply put, and then I'll get back in.

是的。嗯，這是——嘿，我只是財報電話會議上的第一個問題。你有足夠的時間趕上。所以也許只是簡單地說，然後我會回來。

Number one, have your volume expectations changed at all in U.S. consumer for the year? And number two, you mentioned 30% gross margins. Is that how we should we be thinking about fiscal '24?

第一，您對今年美國消費者的銷量預期是否發生了變化？第二，你提到了 30% 的毛利率。我們應該如何考慮 24 財年？

I'll let Matt do the margin side of that. Remember what we said is partly what I don't want to be in the business of is dealing with you guys. I don't mean this in a bad way. I mean the -- I don't want to be sort of captive to sort of what you all think. All I can be captive is to what commitments we've made.

我會讓馬特做邊際的。請記住，我們所說的部分原因是我不想與你們打交道。我不是說這個不好。我的意思是——我不想成為你們所有人的想法的俘虜。我唯一能確定的就是我們所做的承諾。

And so we said flat plus 10% on lawns. I think Mike and I felt that those were super easy relative to the investments we're making. And I still feel that. So what do I think when you say that Mike and I are working toward leverage in the 4s, it sort of assumes not a lot of positiveness out of Hawthorne and more positiveness out of the consumer business.

所以我們說平地加上草坪上的 10%。我認為 Mike 和我覺得相對於我們正在進行的投資而言，這些非常容易。我仍然有這種感覺。所以當你說邁克和我正在努力在 4s 中發揮槓桿作用時，我怎麼看，它假設 Hawthorne 沒有太多積極性，而消費者業務則有更多積極性。

And -- but where I live, as I was driving in last night, our birch trees don't even have leaves on them yet. So I put this now, it's New England. But I would say I put this as real early in the season and a lot of stuff still to do. But I think we like the weather forecast. We like the programs. We like the marketing efforts. I don't think there's -- I personally don't think there's any evidence that the consumer is not gardening or staying away from our product line.

而且——但在我住的地方，當我昨晚開車進來時，我們的白樺樹甚至還沒有葉子。所以我現在把它放在新英格蘭。但我會說我在賽季初就把它當作真實的，還有很多事情要做。但我認為我們喜歡天氣預報。我們喜歡這些節目。我們喜歡營銷工作。我不認為 - 我個人認為沒有任何證據表明消費者沒有從事園藝或遠離我們的產品線。

So I think Mike and I are expecting positiveness of flat plus 10 for lawns. But that -- we're really going to be able to tell you that in July or something like that when the season is kind of 80% through.

所以我認為 Mike 和我期待草坪的平坦度加 10 的積極性。但是那——我們真的可以在 7 月或類似的時候告訴你，當這個季節已經過去了 80% 的時候。

Yes, Chris, from a margin perspective, I think Jim talked about it. You heard it in my prepared notes a little bit. But the objectives that we're putting out for growing top line GDP plus 100 basis points, getting back to 30-plus percent margins, maintaining SG&A in that 15% to 16% range, and then also delivering free cash flow year in, year out around $300 million, all of those are formative. Getting there in 2024, I think we check off a number of those things.

是的，克里斯，從保證金的角度來看，我認為吉姆談到了這一點。你在我準備好的筆記中聽到了一點。但我們提出的目標是將 GDP 增長 100 個基點，回到 30% 以上的利潤率，將 SG&A 保持在 15% 到 16% 的範圍內，然後年復一年地提供自由現金流大約 3 億美元，所有這些都是形成性的。在 2024 年到達那裡，我想我們核對了其中的一些事情。

The margin in particular was coming from sort of a full year perspective in the mid- to high 20s. Here in 2023, as you know and as we've talked about, there is a significant impact from raw material inflation and other inflationary items that have impacted our margin that we fully offset in pricing, but that is margin dilutive. If you just take a look at the sheer math here, it's kind of like 800 basis points up in pricing.

利潤率尤其來自 20 年代中期到中期的全年觀點。 2023 年，正如您所知和我們所討論的那樣，原材料通脹和其他通脹項目對我們的利潤率產生了重大影響，我們在定價中完全抵消了這些影響，但這會稀釋利潤率。如果你只看一下這裡的純粹數學，定價有點像 800 個基點。

You see that in our pricing lifts that we show you in the press release tables. And then that's been offset with really about 700 basis points, 800 basis points, if I round up in inflationary factors. So you're still not getting the margin lift yet.

您會在我們在新聞稿表中向您展示的價格提升中看到這一點。然後，如果我計算通貨膨脹因素，這實際上被大約 700 個基點、800 個基點所抵消。所以你還沒有得到利潤提升。

But as we talked about, some of those commodity factors are starting to weaken, that will run through. We have higher cost inventories that Jim and I both spoke about that we are working through, and we are trying to work those through at a faster rate.

但正如我們所說，其中一些商品因素開始減弱，這將貫穿始終。我們有更高的成本庫存，吉姆和我都談到我們正在努力解決這些問題，我們正在努力以更快的速度解決這些問題。

Mike and his team have been integral in doing that, that could bring margin in faster. But all of this right now, the mechanical math tells you, this is going to happen towards the end of 2024. And so 2025 is where we would start to see those 30-plus percent margins for the year come back into place.

邁克和他的團隊在這方面發揮了不可或缺的作用，這可以更快地帶來利潤。但現在所有這一切，機械數學告訴你，這將在 2024 年底發生。因此，到 2025 年，我們將開始看到當年 30% 以上的利潤率恢復到位。

Yes, listen, sorry for everybody that wants questions. This is one where pricing is going to matter for us. It's clear that throughout this whole deal of inflation, that we did price for the dollars, but it was dilutive, I don't know, at least 500 basis points.

是的，聽著，對所有想提問的人表示抱歉。這是定價對我們很重要的地方。很明顯，在整個通貨膨脹過程中，我們確實為美元定價，但它稀釋了，我不知道，至少 500 個基點。

And clearly, the reason that I put that stuff in my script, which was not the original plan was to sort put these -- to of make sure that my team understands that we have goalposts that we're operating on for sort of improvements to the P&L.

很明顯，我把這些東西放在我的腳本中的原因，這不是最初的計劃，是為了確保我的團隊明白我們有我們正在努力改進的球門柱損益表。

Gross margin is our jet fuel. It's what we use to operate the business and build our brands, and it really matters. Today's journal has this article about some companies that priced in excess and were able to do that. We either didn't or couldn't.

毛利率是我們的噴氣燃料。這是我們用來經營業務和建立品牌的東西，它真的很重要。今天的期刊有這篇文章是關於一些定價過高並且能夠做到這一點的公司。我們要么沒有，要么不能。

Remember, we are not like some of these companies that they threw in there like building materials, which was highlighted in the article this morning in the journal. We're dealing with 3 or 4 big retailers, I mean, who are the dominant players in lawn and garden in America. And I think we probably pushed them on pricing about as hard as we could. And we weren't shy about it. But we were losing margin every time we did that.

