Scotts Miracle-Gro Co (SMG) 2023 Q3 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Q3 2023 Scotts Miracle-Gro Company Conference Call. (Operator Instructions) Please be advised today's conference is being recorded.

美好的一天，感謝您的支持。歡迎參加 Scotts Miracle-Gro 公司 2023 年第三季度電話會議。 （操作員指示）請注意，今天的會議正在錄製中。

I would now like to hand the conference over to your speaker today, Aimee DeLuca, Lead Investor Relations, Scotts Miracle-Gro. Please go ahead.

我現在想將會議交給今天的發言人 Aimee DeLuca，Scotts Miracle-Gro 投資者關係主管。請繼續。

Good morning. Thank you for joining us for Scotts Miracle-Gro's third quarter earnings call. With me this morning are Chairman and CEO, Jim Hagedorn. President and Chief Operating Officer, Mike Lukemire; Matt Garth, our Chief Financial Officer; and Chris Hagedorn, Group President of Hawthorne.

早上好。感謝您參加 Scotts Miracle-Gro 第三季度財報電話會議。今天早上和我在一起的是董事長兼首席執行官吉姆·哈格多恩。總裁兼首席運營官 Mike Lukemire；馬特·加斯 (Matt Garth)，我們的首席財務官；和霍桑集團總裁克里斯·哈格多恩。

In a moment, Jim and Matt will share some prepared remarks and then the operator will open the call to your questions. As always, we expect to make forward-looking statements, so please be aware that our actual results could differ materially from what we share today. Please refer to our Form 10-K, which is filed with the Securities and Exchange Commission to familiarize yourself with the full range of risk factors that could impact our results. For further discussion after the call, you are invited to e-mail or call me directly at (937) 578-5621, and we'll work to set up some time as quickly as possible.

稍後，吉姆和馬特將分享一些準備好的發言，然後接線員將開始回答您的問題。與往常一樣，我們希望做出前瞻性陳述，因此請注意，我們的實際結果可能與我們今天分享的結果存在重大差異。請參閱我們向美國證券交易委員會提交的 10-K 表格，以熟悉可能影響我們結果的全部風險因素。如需在通話後進行進一步討論，請發送電子郵件或直接致電 (937) 578-5621，我們將盡快安排時間。

Lastly, please note that today's call is being recorded. An archived version of the call will be published on our website at investor.scotts.com.

最後請注意，今天的通話正在進行錄音。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?

就這樣，我們開始吧。我將把電話轉給吉姆·哈格多恩開始。吉姆？

Thanks, Aimee, and good morning, everyone. We have 3 things to discuss: One, the state of the consumer and the performance of our lawn and garden business. Two, the moves we're making to strengthen Scotts Miracle-Gro; and three, the opportunities we're pursuing for shareholder value creation.

謝謝艾米，大家早上好。我們有三件事要討論：第一，消費者的狀況以及我們草坪和花園業務的表現。第二，我們正在採取的措施來加強 Scotts Miracle-Gro；第三，我們正在尋求為股東創造價值的機會。

I'll get to the point. The first half was great. It met our expectations. The execution by our teams in support of our retailers on load-in could not have gone better. It's a challenging time in retail, and we're navigating it with our retail partners. As for the second half, so far, the season is not coming in the way we had expected because of lower consumer takeaway. We think this is attributable to the combined effects of post-COVID sentiment, declining retailer traffic, regional weather extremes, inflationary pressures and price elasticity. As a result, we will not meet our goal of plus 10% POS in our lawn's unit. The full year impact will be an $80 million EBITDA miss to our lawn's target. The other businesses performed more or less to expectations.

我會進入正題。上半場很棒。它滿足了我們的期望。我們的團隊在支持零售商裝貨方面的執行情況再好不過了。這是零售業的一個充滿挑戰的時期，我們正在與我們的零售合作夥伴一起度過這個時期。至於下半年，到目前為止，由於消費者外賣減少，本季並未按我們預期的方式到來。我們認為這是後疫情情緒、零售客流量下降、區域極端天氣、通脹壓力和價格彈性的綜合影響。因此，我們將無法實現草坪單元 POS 增加 10% 的目標。全年影響將是我們草坪目標的 EBITDA 達不到 8000 萬美元。其他業務的表現或多或少符合預期。

So what are we doing about this? We're attacking fall with double the investment in activation dollars, and our retail partners are in too. Remember, fall is roughly 1/3 of the lawn's business. We're taking out an additional $100-plus million in costs under Project SpringBoard Version 3. This work has already started, and our total SpringBoard savings will now significantly surpass $300 million. And we've amended our credit agreement with our banking partners to get maximum financial flexibility moving forward. We continue to make the tough choices necessary to strengthen the financial position of the company, all without impacting our core franchise.

那麼我們正在做什麼呢？我們正在以雙倍的激活資金投資來應對秋季，我們的零售合作夥伴也參與其中。請記住，秋天大約佔草坪的 1/3。我們在 SpringBoard 項目第 3 版中額外支出了 1 億多美元的成本。這項工作已經開始，我們的 SpringBoard 節省總額現在將大大超過 3 億美元。我們還修改了與銀行合作夥伴的信貸協議，以獲得最大的財務靈活性。我們繼續做出必要的艱難選擇，以加強公司的財務狀況，而所有這些都不會影響我們的核心特許經營權。

We've improved cash flow by $700 million and remain on target to deliver $1 billion in free cash flow by the end of fiscal '24. We're directing this cash flow to debt paydown. By fiscal year-end, we will have reduced our debt by nearly $300 million. The current state of our capital structure is not optimal. We are carrying a significant debt load without the earnings we expected for our investments in Hawthorne, the cannabis space and expansion of our operational capacity to capture pandemic-level demand. Our mission is clear. We will pay down debt to achieve net leverage of less than 3.5x as quickly as possible.

我們的現金流改善了 7 億美元，並繼續實現到 24 財年末實現 10 億美元自由現金流的目標。我們將把這筆現金流用於償還債務。到財政年度結束時，我們的債務將減少近 3 億美元。目前我們的資本結構狀況並不理想。我們背負著沉重的債務負擔，但我們對霍桑、大麻領域的投資以及擴大我們的運營能力以應對大流行水平的需求卻沒有預期的收益。我們的使命很明確。我們將盡快償還債務，使淨槓桿率低於3.5倍。

I think it's valuable to provide context. Our consumer franchise has it all, the best brands, sales force, in-store execution, supply chain, innovation and high cash flow generating capabilities. And we have a major opportunity to get Hawthorne on track in the multibillion-dollar U.S. cannabis industry, along with a great partnership in Bonnie Plants. One thing we are missing is financial flexibility. This obviously will come with debt paydown. The amended agreement gives us the room we need to get through seasonal working capital changes and fully take advantage of margin improvement opportunities. We are maintaining our dividend at current levels and we do not foresee a need to issue equity.

我認為提供背景很有價值。我們的消費者特許經營擁有一切，最好的品牌、銷售隊伍、店內執行、供應鏈、創新和高現金流產生能力。我們有一個重大機會，可以讓 Hawthorne 在價值數十億美元的美國大麻產業中走上正軌，並與 Bonnie Plants 建立良好的合作夥伴關係。我們缺少的一件事是財務靈活性。顯然，這將伴隨著債務償還。修訂後的協議為我們提供了應對季節性營運資金變化和充分利用利潤率改善機會所需的空間。我們將股息維持在當前水平，並且預計不需要發行股票。

Now let's dig into the details of what happened this year, and what we're doing about it. Overall, consumer retail sales across lawn and garden are up through Q3 with consumer spending $117 million more than a year ago. While these increases are largely due to pricing, it demonstrates that people are continuing to invest in their lawns and gardens. This is a reminder of the power of our consumer franchise. We outperformed retailers and competitors. According to major retailers, we gained share and awareness of the Scotts Miracle-Gro and Roundup brands is over 80% across all homeowners, including millennials. No one can drive consumer connection and attachment with lawn and garden better than we can. Lawn and garden, as a whole, is fundamentally strong. Household penetration is 6% higher than pre-pandemic 2019, a sign that the vast majority of consumers who came into the category during COVID have remained engaged.

現在讓我們深入了解今年發生的事情的細節以及我們正在採取的措施。總體而言，第三季度草坪和花園的消費者零售額有所上升，消費者支出比一年前增加了 1.17 億美元。雖然這些增長主要是由於定價造成的，但這表明人們正在繼續投資於他們的草坪和花園。這提醒我們消費者特許經營的力量。我們的表現優於零售商​​和競爭對手。據主要零售商稱，我們在所有房主（包括千禧一代）中獲得了超過 80% 的 Scotts Miracle-Gro 和 Roundup 品牌的份額和認知度。沒有人能比我們更好地推動消費者與草坪和花園的聯繫和依戀。草坪和花園作為一個整體，從根本上來說是堅固的。家庭滲透率比 2019 年大流行前高出 6%，這表明在新冠疫情期間進入該類別的絕大多數消費者仍然參與其中。

Consumers who discovered edible gardening during COVID continue to garden. And we know over 10% of those who are gardening in '23 are new entrants. These gains solidify our confidence that the category will continue to grow. This year, retail traffic at home centers was down 6%. Our marketing and sales team drove people into the stores. We help Savage Spring for many retailers. Our POS volume outpaced foot traffic every month, often by double-digit percentages. Through Q3, gardens had POS gains in both dollars and units across key product lines. Today, we have a $200 million organic gardening business. It's the fastest-growing part of the garden's portfolio and this occurred without the full support of all of our top retailers. We believe that our new organic listings will be far superior in fiscal '24. In lawns, we've had a mix of good and disappointing results. I want to stress that the lawns business is healthy, but it has been impacted by macroeconomic weather and pricing factors.

在新冠疫情期間發現食用園藝的消費者繼續從事園藝活動。我們知道 23 年從事園藝的人中有超過 10% 是新進入者。這些成果堅定了我們對該類別將繼續增長的信心。今年，家居中心的零售客流量下降了 6%。我們的營銷和銷售團隊吸引人們走進商店。我們為許多零售商提供 Savage Spring 幫助。我們的 POS 交易量每個月都超過人流量，通常是兩位數的百分比。截至第三季度，花園的主要產品線的 POS 在美元和單位數量上均有所增長。如今，我們擁有價值 2 億美元的有機園藝業務。這是花園產品組合中增長最快的部分，而這是在沒有我們所有頂級零售商的全力支持的情況下發生的。我們相信，我們新的有機上市將在 24 財年表現出色。在草坪方面，我們的結果有好有壞。我想強調的是，草坪業務是健康的，但它受到宏觀經濟天氣和定價因素的影響。

Let me address fertilizers and grass seeds separately. In fertilizers, our branded POS dollars are up 11%, and we've had share gains of more than 5% at major retailers. While total branded POS units are down 3%, the gap between the performance of our products and private label is striking. Private label is down 20% in POS units. Consumers did not trade down, and they spent more on our brands. In grass seed, POS dollars are up 1%, but POS units are down 8%. We've experienced single-digit erosion of share largely due to the retail pricing at one major retailer. In fiscal '22, we said weather was the main reason for the decline in lawns. With the benefit of hindsight, we can now say that post-COVID consumer sentiment and inflationary pressures played a role too. People shift the discretionary spending to other places, specifically experiences.

讓我分別談談肥料和草籽。在化肥領域，我們的品牌 POS 銷售額增長了 11%，我們在主要零售商中的份額增長了 5% 以上。雖然品牌 POS 裝置總數下降了 3%，但我們產品的性能與自有品牌產品之間的差距仍然驚人。自有品牌的 POS 數量下降了 20%。消費者並沒有降價，他們在我們的品牌上花了更多的錢。在草籽方面，POS 美元上漲了 1%，但 POS 單位下降了 8%。我們的份額出現了個位數的下降，這主要是由於一家主要零售商的零售定價造成的。在 22 財年，我們說過天氣是草坪減少的主要原因。事後看來，我們現在可以說，疫情過後的消費者情緒和通脹壓力也發揮了作用。人們將可自由支配的支出轉移到其他地方，特別是體驗。

This started in '22 as part of the post-COVID hangover and extended into '23. Our recent McKinsey report cited that most consumer spending declined in April right at the start of the lawn season for the first time since the pandemic. The only areas where it increased were entertainment outside the home and travel. These insights are supported by our consumer research. When asked why they did not engage in lawns, consumers said the economy and budget, spending money elsewhere. They also said their lawns look good enough. This has a lot to do with weather, mostly in the early spring, which is becoming more unpredictable and subject to weather events and extremes that impact our early seasons. We think this is a result of climate change. This year, the weather patterns in the Midwest and Northeast significantly reduced normal dandelion and weed pressures that drive consumers to our Weed and Feed fertilizer product. This lack of weed pressure had a similar impact on our Ortho selective weed killer business, which is down a similar amount in the Midwest and Northeast.

這種情況從 22 年開始，作為新冠疫情后宿醉的一部分，一直延續到 23 年。我們最近的麥肯錫報告指出，大多數消費者支出在 4 月份草坪季節開始時出現自大流行以來的首次下降。唯一增加的領域是家庭之外的娛樂和旅行。這些見解得到了我們的消費者研究的支持。當被問及為什麼不搞草坪時，消費者表示經濟和預算問題，把錢花在其他地方。他們還說他們的草坪看起來足夠好。這與天氣有很大關係，主要是在早春，天氣變得越來越不可預測，並且受到影響我們早期季節的天氣事件和極端事件的影響。我們認為這是氣候變化的結果。今年，中西部和東北部的天氣模式顯著減少了正常的蒲公英和雜草壓力，從而促使消費者購買我們的雜草和飼料肥料產品。這種雜草壓力的缺乏對我們的 Ortho 選擇性除草劑業務產生了類似的影響，該業務在中西部和東北部也出現了類似的下降。

Gardens is more insulated from early weather because the consumer is not an on timeline. People plant when the weather is conductive to growing, and our numbers support this. This year, we increased spending on laws to engage the consumer early. In March, we launched the National Daylawn Savings Campaign, which timed well with favorable weather in the South. It led to significant POS unit lift in Texas, up 79% and in Florida, up 86% at the launch. This initial engagement drove sustained POS activity. For example, Texas, our single largest lawn state is now up 10% in lawn unit POS year-to-date. Florida is flat. This was not the case in the Northeast and Midwest, where consumers were still dealing with cold and wet weather during our early national activation.

