Central Garden & Pet Company

Q2 2022 Earnings Conference Call


spk_0: and gentlemen thank you for standing by welcome to central garden and at fiscal twenty twenty two second quarter earnings call my name is somali and i will be a coffee shop we're for today at this time all parties with on to listen only mode later we will conduct a question and answer session and structure will be given at that time if anyone's require assistance gonna call to for star followed by zero on a touchstone for every minor cough recall college be employed i would now like it would turn to call over to frederick that only vice president and russia relations
spk_1: please go ahead
spk_2: thank you your somali good afternoon everyone thank you put your ending up with me on the call today or a typical for chief executive officer nicola hannah chief financial officer jd walker president garden consumer product and john henson president pet consumer product campbell provide a big with update and nico will discuss our financial twenty two future result in more detail and revisit our outlook for the full year following the prepared remarks jd and john will join up for the que les i'll preferably providing the robot for off it got twenty two second quarter ended march twenty fifth two thousand twenty two and related materials available at i it up central dot com and contained the gap to non get reconciliation for the non gap measure the govt on of call lastly unless otherwise stated all growth comp american made during the call or against the same period in the prior year i would like to remind you that bateman made during of call which are not historical fact including the potential impact of corporate nineteen on our beloved earnings per share and other guy them for fiscal twenty two expectations for new capital investments product launch with and future acquisition of forward looking statements subject to risks and uncertainties that could cause actual results to differ materially from both implied by forward looking statements the threat from others are described in our filing with the securities and exchange commission including our annual report on form ken k father november twenty three two thousand and twenty one ventral on it takes no obligation to public the update beat forward looking statements to reflect new information subsequent events or otherwise know i will turn the crawl over to out the old can call for him
spk_3: thanks frederica and good afternoon everyone i want to start the call by thinking our team at central for their continued dedication and passion to serving know consumers imposter move across both a pet and garden industries our solid financial performance in the second quarter is a direct result of how well they are executed thank you team central let me share three key take ways from this quarter first central delivered another solid quarter we grew sales and operating income and importantly expanded gross margin in a challenging and highly inflationary environment second although the garden season experienced a slow start weather is not been as favorable to date and other risks like heightened inflation geopolitical impacts and supply chain disruption continue we remain committed to or for your guidance of three dollars and ten cents or better which represents six percent growth vs prior year non gap eat ps or thirteen percent growth on a gap basis and third the fundamentals of the pet and garden industries are strong and we expect a purposeful investments we are making know will drive long term shareholder value now turning to our results in the second quarter central delivered net sales growth of two percent driven by a recent acquisitions while organic sales declined three point five percent it is important to note we are camping twenty three percent sales growth in the prior year court
spk_4: shifting to gross margin
spk_3: like most companies inflation has impacted all areas of our business from commodities to packaging labor rates fuel costs international ocean freight and more thanks to our carefully executed pricing favorable product mix and productivity improvements are gross margin expanded a hundred basis points burst prior year
spk_4: our teams have done a good job controlling what we can control in the fireplace and environment
spk_3: are operating income improved two percent even as we continue purposeful investments in strategic areas including capacity expansion and automation innovation brand building consumer insights and ecommerce to drive long term growth
spk_5: and finally as we indicated in our last earnings call we expected second quarter he appears to be below prior year
spk_3: he ps came in at a dollar and twenty seven cents or five cents below que to of twenty one now let me provide you some color on the trends were seeing across for customers and consumers in or two segments starting with pet
spk_5: today more than half of all us households own at least one pet and that number has risen significantly during the pandemic years
spk_3: since twenty nineteen and incremental four million households added pets to their families not surprisingly household penetration and almost all of the pet supply categories also improved as our furry feathery and scale a friend benefit from the new normal in addition to penetration games annual spend per household in the pet category continues to increase was significant gains and twenty twenty versus twenty nineteen and steady growth in twenty twenty one consumers are buying more often and spending more per trip compared to pre pandemic levels in line with these trends our pets segment enjoyed sustained consumer demand across most pet supplies categories on top of a record second quarter in the prior year notable contributions came from our dog and cat outdoor cushions professional and distribution businesses offsetting softness in pet beds our point of sale or pos was down slightly as we are lapping thirty percent pos growth in the prior quarter we've made progress improving fill rate in every pet business and as new capacity expansion projects or commissioned across our key businesses were working towards our goal of getting back to pre pandemic service levels by year end we gain market share and several categories including health and wellness dog toys and treats as well as equine and last but not least or investments in digital capabilities are beginning to pay off ecommerce grew almost ten percent and now represents approximately twenty two percent of our pet branded sales
