You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. 
Text: I've already scheduled time with many of you after the call to fill in the gaps.
A quick bit of housekeeping before we start.
Cory and I will be participating in two investor conferences during the week of March 7.
The first is the Raymond James annual institutional investors conference at the Grand Lakes Resort in Orlando.
We'll travel to Boston to present the next day at the UBS annual global consumer and retail conference.
With that, let's move on to today's call.
Investors should familiarize themselves with the full range of risk factors that could impact our results.
Those are filed in our Form 10-K, which is filed with the Securities and Exchange Commission.
I want to remind everyone that today's call is being recorded, and an archived version of the call will be available on our website.
The first quarter may comprise a small percentage of the year, but it doesn't mean things are slow around here.
In fact, there are several important storylines coming out of Q1 that are worth exploring in more detail.
Among them: a continued high level of consumer engagement that led to a second straight year of Q1 profitability in the U.S. Consumer segment, with strong momentum as we ended the calendar year; the announcement of a third pricing action in the consumer business that will take effect in the second half of the year; an increase in our full year sales guidance for the segment; some moderation, finally, in commodity prices; continued restrengthening of our supply chain and has us well positioned to meet the demands for the upcoming season; restructuring efforts in Hawthorne that will make the business even stronger; and plenty of activity, including two more Hawthorne acquisitions in what is the most robust M&A pipeline we've had in 25 years.
Yes, there's a lot to cover.
Before I jump into the details, I want to share a story that helps us put context around the strategy I outlined on our last call and its potential to drive value for our shareholders.
As most of you know, my brothers and sisters and I own roughly 25% of the company.
As part of our recent meeting with our advisors, we discussed the financial return on the family's investment since the merger of Scotts and Miracle-Gro in 1994.
Just like other long-term shareholders, we've done well.
The most important part of the discussion, however, was centered around the simple question, why?
Why have we done so well?
And that's the part of the story that matters to all shareholders.
One of the benefits, I believe, from strong family ownership in a public company is that we take a long-term view, and we're not afraid to think like an activist and recognize the need to reimagine the company from time to time.
This is one of those times.
On our last call, I said we're pursuing five pillars of growth that could double the size of Scotts Miracle-Gro through both organic and acquired growth over the next five years.
I also said we would explore the possibility of dividing the company into two pieces.
Obviously, those things won't happen overnight.
But the progress we've made already this fiscal year demonstrates just how seriously we're focused on this journey and how bold we're willing to be.
So let's jump in.
I usually leave the numbers to Cory, but I want to start by touching on the P&L.
If you're only looking at the year-over-year comparisons, I'd say you're looking at things the wrong way.
Look at it with a historical context.
While it remains the smallest quarter of the year, Q1 has become increasingly important on a full year basis.
We've moved more shipments into the quarter to better serve our retailers, a change that has improved the performance of the business significantly.
You'll miss that fact if you just compare the year-over-year results.
For example, Q1 volume is down from last year, but up 107% over fiscal '20 and significantly higher when compared to the average in the four years before COVID.
This feels like a base we can grow from.
The year-over-year gross margin rate is down 2%, but the segment's margin is up more than 1,300 basis points compared to the average of the four years prior to COVID.
And that's true in the face of sharply higher commodities.
The same story holds with segment income, which was a positive number for only the second time in our history.
On average, the bottom line result was $50 million better than in each of the four years prior to COVID.
And as we look ahead, there's good reason to believe that the first quarter of U.S. Consumer segment on an EBITDA basis could remain profitable going forward.
If we look at consumer activity, it's another good story.
In Q1, POS, as measured by consumer purchases at our largest retailers, was up 3% in units.
It was up 9% in dollars.
Both numbers were against a plus-40 comp a year ago.
Normally, I caution against reading too much into our Q1 POS, and that caution still applies.
What's different this time, however, is the December quarter marks a continuation of a trend dating back to spring of last year that shows a level of consumer engagement that consistently has outpaced our expectations.