請記住，我們不像他們像建築材料一樣投入其中的一些公司，今天早上在期刊上的文章中強調了這一點。我們正在與 3 或 4 家大型零售商打交道，我的意思是，他們是美國草坪和花園的主要參與者。而且我認為我們可能會盡可能地推動他們定價。我們並不害羞。但每次我們這樣做都會損失利潤。

They need to understand that. And my team needs to understand that gross margin is our jet fuel, and we need that to war here. So I think we're trying to figure out where we -- I mean, I don't think we're final on what we do with pricing. I think it's going to depend on conversations we have sort of now in the next month or so with our retail partners for them to understand that this. And a lot will be just how does the business look? How did brand do? Did we lose share? There's no obvious share loss here. I think there's -- just I'll throw out there a little sensitivity on our most expensive grass seed, where we're looking at this. But so I think we're pricing that sort of in market right now.

他們需要明白這一點。我的團隊需要明白毛利率是我們的噴氣燃料，我們需要它在這裡開戰。所以我認為我們正在努力弄清楚我們——我的意思是，我認為我們在定價方面並不是最終決定的。我認為這將取決於我們在下個月左右與我們的零售合作夥伴進行的對話，讓他們了解這一點。很多將只是業務看起來如何？品牌是怎麼做到的？我們失去份額了嗎？這裡沒有明顯的份額損失。我認為有 - 我會在我們正在研究的最昂貴的草種子上拋出一點敏感性。但我認為我們現在正在為這種市場定價。

But I think we do need pricing, and we can get gross margin back where we needed to be, if the retailers and the operating team are willing to say pricing is just a faster way to get there than wait for the commodities to come down, which they are, okay?

但我認為我們確實需要定價，我們可以將毛利率恢復到我們需要的水平，如果零售商和運營團隊願意說定價只是一種比等待商品下降更快的方式，他們是誰，好嗎？

Why don't we move to Andrew Carter.

為什麼我們不搬到安德魯卡特那裡。

Our next question comes from the line of William Carter of Stifel.

我們的下一個問題來自 Stifel 的 William Carter。

Can you -- yes, it's Andrew Carter. Can you hear me?

你能——是的，是安德魯·卡特。你能聽到我嗎？

We can.

我們可以。

Okay. Great. So I'm just going to simplify your question. So it sounds like you said the guidance change today is all the bad, but none of the good, and specifically to Hawthorne. Hawthorne was worse than we expected, but you did reiterate the breakeven run rate. Is that a fair question to kind of characterize the overall guidance?

好的。偉大的。所以我只是想簡化你的問題。所以聽起來你說今天的指導變化都是壞事，但沒有一件好事，特別是對霍桑而言。霍桑比我們預期的要糟糕，但你確實重申了盈虧平衡運行率。這是一個描述整體指導特徵的公平問題嗎？

I think it is. I think what you're looking at is a few things and how we walk through this. First of all, what Mike and the team have been able to do is absolutely outstanding. And the level of connectivity in the company today is extremely high.

我覺得是這樣的。我認為你正在看的是一些事情，以及我們如何解決這個問題。首先，Mike 和他的團隊所做的一切都非常出色。今天公司的連通性水平非常高。

So we are on top of all of this and the message should read like this to you. We've seen very good performance on the load out, that's booked in the first half. POS so far, you heard Jim and Mike both go through that. We have seen a little bit of a mix change where our branded fertilizers performing extremely well, private label fertilizers okay, but we've seen great mulch performance. That is a mix change from what we had expected. That keeps POS plus 10% in the lawns area and then sort of flat over the rest. But that mix is going to change as we move through the year because we're expecting now sort of mulches -- soils to come up a little bit.

所以我們掌握了所有這一切，消息應該像這樣讀給你聽。我們已經看到了非常好的加載性能，這是在上半年預訂的。 POS 到目前為止，您聽說 Jim 和 Mike 都經歷過。我們看到了一些混合變化，我們的品牌肥料表現非常好，自有品牌肥料還可以，但我們看到了很好的覆蓋性能。這是我們預期的混合變化。這使草坪區域的 POS 增加 10%，然後在其餘部分持平。但隨著我們這一年的推移，這種組合將會發生變化，因為我們現在期待某種覆蓋物 - 土壤會出現一點點。

And so you may see lawns come down a little bit and growing media come up a little bit. So there's some mix movement there, margin. But the bigger piece, you're absolutely right, is all with Hawthorne. Now the piece here that's extremely important with Hawthorne is like Jim said. We are navigating many different obstacles in terms of revenue generation. But all of the delta in terms of underlying performance is coming from our cost-outs. That's why we took a restructuring in the quarter to further realize our position and reform it with where the overall revenue is. We've taken out 4 warehouses to be able to do that. That brings cost out with it. And the trajectory now is to keep us on track for breakeven performance by the end of the year.

因此，您可能會看到草坪稍微倒塌，而生長的媒體則稍微長出一點。所以那裡有一些混合運動，保證金。但更重要的是，你是對的，與霍桑有關。現在這裡對 Hawthorne 極其重要的部分就像 Jim 所說的那樣。在創收方面，我們正在克服許多不同的障礙。但就基礎性能而言，所有增量都來自我們的成本支出。這就是為什麼我們在本季度進行重組以進一步實現我們的地位並根據總收入對其進行改革的原因。我們已經拿出 4 個倉庫來做到這一點。這帶來了成本。現在的軌跡是讓我們在年底前保持盈虧平衡。

Okay. Great. Second question, I wanted to drill in just on the -- you did say POS was in -- you expected POS to come in line with your expectations. I just want to drill down on that statement because March obviously started behind April. That was a weaker month. April was strong. So what I would ask is, are you in line with your original expectations through April, therefore, kind of upside to your old estimate? Or is this kind of guidance for full year in line kind of predicated on weather kind of staying the same in May and June?

好的。偉大的。第二個問題，我想深入了解——你確實說過 POS 在——你希望 POS 符合你的期望。我只是想深入了解該聲明，因為三月顯然是在四月之後開始的。那是一個較弱的月份。四月很強。所以我想問的是，到 4 月份，你是否符合你最初的預期，因此，比你原來的估計有點上行？或者這種全年的指導是否基於 5 月和 6 月的天氣保持不變？

Yes, there's a lot going on there. Let me -- I was going to say I'll kick off, but we can go straight to Mike. Go ahead, Mike.

是的，那裡發生了很多事情。讓我——我本來想說我會開始的，但我們可以直接去找邁克。來吧，邁克。

No, I think we're in line with our current expectations. Mix will be -- will adjust based on greater takeaway based on the timing of the season. But we -- there's so much POS ahead of us that we're not changing anything as far as our guidance. We're just running various models based on how POS comes out.

不，我認為我們符合我們目前的預期。混合將是——將根據季節的時間根據更大的外賣進行調整。但是我們 - 我們前面有太多 POS，就我們的指導而言，我們沒有改變任何東西。我們只是根據 POS 的出現方式運行各種模型。

Yes, Andrew. I do think that you probably -- at least from my point of view, you're overthinking it. I think what's clear is Garth did not want to see the numbers go up coming out of this call. I don't think we're sitting around reforecasting every week on what we see in North America. I think people were just running business right now. But I think it's a positive season so far. And is there any disappointment in the season?