花園更能免受早期天氣的影響，因為消費者不准時。人們在天氣有利於生長時進行種植，我們的數據也證明了這一點。今年，我們增加了法律支出，以便儘早吸引消費者。三月份，我們發起了全國日草坪儲蓄活動，這一活動恰逢南方天氣宜人。推出後，德克薩斯州和佛羅里達州的 POS 銷量分別增長了 79% 和 86%。這種最初的參與推動了 POS 活動的持續發展。例如，德克薩斯州是我們最大的單一草坪州，今年迄今為止，草坪單位 POS 增長了 10%。佛羅里達地勢平坦。東北和中西部的情況並非如此，在我們早期的全國激活期間，這些地區的消費者仍在應對寒冷和潮濕的天氣。

Daylawn had virtually no impact on POS there. We know people respond when we market to them at the right time. So here's how we're adjusting. We're looking at weather differently. With spring less reliable, starting in fiscal '24 and beyond, we will diversify our marketing and promotions to work around weather extremes and elongate the lawn season. We will not give up on spring as it is our main activation point, but we will invest more in summer and fall for sustained growth. I've challenged the team to drive 10% more lawn's business into the fall. As for Q4 this year, I said earlier that we will attack this fall, which is an ideal time to fertilize and seed.

Daylawn 對那裡的 POS 幾乎沒有影響。我們知道，當我們在正確的時間向他們推銷時，人們會做出反應。所以這就是我們正在調整的方式。我們對天氣的看法不同。由於春季不太可靠，從 24 財年及以後開始，我們將多樣化我們的營銷和促銷活動，以應對極端天氣並延長草坪季節。我們不會放棄春季，因為它是我們的主要激活點，但我們會在夏季和秋季加大投入，以實現持續增長。我向團隊提出挑戰，要求他們在秋季將草坪業務增加 10%。至於今年第四季度，我之前說過，我們會在今年秋天進攻，這是施肥播種的理想時機。

Retailers are joining us in fall campaigns to drive consumer takeaway and rightsize their inventories. I look forward to reporting the results of this effort during our fiscal '24 Q1 earnings call. We've also determined that pricing, especially grass seed, was an issue for consumers. There have been unhealthy price gaps between our products, competitors and private label. Some consumers took the cheaper option. We are addressing this by decreasing prices on certain targeted SKUs. These special programs with retailers will result in incremental volume lists and expanded shelf opportunities this fall and into fiscal '24.

零售商正在加入我們的秋季活動，以推動消費者外賣並調整庫存規模。我期待在我們的 24 財年第一季度財報電話會議上報告這項工作的結果。我們還確定定價，尤其是草籽，對消費者來說是一個問題。我們的產品、競爭對手和自有品牌之間存在不健康的價格差距。一些消費者選擇了更便宜的選擇。我們正在通過降低某些目標 SKU 的價格來解決這個問題。這些與零售商合作的特別計劃將在今年秋季和 24 財年增加銷量清單並擴大貨架機會。

Looking to the future, innovation is important in lawn and garden. Last month, we held our annual field day at our Marysville research facilities where we showcase new products for our senior leaders and board of directors. The pipeline is impressive. In lawns, we're developing products to simplify lawn care and creating combo products to make it easier for consumers to DIY with awesome results. We're also mindful of weather extremes with drought tolerance solutions and turf alternatives. These products will launch in '24. In gardens, organics, natural products and live goods are more important to consumers. Next year, we'll expand our robust line of Miracle-Gro organic solutions.

展望未來，創新對於草坪和花園非常重要。上個月，我們在馬里斯維爾研究機構舉辦了一年一度的現場日，為我們的高級領導和董事會展示了新產品。管道令人印象深刻。在草坪方面，我們正在開發產品來簡化草坪護理，並創造組合產品，讓消費者更輕鬆地 DIY 並獲得令人驚嘆的效果。我們還通過耐旱解決方案和草坪替代品來關注極端天氣。這些產品將於 2024 年推出。在花園中，有機物、天然產品和活物對消費者來說更為重要。明年，我們將擴展我們強大的 Miracle-Gro 有機解決方案系列。

Now let's turn to Hawthorne. There has been a stabilization in this business in Q3. It held the line and the daily sales run rate has improved slightly quarter-over-quarter. It's a small win, but a sign there are pockets of recovery in this industry. I've said I want to get Hawthorne to profitability by fiscal year-end. We believe it's achievable, especially as we know that many seasonal professional horticultural sales come late in the fiscal year. We also continue to actively explore noncash partnerships with other industry leaders. We will only make such deals if they bring scale and expanded capabilities that contribute to Hawthorne's and the industry's long-term growth. Our discussions are ongoing with several interested parties. My objective is to move Hawthorne into a partnership or a separate entity from Scotts Miracle-Gro, one in which we maintain the controlling interest. I hope to report more progress on this front soon.

現在讓我們轉向霍桑。第三季度該業務已趨於穩定。它堅守陣線，每日銷售運行率環比略有改善。這是一個小小的勝利，但標誌著該行業出現了復甦。我說過我希望霍桑在財政年度結束前實現盈利。我們相信這是可以實現的，特別是因為我們知道許多季節性專業園藝銷售會在本財年晚些時候進行。我們還繼續積極探索與其他行業領導者的非現金合作夥伴關係。只有當此類交易能夠帶來有助於霍桑和行業長期增長的規模和擴展能力時，我們才會進行此類交易。我們正在與幾個感興趣的各方進行討論。我的目標是將 Hawthorne 轉變為合夥企業或獨立於 Scotts Miracle-Gro 的實體，我們在其中保持控股權。我希望盡快報告這方面的更多進展。

Moving to our total company outlook for '24. We have tailwinds coming our way that will contribute to margin improvement as we work our way through high-priced inventory and realize the benefits of lower commodity prices and easing of consumer inflationary pressures. Urea exceeded $900 at its peak, it's now in the mid-$300s. Other commodity costs like resins, corrugate and pallets have come down and freight rates continue to moderate. They're down mid- to high single digits this year, and we expect further declines in '24. All of this points to margin improvement opportunities and ability for us to remain flexible in our targeted pricing reductions for consumers.

接下來是我們對 24 年公司的整體展望。當我們努力消除高價庫存並實現大宗商品價格下降和消費者通脹壓力緩解的好處時，我們的順風車將有助於提高利潤率。尿素最高時超過 900 美元，現在已在 300 美元左右。樹脂、瓦楞紙和托盤等其他商品成本已經下降，運費繼續放緩。今年它們下降了中高個位數，我們預計 24 年將進一步下降。所有這些都表明我們有機會提高利潤率，並有能力在針對消費者的目標降價方面保持靈活性。

We've been down this road before, and we've emerged in a better place. That's how we see this playing out now. The trajectory of our fundamentals is strong. We're improving cost structure, paying down debt generating cash flow and investing appropriately in our brands, marketing, sales, R&D and supply chain. I very much appreciate the support of JPMorgan Co bank and all of our banking partners. They've displayed tremendous trust in us, and we will not let them down. I also want to praise the work of our financial team. As we've restructured and optimized to align to today's realities, we've had to make difficult decisions. And that includes having to break ties with good and loyal people. We've sought to take care of them, and we wish them the very best in the future. It's equally important that I acknowledge the grid of our leadership team and associates. They are talented, battle-tested and world-class. Their commitment to winning and delivering exceptional shareholder returns is unparalleled. Thank you.

我們以前也曾走過這條路，現在我們已經走在了更好的地方。這就是我們現在看到的情況。我們的基本面軌跡強勁。我們正在改善成本結構，償還債務，產生現金流，並對我們的品牌、營銷、銷售、研發和供應鏈進行適當投資。我非常感謝摩根大通銀行和我們所有銀行合作夥伴的支持。他們對我們表現出了極大的信任，我們不會讓他們失望。我還要讚揚我們財務團隊的工作。當我們進行重組和優化以適應當今的現實時，我們不得不做出艱難的決定。這包括必須與善良和忠誠的人斷絕關係。我們一直在努力照顧他們，並祝愿他們未來一切順利。同樣重要的是，我承認我們的領導團隊和同事的網格。他們才華橫溢，久經沙場，是世界一流的。他們對贏得和提供卓越股東回報的承諾是無與倫比的。謝謝。

I'll turn the call over to Matt to discuss the financials.

我會把電話轉給馬特討論財務問題。

Thanks, Jim, and good morning, everyone.

謝謝吉姆，大家早上好。

As Jim noted, we started the year with record level first half load-in. In the third quarter, it became apparent that second half consumer takeaway will run behind expectations, resulting in longer-than-anticipated margin recovery and therefore, a different deleveraging path. The credit agreement amendment was pursued as a result. We believe this agreement appropriately reflects SMG's core strengths and strong free cash flow while providing flexibility to maximize value going forward.

正如吉姆指出的那樣，我們以創紀錄的上半年加載水平開始了今年。第三季度，下半年消費者外賣將明顯落後於預期，導致利潤率恢復時間長於預期，從而走上不同的去槓桿路徑。因此，對信貸協議進行了修訂。我們相信該協議恰當地反映了 SMG 的核心優勢和強勁的自由現金流，同時提供了實現未來價值最大化的靈活性。

Now on to the financial review. Third quarter total company sales of $1.12 billion were 6% lower versus last year, primarily related to a 39% volume decrease at Hawthorne. Net sales in U.S. Consumer were $916 million, an increase of $12 million over third quarter last year. The 1% increase is attributable to both POS growth in the quarter and higher ending retailer inventories. Specifically, the most significant increase was from our growing media business with nearly $100 million in higher shipments in the quarter than a year ago, driven by consumer demand for appealing and productive gardens throughout the growing season.

現在進行財務審查。第三季度公司總銷售額為 11.2 億美元，比去年同期下降 6%，主要與 Hawthorne 銷量下降 39% 有關。美國消費者淨銷售額為 9.16 億美元，比去年第三季度增加 1200 萬美元。 1% 的增長歸因於本季度 POS 的增長以及零售商庫存的增加。具體來說，最顯著的增長來自於我們不斷增長的媒體業務，在整個生長季節消費者對有吸引力和多產的花園的需求的推動下，本季度的出貨量比一年前增加了近1 億美元。

As I shared on our last earnings call, we entered May with POS units at our largest retailers essentially flat and dollars up mid-single digits with mix favoring growing media. POS trends entering August are consistent with these results as gardening season is in full swing. We expect a more favorable POS mix in the fourth quarter as we launch our fall season media and retailer-supported promotions focused on our branded fertilizers and grass seed. Our total units are behind our original projection. They remain ahead of 2019 pre-pandemic levels, giving us confidence and our consumers' desire to engage in the category in the face of the dynamic environment Jim outlined earlier.

正如我在上次財報電話會議上分享的那樣，進入 5 月份後，我們最大的零售商的 POS 業務基本持平，而美元則出現中個位數增長，其中混合有利於不斷增長的媒體。進入 8 月份的 POS 趨勢與這些結果一致，因為園藝季節正如火如荼地進行。我們預計第四季度將出現更有利的 POS 組合，因為我們推出了秋季媒體和零售商支持的促銷活動，重點關注我們的品牌化肥和草籽。我們的總單位數落後於我們最初的預測。它們仍然領先於 2019 年大流行前的水平，這給了我們信心，也讓我們的消費者在面對吉姆之前概述的動態環境時參與該類別的願望。

From a retailer inventory perspective, units are up approximately 3% versus prior year entering August. Retailers are expected to continue to lower seasonal inventories, which will reduce our shipments. As a result, we now expect full year net sales in the U.S. consumer business to end the year 2% to 4% lower than the prior year. At Hawthorne, industry challenges continue, but we are seeing early signs of stability on the top line. There still a 40% decline from prior year. Third quarter net sales improved slightly from second quarter to $93.4 million. Customers are seeking value, and we have supported improved demand signals with targeted pricing actions.

從零售商庫存的角度來看，進入 8 月份時，庫存數量比去年同期增加了約 3%。預計零售商將繼續降低季節性庫存，這將減少我們的出貨量。因此，我們現在預計美國消費者業務的全年淨銷售額將比上年下降 2% 至 4%。在霍桑，行業挑戰仍在繼續，但我們看到收入穩定的早期跡象。與去年相比仍下降了40%。第三季度淨銷售額較第二季度略有改善，達到 9340 萬美元。客戶正在尋求價值，我們通過有針對性的定價行動來支持改善的需求信號。

Looking ahead, fourth quarter sales in the North America hydroponics business are expected to remain relatively flat to third quarter. We will see significant growth in the pro-horticultural lighting division driven by seasonality and the continued shift by growers from HPS to LED. For the full year, while total Hawthorne net sales are expected to decline 30% to 35% from prior year, the outstanding work the team has done to rightsize Hawthorne's cost structure will help deliver run-rate profitability by fiscal year-end.

展望未來，北美水培業務第四季度的銷售額預計將與第三季度保持相對持平。我們將看到在季節性和種植者從 HPS 持續轉向 LED 的推動下，園藝照明部門將出現顯著增長。就全年而言，雖然Hawthorne 的總淨銷售額預計將比上年下降30% 至35%，但該團隊在調整Hawthorne 成本結構方面所做的出色工作將有助於在財年末實現運行率盈利能力。

Moving on to total company gross margin rate. There are several important drivers at play this quarter. The adjusted gross margin rate in the quarter fell 420 basis points below prior year to 21.3%, bringing the year-to-date rate lower by 200 basis points to 27.6%. For the full year, we now expect a year-over-year gross margin rate decline of 275 to 300 basis points. The rate decline is driven by these 5 factors. First, the largest was an approximate 190 basis point decrease from the write-down of pandemic-driven excess inventories in the U.S. consumer business that was $20 million higher than our expectations.

接下來是公司總毛利率。本季度有幾個重要的驅動因素在發揮作用。本季度調整後毛利率比去年同期下降 420 個基點至 21.3%，使年初至今毛利率下降 200 個基點至 27.6%。對於全年，我們目前預計毛利率將同比下降 275 至 300 個基點。利率下降是由這 5 個因素驅動的。首先，最大的降幅是美國消費業務因疫情導致的過剩庫存減記約 190 個基點，比我們的預期高出 2000 萬美元。

On a full year basis, those write-downs will drive a 120 basis point decline in gross margin rate. I view this as onetime in nature and will, therefore, add this back to the margin calculation when estimating underlying performance. While commodity costs have continued to moderate, the benefit of the lower cost will be more fully realized in the back half of fiscal 2024 given higher channel inventories and lower production volumes. Material costs account for gross margin rate declines of 175 basis points for the quarter and 430 basis points year-to-date.

