The Scotts Miracle-Gro Company (SMG)

Analyst Day 2015

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Dec 10, 2015

My name is Jim King. I'm Senior Vice President of Corporate Affairs and Investor Relations at Scotts Miracle Gro. So on behalf of the entire management team, I want to welcome everybody here this morning to our Annual Analyst Day event. I've been at Scotts now for 15 years. And I think in all but 2 of the last 12, we've had this meeting in either December or January here in New York, and it's always been a great event for us. So I think it will be again today. And it's good to see so many familiar faces and a handful of new ones. So hopefully, I'd encourage you to mingle with the management team over the course of the day. We have, at just about every table this morning, different members of the management team, mostly from our marketing, finance or sales team. So if you guys can just make yourselves apparent, raise your hands. I think whether you're here in person this morning or listening online, I think you're going to today to be time well spent. As most of you know, just a month ago, we announced our 2015 results, and we thought we had a fantastic year, best year that we had had probably since 2010, and as you'll hear Jim say in a few minutes, our most productive year in probably at least a decade. 2016, off to a good start for us already, and we feel really good about how the season will unfold. But as you'll hear in a little bit, we're going to be announcing a series of initiatives today that are focused on beyond 2016 that ensure our long term success. So with that, let me move on and tell you a little bit about how the day is going to go. When I'm done, I guess I need my slide advance here. When I'm done, Jim is going to join is going to come to the stage for about 45 minutes, share an update on the business, and midway through his presentation, he'll be joined by a couple of members of the management team. When he's concluded, Randy Coleman, our Chief Financial Officer, is going to join or come to the stage and share an update on our 2016 guidance and provide more specific information about what's going to be driving that guidance than we provided last month. After Randy, Mike Lukemeyer, Chief Operating Officer and Mike Carbonara, President of our North American sales, are going to share some thoughts for about 20, 25 minutes on our 2016 operating plan and give you a sense of why we feel so good about the upcoming year. When they're concluded, we're going to pivot a bit, and you're going to see a series of 4 separate presentations by different members of Mike Lukemire's team that will expand upon some of the things that Jim is going to talk about during his remarks. Josh Peoples, who's General Manager of our Lawns business and Patty Ziegler, Vice President of Marketing, are going to talk about 2 things. 1st, plans that we have in place this year for our lawn our Scotts Turf Builder business and the lawns business in general, some of the new marketing initiatives that we're putting behind that. And then Patti is going to talk about a significant effort that we're going to expound on a few times during the course of the day that's going to bring digital technology into the garden. It's an initiative we call the Connected Yard. They're going to be followed by John Sasse. John is the General Manager of our Gardening business and Chris Hagedorn. Chris is General Manager of the Hawthorne Gardening Company. For those of you who don't know, Hawthorne is a subsidiary that we've put in place about a year ago based in New York that is focused on urban and indoor gardening. They're going to talk about 2 things. They're going to talk about what we're doing in the organic That's another theme that you're going to hear throughout the morning. And then Chris is going to spend some time talking about what we've been doing so far in hydroponics and the opportunities that we think exist long term in that business. As all of you know, California was a big issue for us over the course of the year. The drought there impacted our business not insignificantly in the back half of the year. And we've been saying all year long that we thought there were more opportunities than challenges from the California drought if we responded proactively. So after John and Chris, you're going to hear from Doctor. Mark Slavens. Mark is Vice President of Environmental Affairs at Scotts, and he's going to share with you some of the things that we've been doing proactively in the future to ensure that water can be the opportunity that we think it can be. And then finally, the last presentation of the day, another theme that you're going to hear frequently is live goods. Live goods is industry speak for herbs, vegetables, potted flowers. Mike Sutterer, Vice President of our Marketing Group, is going to talk about some of the things that we're doing in the LiveGoods space and why we're so excited about that. So after that, we're going to take a quick break, have lunch and then have a Q and A session afterwards. So one final thing before I turn things over to Jim, obviously, legal disclosure. Everybody knows that we're going to have forward looking statements this morning. So I'd ask everybody to familiarize themselves with the risk factors. And with that, let me move on and get things started and turn things over to Jim Hagedorn. There it goes. Okay. You were tapping too. Good morning, everybody, and happy holidays. It's actually a really nice time to be in New York. I did have this feeling though of like when I was in the subway last night and the way back, one stop north of the 6th line, of what no, we're worried about terror a little bit. My wife was stuck in like the tunnel underneath like by the UN on First Avenue, same thing, like just worried about it. But I would this morning, it was less crowded in the subways, and it's like New York in the sort of holiday spirit. So it's a really nice time to be here. Weather is nice and warm. So I got a brand new grandkid, so his kid. And who's here from Merrill Lynch? So Olivia Tong, normally here at Fixtor here. She's got a brand new kid. I've been harassing her for years to go for it and have a kid. So if I had been organized enough, we would have stuck it up on so it's just it's really nice. So welcome. I think we have a really good meeting today. So I would say thematically before I get into sort of the script. So I would say thematically before I get into sort of the script. So you guys got to like actually close the books up and try to like just ride with me, okay? And we got a fabulous company. I think we've done good things with it. But it was one of those things where what we're going to talk about today is really sitting down and saying, we like our company a lot. How do we make it a lot better? What would we have to do? And I think we're making those choices. And it probably will come out that is that as we've talked to our Board about this, which I think we've got a smaller Board, so it's we have a really good Board. We'll talk about that, too. But I think I got 40% of the Board. Now for some reason, they're all sitting there. Maybe nobody will sit with them or but my Board over there. The Board really liked it. I think the management really likes the idea. The idea. A lot of our outside advisors like it. And pretty much this meeting is part of a process that really started out with our August Board meeting, kind of more or less said reasonable to our winter Board meeting that has occurred already, where they said, okay. A lot of work that's happened with our banks to sort of allow it and sort of make sure we can finance it. That met with the family a couple of weeks ago. They are okay. So this meeting is in part, it's part of our last stop before we get into pretty serious execution mode. So that's I would say fasten your seatbelts and let's get it on. When we held our Analyst Day meeting in Florida last February, we put a bunch of org charts up. We spent a lot of time talking about the changes we're making to our organization, especially at the executive level. And throughout the year, I stressed how significantly the chemistry within our leadership team had improved. I talked about how much easier it was to run the business, to make decisions and to get stuff done. Today, I have just 6 direct reports. As a group, we have an average tenure of nearly 16 years Scotts. That includes one member of the team who's been with us just 2 years. However, that person spent 20 years in their leadership roles serving the country and Delta Force and he's been a tremendous addition to our team. Where is Hoover? There he is. He runs our strategy group. And I admit that I probably underestimated the power of chem chemistry in the past. And I think that's allowed me to be a better leader and to create a better team. Together, I think we're making Scotts a better company. And I hope you'll see that yourself by the end of the meeting. Because over the past several months, this team has been developing a plan that represents a significant update to our strategy. And I like the plan. I like it a lot. And I believe the shareholders who are focused on long term success and value creation will like it as well. It's a plan that's pragmatic in its view of the marketplace, courageous in its recognition that we must adopt a new mindset to continue to replenish our pipeline with new gardeners. It's creative and it's designed taking a non traditional approach to growth by embracing the idea of using partnerships, alliances and minority ownership positions. It's smart in this assessment that the best path to long term growth may be addition through subtraction. And it's shareholder friendly and that it's focused on reconfiguring our portfolio to spent the better part of last year putting ourselves in a position to execute this plan. Since midsummer, we've had multiple in-depth conversations with our Board, which by design is a pretty non traditional group. We have former bankers, regulators, advertisers, strategists and educators. A retired 3 star Army General is our lead independent Director. The power of our Board is in its combined experiences. Our members actively engage with our business leaders on everything from innovation to marketing to regulatory compliance to M and A. So they've been actively involved in helping to shape the plans that you'll hear today. In addition to the Board, we have vetted these plans with our bankers and other outside advisors. Michael Porter of the Harvard Business School is not just a friend and a former board member, but he's been a strategy consultant with us for more than a decade. He has been highly engaged at several critical points in building this plan. And over the past 2 months, we've also worked with our bankers to create a capital structure that supports this plan and gives us maximum flexibility to manage our business. Today and in the months to come, we'll refer to this plan as project focus and for reasons that will soon become apparent. As we talk about it today, I would encourage you to listen for 3 major themes. First, we believe the lawn and garden category continues to have meaningful growth potential, especially in North America. The competitive advantage we've worked so hard to nurture our brands, our innovation pipeline, our sales force, our supply chain, our relationships with some of the best retailers in the world will continue to be critical to driving that growth. However, the approach and mindset we bring to work every day will have to evolve. Our consumers are changing and we have to as well. The trick to being the trick is to being dynamic enough to stay ahead of them, to bring new ideas to our space that keeps them engaged and excited about gardening. That means we have to accelerate our efforts in categories like naturals, organics, hydroponics and live goods. It means we're going to have to pursue emerging areas like precision irrigation and bringing Internet enabled technology to the garden. So for the North American business to continue to grow, we have to embrace our reality, which means our portfolio of products today could and probably will look different a decade from now. The second theme you'll hear today is that we clearly believe our North American consumer franchise is our one core business. So earlier this year, we began exploring options to maximize the value of our non core assets. Early in my tenure as CEO, someone asked if I'd rather be bigger and less valuable or smaller and more valuable. And I said bigger. What have I learned in 12 years or so since I had that conversation? Sometimes bigger is better, but not Service. And I'll also share thoughts about opportunities we're exploring for our European business, which are designed to give us greater optionality to pursue strategic alternatives in Europe, including the potential to eventually exit that market. The third theme is a recurring one, our belief that cash flow is king. I don't necessarily believe that EPS drives value. I believe that cash flow drives value. And how we use that cash is one of the most important decisions we make. I'm confident that the pivot we're making to allow us to continue will continue to allow us to drive significant operating cash flow. For the balance of this year, that cash plus our flexible balance sheet will primarily be used to invest in long term growth opportunities. But in the very near future, M and A will slow to a trickle and we'll focus on integrating the businesses we bought and running the company for maximum cash generation. At that point, we intend to recommit to a capital allocation strategy that returns more cash to shareholders, most likely from repurchasing shares. There are 2 other things I'd like to encourage you to listen for today. 1st, on multiple occasions, we'll talk about partnerships, minority ownership or strategic investments. Whether it's been with Monsanto or SC Johnson or Church and Dwight, one thing we've learned over time is that we don't have to own an asset to win. We've often made ourselves better, stronger and smarter by teaming with partners who in their respective areas are better, stronger and smarter than we are. And second, that while we pivot to 2016, we also have a strong operational plan this year and we continue to feel bullish about the state of our business. In fact, I want to stress that the changes we're making are not because we think anything's broken, quite the contrary. In fact, fiscal 2015 was one of the best years we've ever had. And it certainly was one of the most productive years we've had in the 15 years that I've been CEO. In our core U. S. Business, we gained or held market share in every category. We introduced 2 new products that added $50,000,000 in revenue. We launched new advertising campaigns to support our Miracle Gro, Ortho and Tomcat brands. We completed 8 acquisitions. We successfully renegotiated our roundup agency agreement with Monsanto. We saw an 8% increase in consumer purchases and mass retail. Our European business benefited from our restructuring efforts and had its most profitable season in years. And Scotts Lawn Service had record top and bottom line performance driven by higher customer counts and improved retention. We have a high degree of confidence in our plans for 2016 as well. Later this morning, you'll get a more complete briefing from Mike Lukmeier. We'll introduce even more new campaigns this year, some of which you'll see today, and we'll benefit from the full year effect of acquisitions we made last year. Our retail partners remain engaged and so do consumers. In fact, consumer purchases so far in Q1 are up 13%. The fall season is a relatively small quarter, but it's still an important data point. We expect all this to roll up to a 4% to 5% top line growth again next year and mid teen improvement in company wide operating income. So I have no beef with the recent performance of the company. None of us does. Our Board doesn't. And I interpret Wall Street's reaction to our results as approval as well. So the changes we're making have a little to do with near term performance. It's about securing our long term future. Scotts will celebrate its 150th anniversary in 2 years. That's a huge milestone. And we've been the leader in this industry for more than a century. A company doesn't make it as long as we have by thinking quarter to quarter or year to year. You don't survive by sitting back and letting the game come to you. You have to anticipate the needs of the market and sometimes that means you have to pivot. This company started off selling buggies, then cars came along, then it started selling washing machines, then Sears came along. Right after the turn of the century, we switched our focus to consumer lawn and garden. The pivot we need today doesn't require the kinds of dramatic shifts the company has undergone in the past. But to be successful, a decade from now, we have to manage a series of smaller but important changes and they have to start occurring right now. Here are 5 of the biggest opportunities we're pursuing. 1st, organic and natural products are no longer a nice to do. They are essential to the future. Mike Lukmeier is challenging the Gardens team to convert the majority of the Miracle Gro business to organic within 5 years. This is a major initiative. Increased investment and effort is needed here. If we don't do it, someone else will. Ask former executives of Kodak. It's not a risk we can take. 2nd, given the focus on water conservation and water quality in nearly every corner of the United States, we must adapt our thinking as it relates to this subject. This is especially true within our lawns business. We will support and invest behind the creation of water positive landscapes that use less water and guard against runoff and leaching. Consumer outreach and education will be one component of that plan as will engagement with environmental groups. But we're also exploring investments with Precision irrigation. We don't necessarily have to buy a business. There is some great innovation happening in the space. And precision irrigation around the home will become more critical in the future, especially in the Western United States. Investing in this space today could give us a good foothold and allow us to use our competitive advantages to help shape the consumer and retail experience as this technology evolves. 3rd, 2 years ago, we began talking to you about hydroponics. And since then, we've entered that space. This is the fastest growing segment in lawn and garden and has above average margins. Also a category where precision irrigation and sustainable growing is important. So there is real overlap between hydroponics and water. Additionally, the landscape in hydroponics is really interesting. It's younger, it's more urban, it's more West Coast, it's more reliant on independent retailers. It's also a category filled with talented, energetic and creative entrepreneurs who have built extremely good businesses. So everything that we need to improve on, upon our in our core business is already in place in hydroponics. We can take those learnings and apply them throughout the entire business. While we've been in the category for less than a year, we've already been exploring whether to expand our reach. Whether it's control products, lighting, hydroponic systems, our goal must be to serve these consumers with a full range of products, just like we do in our traditional business. 