是的，安德魯。我確實認為你可能——至少從我的角度來看，你想多了。我想清楚的是，Garth 不想看到這次電話會議的人數上升。我不認為我們每週都在重新預測我們在北美看到的情況。我認為人們現在只是在經營業務。但我認為到目前為止這是一個積極的賽季。賽季有什麼令人失望的地方嗎？

No. I mean it's always lumpy. We got 50% of our POS still ahead of us. So there will be ups and downs of weeks. We've had fabulous weeks. We've had weather weeks. So -- and we constantly make adjustments. But we're staying with our guidance on where we're going on the U.S. business. So we've not called anything...

不，我的意思是它總是凹凸不平。我們還有 50% 的 POS 未完成。所以會有幾週的起伏。我們度過了美妙的幾週。我們經歷了天氣週。所以——我們不斷地做出調整。但我們將堅持我們對美國業務發展方向的指導。所以我們什麼都沒叫...

And that would be -- Andrew, that would be typical. We typically would not be calling up or probably down our numbers this early in the year.

那就是——安德魯，這很典型。我們通常不會在今年年初調高或調低我們的數字。

Generally, I'll talk to the finance guy about any number until after May 31. Because it is just the way how the season rolls out. So -- and by region and by weather effect. But everything that we've done promotionally this year and timing with retailers is actually beyond our expectations.

一般來說，我會在 5 月 31 日之前與財務人員討論任何數字。因為這就是賽季的展開方式。所以 - 按地區和天氣影響。但我們今年所做的所有促銷活動以及與零售商的合作時機實際上都超出了我們的預期。

But Luke isn't messing around. I think we generally do not want to spend a lot of time rebudgeting at this point in the season. I think we just run the business. And I think we feel I would say, neutral to positive about the consumer business.

但盧克並不是在胡鬧。我認為我們通常不想在賽季的這個時候花很多時間重新預算。我認為我們只是經營業務。而且我認為我們覺得我會說，對消費者業務持中立態度。

We'll blow it out this week.

本週我們會把它吹滅。

Our next question comes from the line of Joe Altobello of Raymond James.

我們的下一個問題來自 Raymond James 的 Joe Altobello。

So I guess staying on POS for a second, flat through April, given where you were 3 months ago, sounds pretty positive. Can you remind us what your compares look like in the back half of this year. So you kind of put that into context?

因此，考慮到 3 個月前的情況，我想在 POS 上停留一秒鐘，直到 4 月持平，聽起來非常積極。你能提醒我們你今年下半年的比較情況嗎？所以你有點把它放在上下文中？

Super easy. The very soft comps, do we have any -- I'm looking at the sales guy over here.

超級簡單。非常軟的補償，我們有沒有——我正在看這裡的銷售人員。

He's been at computer, though. Not ready.

不過他一直在電腦前工作。沒有準備好。

You're looking at throughout the year low single digits to negative double-digit comps. So we've got a negative comp for the balance of the year.

您正在查看全年的低個位數到負兩位數的補償。所以我們對今年的餘額有一個負面的補償。

Okay. Helpful. And then secondly, on the SG&A guide. If my math is correct, I think you're guiding somewhere in the neighborhood of about $570 million this year. Obviously, it's well below what you spent the last few years here. How much of that is temporary? And how much of that might come back, I guess, in '24? Or should we kind of stay at that, call it, mid-15s percentage of sales?

好的。有幫助。其次，在 SG&A 指南上。如果我的計算是正確的，我認為你今年的指導價值約為 5.7 億美元。顯然，它遠低於你過去幾年在這裡度過的時光。其中有多少是暫時的？我猜，在 24 世紀，其中有多少可能會回來？或者我們應該保持在 15 歲左右的銷售額百分比？

Yes. That's what we've been very diligent about giving that guidance because I think we had a lot of questions earlier in the year about that. And you're exactly right, sort of mid-15s, I'm saying, between 15% and 16%. That's down from that 19% level.

是的。這就是我們一直非常努力地提供該指導的原因，因為我認為我們在今年早些時候對此有很多疑問。你完全正確，大約 15 歲左右，我是說，在 15% 到 16% 之間。這低於 19% 的水平。

But again, we've detailed for you where we've come from, which was a much larger revenue trajectory through Project Springboard. We've realigned our SG&A spend. We think in between 15% and 16% is a good way to look at that moving forward. So as revenues grow, Joe, we'll bring back some spend, but we're keeping that pretty locked in.

但同樣，我們已經為您詳細說明了我們的來源，這是通過 Project Springboard 獲得的更大的收入軌跡。我們重新調整了 SG&A 支出。我們認為在 15% 到 16% 之間是展望未來的好方法。因此，隨著收入的增長，喬，我們會收回一些支出，但我們會把這筆錢鎖在裡面。

Joe, we've known each other a long time. It was crazy painful around here, okay? I mean it was a -- I think, I told people it's going to be a long (expletive) winter, and it was. We let a lot of people go, a lot of people we had basically just hired. We went from kind of we can do anything. I think what was -- we called it, Mike, unconstrained?

喬，我們認識很久了。周圍很痛苦，好嗎？我的意思是那是一個——我想，我告訴人們這將是一個漫長的（咒罵的）冬天，事實確實如此。我們讓很多人走了，很多人基本上是我們剛剛僱用的。我們從某種意義上說我們可以做任何事情。我想什麼是——我們稱之為，邁克，無拘無束？

Unconstrained.

無拘無束。

To super constrained in a real short period of time, and that hurt. But I would invite you, Joe, you've been a friend for a long time. I would say come visit with us. Maybe we can set up an event where you can actually meet the sort of operating team. So there's fewer people, pretty diverse crowd, but really enthusiastic. They didn't get down. And it would have been really easy to kind of lose our way and everybody be down.

在真正的短時間內超級受限，那很疼。但我會邀請你，喬，你是我的老朋友了。我會說來和我們一起參觀。也許我們可以舉辦一個活動，讓您可以真正見到那種運營團隊。所以人少了，人群相當多樣化，但真的很熱情。他們沒有下來。很容易迷路，大家都很沮喪。

We got [abundant young warriors] who are running this business, and I'm really proud of them. And I would say we should find a way for you and others to meet some of the team. So it's a smaller team, but they're super engaged, and they're kind of rocking and rolling. So while the numbers are down and it hurt, I do think that the surviving team is super on top of their game, and you'd like it if you met them.

我們有[豐富的年輕戰士]在經營這項業務，我真的為他們感到驕傲。我想說的是，我們應該找到一種方式讓您和其他人與團隊中的一些人會面。所以這是一個較小的團隊，但他們非常投入，而且他們有點搖擺不定。因此，雖然人數下降而且很痛苦，但我確實認為倖存的球隊在他們的比賽中處於領先地位，如果你遇到他們，你會喜歡的。

Your next question comes from the line of Bill Chappell of Truist Securities.