就全年而言，這些減記將導致毛利率下降 120 個基點。我認為這本質上是一次性的，因此在估計基本表現時會將其添加回保證金計算中。儘管大宗商品成本繼續放緩，但鑑於渠道庫存增加和產量下降，成本降低的好處將在 2024 財年下半年得到更充分的體現。材料成本導致本季度毛利率下降 175 個基點，年初至今下降 430 個基點。

On a full year basis, material costs are approximately 95% locked and are expected to drive a 350 basis point margin rate decline year-over-year. As previously detailed, we are running operations at lower levels to reduce inventories. Lower production volumes account for nearly 130 basis points of rate decline in the quarter and 300 basis points for the full year. These headwinds are partially offset by favorability from Project SpringBoard and net pricing. Net pricing equated to 130 basis points for the quarter and approximately 560 basis points year-to-date. We call that last year's pricing actions will anniversary this month. For the full year, net pricing inclusive of higher-than-planned volume rebates and promotional programs is expected to drive 500-plus basis points of gross margin rate improvement versus the high single digits net pricing we originally anticipated.

全年來看，材料成本鎖定約 95%，預計將導致利潤率同比下降 350 個基點。如前所述，我們正在較低水平運營以減少庫存。產量下降導致本季度利率下降近 130 個基點，全年利率下降 300 個基點。這些不利因素被 SpringBoard 項目和淨定價的青睞所部分抵消。本季度淨定價相當於 130 個基點，年初至今約為 560 個基點。我們稱本月將是去年的定價行動週年紀念日。就全年而言，包括高於計劃的批量回扣和促銷計劃在內的淨定價預計將推動毛利率提高 500 個基點以上，而我們最初預期的高個位數淨定價。

And finally, for the quarter, unfavorable product mix has somewhat been offset by favorable segment mix given greater volume declines in the lower-margin Hawthorne business. For the full year, mix will lower the rate by 60 to 70 basis points. Our pass back to gross margin rates above 30% is clear with a return to normalized volumes, continued moderation in commodity costs, targeted net pricing actions, more favorable mix and the full benefit of rightsized warehousing and inventories in both major businesses. Through our latest actions on Project SpringBoard, we'll achieve greater than $300 million in savings. Even with the impressive improvements our associates have delivered through SpringBoard, achieving our targeted margin levels will progress into fiscal 2025, consistent with the viewpoint we shared last quarter.

最後，本季度不利的產品組合在一定程度上被有利的細分市場組合所抵消，因為利潤率較低的霍桑業務銷量下降幅度更大。全年而言，混合利率將降低 60 至 70 個基點。我們的毛利率回到30% 以上的趨勢是顯而易見的，因為銷量恢復正常、商品成本持續放緩、有針對性的淨定價行動、更有利的組合以及兩大業務的倉儲和庫存規模調整的充分效益。通過我們在 SpringBoard 項目上的最新行動，我們將節省超過 3 億美元的成本。即使我們的員工通過 SpringBoard 取得了令人印象深刻的改進，我們的目標利潤水平仍將在 2025 財年實現，這與我們上季度分享的觀點一致。

Our progress on Project SpringBoard is also evident on the SG&A line. Total company SG&A for the quarter was $129 million, 5% lower than third quarter last year and 34% lower than 2 years ago. It is important to note that these cuts were made without sacrificing our core strengths. For example, U.S. consumer media advertising, essential to driving consumer engagement, will be up 25% this year versus last year. As a percentage of sales, we still anticipate sustaining SG&A in a range of 15% to 16% of net sales going forward. Based on lower expected sales this year, we may end the year closer to the high end of the range. Taking all of these factors together, we now expect operating income in a range of 7% to 7.5% of net sales for the fiscal year and adjusted EBITDA about 25% lower than prior year.

我們在 SpringBoard 項目上的進展在 SG&A 線上也很明顯。該季度公司 SG&A 總額為 1.29 億美元，比去年第三季度下降 5%，比兩年前下降 34%。值得注意的是，這些削減是在沒有犧牲我們核心優勢的情況下進行的。例如，對於推動消費者參與至關重要的美國消費者媒體廣告今年將比去年增長 25%。作為銷售額的百分比，我們仍預計未來 SG&A 占淨銷售額的 15% 至 16%。基於今年較低的預期銷售額，我們可能會在年底接近該範圍的高端。綜合考慮所有這些因素，我們現在預計本財年的營業收入將占淨銷售額的 7% 至 7.5%，調整後的 EBITDA 將比上年下降約 25%。

Noncash adjustments to EBIT are anticipated to be $10 million to $20 million higher than last year, largely related to increased share-based payments. Below the operating line, we now anticipate a full year tax rate in the 28% to 29% range due to lower pretax earnings.

息稅前利潤的非現金調整預計將比去年增加 1000 萬至 2000 萬美元，這主要與股份支付的增加有關。由於稅前收益較低，我們現在預計全年稅率在營業線以下 28% 至 29% 範圍內。

Interest expense will increase $60 million over prior year on higher average borrowing costs. It should be noted that this quarter will end the year-to-date trend of higher average debt levels. Average debt by the end of the fiscal year will be around $200 million lower than prior year. Equity income from the Bonnie business is expected to improve $5 million to $10 million versus last year. On the bottom line, non-GAAP adjusted earnings for the quarter, which excludes impairment, restructuring and other nonrecurring items, were $66 million or $1.17 per diluted share compared with $110 million or $1.98 a year ago.

由於平均借貸成本上升，利息支出將比上年增加 6000 萬美元。值得注意的是，本季度將結束年初至今平均債務水平較高的趨勢。到本財年末，平均債務將比上年減少約 2 億美元。 Bonnie 業務的股權收入預計將比去年增加 500 萬至 1000 萬美元。總而言之，本季度非公認會計準則調整後收益（不包括減值、重組和其他非經常性項目）為6600 萬美元，即稀釋後每股收益1.17 美元，而一年前為1.1 億美元，即每股稀釋收益1.98 美元。

Note that the EPS impact of the onetime inventory write-off that ran through U.S. consumer profitability is roughly $0.25 per share.

請注意，一次性庫存沖銷對美國消費者盈利能力的每股收益影響約為每股 0.25 美元。

Let's turn to free cash flow. Free cash flow improved greater than $700 million year-to-date over the first 3 quarters of 2022 as we continue to drive down inventory. We continue to anticipate strong free cash flow generation of approximately $1 billion through fiscal 2024 and $300 million per year on average going forward.

讓我們轉向自由現金流。隨著我們繼續降低庫存，2022 年前三個季度的自由現金流量增加了超過 7 億美元。我們繼續預計到 2024 財年將產生約 10 億美元的強勁自由現金流，未來平均每年將產生 3 億美元。

Now let me elaborate a bit further on our recent credit facility amendment. The amendment allows for increases to our debt leverage maximums, modifications to adjusted EBITDA to better reflect underlying performance and adds a new fixed charge coverage covenant. Given the lower Hawthorne sales levels, we have agreed to reduce the size of the revolving credit facility by $250 million to $1.25 billion.

現在讓我進一步詳細說明我們最近的信貸安排修正案。該修正案允許提高我們的債務槓桿上限，修改調整後的 EBITDA 以更好地反映基本業績，並增加新的固定費用覆蓋契約。鑑於 Hawthorne 銷售水平較低，我們同意將循環信貸額度的規模減少 2.5 億美元，至 12.5 億美元。

The amendment also raises our borrowing costs in our revolver and term loan A by 25 basis points with an additional 25 basis points when net leverage is above 6x. We ended the quarter with leverage at 6.15x adjusted EBITDA, including $41 million of allowable increases to adjusted EBITDA for nonrecurring E&O and warehouse closure costs.

該修正案還將我們的循環貸款和定期貸款 A 的借貸成本提高了 25 個基點，並且當淨槓桿率高於 6 倍時，額外提高了 25 個基點。本季度末，我們的調整後 EBITDA 槓桿率為 6.15 倍，其中調整後 EBITDA 的允許增量為 4100 萬美元，用於非經常性 E&O 和倉庫關閉成本。

The maximum net leverage glide path going forward provides ample room and flexibility to navigate seasonal working capital, weather and POS swings. The first 2 quarters of 2024 are the most acute periods in the outlook based on normal seasonal ordering patterns, and we have proper headroom to manage any outside swings. We remain committed to driving leverage below 3.5x as soon as possible so that we can return to a more balanced capital approach, maintaining balance sheet flexibility and delivering increasing direct shareholder returns. Until then, our cash flows remain earmarked for debt pay down.

未來的最大淨槓桿下滑路徑為應對季節性營運資金、天氣和 POS 波動提供了充足的空間和靈活性。根據正常的季節性訂購模式，2024 年前 2 季度是前景最嚴峻的時期，我們有適當的空間來應對任何外部波動。我們仍然致力於盡快將槓桿率降至 3.5 倍以下，以便我們能夠回歸更加平衡的資本方法，保持資產負債表的靈活性並提供不斷增加的直接股東回報。在那之前，我們的現金流仍指定用於償還債務。

Without a doubt, it has been a dynamic time for the company. I will stress that the results and guidance we've shared today reflect near-term conditions. 2024 will be upon us quickly, and we have laid out expected high points in the year ahead, broadened retailer partnerships, gross margin improvement, continued benefits from Project SpringBoard, significant free cash flow generation and improving financial flexibility.

毫無疑問，這對公司來說是一個充滿活力的時期。我要強調的是，我們今天分享的結果和指導反映了近期狀況。 2024 年即將到來，我們已經為未來一年制定了預期的高點、擴大了零售商合作夥伴關係、毛利率改善、SpringBoard 項目的持續收益、顯著的自由現金流生成和財務靈活性的提高。

As Jim stated, we are accountable for improving our results. I'm extremely motivated to create value at the levels commensurate with our market-leading positions. I'm inspired by the joy our products bring to our consumers, the pride our associates have in shaping the future of some of the world's greatest brands and the commitment to excellence across every facet of the organization. Our priorities are clear. And we are executing urgently against them.

正如吉姆所說，我們有責任改善我們的結果。我非常有動力去創造與我們市場領先地位相稱的價值。我們的產品給消費者帶來的快樂、我們的員工為塑造一些世界上最偉大品牌的未來而感到的自豪以及組織各個方面對卓越的承諾，都讓我深受啟發。我們的優先事項很明確。我們正在對他們緊急執行。

With that, I'll turn the call back to the operator so we can answer your questions. Operator?

這樣，我會將電話轉回接線員，以便我們回答您的問題。操作員？

(Operator Instructions) And our first question comes from Joe Altobello from Raymond James.

（操作員說明）我們的第一個問題來自 Raymond James 的 Joe Altobello。

A few questions on pricing. You mentioned price elasticity in the press release and also in the call this morning. Is this the first time that you're really seeing that come to the 4, if you will? And I guess, how do we think about pricing next year? Obviously, commodities coming down, but could we see pricing down next year?

關於定價的幾個問題。您在新聞稿和今天早上的電話會議中提到了價格彈性。如果你願意的話，這是你第一次真正看到《4》出現這種情況嗎？我想，我們如何考慮明年的定價？顯然，大宗商品價格下跌，但明年價格會下跌嗎？

I think you're going to see pricing down on service SKUs for sure. Joe, it's not an easy -- this is something we've been spending a ton of time. If you look at my whiteboard in here, we've been kind of all over what's happening. You look at the lawn fertilizer business, okay, where we gained like 5 share points, and we think that's a pretty conservative number. Certainly, the retailers, we gained a lot more than that. We just sort of dumbed the numbers down a little bit, just so it didn't like mess with our own heads. But no doubt, we gained share on the fertilizer side, but the category declined. So you see private label, we talked about being down. I think the number was 20% and call our units roughly flat. I think they're up a little bit on the branded side. So there's one where we didn't lose share, but the category declined. Now I'm not that nuts about that because when you go back and you look back during the financial crisis, we took the same kind of pricing.

我認為您肯定會看到服務 SKU 的價格下降。喬，這並不容易——這是我們花了很多時間的事情。如果你看看我這裡的白板，我們已經了解了正在發生的事情。你看看草坪肥料業務，好吧，我們獲得了大約 5 個份額點，我們認為這是一個相當保守的數字。當然，對於零售商來說，我們收穫的遠不止這些。我們只是把數字簡化了一點，這樣就不會弄亂我們自己的頭腦。但毫無疑問，我們在肥料方面的份額有所增加，但該類別卻有所下降。所以你看到自有品牌，我們談到了下滑。我認為這個數字是 20%，我們的單位大致持平。我認為他們在品牌方面有所進步。因此，我們沒有失去份額，但類別有所下降。現在我對此並不那麼著迷，因為當你回顧金融危機期間時，我們採取了同樣的定價方式。

Units declined after things recovered, but we made a ton of money. And so I think the future story for lawns, we need to fight this and work units up largely because we had such a large decrease last year that if you look back at sort of units sold over a decade, and we were looking at those kind of numbers, they are actually pretty flat, maybe up a little bit during COVID, but they didn't get the giant COVID increase that like gardening got, but pretty flat. And then there's a big decline last year, and we very much said, if you looked at Texas drought, California drought, really historically crappy weather in the Midwest, Northeast, we basically said it's a weather event.

情況恢復後，單位數量下降，但我們賺了很多錢。因此，我認為草坪的未來故事，我們需要與這個問題作鬥爭，並在很大程度上提高工作單位的數量，因為去年我們的減少幅度如此之大，如果你回顧過去十年銷售的單位，我們正在研究這些類型就數字而言，它們實際上相當平坦，在新冠病毒期間可能會有所上升，但它們並沒有像園藝那樣出現新冠病毒的巨大增長，而是相當平坦。去年出現了大幅下降，我們非常強調，如果你看看德克薩斯州的干旱、加利福尼亞州的干旱，以及中西部和東北部歷史上糟糕的天氣，我們基本上會說這是一個天氣事件。

We look at it now. And while, for sure, there was weather, and it's a -- this is -- I could talk for an hour on this one, I think, but I won't know -- yes, I think they don't want me to hear. But there's one where we think that the category is down in part because the pricing of products has gotten high even though we didn't lose share, we did the opposite, we gained share. Now if you look at grass seed, it's a little bit like the opposite and driven by one retailer mostly. And that was where we would typically see kind of a 30% difference between our products and private label and a lot of the private label we do.