spk_4: shifting to garden
spk_3: in twenty twenty one garden household penetration grew slightly with about one million households entering the garden category on top of the even larger increase seen in twenty twenty the segments with the largest gains were like plants and wild bird as consumers continue to beautify their outdoor spaces and enjoy their new or renewed passion for gardening and caring for wild birds net sales growth in the garden segment was driven by a recent acquisitions all of which continued to perform well
spk_4: garden organic sales were below the prior year quarter
spk_3: three factors drove the organic sales decline first the garden season is off to a slower start and foot traffic across her t retailers has been down vs prior year marge schott cold temperatures and snow in many states and inflation including rising gas prices has led consumers to consolidate their trips to stores second as we mentioned that our last earnings call we experienced a bit of a poll forward of sales in the queue one and finally it is important to remember that were laughing a robust twenty three percent organic growth rate in the prior year quarter as a result strength and wild bird was more than offset by softness and chemicals and fertilizer distribution branded controls and grass seed for both organic sales and pos
spk_4: well brick and mortar still dominate the garden channel landscape ecommerce continues to become more relevant to consumers and our business
spk_3: in queue to our garden ecommerce business grew by more than twenty percent representing low single digits of total gun sales service levels in our garden businesses have improved over prior year and our teams are working hard to get fill rates back to historic levels by year end now i'd like to take a few minutes to provide an update on our progress against our central the home strategy starting with the consumer pillar where we seek to build and grow distinctive brands consumers love we continue to elevator capabilities including significant new hires new external partnerships and a fresh focus on consumer insights to build our brains to new heights and create disruptive innovation platforms this is inspiring new thinking and reinforcing a growth mindset a critical goal for us to step up product innovation to drive and criminal girl expand margins and enhance the distinctiveness of our brands
spk_4: here's some reason examples
spk_3: well dogs and cats continue to reign supreme the growth of the other pets space cannot be denied in fact pets other than dog and cat although fewer in number recently experienced the greatest surge in ownership with the number of households increasing twelve
spk_4: percent versus prior year
spk_3: k p r leading brand for small animals is well positioned to take advantage of this growth trend providing premium products including food and trees hay betting assess rees and enclosures for pet birds rabbit guinea pigs and more k p recently launched it's neutral soft one which provide optimal nutrition for picky feathered eaters unlike almost all other bird food which is hard katie neutra soft pairs a distinctive soft texture would naturally sweet flavors and nowhere official colors to mimic the fresh fruits and vegetables found in a pet birds native habitat we're excited about this disruptive food form and are strong marking support behind it to build and grow brands consumers love we remain committed to invest in demand creation to accelerate organic growth one example of our work is the recent flip the turf campaign
spk_5: though in february just in time for superbowl or pennington bram launched a bold campaign
spk_3: grayling together players fans athlete advocates and those fighting for a greener future to call upon the nfl to make a change for the better
spk_4: well we've been keenly aware of the benefits of natural grass over turf when it comes to sustainability pennington also realize the safety issues turf presents to athletes thanks to our efforts thousands of consumers signed our change dot org protection
spk_5: and the movement caught fire
spk_4: half of the nfl teams currently play on artificial turf and we made a pledge that if they put safety and sustainability first and flip the turf to graph we will provide are winning pennington grass seed
spk_3: the result of this campaign were impressive pennington had the highest social media engagement rate across every category of any brand that did not run a superbowl ad this was an important step in building our brand purpose and recognition now let's turn to the customer pillar where we focus on strengthening the relationships with their customers and building a leading ecommerce platform we're proud the central has been recognized once again as pet cause companion animal vendor of the year we're pleased received this prestigious award for a continued commitment to championing the health and wellbeing of companion animals and expanding category sales in our efforts to build a leading ecommerce platform we recently completed the implementation of do my own pick pack and ship solution for online fulfillment in our largest arden cushion plant this investment will increase ardent ecommerce fulfillment capacity by for thirty percent and provide a runway for growth for years to come in the fastest growing channel so to summarize my remarks we feel good about the progress in both the second quarter and the first half of our fiscal year and we're excited about the opportunities ahead of us nevertheless fiscal que three is typically the largest quarter for central an unfavorable weather has caused a late start to the garden season