你的下一個問題來自 Truist Securities 的 Bill Chappell。

Just one, I guess, first a quick one on -- not quick. But on Hawthorne business, I mean, help me understand what gives you confidence that you've cut enough to get profitability? It seemed like you implied that kind of the daily sales numbers hasn't really picked up as you would expect it to by this point? I know there's not a whole lot of visibility to that industry in general. So what guideposts are you looking at that feel like, okay, we're going to -- on that path to breakeven on that path to improving just with the assumption that top line is not going to improve and maybe it stays as weak, if not weaker, for the foreseeable future.

我猜，只有一個，首先是一個快速的——不是很快的。但是關於霍桑的生意，我的意思是，幫我理解是什麼讓你相信你已經削減了足夠多的錢以獲得盈利？似乎你暗示那種每日銷售數字並沒有像你預期的那樣在這一點上真正回升？我知道一般來說，這個行業的知名度並不高。那麼，你在看什麼路標，感覺就像，好吧，我們將——在這條通往收支平衡的道路上，在這條改進的道路上，假設頂線不會改善，也許它仍然很弱，如果在可預見的未來，不會更弱。

Well, I don't know. I'm looking at Chris and Matt on sort of trajectory on sort of operating profit, I guess, is how we talk about that. But I would say we've been talking about where we're going to start seeing industry bottoming out. I think that within the Hawthorne crew and with the industry people we've talked to, I think people are viewing like we're either been there or we are there.

嗯，我不知道。我正在看克里斯和馬特關於營業利潤的某種軌跡，我想，這就是我們談論的方式。但我想說我們一直在討論我們將從哪裡開始看到行業觸底反彈。我認為在 Hawthorne 劇組內部以及與我們交談過的行業人士中，我認為人們正在觀看我們要么去過那裡，要么我們在那裡。

And so I do think that, that's part of this is that it feels like there's starting to be enough positive signs on sort of value per pound, I think, and consumption of products with people who know what they're doing, that we're sort of at that inflection point.

所以我確實認為，部分原因是感覺開始有足夠的積極跡象表明每磅的價值，我認為，以及與知道自己在做什麼的人一起消費產品，我們'重新回到那個拐點。

On the cost side, I don't know, they -- when we talk about cutting expenses here like on an annual rate of like nearly $0.25 billion, Hawthorne is like half of that. And that has been -- I give credit to everybody there that whatever Mike and I have done, Chris has done like about the same amount of money.

在成本方面，我不知道，他們——當我們在這裡談論以每年近 2.5 億美元的速度削減開支時，Hawthorne 只是其中的一半。那就是——我感謝那裡的每個人，無論邁克和我做了什麼，克里斯所做的都差不多。

And so it's been very challenging. I do think you heard comments about we got to do something. Part of what I'm looking at is there gets to be a point beyond breakeven that depending on the sales volume and the mix that you just say, is this a place we can stay. And we're not giving up on this market. I think if you look at just consumption by Americans of pot, those numbers are okay to good. I don't think that Mike or Matt or Chris or me, would look and say that we just want to be in North American consumer business.

所以這是非常具有挑戰性的。我確實認為你聽到了關於我們必須做點什麼的評論。我正在看的部分內容是，根據銷量和你剛才說的組合，必須有一個超出盈虧平衡點的點，這是我們可以留下來的地方。我們不會放棄這個市場。我認為，如果你只看美國人的大麻消費量，這些數字還可以。我不認為邁克、馬特、克里斯或我會說我們只想從事北美消費者業務。

I think we get back to where we have been in the past before we started making these investments of saying of the 5 pillars that do we need live goods? Do we need Hawthorne? I think the answer is yes. We like the growth characteristics of that, and we still believe in both of those. I do think that at the volume numbers we're talking here, we're going to need to hook up with other people who are in a similar situation who need scale. And that's what you should read from the hints that we threw out there. But Chris, I don't know where you are just on the business. And then, Matt, I think we talk about sort of the operating profit.

我認為在我們開始進行這些投資之前，我們回到了過去的狀態，即我們需要直播商品的 5 大支柱？我們需要霍桑嗎？我認為答案是肯定的。我們喜歡它的增長特徵，我們仍然相信這兩者。我確實認為，就我們在這裡討論的數量而言，我們將需要與處於類似情況但需要規模的其他人聯繫。這就是您應該從我們在那裡拋出的提示中讀到的內容。但是，克里斯，我不知道你在做什麼工作。然後，馬特，我想我們談論的是營業利潤。

Hey, bill. It's Chris. Yes, so just a little bit more detail on why we've got some confidence in the second half here. And Jim mentioned, I think, we are starting to see some tailwinds materializing in the industry, and they may take another month or 2 to hit us, just where we occupy kind of the value chain in the industry that once those and producers do see some price recovery for their products that will work its way through to us, but there's a little bit of -- there's inventory in retailers and all sorts of things that work its way back.

嘿，比爾。是克里斯。是的，所以只是更詳細地說明了為什麼我們對下半場有信心。吉姆提到，我認為，我們開始看到行業中出現一些順風，它們可能還需要一兩個月的時間來打擊我們，而我們在行業中佔據的價值鏈一旦那些人和生產商確實看到了他們產品的一些價格回升將對我們產生影響，但有一點——零售商的庫存和各種各樣的東西都在回升。

We're also expecting just a pretty standard seasonal lift that we see kicking in, in Q3 and into Q4 with outdoor grows in places like California. So we expect that as well. And we've also got a number of pretty high upside, what we believe are high upside in East Coast states, places like New York, Maryland, (inaudible) but it's an emerging market for us. We expect to start to see some velocity in.

我們還期待在第三季度和第四季度看到一個非常標準的季節性提升，在加利福尼亞等地進行戶外種植。所以我們也希望如此。我們也有一些相當高的上漲空間，我們認為東海岸各州的上漲空間很大，比如紐約、馬里蘭州（聽不清），但這對我們來說是一個新興市場。我們希望開始看到一些速度。

And then we've got a ProHort business that in spite of everything that's going on in the North American cannabis market, the ProHort business for us, which is primarily the Agrolux brand, is doing extremely well. And those are sales due to the seasonality of their customers, which are professional ProHort, a lot of veggie growers and that kind of thing in Europe and Canada, their season, they want to buy product at the end of our year.

然後我們有一個 ProHort 業務，儘管北美大麻市場發生了一切，但我們的 ProHort 業務，主要是 Agrolux 品牌，做得非常好。這些是由於他們的客戶的季節性而產生的銷售，他們是專業的 ProHort，很多蔬菜種植者以及歐洲和加拿大的那種東西，他們的季節，他們想在我們年底購買產品。

So those are sales we expect to see kicking in, in Q4. But they're big numbers. So we're optimistic. Look, if the market continues to have struggles, we'll continue to make moves, whether they're large strategic moves, as Jim mentioned, or the type of internal moves we continue to make.