我們現在看看。當然，有天氣因素，而且這是——我想我可以就這個問題談一個小時，但我不知道——是的，我認為他們不想要我聽到。但我們認為該類別的下降部分是因為產品的定價很高，儘管我們沒有失去份額，但我們做了相反的事情，我們獲得了份額。現在，如果你看看草籽，就會發現情況有點相反，而且主要是由一家零售商推動的。這就是我們通常會看到我們的產品與自有品牌以及我們所做的許多自有品牌之間存在 30% 差異的地方。

So between us and the merchants, there's kind of a sweet spot there where retailers need the private label where they make higher margins to be healthy. And so we're cool with that. And I think compared to a lot of other marketing companies, we participate in the private label and think that's a healthy thing for us to do. One of the retailers we have, which was a major retailer, that differential, they sold our grass seed because they wanted the margin up above our recommended retail and the price gap then on the private label was about 50%. And there, we lost share there. So I think there's one where when you have a delta like -- and they're not going to repeat that.

因此，在我們和商家之間，存在一種最佳平衡點，即零售商需要自有品牌，以便獲得更高的利潤以保持健康。所以我們對此很滿意。我認為與許多其他營銷公司相比，我們參與自有品牌，並認為這對我們來說是一件健康的事情。我們擁有的一家零售商，是一家主要零售商，他們出售我們的草籽，因為他們希望利潤高於我們推薦的零售價格，而當時自有品牌的價格差距約為 50%。在那裡，我們失去了那裡的份額。所以我認為當你有一個類似的三角洲時，他們就不會重複這種情況。

So that's part of what we're doing when we talk about sort of specialized programs to deal with certain SKUs. So we're not going to see that big a difference. I think they recognize the sort of, I'm going to say, the damage they did by having that big a differential. So that's not going to occur again. But there is one where we do think the grass seed probably got more expensive than it should be. And the good news is the commodities are down on both the lawn fertilizer side and on the grass seed side that allow us to correct these prices. I don't know, Mike, would you add anything on this?

因此，當我們談論處理某些 SKU 的專門程序時，這就是我們正在做的事情的一部分。所以我們不會看到那麼大的差異。我認為他們認識到了，我要說的是，他們因巨大的差異而造成的損害。所以這種情況不會再發生了。但我們確實認為草籽的價格可能比應有的價格更高。好消息是草坪肥料和草籽方面的商品價格均下跌，這使我們能夠糾正這些價格。我不知道，邁克，你能補充一下嗎？

No, I think it's a balance of units and the right price for consumers, and we work with retailers, and we will get the -- I mean we've seen in one adjustment we've made already a 40% lift in units. And so we want to drive units, and we wanted to do it in a margin-accretive way.

不，我認為這是單位數量和對消費者來說合適的價格之間的平衡，我們與零售商合作，我們將得到——我的意思是，我們已經看到，在一次調整中，我們已經將單位數量提高了40%。因此，我們希望推動銷量增長，並且希望以增加利潤的方式來實現這一目標。

I think that's a very important point. That margin accretive way, absolutely, Mike, because -- and Jim just said it, you're seeing commodities come down. You're seeing us manage our cost structure, I think, expertly and bringing our average cost down, that's margin accretive. And so we're going to stay ahead of the selected price reductions that we're giving with cost out and cost position to look to '24. And it's still early days looking at '24 for that to be margin accretive.

我認為這是非常重要的一點。邁克，這絕對是利潤增長的方式，因為——吉姆剛剛說過，你會看到大宗商品價格下跌。我認為，你會看到我們熟練地管理我們的成本結構並降低我們的平均成本，這會增加利潤。因此，我們將繼續領先於我們所提供的選定降價，並展望 24 年的成本支出和成本狀況。 24 年實現利潤增長還為時過早。

Yes. I mean, Joe, this is, again, something that is fresh, but these price adjustments we're taking are not free. So we're not just offering across-the-board changes on grass seed or further anything else. What we're saying is in exchange for cost out, we're going into that because we kind of think that it's a good idea anyway. But in exchange, we get incremental listings and promotion that we did not have going into this year. So we are working very closely and carefully. And I think in a really positive way with retailers to offer opportunities for cost outs that focuses on certain SKUs that we believe have become expensive in exchange for other concessions from them on incremental business.

是的。我的意思是，喬，這又是新鮮事，但我們正在進行的這些價格調整併不是免費的。因此，我們不僅僅是對草籽或其他任何東西進行全面的改變。我們所說的是以降低成本為代價，我們之所以這樣做是因為我們認為無論如何這是一個好主意。但作為交換，我們獲得了今年沒有的增量列表和促銷。因此，我們正在非常密切和仔細地合作。我認為，零售商應該以非常積極的方式提供成本削減機會，重點關注某些我們認為已經變得昂貴的 SKU，以換取零售商在增量業務上的其他讓步。

And so that's -- and when -- this is, as we were preparing for this call, this is just this morning, Mike was telling us about the benefit and the supply chain of that incremental load. Full utilization of your supply chain, which brings the cost and balance. And so -- and the effectiveness of our field service teams and really it's a win-win for retailers and us. And we want the halo effect of our products. You're not just going in to buy a promotion, one promotion, you're getting multiple products, and that's what we want to get back to fundamentally.

所以，當我們準備這次電話會議時，就在今天早上，邁克告訴我們增量負載的好處和供應鏈。充分利用您的供應鏈，從而帶來成本與平衡。因此，我們現場服務團隊的效率對於零售商和我們來說確實是雙贏。我們希望我們的產品具有光環效應。你不只是去購買促銷活動，一次促銷活動，你會獲得多種產品，這就是我們想要回到的根本原因。

James. Do you want to take Chris next?

詹姆士。接下來你想帶克里斯嗎？

Yes.

是的。

Chris Carey, please go ahead.

克里斯·凱里，請繼續。

Can you hear me?

你能聽到我嗎？

Yes, we can.

我們可以。

Just a couple of maybe -- well, I don't know if it's quick ones, but here it goes. From -- so it's a pretty big earnings reset, right? And I think the obvious debate today is just what the earnings power of this organization will be specifically into next year. And I think that maybe just 2, maybe, key debates, right? So first, I know it's been touched on a little bit, but like what's your visibility that the excessive inventory that you still have will be clear going into next year. Said another way, is there any way you can frame the ability to enter next year clean from an inventory standpoint? That would be question 1.

也許只有幾個——好吧，我不知道這是否很快，但就這樣了。從——所以這是一個相當大的收益重置，對吧？我認為今天明顯的爭論是該組織明年的盈利能力將具體體現在什麼方面。我認為也許只有 2 場關鍵辯論，對吧？首先，我知道它已經被觸及了一點，但就像你的可見度是多少，你仍然擁有的過多庫存將在明年變得清晰。換句話說，有沒有什麼方法可以從庫存的角度構建明年清潔的能力？這就是問題 1。

Question 2 would just be, do you think there's a dynamic where because you had such good load in this year, you're really building through next year? I realize these are hard questions because we're so far from that outcome. But given the reset today, all are already next year. And so getting a little bit of maybe visibility on inventory and phasing, I think might help people today. So just any thoughts you might have on that would be helpful.

問題 2 就是，你認為由於今年的負荷如此之大，你是否真的會在明年繼續努力？我意識到這些都是很難回答的問題，因為我們離那個結果還很遠。但考慮到今天的重置，一切都已經是明年了。因此，我認為對庫存和分階段有一定的了解可能會對今天的人們有所幫助。因此，您對此的任何想法都會有所幫助。

Look, I'll start and then hand to Matt. This is something comparabilities are going to be hard, I think, because the last year has been one of sort of making quarters and dealing with leverage targets. And that's created, I think, sales within quarterly periods that where we've sort of incented to make numbers. And for those of us who've lived it, it was very much kind of week-to-week, day-to-day work where we start a quarter looking at how we want to end and kind of what we had to do to sort of get there. Coming out of that and going to a more natural flow, I think, is probably will result in discontinuities.

聽著，我先開始，然後交給馬特。我認為，這是很難進行比較的，因為去年是製定季度和處理槓桿目標的一年。我認為，這就是在季度期間創造的銷售額，我們在某種程度上鼓勵創造數字。對於我們這些經歷過這種情況的人來說，這是一種周復一周、日復一日的工作，我們從一個季度開始就考慮我們想要如何結束，以及我們必須做什麼才能結束。有點到達那裡。我認為，擺脫這種狀態並進入更自然的流程可能會導致不連續性。

I'm not saying the negative, by the way. I'm just saying that it will create comparables that -- I think COVID did that by itself. And then I think our behavior through '23 probably will make it even more challenging to read. I don't think that -- so if you look at our inventories and sort of retail inventories, I think, by and large, there's not a giant retail inventory issue. Decisions we made, Chris, that when you look at how we are sort of talking about end of the year because remember, we're not there. We're still sort of working our fall season right now. I think for us to have come in below 4.5x leverage next spring. So I think it was like the end of Q2 was kind of when that our leverage went back under the old agreements went down back to 4.5x. It would have required a pretty exceptional year for us to get there. And I think we talked about it, for sure, we talked about it internally and with the board that -- but it was very much a different dynamic going back to the banks saying we made a ton of progress, but 4.5% is going to be challenging.

順便說一下，我並不是說消極的。我只是說，它將創造出可比的結果——我認為新冠病毒本身就做到了這一點。然後我認為我們在 23 年的行為可能會讓閱讀變得更加困難。我不這麼認為——所以如果你看看我們的庫存和零售庫存，我認為，總的來說，不存在巨大的零售庫存問題。克里斯，我們做出的決定是，當你看看我們如何談論年底時，因為請記住，我們不在那裡。我們現在仍在進行秋季工作。我認為明年春天我們的槓桿率將低於 4.5 倍。所以我認為，就像第二季度末我們的槓桿率根據舊協議回落到 4.5 倍一樣。我們需要非常特殊的一年才能實現這一目標。我認為我們確實討論過這個問題，我們在內部和董事會討論過這個問題，但回到銀行說我們取得了很大進展，但 4.5% 將會是一個非常不同的動態。具有挑戰性。

We made this quarter, and I'm not going to argue whether we could or couldn't have made Q4. That's not kind of where we were. Once we basically said, look, we're going to be going back to the banks for Q1 or Q2 anyway. And again, that's something we had talked about previously, for sure, with management and the board then we just said with the shortness in lawns, we're doing that, and I waited then for a recommendation from Matt and Mike, how they wanted to pursue the year, if we said the pressure is off, I'm trying to sort of make a certain number for a leverage calc.

我們在這個季度取得了成功，我不會爭論我們是否能夠取得第四季度的成績。那不是我們當時的情況。一旦我們基本上說，看，無論如何我們都會在第一季度或第二季度回到銀行。再說一遍，這是我們之前與管理層和董事會討論過的事情，然後我們只是說草坪短缺，我們正在這樣做，然後我等待馬特和邁克的推薦，他們想要什麼為了追求這一年，如果我們說壓力已經消失，我會嘗試為槓桿計算得出一定的數字。

How do we want to naturally allow the year to end. So what I wouldn't do is try to read too much into that because we were -- the recommendation I got from the 2 of them was, let's just let the quarter naturally end in Q4, and we'll build an operating plan to that. So I'm not -- this doesn't make anybody's job easier, but when you talk about the earnings power of the company, we could have struggled through Q4 and made a better number. There's no doubt that we could have done that and retailers were to work with us. We made a decision to sort of allow, since we're going to the banks anyway, let's just allow this thing to naturally sort of unwind. And I think it's a healthy thing actually. But -- yes, Matt, go.

我們要如何自然地讓這一年結束。因此，我不會做的就是試圖對此進行過多解讀，因為我們——我從他們兩個那裡得到的建議是，讓我們讓這個季度自然地在第四季度結束，我們將製定一個運營計劃那。所以我不是——這不會讓任何人的工作變得更容易，但是當你談論公司的盈利能力時，我們本可以在第四季度苦苦掙扎，並取得更好的數字。毫無疑問，我們本可以做到這一點，零售商也將與我們合作。我們決定允許，因為無論如何我們都會去銀行，讓我們讓這件事自然地放鬆下來。我認為這實際上是一件健康的事情。但是——是的，馬特，走吧。

All right, Chris. Let's frame this up this way. Let's start in third quarter. So you got $1.17, the inventory question, you saw us take a $20 million write-down on some inventory here in the third quarter towards $0.25 a share. So to me, I take the $1.17, I add the $0.25, I'm at $1.42. That's the underlying earnings in Q3. As you step forward into Q4, everything that Jim just said is tactically and strategically how we're moving forward that allows us to unwind inventory. The fall programs that we are putting into place, Mike and his team are executing to drive down inventories to clear out high-cost inventories as we go into '24. Now what I've said about '24 is that it's going to be kind of another transition year of getting margin back, and I'll talk about that in a minute, but let me finish on Q4. If you look at the full year in '23, Chris, frankly, you just said it, and I think we're in the same place. We're already looking at '24. The numbers coming out of Q4, we know that, that's a weak quarter for us just seasonally. You're probably looking with our guidance around $1 to $1.25.

好吧，克里斯。讓我們這樣來構建這個框架。讓我們從第三季度開始吧。所以你得到了 1.17 美元，庫存問題，你看到我們在第三季度對一些庫存進行了 2000 萬美元的減記，每股 0.25 美元。所以對我來說，我拿了 1.17 美元，加上 0.25 美元，我的價格是 1.42 美元。這是第三季度的基本收益。當你進入第四季度時，吉姆剛才所說的一切都是我們在戰術和戰略上前進的方式，使我們能夠釋放庫存。我們正在實施的秋季計劃，邁克和他的團隊正在執行，以降低庫存，以便在進入 24 世紀時清理高成本庫存。現在我所說的關於 24 年的內容是，這將是又一個恢復利潤的過渡年，我稍後會討論這一點，但讓我在第四季度結束。如果你看看 23 年的全年情況，克里斯，坦率地說，你剛才說了，我認為我們處於同一位置。我們已經在關注'24了。我們知道，從第四季度的數據來看，這對我們來說是季節性疲軟的季度。您可能正在尋找我們大約 1 至 1.25 美元的指導價。

Again, I'm adding that $0.25 back in to the underlying earnings of the company. So that's the full year. As you look at '24, everything that we're doing is around motivating gross margin accretion, and that's probably going to come in excess of 100 basis points. SG&A will stay tight everything that we're doing around driving cost out of the company are going to be supportive, but that inventory overhang is probably going to come through still in the first half. And so you're really now looking at a '25, 2025, where you have hundreds of basis points in margin as you release those high-cost inventories fully into the system. And as Mike said, you're getting efficiencies through the whole system.