4th, about a decade ago, there was an increase in the number of consumers growing their own herbs and vegetables. This was not a blip on the radar screen. It remains true today. And it's an activity that's driving retail foot traffic. We must find ways to more directly participate in the $7,000,000,000 We need to be a gardening company, not just a garden products company. I'll have more to say about this in a few minutes, but it's an area we believe our expertise is valuable. Most of the major players in LiveGoods could benefit from marketing skills and R and D capabilities. And we could benefit from the opportunity of co marketing and co branding our products with their LiveGoods. The potential here is significant. And 5th, we've got to get better with technology. Later today, you'll hear us talk about initiative we call the Connected Yard. A few years ago, who would have imagined that many people in this room today would monitor their sleep habits or measure the number of steps they take with a wristband or smartphone. Not only is it not Farfetch to imagine that kind of technology of the garden, it's already here. Imagine the ability to look at your phone and know whether the plants need watering, whether they need nutrients, whether they're healthy. This isn't a pipe dream. The opportunity is real, but we cannot be a follower here. We must be a leader. This may be an area where having a partner is the best way to succeed. You'll hear about all 5 of these things this morning. None of them will probably offer major paybacks in 2016. Some might not even be a big part of the story in 2017, but all of them are critical to our long term success. A decade ago, this company might have said we're investing in all those areas and still try to do everything else. But today, we're a different company and that's what leads to project focus. There are no word games or hidden meanings here. The word focus means exactly what it says. And I hope you'll leave here believing that we're not just saying we're focused, but that we actually are. When you dissect our business, you'll see that the North American brands account for roughly 80% of our sales and 90 corporate value. At the end of 2015, company wide operating margin was 13%. But in the U. S. Consumer business, it was more than 20%. Europe was just 5%. Lawn service was 12%. North American return on invested capital is nearly 15%, corporate average is 12. We view our weighted average cost of capital at about 8% by the way. So if we're trying to create value, then tinkering around the edges of our non core business is not going to do the job. In fact, tinkering around the edges might just distract us from what really matters. That's why we're announcing today the first step in our evolution. Last night, we entered into definitive agreement to combine Scott's salon service with TruGreen, which is currently owned by the private equity firm, Clayton Duvelier and Rice. Scotts will own just over 30% of the combined company. For years, you've heard us talk about service and why we liked it. That's still true. As I said a few minutes ago, SLS had a record year in 2015. So we like it just as much as ever. But the question is how to generate the most value for our shareholders. By joining with TruGreen and owning nearly 1 third of the combined company, we think our shareholders are far better served. On day 1, the entity will have about 2,500,000 customers, 1,400,000,000 roughly $130,000,000 of operating profit. We've already identified roughly $50,000,000 in synergies While the economics of this transaction are easy, it was a difficult and bittersweet decision for us. In the end, it came down to a single question. Are we the right owners for this business? At least for now, we've decided the answer is no. We think our shareholders are better served if Scotts owns a major stake in the bigger and market leading company. The beauty of working with CD and R is we know the approach they'll take. If you didn't know, Scotts Miracle Gro used to be owned by CD and R. And one of our current board members was a former partner at CD and R. It's a smart outfit, and we expect that they'll focus quickly on integrating these businesses, achieving synergies and implementing a smart strategy for growth. So if we're serious about maximizing the value of SLS, then we believe this deal makes total sense. Before I go any further, it's important that you understand the details of the transaction. So I'm going to turn things over to Randy and Jen Jimmison, who runs Scott's Lawn Service for about 10 minutes. Thank you. Thank you, Jim, and thank you for the opportunity to talk a little bit more in detail about the transaction. As you know, I lead the service business, and there's probably 2 or 3 things I'd like to at least provide a perspective for you. 1st, why we're so excited about the transaction. And that really centers around, 1, that's a category, the service category. Let me give you a little bit of excuse me, sir, give you a little bit of color commentary on the category of service. Right now, the category is around to give you a little sense around the category, the category right now is around about $4,000,000,000 category. This is why it feels like it's a mature category. This category is both large and then growing at a pretty regular rate. $4,000,000,000 is just the residential consumer business. If you include the commercial business, the category is around $6,000,000,000 relative to the U. S. Market. This category, also from a service economy standpoint, we think is a category that's going to continue to see growth due to the macro social economic environment around baby boomers and even millennials that are moving more toward a service economy. So this is again, service is a good category. It's big. It's growing. We also would say that as you think about the category, this is just the lawn service element of it. If you think about the amount of the portfolio of services we can provide against consumers, the opportunity is much larger than just the category of lawn service. In the end, when we think about combining the 2 businesses, I guess one point I'd like to make is when we think about this transaction, this is not a transaction of a good business and a bad business being put together or 2 bad businesses that are being put together with the hope or expectation that this will somehow become good. These are really 2 good businesses. And I think we've shared some of the information around that. The Scott Bond service is coming off of a record year, but we have record customer count. We've seen double digit growth, both in top line and in earnings. And we've also then built some capabilities around providing additional services to our customers, specifically in the insect and pest category. TruGreen as well. I know there's not a lot of public information on TruGreen since it's been filled off of ServiceMaster, but we spent a lot of time with TruGreen. I will tell you with confidence, TruGreen is a good business. As they've come out of the Service Master portfolio and has been stood up as a standalone entity, they brought a new management team in with David Alexander over the last two and a half years, have made tremendous progress in the TruGreen business. And they are again have tremendous momentum and are at record highs in recent years around several issues. 1, they are seeing significant growth top and bottom line. They are returning the business back to record levels with consumer retention. They have started to invest in the category. So I think many of you may have seen their TV ads and their marketing campaigns, but they partnered with the PGA and launched a national media campaign to continue to invest in the category and engage with the consumer. They're in a good position. Their consumer experience, their associate engagement, all are among sort of recent highs within that organization. So these are 2 businesses that have momentum that are 2 good businesses. As we think about putting them together, we believe creates a very unique opportunity to create a great business. So I want to talk just briefly around how we think about this combined entity is going to create value. On the screen, on the left, we'll give you a sense of the service footprint of the combined entity. As you would see that these two businesses are very, very similar. They're actually more alike than they are apart. The service footprint of both TruGreenness and Scott Bond Service almost overlaps perfectly. If you think about the consumer, SLS or Scott Bond Service has a marketing universe of around 25,000,000 households. That's the exact marketing universe of the TruGreen portfolio as well. So as we put these businesses together, the opportunities for us to create value, to go to market with a unique platform, to service our customers, we think, is incredibly powerful. The operational synergies are pretty obvious, both in terms of the opportunity for us to look at overhead and other indirect expense, that's very easy. But the synergies around providing the best service to our customers, we think, is really the tremendous opportunity here. That in this business, this is a business around route density. We spend a lot of our time getting to the yard. As we bring these businesses together, the efficiencies we can get by the route density and the combined capabilities of both organizations is pretty significant. So with that, I'll turn it over to Randy to show a little bit more about the financial nature of the transaction. Great. Thanks, Jim. Good morning. I'm Randy Coleman, and I wanted to start this morning just with a little bit of backdrop on what the numbers look like for this business. And we were preparing for this yesterday and looking at the deck. We realized this slide in particular really doesn't tell the whole story. So I think you really have to go back a few more years. And when you think about the TruGreen business, at one point in time, silver well over $1,000,000,000 a year and had EBITDA approaching $200,000,000 a year. It went through a tough period of time. It had some management changes, some system integration challenges as well. But coming out of that, you can see since 2013, the business really has a lot of nice momentum. But just give that context that, well, dollars 85,000,000 of EBITDA today, we think there's still a whole lot room beyond that as we look forward, even separate from working with Scotts Lawn Service. And looking at the Scotts Lawn Service numbers, and I'll point this out. One thing that we don't do the same way in the past, even though the businesses are very similar, is how we internally track our numbers. So the TruGreen numbers on the left are EBITDA. The Scotts Lawn Service numbers on the right are EBITDA. But for the people here in the room that have a book, the numbers we had in there yesterday were EBITDA. So just to clarify that as we've made this apples to apples on this presentation. But you can see line over recent years. And we picked it with an all time high in both line over recent years. And we picked up at an all time high in both sales and profitability in 2015. So both of these businesses are in a very good place. They have a lot of momentum, and it creates a very nice platform as we move forward. Thinking about the $50,000,000 synergy number in particular that Jim referenced earlier, it's really and Jim to use the word intuitively obvious. I think this deal is intuitively obvious when it comes to synergies. So I think most obviously, on the marketing side, we spent a lot of money and time and effort competing against each other after the same consumers. And we believe that 70% or so retention rates that we have individually as a combined company, we can improve that over time and actually spend less money trying to get there. So that's a big piece of the marketing and sales synergies. And then obviously, there will be a lot of branch operations, some redundancies in the corporate office and so on. And unfortunately, some of those people lose their jobs as we move forward. But a big $50,000,000 bogey on our synergy number right out of the gate. And again, depending on how you think about that, I think there's even possibilities beyond that, especially related to what Jim referenced earlier as far as routing synergies and the margins that, that creates. So thinking a little bit about the terms of the deal and what it means for us. We own, as Jim said, about 30% of the business, and our board representation will be approximately equal to that. One key feature of this deal is we'll be collectively pulling cash out as we lever up the new combined business. We'll be receiving cash proceeds on a tax deferred basis of around $200,000,000 as part of this deal. And as a result, there will be incremental interest as part of the NewCo, and our 30% interest in that will hit our P and L. As an offset to that, we'll take that $200,000,000 and there's a couple of things we can do. We can either go out and buy other businesses or complete some of the transactions that Jim outlined earlier or we can buy back shares. And so for the time being, we'll assume we'll probably do a combination both. But as the year progresses, we have more definition around our eventual plans. We'll continue to update our guidance accordingly. And at this point, we expect the deal to close sometime in March and hopefully by the end of our Q2 just for setting expectations. So when we talked about this deal over the last several months, and really, if you go back a couple of years when we really initiated conversations and talked about a lot of different scenarios, we think this structure makes the most sense for Scott's and for the new company as well. It's difficult to assess where we'll be if you look out 3, 4, 5 years. There's a lot of optionality for partnering with CD and R. They've been a very good partner to date from that end. But also when we think about TruGreen and Scott's Blom service working well together, I want to compliment my friend Jim Jimmison, who's been very collaborative right out of the gate, working with David Alexander. They're already working on integration plans, realizing the synergies and everything we need to do to make sure that this deal is successful. So very positive as we look forward for the next 3, 4, 5 years. And at that point, Jim will pick it up from here, but we have a lot of optionality, and we go a lot of different ways. So I'll be back shortly. Thanks for your time. And thanks for the water, Randy. Most appreciated. It's worth noting that Jim Jimmison will go with the deal. He's accepted the role of Chief Operator at TruGreen, and he'll play a critical role in the integration of daily operation of the business going forward. He's been a great executive for us, and our confidence in this deal is even knowing is knowing that he'll be part of the management team on a go forward basis. On multiple occasions over the last 2 or 3 years, we've contemplated buying the TruGreen business ourselves. While the combination was obviously attractive, we just felt we couldn't risk taking our eye off the ball with our core business. And leading a multiyear integration would have meant just that. Down the road, who knows what happens. We realize there's a high probability CD and R takes their chips off the table at some point. That's what they do. As Randy told you, we'll have the ability to participate in a future IPO or a third party sale of the TruGreen business. We'll also have the ability to retain our share in the business in a public offering or buy 100% of it. I can't tell you what course we'll take right now and I don't really have a bias, but we do have maximum optionality. And I can tell you that the decision we make down the road will be based on what's best for our shareholders. Randy also told you that the deal is being structured will allow us to pull out approximately $200,000,000 in cash on a tax deferred basis now. And we're going to immediately put that money to work. We have several other opportunities that could further reshape our portfolio. I wish we're a little bit further along so I can tell you more, but let me share what I can. The first has to do with Europe. And I'll say at the outset, we're not wed to Europe. But but we would be interested in working with a strategic partner in Europe, even if it required an infusion of capital, long as it provides 2 things. 1st, enough obvious cost synergies that would immediately enhance the financial health of our current business. And second, enough size, scale and diversification that it would improve the overall value of the business. So what's the punch line? We've been in discussions with a potential partner in Europe. And with the available synergies between the 2 of us, it's one of those rare situations where 1 plus 1 really equals 3. We don't know for sure that we will get a deal done, but I know the idea has merit on both sides and both sides are right thing for It's the right thing for the industry. And it's the only logical path forward for companies competing in this space and struggling to improve their financial performance. As for us, the upside to any partnership is it provides us maximum optionality. If we decide to stay in and more profitable. But these same attributes, and more profitable. But these same attributes are what could make it easier for us to exit down the road. The discussions are advanced enough that we could have an agreement within the next 90 days with a closing within fiscal 2016. While we like the concept we're discussing, we're not rushing to the altar either. If we can't structure a deal that makes sense, we'll maintain the status quo. While our European business is not a major contributor to the bottom line, its performance right now is vastly improved from just a few years ago. There are 2 other investments we're also exploring. I told you earlier that LiveGoods is an area that's interesting to us. I know you've heard us say this in the past and many of you've been around long enough to see us experiment here a couple of times. Why do we like the space so much? Because people don't go out and buy soil and plant food for fun. They buy our products because they're gardening. And frankly, I don't like that answer. I want us to be more than a dirt and fertilizer company. We want to be a gardening company. LiveGoods puts us closer to the consumer. It makes us even more relevant in their lives. Over the course of the last 6 months, we've had discussions with several significant players in the live goods space. We don't need to be and probably don't want to be an outright buyer. We don't need to own greenhouses and live goods inventory to accomplish our goals. We also don't necessarily need to put our own brands on live plants. There are good brands already in the market that have high levels of consumer acceptance or there could or ones that could have. But we believe we can help several of the current players in the space by sharing some of our marketing and innovation expertise. And we know that we can benefit by better cross merchandising of our existing products with their live goods. It's worth noting that we've been doing research on plant genetics for nearly 15 years. You'll hear more about that during the last presentation of the day. And it would be great to bring some of that technology to the live goods category. We began exploring this idea pretty heavily this past spring and have been in talks with 1 live goods player in particular about becoming a minority investor. It's an organization that has significant presence in our current retail channels and also has an industry leading brand. So the opportunity for both sides to benefit from our partnership is significant. Just like Europe, we're far enough along to believe the idea has merit and confident enough in the progress we're making to share it with you today. We have a letter of intent in place, but we're not far enough along in the formal process to announce the terms or the partner this morning. But if a transaction gets done, we'd expect it to occur during our Q2. One final idea that's in the pipeline is in the hydroponic space. We really like the deal we did with General Hydroponics. We acquired instant market leadership in the hydroponics retail channel as well as some expertise. That's allowing us to create new high quality products that will sell with our niche brands to our larger retail partners in a way that protects the General Hydroponics brand in its primary channels of trade. You'll hear more about this later. But as we learn and grow, we're also seeing greater opportunity than we originally envisioned. We're exploring a strategy to become a one stop shop for hydroponic gardeners, not just soil and nutrients, but pesticides, lighting and growing systems. We don't see hydroponics operating in a vacuum. You'll hear later this morning about the direction we're headed to support water positive landscapes. Hydroponics can play a role here as well. I've just told you we're looking to invest in a live goods player. Hydroponics can play a role here too. Just like live goods, this is an area where we can invest and not necessarily acquire 100% of a business, especially if they have skills we don't possess. But if our investment allows us to help those businesses grow, then there's potential significant upside for everyone. I cannot be overly precise with timing here, but our goal is to make more investments in the hydroponic space during fiscal 2016. In total, up to $200,000,000 in additional deals. Randy will provide more details later, but essentially the SLS deal is an enabler of a broader plan. The immediate cash proceeds will help fund many of the deals flowing through our pipeline. Once we complete those deals, hopefully within 2016, you're going to see M and A activity downshift considerably other than tuck in PEAT or grow immediate deals that will likely be too small to even discuss. Over the past 3 years, we've turned over every rock we could imagine in the lawn and garden space. We made more acquisitions than we originally expected, but that's because there were many good activities out there all at the same time. What's left are acquisition opportunities that we either don't like because of the target or the price. But what we do like is Scotts Miracle Gro. Given our confidence and our ability to execute against the plan that we've outlined this morning, we think buying our own shares over an extensive period of time is a smart move. Right now, we have an open repurchase authorization of $500,000,000 that's virtually untouched. We'll probably buy some shares back at some point this year and even more in 2017. The idea of being more aggressive in the future is one that we're already exploring. The plan is to go beyond our current authorization over time. If the share price gets too hot, we'll probably pull back and pay down debt. But remember, we're comfortable living with leverage at 3.5 times. So if we significantly pay down debt, that gives us the latitude to be an even more aggressive buyer of our shares if the stock price falls back or we can pay one time dividends. As you can see, there's a lot on our plate right now. And we recognize the initiatives we're talking about will take 3 to 5 years to execute. In 2012, we repositioned the business with a focus on margin, cash flow and returning cash to shareholders. We said it would take 2 to 3 years to accomplish. Some people were skeptical, wondering whether we stick with the plan. We did. We're even more committed to executing the plans I've laid out this morning. We know we'll have to reconfigure this company for the future and we will execute the plan. It's all about focus. By the time we get through the list of everything I've laid out this morning, the merger of Scotts and Miracle Gro will be celebrating its own milestone. It will have been a quarter of century since I went to my family with the idea of combining our family business on Long Island, Miracle Gro with The Scotts Company in Ohio. We've driven a lot of value for our shareholders since then. But as I said at the outset, we still have a lot of value out there to be captured. Since the end of fiscal 2012, our total return to shareholders has been roughly 70%. Some investors might look at that and say they missed out, and I get that. But the stock not only touched an all time high last week, but we're trading at a record multiple. But we don't believe that the window of opportunity has closed. In fact, we believe there's a lot of upside still on the table. I've said for years that we have world class brands, and I still believe that. And we have a good company, a really good company. But we think we can become exceptional. And that's what Project Focus is all about. Before we get into a deeper discussion of the business, including our plans for 2016, I want Randy to come back up and talk about what we think the year will look like from a financial perspective. We gave detailed guidance on our last conference call, so we could get everyone in a similar starting place prior to this meeting. We did that knowing that our financials would look a bit messy this year based on what I've explained over the past 30 minutes. So I'm going to step away now and allow Randy to take the stage and help you understand what all this will mean for our financial performance for 2016. Don't forget the water. Hello, again. Before I get started, just to let everyone know, given the need for clarity around the numbers and the impact of the transaction we discussed on the guidance, the next section of me will be prepared remarks and then we'll bring on Luke and Karp at that point and the rest of the team. So let me start by sharing with you my enthusiasm for the plan that Jim just described. As he said, every member of the executive team played a hands on role in getting to this point. I've been actively engaged from day 1 on the SLF transaction, and I've been heavily involved in working through our discussions in Europe as well. I want to say at the outset that from both the financial and strategic perspective, I'm totally convinced we're taking the right steps for each area of our business. I'm convinced that we'll put ourselves in a much better position to take advantage of the opportunities in our core business and also to drive meaningful value for long term shareholders. I agree with Jim. This is a really good plan. In fact, I've been at Scotts for nearly 17 years now, and I can say that I'm as energized as I've ever been about the path we're taking. There are 3 things I want to share with you this morning. 