所以這些是我們預計在第四季度看到的銷售。但他們是大數字。所以我們很樂觀。看，如果市場繼續掙扎，我們將繼續採取行動，無論是吉姆提到的大型戰略舉措，還是我們繼續採取的內部舉措類型。

But I think there's a lot of signs out there in spite of the headlines that are making us optimistic.

但我認為，儘管頭條新聞讓我們感到樂觀，但仍有很多跡象。

I think just to come on from a position of trajectory and profitability the top line, we're being pretty conservative about and how we're talking about it today. I think Chris and Jim both shed a light on there could be potential improvement. So there is positivity pretty much in every product line that we're talking about.

我認為只是從軌跡和盈利能力的位置來看，我們今天對它以及我們談論它的方式非常保守。我認為 Chris 和 Jim 都闡明了可能存在的改進潛力。因此，我們正在談論的每個產品線幾乎都有積極性。

But specific to how we're talking to you about it, the profit trajectory is based on the actions that we've already taken. As Jim said, Project Springboard, half of that was coming from Hawthorne that's built into the recovery trajectory. The restructuring that we took also is directed at Hawthorne. That takes out a significant amount of warehousing costs in and of itself, that is the major delta between today and the end of the year. So don't necessarily need a revenue change to help us get to that profitability point. So it's really on us, and we've already taken the big actions and now it's just working it through the next couple of months.

但具體到我們如何與您談論它，利潤軌跡是基於我們已經採取的行動。正如吉姆所說，Project Springboard，其中一半來自 Hawthorne，它已融入恢復軌跡。我們進行的重組也是針對霍桑的。這本身就消除了大量的倉儲成本，這是今天和年底之間的主要增量。因此，不一定需要改變收入來幫助我們達到盈利點。所以這真的在我們身上，我們已經採取了重大行動，現在它只是在接下來的幾個月裡努力。

Great. And then just 1 follow-up back on consumer POS and just maybe hopefully this is a short answer question. But I get that you're pleased with how the market or how the business is reacting when the weather is good. But clearly, weather in March was bad. And I think you said there was only 1.5 good weeks in April. And so -- and historically, in the years that I've covered it, it's been rare where you could kind of make up those March and April sales in May, June, July in the Southern half of the country. So is your expectation and your kind of optimism for the POS that the Northern half or the other markets that haven't broken are going to be better than expected? Or do you actually expect consumers who for weather reasons didn't show up in March or April are going to still show up later in the season and make equal amount of purchases because you're going to go deep into the season?

偉大的。然後僅對消費者 POS 進行 1 次跟進，希望這是一個簡短的回答問題。但我知道你對天氣好的時候市場或企業的反應感到滿意。但顯然，三月的天氣很糟糕。我想你說過 4 月份只有 1.5 個好星期。因此——從歷史上看，在我介紹它的這些年裡，你很少能在美國南部的 5、6、7 月彌補 3 月和 4 月的銷售額。那麼，您對 POS 的期望和樂觀程度是否表明北半部或其他尚未破裂的市場會好於預期？或者您是否真的期望由於天氣原因而沒有在 3 月或 4 月出現的消費者仍會在本季晚些時候出現併購買相同數量的商品，因為您將深入本季？

Well, I don't expect -- I don't see us being that far behind. I would say we're going to make up -- we're going to deliver what we said we're going to do, and we're going to execute against it.

好吧，我不希望——我不認為我們會落後那麼遠。我會說我們會和解——我們會兌現我們說過要做的事情，我們會按照它執行。

So -- and I would tell you that we've actually been a lot more aggressive early like with [birds]. And given the weather, we actually saw in markets where it wasn't weather-related, that we were actually flat to slightly up in units, because we got consumers out. So I'm actually more bullish than what we have out there, so.

所以 - 我會告訴你，我們實際上在早期就像 [鳥類] 一樣更具侵略性。考慮到天氣，我們實際上在與天氣無關的市場中看到，我們的單位實際上持平或略有上升，因為我們吸引了消費者。所以我實際上比我們所擁有的更樂觀，所以。

So you don't think the weather has been that much of an issue?

所以你不認為天氣一直是個大問題？

No, it's not been as big as it's historically been. In fact, I think it's probably, in some cases, better than I thought.

不，它沒有歷史上那麼大。事實上，我認為在某些情況下，它可能比我想像的要好。

If you look at -- if you went back 2 weeks ago, I know Luke was at that point saying we got this. We're going to run supply chain out of product, then we get like 2 (expletive) weekends, and there's 2 bad words now. And people are looking concerned. This is over like a couple of bad weekends.

如果你看看——如果你回到 2 週前，我知道盧克當時說我們明白了。我們將耗盡供應鏈的產品，然後我們會有 2 個（咒罵的）週末，現在有 2 個壞詞。人們看起來很擔心。這就像幾個糟糕的周末一樣結束了。

Look at the weather forecast right now. Like again, again mine goes out like 14 days. Just looks really great. And I think there has been a move in our business toward May, June, honestly. So I think it -- if somebody said to me, you're going to get April showers, are you worried about it? I would say not really. So I don't think we're -- we don't need a lot to happen. I expect a lot to happen. I don't think we need a lot to happen.

看看現在的天氣預報。又一次，我的又過了 14 天。看起來真的很棒。老實說，我認為我們的業務已經向五月、六月邁進了一步。所以我認為——如果有人對我說，你將迎來四月的陣雨，你會擔心嗎？我會說不是真的。所以我不認為我們 - 我們不需要很多事情發生。我期待很多事情發生。我認為我們不需要發生太多事情。

I expect POS to be there. So it's a question of where we end in inventories and those type of things, not a POS issue. I think people are hanging on to us. Too much more than, say, what our retail inventory is at the end of the timing of shipments.

我希望 POS 在那裡。所以這是一個問題，我們在哪裡結束庫存和那些類型的事情，而不是 POS 問題。我認為人們正在依賴我們。比說我們在發貨時間結束時的零售庫存要多得多。

Yes, Bill, I think in that's what Luke is -- Luke wants to see retail inventories not crash. Retail inventories are down a lot. We want to keep retailers in the game. And I think what this weekend and next like 1.5 weeks will do was we'll be forcing retailers to buy product from us. And that's a good thing, so.

是的，比爾，我認為盧克就是這樣——盧克希望看到零售庫存不會崩潰。零售庫存下降了很多。我們想讓零售商參與進來。我認為本週末和下一個 1.5 週將要做的是我們將迫使零售商從我們這裡購買產品。這是一件好事，所以。

They never want to be long on inventory. So I think that it's early to get POS pull off is helpful. But as far as POS being there, I'm really -- we're trending towards like 2018. We're kind of blew it away on POS. So I think people over -- say POS tied to shipments more than, and so fair enough.

他們從不希望存貨過多。所以我認為儘早推出 POS 是有幫助的。但就 POS 而言，我真的 - 我們正朝著 2018 年的方向發展。我們有點在 POS 上把它吹走了。所以我認為人們結束了 - 說 POS 與出貨量的關係更多，這很公平。

In 2018, the POS was May, June, right? And that's why we count it.