spk_4: we expect continued inflation and commodities rate labor and were monitoring consumer behavior and spending patterns as we execute further pricing actions across our pet and garden portfolios
spk_3: we are also monitoring the impact of the russia ukraine war and the global economy including prices for certain grains and feed fertilizer and energy on an already challenge global supply chain for the remainder of fiscal twenty two we remain focused on our top priorities that we laid out last quarter first successfully adding capacity and automation to restore customer service to historic levels next managing through disinflationary period with a focus on pray thing actions and cost control efforts third making meaningful progress against our long term strategy by investing in our capabilities are brands and are innovation agenda and finally continuing to recruit retain and develop the top talent in our industries despite the continued headwinds i'm confident in our team's ability to navigate in these challenging times with that let me turn it over to nico who share more details of our cue to results and the outlook for the fiscal year nico
spk_6: thank you tim good afternoon everyone we feel good about the solid performance of our business given the current environment
spk_3: especially after record net sales growth of thirty three percent and e p s growth of fifty nine percent in the prior quarter
spk_5: second quarter net sales reach nine hundred and fifty four million the increase of two percent with due to the fifty two million contribution from a recent acquisitions organic net sales decline three point five percent however looking at the growth over a two year period organic fails grew at a fourteen percent hager in the second quarter
spk_3: consolidated gross profit increased fourteen million to two hundred eighty seven million gross margin improved one hundred basis points to thirty point one percent thanks primarily to our pricing actions to mitigate significant cost inflation in commodities great and labor as well as favorable product mix and productivity improvements ft in a expense rose seven percent to one hundred and eighty million driven by our recent acquisitions higher logistics costs are performed that's been spending and capacity expansion and automation as well as and capabilities es una as a percentage of net sales increase one hundred basis points to eighteen point nine percent
spk_6: operating income grew by two million two hundred and seven million and operating margin with eleven point two percent in line with prior year despite continued inflation and height investment spending
spk_5: net interest expense with fifteen million compared to ten million a year ago the increase was due primarily to hire get from the four hundred million of senior notes we issued last april
spk_6: net income with seventy million compared to seventy three million a year ago
spk_5: diluted gap earnings per share was a dollar twenty seven or five cents lower than in the prior year quarter and adjusted ebitda grew two million or two percent to one hundred thirty one million
spk_4: our tax rate with twenty three point four percent compared to twenty two point seven percent in the prior quarter due to increased foreign earnings and higher tax rate jurisdiction
spk_6: now provide some insight into the segment starting a pet
spk_5: pet segments sales increased one percent to four hundred ninety eight million driven by dog and cat outdoor cushions professional and distribution offsetting lower sales in pet bed due to intentional skew rationalization pet that up against strong comparable in the second quarter a year ago and when looking at the growth over a two year period organic pet sales increased at a twelve percent care
spk_6: pets segment operating income with sixty one million the decline of poo percent compared to prior year
spk_5: and operating margin decline forty basis points to twelve point two percent due to inflationary headwinds in commodities frightened labor as well as purposeful investments in our growth initiative to drive long term growth pets segment adjusted ebitda decreased one million or one percent to seventy million
spk_7: turning out a garden
spk_5: garden segment sales grew three percent or thirteen million to four hundred fifty seven million
spk_6: excluding the contribution from acquisitions organic failed decrease nine percent as growth and wild bird was more than offset by declines and chemicals and fertilizer distribution branded controls and graphene
spk_5: at to mentioned the decline was driven by three factors first unfavorable whether across the country causing a late start to the garden feet and more than offsetting pricing action taken to cover inflation
spk_6: second some poor forward into que one third our garden segment is copying extraordinary growth in the prior year and when looking at the growth over a two year period organic garden sales increased at seventeen percent kagan
spk_5: garden segment operating income grew seven percent to seventy one million garden segment operating margin increase fifty basis points to fifteen point four percent primarily driven by the benefits of our pricing action and the contribution from acquisitions exceeding inflationary headwinds and are heighten investment spending
spk_6: garden segment adjusted ebitda increase three million or five percent to seventy eight million now moving of the balanchine cashflows cash and cash equivalents at the end of the second quarter were fifty four million compared to forty million a year ago
