Core Insights - Scotts Miracle-Gro Company released its 2025 Corporate Responsibility report, highlighting progress in environmental, social, and governance goals aligned with its sustainability strategy [1][2] Group 1: Environmental Initiatives - The company launched the Miracle-Gro Organic Raised Bed & Garden Soil in 2024, made from locally sourced upcycled green waste, and expanded its organic product line in 2025 [5] - Scotts Miracle-Gro diverted 1.76 million pounds of coir waste for agricultural and industrial applications and reduced greenhouse irrigation water use by nearly 50% [5] - The company exceeded its goal of reaching over 157 million people through partnerships focused on water quality, conservation, and pollinator habitat protection [5] Group 2: Community Engagement - The company provided over 180 grants to connect children with gardens and green spaces, supporting various educational and community programs [5] - The Scotts Miracle-Gro Foundation expanded its grant for The Nature Conservancy's water quality initiatives to include the Colorado River Basin [5] Group 3: Company Overview - Scotts Miracle-Gro is the world's largest marketer of branded consumer products for lawn and garden care, with approximately $3.6 billion in sales [4] - The company's brands, including Scotts®, Miracle-Gro®, and Ortho®, are market leaders in their respective categories [4]

Core Insights - Scotts Miracle-Gro (NYSE: SMG) has underperformed in the past year, with a loss of approximately 13% in its stock value due to a focus on debt reduction and inventory normalization [1] Company Performance - The company is currently prioritizing debt reduction and normalizing inventory levels, which has impacted its stock performance negatively [1] Market Context - The broader market context includes a trend of companies making contrarian bets based on macro views and turnaround stories to achieve favorable risk/reward profiles [1]

Industry Overview - The U.S. cannabis industry is projected to generate over $30 billion in annual sales in 2024, with expectations to exceed $50 billion by 2030 due to expanding legalization and rising consumer demand [1] - Recent bipartisan discussions in Congress aim to improve banking access for cannabis businesses, potentially boosting profitability [1] - Ancillary cannabis companies, which provide products and services to cultivators and retailers, benefit from sector growth while avoiding direct plant-touching risks [1][3] Company Highlights - **GrowGeneration (GRWG)**: Operates the largest chain of hydroponic and organic gardening stores in the U.S., reporting net sales of $41 million in Q2 2025, a 14.7% increase from the prior quarter, despite a year-over-year revenue decline [5][8] - **Hydrofarm Holdings Group (HYFM)**: Manufactures and distributes hydroponics equipment, with 2024 revenue of $190.29 million, down 16% from 2023. The company is set to release Q2 2025 results, with a focus on stabilizing revenue [9] - **Scotts Miracle-Gro (SMG)**: Generated approximately $3.55 billion in total revenue in 2024, with a significant improvement in net loss to $34.9 million. The Hawthorne division faced a 35% decline in sales, but the company plans to divest this unit to reduce volatility [10][13] Investment Considerations - Ancillary cannabis stocks like GrowGeneration, Hydrofarm, and Scotts Miracle-Gro provide exposure to the cannabis market while avoiding the complexities of direct sales [14] - GrowGeneration is noted for improving margins and effective cost management, while Hydrofarm is viewed as a watch-and-see opportunity pending upcoming earnings [15] - Scotts Miracle-Gro's planned divestiture of the Hawthorne unit may reshape its market exposure, focusing on core operations for more predictable growth [15]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited condensed consolidated financial statements for Q3 and nine months ended June 28, 2025, including operations, comprehensive income, cash flows, balance sheets, and detailed notes [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net sales slightly decreased in Q3 2025 and for the nine-month period, while net income increased significantly for both periods Condensed Consolidated Statements of Operations | Financial Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | Nine Months Ended June 28, 2025 | Nine Months Ended June 29, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $1,188.0 M | $1,202.2 M | $3,025.8 M | $3,138.0 M | | **Gross margin** | $378.0 M | $354.1 M | $1,020.7 M | $880.0 M | | **Income from operations** | $215.0 M | $200.1 M | $508.7 M | $424.9 M | | **Net income** | $149.1 M | $132.1 M | $297.1 M | $209.1 M | | **Diluted net income per common share** | $2.54 | $2.28 | $5.07 | $3.64 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) Comprehensive income increased for both the three and nine months ended June 28, 2025, reflecting net income adjusted for other comprehensive items Condensed Consolidated Statements of Comprehensive Income (Loss) | Metric | Three Months Ended June 28, 2025 | Nine Months Ended June 28, 2025 | | :--- | :--- | :--- | | **Net income** | $149.1 M | $297.1 M | | **Total other comprehensive income (loss)** | $1.2 M | $(0.2) M | | **Comprehensive income** | $150.3 M | $296.9 M | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly decreased for the nine months ended June 28, 2025, leading to a net decrease in cash and cash equivalents Condensed Consolidated Statements of Cash Flows | Cash Flow Activity (Nine Months Ended) | June 28, 2025 | June 29, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $197.2 M | $549.0 M | | **Net cash used in investing activities** | $(60.0) M | $(80.0) M | | **Net cash used in financing activities** | $(158.2) M | $(221.1) M | | **Net increase (decrease) in cash** | $(20.5) M | $248.0 M | | **Cash and cash equivalents at end of period** | $51.1 M | $279.9 M | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 28, 2025, total assets were $3,090.6 million, with a total equity deficit of $170.9 million, reflecting changes in receivables and debt Condensed Consolidated Balance Sheets | Balance Sheet Item | June 28, 2025 | September 30, 2024 | | :--- | :--- | :--- | | **Total current assets** | $1,283.3 M | $980.4 M | | **Total assets** | $3,090.6 M | $2,871.9 M | | **Total current liabilities** | $798.6 M | $750.3 M | | **Long-term debt** | $2,136.2 M | $2,174.2 M | | **Total liabilities** | $3,261.5 M | $3,262.5 M | | **Total equity (deficit)** | $(170.9) M | $(390.6) M | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes explain accounting policies, including the consolidation of THC, accounts receivable sales, debt covenant compliance, and segment performance - The company sold its subsidiary The Hawthorne Collective, Inc. ("THC") but determined it is the primary beneficiary of the acquiring entity (BDH), a variable interest entity, and therefore continues to consolidate it[24](index=24&type=chunk) - Under its Master Receivables Purchase Agreement, the company sold **$1,708.9 million** of accounts receivable during the nine months ended June 28, 2025. Net receivables derecognized from the balance sheet were **$418.8 million** as of that date[27](index=27&type=chunk) Debt Covenant Compliance | Debt Covenant | Requirement | Actual as of June 28, 2025 | | :--- | :--- | :--- | | **Maximum Leverage Ratio** | ≤ 5.00 | 4.15 | | **Minimum Fixed Charge Coverage Ratio** | ≥ 1.00 | 1.47 | Segment Net Sales (Nine Months Ended June 28, 2025) | Segment | Amount | | :--- | :--- | | **U.S. Consumer** | $2,682.6 M | | **Hawthorne** | $115.9 M | | **Other** | $227.3 M | | **Consolidated** | $3,025.8 M | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20%28MD%26A%29) Management discusses a 3.6% net sales decrease, primarily from the Hawthorne segment, offset by improved gross margin and strong debt covenant compliance [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Net sales decreased 3.6% for the nine months ended June 28, 2025, but gross margin rate improved significantly, leading to higher net income Contribution to Change in Net Sales | Contribution to Change in Net Sales | Three Months Ended June 28, 2025 | Nine Months Ended June 28, 2025 | | :--- | :--- | :--- | | **Volume and mix** | (0.9)% | (2.8)% | | **Pricing** | (0.2)% | (0.6)% | | **Foreign exchange rates** | (0.1)% | (0.2)% | | **Total Change in net sales** | **(1.2)%** | **(3.6)%** | Contribution to Change in Gross Margin Rate | Contribution to Change in Gross Margin Rate | Three Months Ended June 28, 2025 | Nine Months Ended June 28, 2025 | | :--- | :--- | :--- | | **Volume, mix and other** | 2.5% | 2.9% | | **Material costs** | 0.9% | 1.8% | | **Pricing** | (0.2)% | (0.5)% | | **Impairment, restructuring and other** | (0.6)% | 