2018年的POS是5月、6月吧？這就是我們計算它的原因。

We're not good at short answers. We're talking to ourselves.

我們不擅長簡短的回答。我們在自言自語。

Our next question comes from the line of -- I'm sorry, comes from the line of Eric Bosshard of Cleveland Research Company. Your question please, Eric.

我們的下一個問題來自——對不起，來自克利夫蘭研究公司的 Eric Bosshard。埃里克，請問你的問題。

I have 2 questions. I guess 1 for Matt and 1 for Jim. To start with Matt on the numbers. One, on Consumer, it's clear today that the bias is upside, sales in consumer, and I appreciate the outlook and the clarity on that. On the gross margin side, what I'm trying to understand is do you have that same sort of sight line to progress? I didn't totally understand why the gross margin didn't start to improve to the second half of next year. So what are the moving pieces in gross margin that influence that, both near term? It seems like pricing holds in and the promotional budgets are set for this year. But are the moving parts within gross margin as well in consumer that we should be thinking about in both the near term and into '24?

我有兩個問題。我猜 Matt 得 1，Jim 得 1。先從馬特的數字開始。一，關於消費者，今天很明顯，偏見是向上的，消費者的銷售，我很欣賞前景和清晰度。在毛利率方面，我想了解的是你是否有同樣的視線來取得進展？我完全不明白為什麼毛利率到明年下半年還沒有開始好轉。那麼，短期內影響毛利率的因素是什麼？似乎定價保持不變，今年的促銷預算也已確定。但是，我們是否應該在近期和進入 24 世紀時考慮毛利率以及消費者中的移動部分？

Yes. Thanks for framing it up that way because pricing does hold. Promotions are working. You just heard the whole volume story and how we're looking at that through the rest of the year. The biggest piece in margin formation and by the way, margin degradation from the 30s has been the inflationary impact.

是的。感謝您以這種方式構建它，因為定價確實有效。促銷活動正在發揮作用。你剛剛聽到了整個卷的故事，以及我們在今年餘下的時間裡是如何看待這個故事的。利潤率形成的最大部分，順便說一下，30 年代以來利潤率下降一直是通貨膨脹的影響。

And so what we've done, and you know this, we pretty much locked up this year. So we have 90% of our COGS locked up in 2023. We've begun to layer in, in 2024. We do that both from a supply surety perspective and also a price perspective on our COGS so that we have that visibility to work with our retailers on.

所以我們所做的，你知道這一點，我們今年幾乎鎖定了。因此，我們在 2023 年鎖定了 90% 的 COGS。我們已經開始在 2024 年分層。我們從供應保證的角度和我們的 COGS 的價格角度來做到這一點，這樣我們就有了合作的可見性我們的零售商。

That being said, in addition, we also have high-cost inventories that we're continuing to work through. Remember, we came into this year with -- in the neighborhood of about $1 billion of excess inventory between both of the businesses we're working through a significant amount of that. And that is some of the, if not all of the inventory release that we're going to get over the next 2 years is that higher cost inventory.

話雖這麼說，此外，我們還有我們正在繼續努力解決的高成本庫存。請記住，我們進入今年 - 在我們正在處理大量庫存的兩家企業之間大約有 10 億美元的過剩庫存。這就是我們將在未來 2 年內獲得的部分（如果不是全部）庫存釋放是更高成本的庫存。

The activities that Mike spoke about to bring those in faster we're looking at. So you have those 2 phenomenon, which is prices being locked in, inflationary factors coming down, but at the same time, we're already locking in 2024. And then you have the high-cost inventories that we're working through and trying to do that more quickly. On the backside of that, you'll get back to that natural in the 30s for U.S. consumer type margins, nothing else at play. And by the way, that's why Jim talked about we have other levers, right? We've done great work on the SG&A side. We continue to drive out operational efficiency throughout the entire organization, there is additional pricing to go should we need to go for it.

Mike 談到的活動可以讓我們更快地參與其中。所以你有這兩種現象，即價格被鎖定，通脹因素下降，但與此同時，我們已經鎖定在 2024 年。然後你有我們正在努力解決和嘗試的高成本庫存更快地做到這一點。在這背後，你將回到 30 年代美國消費者類型利潤率的自然水平，沒有其他因素在起作用。順便說一句，這就是吉姆談到我們還有其他槓桿的原因，對吧？我們在 SG&A 方面做得很好。我們繼續提高整個組織的運營效率，如果我們需要這樣做，還有額外的定價。

Okay. That's helpful. And then, Jim, you talked about early in your script about this being the base or foundation. I don't even know if you said that. But you talked about a transition now to growth for the company. And so I'm curious, you talked about reforming the strategy team and this transition to growth. I'm curious what that looks like strategically? And I guess I also was surprised to hear that Hawthorne was mentioned in that considering the path that's been laid with Hawthorne. And I appreciate Chris's comments that there's tailwinds growing in that business. But help me understand when you talk about transition to growth, what that looks like or what's on that menu?

好的。這很有幫助。然後，吉姆，你在劇本的早期談到這是基礎或基礎。我什至不知道你是不是這麼說的。但是你談到了公司現在向增長的過渡。所以我很好奇，你談到了改革戰略團隊和這種向增長的轉變。我很好奇這在戰略上看起來像什麼？而且我想我也很驚訝聽到提到霍桑，考慮到與霍桑一起鋪設的道路。我很欣賞克里斯的評論，即該業務正在增長的順風。但是，當您談論向增長過渡時，請幫助我理解它是什麼樣子或菜單上有什麼？

Okay. Let's just start with innovation -- dollars that Pattie has. I think if you look at the dollars that the marketing group had going into this year, I think they had -- I'm not going to say unlimited dollars, but I think they had kind of what they wanted on their core brands.

好的。讓我們從創新開始——帕蒂擁有的美元。我想如果你看看營銷團隊今年投入的資金，我認為他們有——我不會說無限的資金，但我認為他們在核心品牌上有他們想要的東西。

I think if you're in kind of a secondary or tertiary brand, I think those were pretty tight. So I think if you look at R&D, the R&D budgets were fairly intact. I think if you look compared to the sacrifices that happened all over this business, R&D was relatively immune to that, not completely. But I think we talked about on these past calls that if something had a sort of marginal payout or a payout that was farther down the road, we either eliminated the program or we put it in suspended -- we put it in the refrigerator until later to deal with it. Not let it go bad, but take it out later.

我認為，如果您屬於二級或三級品牌，我認為這些品牌非常緊俏。所以我認為如果你看一下研發，研發預算是相當完整的。我認為，如果你看看與整個業務中發生的犧牲相比，研發部門相對免疫，而不是完全免疫。但我想我們在過去的這些電話會議上談到，如果某件事有某種邊際支出或更遠的支出，我們要么取消該計劃，要么暫停它——我們把它放在冰箱裡，直到以後去處理它。不要讓它變壞，而是稍後將其取出。

So I do think that as we -- I think as we -- Eric, we basic -- I would say we see light at the tunnel. The winter, again, I don't know how to say it any differently, it's really (expletive). We were talking about islands. It felt like an island here. We believed in ourselves. I'm not sure everybody else believed in us. I think this company deserves a ton of credit for doing what was required both in making sales numbers and getting expenses out.