spk_5: given our liquidity position we remain on the lookout for high growth companies with a creative margins and boat pet and garden to build scale and our core categories enter adjacent categories and add capabilities around ecommerce net cash used by operations with one hundred neighbor compared to eighty four million a year ago the increase was mainly driven by working capital requirements in particular and increase in inventory resulting from an intentional build up in inventory due to the increased demand for our products amid the continue global supply chain issues as well have higher input costs callbacks with fifty one million as we continue to lenient on capacity expansion and automation some examples of investments made in the quarter our new lines of production and dog and cat relocating do my own to a larger more efficient state of the art facility and enhancing our manufacturing footprint and capabilities for branded controls in missouri total debt with one point two billion up for one billion at the same time last year or leverage ratio a two point nine times at the end of the quarter compared to two point five times a year ago well within our target range
spk_4: we had no borrowings under our credit credit facility at the end of the second quarter
spk_5: depreciation and amortization for the quarter with eighteen million compared to nineteen million the prior quarter during the quarter we we purchased approximately two hundred twenty seven thousand shares or nine point four million dollars of our stock there remains a one hundred million under the boards previously authorize share repurchase program as well as additional shares under the boards equity dilution authorization
spk_3: and finally turning to our fiscal twenty two outlook we are certainly pleased with our soul result in the second quarter and the first half of fiscal twenty two
spk_4: we are now lapping two years of extraordinary growth and while improving our supply chain remain strapped with outstrip capacity
spk_3: we continue to experience labor shortages across many of our businesses and driven by the current geopolitical factors we expect costs for raw materials and freight to increase further while we have taken and plan to seek additional pricing were necessary
spk_6: we may not be able to offset all the impact this fiscal year through pricing
spk_3: we continue to pursue our productivity cost agenda and right favorable mix to mitigate the gap we are monitoring customer dynamics and consumer spending is they adapt to disinflationary environment
spk_5: despite all this we are executing against our long term strategy and continue to lean in with purposeful investment spending to dry profitable sustainable growth considering all the above we are maintaining our guidance of fiscal twenty two gap pps of three dollars and ten cents or better please keep in mind that this outlook exclude any impact from potential acquisitions that may be undertaken during the year
spk_6: and with that we would like to open a line for questions
spk_0: gagging i decided will be conducting a question and answer session if you like to ask the question please chris star one on go on t and confirmation toll indicate you on his in the question keep restart you if you're going to rule you question from if you could participate and speaker equipment maybe necessary before christmas donkeys one moment please while we cool cool question and i first question comes from the lot of bill chapel with through security pleased to see which one question
spk_8: thanks good afternoon
spk_9: a bill bill
spk_8: it just look at it the the gardening thieves and i clearly from what you've got thirty late start is there been any way to quantify what impact that on the garden segment this quarter into any can update of which seeing
spk_10: it good
spk_11: through april in the early make
spk_3: i'll give a quick headline and turn over to jd you know that even better i mean no doubt this you know that this year unlike the last two years we characterizes you know an unfavorable weather season so far it apply to you know dimensionalize that i think we're probably three to four weeks behind where we'd been in the last couple of years good weather years and i mean you know well bill you know at at some point you kind of run out a runway may and june are great months for us and we'll need to be great months for us and we're hopeful especially after a really bad the margin in april that this thing can turn so yeah i think about it kind of in all three to four weeks behind type in terms of dimensional i think of the impact of the garden see them
spk_12: jt
spk_13: expand on that if you would
spk_14: have village jd here i think i think kim summer and that well i'd say that it's very difficult to pinpoint exactly the the impact from on favorable weather there so many causal factors impacting the bit and one of the more challenging business environments and obscene you know everything from all retailers taken a very aggressive approach last year they took a more measured approach this year to their inventory build in the stores
spk_0: tim mentioned earlier in his grip that the retailer foot traffic was damn year over year a lot of that due to the inflationary environment one like we haven't seen him and several decades but we're still battling with the lingering supply chain challenges woken up quickly that and we're seeing improvement in our service metrics but that's still a chow and and and it was noted earlier as well that we had a pull forward into que one so with all of this noise it's challenging to do exactly pinpoint whether i should mention that we took some pretty sizable price increases to i think it's too early to tell the the impact for all mom from those pricing create a increase
spk_14: his on he lasted
spk_5: a whole all those things said one encouraging sign is when the weather's been good and favorable there is pent up demand and we've seen strong
spk_14: consumption and are equal level so that's a encouraging thing we just need to whether to be a little more favorable go on for