1st, I want to help reset your full year models. So I'll start by helping you understand the impact of taking SLS out of our financials for 2015. And to make the year over comparisons as easy as possible, we will show 2015 results on a pro form a basis. And while the end result doesn't change, it does change the geography of the P and L. We've adjusted 20 15 results as if the deal had already occurred, and that exercise takes long service out of each line of the P and L and then consolidates the impact in the other income line. 2nd, I will reset our 2016 guidance regarding expected company wide performance. While we have a few other potential deals in the works, I will not talk about those in any detail. Adjusting only for SLS, you'll find that very little will actually change, including our projected range for EPS for the year. And 3rd, at a high level, I want to talk about our longer term financial outlook and our goals over the next 3 to 5 years. So let me get started by resetting our 2015 results. While I'm going to provide pro form a numbers, I know I do want to advise you that there may be some fine tuning once the deal is closed. We're still trying to resolve a few accounting questions, so right now, I might these our estimated pro form a numbers. Last year, Scottsblawn service had sales of $289,000,000 and operating profit of about $32,000,000 As Jim said earlier, it was a record year for that business. When you begin to strip out SLS line by line from the P and L, you can then see the full story. We've told you all along that SLS has a gross margin rate of more than 50 percentage points. So on a pro form a basis for 2015, you see that our company wide gross margin rate declines from 35.6% to 33.7%. SG and A on a pro form a basis for 2015 would have been $569,000,000 instead of the $698,000,000 that we reported. While gross margin at SLS was higher than the company wide average, so was SG and A. In fact, it was nearly twice as high as our company wide average of 23%. So when you exclude SLS, our SG and A as percentage of sales would have been less than 21% last year. Of that amount, roughly onethree of it is dedicated to marketing and advertising. We're not counting pennies when it comes to supporting our brands. Clearly, you can see we've done a good job bringing waste out of the system, and we do run a pretty tight ship. The other big change in the actual versus pro form a results is on the other income line. As a 30% owner without management control, we cannot consolidate our share of the trivially profits in our P and L. So our share of the profit will be treated as other income. In terms of the actual presentation on the P and L, we are likely to call up the number under a separate heading simply because of its material nature. So for 2015, the $6,000,000 of other income we reported would have actually been $33,000,000 on a pro form a basis, reflecting our pretax earnings on a single line. From that point on, nothing on the 2015 P and L changes. As you can see, operating interest expense, net income and EPS are all unaffected by the pro form a restatement. It's just the geography of the SLS operating results that affects the P and L. That said, I do want to point out the impact on the operating margin rate, a 130 basis point improvement. This is an important point, and I'll come back to it later in my remarks. Before I move on to guidance, let me elaborate on one other point. Because our share of the TruGreen business will be considered a significant equity investment, the amount of disclosure on this investment will actually be greater than when SLS was a standalone reporting segment. So in our next 10 ks, you'll see a balance sheet and consolidated P and L for the TruGreen business included in our footnotes. With that, let me move on to my second goal this morning and help you understand our guidance for fiscal 2016. The column on the left shows you the initial ranges we provide for sales growth: gross margin rate, SG and A growth, other income growth, interest expense, tax rate, share count and adjusted EPS. The column on the right shows the impact on our guidance based on the SLF transaction. You can see the midpoint of the gross margin rate is slightly better by 25 basis points, and our share count declined by 500,000 shares. The increase in SG and A is also evident. So let me make sure you understand the numbers. Sales growth of 4% to 5%. The story here is pretty simple. We expect unit volume of 1% to 2% in the U. S. Business. We expect 1 point of pricing across the total company, and we expect the full year impact of acquisitions made in 2015 to add another two points. Some of you will tell me I'm conservative. And when my good buddies, Mike Luke Meyer and Mike Carbonaro, follow me up here in a few minutes, you'll see that they're 2 of the most optimistic people I know, right, Luke? I like that, and it's their job to be optimistic and to push for a higher result. And it's my job, however, to help manage expectations. So I'm going to start with conservative assumption. It's way easier for us to flex up because of better than expected results than it is for us to gear down. On the gross margin line, I told you last month improvement would be 100 to 150 basis points. With lawn service out, the year over year improvement will likely be in a range of 125 basis points to 175 basis points. The improvement in the gross margin rate will be driven by 3 things. Number 1, the point of pricing that I mentioned just a moment ago number 2, the positive impact of our amended Roundup agency agreement. Recall that our share of the profits from Roundup will increase $20,000,000 in 20 16, 2017 2018. This was added to the agreement to help us offset the interest expense associated with the deal and help fund any of the start up efforts related to extending the Roundup brand into other lawn and garden categories or new geographies. We will lose some of the $20,000,000 to SG and A and interest, but Alvid is a good guy related to gross margin. And the 3rd issue positively impacted the gross margin rate is roughly $10,000,000 of net savings from lower commodity I know that some of you expected that number to be higher, so let me help you get there. Let's start with reminding you of our mix on cost of goods sold. As you can see, commodity sensitive materials remain a little less than 25% of total COGS. The biggest chunk of inputs is related to our growing media business, where we continue to see some pressure from peat prices. I want to be clear here. It's not that there's a shortage of peat. There are decades' worth of reserves still available to us. But pea is harvested literally a few inches at a time from the surface of the bogs. You need extremely dry conditions to harvest. So the unusually long winters and wet springs in Canada over the past 3 years have made it harder to harvest. And that, in turn, has put pressure on supply and driven prices higher. We continue to look at peat acquisitions and maintain our goal to eventually resource about half of our own needs in the consumer Grass seed, while small sliver of the overall COGS pie, also continues to be higher. Those 2 higher inputs, grass seed and peat, essentially will offset the savings we expect from urea, which remains our single largest input. There are two pieces of good news as it relates to urea. Number 1, we now have roughly 90% of our costs locked in for the year, so there's very little risk left on the table. And second, the longer term outlook on urea remains favorable. Right now, we don't see any logical reason to believe urea prices will spike over the next year. So the $10,000,000 of expected cost savings will come through lower diesel costs and gasoline as well. You might recall that we had a $0.04 EPS hit in 2015 from our year end mark to market true ups for 2016 diesel and gasoline hedges. As we begin to use those hedges, we'll benefit from lower year over year costs and see a direct impact on the gross margin rate. Again, I don't see much risk here. Right now, we have about 75% of our costs locked in for the year, a number that will continue to trend higher over the next 2 months. In fact, we've already begun hedging some of our 2017 diesel to take advantage of some of the pricing we're seeing as of late. Let me move on now to SG and A. No change here from what we said last month. SG and A should grow roughly in line with sales. And if sales move up or down from our guidance range, SG and A should follow based on the impact from variable compensation. In terms of the drivers of SG and A, given the late start to the season last year, we pulled back some of our advertising in 2015 and we're assuming a more normal spend level in 2016. Other than that, the increase is driven primarily by wage and benefit inflation and also the impact of acquisitions. As I told you earlier, we're being paid a dividend of roughly $200,000,000 as part of the JV with TruGreen. Obviously, there will be interest expense associated with that. However, that interest will be accounted for in the TruGreen P and L. For us, the impact of interest expense hits us on the other income line. For the time being, we're going to include $27,000,000 in the other income line, but that number will be dependent on the timing of the closing of the deal. You'll note that we're assuming a decline in other income for the year and that's the dilutive impact associated with the interest as well as amortization for purchase accounting treatment in the new company. The net of all that should result in a 12% to 16% increase in operating income for 2016 on a pro form a basis. And as a reminder, that is the same range as our original guidance. The interest expense line also remained unaffected by the deal. So the $18,000,000 to $20,000,000 increase we discussed last month continues to hold. This number could change depending on the extent of our M and A activity over the balance of the year. The one other change to our guidance is related to share count. Our current expectation for this year is to hold shares flat from 2015. And that gets us back to the same EPS guidance we provided a month ago. On an adjusted and pro form a basis, we expect EPS still to be in a range of $3.75 to $3.95 per share. But there are 3 important caveats here. First, this guidance assumes the lawn service deal closes March 1. I said earlier, between interest and amortization, we're expecting dilution of roughly $0.10 of EPS this year. We expect to offset that dilution through share repurchases and also a slightly better gross margin rate than I shared with you last month because we now have more certainty on our raw material costs than we did at that point. So our net guidance is unaffected. As I said at the outset, that is our best estimate right now. It could move a little based on timing, but not materially. Number 2, this guidance assumes only the loan service transaction. Jim mentioned that we're exploring options right now in Europe as well as investments in the Live Goods business and some top end hydroponic deals as well. Based on what I know right now, I wouldn't expect those deals to be accretive to EPS in 2016, but the timing of them could dictate whether they are neutral to the year or perhaps slightly dilutive. Depending on the eventual outcome of potential M and A activity, the share count may decline from additional repurchases. And 3rd, this guidance is based on adjusted results. So let me tell you what that means. The purpose of adjusted earnings, of course, is to make it easy for investors to understand how the business is operating without the impact of one time items. For the last several years, we have provided a detailed bridge to help you understand between our adjusted earnings and our GAAP earnings. We currently have multiple deals in the works at the same time, and we're incurring expenses on all of them simultaneously. And as Jim said, the purpose here is really to transform the portfolio in a pretty short period of time to position the business for growth over the next 5 to 10 years. Given that all this activity is happening at once and given the fact that we can't control the timing of deals getting announced or closed, we've determined the best thing to do this year is to exclude from our adjusted earnings the cost associated with getting the transformational deals done in Service and potentially Europe. Of course, these costs will be included in our GAAP results and we'll be fully transparent in both our quarterly press release as well as filings with the SEC. Don't forget that we continue to receive reimbursements from our insurance providers regarding the bonus test recall and remediation costs that we incurred last year. Those reimbursements, just like the initial costs, also will be excluded from our adjusted earnings. They are likely to more than offset any deal costs we incurred during the year. As an FYI, we received another $20,000,000 from one of our insurance companies just yesterday. To date, we've now collected about $45,000,000 or over 70% of our cash outflows related to consumer claims. Therefore, we're likely to wind up with the unusual scenario of having reported GAAP earnings exceed our adjusted results. There's one other piece of housekeeping to share. Upon closure of the Scottsblon Service and Triggering joint venture, segment reporting will immediately change. I expect us to have new segment reporting next year for this year now in 20 16, and it will likely include separate segments for our U. S. And European consumer businesses, respectively, and also a third that will be described as all other. The all other segment will include our Canadian, Mexican and Asia pack operations, the Hawthorne Gardening Company and our supply agreement to ICL, which purchased our professional horticulture business several years ago. The 4th segment will be corporate, which will have no sales, but will include the cost centers not directly allocated to the operating businesses as well as expenses related to equity compensation, medical benefits and the like. So I want to shift gears here and talk about the 3rd item on my agenda, which is our long term outlook and our long term financial goals. I'm not going to provide any specific guidance today, but I do want to speak philosophically. And much of what I'm about to say will reinforce what you heard from Jim just a few minutes ago. Let's start with cash flow. For me, this is our most important metric, and it's the one that almost no one asks about. Over the past several years, the business has generated operating cash flow in the neighborhood of $250,000,000 to $300,000,000 It was slightly lower in 2015, but only because of the time and repayments from our insurance providers regarding the bonus set situation. Even extracting SLS, I think this business can still generate that level of cash flow, and it's my intention to push us even harder. If I move to the P and L, I'm going to focus on margins. So let me just say at the outset, given the changes we're making to our portfolio, a 40% gross margin rate, which was our previously stated goal, is unrealistic at this point. Even with the 150 basis point improvement in 2016, the rate only creeps above 35%. While that number is low for a consumer goods company, I think it needs some context. Actually, the margin on our branded products is really good. Yes, a few of those products have margins in the low to mid-30s, but most are in the 40s and some above 50%. Our margins in Europe in general are much lower. And in the U. S, it's our private label business and the rapid growth of the mulch category, which are now more than 10% of our U. S. Business, that has caused some mix pressure as well. But that said, I believe we can easily and quickly surpass our 15% target for operating margins. In fact, that should occur even this year. So I'm pushing that goal higher. I think our operating margins can hit 18%. How fast we get there will depend on how much stronger we can make our European business and what we ultimately decide to do in that space. But as I said a few minutes ago, Europe will now be its own reporting segment. So the bright light of publishing those results every single quarter will help us stay focused on the issue. One of the positive things you'll see in the new segment reporting is the operating margin in the U. S. Business is north of 20%. I think that says everything about project focus. Jim is absolutely right. There are great opportunities in organics, in naturals, in hydroponics, and water positive landscapes and in live goods. And all the competitive advantages we work so hard to create can be used to help us win in each of these areas. The pivot he described will make us a stronger company in the long run and a more profitable and valuable as well. It's not my job to assign a value to our equity. I'll let the market do that. But I will say a more focused Scotts Miracle Gro, a company with strong and consistent cash flow, a solid growth story, a better operating margin profile and a smart capital allocation strategy is a stock that I would want to own. We spent the first hour of this meeting talking about strategy. We're going to spend the next 90 minutes talking about execution. Jim said earlier that we have solid plans in place for 2016, and I totally agree. We continue to see nice macroeconomic tailwinds as well as highly engaged retailers and consumers. Mike Luechmeyer, our Chief Operating Officer and Mike Carbonara, our President of North American Sales, are going to walk you through our 2016 plans, and then Mike Lukemire will turn the stage over to various members of his team to elaborate on some of the growth initiatives that Jim mentioned earlier. Thank you very much for your time this morning. Thank you, Randy. Is this on? Usually, for Mike and I, when we go to a sales conference, we have a band. It's Mike and Mike late night. So we're a little more entertaining maybe. So our marks are not quite as prepared as Jim and Randy's, but what we want to take you through is the 2016 operating plan and then get some experiences on where we're going for 2016 and 2017. So okay. Jim talked about that we restructured 25% of our leadership out and is significantly better. Most people thought we lost bandwidth that we wouldn't be able to execute. We actually executed better. We streamlined decision making. We are quicker to the market. We're faster on new product launches, and the team is actually functioning and getting more things done than ever before. So the key to that culture change is 3 things. And in my 36 years and building teams, it really comes down to passion, collaboration and trust. Gone when I talk about passion, gone is the passive aggressive behavior that kind of infected Scott's. We weren't working as a team. We had our own agendas. We had a vision. We'd all have our own vision, and we weren't working together. And so the second part is collaboration. And so when we collaborate, it's not North America versus corporate, it's not sales versus marketing, It's about one team. And then finally, trust. When I talk about trust, there's 2 things there. Trust is built by doing what you said you're going to do. We made a commitment. The little button up there, we will grow in 2015. At our sales conference, we said we started out and said we must grow. It's kind of aspirational. By the end of the conference, it was a commitment to Will. And it makes a big difference when you see the strategies that are presented today and what we're going to talk about is that we're doing things and we're trying to drive the business to go forward. And so this is the kind of change in culture that is actually going to make this company one team, one goal. And then the second thing on trust is you have to be selfless. By being human, we are naturally selfish. The best example at John Maxwell, one of our educators said to us, he goes, you know you're all selfish. And everybody goes, oh, I'm not selfish. Because when you see a photo, who's the first person you look for? It usually is you. So by nature, we are selfish. But if you're selfless to a goal, then you can