所以我確實認為，正如我們 - 我認為我們 - 埃里克，我們基本 - 我會說我們在隧道看到了光明。冬天，又一次，我不知道該怎麼說，真的（咒罵）。我們在談論島嶼。感覺這裡就像一座孤島。我們相信自己。我不確定其他人是否相信我們。我認為這家公司在實現銷售數字和減少開支方面所做的工作值得稱讚。

For us, north of $200 million of sustainable savings coming out of the business, that is some amazing stuff. And heroic, nobody was sitting around really talking about growth, okay?

對於我們來說，超過 2 億美元的可持續儲蓄來自該業務，這是一些了不起的東西。英勇，沒有人坐在那裡真正談論增長，好嗎？

Now as we're looking at light at the end of the tunnel. It's not really survival. It's how do we grow out of this. I think we're starting to queue up investments. I think the strategic team, we -- Aimee ran our strategy group, and that group was eviscerated in like a day. And what's clear is that in corporate, and we're basically repurposing existing high-end thinkers into Matt's Group.

現在我們正在尋找隧道盡頭的光。這不是真正的生存。這就是我們如何從中成長。我認為我們開始排隊投資。我認為戰略團隊，我們 - Aimee 管理著我們的戰略小組，並且該小組在一天之內就被掏空了。很明顯，在企業中，我們基本上是將現有的高端思想家重新利用到馬特的小組中。

What's clear is that corporately, we need to think through a bunch of these opportunities, not really burden the operating team with this, but partly come up with metrics that we can use as guidepost for the business going forward, but also to make the investment choices that will drive growth in both sales and margin here in the company.

顯而易見的是，從企業角度來看，我們需要仔細考慮這些機會，而不是真正給運營團隊增加負擔，而是部分地提出一些指標，我們可以將其用作未來業務的指南，同時也可以進行投資將推動公司銷售額和利潤增長的選擇。

And so that's what I meant by it is that I think we're seeing light, and we're basically saying growth is going to become something that matters and how do we thoughtfully get there. I didn't say that we're free, but I think we see a view of that's less burdened than it was.

所以這就是我的意思，我認為我們看到了曙光，我們基本上是在說增長將成為重要的事情，以及我們如何深思熟慮地實現這一目標。我並沒有說我們是自由的，但我認為我們看到了一種比過去負擔更輕的觀點。

Our next question comes from the line of William Reuter of Bank of America.

我們的下一個問題來自美國銀行的 William Reuter。

You've mentioned taking additional pricing. Is the expectation that you would consider doing that mid-season? Or is this more in reference to when you have shelf space resets at the end of the season?

你提到了額外定價。期望你會考慮在季中進行嗎？或者這更多是指您在季末重置貨架空間的時間？

Well, it's not really shelf space resets. The negotiations with our largest retailers for next year are happening now. And so this is a current discussion. And I haven't taken pricing off the table.

好吧，這並不是真正的貨架空間重置。與我們最大的零售商就明年進行的談判現在正在進行中。所以這是當前的討論。而且我還沒有取消定價。

I think probably there's pressure not to take pricing. I'm just partly what I'm passing to my team and to our retail friends who are listening to this call is that our gross margin really matters, the ability to grow out of this, which everybody needs us and our retailers, it's going to be do we have enough ammo to run the business? And so we've come out of a period that was pretty tight.

我認為可能存在不定價的壓力。我只是部分地傳遞給我的團隊和正在聽這個電話的我們的零售朋友是我們的毛利率真的很重要，從中成長的能力，每個人都需要我們和我們的零售商，它會是我們有足夠的彈藥來經營業務嗎？所以我們已經走出了一段非常緊張的時期。

So if we need pricing to get us back to historical margins because that's all we're talking about. Then as far as I'm concerned, that's a tool that's in our tool bag. You accept that, Mike?

因此，如果我們需要定價來讓我們回到歷史利潤率，因為這就是我們所談論的。然後就我而言，這是我們工具包中的工具。你接受嗎，邁克？

I accept that. We're first trying to get there and get units out, to get cost in alignment with our retail partners to not have to do that unless we need to.

我接受。我們首先嘗試到達那裡並取出單位，以使成本與我們的零售合作夥伴保持一致，除非我們需要，否則不必這樣做。

Understood. That helps a lot. And then the $200 million of run rate cost savings by the end of the year, I can't remember if you provided the breakdown of what percentage of that is in SG&A versus COGS. Is there kind of a rough outline for me to think about?

明白了。這很有幫助。然後到年底節省了 2 億美元的運行率成本，我不記得你是否提供了 SG&A 與 COGS 的百分比明細。有沒有一個粗略的輪廓供我考慮？

I think last time we spoke about it, it was roughly 1/3 SG&A and then 2/3 in COGS. Sorry, the other way around, 2/3 in SG&A, 1/3 in COGS.

我想上次我們談到它時，大約是 SG&A 的 1/3，然後是 COGS 的 2/3。抱歉，反過來，2/3 在 SG&A 中，1/3 在 COGS 中。

Perfect. And then just lastly for me, I was curious if you could share any changes that you have in terms of your long-term plan for Hawthorne when you've been asked about this historically. I know you basically said, look, this is not an opportunistic time to do anything. We need to fix the business. But Jim, in an earlier response, you mentioned that your perspective on cannabis has changed a little bit. So I was wondering if that maybe has changed strategically how to think about the asset?

完美的。最後對我來說，我很好奇你是否可以分享你在霍桑的長期計劃方面的任何變化，當你被問及這個問題時。我知道你基本上是說，看，現在不是做任何事情的機會主義時間。我們需要修復業務。但是吉姆，在早些時候的回應中，你提到你對大麻的看法發生了一些變化。所以我想知道這是否從戰略上改變瞭如何看待資產？

Well, look, I'm -- the strategy of going to cannabis was something that is about 10 years old at this point and was highly supported both at the Board level. I think with the investor community at the time, it was. But maybe people have amnesia now. But I let it.

好吧，看，我是——使用大麻的策略在這一點上已經有 10 年的歷史了，並且在董事會層面得到了高度支持。我認為當時的投資者群體確實如此。但也許人們現在已經失憶了。但我讓它。

So I think Luke and I and Matt believe in this business. We -- I know we said that we're sort of pulling off the table any sort of view of kind of spinning or any merger that would kind of result in the spin into a different equity. And that is and was true. I think what's changed in the last, call it, months is that as we look at this industry and just look at the sort of devastation out there with some really good companies, that I think we have a little bit of an Ellis Island view of bring us -- what was it, Chris?

