This is The Scotts Miracle-Gro Company's third quarter conference call. Today's call is being recorded. Mr. King, you may now begin.

Good morning, everyone, and welcome to the Scotts Miracle-Gro third quarter earnings conference call. With me this morning are Jim Hagedorn, our Chairman and CEO; Randy Coleman, our CFO; Mike Lukemire, our President and Chief Operating Officer; as well as Chris Hagedorn, who is General Manager of Hawthorne Gardening Company. I'm sure you've already seen this morning our press release that includes the details of our record third quarter results, updated guidance for fiscal 2020 and the announcement of additional plans to return cash to shareholders. In just a few moments, Jim will share some prepared remarks, providing more color on these issues as well as others. Afterward, Randy will drill a little deeper into the numbers and set the table for communicating our year-end results in November, which is also when we will provide guidance for fiscal 2021. After Randy's remarks, we'll open the call for your questions, and both Mike and Chris will also participate in that session. Given the amount of content being covered today, we ask that you help us manage through the time by asking only 1 question and 1 follow-up. If we don't get to everyone in the queue or if you have additional questions we don't cover, please call me directly at (937) 578-5622, and I'm glad to give you as much time as needed. Obviously, our comments this morning are going to contain forward-looking statements, so I'm compelled to remind everyone that our actual results could differ materially from what we discussed. A discussion of the risk factors that could impact future results are provided in the press release this morning as well as within our 10-K, which, of course, is filed with the SEC. I want to remind everyone that this morning's call is being recorded. An archived version of the call will begin available on our Investor Relations website. With that, let me clear the stage and turn things over to Jim Hagedorn. Jim?

Thanks, Jim, and good morning, everyone. In the late 1990s, we created a commercial that was used for our sponsorship of the American Experience on PBS. The ad copy read as follows: at the Scotts Company, we make grass greener, trees taller and flowers more beautiful. If there's a better business to be in, please let us know. As all of us here reflect in what we've seen over the past several months, the question posed in that PBS spot feels more relevant than ever. What our category does for people's emotional and physical well-being has never been more evident than it has been in 2020. How our brands and products enhance the lives of consumers has never been more important, and our ability to thrive during times of macroeconomic distress in delivering for all of our stakeholders has never been more obvious. This is a great business to be in, and all of us are grateful to be a part of it. The record results we announced this morning are both exciting and humbling. On a full year basis, we now expect to exceed even our most optimistic expectations. The unprecedented success we're seeing continues in both the U.S. Consumer segment and in Hawthorne. We're now in positive territory with every product category in both businesses and momentum we've enjoyed does not seem to be slowing down as we enter the final 2 months of our fiscal year. I want to start by thanking our consumers and cultivators for their support of our brands. I want to thank our retail partners for their support of our category and our business. And most of all, I want to thank the associates of The Scotts Miracle-Gro Company who delivered these results. Our success this year has required a level of dedication,…

Thanks, Jim, and hello, everyone. It's obvious from our announcement today that our Q3 results greatly exceeded what we expected when we updated our guidance about 7 weeks ago. Our momentum throughout June surpassed anything we've historically seen with continuing even as we speak. So I want to start by joining Jim in thanking our consumers and retail partners, but mostly our associates for helping us navigate the COVID crisis so effectively in delivering outstanding results. This morning, I'd like to spend most of my time providing some core commentary on the P&L. I won't go through all the numbers. I know most of you have already done that. I also want to pick up on Jim's commentary about 2021. I'll reiterate that we're not providing guidance today, but I'll also stress that we're confident in our ability to drive earnings even higher next year. So let's get started. On the top line, the most important story to understand is what's happening with U.S. Consumer. In June, we raised our guidance and projected 9% to 11% growth for the full year. But even as we were making those comments, the landscape was evolving differently than we expected. If I show you 20 years of consumer POS data, we see a consistent pattern of consumer behavior. In any given year, the timing of the season and impacts from weather could affect the flow of the POS curve to some degree within a season, but is very consistent after the middle of June. So that's what we expected. Instead, we saw an extension of the season that went well beyond our expectations and also continued with dramatic year-over-year growth throughout the rest of June. Given the consumer momentum in the market, we continue to push the category with more media and in-store…

Steven, let's go ahead and start the Q&A.

[Operator Instructions] And we will take our first question from Mr. Jon Andersen with William Blair.