1.6% | | **Total Change in gross margin rate** | **2.3%** | **5.7%** | - Interest expense for the nine months ended June 28, 2025, decreased by **18.8%** to **$102.0 million**, driven by lower average borrowings of **$341.7 million** and a **50 basis point** decrease in the weighted average interest rate[132](index=132&type=chunk) [Segment Results](index=35&type=section&id=Segment%20Results) U.S. Consumer sales slightly declined but profit rose, Hawthorne sales sharply decreased but became profitable, and Other segment sales and profit increased Segment Performance | Segment | Net Sales (9M 2025) | % Change YoY | Segment Profit (9M 2025) | Segment Profit (9M 2024) | | :--- | :--- | :--- | :--- | :--- | | **U.S. Consumer** | $2,682.6 M | (0.8)% | $638.1 M | $580.5 M | | **Hawthorne** | $115.9 M | (45.9)% | $0.7 M | $(9.2) M | | **Other** | $227.3 M | 3.4% | $22.7 M | $13.0 M | [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) Operating cash flow decreased significantly, but the company maintained strong compliance with all debt covenants and substantial borrowing availability - Net cash provided by operating activities decreased from **$549.0 million** to **$197.2 million** for the nine months ended June 28, 2025, compared to the prior year[147](index=147&type=chunk)[148](index=148&type=chunk) - As of June 28, 2025, the company was in compliance with all debt covenants and expects to remain so. The leverage ratio was **4.15** against a maximum of **5.00**, and the fixed charge coverage ratio was **1.47** against a minimum of **1.00**[159](index=159&type=chunk)[160](index=160&type=chunk) - The company had **$1,166.9 million** of borrowing availability under its Sixth A&R Credit Agreement as of June 28, 2025[158](index=158&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes occurred in the company's quantitative and qualitative market risk disclosures during Q3 fiscal 2025 - There were no material changes to the company's market risk disclosures from the 2024 Annual Report[187](index=187&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management, including the principal executive and financial officers, concluded that the company's disclosure controls and procedures were effective as of June 28, 2025[189](index=189&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the fiscal quarter[190](index=190&type=chunk) [PART II. OTHER INFORMATION](index=43&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) No material developments occurred in previously disclosed legal proceedings, and other claims are not expected to have a material adverse effect - There have been no material developments to the pending legal proceedings previously disclosed in the 2024 Annual Report[191](index=191&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) The company's risk factors have not materially changed from those described in its 2024 Annual Report on Form 10-K - The company's risk factors have not materially changed from those described in the 2024 Annual Report[193](index=193&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Dividend payments are limited by the credit agreement, and the company has no active share repurchase program, with minor share purchases by a trustee - The company's credit agreement limits regularly scheduled cash dividends to holders of its Common Shares to an aggregate amount not to exceed **$225.0 million** per fiscal year[198](index=198&type=chunk) - The company does not have an active share repurchase program. A total of **4,449 shares** were purchased during the quarter by a trustee for an executive retirement plan[199](index=199&type=chunk)[201](index=201&type=chunk) [Item 3. Defaults Upon Senior Securities](index=44&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - None[202](index=202&type=chunk) [Item 5. Other Information](index=44&type=section&id=Item%205.%20Other%20Information) No director or officer adopted, modified, or terminated any Rule 10b5-1 trading arrangements during the quarter - No director or officer adopted, modified, or terminated any Rule 10b5-1 trading arrangement during the quarter[204](index=204&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section indexes exhibits filed with Form 10-Q, including officer certifications, subsidiary lists, and XBRL data files - The report includes a list of exhibits filed, such as certifications, lists of subsidiaries, and XBRL data files[205](index=205&type=chunk)[208](index=208&type=chunk)