我再次將這 0.25 美元添加到公司的基本收益中。這就是全年。看看 24 年，我們所做的一切都是為了刺激毛利率增加，而且毛利率可能會超過 100 個基點。 SG&A 將保持緊縮，我們圍繞降低公司成本所做的一切都將起到支撐作用，但庫存過剩可能仍會在上半年出現。因此，您現在真正關注的是 2025 年 25 日，當您將這些高成本庫存完全釋放到系統中時，您的利潤將有數百個基點。正如邁克所說，您可以提高整個系統的效率。

What does that mean for '24? There's a pathway back here in '24, where we see $3.50 to $4 a share in earnings, where we see EBITDA in excess of $600 million, and where we see completing the free cash flow of about $1 billion over 2 years, that's going to be directed to debt pay down. That will end up with the '25 improved margins, continued growth given the share and shelf positions that we've gained over the prior 2 years and $300 million plus in free cash flow that again will go to strengthen the balance sheet. Can't really give you an EPS view on '25 yet. And also the caveat for everyone. These are early days, but we know the conversation is very much about '24 at this point, and that's why I'm giving you a little bit of a preview.

這對 24 意味著什麼？ 24 年有一條路徑，我們看到每股收益為 3.50 至 4 美元，EBITDA 超過 6 億美元，我們看到在 2 年內完成約 10 億美元的自由現金流，這將被引導去償還債務。最終，我們將在 25 年實現利潤率的提高、我們在過去兩年中獲得的份額和貨架地位的持續增長以及 3 億美元以上的自由現金流，這將再次加強資產負債表。目前還不能真正向您提供 25 年的 EPS 視圖。還有對每個人的警告。現在還處於早期階段，但我們知道此時的討論主要是關於 24 世紀的，這就是為什麼我要給你一些預覽。

So that was a really comprehensive answer. I won't ask another question, but just to clarify a couple of things that I just heard, you're going to be -- you're still working down inventory into the front half that might limit some gross margin expansion, which really accelerates into fiscal '25. On fiscal; '24, did you say the gross margins would be up 100 basis points, or you're just saying they would be a bit more under pressure and then confirming you just kind of said $3.50 to $4, I don't know if you're talking about a multiyear or if that was in reference to what you think the earnings power could be actually be in fiscal '24.

所以這是一個非常全面的答案。我不會問另一個問題，但只是為了澄清我剛剛聽到的幾件事，你仍然會在前半部分減少庫存，這可能會限制一些毛利率的擴張，這確實加速進入 25 財年。關於財政； “24，你是說毛利率會上升 100 個基點，還是只是說他們會承受更大的壓力，然後確認你只是說 3.50 美元到 4 美元，我不知道你是否這麼說”我們談論的是多年期，還是您認為24​​ 財年的實際盈利能力。

Chris, I was very deliberate in what I said. I practiced it for 3 days. The 100 basis points is what you're looking at going '24 versus '23, okay? There's a lot of activity that's left to go after for us to really point to what that's going to be. But Mike and the team through the power of Project SpringBoard plus all the optimizations that they are doing that feels good, plus what Jim spoke about growing those shelf positions, increasing our volume, that will all contribute. That will yield with the other potential items that we have in place a 2024 view that says you kind of have $3.50 to $4 a share in place. A lot to execute on. It's early days, but that's what we need to be targeting, and that's what we're going after. That then would lead to a 2025 of another opportunity for increased margin expansion as the full deflationary impacts in our cost structure move through. Our inventories are aligned with the much lower raw material costs we have now and that will help us move forward. And by the way, all of that is kind of what I was speaking to directly in that margin bridge discussion and the prepared notes.

克里斯，我說的話是經過深思熟慮的。我練習了3天。 100 個基點就是你所看到的 24 年與 23 年的情況，好嗎？我們還有很多活動要做才能真正指出那將是什麼。但是 Mike 和他的團隊通過 SpringBoard 項目的力量，加上他們正在做的所有優化，感覺很好，再加上 Jim 所說的增加貨架位置、增加我們的銷量，這些都會有所貢獻。這將與我們現有的其他潛在項目一起得出 2024 年的觀點，即每股 3.50 至 4 美元。有很多事情需要執行。現在還處於早期階段，但這就是我們需要瞄準的目標，也是我們所追求的目標。隨著我們成本結構中全面通貨緊縮的影響逐漸顯現，這將在 2025 年帶來另一個提高利潤率擴張的機會。我們的庫存與我們現在低得多的原材料成本保持一致，這將有助於我們前進。順便說一句，所有這些都是我在邊際橋樑討論和準備好的筆記中直接談到的內容。

Our next question comes from Peter Grom from UBS.

我們的下一個問題來自瑞銀集團的彼得·格羅姆。

I guess I just wanted to ask about, you probably provided a lot of color on the '24. But I guess I wanted to get some color on the Hawthorne commentary that you intend to move Hawthorne into a partnership or separate it from Scotts. I haven't talked about for some time, but previously, it was kind of talked about from a position of strength versus where you stand today. So can you maybe just talk about that decision, and why now is the appropriate time?

我想我只是想問一下，你可能在 24 號上提供了很多顏色。但我想我想對霍桑的評論發表一些看法，即您打算將霍桑轉變為合夥企業或將其與斯科茨分開。我已經有一段時間沒有談論過這個話題了，但之前，這是從你今天所處的強勢地位來談論的。那麼您能否談談這個決定？為什麼現在是合適的時間？

Okay, sure. I think we all feel this way, by the way. We've made a ton of progress in stripping costs out of Hawthorne. And on pretty conservative numbers, that business gets back to profitability, call it this year, I don't know. I think that's what we said in the script. My issue with that business is that when it had a great valuation within our equity when it was earning like nearly $150 million of EBIT, it was good. I think without a kind of significant recovery in that space and everything we're talking about here, I'm just kind of going back to the previous question a little bit. We're just working our initial operating plan for next year right now. And so I think for everybody who's got questions, the bank plan and the sort of initial operating plans are pretty darn conservative, okay, on purpose because of where we are, and we're not sort of going to try to continue to lead with our (inaudible) here. But let's say, Hawthorne makes reasonable progress, they will.

好吧，當然。順便說一句，我想我們都有這種感覺。我們在削減霍桑的成本方面取得了很大進展。從相當保守的數字來看，該業務是否會在今年恢復盈利，我不知道。我想這就是我們在劇本中所說的。我對該業務的看法是，當它在我們的股本中具有很高的估值時，當它的息稅前利潤接近 1.5 億美元時，它就很好了。我認為，如果這個領域以及我們在這裡討論的一切沒有顯著的恢復，我只是稍微回到之前的問題。我們現在正在製定明年的初步運營計劃。因此，我認為對於每個有疑問的人來說，銀行計劃和初始運營計劃都相當保守，好吧，是故意的，因為我們所處的位置，我們不會嘗試繼續領先我們（聽不清）在這裡。但假設霍桑取得了合理的進步，他們就會的。

We're already seeing, I'm going to call modest recovery in that business. I just don't think that it's with the assumptions we put in there, which I think are reasonable. It's so impressive that it can stay the way it is. I think it just looks like a kind of marginal part of the Scotts portfolio. And when you look at it and you say, it's created a lot of beta in our earnings. We haven't really talked about -- I'm sort of escape innovating around this question, I'm not trying to go away from it. But if you look where we are, we got Hawthorne making negative earnings, and we had deployed like $1 billion into inventory and other capital areas. And that's the issue that we're fundamentally dealing with, you can call it about half and half.

我們已經看到，我將稱之為該業務的適度復甦。我只是認為這與我們在那裡提出的假設不符，我認為這些假設是合理的。它是如此令人印象深刻，以至於它可以保持原樣。我認為它看起來只是斯科茨投資組合的邊緣部分。當你看到它時，你會說，它為我們的收益創造了很多貝塔值。我們還沒有真正討論過——我有點逃避圍繞這個問題進行創新，我並不是試圖擺脫它。但如果你看看我們現在的情況，就會發現霍桑的盈利為負，而且我們已經在庫存和其他資本領域部署了大約 10 億美元。這就是我們從根本上處理的問題，你可以稱之為一半一半。

A lot of what we're doing in the operating side of the business is slashing burning on inventory, on the capital stuff that we invested in, in capacity on both Hawthorne and Scotts and wiping that out. But we're still operating with more than $1 billion, significantly more than $1 billion invested in an earning Jack ship, okay? And based on sort of the operating forecast that I've seen so far, it marginally makes money. It's a good business. Now I want to get to this part that is we've talked about hooking up with other people. And this is not new for me to create the sort of Ellis Island approach, which is -- there are some really good companies out there that were worth multibillions of dollars that are now worth zero. And a lot of that is investor sentiment. It's the challenges the business has had, it's the inability to bank. I mean, there's just so many things you can throw out there that are sort of negatives on that space right now. We're not going to shut it down.

我們在業務運營方面所做的很多事情都是削減庫存、我們投資的資本、霍桑和斯科茨的產能消耗，並將其消除。但我們仍在運營超過 10 億美元，遠遠超過 10 億美元投資於一艘盈利的傑克船，好嗎？根據我迄今為止所看到的運營預測，它略有盈利。這是一筆好生意。現在我想談談我們已經討論過的與其他人交往的部分。對我來說，創造埃利斯島的方法並不新鮮，那就是——有一些非常好的公司，曾經價值數十億美元，但現在價值為零。其中很大一部分是投資者的情緒。這是企業所面臨的挑戰，是銀行業務的無力。我的意思是，現在你可以扔掉的東西太多了，這些東西對這個空間來說是負面的。我們不會關閉它。

We've invested the money. We've -- and so as we've talked to people, you all need to know that this is a very unique property, probably the best piece of that business. And when we talk to other partners, all of whom are worth zero, including us on this part of the business, Hawthorne has so much -- we really -- we collected well in that space. The problem is nobody is making money on the cultivation spot, and nobody's spending money on capital, and that's fundamentally the issue, and there's a lot of reasons for that. I've seen good reports even today on why that -- and I think -- I don't know, Aimee, who wrote that report that I saw this morning. But it's right. So we spent the money. We could just walk away from it. I think that's wasteful. We did this for one reason, growth. We looked at lawn and garden. Now we had like a 30% increase during COVID in lawn and garden.

我們已經把錢投入了。當我們與人們交談時，你們都需要知道這是一個非常獨特的財產，可能是該業務中最好的部分。當我們與其他合作夥伴交談時，他們的價值都為零，包括我們在這部分業務中的價值，霍桑在該領域收集了很多東西——我們真的——我們收集了很多東西。問題是沒有人在種植地賺錢，沒有人把錢花在資本上，這就是根本問題，而且有很多原因。即使在今天，我也看到了關於為什麼會這樣的很好的報告——我想——我不知道，艾米，是誰寫了我今天早上看到的那份報告。但這是對的。所以我們就花了錢。我們可以離開它。我認為這很浪費。我們這樣做的原因只有一個：增長。我們看了草坪和花園。現在，在新冠疫情期間，草坪和花園的數量增加了 30%。

But before that, we were seeing a couple of percent growth. And we looked at live goods, and we looked at cultivation supply in the cannabis side and said these are growing at a multiple of ours. So we invested that. And I think we continue and -- within our numbers to have -- I don't know what the number is, but call it $15 million of R&D spend, innovation spend behind the Hawthorne business today and we could walk away from that. But this is really the difference between the future and not.

但在此之前，我們看到了幾個百分點的增長。我們研究了生鮮商品，也研究了大麻方面的種植供應，並表示這些產品的增長速度是我們的數倍。所以我們投資了。我認為我們會繼續——在我們的數據范圍內——我不知道這個數字是多少，但稱之為 1500 萬美元的研發支出，今天霍桑業務背後的創新支出，我們可以放棄這個數字。但這確實是未來與未來的區別。

We could cut that money and not spend that. But when we talk to partners, people in the industry recognize the power of what Hawthorne has. And everyone is in the same boat. So the question is, could you take people like more than one company, more than Hawthorne and put people together and create a business that has enough scale and enough earnings that is capable of being kind of a stand-alone business? And whether that's within Scotts or outside of Scott, but I would make the argument that, that business needs to be north of $100 million of EBITDA, I think it's the terms we use in the operating side. And I just don't see Hawthorne in the near term getting to that. And I see a lot of other people out there with really good exceptional businesses also floundering where getting together offers scale and it offers strategic impact that I think we're not going to get along. And I think for the Scott shareholders, I think the beta we've introduced into our earnings as a result of this investment is probably not healthy. We know one thing about Scott.

我們可以削減這筆錢而不花它。但當我們與合作夥伴交談時，業內人士認識到 Hawthorne 所擁有的力量。每個人都在同一條船上。所以問題是，你能否像霍桑那樣將多個公司的人員聚集在一起，創建一家具有足夠規模和足夠收益的企業，能夠成為一家獨立的企業？無論是在 Scotts 內部還是在 Scotts 外部，但我認為，該業務需要超過 1 億美元的 EBITDA，我認為這是我們在運營方面使用的術語。我只是不認為霍桑在短期內能做到這一點。我看到很多其他擁有真正優秀卓越企業的人也在苦苦掙扎，因為聚集在一起可以提供規模和戰略影響，我認為我們不會相處。我認為對於斯科特股東來說，我認為我們因這項投資而引入收益的貝塔值可能並不健康。我們知道關於斯科特的一件事。

Scott is a high cash-flow business. And we've got to find ways to sort of strengthen the Hawthorne platform and offer, I think, other people who are in exactly the same boat and you all know who they are, okay, and create something that strategically is important. And I just -- I don't think that we can get there by ourselves. And the -- there are opportunities. And when we talk to those people, unlike maybe a little bit the conversation we would have with you guys on the phone today, where you say, nobody else is saying that. Everybody else is saying, no, no, you guys really put something great together. Chris, you got something to say?

斯科特是一家高現金流企業。我認為，我們必須找到方法來加強霍桑平台，並為其他處於同樣困境的人提供服務，你們都知道他們是誰，好吧，並創造一些具有戰略意義的東西。我只是——我不認為我們能靠自己到達那裡。還有機會。當我們與這些人交談時，可能與我們今天在電話中與你們進行的對話有所不同，你們說，沒有其他人這麼說。其他人都在說，不，不，你們真的把一些偉大的東西放在一起。克里斯，你有話要說嗎？

Yes. No, I just...