One of the dynamics that play out this year is -- that you referred to in the prepared comments is a less promotion, and that's been driven by, I think, a couple of things, most notably COVID-19 and some of the restraints that, that put on the home centers. So I guess my question there is, has that benefited -- has that benefit largely accrued to the retailers? Or has it also accrued to Scotts with less promotion frequency and depth? And how do you think this plays out in 2021, 2022? Do we go back to a more promotional intense environment in line with kind of what we -- pre-COVID? Or have there really been some learnings around consumer engagement that can be applied here to maybe moderate the level of promotional activity in the category?

I think I'll start and then hand it over to Randy. Jon, here's what I think. Number one, most of the benefit, I think, accrue to the retailers. I think we got some benefit, but a lot of that, because there was no voice sort of to the industry/category, we upped our spending and pretty much just did kind of what we want. And in some ways, it was good because we didn't have to ask a lot of permission. We just kind of ran for the industry. And I think that worked for us, and we learned a lot from it. I don't think the retailer has probably pocketed a lot of that because their operating expenses were up significantly. So they kind of had to work their labor and cleanliness and stuff in the stores. So I don't think the retailers would be kind of beating their chest that they pocketed a lot of it. But I think as we look at sort of the margin at the retail level on our products, we thought it was -- we think it's a lot higher at the retailer side, a lot, again, I'll repeat, I think they spent most of that. We've talked about that -- my -- at least my view, and I think it's kind of our view here is that Black Friday, we were getting kind of more and more down on these Black Friday events, largely because if we looked at these early season, which are real tied to weather, what we saw is a real high miss rate of sort of cold and bad weather and at least 50% of everybody's promotional numbers is going into these Black Friday events. And our views with -- I'm going to say, call it, like a 20%…

Yes, yes, yes. I would say about 10% overall home center lost.

And so I think they're going to want to get that back. And I think that the people who gained it, which would be wholesale clubs, hardware, general merchandise. I mean, there's a lot of people. Clients are split out online and you have direct-to-consumer. I think there's going to be a lot of pressure for them to maintain that share. Farm and fleet was another area that like did really well this year. And so what do I think? I think it sets up a pretty competitive environment for the beginning of next season. And so I don't think we're going to be able to talk people out of that because I think you're going to have people who made big gains, want to defend them. And I think you're going to have people who lost. And remember, lawn and garden is a major category in a season for us, the most important category, most important nonlumber category in home centers during our season. And so I think there's going to be a big fight -- and listen, depending on what happens with COVID, you could see that in the fall. I think you're going to see Halloween being kind of a weird season this year. And so I think that opens up fall opportunities for us to promote, which were -- I think, are beyond discussions. I think there's actually planning occurring with our significant accounts on making fall bigger season than it would normally be. And so what do I think? Back to your question. I think there's going to be a difference next year. I think most of the benefit did end up with the retailers. I think it's going to be more competitive, and I think you're going to see a more year-round business than you've seen before. I don't know, Randy?

No, Jon, there's nothing I could add to that. So I think Jim cashed it all. You have a follow-up you wanted to ask?

Yes. I do. A quick follow-up. And maybe for you, Randy. So I know -- thank you for the commentary on 2021. I know it's earlier than usual, but appreciate that. I guess what I heard is, you'd be happy with kind of flat top line, I think, in U.S. Consumer is what you're referring to. And yet, you see an opportunity to grow earnings. And so let's assume kind of flat top line in U.S. Consumer plays out and there's some growth in Hawthorne, but in aggregate, modest top line growth given the tough comp. Can you walk through, maybe just at a high level, some of the key puts and takes there? Like what are -- I think you mentioned $60 million to $70 million of perhaps swing in variable comp, then there's this kind of onetime bonus to employees. I don't know if that's incremental for that. But just step us through the benefits that could get you to solid earnings growth despite maybe less top line than normal?