actually make great things happen. And what's happened in 2015, what you're seeing in the strategy that Jim has presented, if you're seeing it with our leadership team is a change in culture. And I hope I don't hope, I believe you'll see from the passion and what the team is going to present today, a belief in 2016 and the future of the next 5 years of the Scotts company. So let's go into the planning. So as the team gets up and speaks, we bucket our strategy into 3 pillars. We're going to talk a little bit about grow the core, which is more our media and optimization of our current business. We're going to talk a little bit about extensions, so like Comcast and cleaners and repellents. These are kind of extended categories that we've looked at to grow our core business. And then finally, you've heard about Connected Yard probably three times, it's reinventing who we are. Now one of the things we're not going to talk about today is we're actually reinventing our supply chain with some significant savings out of that and going to the next generation. So there's more to come. But we're going to give you exposure to the 4 key initiatives that Jim described in his speech. Mike is going to take you through why we believe in the 16 plan, why Randy Coleman sleeps well at night. And we're a little more optimistic than Randy, but I'll let you describe it and you can judge for yourself on whether our plans are pretty good. Thanks, Mike. I think I got the same thing you got, Jim. You didn't drink out of the same bottle. No, I did not. Thank you. I'd like to spend the next few minutes to review what's happening in North America for 2016. And there are 5 key areas that will help us deliver solid growth in 2016. Number 1, strong consumer engagement number 2, enhanced retailer partnership and support number 3, continued product innovation number 4, increased media support and number 5, improved regional performance. When I look at 2016, I see consumers with more discretionary dollars due to low fuel prices at the pump and at home and low commodity cost prices, excuse me, to keep our costs in check. And as Jim said previously, it's having a direct result on our sales in this fall, up 13% in POS. But I think what's important to note, in our northern markets, we've had favorable weather conditions. Our POS is up over 20%. And the categories that are driving that growth are high margin ones like fertilizer, grass seed and soils. I'm really excited what I see from our retail partners. I'm sure you know, but a few of our retailers have undergone some management transitions. And while we've had strong relationships with those retailers in the past, we're even more optimistic about the innovative thinking they're bringing to the lawn and garden category. Having attended several customer planning meetings for the upcoming season, the theme is very consistent. They want more transactions in lawn and garden and they want us to help them achieve that growth. It's coming from all classes of trade with whom we do business: home centers, mass, hardware, warehouse clubs, food and drug, farm and fleet, garden centers and direct to consumer. And that same mentality exists with our Canadian and Latin American customers. But what I'm really enthused about is our new product lineup for 2016. With the changing culture that Mike Lukmer spoke of comes a new approach to new product development, focusing on innovating fast and failing early. This change in approach is allowing us to bring more innovation to the market across all of our categories, more than we've ever done in my 21 years with Scotts Miracle Last year, we test marketed our new and improved Wheaton Feed formula and product in Columbus and Louisville. Those two markets outperformed the entire the rest of the entire country. And so we'll be rolling that out nationally in 2016. And we're expanding distribution of EveryDrop outside of California, a product aimed at supporting our customers in drought stricken areas. In the mulch category, we're introducing Scotch Triple Shred, a product that provides superior coverage and provides us with enhanced margins. In controls, Roundup Sure Shot Wand will go national with expanded distribution. This product brings a new use occasion, taking ground up to the garden bed to kill weeds without harming plants. These are all in addition to the 2nd year of successful launches of both cleaners and aerosols. So how are we able to get so much done? Again, it starts with a changing culture and the embracing of great ideas, no matter where they come from. We form new partnerships with traditional suppliers as well as many new companies across a variety of industries. Most of these partnerships are aimed at new products, such as Bell Labs rodent control products or the AeroGarden line of indoor garden systems. And SCJ continues to bring us access to channels and markets where we have historically underpenetrated. I anticipate that these partnerships will flourish, and we'll see several new ones in 2016 and beyond. With a strong innovation pipeline, it's critical that we have marketing resources necessary for a successful launch. In 2016, we'll see an increase in our spending and new creative for Tomcat, AeroGrow and our launch lines designed to bring in new customers into these segments. And later this morning, Patti Ziegler will share how we are reinventing our media spend with a 1 on 1 relationship with the consumer who, as you've heard numerous times, Connected Yard. As Patti will share, Connected Yard is a new way to bring technology and inspiration to a new generation of gardeners. In 2016, we'll see the launch of a platform which will continue to evolve and grow for years to come. When we look forward to 2016, it's important to put things in the context of previous year and weather. While 2015 was a good year for us, it was in spite of droughts in California and the PNW, historical rainfall and floods in Texas and the latest start to spring ever in the Northeast. With a little break in the weather in 2016, we should have some relatively easy comps, especially in fertilizer and grass seed. But keep in mind, last year, the West was our best performing region the California water restrictions kicked in. And our Texas fertilizer business was strong until the May floods came. As I stated earlier, consumers want to be engaged in the lawn and garden category. They only need a little support from the weather. I'd be remiss if I didn't mention our sales execution team and the advantage it provides to our customers and to us. In peak season, we have over 2,000 sales managers, merchandisers and counselors to ensure that our products get the best display placement. Our field sales team also trains store associates on the features and benefits of our products and assist consumers at the point of purchase. We are the largest sales force in our industry by far and we are the best. Our collaboration with all departments within our organization has never been better. Our planning process is more robust and inclusive, which provides us with even better customer service. We are truly living the 1 goal excuse me, 1 team, 1 goal theme, and that goal is to grow. We have a combination of a healthy consumer, an engaged retailer, strong innovation and a great media plan. So with unit volume expected to be between 1% 2% and pricing in North America at 1.5%, Randy, I am more than comfortable with a 2% to 3% top line growth. And would echo that, Randy, so you can see why Randy sleeps well at night. So how about it, guys? Do you believe in the plan? Come on, Jim. I do. Come on, come on, come on. We're going to have some energy. You guys will never be salespeople. So thank you, Mike. What we're going to do next is Josh Peoples is going to come up and talk a little bit about lawns and you're going to actually see some of the sizzle and new exciting things followed by Paddy and Connected Yards. So Josh? All right. Good morning, everybody. Again, my name is Josh Peoples. I lead our lawns business. I've actually been with Scotts for 16 years now. So I always like to say I started at about what about the age of 15, Jim. So it's been a great time here with Scotts. And I'm joined by Patty Ziegler, who is our Vice President of Marketing. So I think one of the most critical things for our growth, not only in 2016 and beyond, is really for us to inspire and engage a whole new generation of homeowners and consumers. And really this is, bound upon the fact that their kind of perspective of the lawn and their lives are changing and their values. And there's no business that this is more essential to than our lawns business and our Scotts brand. And so we're making a pretty dramatic step here into 2016 and really reminding them why the lawn is a priority and why it is an essential part of their lives and their values as well. And the only other thing I would add here is, it's not just about how we talk about it, how we articulate and how we kind of reframe the category, that will be a huge piece of what we do, But it's also about the tools and solutions that we bring to life for consumers. And I'm going to share some of the Product Care introductions that we have in 2016 that Mike Carbonara alluded to as well as some of the pipeline that we have coming. But also this is where technology plays a huge role within this as well to help consumers get the lawn that they want. And all of this is really bound around the fact that this is also necessary for it to be relevant and inspiring for our very loyal base that we have as well. And I think that's where these 2 intersect and become very powerful that a lot of the things that are very inspiring and actually motivate a new consumer aren't radically different from our loyal base and what got them into the category as well. And it's really cool, I think, to talk to both our loyal base as well as new consumers about what the lawn means. And it's a simple nudge to get them to either be reminded of or help them discover all the reasons that the lawn is you close your eyes, the smell of grass, the sight of it, as well as all of the, kind parts of nature that it helps connect with us as human beings becomes extremely powerful for a lot of people. And really, it's, I think, our job to give them the nudge to try the category and really starts with getting them to care about the lawn. And I think secondarily then to care for it. And that's where Scotts comes into play. And I think we've spent a lot of time on telling people about how to care for it and not necessarily the first part on why the lawn is an essential part and why you should even care about it. So that's going to be a pretty monumental move we'll make. And then I think the last piece becomes there are just some really positive functional benefits that exist for consumers as well. And I think continuing to highlight those becomes powerful as well. As you can see the picture, if I was the rugby guy, there are very few situations there or surfaces that I would want to be landing on other than grass. And so I think presenting a whole host and myriad of ways that the lawn comes to life and is essential to who you are as a human as well as for this next generation more aligning with their values is imperative for us. So in 2016, I'm ecstatic. We're going to take a new step into a whole new campaign around It's Good Out Here. And really, this does kind of, I think, harness all of those things that I just brought up, and we're going to roll a video that I think will do a good job of getting you kind of the mood and feel of this. There's a generation of homeowners who have forgotten about the lawn, who only see the lawn as a status symbol, as a relic of their father's old game of keeping up with the Joneses. But deep inside of them, inside of all of us is a feeling that man has had since the dawn of time, the pure love of the lawn. And Scott's lawn is going to awaken that feeling. We'll remind them what dogs know, kids know, kids who think their dogs know, hobbits know what their eyes, toes and nose know. We'll remind them what they've known all their lives, that it's good out here. And with Scott, it can always stay that way. We'll show them that the lawn is nature's gym mat, that lawn parties are better than house parties, that no one wants indoor kids, that there are no nature skills required. Thoughts will awaken every emotion we have when we really think about the lawn. We'll all nodding and say, yes, it's good out here. So for myself, I think I don't think there's anything more powerful than as you watch that, if you don't get like kind of either the tingles or I know I'll use one of Jim's line of, yes, hell yes, that like makes you feel good. That is the reminder of, man, it does bring a lot more to our lives than just kind of this perfectly grown turf that has kind of never utilized. It's actually something that can inspire and really brings about the connections as a human that you're looking for. And as I alluded to earlier, it's not just about at Scotts, it's of course providing the inspiration for them, it's also delivering and delighting them with products that allow them to take care of that and really hitting and addressing some of their key needs. So whether it's water management and utilization, Mike just alluded to our launch of Scotts EveryDrop, which uses best in class surfactant technology that allows water to be better utilized and gives consumers the same experience, but they can use less water to best in class products and continuing to improve them such as Easy Seed as well as our Northern Weed and Feed. It's also about simplicity. So we're launching a battery operated handheld spreader called the Wiz, which is really about for consumers that want the ease and convenience and have smaller yards, it's a way to allow them to participate in the category at a really good value to be able to enter in. And then finally, I do think it really gets back to kind of safety and confidence. I mean the beautiful thing about our partnership with Church and Dwight and their OxiClean brand is it allows consumers to not only have an outdoor turf, which doesn't exist today within the market. So with that, again, it's going to be a pretty transformational move as we begin to inspire consumers to care about the lawn, obviously having products that allow them care for it. And I'll turn it over to Patti because I think this is where it becomes powerful of generally, this is where we would stop with just care products, but I think there's a whole other level that we can go to. Thank you very much. So both Josh and Jim have talked about how technology can help transform the category. And importantly, we need as we know with a newer, younger consumer who is less informed, we need to take that consumer all the way from inspiration through success. And as Dave also mentioned, you can see that technology can transform a category. And Jim talked about counting your steps or counting your sleep or managing your home environment. And we believe that a lot of the innovation you're seeing in the smart home can be meaningfully applied to the connected yard. And we believe it's a space that Scotts Miracle Gro company should define and will ultimately be a tremendous leader in this area. So we've demonstrated our success. Last year, we launched our first app in a meaningful way to connect with consumers with over 250,000 downloads. And excitingly, 70% of those consumers did go ahead and create a lawn care plan consumer more deeply, reminded them what products and what information they need to experience success, which is important for this younger consumer who is so outcome based. We are very excited that this worked. And so we are going to take this and apply this learning and move even further along. So we're going to create and advance the connected yard by introducing our Grow platform. This experience platform will take advantage of the cloud computing and the available data in the environment plus hardware and software components to create interesting, engaged, personalized activities for consumers. So an activity that's personalized not only to their interests but also to their backyard home environment. So through sensors and irrigation controllers and ultimately, the potential of fertigation, consumers will have more and more ability to delegate activities to lead to their success, but they'll also get addicted to the joy you get when you are participating in lawn and garden as we redefine the experience through the Connected Yard. Also, we will also compile lawn and garden into yard. So starting to speak to the consumers in the way they're thinking about their outdoors, as Josh referred to in the new advertising campaign, to be specific and interested to them, for them to create something exciting that we think they will enjoy. And to do that, we're introducing Gro, and we'll roll a video here in a second. But this takes advantages of the Internet of Things technology, hardware, software and available data to create these personalized experiences. Most importantly, it will meaningfully engage consumers, and it will let them have a perfect lawn and garden experience and make things much easier for them to do. The future is happening all around us. Now Scotts Miracle Gro is bringing the future outside. Introducing Gro. For the first time, your yard communicates with you. It tells you how much water it needs, what grows best, and how to take care of it. GROW knows every inch of your yard better than you do. Connecting lots of hyperlocal data to your yard, GROW listens to things like temperature, humidity, wind, soil, and bug conditions and turned it into easy to use information that will help you save water, grow with confidence, and have a more personalized relationship with the green in your life. GROW, natural intelligence. You saw in the video how we used not only lawn and garden. We created the specific experiences. We really simplified and engaged the consumer with summarizing the data in a more meaningful and chunkable way, relying a lot on visual information, not just the written word to communicate and engage them to participate more. We've seen through the Mylan's app that product introduction of products, specifically within the experience, leads to more productive results and success for consumers. Now I would like to introduce our next speakers, John Sasse and Chris Hagedorn. Thank you. Good morning, everybody. Thank you. I'm John Sasse. I get to lead our gardens business at Scotts. I'm joined with Chris Hagedorn here, who's the General Manager of the Hawthorne Gardening Company as well. We're going to talk to you a little bit about gardening and it's been a topic, obviously, it's come up a lot about naturals and organics. And so over the next several minutes here, Chris and I will share with you some of the plans we have in place to really capitalize on the space and the trends that we're seeing in the category. But before we get there, I think it's important to start by saying Miracle Gro and gardening is at our core. It's what we do. For over 65 years, Miracle Gro has become synonymous with gardening in America. The iconic green and yellow packaging has been a staple in households across America. And over those years, we've become the category leader in the spaces we operate, the soils category, the plant food business. But yet at the same time, the world is changing. And so a lot of the megatrends that we talk about, the millennial generation coming online, the urbanization efforts that are happening are having an gardening category as well. And so no longer is the gardening space regulated back to just the landscapes of the suburbs of the U. S. We're seeing gardening show up in many different and unexpected places as well. So whether it's on a balcony or a fire escape, whether it's on a rooftop garden, you're seeing it on walls, you're even seeing gardening without soil in hydroponic systems. And so part of those trends are what we're seeing happen in this category and why we're seeing the shift that we need to make as well with our products and solutions. It basically comes down to 3 key trends that we see evolving in this category: the rise in the growth of edibles the importance of naturals and organics, which we've talked about several times today And then lastly, that shift of growing not in ground and out in your front landscape, but actually growing indoors and in more urban and small space settings. These are the key focus areas that both Chris and I are focused on to make sure that as we move forward, we have the right solutions for consumers to be able to enjoy gardening with these things in mind. So I'll start and talk about the first two almost collectively here. So edibles and naturals and organics, because at the end of the day, essentially they go hand in hand. We're seeing a great increase in edibles over the last several years and we've talked about it a couple of times today. And to the extent that it's estimated now roughly 42,000,000 households are engaged in the activity. That's 1 in 3 homes today are doing some form of food gardening. And so just like organics are increasing in other categories in food and other spaces, We're seeing it become more important within gardening as well. And it is those consumers, the consumers who are growing edibles that are higher likelihood to want natural and organic products. These consumers are more involved in the category, they're more engaged in gardening and they're spending more dollars as well in the category. At the same time, the millennial generation is coming line as well and gardening and edibles seems to be that entry point. They are more interested in organic products and Edible Gardening seems to be a bit of a sweet spot. So with that diverse consumer base, if you look across both the businesses that Chris and I operate, we have a diverse portfolio today of natural and organic solutions to serve the different needs of the consumers, our retail partners and our customers alike. Under the Miracle Gro brand, we have Nature's Care, which we