是的。不，我只是...

It's your baby.

這是你的寶貝。

Yes, I know it is. And it's -- look, it's tough going through what we've been through. And look, understanding what the investments on this side of the industry have done to the core business sacrifices that the North American business has had to make to support Hawthorne through what it's been through. I just want to just quickly touch on when you said making this decision from a -- in the past, you've talked about it from a position of strength and now it's different. And look, clearly, I recognize the maybe the irony and what I'm saying. Look, strength of a relative thing. And clearly, Hawthorne is not the business it was.

是的，我知道是的。看，我們經歷過的事情很艱難。看看，了解行業這一方面的投資對北美企業為支持霍桑度過難關而必須做出的核心業務犧牲做出了哪些貢獻。我只想快速談一下，當你說做出這個決定時——過去，你是從強勢的角度談論這個問題的，但現在情況不同了。顯然，我認識到我所說的可能是諷刺。看，相對事物的強度。顯然，霍桑不再是以前的生意了。

The industry is not the industry it was at the time being, but Hawthorne still within the industry operates from a position of relative strength. And I think that's giving us in partnership conversations are really good position to negotiate and work from -- as Jim said, there's a lot of really good businesses out there that have fundamentally strong assets. If we can put those things together with Hawthorne. And when Jim talks about partners that he has, he's not just talking on the cultivation side where we operate. But when customers of ours, I mean, the people who are actually using our products come to see what we do here at Hawthorne, come to Marysville here and see R&D and innovation, all the work that goes into that side of the business.

該行業已不再是當時的行業，但霍桑仍然在該行業中處於相對強勢的地位。我認為這為我們在合作夥伴對話中提供了非常好的談判和工作條件——正如吉姆所說，有很多非常好的企業擁有強大的資產。如果我們能把這些東西和霍桑放在一起的話。當吉姆談論他擁有的合作夥伴時，他不僅僅談論我們經營的種植方面。但是，當我們的客戶，我的意思是，那些真正使用我們產品的人來看看我們在霍桑所做的事情，來到馬里斯維爾這裡，看看研發和創新，以及業務方面的所有工作。

People are really impressed and they're extremely optimistic about not just the long-term outlook of the industry despite where we are, but the presence and the contributions that Hawthorne can provide to it. So look, I know things are tough right now. We are going to make a move. The work that the team has done to get the business back to a place where profitability is really within our reach has been tremendous. It has not been easy for anybody. But again, I think we are in a position of relative strength compared to a lot of the other folks in the industry. And we want to go this not alone, but together and there's a lot of...

人們真的印象深刻，他們不僅對行業的長期前景非常樂觀，而且對霍桑可以為行業提供的貢獻也非常樂觀。所以看，我知道現在情況很艱難。我們要採取行動了。為了讓業務回到我們真正可以實現盈利的狀態，團隊所做的工作是巨大的。這對任何人來說都不容易。但我再次認為，與業內許多其他公司相比，我們處於相對優勢的地位。我們不想單獨行動，而是一起行動，還有很多……

And I want to talk just a little bit, Chris, about the cost of that strength. Some of the people we've talked to theoretically know how they can cut expenses. We have absolutely blood all over us here, as a result of what we're doing. There was a whole another round of layoffs this week here, okay, as we have sort of proactively dealing with our self-help, okay? When we talk to some of these partners, some of the partners are living in the same world on Chris' side, and they have made some of the changes. With us, we show up with absolute certainty in our numbers because they are created through blood. And that blood has been let, okay? So getting Hawthorne back to profitability is something that was shotguns and knives. And we've done it already, unlike some of our partners who say, well, I could do this and that. We've already done it. So part of the strength in these discussions is from the certainty of we've already done it. I don't know, Peter, if that helps at all.

克里斯，我想談談這種力量的代價。我們採訪過的一些人理論上知道如何削減開支。由於我們所做的事情，我們這裡渾身都是血。本週這裡又進行了一輪裁員，好吧，因為我們在積極主動地處理自助問題，好嗎？當我們與其中一些合作夥伴交談時，一些合作夥伴與克里斯那邊生活在同一個世界中，他們做出了一些改變。對於我們來說，我們的數字是絕對確定的，因為它們是通過血液創造的。那血已經流出來了，好嗎？因此，要讓霍桑恢復盈利，就需要動用獵槍和刀具。我們已經做到了，不像我們的一些合作夥伴說，好吧，我可以做這個那個。我們已經做到了。因此，這些討論的部分優勢來自於我們已經做到了這一點的確定性。我不知道，彼得，這是否有幫助。

No, it does a lot. I appreciate all that color. I mean -- and then Matt, I appreciate all the color you provided to Chris' question on '24. Maybe just a couple of points of clarification because it just -- to get the $3.50 to $4, it seems like a substantial increase in earnings given what we're kind of what's implied for this year. So maybe first just on the 100 basis points of gross margin expansion, is that incremental on top of what you would get back from cycling, the write-downs? Because I think you mentioned that's 120 basis points, or is that a total number? So whatever taking 270 to 300, you just add 100 to it, and that would get you there. And then I guess what I'm trying to understand within that is just maybe what's assumed for leverage and kind of interest expense? I think it would be helpful to kind of just maybe bridge us to $3.50 to $4 with 100 basis points of gross margin expansion. I just think that would be helpful.

不，它有很多作用。我很欣賞所有這些顏色。我的意思是——然後馬特，我很感謝你為克里斯關於“24”的問題提供的所有信息。也許只需澄清幾點，因為考慮到我們今年的預期，為了獲得 3.50 美元到 4 美元的收入，收入似乎大幅增加。因此，也許首先毛利率擴張了 100 個基點，這是否是在您從循環中獲得的減記之上的增量？因為我認為您提到了 120 個基點，或者這是一個總數？所以無論 270 到 300 是多少，你只要加上 100 就可以了。然後我想我想理解的可能只是槓桿和利息費用的假設？我認為，如果毛利率擴大 100 個基點，我們的收入可能會達到 3.50 美元至 4 美元，這可能會有所幫助。我只是認為這會有幫助。

Yes, no worries. And I do think, one, you have to take into account there's top-line growth next year. right? And so kind of out of the gates, everything that Jim and Mike have spoken about is growing mid-single digits in U.S. consumer next year, which with the margin also going up kind of that 100 basis points. And by the way, that's kind of a year-end full year '23 to a full year '24 as I'm looking at it, and that's coming through, like I said, additional volume, additional cost outs, additional expansion of capability that we are bringing on to the shelf with innovation, all of that is going into play. So that leaves you with a pathway to gross margin, EBITDA, again, growing commensurate. And then as you move to sort of lower in the P&L. Yes, you're right.

是的，不用擔心。我確實認為，第一，你必須考慮到明年的收入增長。正確的？就這樣，吉姆和邁克所說的一切都在明年美國消費者中實現中個位數增長，利潤率也上升了 100 個基點。順便說一句，正如我所看到的那樣，這相當於 23 年年底到 24 年全年，正如我所說，這會帶來額外的銷量、額外的成本支出、額外的能力擴展我們正在通過創新將其上架，所有這些都將發揮作用。因此，這為您提供了一條實現毛利率和 EBITDA 相應增長的途徑。然後當你的損益表降低到一定程度時。你是對的。

We are going to do what we've done this year. You'll see a consistent debt paydown of about $300 million next year, that obviously will work towards the net leverage calculation on an average of about $200 million. Commensurate with that will be an interest expense reduction you can do the math there. You're kind of averaging 5.25% right now. Next year, you're probably going to be in that range, 5.25% to 5.50%. So I'll leave you to do some math, but albeit on a lower debt level, and then tax rate will probably improve a little bit next year. This year, we're seeing a higher effective tax rate as earnings are a bit lower as earnings grow higher. Some of those fixed tax items, we get more coverage. And so your effective tax rate will move lower. So kind of moving back into that 25% to 26% range is what I'm thinking. And therefore, you put all that together, that's what helps drive the EPS growth year-over-year.

我們將繼續今年所做的事情。明年您將看到約 3 億美元的持續債務償還，這顯然將有助於平均約 2 億美元的淨槓桿計算。與此相稱的是利息費用的減少，你可以在那裡進行數學計算。你現在的平均率為 5.25%。明年，您可能會處於這個範圍內，即 5.25% 到 5.50%。所以我會讓你做一些數學計算，但儘管債務水平較低，但明年稅率可能會有所提高。今年，我們看到有效稅率更高，因為隨著收入增長，收入略有下降。對於其中一些固定稅項，我們得到了更多的覆蓋。因此，您的有效稅率將會降低。我的想法是回到 25% 到 26% 的範圍。因此，將所有這些放在一起，這就是有助於推動每股收益同比增長的因素。

Our next question comes from Eric Bosshard from Cleveland Research.

我們的下一個問題來自克利夫蘭研究中心的埃里克·博斯哈德。

A couple of things. Jim, I'm curious what pricing the experience this year and your thinking for next year. I'm just curious where that goes and what your strategy is within that. You've talked a little bit about it. I just would love to understand a bit more. Are you at the point where you feel like the consumers have pushed back on price where in order to have volume growth, in order to have mid-single-digit revenue growth next year, the pathway there is a notable change in your pricing strategy? Just help us understand that a little bit.

有幾件事。吉姆，我很好奇今年的經歷和你明年的想法是怎樣定價的。我只是好奇它會走向何方以及你的策略是什麼。你已經談過一些了。我只是想多了解一點。您是否覺得消費者已經推遲了價格，為了銷量增長，為了明年實現中個位數的收入增長，您的定價策略將發生顯著變化？只是幫助我們理解一點。

Listen, I'd start with what's notable is we're not taking pricing next year. So let's start with that one. Eric, I'm not sure we've seen consumer pushback. I said with [grass seed,] I think we all think we have -- I'm not sure that we understand that, well, look at the lawn business, you gained 5 share points. And again, I said that was conservative. The category got smaller. I think that's maybe the pushback. If you look at that research data we had that people said they were just kind of watching their pocketbook. I don't think it's just us. I think it's all kinds of products. So I think that grass seed was a pretty unique situation where we had a retailer actually price like our sun and shade above recommended retail and offer a private label product, 50% below us.

聽著，我首先要指出的是，我們明年不會定價。那麼讓我們從那個開始吧。埃里克，我不確定我們是否看到了消費者的抵制。我對[草籽]說，我想我們都認為我們已經——我不確定我們是否理解這一點，好吧，看看草坪業務，你獲得了 5 個份額點。我再說一遍，這是保守的。品類變小了。我想這可能就是阻力。如果你看看我們的研究數據，人們會說他們只是在看自己的錢包。我不認為只有我們如此。我認為這是所有類型的產品。因此，我認為草籽是一種非常獨特的情況，我們的零售商實際上將我們的陽光和遮陽產品的價格高於推薦零售價，並提供自有品牌產品，比我們低 50%。

Yes, that one the consumer did vote, but that is a very unique situation that's not going to happen again. So I think we're -- we started on pricing and Mike, you can jump in at some point here is we're not taking pricing. I don't think the retailers would be real tolerant of it. And I think we do feel like some of our products have gotten pretty darn expensive. And those really were lawn ferts, the combo products, they tend to be expensive anyway and grass seed. Then we had conversations with retailers in the last couple of months that are -- and I think you can start with Depot, who is publicly, I think, when TED Talks looking for cost outs within their system, and they're talking to vendors about participating, and they talk to us about that.

是的，消費者確實投票了，但這是一種非常獨特的情況，不會再發生。所以我認為我們開始定價，邁克，你可以在某個時候插話，我們不定價。我認為零售商不會真正容忍它。我認為我們確實覺得我們的一些產品變得非常昂貴。這些確實是草坪肥，組合產品，無論如何它們往往很昂貴，而且還有草籽。然後我們在過去的幾個月裡與零售商進行了對話——我認為你可以從 Depot 開始，我認為，當 TED 演講在他們的系統中尋找成本支出時，他們正在與供應商交談關於參與，他們與我們談論了這一點。

And I think within that, the underlying part of the conversation is we actually were sensitive to pricing on lawn ferts and grass seed, where how we could participate with them, which I -- ultimately I gets a cost out as a price reduction. So we've sort of targeted these reductions in exchange for concessions on listening and promotional support that's incremental to anything we had now. So Eric, seriously, I'll view this as a conversation. It's a little different than what you're saying. So you guys finally saw there was pushback from the consumer, not really.

我認為，對話的根本部分是，我們實際上對草坪肥料和草籽的定價很敏感，我們如何參與其中，我最終會通過降價獲得成本。因此，我們有針對性地減少了這些開支，以換取在傾聽和促銷支持方面的讓步，這對我們現在所擁有的一切都是增量的。所以埃里克，說真的，我會把這看作是一次對話。這和你說的有點不同。所以你們終於看到了消費者的抵制，但事實並非如此。

We basically said we're not pricing because we thought our stuff has gotten expensive. And the thing is agricultural products, food, we see it early because you're dealing with a lot of the same stuff, you're dealing with agricultural commodities, urea, various other nutrients, chemistry that goes into the products, pallets, plastic, transportation, all this stuff really pricing up, and we've seen a lot of giving price back on that. And so I think for us to sort of assume we could get pricing, I don't think we would have thought it was good for the business, and maybe that gets to what you wanted to say. But the ability to participate in cost-outs with retailers in exchange for volume increases that were incremental to what we -- and I mean truly incremental to what we have today, I think, which -- this is the whole question I had this morning as I was talking to Mike about this as we were sort of anticipating questions, these are margin positive for us, not only dollar margin positive, they're margin percent positive as -- remember, we overbuilt our supply chain as we were in COVID, not unlike other people.