The COVID impact on POS continues to complicate the pure year-over-year comparison.
But if you look at POS units over the past four quarters, we're up 22% compared to two years ago.
More importantly, that two-year comparison has grown stronger with time, suggesting that the COVID benefit may be more permanent than we first expected, which would result in a much higher base from which to grow.
I'm not going to predict whether POS for the March quarter will be positive because we continue to have difficult comps.
But our most recent consumer sentiment data, which we received just last week, tells us consumers continue to see gardening as important to their lifestyles.
It also tells us they plan for their spending levels to be consistent with last year, an important fact given the overall amount of inflation in the economy.
And while we continue to expect a modest decline in overall participation levels, more than two-thirds of consumers who do plan to participate in gardening this year said they expect to buy more plants and have bigger gardens.
Everything we're seeing and everything our retail partners are sharing with us is cementing our optimism as we move closer to the peak of the season.
We've increased our sales guidance for the U.S. consumer business to a range of minus 2 to plus 2% on a full year basis, an increase of 200 basis points from our previous range.
This increase does not require us to change our view of the balance of the year.
We're able to increase the range for two reasons.
First, the Q1 result was better than expected and should be a permanent benefit for the year.
Also, we have communicated to our retail partners another price increase for the second half that will impact our full year results by 1%.
The difficult decision to take a third price increase in a single year, while unprecedented for Scotts Miracle-Gro, was necessary in the face of continued cost increases that created a bigger headwind than we expected.
The additional point of pricing, which takes effect in Q3, will get us back in line with our goal to offset commodity increases that have been a challenge for the past year.
Fortunately, we've been seeing a few key commodity inputs peak over the past month, and it's beginning to feel like the worst may be behind us.
Like others, we're still seeing higher distribution costs, but I'll leave it to Cory to discuss that in more detail.
The additional round of pricing is not merely rooted in protecting our margins.
It's about supporting our retailers and protecting our competitive advantages.
Over the years, we've built a market-leading position and driven strong returns for our retail partners by investing strongly behind innovation as well as sales and marketing support.
These competitive advantages drove both consumer engagement before and during the COVID crisis.
We didn't outperform our competitors during COVID due to dumb luck.
We won because consumers trusted our brands to deliver the results they are seeking.
We won because our marketing team created relevant messages that resonated with those consumers and drove them to the stores.
And we won because retailers knew they could count on our sales force to help manage their lawn and garden departments during the height of the crisis.
Given the current challenges in the labor market, our in-store sales force is more important than ever in supporting our retailers, and we need to protect that investment.
That's also true of our supply chain, which has been able to meet retailer demand when others could not.
I said in the last call, we don't like this level of pricing, and I don't.
But the actions we've taken allow us to protect those competitive advantages and strengthen our relationship with consumers and retails even further.
Speaking of relationships, I want to provide an update on the performance of Bonnie Plants and our strategy for live goods.
There is good news on both fronts.
First, Bonnie POS is in line with our core legacy brands, and we're expecting another strong season in the edible gardening space.
Over the past few months, there have been significant improvements to the Bonnie supply chain, both in the way of process improvement and a new influx of talent.
We're also seeing continued integration of our sales and marketing efforts.
This should result in better in-store experience for consumers and more cross-selling opportunities for our core brands, especially Miracle-Gro.
As you know, we see live goods as an important gateway to the relationship with consumers.
Our relationship with Bonnie has already improved the category, and we believe there's more we can do to enhance the range of choices available to consumers.
Together with the Bonnie team as well as our partner, Alabama Farmers Coop, we have been actively exploring additional M&A opportunities that could significantly strengthen our live goods portfolio and bring a higher level of consumer-driven innovation and retailer support to the industry.
While it's too early to share any details, we're excited by the prospects, and we'll be sharing more with you as these discussions play out.
From nearly every angle, I'm extremely bullish about the potential in the core lawn and garden business right now.