launched this past year with great success on a national basis, in addition to organic choice, which has been a staple out there for years for us and continues to have a solid backing. Under Chris' leadership in the Hawthorne Gardening Company, we have the EcoScraps brand, which has a fantastic sustainability message as well as the Whitney Farms brand. And I'll let Chris elaborate more. All right. Cool. Thanks, John. So as John has been saying, Miracle Gro and the SME team have been looking at the sort of the evolution of the Garden space from sort of the big brand perspective and evolving those Miracle Gro brands. At Hawthorne, and we've been around for about a year now, we've been taking sort of an alternate approach, which is developing brands that don't come from the big company, at least outwardly, for consumers that prefer to go to their corner coffee shop instead of Starbucks. That's been the mindset that we've had with Hawthorne. So before getting to the brands, just talk a little bit about some of the reasons why we're so excited about these categories. What you see there, the 2 that I think are really important for this discussion are the center 2, indoor device gardening, hydroponic gardening, what really set us apart, I think. And you see there the current household penetration, very small numbers, less than 5% each. What's got us excited is the big sort of future interest numbers. This is research that we did. It's novel research from within SMG. And I think it points to a huge amount of potential for these categories, both indoor device gardening, which for us really means AeroGrow and then hydroponic gardening, which kind of speaks for itself. So looking at the brands here, some of these brands may be familiar to some of you folks, some of them may not be, and I'll move through them pretty quickly. EcoScraps and Whitney Farms are natural and organic brands. Whitney Farms, we kind of pulled off the SMG garbage heap. It was a brand that kind of it was too small for SMG to pay the attention it needed. We're small enough that we can. And we've reinvented that brand. We're relaunching the West Coast in independent garden centers and have a major national launch with one of the best retailers in the country coming up for this gardening season. EcoScraps, on the other hand, is our most sort of channel agnostic brand. You can find it in every major kind of gardening retailer you'd expect. And what makes EcoScraps unique is their business is they go out, they collect food scraps from a variety of places, compost it and turn that into plant food soils and the like. EcoScrass has been around for about 5 years. In the previous 4 years before our partnership or acquisition, they composted about £75,000,000 of food waste, which sounds like a great number, and it is. The exciting thing for us is that in the 1st year of our partnership, which is this coming year, 20 16, we will compost more than £75,000,000 worth of food waste. So more food waste compost this coming year than the entire history of EcoScraps up to this point. So it just it goes to show and that's really before we can plug into a lot of the synergies with SMG. So it just goes to show you that this is one of those brands where like TOMS Shoes, the bigger the brand is, the more you sell of it, the better the brand is for the nation and for our business, obviously. Moving into the indoor and urban. AeroGrow, as I think a lot of you guys know, was our first partnership at Hawthorne, before Hawthorne really existed. We bought less than 50% of the company, and we're really pleased with the partnership. As you can see, it's growing well. The business is performing excellent and a really great group of people have in Boulder to run it. Till, I've got a little bit less to say about than the rest just because it's a little bit further out. We don't plan to launch this brand for another year, year and a half. When we do, though, it'll be an evolution of a lot of technology we've been working with through our partners and through John's business to bring products to Urbanites. And I think a lot of the folks in here, I'm sure, live in New York City. And we don't have products that are that appropriate for you guys yet. We don't have products you can buy when you're shopping on foot. We don't really ship well with our products. And as we try to improve with Amazon, I think this will become a big focus. It's designing products that work for apartments that can be shipped, that you can pick up and carry with you comfortably. So moving on then to our hydroponics business. General hydroponics and vermicrop are the lion's share of our business at this point. It's an acquisition that we closed this past springtime in April. So we've had less than a year with the business to really learn it. We haven't had a chance this up to this point to really integrate the businesses. Up to this point, it's been or excuse me, to really integrate a bunch of synergies. We've been just integrating businesses and trying to keep them running. The good news is that the businesses have blown away what I thought were somewhat aggressive business cases. I think Jim would say they were conservative business cases. But regardless, the team there and we were able to leave almost the entire management team in place. The team there has performed phenomenally well and really encouraging results. Now Jim has mentioned that we plan to use GH and Verma Crop as sort of a platform to create a few more partnerships or acquisitions in the hydro space. We'll talk a little bit more about that as we go on. And then just briefly I want to pay a little bit of tribute to the Blackmagic brand there. You see it was a little bit of an after thought when you guys were looking at your books. It won't be in there. I was trying to be sort of subtle about it, but it's a brand that we'll be launching in 2016. It is a hydroponics brand spun off sort of from GH. Really excited about the offering, you'll see a lot more about that in the coming weeks months. But I don't really want to spend too much time on today. So just to focus on hydro, and again, guys looking at your books, you'll see a different slide just to explain a little bit about why that is. First of all, that number 1.1, you guys are seeing 1.7 in your books. We wanted to that was a really broad definition of sort of indoor gardening and you guys are all smart folks, you can figure out what I mean. We decided for the sake of this discussion when I'm up here to really narrow that down and focus much more strictly speaking on hydroponics category. You also see another graph in there on the left hand part of your slide. We decided to pull that out just for clarity's sake. I do believe that, that slide tells a good story. It just takes a little bit of interpretation. Essentially, it means that those lower frequency or excuse me, lower sort of percent numbers you see like on Nutrien's, that's just that's a high dollar price point and high frequency purchase. So anyway, just to help paint the picture. But for what we've got up on the screen here, it's over $1,000,000,000 category, which in terms of lawn and garden is quite significant. And we only really operate in 2 of those categories, nutrients and growing media, which are both sort of GH and vermicrop core strengths. Our plan right now and we love those categories. We do. We think it's where we have a right to win as a business. Those are the things that if you go back to Horace Hagedorn's point about, I want to be selling the product that people come in and buy every week, not once a year or once every 5 years. That's what we have with GH and Vermicrow. But the more that we've gotten to learn the business, the more time we've spent here, we've learned that there's a lot more exciting categories in addition to the ones we currently operate in. As Jim mentioned already, lighting, durables, devices, etcetera, these are all really excellent products. They're purchased with a surprising degree of frequency. They're branded high margin products that we think if we can roll some of those products into our offering, we can just help be an even better partner to the hydro consumer and hydro trade overall. So we're going to talk a little bit more about that as we go on. And then just down there at the bottom, you see that growth potential. The folks who are interested in hydroponics are extremely interested in hydroponics. This category of gardening is the way that we can bring a whole new sort of joy and pastime of gardening. So the way that we're looking at Hawthorne, I think at GH as well, is that hydroponics is sort of the entry point. We can use that as a springboard to hopefully secure consumers for their lifetime. So speaking of consumers, and I'm going to try and blaze through this one relatively quickly, it's a really exciting space. These folks shop very frequently relative to your sort of mainstream gardener. And when they shop, which is more than once a week when they head to the store, they spend a significant amount of money. And once they found a program that works, they tend to stick with it. They're also adventurous though. Until they find that program that works, they're going to tinker, they're going to modify, they're going to try all sorts of different products and they'll work until they get it right. And these guys and this is just these guys are having spent time, a lot of time with our R and D folks and a lot of time with these consumers, there are times where it's almost indistinguishable. These guys are so keyed into what they do. They're so passionate about what they're doing that they are as skilled and as technically expert as any gardeners I've ever come across. It's also a really unique consumer for SMG. SMG tends to be a little bit older, they skew female, they skew suburban and rural. The Hydro Gardner is the opposite of all those things. The Hydro Gardner skews male, he skews younger, he skews urban. He is a heavy digital user. He operates in online communities where they share best practices and growing techniques with their friends. So when you become a cult brand in this space, it spreads like wildfire and you can see really incredible hydroponics than they are any other type of gardening. If we can draw them into our brands by giving them the best products, we can secure a consumer for life and a consumer that will spend a tremendous amount of money. The key here is the products have to work. They absolutely have to work because there is no margin for Air Here. If you fail a consumer one time, you're burned and you'll never get them back. And they will tell all their friends about it too. So the good news for us, the company that we acquired has the best product in the marketplace. And not only that, but between the R and D team that was already in place in California, the R and D team that we have at Hawthorne and the folks in Marysville, we have and I am totally confident in this, the best R and D team focused on hydroponics in the world. So we're in a pretty good place there. And what makes it really, really exciting, not just for Hawthorne and for GH, but SMG is it's a totally new consumer. With our organic and natural brands, and this is something John and I talk about a lot. There is I think some people see a conflict. They see cannibalization. I consider it healthy tension, that I'd rather be trading sales back and forth than with our competitors. With hydroponics, there is no conflict whatsoever. It's a totally incremental channel to us. These guys shop in unique stores. Anyone who drives in and out of New York City, Islands on Long Island on the Expressway has seen that hydroponic store along the side of the highway, that's where these folks shop. They don't go to Home Depot. They don't go to ACE or True Value. They go to hydroponic stores. So this is all new business for us. It's spreading like crazy. If you look at the map there, it's in the predictable states, but it's flowing more and more into the middle of the country and it's just a really exciting place for us to be. And I'm going to wrap it up pretty soon here, but I just want to talk a little bit about the plan that Jim has already sort of mentioned, which is we have a plan to try to really roll out our nutrients and growing media. There's all sorts of technology in the space. With the R and D team I mentioned, I think there's a huge amount of innovation that we can bring the space. And this is a plan that we've developed internally. We've worked with our partners in the hydroponic space. So there is that deep industry expertise. We validated it with the leadership at SMG. With our external strategy partners, we were lucky enough to spend a day up at Harvard with Mike Porter working through the plan and sort of getting his blessing. So we feel really confident. We put together a strong plan that will deliver. I mean, really, the thing for me, and I'm sure that Randy doesn't want to hear this, but to me, delivering results is of course, is important. The business must perform. But if we can develop and offer the best line of products to the hydroponic a better family a better family of products to the hydroponic market than has ever existed before. And I think we have a plan to do it really, really rapidly. And I think the whole landscape is gonna change and I can't wait to come back here next year and sort of celebrate that with you guys. So that's all I've got for now. See, I finished up a little bit early. And I'll hand it off to Doctor. Slavens to talk about water. Thanks, Chris and John. So we've heard some really great things today. And what I'm going to do is talk a little bit about water and our strategy and how we actually see this as a positive for Scotts. The way we approach this is going to be absolutely critical. If we aren't proactive and we don't approach this as an opportunity, there's inherent risk that we could have towards our business in certain categories in general. But there is a lot of roadway in front of us and a lot of things we can do to really capitalize on this. And so we've talked about the changing landscape and the changing values we see with our consumers. The Scotts business is really seeing the brunt of this change. When people are concerned for their time and well-being and how they're getting out and spending their Saturdays, they're looking for ways that they can change their landscape to actually reduce the amount of maintenance that they put, on a Saturday. So they want to do less. They want fewer inputs. But there's also this growing concern for how we manage landscapes, the things that we do and the impact those can have on the environment. Most importantly, the impact that it can have on water. And there's 2 aspects of water that we're critically concerned with, the impact on water quality, so things getting into water that can have an adverse effect, but secondarily, the impact on how much water we use. In certain areas of the country, up to 60% of household water use is used outdoors on the landscape. And when we go to states like California, where they're in significant drought, it's hard to justify that much water use outdoors to have a dark green lawn or to have annual plants. So we're seeing consumers adjust and make changes to address that change. And this isn't a bad thing. Water wise landscaping is an opportunity for growth for a couple of different reasons. Now this trend or this change is happening fast. We've seen dramatic shifts in how people are landscaping over the last 3 to 5 years. In fact, the majority of people who are starting to make these changes have done it in that timeframe. And we're seeing states like California incentivize homeowners to make these changes. In fact, the state of California last year paid residents over $800,000,000 to remove grass from their landscapes and switch to low water use alternatives. These consumers are going out into the store and they are spending money, money in our category and in other categories that we don't play in today. And so we're going to talk about plans and how we can actually become more relevant and capture some of that growth. But it is growing fast and it is mainstream, and we want to be a part of this change. Now when we look at what consumers are doing when they're moving away from lawns, They're moving into categories that we own today, but this is when we start to tie all of these pieces together and how we can actually find synergies and some of our plans we're going to hear about following me on live goods, but other things we've talked about like hydroponics and precision irrigation already. The consumer who does this work or goes and makes these subtle changes to their landscape, they're actually going to the store and they're spending more money than our traditional consumer does today. In fact, when they make a change, they're spending 2x what our traditional consumer does to put in bark, decorative rock mulch, new live goods. And the other thing that's really great about this change that we as gardeners love is they're going in and learning about plants and what's required to maintain them and make them healthy. They're learning about proper feeding and care. And that's driving them back to the store for repeated purchases, getting them more engaged in the things that we do. So this is a big opportunity for us. We have products in place to capitalize on this, and we have plans to partner and look at new opportunities to grow in this space as well. But one thing that I want to make perfectly clear is that lawns are not part of this problem. We think that you can actually have a lawn and grow it in what we could call a sustainable way. You have to use the right types that are regionally relevant. And there are things we can do from an irrigation management perspective and care product perspective to help you have them while using less water. Salons are still a critical component and an important component of this new and evolving landscape. Now if we look at across the U. S. Where water issues are important. We have on the East Coast and Midwest issues around water quality that are pervasive and have been around for a long time and more prominently on the West, concerns around water conservation. This is where we do a significant amount of business. Over 75% of our business takes place in areas of the country where we're seeing issues either related to water quality or water quantity concerns. It is absolutely imperative that we engage in this and do work to get out in front of this. And we've been engaged in this for several years. In fact, over the last 15 years, we have been part of this conversation. We have been working with key states like California, Texas, Florida, New York, addressing these concerns, working with environmental groups, working with governments and regulators. We have made changes to our product formulations. 