spk_15: got it thank you and then on the curb third any impact for way to one of the in fact that the canada china shut down the i can't remember how much of your business he source for there's a manufacturing from china and if that gonna have an impact within the next few months
spk_16: no was withdrawn from you know the global supply chain has been you know channel and for quite some time now i'm we've not seen you know the latest you know what's going on in china have have the moors negative impact but or supply chain dogs remaining challenge we are catching up you know certainly service and que to was better than it was que one we have a lot of capacity your boat across the network and we you know plan two sequentially improve service and que three argue for
spk_6: yeah bill i would just dad just a reminder we do look at less than eight percent of our cough to good coming out of china and then the other thing i would point out if you'll notice guard inventories are up quite a bit and so we we have forward by some inventories and and some of that would you stop coming in from china because because we've learned the hard way that the supply chains are really slow moving right now
spk_15: thanks to the color
spk_0: arnett netflix come from the line graph commerce with keeping capital markets people seemed your question
spk_17: hi good afternoon thanks for taking my question on and off to a really good start arrogant and very difficult comparison
spk_14: yeah get to that end i was hoping it back a little bit more about the outlook for organic sales and in the to category than and maybe starting with with pet i'm in a given or now past what i believe not only the top it's kind of when your comparison but also stack comparison it was wondering your level of optimism that ah perhaps the organic failed may even be able to accelerate from here to tie you're thinking about that
spk_3: sure or give a headline and then we can go in both categories that think to your point brad
spk_4: you know when you're when you think about this year you can simplify it maybe in the to have were from half the cops lot more challenging than back here
spk_3: a slightly more precise you would really think about it as the first seven months that versus the laugh
spk_4: by so you know it's really at this point may where we're getting into far more favorable comp year over year and so you saw that in some of the commentary birth by you know on on pad we grew failed one percent which we feel really good about because we're laugh and twenty one percent growth
spk_3: with quarter year ago and on garden on the organic field line we were down
spk_4: you know kind of high single digit but again laughing at twenty three percent growth year ago if you look at the the last six months last couple of quarters particularly made your to go on our physical you've got more favorable car i think i'm on the side we continue to feel very good about the consumer fundamental
spk_3: we feel good about the competitiveness of our franchises you don't we noted a number of categories where we expanded market share in the quarter we feel good about year to go initiative
spk_4: we've got a number of for innovations hitting the market we've got some new marketing campaign and you'll hear more about that as we talk to three and for so think overall on the petside feeling good about organic growth the you know good load single type growth
spk_3: likely year to go and then on the garden side is jd said earlier in the call would you need their mother nature to the help us here and and break more favorably the cops as you get the balance for the are a lot easier and with some favorable whether we should expect that the term
spk_14: that that's really helpful can and in and i was wearing it is it in the category he got going through a little bit more detail of doubt
spk_15: what's happening on on pricing vs volume
spk_14: and
spk_3: how how much that a factor and failed melted by him from you don't break thing is definitely the biggest driver of our overall sales performance order of magnitude were pricing in the in the high single digits you know seventy percent across the the portfolio that would be on both the garden and the pet side so obviously you don't do the simple math and fuel prices up and that i'd single and then we'd quoted are our total field performance of nuclear somewhere in the boy next you're looking at a at a negative number now hadn't said that that death in aggregate we have a business unit that the and brands that are still growing volume i mean our dog and cat business unit that i only pray thing but it's growing volume our outdoor cushions business not only pricing it's growing volume or health and wellness business is programming volume so we you know if you really need to get down to the be used specific and sometimes the skew specific but the aggregate story is
spk_18: i think appropriate and very carefully executed pricing quite honestly at a customer channel
spk_3: fk ewe level you know to take into account competitive dynamics etc on the backdrop of a very aggressive inflationary are below that were working here against i think of the beginning of the year i i shared with you brat and others that we're expecting a couple hundred million of inflation on the year were thing that number or creep higher birth original expectations and that's why we're responding with little bit more pricing so
spk_17: pricing definitely impacting volume but again it differs it differs be you by view of business by didn't
spk_0: it's very helpful thank you can
spk_19: a networking company to charge you with modest crispy and hard people seem to question
spk_20: good afternoon perks couldn't the questions
spk_19: the i guess just your liquor your reward is kind of bbl with requisitions look like this point as a current environment you know