Look, just before Randy jumps into that, and he'll do that, I just want to talk about really the top line a little bit. Part of my job as we go through budget and which has been challenging, both the in-season here and as we look at next year is what would be kind of a victory. And so I think as we looked at this, especially early on. And we've got, I think, a lot more granular now than we did, like, call it, even a month ago, is would we be happy if we could comp this year, hold our gross margins and then pick up the SG&A tailwinds. And I think Randy and I sort of set the expectations to the operating community that we thought that would be a good result. And I think that's what we communicated today. And Randy can sort of take you through details of that, at least the sort of SG&A tailwinds and what we think. I do want to talk a little bit about just the top line just because I think it's important. I think anybody who -- Mike is pretty self-critical about our ability to execute in season when demand was just going kind of bananas. I'm much more forgiving of that. And my wife and I have done a lot of gardening this year. And so we've been in quite a few garden centers buying stuff, and there were a lot of empty shelves. I think Chris' demand on Hawthorne was also, I wouldn't say excessive, but it was a lot higher than we had forecast and that business is a lot younger and we just implemented SAP. So I think you could easily sort of tag maybe $100 million of money we left on the table…

I completely agree with everything Jim said, Jon. I'd say, we obviously have a much more line of sight to what Q1 is going to look like and through this [ play ] momentum going into the fall. I think you get beyond that point, and you have to make assumptions and do scenario analysis around what's going on in the world and what's that going to mean. And we're doing that. But we're trying to put bets on what scenario is going to be the right one, I think it's way too early to get there. But to your question does next year look like from the bottom line? It's pretty clear if we take our incentive plans back to more of a target or normalized level, plus some of the SG&A that we've expedited from Q1 into Q4 and trying to get ahead and build a better business for next year and year after that, trying to quantify that -- as to dollar share of EPS of -- that's gross margins are flat on flat sales growth, which believe me, we'll be pushing for much higher numbers than that. But as a starting point you just have each scenario to work against, that's the way we're thinking about it. And when we're trying to keep things in balance between sales growth, and we're going to be a $4 billion company this year. And last year, slightly over $3 billion. So we're beating ourselves up a bit on service, but trying to keep up with that. If you go backwards 4 months ago, we were counting our pennies and just trying to be careful and make sure we'd be able to navigate through this year. So again, I give everybody a big pat on the back. But you unwind a lot of that SG&A that we're putting in our P&L here in 2020 and roll that into 2021, our operating margin rates will be significantly higher, and we'll see a lot of accretion across the company and Hawthorne too, which I know is a big focus for everybody. But we're trying to keep things in balance. We're trying to think about this year, but also next year and the year after and the year after that. And I really like the way that we're running the business right now in order to prepare for that. So hopefully, that answers your question, Jon, and I'm really bullish on where we're going right now.

[Operator Instructions] We will take our next question from Mr. William Reuter with Bank of America.

I just have one. I know it's a little early for line reviews for next year, but I would imagine your categories have been some of the most productive for your big retail customers. Have you heard from them that they plan on dramatically altering or increasing the shelf space allocated to your categories?

This is Mike Lukemire. Yes, we're in the midst of line reviews, and we're seeing retailers want to lean in more with us on that space. But we really don't finalize that until really December as they finish out their years. But the indication is they're definitely leaning into fall. So we are seeing expanded space there. And we're seeing a willingness with our retailers to lean in and do more and build off of what we've accomplished this year.

And the other thing I'd add -- this is Randy. Again, when you think about the way we go to business and we talk about e-commerce being up 200% or even higher on that when you look at buy online and pick up in store, and looking forward, I'd expect that to continue to be a key way the consumer shop. And I believe we're at a real advantage in that area just because of national advertising, national scope of brand across stores, regardless of -- if you're in Washington, state of Florida or Maine, California, we have it covered. So I think there should be more focus by us and the retailers and just trying to focus on key core SKUs that consumers want to show up and buy. And I think we're at a big advantage in order to do that. And that business has grown faster than any other channel or any other component that we look at.

Yes. I'd like to just throw a little bit into sort of that because that -- I think what Randy says an important point. It's not just us that are looking at kind of inventory levels, it's us paying the retailers. And again, Mike's hard on himself, but this year was very much kind of business combat and I think when you do that stuff, you break stuff. And so we had kind of what I'd call a good war, but we definitely broke some stuff. And that's going to help us be better, but it's us and the retailers. And I think this idea of kind of our core SKUs and make sure that we have the inventory and the retailers do as well so that we don't have the stocks and empty shelves. So I think you're likely to see kind of a rebuilding both of our inventory and retail inventory on certain of our high-volume SKUs for next year.

Yes. And we're seeing that playing out big time, but some of the southern markets will need to have 80% of the POS in early. So I mean, there's just good momentum right now. On being ready and taking advantage of that and occupying their shelves.