1 of the biggest changes we made was removing phosphorus from our Scotts Turf Builder products to be more protective of water quality. But although we've done a lot, I would say that we've been very defensive. We haven't been proactive. And so for us to truly win in this space, we are going to have to make a change, and we're going to have to take a proactive approach to get out in front of this and be prepared to design products for this landscape of the future because this is where consumers are going and we need to meet them where they are. And to do this, we can't be talking out of both sides of our mouth. We have to have a deep commitment to sustainability, and that's going to be absolutely critical. We will work to design new products, reformulate, work with our retail partners and make sure that we are talking to consumers in a way that they can manage their landscapes in a way that they are mindful of water and also still having the landscapes and gardens that they desire, that they would like to have. Now how we're going to do this is pretty cool. This is what I get really excited about. A lot of times we approach the things that we do as being less bad. So we're going to do less, we're going to remove pollutants from the environment or do things that are moving us in a less bad direction. We're saying we don't want outdoor spaces, lawns and gardens to be less bad. We want them to be all good. We want everything we do to be positive. And so similar to LEED certified buildings focused on energy conservation, we're going to work with leading experts and partners that we have in the industry to design landscapes that are water positive. So everything they do will be designed to be protective of water quality and designed to use water efficiently so that the benefits you get from growing fresh garden tomatoes, having that lawn that you desire or whatever it might be is all good. And we'll do this by creating core design principles of product design with parameters that we set for ourselves of what is good and what is not good. We'll work to design landscapes that are functional, promote drainage, promote filtering of water and things of that nature to be really strong components of the ecosystem that they exist in. When we do this, we're going to be able to lead the industry to a really great place and basically outcompete and out innovate everybody else in the marketplace. So when we start to look at the landscape of the future, what are the things that are going to be critical to this landscape? Where are there going to be synergies with our business today, where there are going to be areas for growth. There's a lot of things that we already do today that are inherent to this new and existing change, such as looking at drought tolerant grasses. We're already working on alternative ground covers. We're working on regional mulches that use water more efficiently. We are in the hydroponic space. So how do we take that brings oftentimes when you're in spaces where you have drought restrictions, how do we take the outdoor garden and bring it indoors so we're improving water use efficiency. But more importantly, there's some things we can do today by leveraging technology that exists to have dramatic changes or move the industry in a really positive way without compromising much of what we do by focusing on precision irrigation, like we've mentioned earlier or alternative mulch types like rock mulch and then getting into our core brands or our core technologies, which is how do we formulate and make nutrition available differently to the plants that slow release or more precise. So this is a really exciting place for us to go as a company. So over the next year, we're going to work diligently with some key partners that we've established over the last several years. These partners are in place because they're not only academic centers of excellence, but they support our businesses as well. So working with schools like Cornell, Texas A and M, UC Davis, we will design these landscapes of the future that will be water positive by pulling in experts that will help us understand key components that will improve drainage, improve irrigation, choose the right plant selection and help us create what we call essentially a LEED certified landscape, but a water positive landscape and partner with other environmental groups and states to make this become the new norm for how we go to business. And by working on the forefront of this, we will know where the industry is going, get out in front of it and actually out innovate and be leaders in this space. Now there's a couple of components of this landscape of the future or this water positive landscape that are going to be absolutely critical, and Jim alluded to this one earlier. First is precision irrigation. If we look at a lot of the issues we face in our industry today, we can attribute a lot of that to how we've managed water. We either put it on at rates that are too fast, forcing runoff. We have our sprinklers running just after it rains, wasting water, okay, or we're just applying it when plants don't need it or where plants don't need it. We can get smarter. And as we start to tie in new technologies like Connected Yard and we leverage sensor technology, weather station based technology, so the irrigation heads come on when they need to come on and don't come on when they don't need to come on, we can save up to 25% of outdoor water use immediately. And then we shift to how it's actually applied. There's some really great technology in the market today, and it's just getting better, and we want to be a part of that. As we look at new sprinkler heads that put down water at a much slower rate so the water can seep into the soil, so it's not wasted by runoff, it reduces helps reduce evaporative losses by applying it directly to the plant through drip irrigation or even going as far as putting irrigation underneath the soil or sub irrigation directly to the roots. All of these things layered on can easily help to reduce a significant amount of water use. And this piece right here can actually help in California, for example, reduce 25% of your water use just by being more precise easily. And that's not even taking into account the other changes we can make through other technologies we want to continue to look at. Now as we start to look at water positive landscapes, we want to be the total solution company. We want to make sure that we drive consumers to where they need to go to be water positive. It doesn't mean we have to own everything, but we're going to partner, we're going to work with other companies, we may acquire companies, we may license technology to win in this space. But within our core business, we are already making some dramatic changes that support our organic strategy that will actually also help to support the water positive strategy by moving We're investing in regional mulches. We investing in regional mulches that are designed to use less water. But 2 other areas that are really important and a big component of this that I shared that we'll continue to look at that are a little bit outside of our core of who we are today that are really exciting places to go are looking at things like decorative rock mulch or pavers or hardscapes. That's a very fast growing trend as people are moving to those to reduce maintenance and reduce water use. And that's an area we want to look at how we build that into the total solution for our consumers because where those products are sold are where we do a lot of business. So building complete solutions will be key. But second to irrigation, as far as how we can have an impact is, let's start to change the plants that we grow. Let's make sure that as we are growing in the garden, in the landscape, our plants are regionally relevant, drought tolerant, adapted for where they're growing. And let's leverage this vastly growing trend of people moving to succulents, native plants, plants that require less maintenance and less inputs and see if we can engage consumers even more and get them excited about this opportunity. And as we develop this plan and we work with key partners, this is going to be a really exciting time for our company to become more proactive. It's going to help us get out in front of this opportunity. And I think this is one of the areas that there's going to be extreme upside to partner and work with key partners that we've already established in the past that continue to show growth for our company. And to build on LiveGoods, I want to turn time over now to Mike Sutter, who's going to lead us on a discussion about our strategy for LiveGoods. Thanks, Mark. Appreciate it. So I think it's only fitting that on the last section to go before lunch, since I have the opportunity to talk about food. So hopefully, I'll be a nice lead in to your lunch. My name is Mike Sutter. I've had the good fortune of working for The Scotts Company for over 15 years. And I've worked on a lot of exciting projects, a lot of new growth initiatives over that time. But I can honestly say, I'm the most excited and most passionate about this one. LiveGoods is something that I think holds tremendous potential for our company. As Jim mentioned, SMG wants to be a gardening company, not just a gardening products company. And the essence of gardening really always starts with the plant. As great as they are, no one ever bought a bag of soil for how colorful it is or bought a box of fertilizer for its homegrown flavor. But these are the exact reasons why people buy live plants and why they get into gardening in the 1st place. I actually remember the exact moment that I first got interested in gardening. I was actually 5 years old. I was in the backyard of our house with my mom. I loved purple petunias and she actually gave me the opportunity to plant my very first purple petunia. And then what I remember most about that is the excitement of being able to plant that live thing into the ground and let it grow and nurture it. And it really all started with the plant. So for the next few minutes, I'm going to talk a little bit about the live goods category, why we're so excited about it and where we see the opportunities for growth. The first thing that I think really highlights why we're so excited about being a gardening company, because that's where the money is. Of the $9,000,000,000 in retail sales around gardening, only 25% are in gardening products. And I say only, but it's still $2,000,000,000 don't get me wrong, that's a nice piece of business, soil, food, mulch. We've made a lot of money there with our leadership position and there's a lot more to be made. However, the giant slice of the pie, 75% on the other side of the chart is live plants. And that's a place where we've just only begun to play and it's nothing but upside for us. And the great thing about the labgoods category is not only is it big, but it's growing as well. There are over 5,000,000 more households buying live plants today than there were just a few years ago in 2011. And that growth is being driven by vegetables and herbs, fueled by the edible gardening trends as consumers continue to engage in that as we talked about earlier. And consumers are largely buying live goods in the retail channels where SMG is already which gives us even more optimism as we enter this space. We've already had success there with our core business, so we believe we can do so with live plants as well. Now don't get me wrong, there's opportunities outside of our core channels as well, and I'll talk about a few of those in a couple of minutes. But retailers our core retailers love the live goods category. It's a traffic driver for them. The average live goods purchaser visits a garden center 8 times during the year. That's twice as many times as a non LiveGoods buyer. And each time those LiveGoods buyers visit The Garden Center, they spend more money. So their average basket ring is higher. So they visit more frequently and they spend more money. It's one of the reasons why retailers continue to put more and more emphasis on the live goods category. Now there are a few macro trends, some of these we've talked about that are providing even more tailwinds for growth in the LiveGoods segment. 1 is the emergence of millennials. Now much has been made about this segment, how big they are, the influence they have, and we're definitely seeing that in LiveGoods and in Gardening. The millennial segment is the fastest growing segment in LiveGoods. It's growing at a rate, they're participating at a rate 9 times boomers are retiring and should theoretically have more time on their hands. And unlike their parents and grandparents, millennials aren't bringing the floppy hat into the garden. They're bringing technology into the garden with them. As Patti talked about before, we see a lot of opportunities with technology. And one of the things technology is doing is changing how people get information. Consumers are looking for education and inspiration about live goods or gardening, they're turning now more to their smartphones for that information than any other source. Consumers aren't willing to invest the time to become horticultural experts. They want quick pictures, videos to help educate them. They're not willing to read long lines of text. And consumers' attention spans are becoming shorter as well, which is having an impact on gardening. I read a study earlier this year that the average attention span of a human is measured at 8 seconds. That same study measured the average attention span of a goldfish at 9 seconds. That's pretty sobering. Unfortunately, Goldfish make really bad gardeners, so we're going to have to figure out how to quickly engage and inspire our consumer base. And those short attention spans are driving almost an insatiable desire for instant gratification. And we're seeing that in live goods as well. Consumers not only are willing to or not willing to invest the time to become experts, they're not willing to wait for the benefits either. They want instant blooms on their flowers and they want to buy a tomato plant today and start harvesting fruit from it tomorrow. It spawned a whole new segment in live goods that retailers call do it for me container gardening, and it's actually one of the fastest growing segments in Live Plants. Now we've spent a lot of time already talking about health and wellness trends, so I'm not going to spend a ton of time here. But there are obvious applications and obvious benefits to this in live plants as well, particularly in the area of organics, which I'll talk about in just a few minutes. So a little bit on where a little bit more detail on where we see the opportunities in LiveGoods and why we're so excited about it. 1 is in the area of reinventing the shopping experience. The shopping experience today, quite frankly, in the store is a little bit uninspiring. It's a little bland, and I would say potentially even boring. We have an opportunity to reinvent that and really focus more on the end benefits as we inspire consumers to buy more plants. It's one thing to sell a tomato plant, it's another thing to inspire people to grow a salsa garden. We can do that. In addition, we can provide complete solutions for consumers. We have the products and brands be able to deliver not only the plants, but also the soil and food that consumers need to be successful. It's that simplicity that consumers are looking for in the macro trends we just discussed. One of the other things I'm most excited about that we can bring to this category is innovation. As Jim mentioned earlier, we spent a lot of years, doing research and development and have access to technology that we believe we can leverage in LiveGoods. And in fact, we already are. We are reinventing the entire planting experience and building it back up through genetics, nutrition and growing protocols to deliver a superior gardening experience for consumers. Now I wish I could take you all to Ohio right now to see all the great research that our world class R and D team is doing. Unfortunately, I can't, but I did bring along a couple of pictures, which I hope will help get the point across. In the area of vegetables and herbs, we'll deliver a faster harvest with more bounty for a longer period of time than traditional vegetables and herbs. In addition, in the area of flowers, we deliver more blooms with a healthier plant and more color. These are exactly the things that consumers have told us they want in live goods and what they're willing to pay more for. We see a lot of opportunity in this space as we enter LiveGoods. Now as Jim mentioned in his comments, there are strong brands in the LiveGoods space already. They could become great brands with a little more nurturing and investment. However, SMG has the strongest brands in the Gardening segment, and we believe there's opportunity to bring these brands in LiveGoods as well, particularly in the area of natural and organics. This is a small but fast growing segment in LiveGoods that we believe we can accelerate. And as John and Chris just mentioned, we're making a lot of investments in the natural organic space on our soil and food businesses. It only makes sense to leverage those synergies in LiveGoods as well and bring those same brands to Live Plants. One of the easiest wins, I think, for us, and it's one that's worth a lot of money to us, is to be able to better create a link between the live plants and the soil and food that we already sell. Attachment rates or when a consumer buys a live plant, less than 20% of the time, they also buy soil or food at the same time. That creates a lot of opportunity for us to create a linkage to sell that consumer the complete solution in store. Now it may be unrealistic to get it all the way to 100%. If we did, it would be worth $400,000,000 to us to drive attachment rate to 100%. But even making small changes can have a big impact. We did a small test in 2015, where we significant results. So with more focus and more investment as we scale up our presence in LiveGoods, we believe this could be a huge opportunity for us as well. We've talked a little bit already, actually quite a bit in all of the presentations about the changing consumer lifestyles and new trends and how that creates opportunity in gardening. All of those opportunities apply to live plants as well, whether it's millennials, whether it's organic food, whether it's instant gardens that we've discussed or the trends in digital, we have plans to aggressively move against each of those areas as we enter into the labgoods space. It can be a little bit intimidating to get into gardening. It doesn't have to be, but there hasn't been a lot of change in the language of gardening in years. We talked a little bit about the fact that consumers don't want to become agricultural experts or horticulture experts. They're not willing to invest the time to do that. But the language of gardening really is rooted in agriculture. Words like determinant or indeterminate. Quite frankly, I don't even know what those mean, right? How can we expect the new consumer entering the segment to understand? They're not willing to invest the time nor should we make them invest the time to become master gardeners. So instead of trying to educate them on the language of gardening, we're going to change the language of gardening to be more relevant to consumers. And we can do that by connecting with things that already are relevant for them and that they understand, whether that's popular culture or trends or personalities, we can create an easier mechanism or an easier language for consumers to relate to in gardening. One of the biggest opportunities we have in that space is food gardening. Instead of varieties like Better Boy or Heirloom or Florida 90 1, what if we had Wolfgang Pucks soft tomatoes, a much easier way for a consumer to engage and relate to gardening. We've seen things like this get implemented in other categories like paint, and I believe we've got great potential in live goods as well. Now I started by talking about one of the reasons that we love LiveGoods is that LiveGoods are purchased in the retail channels where we're already strong, and that is definitely true. However, we see opportunity to grow in more nontraditional channels as well. Consumers are telling us and voting in a lot of categories and this one is no different. They're turning to e commerce, They're turning to solutions that bring products direct to them. Live plants will be no different than that. Now there are logistical challenges with sending a live plant directly to a consumer's home, but there are companies that are already dealing with this that we can look to. 1-eight 100 Flowers is one such company that we actually one of our Board members runs. So we know it can be done, it will be done, and we want to be part of the transformation of moving to these channels as well. So as I wind down my portion of the presentation, I want to bring this back to the theme of the entire day. Jim opened the entire discussion today about talking about focus and the theme being project focus. And our approach to LiveGoods is really no different. It is all about focus as well. We could very easily have made the decision or make the decision to enter this space by buying a company and starting to run greenhouse operations and direct to But the approach that we are going to take as we enter this space is actually going to be different. We are going to focus on the things that we do well, marketing and R and D, bringing that innovation to the marketplace that I shared with you earlier, while allowing our partner to focus on the things that they do well, growing operations and distribution. In this way, we feel like we will maximize the potential as we enter the $7,000,000,000 LiveGoods segment. So we will share more specifics about our plans as they become available, hopefully in the early part of or early in 2016 or in our Q2. Now I'm going to turn it over to Mike Lukemire to close us out. Thank you, Mike. To close this section out, I want to make 3 points. Number 1, we believe in our 2016 plan. Number 2, you saw with naturals, hydro, connected yard, water and live goods, all a theme of the next generation lawn and garden. We have a lot of bandwidth, we have a lot of activity going and the future is really bright. And my final point from this group is you're seeing the next generation of Scott's leadership, passionate, collaborative and really working on and really love this business. And so it's a pleasure for me to come in every day with Jim. We talk about QTR all the time. We want everything now or yesterday. But overall, that's the conclusion of our section, and I will turn it back. Okay. Thank you. So what have we talked about? I think King is going to sort of take us through launch and I think we'll do Q and A afterwards. I think to sort of sum it all up, we took a look at the business. We really like North America. We think we have a lot of just very significant sort of competitive advantage in our scale. We want to reinforce that. So I think hydro in, live goods in, precision irrigation in, sort of non core, pretty much out and use that to sort of fund our in. The then it's a matter of just focusing on us and saying basically we'll buy ourselves back as much as we can. So we think we're the best investment we can make is our company. So we Al, what you think about Scott, I know you made a lot of money with us. We about the business. And my family, I think actually the 2 of us are the big owners here. The family is very excited about sort of the plan that we've laid out. I want to give credit to the sort of team. You have no idea how hard we've been running the last, call it, 6 months. We presented this idea for the first time to the Board up in Vermont over the summer. We got kind of a nod that says proceed, tell us more. We had a meeting in the late fall where they said press. And at that point, to get to today, we I think wanted to sort of announce all the deals today. We just didn't quite get there with some of our partners. And that's not because they did anything wrong. It's just that it's always harder than you think. And we really started this sort of late fall, is trying to get all these deals put together. We've got a tremendous amount of momentum right now on these. These deals, if I could announce them, I think you'd be really excited you'd be really excited by. The Clayton Jubilee deal, I think, is one where we're not having to sort of make a choice right now, except we create a much better company in our opinion. And I want to just sort of take my hat off to a lot of the people at Scotts who have built that business and to some extent are going to have to struggle through the next few months to figure out who's on the team and who's not on the team. And just so you know, we're we have an enhanced severance package that's a part of that, and they have priority in being rehired. This is particularly our headquarters unit in Marysville. But it's a tough time of year to be struggling with job security, and we feel for that, I mean it. But there's been a tremendous amount of work that Mike's team and my team have done. The corporate team, this is one where we had a pretty big