所以我認為盧克、我和馬特相信這項業務。我們——我知道我們說過，我們正在討論任何一種旋轉或任何合併的觀點，這些觀點會導致旋轉成不同的股權。那是真的。我認為過去幾個月發生的變化是，當我們審視這個行業，看看一些非常優秀的公司遭受的破壞時，我認為我們有一點埃利斯島的觀點給我們帶來——它是什麼，克里斯？

I think [your poor and huddled] masses. In our case, earning to be profitable.

我認為 [你們可憐而擁擠的] 群眾。在我們的例子中，賺錢是為了盈利。

So I think we're looking at -- and there's other people in this -- good companies in the same situation as us. And we're looking really hard at saying what combinations could there be where everybody kind of throws their businesses into a new business that has the scale to sort of get to a place that we're not making excuses all the time and they survive.

所以我認為我們正在尋找 - 還有其他人在這方面 - 與我們處境相同的好公司。而且我們真的很難說出什麼樣的組合可以讓每個人都將他們的業務投入到一個新的業務中，這個新業務的規模可以達到我們不會一直找藉口並且他們能夠生存的地方。

So I think within that sort of line of discussion, we're really confident in what we own, which are really the best brands in the supply space, very dominant. And that there's other people that add things to it that make both companies better. And we're open-minded to those combinations. And I think that's what's important is that I do think that staying where we are is tough.

所以我認為在這種討論中，我們對我們擁有的東西非常有信心，這些品牌確實是供應領域最好的品牌，非常具有主導地位。還有其他人在其中添加東西，使兩家公司都變得更好。我們對這些組合持開放態度。而且我認為重要的是我確實認為留在我們現在的位置很艱難。

And it's just because I think when you have a business that is earning, I don't know, $10 million, $15 million, $20 million, whatever the number you want to throw out there. I think it's one of those things that just it's a lot of work. It just doesn't -- it feels like it's constantly trying to find money. And I think you've -- I think we need to be sort of with a business that is north of $1 billion in top line and sort of north of $100 million on the bottom line before it starts to feel like it's really strategic, a market leader that is sustainable.

這只是因為我認為當你擁有一家盈利的企業時，我不知道，1000 萬美元、1500 萬美元、2000 萬美元，無論你想投入多少。我認為這是很多工作的原因之一。它只是沒有——感覺它一直在努力尋找錢。而且我認為你 - 我認為我們需要與一家收入超過 10 億美元且利潤超過 1 億美元的企業合作，然後它才開始讓人覺得它真正具有戰略意義，可持續發展的市場領導者。

And so I think we've got a great business to sort of go to Ellis Island with, but I think we need some more immigrants to huddle masses to join us. Chris, I don't know what you'd say.

所以我認為我們有一個很棒的生意可以去埃利斯島，但我認為我們需要更多的移民來聚集群眾加入我們。克里斯，我不知道你會說什麼。

Yes. Look, I think Jim said a lot of it. My personal, and I'm not going to say optimism here, but I'll say just my confidence in the space is we put a lot of time, a lot of money into the space, as you guys know. We put a lot of pain into it over the past 18 months.

是的。看，我認為吉姆說了很多。我個人，我不會在這裡說樂觀，但我會說我對這個領域的信心是我們在這個領域投入了大量時間和資金，正如你們所知。在過去的 18 個月裡，我們付出了很多努力。

And Jim mentioned the contributions that the Hawthorne team has made towards overall cost reduction within Scotts. And I just -- I want to call out Tom Crabtree in particular. He's here in the room. But Tom has really who's led the day-to-day work on getting those numbers down for Hawthorne. And it was a tough, tough work that I know was hard on Tom and everybody in the team.

Jim 提到了 Hawthorne 團隊為降低 Scotts 整體成本所做的貢獻。我只是——我想特別提到 Tom Crabtree。他在房間裡。但 Tom 真正領導了日常工作，為 Hawthorne 降低了這些數字。這是一項非常艱鉅的工作，我知道這對湯姆和團隊中的每個人來說都很艱難。

So I just -- I want to make a big shout out and just express my gratitude and appreciation and respect for all the people that did that. But we didn't do that work for no reason. We didn't do it to get out. We did it to make this business sustainable to sort of reinforce its fundamental soundness and prepare us for the next phase here. So the business is going through disruption, everyone recognizes that. And it's -- frankly, it's tough to have to lead it through that and to feel responsible for it.

所以我只是——我想大聲疾呼，表達我對所有這樣做的人的感激、讚賞和尊重。但我們沒有無緣無故地做那項工作。我們這樣做不是為了出去。我們這樣做是為了讓這項業務可持續發展，以加強其基本穩健性，並為下一階段做好準備。所以業務正在經歷中斷，每個人都認識到這一點。而且它 - 坦率地說，很難帶領它完成它並對此負責。

But there are transactions to be done here that we see that are, I think, would be accretive in pretty much every regard. There are some good players that are out there. And look, I think, we've got an obligation to explore those opportunities. Not only because we need to find a way to realize (inaudible) to get that business, as Jim mentioned, to a place we're profitable at a level that we can really be proud of.

但我認為，我們看到這裡有一些交易要做，在幾乎所有方面都會增加。那裡有一些優秀的球員。看，我認為，我們有義務探索這些機會。正如吉姆提到的那樣，不僅因為我們需要找到一種方法來實現（聽不清）讓該業務達到我們真正引以為豪的盈利水平。

But aside from that is there's such incredible opportunities now where if that falling knife of cannabis valuations hasn't hit the floor yet, it's awful close. And we think there are opportunities here to create partnerships and alliances that may not exist in the future. And we just -- we got an obligation just as kind of hunters in the space to take a shot right now, so.

但除此之外，現在還有如此令人難以置信的機會，如果大麻估值的下跌刀還沒有落地，那就太接近了。我們認為這裡有機會建立未來可能不存在的伙伴關係和聯盟。我們只是 - 我們有義務像太空中的獵人一樣立即開槍，所以。

Kind of just reemphasize one thing that both of you have said, which is this is about value creation. And we do have an extremely unique position with Hawthorne providing the complete solution. And as Chris said, that has a significant value for our customers.

只是再次強調你們倆都說過的一件事，那就是這是關於價值創造的。我們確實擁有極其獨特的地位，Hawthorne 提供了完整的解決方案。正如克里斯所說，這對我們的客戶具有重要價值。

And so as we look at consolidation, Jim said it, Chris said it, this can be done in a noncash way. That is formative to how we move forward and honestly, puts us in a stronger position for any decision that we make going forward on where this entity resides.

因此，當我們考慮合併時，吉姆說了，克里斯說了，這可以通過非現金方式完成。這對我們前進的方式形成了影響，並且誠實地使我們在做出關於該實體所在位置的任何決定時處於更有利的位置。

And ladies and gentlemen, that does end the Q&A session and conclude today's conference call. Thank you for participating. You may now disconnect.

女士們，先生們，這確實結束了問答環節並結束了今天的電話會議。感謝您的參與。您現在可以斷開連接。