We will take our next question from Mr. Joe Altobello with Raymond James.

Congratulations. First question on U.S. Consumer. And can you touch a bit on this with respect to edible gardening and with respect to kind of gardening and just sort of speak to 2021 and beyond. But I'm curious if you think COVID, if it is permanently currently changing the way consumers think about your categories or is this more of a temporary phenomenon, which, if it's the latter, it would make even slack sales aggressive for next year?

I'll use profanity, s***, I have not -- what do I think? See, I guess I disagree. And when I disagree with is the fact that the consumers are seeing it differently. I think that what we see is that how people feel about the category, which is -- I think people's attraction to gardening, clearly people being stuck at home has been helpful to us. But I think people have really gone to things that make them happy. And I think they've, to some extent, rediscovered the value. I mean, hardly anybody, I don't know, that doesn't have a garden. And I know Carli and I, we're up at our place in Vermont. We have a pretty big garden. We intend to expand it next year. And I'm not sure there's not a lot of people getting a lot of satisfaction, often that aren't getting a lot of satisfaction from gardening. And I think we expect that to continue. The focus of our communications efforts is weird, I'm not really calling it advertising efforts. I don't know, Randy would know the number, Joe, about like what over the last 3 or 4 years, it was really -- I got to say, Randy, who came to me like 3 years ago. And I think I told you guys this that said, we're a branded consumer company. And why is our like marketing dollars continuing to go down and our promotional dollars continuing to go up? And so I don't know, Randy, what are we spending over the last 3 years. Last year, we were up 30% or so. This year, another 20%. And then this year, even beyond the dollars, the fact that media is on sale right now. Pricings are well above that 20% they're probably 35% again. So…

The only thing I'd say, we could have taken the easy way out and just turn up our hands and said, we'll figure it out later. We'll tell you when we know. But SEC was very encouraging back at onset of COVID saying we should be providing more transparency about forward-looking numbers. We've tried to do that, but we do have a culture of trying to be conservative and make sure that we hit the targets. I think we clearly way too low back in June when we spoke at the William Blair Conference. We've taken another shot and saying, if we just keep the same run rate we saw in July and that runs out the rest of the year, retail inventory stay about where they are, the Hawthorne forecast, maybe a little upside, but looks pretty good. We do all that, that should be in the range that we talked about. Having said that, it's very unpredictable right now. And there could still be upside to that. And Jim's saying, [indiscernible] take it easy on yourself, but I think we all expect better from ourselves around here, and we've given it the best shot we can right now.

We will take our next question from Mr. Bill Chappell with SunTrust.

And congratulations on an exceptional quarter. Two quick questions. I guess maybe not quick the way we've been going. The first is on kind of the outlook for Hawthorne next year. I mean I understand your early stages of planning. But I mean, do you have any real visibility to kind of how these come down the pipe for individual states in terms of like they utilize medicinal and then sales go here and then they go recreationally get here. I mean, after doing this for a couple of years, just trying to understand if you have any visibility, especially as you talk about potential tough comparisons in the second half of next year?

We're all kind of looking at each other, say who answers that one. And I don't know. Chris, do you want to start on that and then hand it to Randy.

Yes, sure. And I'll be relatively brief, hey Bill, it's Chris. The way that we've sort of tracked this over those past few years, as you mentioned, starting to get a pretty good handle, we think, on sort of the time lines from this thing is legalized in one fashion or another, whether it's a [ vote ] or stat senate bill, whatever. There's usually about a 12-month lag time from when a law gets passed till we start seeing actual cannabis being sold. And typically, it's about a year lag time, even for our business to really see a bump from that. And then, typically, there's a year or 2 of the state getting comfortable with recreation before they -- or, excuse me, with medical before they make a move for recreational. So typically, the way that we look at these another states legislated a bit differently, but we figured there's about a year from passage of law till we start seeing a real bump in our business in that geography and another year or 2 after that before the state starts to reach any level of what we consider maturity, hope that answers your question.