miso case that I think lots of people won't fight. We actually feel like we've never delivered asbestos to people, but we just won a meso case out in California that was pretty important to us first time we won the trial, and we won that. We feel great about that. I think the treasury team has done a great job in reconfiguring our credit to allow for a lot of the stuff we've talked about. Our deal teams have been working their butts off. This is one Randy has really been leading the CENR negotiation and a lot of the European work we've been doing. So it's just everybody in the team has and there's a bunch of people outside who are participating in the discussions with CD and R that, I think we had hoped it had been done at sort of a reasonable time yesterday. And I think they walked out this morning of probably some law firm at like 7:30 this morning. So I dude, I would have gone to a bar. They were just I think Randy did. They were pretty caffeinated up. But anyway, it's been a lot of work on the team. And I think that the ultimately, we're basically saying what's the portfolio we want on a go forward basis for company? And we feel very much it's a North American portfolio. And I'm not going to repeat the areas where we want to sort of add to it, but we our North American business and we want to add to it. And we think that this is I think it's a good plan. It's executable. I think we get to, call it a year in where we're done on the M and A side and then we just start basically using all the cash we have to sort of enhance value for our shareholders. So that's pretty much our plan. It's got a very much a start point, which is kind of today. It's very much got an endpoint. I think everybody knows what they have to do. The management team very much believes in it. The Board believes in it. My family believes in it. I think this is one of those things where it's pretty much all good. Now we just have to go do it. So Hector, one thing I would add to your comments. Randy and I are out on the road at Fairmount. We've been doing some marketing over the course of the summer. And I think one of the things I think we're out on the West Coast with one of you doing some marketing, and some of you may be listening online. And what we were telling Jim and the rest of Jim's team and some of our Board members is a lot of that was a listening tour for us. And I think a lot of what you're hearing today is based on input that we have heard from our institutional shareholders. I know Jim, to his credit, has always inquired about how we think these things will play, what people are asking about. Just about every Board meeting we have, that occurs as well. So these weren't decisions that were just made in a vacuum either. It was understanding, I think, what we think are important issues to shareholders. And that was pretty critical, I think, in a lot of our thinking here. All right. So we're going to shift gears a little bit. I think we're right on time, so that's good. I want to just shout out to my colleagues as well. Jim mentioned the amount of work that's been going into putting the plan together and running the business. And then I insert this meeting on top of it. And there's a lot of work that goes into this. So I appreciate those folks who have taken time out of their normal work day to help make this a successful event today. So we're going to break for lunch now. If you're listening online, we will try to start the webcast back at about 12:20, and we'll take Q and A at that point. If you're sitting at a table where there have been some no shows, find a way to work with other get to a table with some members of the management team and pick their brains a little bit over lunch. So we're going to start getting the lunch set now, and we'll start back at 12:20. All right. If we can try to get everybody's attention, we'll I think go through some Q and A. So I think I'll start by preempting Q and A a little bit because it's been kind of the subject at least at my table on sort of why now, how did this stuff come together. So I think all the deals, why now? My father had this view of like luck is where preparation meets opportunity. So I do think that to some extent deal flow right now is a result of things beyond our control, and we just have the ability to sort of play into it. The virtually every one of these deals, other than sort of hydro, are deals that we've been working on for like at least a decade. So consolidation in Europe, consolidation of service, live goods are all ones that have just taking a long time. And to some extent, our relationship with F. C. Johnson is the same thing. This is years years of spending time with my friend, Fitz Johnson, on how to get him to bring our products into his channels of trade and to get his products rating off into our channels of trade, which I think is an important deal and the relationship is important. The Monsanto deal is another one of those things where for at least a decade, we understood what worked and didn't work within our Monsanto relationship. We've just never been able to get Monsanto to do anything unless they have a need to do it. And while they were in their discussions with Zincenta, there was a need. And we all came together, which I'd view as a little bit serendipity, came together and we had a ton of freedom to operate that came out of that, an enhanced deal, significant sort of what I view as insurance coverage that we could get hosed in that deal because it represents a opportunities to evaluate changes in how we'd want to own Europe. So we've tried to play on our own on live goods. This is an area where lots of needs kind of came together, both on the sour side and our side to put this together. And I think to some extent, a very much a willingness to take a minority position as an area where we can add value and we don't have to sort of I think in every one of these businesses and I'll probably get in trouble for speaking about my friend, Hugh Grant. But I always felt that and this has driven me a lot is that Syngenta and Monsanto to me as somebody who manages the company that has deep relationships with both those companies made a lot of sense. Why it didn't get done, I view largely as a people problem. But it would have been the right thing for both those companies, if you ask me. We've taken a point of view on all these that make Scotts better, make service better, make Europe better and how we participate shouldn't be about who owns control and it should be about how do we participate and all these companies are better off. That's how we got to it. So the Clayton Dubilier was just we were very interested in ServiceMaster when it was sold to Clayton Jubilee. Clayton got that deal done. I think God bless, they paid a lot of money at a time where valuations were peaking out in 'seven. And they've been through their own grief and series of managers on that business. But the end result is it was a lot of tax issues were spun to the so they spun that business to their shareholders as a standalone. That solved a lot of tax problems. And then it was just a matter of it made sense to both Clayton Dubilier, the operating team at TruGreen, to me, my team and the operating team at Scott's that it made sense to put these together. And it was a series of discussions that occurred over the summer, really led by Randy and partners at CD and R that got it done. LiveGoods also was one of those things where it just kind of came together, but in large part, because we said we don't have to be the owner. We'd like to participate. And I think it does a lot of stuff for us. It effectively means that if it is sold, we're going to get a look at it. We get to participate. We think we have a lot to add. I think and I think they agree. Europe, a consolidation is necessary. I think 5% returns where our cost of capital was 8. I think under a sort of an EVA definition, you'd say it's value destroying. And the benefits of this consolidation, which assuming we get the contractual work done, which I'm going to make the assumption we do, assumption we do, assume we get the antitrust elements done, which I hope we do, We think we are positive about that. The company is just a way better company. And so but every one of these for everybody who in this room who knows me, we've been working on every one of these for about a decade. It's just and I'd throw SCJ in there, I'd throw Monsanto in there. A lot of the stuff we did just kind of came together. And I want to sort of give credit to my management team. And it's a new team. It's about half the size is what it was. No exaggeration that decision making has been way easier. My relationship with Mike, start with there, is these guys are my prime partners. I got my finance partner and I got my operating partner. We basically sat on a board in my office like over the summer and sort of said, we can make the company anything we want, but we had to give some stuff up to do it. What would you want this company to be? And that's and we looked at it and said, fuck, that's we like that. Then you take it to the Board and say, what do you guys think? And they said they probably didn't use the profanity, but they were pretty enthused about it. And I we've talked about all this stuff and I'm going on, I'm sorry, but I will tell you that the words that show up in like scripts don't happen by accident. It's something you think about Jim and I have been working on this script for coming up on a month now. It was an important stake we put in the ground changes was so putting in the part about our Board, I've gotten to a point, we were talking earlier down at this table right here, like you, that man, if you can't convince your Board, if you can't get more than half your Board to agree on something, it's probably a bad idea. I used to like take all this stuff personally if I couldn't get them to agree and stuff and say, yes, I'm not even going to say bad things about my Board. I've gotten to the point of saying, if I can't convince people who want to agree with the company's position that it's right, it's probably not. And at least it will cause you to go back and rethink it. But this is one where we presented it and it was like uniformly. And we have a very functional Board right now. I mean, without a doubt, the best Board I've ever had. So we have a very functional engaged Board right now who like bought into it. And I'm talking to smart mofos on our board. And that caused us to go do a bunch of work, bring it back to the fall meeting, basically said press. But press was move forward to about a month later, a family meeting where we got a control shareholder. We had to like convince. They were good and then the last stop really is here, is does the street puke all over it. So these are a lot of puke tests that we kind of went through to say, we have a bunch of constituents we're trying to keep on board here. But it's one of those things where we look and said, we just really like where this goes. And to some extent, a lot of people, including my family, have asked. We've called it an open to buy window, which is there's a lot of M and A flow right now. And we have done really well in what we've called, and I think many of you have profited from it, going super shareholder friendly. I think, Al, when you bought in, you said, just don't change your mind, like 6 months from now. And we've got other meetings later today with some of our larger shareholders that I think we want to say, we haven't changed anything. We're taking advantage to reconfigure the company right now, and it's going to be very much North American focused. And service out, probably Europe out, but I think the interim step with Europe is the European business a much more attractive consolidated than it is not. And so that's really just a step in the process. And I'm not saying something I think our European partners who most of them are still to be involved in the business, would say anything that it's a big surprise to them. I think it's that company consolidated is better off with outside of us. We have other stuff we want to do. So we just and the weird thing is it's all kind of come together in a way. So far, we haven't had major shit blow up in our face. We've got the operating business Mike is doing, which is very important to what we're up to right now is we've had no major stubs in spite of the fact that this year was not like a year for the sort of people who cry a lot. The year started off really well. It got droughty in California and it got I mean, those of you who operate in the East Coast here, it was no joke, man. The amount of snow we had and how late it was, it really compressed our business. That means that executing really hard. Keeping retailers in the game when they just want to sell their inventory and get out was hard. And it's one of those years. Now this is like, I think 4 years in a row where we've had to make the summers became make the year. It's not the beginning of the spring. And this is a huge credit. And I want to give a little credit to Barry Sanders, who was very helpful in sort of establishing the process of management. We just made it better. And these 2 deserve a lot of credit for that as well, which is people didn't get freaky, they didn't get PTSD in the middle of the year, they operated through the year and amazingly brought in a really good result and very fairly. So I think everybody ought to have a lot of faith that 2015 was not an easy year, but I think under a calm and sort of collected way, the operating team brought it in, while we were doing all this other stuff. And next year, we have quite a bit tailwinds. So it's like I think it allows us again to sort of get all this stuff done where the operating side of the business is pretty well under control and operating in a very good place. Without and this is the challenge, because I think everybody knows here, we have like 3 sets of numbers. And I don't mean this an illegal sense. We have these numbers we tell you about, which are easiest numbers. We have the board numbers, which are our next hardest numbers because that our incentive is based on that. And then we have our internal numbers, which are the hardest. And so Randy is operating on the easiest set of numbers he communicates and sets expectations with you guys. Mike is operating on the hardest set of numbers. And then we just sort of I try to make sure that the management gets paid. So it's kind of part of my job. So I think we're in a good place, but everything here sort of came through, call it virtually a decade. It just crazily happened kind of all at once. So that's how. And then hydro, I participated in an interview with the Wall Street Journal, I don't know, probably 5 years ago on do I view hydroponics as a legitimate part of lawn and garden? I said yes. My Board said no. And I think as we've watched the space become more accepted, I think our view less risky, especially certain nutrients, growing media, growing systems, control products. This is what we do. I think the Board has become fairly relaxed. And I think I have to say, I feel very blessed to have a Board of Directors who is willing to a management team who's willing to say, okay, we're going to put significant amount of money, not maybe crazy money, but pretty significant amount of money for us, into a space that for other public companies, I don't think you see anybody participating in. So I feel very lucky that I have a Board and management team that kind of trust me on this and believe. So you guys can't ask the first question. You had me for a whole lunch. Anybody else have questions besides these 2? He's live. Sorry, I'm going to let you go first anyway. Just do us a favor for the let us get a mic to you and for the transcript, if you just give us your name and affiliation so we have it. Bill Chappell, SunTrust. I will ask questions of Mike and Randy to make it fair. And actually all about a few questions about this fiscal year. Just want some clarification, a couple of quick ones. It said 1% to 2% benefit from price. I thought we'd been talking about 1%. Is that a change? 2nd, on the acquisitions or transactions, you said they all may be slightly dilutive depending on timing. But they're all closed today. Would they be neutral to earnings? Or are you actually looking at some kind of dilutive possibilities? And then 3rd, kind of bigger question, maybe on the outlook for the next year. I mean, the problem of doing so many things at the same time is it distracts from the core. And especially going into live goods and whatever you're doing in Europe, you're going to distract I mean, management is going to be doing a lot of different things just as we go to the start of the season. So I mean, how much risk is there to disruption to that? And how much competitive pressure have you been seeing? We heard Central talk about gaining some share recently. We've heard Spectrum talk about gaining some share recently. Is that a big factor in what you're thinking? On pricing? On what? Okay, great. On pricing, Bill, it's 1% for the total company, which when you look at the weighted average of pricing across U. S. Business and how it applies, it's more like 1.5% for U. S. Consumer business without any pricing for lawn service in Europe and so on. So that's how the math works. Your question about dilution or accretion, when you look at the lawn service deal individually, it's dilutive because of the leverage that's being added to that deal and the interest that's going to come out of that. There's a little bit of amortization from purchase accounting and allocating the purchase price to the assets and amortizing them and so on. So when you get past this year and you look at a full year of 2017, that service deal, we think, will be about neutral EPS wise. And then when we get to 2018, it should be very accretive and really nice in the long run. If you look at the 2 other deals combined, if they were to close tomorrow, one would be accretive right out of the box. The other one would be dilutive due to purchase accounting. But from a cash flow perspective, it would be very positive. So EPS is one measure. The accounting can get a little bit give you some strange answers. But from a cash flow perspective, they're all excellent deals. And we look at all three together and the $200,000,000 we're pulling out tax deferred from the service deal, and it could potentially fund the other 2 more or less. And then we still have a lot of capacity from the changes we made in our capital structure that we can start at that point buying back shares even faster than what we anticipate. So it's still a little murky out there, and we have to finalize some things. But I think the timing is right. The partners are right. The deal structure is right. And I think we need to give a little bit of credit to not only the people at Scotts that worked really hard on this, but some of the partners from outside as well that we've been working with for year plus to try to pull all this together. So thank you. And then look on the Raina and I were sort of talking about sort of Q1 results, which have been stunningly good. And I think that just goes back to sort of normal weather, to be honest, in the Northeast. So we sort of I wouldn't say we're pinching ourselves a little bit, but it just seems like when everything is going great is when you should expect things not to go great. So I said, what do you think? And it's I think it gets back to the same issue of focus. What I would add, and I'll leave it to Mike to sort of talk about, is that I think this is one where you guys have heard us talk about cross lead, which is this sort of stand McCrystal approach to sort of managing an enterprise, something that we've taken very seriously. We operate using kind of principles of cross lead, which is kind of, I would say, military management and in a good way. Like this is war and terror stuff. And I think when Stan was managing the war and terror, I think it probably was the best management to a far flung enterprise with a lot of need for information to come in. And his whole gig, I think, when they came out of the military was to try to sell that as kind of an approach to management, which we're big believers in. I think it's taken us a while to do it. But I think that so while it is a risk, there's a lot of stuff going on at Scott's. I think we're pretty much under control. And maybe you want to talk about it. No. I think our battle is 8 I review all the businesses no matter where I'm at. I think the team that we've built and the changes we've made, I mean, pretty much 2016 is baked. We're working on 2017. The marketers are on 2017 and 2018. Carbonara's is the execution team, so I'm pretty confident. Mike's been in the business 20 some years, we've got some really good solid operators that are not really being distracted from this. We utilized Jim's or Mike Hoover, Jim introduced as the soft team. What you stand on, Mike? And we have incremental resources that we What we call soft, it's Scott's. This is when we downsized our management team, what we had were really good people who sort of didn't jobs on a go forward basis, people we thought would be a real shame to lose. And we basically said, why don't we just build our own internal consultancy with people who know Scotts, we know are smart. The only thing bad is that you don't have a seat to sit in, in the new company. And we'll reduce our use of outside consultants, we'll go internal. So strategic planning, internal consultancy and M and A all function out of Mike's team. And so I think the Board needed a little bit soft for us. It's just we like the name, we like the sound of it, but it's effectively strategy, M and A and internal consultancy, which is, remember, since we're operating skinny, what we have then is the ability to add bandwidth very quickly and deploy it into businesses that are basically they've run out of their own. And I think Chris has been a major supporter or a major beneficiary of soft bandwidth, which we can import, solve problems and then they go back to