spk_6: you know produced more more opportunities for you to some corridor the great thanks yeah i mean we're we're we're in several you know negotiations on on deals right now i would say you know certainly the deal flow is not what it was you know a year ago yeah i think that the private market for sort of follow the public market valuations of sort of come down and i think folks that were thinking of selling may be you know waiting a little bit till the volatility settles so overall deal flow is is a look at you did you know compared to a year ago that said
spk_19: and you know our pipeline is still pretty active and and were in you know some pretty good discussions
spk_21: burke
spk_3: the other end mentioned in the for for price increases later on the year yeah what magnitude of price increases would you need to kind of offset all of the additional inflation your same today
spk_22: you know it's it's the i think of digits that i that i mentioned earlier is is is the plan
spk_5: i'm here so called seventy five percent
spk_3: in aggregate pm and i think between that if you heard both nico and i'd say earlier in the prepared remarks between our pricing agenda our cost out productivity agenda
spk_19: i'm relying on some some favorite continued favorable mix and part of that acquisition related as well right some of these recent acquisitions are also available on a margin bases between all of that we're hopeful that we can have
spk_4: either offset are largely offset that that tsunami of inflation that as a said is now well north of couple hundred million on the year
spk_3: hooker and then just your lastly a any color terms of kind of couldn't and of sales and earnings for for third and fourth quarter any meaningful differences between the two quarters i mean you know obviously you don't you know it's well obviously a very different magnitude to three vs queue for i think you're going to see we're we're hopeful you'll see and accelerated the top line relative to what we've seen in in the front half
spk_6: show up in the back half starting in two three and cute for and you're going to see obviously earnings as well right and that just simply due on the map for the three ten guide that we provided versus what we've actually lived in the front have i don't know what else you'd say nicole on them
spk_14: no i i i i think you know if anything you you know you may see just looking at the late breaking garden fees and you may see some garden business maybe go and do a queue for that we normally would feed que three booming the weather the weather cooperates but that's about the only you know dynamic that i can see really happening other than the fact that you know que three is our biggest quarter
spk_23: i don't think that's going to change that literally go up i would add to that the last year we had some fairly heavy inventories at retail at the the bar
spk_0: at the end of two three and a retailer or rely that inventory and cute or so that to may lead to exactly what you said little bit of a shit from que three and a queue for someone to
spk_24: that's helpful thanks to before and our sources confirm the line william router with bank of america cliff was he was your question
spk_6: good afternoon my first question on the the high single digit price you mention and then over two hundred million dollars inflation at this point are we in a dynamic such that will continue to see gross margin expansion in the back of beer like we didn't second quarter well if a great question and damn it you know we're going to continue you know the answer is is is it depends as usual we're going out to see how inflation behave and acute three the and and then you've got the last to leave you know how they behave in and the not all depend on really how much overhead we absorb in that period so all those things are gonna have an effect on on how margins play out the other thing i would tell you is mix you know if you look at our portfolio we've got a really wide range of margins and favorable mexican can really have a profound role on our margin we see that play out really in the first half of the year where we've had very favorable max that happened in queue to with our with our acquisitions performing well and and affecting margin there so
spk_25: we were planning on it but press could tell you this is how it's going to play out it's gonna be picked tbd
spk_14: it's a very fluid dynamic process right now and and then also given the late you know breaking garden season kind of throws another wrench into it so we're just gonna have to see how the whole thing plays out
spk_3: okay and then secondarily i have heard such a range of consumer behavior with regard to our consumers trading down that inflation is accelerating have you been seeing a makeshift in terms of your private label which i think it's about fifteen to twenty percent of sales has that been either gaining or losing sales well if you're branded products yeah william we we definitely monitor that closely
spk_4: and as you said i mean one of the i think a good thing about her portfolio's is the majority of our portfolio deftly branded but we do have some limited exposure to private label as well so we monitor this closely there their many categories where we may have an open book on the branded and the private label side looking the data including the most recent quarter a cute to
spk_3: we are not seeing a shift from branded to private label in the categories in which we compete in fact you know i would tell you the pretty consistently were thing are growth trends unbranded our strip the growth tramp on private label your by a margin so
spk_26: what were on top of it i think of the american consumer continues to to
spk_0: the be put under pressure with rising gas prices and overall inflation
spk_27: they are going to be working at a trade off gonna category by category but so far in both lawn and garden consumable than and path as a relates our business we are seeing that as an unfavorable impact
spk_28: in color thanks a lot