我們基本上說我們不定價是因為我們認為我們的東西已經變得昂貴了。問題是農產品、食品，我們很早就看到了它，因為你正在處理很多相同的東西，你正在處理農產品、尿素、各種其他營養素、產品中的化學物質、托盤、塑料、交通、所有這些東西的價格確實在上漲，我們已經看到很多人在這方面進行了降價。所以我認為，如果我們假設我們可以獲得定價，我認為我們不會認為這對業務有好處，也許這就是你想說的。但是，能夠參與與零售商的成本削減，以換取銷量的增加，這對我們來說是漸進的——我認為，我的意思是對我們今天所擁有的真正漸進的——這就是我今天早上提出的全部問題當我和邁克談論這個問題時，我們正在期待一些問題，這些對我們來說是積極的利潤，不僅僅是美元利潤，它們的利潤率是積極的——記住，我們在新冠疫情期間過度建設了我們的供應鏈，與其他人沒有什麼不同。

And so as we've seen slack in that system, where the demand really hasn't been there, and again, we saw it this year, to have incremental business that further loads our supply chain, is actually super beneficial for us on a margin percent. So it even pays for itself in a percent basis. So I don't know, Eric. What do you think of the answer? And like we can talk about it. But I'm not -- no, I'm not trying to be stupid here. Like it's always good to talk to you, Eric. I mean it.

因此，正如我們看到該系統的閒置，需求確實不存在，今年我們再次看到，增量業務進一步增加了我們的供應鏈，實際上對我們來說非常有利保證金百分比。因此，它甚至可以按百分比收回成本。所以我不知道，埃里克。你覺得這個答案怎麼樣？就像我們可以談論它一樣。但我不是——不，我不想在這裡犯傻。埃里克，和你說話總是很高興。我是認真的。

Yes. I'm just trying to figure out how you connect that, that's where your customer, Home Depot wants to cost out. Your consumer has said, like my lawn is good enough at that price. The units are negative. Your comment is it's great to load volume -- one path is to lower the price to solve all those things.

是的。我只是想弄清楚如何將其聯繫起來，這就是您的客戶家得寶想要支付的費用。你的消費者說，就這個價格來說，我的草坪已經足夠好了。單位為負。您的評論是加載量很好 - 一種方法是降低價格來解決所有這些問題。

And I guess, effectively, we're doing that. I think you're misreading what I said in my prepared comments, okay, which is my lawns good enough for the price. For those of us who live in the Midwest and the Northeast, you saw kind of real wet early spring, and lawns looked really great. They were not parched out. And I think that it was -- I'd like to save the money and my lawn looks good enough. A lot of that, from our point of view, good enough was weather related and that my lawn looks pretty green without doing anything. And that was true the spring. So I don't misread the data. Mike anything you...

我想，實際上，我們正在這樣做。我認為您誤讀了我在準備好的評論中所說的內容，好吧，這是我的草坪，對得起這個價格。對於我們這些生活在中西部和東北部的人來說，你會看到真正潮濕的早春，草坪看起來真的很棒。他們並沒有被烤焦。我認為——我想省錢，而且我的草坪看起來足夠好。從我們的角度來看，其中很多都與天氣有關，而且我的草坪在不做任何事情的情況下看起來很綠。春天確實如此。所以我不會誤讀數據。邁克任何你...

No. I mean if you look at Texas, I mean, we over-indexed. The weather was right. We did the promotions and the advertising. We were super, I mean what was the percentage early on, it was a 90% low. We were really optimistic about it.

不，我的意思是，如果你看看德克薩斯州，我的意思是，我們過度索引了。天氣很好。我們做了促銷和廣告。我們非常棒，我的意思是早期的百分比是多少，這是 90% 的低點。我們對此非常樂觀。

Eric, I think in dollars in Texas. We're up like 25-plus percent. Year-to-date, in our largest single lawn market is Texas, and it's up in dollars like 25%. I don't know what we said like it's more than 10% in units year-to-date. And so -- listen, it's one of those things where I actually don't know what it all. I wish I could say I know exactly what it means. We spent -- Matt and I spent a ton of time this week on saying we need to actually have an answer here. And Eric, one of the things -- this is really for everybody. We become -- our spring season has become very much a weed and feed season. And when you look at that early Daylawn Savings program we did, which coincided really well with Southern weather. And I just -- I know this data really well now. It worked really well, weather was good. And we talked about before, whether weather is not good and you promote it doesn't do much. We didn't see like the needle even move for Daylawn Savings with national promotion.

埃里克，我想在德克薩斯州用美元。我們的漲幅超過 25%。今年迄今為止，我們最大的單一草坪市場是德克薩斯州，其美元價格上漲了 25% 左右。我不知道我們說的是什麼，年初至今已超過 10%。所以——聽著，這是我實際上不知道的事情之一。我希望我能說我確切地知道這意味著什麼。我們花了——馬特和我這週花了很多時間說我們需要在這裡真正找到答案。埃里克，其中一件事——這確實適合每個人。我們的春季已經成為雜草和飼料的季節。當你看看我們早期實施的 Daylawn Savings 計劃時，你會發現它與南方的天氣非常吻合。我現在非常了解這些數據。效果真的很好，天氣也很好。而且我們之前也講過，天氣不好你宣傳也沒有多大作用。我們沒有看到 Daylawn Savings 的全國促銷活動有任何進展。

It got a lot of load in, which was good. Even in the North, retailers were prepped, but then since you saw nothing really happened in Daylawn in the northern markets, it really became like a Black Friday, a single Black Friday event where your -- the peakiness of the lawn season in like the Northeast was one week, okay, which is when the stuff was on promotion. And that's partially our fall. We, together with the retailers, have got very focused on weed and seed. And then you say, so what is it that the people really want? Do they want green, or do they want (inaudible)? So lawn took this position, the brand people lawn saying, the weed season was just kind of screwed up in the Northeast. And we said, yes, so you say, okay, I assume we sound a little bit like you, so you say.

它有很多負載，這很好。即使在北部，零售商也做好了準備，但由於你在北部市場的戴勞恩看到什麼都沒有發生，它真的變得像黑色星期五，一個單一的黑色星期五活動，你的——草坪季節的高峰就像東北是一周，好吧，那是東西促銷的時候。這部分是我們失敗的原因。我們與零售商一起非常關注雜草和種子。然後你說，那麼人們真正想要的是什麼？他們想要綠色，還是想要（聽不清）？因此，草坪採取了這一立場，草坪品牌人士表示，東北地區的雜草季節有點搞砸了。我們說，是的，所以你說，好吧，我想我們聽起來有點像你，所以你說。

And then we went back and pulled the Ortho data, and it basically was exactly the same, Ortho selective weed, almost exactly the same. So I think part of what's happened in lawns is we've become very much in the spring season, (inaudible) plus weed plus dandelion. It's become kind of (inaudible) plus 2, one big [mondo] promotion. And if the weather interferes with that, it's just -- it's pretty disruptive. And so I think that's a little bit how we look at these -- the differences in the country because you have the biggest state in the union from a lawn point of view, like plus 25 in dollars plus 10 in units and pretty bad numbers in the Northeast. And so how do you get to this whole issue of pricing, where you got one state, the number is -- but it goes bananas, and then we get into this whole weed thing and then we look at Ortho and it's the same numbers.

然後我們回去拉了Ortho數據，基本上是一模一樣的，Ortho選擇性雜草，幾乎一模一樣。所以我認為草坪上發生的部分事情是我們在春季變得非常多，（聽不清）加上雜草和蒲公英。它已經成為一種（聽不清）加 2，一項大型 [mondo] 促銷活動。如果天氣乾擾了這一點，那就非常具有破壞性。所以我認為這就是我們看待這些問題的方式——國家之間的差異，因為從草坪的角度來看，你擁有聯邦中最大的州，比如加上 25 美元加上 10 單位，以及相當糟糕的數字東北。那麼你如何解決整個定價問題，在一個州，數字是——但它很瘋狂，然後我們進入整個雜草問題，然後我們看看 Ortho，它是相同的數字。

So Eric, I don't know what it all means except to say that we're not chancing this because I think the retailers believe, and I know you have a great relationship with them. I think the retailers believe pricing was a factor. And so we're dealing with that. But we're dealing in a way of, I'm going to say, strength meaning we will work with you on this in exchange for x, y, z, which is all incremental. And I think what will happen is next -- look, first of all, nobody has anything to go on with spec and Central other than their first half numbers, then they sucked, okay? Not our first half, okay? That's part of what we're talking about here, okay, is -- the work we did and the friendships we had with our retailers really helped our load, and that helped our share, okay? The -- I'm not going to say concessions. The actions we're taking to deal with seed and lawn crisis are going to have effect on our shelf presence and our promotional sort of percentages. And I think you'll see that next year. Those programs are being put to bed now. But I think we're very confident on what's coming out of them.

埃里克，我不知道這一切意味著什麼，只是說我們不會碰這個機會，因為我認為零售商相信，而且我知道你與他們有很好的關係。我認為零售商認為定價是一個因素。所以我們正在處理這個問題。但我想說的是，我們正在以一種強度的方式進行交易，這意味著我們將在這方面與您合作，以換取 x、y、z，這些都是增量的。我認為接下來會發生什麼——看，首先，除了上半場的數據之外，沒有人與規格和中央有任何關係，然後他們就爛了，好嗎？這不是我們的前半場，好嗎？這就是我們在這裡談論的內容的一部分，我們所做的工作以及我們與零售商的友誼確實幫助了我們的負載，這也幫助了我們的份額，好嗎？ - 我不會說讓步。我們為應對種子和草坪危機而採取的行動將對我們的貨架存在和促銷百分比產生影響。我想你明年就會看到這一點。這些計劃現在正在落實中。但我認為我們對他們的成果非常有信心。

Second thing, probably maybe a little bit easier. Just from an inventory perspective, you commented about you managed this year a little bit quarter-to-quarter for the covenant, which makes sense. And now you've created a breathing room around that. Doing that obviously involves some pushing inventory to retail. You've talked about this bigger bet on fall lawns. The question is like is the risk that you end this year with more inventory retail than there should be, and that's a limiting factor for next year, or am I connecting the dots incorrectly?

第二件事，可能會容易一點。僅從庫存角度來看，您評論說今年您按季度管理了一些契約，這是有道理的。現在你已經圍繞它創造了一個喘息空間。這樣做顯然需要將庫存推向零售。您已經談到了對秋季草坪的更大賭注。問題是，今年結束時，你的庫存零售量可能會超過應有的水平，這是明年的限制因素，還是我把這些點聯繫起來不正確？

Yes. I don't -- listen, I don't think it's a limiting factor. I do think that to people where we fell short on our lawn numbers, there probably is higher lawn inventories. I personally have had conversations with retailers, not that there's a problem, but they bring it up. And so fall is pretty important, I think, to everybody. I don't know the exact percentages, Eric, but our spend for marketing in the fall is nearly 250% higher than it was last year. And we're not destocking, so the big fall promotional items that happened with grass seeds, lawn ferts and Tomcat, our rodenticide line. They're all going to get pushed hard. Now I wish I could tell you next quarter, we can tell you what the answer is, but a lot of these occur in that transition between the fiscal year. So a lot of this happens in November. So our first quarter numbers should say how successful we've been in both POS or sales and also in Tomcat. Mike, anything?

是的。我不——聽著，我不認為這是一個限制因素。我確實認為，對於那些草坪數量不足的人來說，草坪庫存可能更高。我個人曾與零售商進行過交談，並不是說存在問題，而是他們提出了這個問題。所以我認為秋天對每個人來說都非常重要。我不知道確切的百分比，埃里克，但我們秋季的營銷支出比去年增加了近 250%。而且我們並沒有去庫存，所以秋季的大型促銷品包括草籽、草坪肥料和我們的滅鼠劑系列 Tomcat。他們都會受到很大的壓力。現在我希望我能在下個季度告訴你，我們可以告訴你答案是什麼，但其中很多都發生在財政年度之間的過渡期間。所以很多這樣的事情發生在十一月。因此，我們第一季度的數據應該說明我們在 POS 或銷售以及 Tomcat 方面取得了多麼成功。邁克，有什麼事嗎？

No. I think you're going to see retail inventories down versus the previous year, Eric. The question is, how far down based on that fall program. So...

不，我認為你會看到零售庫存比去年有所下降，埃里克。問題是，根據秋季計劃，下降了多少。所以...

Yes. So I think that's an important thing to remember. We ended last year, not saying we had inventory problems. We said inventory was, I think, either lower or about where it should be. This year, inventory is going to be lower. Okay.

是的。所以我認為記住這一點很重要。我們去年結束時並沒有說我們有庫存問題。我認為我們說庫存要么較低，要么大約在應有的水平。今年，庫存將會降低。好的。

That's going to be lower, just how much and what's the promotion and what falls in the fourth quarter versus the first quarter on shipments.

與第一季度相比，第四季度的促銷力度、促銷內容以及出貨量下降的情況將會有所降低。

Those were retailer inventories, absolutely. From our inventory position, Eric, we did say part of that $1 billion in free cash flow over 2 years, the $400 million of it was related to excess inventory. And the plan is and was to take about half of that this year, half of that next year. As Mike detailed earlier, trying to gain some momentum here in the fall will help bring in some of that inventory reduction into 2023. So as Jim just pointed to, a lot to report on kind of Q1 of '24 on how this is all going to play out.

這些絕對是零售商的庫存。埃里克，從我們的庫存狀況來看，我們確實說過兩年內 10 億美元自由現金流的一部分，其中 4 億美元與過剩庫存有關。計劃今年將佔一半，明年將佔一半。正如邁克早些時候詳細介紹的那樣，試圖在秋季獲得一些動力將有助於在2023 年實現部分庫存削減。因此，正如吉姆剛才指出的那樣，有很多關於24 年第一季度的報告，說明這一切是如何進行的玩出來。

And then if I could just ask one last one. The obviously, everything was on the table. You add it to the restructuring, you're talking about, I think, a notable change with Hawthorne. You made a change with the debt covenant, and the board decided to keep the dividend, even though you're not going to earn the dividend this year or probably through the first half of next year, why? Why that position or strategy around the dividend?

然後我能否問最後一個問題。顯然，一切都在桌面上。我認為，你將其添加到重組中，你正在談論霍桑的一個顯著變化。您對債務契約進行了更改，董事會決定保留股息，即使您今年或可能到明年上半年都不會獲得股息，為什麼？為什麼要圍繞股息採取這種立場或策略？

Listen, I think we -- I'll speak from -- with 2 hats, okay? And start with the family hat. And that's not because it's more important. It's just the easier one to say. While the dividend does matter to the family. [My little sister,] Susan, who's the Chairman of the limited partnership, we have -- Sue and I have been real tight on this. And our view is whatever best for the company is the right answer, okay? So let's just put that one, which was not some weirdo move by the family to keep the dividend. As we looked at this from other companies who have either suspended or cut the dividends, the destructive effect on the value of the equity is so striking that it was something that in the discussions that Matt and I have had, and we have all had with our banking partners, it just didn't seem like it was worth it. It was really seemed like it was a kind of a third rail issue. And it didn't really move -- it doesn't really move the leverage numbers enough to sort of take the risk on the signal sent to our equity partners, okay? So -- Matt?