And I'm equally optimistic about the steps we're taking to further strengthen our franchise and transform what it means to be an industry leader.
We knew before COVID hit, demographic trends were starting to work in our favor.
We saw that millennials were becoming interested in this space and in our brands.
But once their lives became centered around their homes, they turned to gardening in numbers we never expected.
A decade ago, this group was barely evident in our results.
Today, they're driving our results.
Our job is to keep them engaged to have them see gardening as relevant to their lives and to see our brands as critical to their success.
Throughout the entire business, we're taking the right steps and making the right investments to ensure this happens.
So yes, I'm optimistic as we prepare for the season.
That's true not just for fiscal '22 but in the years to come.
And I know Mike Lukemire and his entire team see it the same way.
Let's shift to Hawthorne.
I'll start with the obvious.
It's clear this year is going to be a challenge, and we'll see a decline in sales.
I'll let Cory cover the numbers, but we already laid out much of what needs to be said in our announcement on January 4.
While the current market reality is frustrating, we're not discouraged.
We continue to believe in this space and its long-term potential.
And over the past several months, there's been a lot of activity occurring that is designed to make the business even stronger when the market returns to growth.
As many of you know, Hawthorne experienced a tough downturn in 2018.
And it was on one of these calls that I publicly criticized the team for being paralyzed by the stress of the moment and said they needed to step up.
You're not going to hear that this time.
The learnings from 2018 have helped us tremendously, and the way the team is managing this situation couldn't be more different.
First, the team saw the market decline coming as far back as June, and that allowed us to prepare.
Second, they knew they couldn't change the reality of the situation, so there was not a panicked effort to chase sales that weren't there.
Third and most importantly, they put on their activist hat and said, "How can we use this downturn to make our business better"?
I have no doubt their answers to that question will, in fact, make Hawthorne better.
So I'm going to pause for a few moments and ask Chris to give you an update.
Let me start by taking a quick moment to update you on current industry trends.
It's beginning to feel like we've seen the bottom of the market.
We haven't bounced off the bottom yet, but daily sales trends have been consistent for about a month, and that makes it a bit easier to navigate.
Also, we're beginning to see some slightly better results in consumable categories, like nutrients and growing media, which is also an encouraging sign.
You guys know the nature of the industry's challenge right now, so I don't need to elaborate.
As I said in our January 4 announcement, we expect to see growth again in the second half of the year, but I'm not going to speculate on exactly when that will happen or to what extent.
What I can tell you is that our business will be significantly stronger once the downturn ends.
We've made key acquisitions, have taken steps to restructure our manufacturing footprint and realigned the management team based on the future needs of the business.
You probably saw our announcement last month about the acquisition of Luxx Lighting and True Liberty Bags, but let me give you some more context.
There is no doubt that Gavita is the premier lighting brand in the indoor cultivation space.
It has been a home run for Hawthorne and is critical to our long-term success.
And Sun System, the private label brand we acquired from Sunlight Supply, is a solid opening price point fixture.
Lighting is the most important category in our industry.
It's a category where we made a commitment to innovation and to being a leader.
For growers, lighting is where they spend the most money, and it's the category that has the biggest impact on their crop.
The right lighting strategy creates a relationship with those growers that opens the door for us to sell a full portfolio of solutions.
Over the last two years, our R&D and supply chain teams have helped drive our success in the critical area of LED lighting.
We created the best products in the market, which has helped accelerate the industry's move to LEDs and strengthened our market share.
Even though that's true, we still knew that we needed more than we had.
We looked at all the available options in the market and decided that Luxx was the brand with the greatest potential.
Luxx is unique because it was designed by cannabis growers and is widely used by commercial cultivators who know its history and trust its performance.
The current market conditions made the economics of the Luxx acquisition extremely attractive, especially when you consider the synergies it allows us to capture.
The Luxx deal makes this the perfect time to begin to consolidate our lighting manufacturing to a single location.
We announced last week that we will move our current lighting production, mostly HPS lights, from Vancouver, Washington to Southern California.