So a couple of things that I would add is, given the nature of the way the industry is set up is there's not really capacity within retailers to be loading inventory. So we have a lot better direct line of sight since we purchased Sunlight Supply a couple of years ago now. So we have good line of sight to what's going on with retailers. And they really just don't have the capacity load. Another area we look at a lot is wholesale and retail pricing in the marketplace, and it's fairly stable. It's up a lot from a couple of years ago. So that seems to be in good shape right now even though the results are high. And then when you think about demand, I think it's -- like Chris said this on our last earnings call, people are staying home and gardening or people staying home and doing other things. So I think demand is high and it's understandable why, whether that will sustain. My bet is it will, but I think we're in a good place and the approach we're outlining right now and more to come in November is if we just stay at the same run rate through the first 6 months of the year, we'll be in healthy double-digit growth next year. Similar approach to what we took this year coming off of 2019 because we can't look at 6 months at a time. But I think that's a very healthy place to be.

Great. I appreciate it. And then second, just -- and I'm sorry if I missed this, but on just your media spend for 2020, were you able to spend what you wanted to? And as you look to next year, do you still need to be at the levels that you've historically been? I just assume such advertising around early season baseball games or NCAA March Madness or stuff like that, I mean, it doesn't necessarily make sense to do it in the fall, but I'm just trying to understand what the total spend kind of looks like this year versus the pending next year?

Right. So when -- back in the March time period and even April, we were really careful and tried to preserve some of that money. And once things started looking a lot better in early May, we really -- there were a lot of fuel on the fire, again, we did that in June. We're still continuing to do that. Our fall program will be higher than it's ever been. I don't know if there's any expectation we're going to go backwards next year, difficult to predict what will be going on with media rates next year. Hard to believe that they'll go down again. But again, you never know. But I'd expect us to continue investing in the brand as our business grows, and I don't see that changing at all.

I mean we will definitely be spending more money next year on with our marketing group. And we do like sports. That's been challenging and Major League Baseball for one has been very flexible. And our view is no games, no money. But they -- baseball has been good to work with, and we continue to like March Madness. So I think if you look at our media people, they continue to like sports. And we're doing a ton in -- on the social side as well, but sports and news are -- will continue to be important for us.

We will take our next question from Ms. Carla Casella with JPMorgan.

My questions related to M&A. You mentioned that you were still looking at opportunities. I'm wondering if you're seeing more from smaller or weaker competitors through COVID. And also, in the event you do find an opportunity, what's your comfort level? What's ticking leverage up above your target range for the right opportunity?

I mean I will start with a latter part. I don't think that's actually necessary. I have actually been pushing Hawthorne to kind of think bigger and where they've ended up is kind of close in adjacencies, which are smaller deals. And I wouldn't put them in the -- so just on the Hawthorne side, I would say our opportunities are not what people who are struggling. I think the whole industry is actually doing pretty well. But it's people who are, I think, open-minded to being with us and monetizing all or some of their investment. So -- but I think that the business has tried to push back to me to say, there's areas within Hawthorne that are clearly opportunities that the owners are willing to monetize that would fit in really well with our kind of pillars or business, which is the places that we operate. And so I think they've pushed back to say, we don't need to do big giant deals, I am pushing Randy and Chris. You know, Randy, the strategy group reports then to Randy to look at kind of game-changing opportunity, which are not part of our plans at the moment. That basically say, if we believe that this country is moving toward sort of national legalization and that because of sort of tax code and problems with banking that these businesses are struggling to some extent unnaturally. What -- if we believe that it's going to be legal, what do we want to -- do we want to step in early? Those are in very early stages, and I'm not predicting we're looking at game-changing opportunities there. But I do want the company taking a look and saying, is there a possibility to go big here? And what does that mean…

And Carla, I'd point out back in 2018 when we purchased Sunlight Supply, our leverage did go in size about 4.5x. And we took a lot of actions to pay that down as quickly as possible. So really comfortable with where we're at. 3.5x is still a very reasonable place to be. And even after this dividend, we won't be even close to 3.5x. So we would do it again if we had the right deal, but we don't have the right deal. But I'd also say Sunlight was clearly the right deal. So at the time, the industry was in all kind of flux. If you compare to where we are now versus 3 years ago, the #3 competitor dropped out of the industry. When you look at us compared to our largest competitor now is #2, our sales are 3 to 4x bigger, our profitability is 5 or 6x higher. So this has been a terrific success. And looking ahead to next year. We still have a lot of momentum and we can do a whole lot better. So more to come on that.

Steve, I'm going to jump in here. If we can just take 2 more questions, and then we'll wrap things up there would be great.

We will take our next question from Alex Maroccia with Berenberg.