聽著，我想我們——我會說話——帶著兩頂帽子，好嗎？從家庭帽子開始。這並不是因為它更重要。只是說起來比較容易而已。雖然股息對家庭來說確實很重要。 [我的妹妹，]蘇珊，她是有限合夥企業的董事長，我們——蘇和我在這方面一直非常嚴格。我們的觀點是，對公司最好的就是正確的答案，好嗎？所以我們就簡單說一下，這並不是家族為了保留股息而採取的奇怪舉動。當我們從其他暫停或削減股息的公司身上看到這一點時，對股權價值的破壞性影響是如此驚人，以至於在馬特和我的討論中，我們都與我們的銀行合作夥伴，這似乎不值得。這看起來確實像是第三個鐵路問題。它並沒有真正改變——它並沒有真正改變槓桿數字，足以承擔發送給我們股權合作夥伴的信號的風險，好嗎？那麼——馬特？

No, no, no, 100%. In the first year that you cut the dividend, it's kind of worth 0.1, maybe 0.15, second year, it aggregates to like 0.3 on the impact to that leverage, Eric. So it's not going to move the needle in 2 years versus what we're going to do in the denominator of the net leverage calculation and also on the cash flow side of what we're going to be able to achieve and direct that to debt pay down. The other thing is, and Jim sort of glanced off of it, in our conversation with our top shareholders, everyone is agreed that they highly appreciate the dividend, our commitment to the dividend and keeping it in place as we manage through this. I'll use the direct quotes, "don't solve a near-term issue with a long-term structural impact." And impacting the equity in the short term to the significance that you've seen with some of the other companies that have cut their dividend would be significant.

不不不，100%。在你削減股息的第一年，它的價值是 0.1，也許是 0.15，第二年，它對槓桿的影響總計約為 0.3，埃里克。因此，與我們在淨槓桿計算的分母以及我們將能夠實現的目標的現金流方面所做的並將其直接轉化為債務相比，這不會在兩年內發生任何變化還清。另一件事是，吉姆有點忽視了這一點，在我們與我們的頂級股東的談話中，每個人都同意他們高度讚賞股息，我們對股息的承諾，並在我們處理這個問題時保持股息到位。我將使用直接引用，“不要解決具有長期結構性影響的近期問題。”短期內對股本的影響將是巨大的，就像你在其他一些削減股息的公司中看到的那樣。

Our next question comes from Jon Andersen from William Blair.

我們的下一個問題來自威廉·布萊爾的喬恩·安德森。

I'm sorry if this has been already addressed a couple of times, but I just did -- I do want to see if I can get some more clarity on the 2024 commentary that Matt gave. Maybe if you can just walk us through again the thinking or the baseline assumptions around sales growth and in particular, on gross margin, is that 100 basis points of year-on-year improvement, is that on an adjusted basis, meaning, is it excluding onetime adjustments in both years, such as the inventory write-downs this year? And then again, how much debt reduction are you assuming in 2024 relative to 2023? And I guess lastly, I think I heard EBITDA referred to $600 million in 2024. Did I hear that right? Is that -- what's implied by the EPS of $3.50 to $4?

如果這個問題已經被討論過幾次，我很抱歉，但我只是這樣做了——我確實想看看我是否能更清楚地了解 Matt 給出的 2024 年評論。也許您可以再次向我們介紹一下關於銷售增長的想法或基線假設，特別是毛利率，是同比改善 100 個基點，是在調整後的基礎上，意思是，是嗎？不包括這兩年的一次性調整，比如今年的庫存減記？再說一遍，您假設 2024 年相對 2023 年債務減少多少？最後，我想我聽說 EBITDA 提到 2024 年將達到 6 億美元。我沒聽錯嗎？每股收益 3.50 美元到 4 美元意味著什麼？

All right. A lot to go through. One, early days looking at 2024. So the reason that we are talking about 2024 is to give you all a viewpoint on how we think we can navigate over the next year, okay? So things will change. But these are kind of the way points that we're laying out. Mid-single-digit growth. You heard Mike and Jim talk about our broadening relationships with retailers. All of the factors that are going into that to improve our positions across the shelf, to improve our positions with the consumer so that they are activated and that they are motivated to continue to participate in the space, mid-single-digit volume growth. On the gross margin line, and I think Eric hit it directly. We are managing what is in our control. So another $100 million of cost out. That is incremental. And as Jim said, that's already started. So that will be in next year's earnings.

好的。有很多事情要經歷。第一，展望 2024 年。因此，我們談論 2024 年的原因是為了讓大家了解我們如何應對明年的觀點，好嗎？所以事情將會改變。但這些是我們正在製定的方法點。中個位數增長。您聽到邁克和吉姆談論我們擴大與零售商的關係。所有這些因素都是為了改善我們在整個貨架上的地位，改善我們與消費者的關係，從而激活他們並激勵他們繼續參與這個領域，實現中個位數的銷量增長。在毛利率線上，我認為埃里克直接擊中了它。我們正在管理我們控制範圍內的事情。因此又花費了 1 億美元。那是增量的。正如吉姆所說，這已經開始了。所以這將計入明年的收益。

On the pathway to all of that, that means that we are getting more efficient -- that means that there is additional profitability to come out. And we told you this year we're about $100 million behind in U.S. consumer that will come back next year, on top of the efficiencies that we are gaining. That's where you get the delta and kind of your low 4-ish type $400 million-ish EBITDA this year to getting back to that $600 million type EBITDA next year. From there, you look at the balance sheet, and what we're able to do considering that this $1 billion over 2 years, we've said it's kind of going to be equal weighted between '23 and '24.

在實現這一切的過程中，這意味著我們的效率正在提高，這意味著我們將獲得額外的盈利能力。我們今年告訴過您，除了我們正在提高的效率之外，我們在美國消費者方面還落後了大約 1 億美元，而明年這一數字將會恢復。這就是你今年獲得 4 億美元左右的低 4 億美元左右的 EBITDA 的增量，明年將回到 6 億美元左右的 EBITDA。從那裡，你看一下資產負債表，考慮到這 10 億美元在 2 年內我們能夠做些什麼，我們已經說過它在 23 年和 24 年之間將是同等權重的。

This year, we're going to pay down $300 million of debt. I think it's good to assume next year, we'll pay down $300 million of debt. You can then what I've said, is use an average interest rate in [5.25 to 5.50 lend,] can work that through on the EPS side, also took a look at the tax rate and said, hey, this year, we're running a little bit higher next year, pathway to 25%, 26%. All of that contributes to an EPS delta that gets you to that kind of $3.50 to $4 range. One thing that I didn't answer. Your gross margin rate.

今年，我們將償還 3 億美元的債務。我認為最好假設明年我們將償還 3 億美元的債務。然後，您可以按照我所說的，使用 [5.25 至 5.50 貸款] 的平均利率，可以在 EPS 方面解決這一問題，還查看了稅率，然後說，嘿，今年，我們'明年會稍微高一點，達到25%、26%。所有這些都會導致 EPS 增量達到 3.50 美元到 4 美元的範圍。有件事我沒有回答。您的毛利率。

I look at things on an adjusted basis. Let's get back to what is happening. There is $20 million in this quarter that is running through our P&L in the U.S. consumer business. To me, it's a restructuring item. And I know that I am the accountant here. But at the end of the day, I don't -- the true underlying power of the earnings of this company, you remove that. It's onetime, it's a write-down. So I do that. I got $1.42 in earnings in Q3. I think that's just off of where the consensus was. I look at the $20 million add back to gross margin, and I build from there. So it would be incremental when you add that back. And by the way, the adjusted margins that we report -- sorry, the margin that we report and talk about are adjusted.

我在調整的基礎上看待事物。讓我們回到正在發生的事情。本季度我們美國消費者業務的損益表中有 2000 萬美元。對我來說，這是一個重組項目。我知道我是這裡的會計師。但歸根結底，我不知道——這家公司盈利的真正潛在力量，你把它去掉了。這是一次，這是一次寫下來。所以我就這麼做了。我在第三季度獲得了 1.42 美元的收益。我認為這偏離了共識。我會觀察毛利率增加的 2000 萬美元，然後以此為基礎進行建設。因此，當您將其添加回去時，它將是增量的。順便說一句，我們報告的調整後的利潤——抱歉，我們報告和談論的利潤已經調整。

And our next question comes from Andrew Carter from Stifel.

我們的下一個問題來自 Stifel 的 Andrew Carter。

I guess just real quickly, like taking holistically, thinking about this year, there's been a lot of weather headwinds. There's been loads, channel loads. You mentioned the isolate -- what you -- which you consider an isolated incident or on grass seed. Do you feel like you still have the position of strength with your retail partners and like in terms of kind of the category leadership. And -- or has that gone backwards? And kind of remind us on private label, at the retailer level, do they make more margin dollars than your branded product? What's the trade-off there for influencing private label?

我想，從整體上看，今年有很多天氣逆風。有負載，頻道負載。你提到了隔離——你認為是一個孤立的事件或草籽上的隔離。您是否覺得您在零售合作夥伴中仍然擁有優勢地位，並且在品類領導地位方面是否如此？或者說這已經倒退了？並提醒我們在自有品牌上，在零售商層面，他們比你的品牌產品賺取更多的利潤嗎？影響自有品牌的權衡是什麼？

Okay. I'm going to leave the -- how much do they make on private label and our products. I'm quite sure it's more on ours. But I'll leave that to people who know better than I. Let's talk about our position of partnership or authority in the relationship with our retailers. You have no idea how much stronger it is as a result of what we have all been through, and I'm talking about at the most senior levels of our biggest retailers. I view them all as kind of personal friends. And it's not because we don't matter. It's because we all matter to each other.

好的。我要離開——他們在自有品牌和我們的產品上賺了多少錢。我很確定這對我們來說更重要。但我會把這個問題留給比我更了解的人。讓我們談談我們在與零售商的關係中的合作夥伴或權威地位。你不知道我們經歷過的事情會變得多麼強大，我說的是我們最大的零售商的最高層。我將他們視為私人朋友。這並不是因為我們不重要。這是因為我們對彼此都很重要。

I will put it this way, not expect anybody to feel sorry for me. It has been a really long kind of year and a few months, like really long. Like one of the few people I can actually talk about this is senior execs at our retail partners. And when we are trying to make quarters, we -- I have to go visit them and so does Mike. You know what we learned that not only are we like personal friends with these folks, but they need us, and we need them. And they view us as not less important, more important, and when we're talking about the selective price adjustments we're making that will result in incremental listings at our top retailers, you do know what that means.

我會這麼說，不指望任何人為我感到難過。這是非常漫長的一年和幾個月，真的很長。就像我實際上可以談論這一點的少數人之一一樣，他們是我們零售合作夥伴的高級管理人員。當我們試圖住宿時，我們——我必須去拜訪他們，邁克也是如此。你知道我們了解到，我們不僅像這些人的私人朋友，而且他們需要我們，我們也需要他們。他們認為我們不僅重要，而且更重要，當我們談論我們正在進行的選擇性價格調整將導致我們的頂級零售商增加清單時，您確實知道這意味著什麼。

That doesn't mean diminishing power. That means increasing relationships with our most important partners and the biggest retailers in the world. And so I would say right off the bat, as we have really -- Mike and I have had to make sales calls this last year, it has been one of the really great experiences in my life, and I want to thank any retailer who's listening to be able to sit with them and share what's happening at this business, and how we needed their help and they gave it without having to really beg. And so I can't tell you how much Mike and I appreciate it. But that is not a sign of a diminishing or weaker relationship. Mike, anything?

這並不意味著削弱權力。這意味著加強與我們最重要的合作夥伴和世界上最大的零售商的關係。所以我想說的是，就像我們真的——邁克和我去年不得不打銷售電話一樣，這是我一生中真正偉大的經歷之一，我要感謝任何零售商傾聽能夠與他們坐在一起，分享這個企業正在發生的事情，以及我們如何需要他們的幫助，而他們無需真正乞求就給予了幫助。所以我無法告訴你邁克和我有多麼感激。但這並不表示關係正在減弱或減弱。邁克，有什麼事嗎？

No, I would say the relationship is even stronger than ever. And so we're dependent on each other, and we're going to work together so we both win. So -- and I think that's what...

不，我想說的是，這種關係比以往任何時候都更加牢固。因此，我們相互依賴，我們將共同努力，實現雙贏。所以——我想這就是……

I think if you look -- look, I'd have to go with the numbers. I think if you look over the last 5 or 6 years, so my data is dated between sales and finance who are all in here, they can probably answer this question better. Over time, we have definitely been taking share in, I think, all categories we participate in. If you look over like the last decade. My numbers are a little dated. But I think if you looked and said, what would be pretty typical would be -- maybe 50-50 in units, but within that 50-50 in units, probably 60-plus percent of the dollars are branded products within that mix. So they make a bigger margin percent for sure, but I'm sure on the dollars it's the random side where they make their -- lot of their money. So I think those numbers are pretty right, which is, call it, 50-50 units, that's probably 60-plus percent our business and 40% private label dollars. The margins are better, but the dollars I'm quite sure are higher in our space. And they're all not in yes to that, Andrew. So I don't know if that answered your question.

我想如果你看看——看，我就不得不接受數字。我認為，如果你回顧一下過去 5 或 6 年的情況，那麼我的數據是在銷售和財務人員之間進行的，他們可能可以更好地回答這個問題。隨著時間的推移，我認為，我們肯定在我們參與的所有類別中都佔據了份額。如果你回顧一下過去十年。我的數字有點過時了。但我認為，如果你觀察並說，非常典型的情況是——也許 50-50 個單位，但在這 50-50 個單位中，可能 60% 以上的美元是該組合中的品牌產品。因此，他們肯定會獲得更高的利潤率，但我確信從美元角度來看，他們賺到的錢是隨機的。所以我認為這些數字非常正確，也就是說，50-50 台，這可能占我們業務的 60% 以上，還有 40% 的自有品牌美元。利潤率更好，但我確信我們領域的美元更高。他們都不同意這一點，安德魯。所以我不知道這是否回答了你的問題。

This concludes today's conference call. Thank you for participating. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。