Core Insights - Scotts Miracle-Gro Company (SMG) reported a third-quarter fiscal 2025 profit of $149.1 million or $2.54 per share, an increase from $132.1 million or $2.28 per share in the same quarter last year [1] - Adjusted earnings were $2.59 per share, up from $2.31 a year ago, surpassing the Zacks Consensus Estimate of $2.19 [1] - Net sales decreased by approximately 1.2% year over year to $1,188 million, missing the consensus mark of $1,230.9 million [1] Segment Performance - In the U.S. Consumer division, net sales increased by 1% year over year to $1,030.2 million, although it fell short of the estimate of $1,071.4 million; the segment's profit rose by 12% to $235.5 million [2] - The Hawthorne segment experienced a significant decline, with net sales plummeting 54% year over year to $31.2 million, missing the estimate of $56.5 million [2] - The other segment saw an 8% increase in net sales year over year to $126.6 million, exceeding the estimate of $100.2 million, and reported a profit of $16.8 million, up 44% year over year [3] Financial Position - At the end of the quarter, the company had cash and cash equivalents of $51.1 million, down from $279.9 million a year ago; long-term debt was $2,136.2 million, a decrease of approximately 12.3% year over year [4] Future Outlook - The company reaffirmed its full-year adjusted fiscal 2025 outlook, projecting low single-digit growth in U.S. Consumer net sales, excluding non-recurring sales from AeroGarden and bulk raw materials; adjusted gross margin is expected to be around 30% [5] - Adjusted EBITDA is anticipated to be between $570 million and $590 million, with adjusted earnings per share projected to be at least $3.50 and free cash flow estimated at approximately $250 million [5] Stock Performance - Shares of Scotts Miracle-Gro have declined by 10.5% over the past year, contrasting with a 10.2% rise in the industry [6]

Core Insights - The Scotts Miracle-Gro Company announced changes to its Board of Directors, with retired Lt. General John R. Vines retiring and former General Scott Miller appointed to the open seat [1][2][3] Board Changes - John R. Vines retired after over 12 years on the Board, maintaining an advisory role as Board member emeritus [2] - Scott Miller, a retired U.S. Army General with extensive military leadership experience, has been appointed to the Board [3][4] Leadership and Experience - Miller has commanded at all military levels and has a distinguished record, including leadership in complex geopolitical regions and significant combat experience [3][4] - The Board aims to enhance its skills and perspectives, with Miller being the sixth new member since 2022 [4] Company Overview - Scotts Miracle-Gro is the world's largest marketer of branded consumer lawn and garden products, with approximately $3.6 billion in sales [5]

Core Insights - Scotts Miracle-Gro reported a significant profit beat with non-GAAP diluted EPS of $2.59, exceeding the analyst forecast of $2.26, while GAAP revenue was $1.19 billion, slightly below both the previous year's $1.20 billion and the analyst estimate of $1,226.93 million [1][2][5] - The company experienced a 1% increase in U.S. Consumer revenue, but total revenue slipped 1.2% year over year, indicating progress in cost control and profitability despite softness in top-line growth [1][5] Financial Performance - Non-GAAP diluted EPS reached $2.59, outperforming the analyst estimate by 14.6% [5] - GAAP revenue was $1.19 billion, down 1% from the prior year and missing the analyst forecast [2][5] - Gross margin rate (non-GAAP) improved by 2.9 percentage points to 32.1% due to reduced material and manufacturing costs [2][6] - Adjusted EBITDA (non-GAAP) was $256.1 million, an 8.1% increase from $236.8 million in Q3 2024 [2][6] Business Overview - Scotts Miracle-Gro is a leading manufacturer of consumer lawn and garden products in North America, with core brands including Scotts, Miracle-Gro, Ortho, and Roundup [3] - The company maintains strong partnerships with major retailers and focuses on cost management, expanding gross margin, and increasing consumer engagement through product innovation [4] Segment Performance - The U.S. Consumer segment, which accounts for the majority of results, saw a 1% increase in net sales, with segment profit growing 12% to $235.5 million [5] - The Hawthorne segment, focused on hydroponics, experienced a significant decline in net sales, dropping 54% to $31.2 million in Q3 FY2025, with plans for divestiture [7] - The "Other" segment, including Canada and miscellaneous international business, saw net sales rise 8% and segment profit climb 44% [7] Strategic Initiatives - The company launched new products in FY2025, including organic fertilizers and natural grass seed, capturing demand from new consumers [8] - Promotional efforts led to a 6% growth in U.S. Consumer point-of-sale units, despite discounting affecting average selling prices [8][9] Future Guidance - Management expects U.S. Consumer net sales to grow at a low single-digit rate for FY2025, with a non-GAAP adjusted gross margin around 30% [10] - Adjusted EBITDA is projected to be between $570 and $590 million, with non-GAAP adjusted EPS of at least $3.50 for FY2025 [10] - Free cash flow is anticipated to be about $250 million for FY2025, with leverage ending Q3 FY2025 at 4.15x [10]

Core Insights - Scotts Miracle-Gro reported $1.19 billion in revenue for the quarter ended June 2025, reflecting a year-over-year decline of 1.2% [1] - The company's EPS for the same period was $2.59, an increase from $2.31 a year ago, indicating an EPS surprise of +18.26% compared to the consensus estimate of $2.19 [1] Revenue Performance - U.S. Consumer net sales were $1.03 billion, slightly below the estimated $1.07 billion, but showed a year-over-year increase of +1.3% [4] - Other net sales reached $126.6 million, exceeding the estimated $114.45 million, with a year-over-year increase of +8.2% [4] - Hawthorne segment net sales were $31.2 million, significantly below the estimated $44.53 million, representing a year-over-year decline of -53.9% [4] Segment Profit Analysis - U.S. Consumer segment profit (Non-GAAP) was $235.5 million, surpassing the average estimate of $194.79 million [4] - Other segment profit (Non-GAAP) was $16.8 million, exceeding the average estimate of $5.79 million [4] - Corporate segment loss (Non-GAAP) was $-28 million, which was better than the average estimate of $-31.49 million [4] Stock Performance - Scotts shares returned +1.1% over the past month, compared to the Zacks S&P 500 composite's +3.4% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Year-to-date EBITDA increased by 9%, and EPS rose by 24% [11][58] - Gross margin improved to above 30%, with a GAAP gross margin rate of 33.7% compared to 28% in the prior year [57][60] - Total company net sales for the third quarter were $1.19 billion, down 1% year-over-year, while year-to-date total net sales were $3.03 billion, a decline of 3.6% [50][62] Business Line Data and Key Metrics Changes - U.S. Consumer net sales for the quarter were $1.03 billion, a 1% increase year-over-year, and year-to-date sales were $2.68 billion, down 1% [45][46] - POS units across categories were up 8% year-to-date, with notable increases in soils (+12%), mulch (+8%), and grass seed (+16%) [11][52] - The branded lawn fertilizers saw a 1% increase in POS units year-to-date, reversing a multi-year downward trend [52] Market Data and Key Metrics Changes - The lawn and garden market grew approximately 5% year-to-date, with the company gaining 2% market share [80] - E-commerce sales increased by 54% in online POS unit sales, reflecting a strong push to engage consumers through digital channels [24][51] Company Strategy and Development Direction - The company is focusing on internal initiatives to improve cost structure and efficiency while also shifting towards outward-facing initiatives to enhance consumer engagement [7][9] - Plans include expanding marketing efforts to younger consumers through digital platforms and influencers, as well as enhancing the R&D pipeline with more natural and organic solutions [21][25] - The company aims for sustained U.S. Consumer sales growth averaging 3% annually, with a gross margin target of 35% or higher [38][63] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving EBITDA guidance and reaffirmed expectations for top and bottom line metrics despite weather challenges [10][11] - The company is optimistic about the lawn and garden category's growth and the strength of its consumer business, emphasizing the importance of partnerships with retailers [35][94] - Management highlighted the positive impact of recent tax policy changes on future