I'm trying to get a better sense of sustainability of the [ gain ] seen in U.S. Consumer. The public landscaping wholesalers also saw some decent growth this quarter, which implies non-DIY spending didn't change much year-over-year despite the pandemic so based on that, do you have any visibility into how many of your end customers are servicing their own properties to some degree in addition to using a professional?

So we would have had a lot more insight, Alex, back when we were partners with TruGreen. Now that we no longer have that relationship, we don't have nearly as much insight. I can tell you back then when we were able to compare and contrast. When we look at sales by geography. So Florida was having a great year for Scotts. TruGreen was as well, for example. So at this point, I can't really speak to that. But...

I think most of it's Consumer gain, if not pro.

If you look at, let's say, our home center channels and say, how much of that was being -- going on the back of a pickup truck with [indiscernible] who is the landscaper. I think you would see much more gain on the Consumer side.

Yes. I agree with that. I mean, people didn't really want people on their property. And so they're very sensitive about that. They wanted to do it for themselves. So I think we're seeing that.

That's helpful. And then just a follow-up. Can you explain how you laid the special dividend decision versus internal growth opportunities or other capital allocation options?

Yes. I mean - Chappell lauded us for like talking too long, I guess. So we sort of said to ourselves what this people used to ask, like, how did you decide how to do it. I think we looked at the equity and saying we believe it's pretty fairly valued. So I think that pushed us toward a cash special dividend. But I think we just kind of made a choice said that seems like the appropriate thing. We've, over the years, talked to a lot of people who generally have said -- and I'm talking investors that I really respect. And where you talk to them and they say, my only problem with your share repurchase stuff is you guys buy like crazy when you're feeling good and your equity is high. And then when the business is not good and your equity blows, you would like to put the brakes on. And you just give me the cash and I will decide because I have more kind of [ cahonies ] when it comes to buying when things aren't great than you do. And so I think because there's nobody really felt strongly about it either way. We just made the decision to go with a special and we feel good about that. And remember, we had a call with my family yesterday and they asked about what are the kind of future plans. And I just want to say the same thing to the Street, which I told them, which is we're in the mode of after reconfiguring our businesses, which is TruGreen, Scotts LawnService out, Europe out, Hawthorne in, live goods in, that we would then pay down debt and go back to being shareholder friendly. And so this is not a onetime deal of returning cash to shareholders. We just decided that with the equity price the way it was, we thought it was a better move to -- for you to just do us a special. But we intend to continue to return cash to shareholders, the question is how -- and we'll just look at it every time we have that opportunity, but we plan to continue this.

Alex, what I'd add is our free cash flow is coming in better than we expected just a couple of months ago. So a $400 million of, say, plus for this year, and we were in a situation where we were going to have cash on our balance sheet starting into July, August, September. So originally, we were contemplating doing something in the fall, we just thought why wait, let's do it now other than sit on cash, and we don't really want to pay down any kind of debt capacity. So that has a lot to do with it. And if you do look at our share repurchases over the last, let's call, the last 5 years, I'm going to give you rough numbers, but we repurchased about $800 million, and the average share price was around $90. So something in that range. So we will be doing share repurchases again. We're not going to wait for $90, though I'll tell you that.

And the last part of it is that as Randy and I talked about preferences of investment in the business versus shareholder friendly. I think Randy has taken a point of view, which I'm completely in agreement with, which is we actually can do both. We can't be accessible in either area, but we can do both. And I think that's what you're seeing right now is Hawthorne is not requesting more money than we're prepared to hand over. And the Consumer business is not requesting more money than we're handing over. So we're meeting the needs of the business to invest, and we're also upping the shareholder-friendly side. So I think we feel like we're pretty well in balance right now.

And we will take our final question of the day from Eric Bosshard with Cleveland Research.

A question and a follow-up, if I could. The -- having 8 million new consumers engaged in the category is a tremendous accomplishment, achievement, however, you want to view how '20 has played out. But something I know that Jim, you've been focused on for years of getting more people engaged in the category. My question is, as you think about '21 -- in '20, they engaged, I would assume, in part because I didn't have anything else to do. In '21, if there are more alternatives for how people spend their time, I'm curious for what you're doing or what the sort of buckets of focus are to say, don't forget about your lawn and garden in '21 when you can do other things. Where is the focus to sort of keep them engaged?