another job. So soft, just for everybody's FYI, special operations forces. That's how we got there. Yes, we liked it. No, I've done just about every job in the company. And so we do have a rhythm of being able to track where we're at every day. And so And this 8 meeting is really it's a decision making meeting where you say anybody who needs anything decided that you figure you can't decide on your own, Mike's sitting in one spot at 8 o'clock every morning, anything you need decided and it gets decided on the spot. And magically, it's turned into the team gets together, communicates, makes a decision. We're not waiting for anything. Issues get raised. So we don't really lose a day. Now you got to be paranoid as an operator, which is for me I worry about everything. But our rhythm right now is generally, we know within a day if we have a problem somewhere. And just sorry, just one follow-up. On the as we look at 'sixteen, is it fair to say with what you're saying 1Q and 3Q are favorable comparisons year over year and 2Q and 4Q are a little bit tougher. From a top line perspective. From a top line perspective, that's where I thought you were going. Yes. For POS, yes, that's true. Shipment always gets a little bit funky because of time every inventory isn't. Is it rain outside? But from a POS, yes, that's true. I mean, we're going to follow the same load pattern to be early because if it breaks, you can't be out. So that really hasn't changed plan wise. A little more sophisticated continual improvement. And I do want to call out that we said it, but it's worth repeating that the retailers in the United States, I'm talking from the hardware co ops to sort of the big three, are super engaged, lot of new leadership, very committed to the space. So it's good to see. And that makes it easier for us as we're dealing with enthusiastic partners who are optimistic about the future. Joe, it's Bello, Raymond James. Just a quick couple of questions. First, Jim, you used the term addition by subtraction earlier with regard to SLS and guess potentially Europe as well. How much of a distraction to your North American business was running those 2 businesses? And how does North America benefit from those two businesses now potentially being part of the JVs that you're minority stake in? And secondly, last year, you shipped slightly north of POS in the U. S. Is that an issue heading into this year? Or do you think POS and should converge? Not at all. I think that if you look and say what business was the most impacted by late spring and sort of drought cutoff and Texas rain, lawns. Lawns was the business like it's just where is Josh? That was the business that good plan, it just the numbers just didn't sort of come together. That's where you would have seen inventory, okay, is lawns. The good fall, that was lawn fertilizer and feed, okay? So I don't I have not heard anything about inventory, carbon. Any issue? I think you have Hold on, Mike. So I don't see any issue at all in the field as far as inventory goes. Yes. I just think the other thing we need to be cognizant of is we have to look at not just dollars but units. So we were up 1% in dollars last year, but 8% in units. So when you take a look at that, that's because of different promotional activity. Our inventory situation is actually in really good shape right now. But that's soils, mulch, ortho price reduction. Yes. And mix. Sort of the greater focus on North America. Well, that's got to be a positive. So Europe, I just we'll talk about Europe. I managed the Monsanto deal back in the day with Chuck Burger. And so when this is when we bought that business, probably most people aren't entitled to kind of green deals a lot, but deals where you beat your numbers, it was a good value on the way in, that was that. Europe, we just, I think, built an overly aggressive that was not my deal, by the way. I was running North America at the time. But I think the European group overcooked their numbers. We probably paid too much. And the result was long term Bob Bernst Bob Stoller ended up running the American business at that time. And it was a major drag. It's not probably possible to go back and look and say, had North America not been responsible, we're trying to make up for the shortfalls and the lack of return on the European business, we could have made a lot more investments both in our brands and additional products, etcetera. So it was a major drag on that business. The Smith and Hawken deal, remember, we bought that deal to be basically an outdoor living brand at Depot. And I can't understand how we went from doing that deal to Nardelli saying no. But so as soon as we started getting Europe kind of more or less back on track, Smith and Hawken was underperforming. And the effect on under performing businesses on the core is really bad, because it just takes money that would be used to invest in the growing part of the business, just trying to reinforce. And you all may not see this, but I'm telling you as an operator of a public company, if you're short if Al is shorting us, Randy's business, we're going to say, can you cover Al's short? I mean, that's what we're trying to do when we're managing a P and L. We try not to be bad stewards of our brand, but there's gives and takes. And so I think that service is not like that. I mean, I think there was a period back in the day like when Call It Travel was running it, where it was missing. We probably were trying to grow too fast in that business. But I don't think that's the case with Jimmison. They've been very good sort of corporate citizens. And it's not like Europe has been bad. It's just a very low return for the amount of money that's invested in it. And so I do think that anything that allows the American business to focus on, I think, the best economy in the world right and the best environment for us because there's a lot of opportunity for us, it's that's got to be good for us. I think, I don't know. You've got to you don't have to do it. No. I mean, I think I mean, we were working on some opportunities and certainly with Scotts Lawn Service as far as expanding services. We'll probably participate as being board members from a minority position. So I don't actually see that much change in the workload other than to try to work with that partner for me. And Jameson did a fantastic job. He's actually my he'd come and give me updates. He was always on his numbers, so I didn't really spend much time with him. Other questions? Tom Mahoney with Cleveland Research. Just to dig into the LifeGoods a little bit more, Can you talk more specifically about the source of the patents or the test that was successful in 2015? And if you're not using your brand, what that business looks like and what your participation in it looks like? Well, let's just start with it's IP, okay? So we had a guy, Jeff Gorazia, who ran R and D. And one of the guys we hired was a guy named Doctor. Bob Herman came out of Monsanto, where Monsanto had been investing in a program they called Smart Plants. So we're not talking biotech here. We're talking conventional breeding. So the question is, can you take conventional breeding, combine it with, I think, science on nutrition, meaning when defeated and try to do that without a lot of input from the consumer, with improvements and changes in sort of growing media and the cultural practices that go behind the plant. That work was work we did with Syngenta and we've done with Monsanto. So these are working with people who are very much interested in the space, who we were like the other half of that. This is something we're very interested. I think on the ag side, it's a relatively small market and how you get paid for it makes it a little more challenging for them. But the genesis of this research is both our work, Syngenta's work and Monsanto's work consumer. And then talk about the test that you guys touted as you're very successful in 2015? Listen, what I would say is open invitation. Anybody who wants to see this stuff in action come next spring to our field trials wherever they are. A lot of them happen in Marysville and come look at this. The test results from the trialers were good. So this is something that as we look for our lives, one of the things we bring is well over a decade of research we've done with significant agricultural partners on stuff that we know works. And it sounds really simple, but the best genetics with the correct nutrition at the right time in the right media, like the only thing consumer has to do is water it. A little bit change in the greenhouse when it's being produced. And you see results like you saw photos of, which is those plants are the same age, same genetics, just treated differently. So it makes a big difference to the consumer when a consumer goes in there and sees a plant that just looks a lot better. Tom, are you asking about the test as it relates to the lift between our products and the live goods? I think it was. It was good. Thanks. Good day, sir. Thanks, Jim. Long term investor, Dominic Lucci, Park Avenue Capital Management. You've done a fantastic job over the years. I would like to get yourself, your management teams as well as the Board's philosophy regarding cybersecurity. I'm probably not going to give you a great answer. Okay. Okay. And part of what I have to do is manage my own boards, because I think probably every board in America wants to spend a shit pot of money on defense. My view is that they can break into NFA, they can break into DoD, they can break into Home Depot, they can break into Target. We're a small company and I think everyone's vulnerable. I think it's a major problem in the world. I think we're doing proper stewardship and maybe more. I think we have a very interesting young group running our IT side of the business. But I think everybody is vulnerable to it. A member of G100, which is this group of 100 CEOs, Minir came and talked to us about basically the experience of finding out they had had intrusion and depot for months months months and kind of how bad it was. I think it was like, I'm not even sure there's that many homes, like 100,000,000 credit cards were breached. So I think that you got to do the best you can and that means you got a team, you have a you have sort of all the protections you can reasonably put in place, a little bit of insurance for interruption. And I think what I'm focusing on now because this is came from the discussion that Meniere offered up to us is the response once you find out you are breached. How quickly can you sort of figure out how bad it is and make it better? And to communicate with investors employees, I worry about personal data of our associates. We're Anthem Blue Cross. We self insure, but they administer our program. They got breached. So like all our shit was like so in spite of the fact that we really take seriously our personal data of people who work for us or who have worked for us. We got briefed anyway because they went in through the healthcare people. And Anthem Blue Cross is a big deal. We do some credit work, credit card work with our service business. And I think that's another area where people's credit card information needs to be protected at an enhanced level. It's one thing if they get into sort of this business plan. It's another thing if they get credit card information from Jim's business or they get all of our Social Security, birth, banking information, where we deposit, how much they get paid. I mean, you can just look at Sony, what happened to them. So I take it seriously, but I think I'm somewhat realistic is that every single person, CEO I've talked to who's been major league famously breached, they were in there for 6 months to 18 months before they even discovered they had a problem. And Moneera's view is the only reason they found out about it was because credit cards were being sold on the black web or whatever the dark web and a blogger who's usually right on this stuff sort of brought his attention while he was on his way to a business performance meeting. So I know the Board is concerned about it. I think they just like to spend a lot of money on it. And I'm trying to manage, because I think you can spend a lot of money and I think people who are really good at this get breached. So I don't know what you think. So one thing I'd add is the Board is very concerned. So every quarter, audit committee meetings, we have updates on cybersecurity. So we're on top of that. I'd also say about a year ago, we had a woman who led this area for the FBI come in as part of an audit committee meeting. She spent time with us as part of our consultants consulting firms to assess where we are and said no big glaring items. You're doing as well as you can. But inevitably, if somebody wants to come and get inside your system, they're going to it. How are you going to react to that? And then the one area that we are the most sensitive about it, like Jim said, is personal information around the lawn service business that we're going to have to work with our new partners on how we manage that together. But for our core consumer business, it's really not as big of an issue. Thanks. If I may, quick follow-up, maybe a little easier question. Now with the company focused on North America, would a possible slowdown in the U. S. Economy as well as consumer spending. Jim, does that keep you up at night? Well, yes. All of us, unless maybe you're like one of the youngsters in the business, has been through the period of kind of for us, which started in 2007, that kind of ran through 2010 or 2011. That's tough. I think global demand was a big problem in that period. People were scared like crazy. And I think it did affect the business. I think we performed well in large part because when people couldn't when Depot and Lowe's and those guys couldn't sell major projects, people were doing paint and lawn and garden were the big categories. So I think we did okay in sort of difficult slower times where these people were trying to sell projects in lawn and garden and paint projects. They were kind of $50 or less projects. Even the young lad here, I have a screensaver that says results count. And he said he came up to me and said, if results count, how come the stock price is so low? I was like, thank you for that. But yes, so I worry about it. I like the American economy and I wish the Republicans could actually feel a reasonable candidate because I think if we had a President who actually gave a shit about business, this country would be a lot better. But no, I mean, I'm not terribly worried about that. I'm really glad we're here in this country. I think this is one where and this gets back to what numbers are we talking to you guys about, our easiest numbers, okay? Mike's numbers are harder. So I think if we look and say we're building plans that produce an acceptable return on sort of 1% to 2% growth, I think we can do that unless something really bad happens. And I think there's probably upside. Does that answer the question? I don't think it does. Back to your J. The other thing I'd add is when we look at our results historically and correlate them to key metrics, the ones that are most correlated are prices at the pump, consumer confidence, which is still pretty robust, disposable income and unemployment is down. So if we look at all those metrics, even though arguably the economy could begin a little bit softer, at least for 2016, even though I'm paranoid, Luke, I would say, when you look at those metrics, we still feel pretty good about it. And I think Christopher has learned a maybe major lesson number 1 now that he's becoming like a real contributor to the P and L, something we do with you guys all the time, under promise and over deliver. So I think that all throughout the business, I think there's a level of under promising going on that is safe. And that's not the way we used to be. I mean, we used to be in large part, it gets back to this question of Europe. Just to sort of under promise, we needed like really good results in North America if Europe wasn't going to produce. So I think this is a sort of time where there's actually less inherent risk in the P and L today, and a need to sort of grow promise than probably we've ever seen. Jim Barrett, CL King and Associates. Randy, this is a question for you. After this flurry of acquisitions, you're planning to refocus on share repurchase. What should be shareholders' longer term expectations in terms of the share count? And secondarily, what should their expectations be in terms of dividend growth? Let me start with dividend. So our plan would be to maintain our annual dividend, which is roughly about a 3% yield, a little bit lower today because the stock price is up. So we'll take that. But I think that's what we'll continue to target, to be the top quartile in our peer set on an annual dividend. If the stock price were to get too high at some point, we want to just recklessly continue to buy back shares. We've done special dividends in the past as recently as it was over a year ago now. So that could be a consideration. When you look at the ultimate number of shares repurchased, we've been brainstorming over the summer. At one point, we thought we might announce today an additional authorization beyond the 500 that's already out there and existing. But since we haven't tapped that yet, we thought that might just be a little bit too silly. So we backed off on that for now. But if you were to fast forward a year from now, we'd certainly be needing to talk to the Board about doing something again. That's our expectation when you go out towards the end of 2017. I think Jim, if you look at it, again it gets back to what we think is fair value. And that kind of changes for us over time. But I think it's something we kind of keep track of what we think the equity should be worth based on our strategic plans. If we thought our equity either reflected or the price exceeded the value of our plan, we would find another way of being shareholder friendly. I think we have limits on the ability to buy back. There's limits on where the Hagadorn's can go that that's the only I think remaining part of the merger agreement that exists today, limits us to below 50%. So I think that going shareholder friendly after we kind of close this book on acquisitions, which our view is we've talked to you about pretty much everything that's out there. So at that point, the expectation is that Mike gets into cash flow mode and we start effectively buying ourselves back. And if that becomes not the right move, we'll dividend stock we'll dividend the value back. Other questions? Yes. You want to wrap up? Look, I feel pretty it's multiple things. I feel pretty privileged to have sort of been able to run this business and lead these folks. I think The Street has been good friends of ours almost the whole time. So I want to say thank you to the investment community and the business and I want to thank them. But our bankers provide us the jet fuel, and the bondholders for operating the business and I want to thank them. I think I started sort of calling out to Olivia and my grandson and it's I'm personally in a really good place right now. I'm happy running the business. I got a great team. I think our plan I mean, legitimate, if I I'm not going to do it. I did it last night when we were practicing here is sort of read some emails from our board members about how they feel about this plan. But it's very positive. I think this is a easy plan for us to attack. I think it definitely makes us a better company. And I think long term, we go right back to being shareholder friendly. And it's not much more complicated than that. And I think our plans have generally been a lot more complicated. This is one where all we have to do now is execute. And I think that Joe goes back or whoever asked question, is there challenges on execution? It's just we got a lot going on, but we have a good team. This is one where I was very complimentary of we call them the biscuit makers of Scotts. We got the gunslingers who run businesses and then we got the biscuit makers who sort of do all the support work. The biscuit makers of Scotts have been doing a fabulous job getting a lot of this stuff done. And so the corporate team has been doing a really nice job of supporting the operating plan. And so how do I feel? I feel really good. Listen, I don't know what people think. I don't know what the stock is doing today. I don't even want to know. But I do think that it's an easy plan. I think my brothers and sisters like it. I don't know. A lot of it depends on how it likes it. Asher might launch us. How do you think? It's okay. Fucked dude. Anything you want to add? No, it's been a great day. Thank you everybody for your time and hopefully you enjoyed it as much as we did. Last but not least. Last but not least. That's you. It's going to be a great year in 2016. So one point of clarification. There's some of us at corporate are referred to or call the corporate people biscuit makers, but not all of us, but as a biscuit maker myself. Here's the plan going forward. Q1 earnings, we will release on February 2. We probably won't have much to say publicly between now and then. We're not at any events or doing any marketing between now and then, but we will afterward. And I think as Randy said earlier, probably going to be a lot of noise in the story over the course of the year. And as we're going through quarter by quarter, we'll make sure that we're updating the models so folks can kind of understand and make sense of what we're doing. Other than that, I want to thank everybody for taking the time to be here today. On your way out, we've got a small token to pass out. And for those of you who registered for the meeting, you heard, I think it was John Sasse talk earlier about our salsa garden. You'll getting in the mail soon a salsa garden of your own, right in time for the Christmas holiday. So thanks for joining us today and Merry Christmas to everybody. Thanks.

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