spk_6: thank you on a fortune come from the line on have holding with barclays people shoot you a question hi mary and off for helping your question up on the back of questions are wondering if higher financing mark as change your outlook it all for them i find
spk_29: no not at all
spk_0: we we really are very you know value focused on on the deal itself and
spk_17: you know what we don't really view you know financing rates having a huge impact on on what we do we we look for great company than and we looked expand our per folio and are you know if if we make the right decision on and
spk_14: the cost of capital is is pretty much secondary and just another you
spk_0: erin burnett for some confirm the nine of crime to seller was jp morgan people see what your question
spk_5: a moment i thought that the tower to be as they have you talked about in the toilet retail in your comfort level in each category with image or a challenge and had a purchase thing that's the last year if a than buying a head more the here are trying to buy ahead
spk_18: the radio on third and darn sure hi carla that uk the to answer your question see repeal inventory of load double digits right now but when you consider the pricing factor that we mentioned earlier and the fact that a year ago we wish we still had fairly widespread out
spk_3: stocks due to the main for the product so really we don't consider this to be heavy and inventory at all i mentioned earlier that the retailers last year loading their stores earlier and heavier for the see them in anticipation of the season and this year we're seeing them take a more measured approach so we believe that you know like the way
spk_30: either improves and consumption improves the that should give a drab replenishment type borders
spk_5: and made of training they one one other planet you know you are only look at total garden feel net revenue and we look at total garden pos they're actually quite in line
spk_30: which again would mean you know there's no kind of dave overhang or dislocation for the necessarily be worried about their track and more left and line that fair jt that that's accurate yeah
spk_31: a humbled a hundred and power oh sorry sorry
spk_6: i'm not up on the petside i would say that rules you don't increased inventory at retail but it's needed wrote it in or service levels than than a challenge to some rubino will continue to improve our but there's no you know nothing nothing kind of for out of sorts as a great and then different
spk_5: how are you negotiate for rate is to stay where they stand relative to like it with at nineteen or twenty
spk_6: if you're thinking differently
spk_30: i'm we do you know a combination of we go out i take as much as six months
spk_0: we also participate in the spot market so we like to play that trade a little bit and and are bit to some extent sometimes you see some dislocation between you know the for great spot so it's all a bit of a mixed bag the other thing i would tell you a large part of our business actually is apple be our dog so
spk_32: it's the retailers are picking up and they're picking up that freight cracked we had a large customer transition to that over on the garden side this year which is why you cause our delivery expense come down a little bit wasn't that rate came down it was just a different way of operating with that customer
spk_33: great a super helpful thing
spk_3: and this and reminder for anyone have any questions you may for star one i into home keep their to join that questioning acid you and of come from the line long term martinson with jeffries cliff was huge your question
spk_5: good afternoon i'm in terms of the additional pricing actions you have plan for this year or those already been negotiated with your retailers or is is something that you need to go to them and their request additional price
spk_32: yeah it is largely as you look at our total physical twenty two pricing on below
spk_3: it is the vast majority is already a either landed or communicated and locked in there is a of small amount as inflation has accelerated in a few areas that were looking for additional thing you know order of magnitude call it around fifteen percent that would form to that bucket up were still in negotiation with our customer partners and eighty five percent is largely locked in okay says will flow through and then when you look at kind of the volume declines you know fully understanding that we're we're up against some tough comparisons and we do have the i'm late start to to the garden season but you know at again as bill at as we parted from many many people that the state of the consumer you are you are you seeing the consumer have pushing back on pricing whether it be for for pad or for gordon
spk_5: you know i would say broadly know or you know maybe better said not yet at least so you know when you look at as you say i think when you look at our at our overall organic sales growth and you take into account the type of in all
spk_3: massive lap that we've got in the twenties and thirties in in the prior year
spk_32: and then surely and the garden side you overlay a true dynamic of a late break to the season
spk_0: overall when you look at pricing versus volume mix i would say it's largely in line with what we planned you know back into when we put our plan together and and got into the market we are seeing the consumer walk away of these high prices at least not yet and to another caller we're not seeing a shift
spk_3: in into private label at least not as of yet and in terms of any sort of meaningful way
spk_0: the last cat of proof point i would say the fact that we have a number of businesses that even on the back up that high pricing are actually still growing volume and i mention the three or four earlier in this call so you know touch wood i think that the american consumers getting pushed and squeezed than a lot of areas but so

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