Massive. Massive. It is our major focus is retention of that customer pool going into '21. I think that I don't want to jump on this COVID bandwagon in ways that are kind of inappropriate. I lost a kid, I know how that feels. We lost an associate here just a couple of weeks ago, only 34 with no underlying health conditions. It sucks. But I think that my view, based on sort of America's kind of shaky response to this, that I think the fall could be squarely and I think people coming on. So I look at saying, I'm not sure the behavior of next spring is going to be a ton different than it is -- it has been this year. And I think that in some weird unfortunately way benefits us, Eric. As we look -- so we are doing tremendous amount of work and the work we're doing with the [ intermedia ], and we've reconfigured our marketing teams and our sort of advertising efforts. And that's broad when I say advertising, it's more communications. They have like unlimited ability to really do what it takes to keep those consumers. And then I know the retailers want to do the same thing. And our online and direct businesses also continues to sort of do well. I think what drives us is that '22 is going to be the interesting year. That's kind of where we're getting to is that I think everybody is hopeful that this is behind us in the '22 season. But I think the '21 season is kind of setting up okay for us. But the major focus is going to be on retention of those customers. And they really don't have a budget to do that. I think we -- the…

Eric, I'd add, we know who the consumers are, and we're targeting them directly. And we're not being cheap, so we're spending lots of dough to get after it. But even beyond the social media, we recently developed a new TV spot that we're in for the first time and the first baseball game that was played last week pretty quickly after the game started in. It runs for a while. But if you watch that, and if that doesn't look an a emotional response from people, people pulled harder because it really goes to what we're trying to do, which is more focused on lifestyle and people with their family in the yards, and I thought it was terrific.

We're seeing more people [ lean ] in, in the fall and gardening. They're looking for the second harvest. Their AeroGarden is tremendously up. We see that momentum of a 365. And then a lot of people are moving out of the cities into the suburbs, which is a huge opportunity for lawn and garden. So I think those trends, we got to capitalize on it. That's where how good we are at that will be the determining factor.

Okay. And then just a follow-up. You sounded optimistic about price next year. I'm curious if there's any challenge to that in a year where it sounds like your home centers lost share this year, and they're going to want to drive traffic. Can you sort of square those 2 points that your price can go up and it sounds like their price is going to go down? And I understand maybe the opposite happened this year. But curious how you think about that?

What do I think? We want pricing. And -- but it's a fight this year to be transparent. And I think for pretty reasonable -- there are retailers out there. Some of the biggest retailers in the world who would say, dude, all kinds of unemployment, you guys are making money like crazy, your numbers are stupid good. Really, you want pricing? But we've got a lot to do to drive comp numbers. And so do they. So we also view it as -- to some extent, unbalanced because of the real lack of promotion, the effect it's had not really on our margins, but on their margins, that I don't think -- because if you look at the consumer price, the consumer price is probably up 10%. I don't know, something like that this year. And we don't think it's crazy to look for 100, 200 basis points of pricing. But there's definitely resistance out there. We will achieve our pricing, but it's, I think, requiring, Mike and I to make visits personally to sort of explain what we're trying to do and the challenge of comping this year, which, again, doesn't -- I don't want anybody to think. I don't think it can be done. But I do think that it is a tall order. And I think we know what to do. And that means that we're going to continue to invest in the business to be a better vendor to have satisfaction rates that are higher and to invest the money in our brands, which is really -- I'll just repeat something that Randy sort of grabbed me at the end of a budget session like 3 years ago and said, dude, why are we putting so much money in promotion and so much less money into our marketing efforts, and that doesn't seem to me to go to the strength of our brands. And so I think Randy was right, and we're trying to convince retailers that this is right, too. It's not an environment where they are just like completely the open minded to us demanding pricing, even though I think we really helped the industry this year. Mike, anything you want to add on that?

No, I think it's -- each one is a discussion and battle to try to get to the right spot for...

But we were being successful, Eric, in getting the pricing. It's just -- it's requiring us to talk personally to top it up.

And Steven, we're going to wrap up at this point. I know there are several people who are in the queue that we didn't get to. So feel free to reach out to me directly, (937) 578-5622. Otherwise, our next planned public communication is tentatively scheduled for November 4, when we'll be sharing our full year results and a more detailed outlook for 2021. Thanks for joining us. Have a great day, everybody.

This concludes today's call. Thank you for your participation. You may now disconnect.