cash tax benefits, allowing for further investment in the business [60] Other Important Information - The company is in the process of divesting its Hawthorne business, which has shown three consecutive quarters of profitability [36][49] - The company plans to take pricing in the upcoming fiscal year to support margin recovery and innovation investments [39][63] Q&A Session Summary Question: Pricing and price mix performance in '25 and strategy for '26 - Management indicated a pricing increase of just under 1.5% in '25, with plans to pursue further pricing adjustments in '26 while maintaining activation spending with retail partners [77][78] Question: Category growth at retail in '25 and comparison to company performance - The lawn and garden market has grown about 5% year-to-date, with the company gaining approximately 2% market share [80] Question: Performance of customers who engaged in traffic-driving strategies - Management noted that retailers who actively participated in promotional programs saw better performance, and future spending will focus on those retailers [84][86] Question: Visibility into achieving mid-30s gross margin over the next few years - Management outlined a phased approach to improving gross margin, targeting a 1% benefit from supply chain savings and another 1% from net pricing adjustments [90][91]

Financial Data and Key Metrics Changes - Year-to-date EBITDA increased by 9%, and EPS rose by 24% [9][53] - Gross margin is above 30%, with a GAAP gross margin rate of 31.8% compared to 29.5% in the prior year [52][50] - Total company net sales for the third quarter were $1,190 million, down 1% from $1,200 million a year ago [46] Business Line Data and Key Metrics Changes - POS units across categories are up 8% year-to-date, with branded lawn fertilizers POS units up 1% [9][48] - Soils POS units increased by 12%, mulch by 8%, and grass seed by 16% year-to-date [9][48] - Hawthorne net sales were $31 million for the quarter, down from $68 million in the prior year [45] Market Data and Key Metrics Changes - U.S. Consumer net sales for the quarter were $1,030 million, an increase of 1% year-over-year [41] - The lawn and garden market has grown about 5% year-to-date, with the company gaining about 2% market share [74][75] - E-commerce sales increased by 54% in online POS unit sales [22] Company Strategy and Development Direction - The company is focusing on internal initiatives to improve cost structure and efficiency while also shifting to outward-facing initiatives to enhance consumer engagement [6][7] - Plans to invest in technology, AI, and automation to drive operational efficiencies [57][16] - The transformation initiative aims to create a world-class consumer goods company and expand marketing efforts to younger consumers [17][21] Management's Comments on Operating Environment and Future Outlook - Management reaffirmed EBITDA guidance and expects to deliver on top and bottom line metrics [8] - The company is optimistic about the lawn and garden category's growth and its ability to capture market share [62][88] - Management highlighted the importance of partnerships with retailers and the positive outlook for the lawn and garden market [32][66] Other Important Information - The company plans to take pricing in the next fiscal year to help drive margins [36] - The transformation of the lawns business is underway, focusing on a revamped product line and new media strategies [26][29] - The company is committed to sustainability and meeting consumer demands for organic and natural products [23][19] Q&A Session Summary Question: What is the pricing strategy for '26? - The company took a pricing increase of just under 1.5% in '25 and plans to pursue pricing in '26, considering commodity costs [71][72] Question: What is the category growth at retail in '25? - The lawn and garden market has grown about 5% year-to-date, with the company gaining about 2% of that share [74][75] Question: How are retailers responding to the activation strategy? - Retailers that engaged with the company's activation strategy saw relative outperformance, and the company plans to continue investing in those partnerships [79][80] Question: What is the visibility into achieving mid-30s gross margin? - The company expects to achieve mid-30s gross margin through supply chain savings and net pricing strategies over the next few years [85][86]