We'll move other LED assembly we've been doing it there too.
This move will significantly reduce our inbound and outbound distribution costs, better leverage our labor force and take advantage of one of the best manufacturing plants in the SMG network.
Those savings will allow us to take substantial costs out of each fixture and significantly improve our already market-leading position, especially in the critical LED market.
As part of this restructuring effort, we're also closing the manufacturing facility for HydroLogic, which we acquired last year.
We are moving that work to our Santa Rosa facility, which is the original home of General Hydroponics.
And we're consolidating distribution on the East Coast to a facility we recently built in New Jersey to meet the expected demand from new markets in the years to come.
The other acquisition we announced, True Liberty Bags, is a much smaller deal but speaks to our strategy of putting the grower at the center of everything we do.
True Liberty's products are used in the post-harvest process to freeze, store, and transport large harvest quantities.
The products are designed to prevent cross-contamination and preserve the quality of the plant.
It is a niche category but a critical one.
True Liberty is the clear leader in the space and a brand that commercial cultivators trust.
The acquisitions in the last six months of Luxx, True Liberty, HydroLogic, and Rhizoflora don't just add the P&L.
These brands make Hawthorne more critical to cultivators who continue to see us as far more than just a distributor.
They see us as a trusted provider that understands the nuances of their business and one that continues to invest to bring them better product solutions and generate higher returns.
The other changes that we've made is a realignment of the team to focus on the needs of the business once the market returns.
The restructuring has resulted in the elimination of roughly 200 positions.
While the business decision was easy, it's never a good day when you have to part with valued members of the team.
We did everything we could to provide them a soft landing, and I sincerely wish them well moving forward.
We also made some changes in Hawthorne management.
Tom Crabtree joined the team a few months ago to lead our sales effort.
Tom has a great background.
He started off in the SMG supply chain and then moved to sales, including a stint in which he transformed the Home Depot sales team.
And more than anything else, Tom is a great leader.
He knows how to build teams, how to motivate them and how to design programs that drive results.
As we look to the future, it was clear to me that Tom was the right person to be the chief operator of Hawthorne, and he was recently promoted into that role.
As you can see, while sales have slowed for the time being, we haven't.
Every one of these changes makes our business stronger and will help further distance Hawhorne from our competitors.
I'll be around for Q&A.
But for now, let me turn things back over to Jim.
You'll remember that the fifth pillar of our growth strategy is to explore opportunities in the emerging areas of the cannabis industry that are more consumer-facing.
While SMG can invest directly in that space right now, we can build optionality that we can capitalize on later.
The creation of the Hawthorne Collective and the convertible loan we made to RIV Capital are part of that strategy.
But recall that we do have three feet on their board, which is very active in setting the strategy and vision for what comes next.
It is through that lens that I can tell you to expect some important developments over the next quarter.
As a result, we may choose to infuse more cash into RIV over the balance of the year that would increase our ownership stake if we converted the loan to equity.
But we would still maintain a noncontrolling and non-ownership interest, and the magnitude of any additional cash would not approach the initial investment we made last year.
On the topic of Hawthorne and the Hawthorne Collective, I want to make one more comment.
I know the discussion we had in the call last year regarding a possible split of the company got a lot of attention.
Jim King has told me he had literally dozens of conversations about this issue with current or potential shareholders.
I want to reiterate that we've made no firm decision about whether to proceed down this path, and it will take a while before we do.
Since our last call, however, we've established an internal team to study this issue and help explore the right courses of action.
There are arguments to be made for splitting and equally compelling arguments to be made to continue operating as one company.
We don't feel any pressure to lean one direction or the other, but we'll rely on the facts and analysis to guide our decision-making.
Before I wrap up and turn things over to Cory, I want to close with this thought, and it brings me back to the meeting with my family.
Our business is sitting in a pretty good place right now, and it would be easy to sit back and just harvest the fruits of our labor over the next few years.
But the opportunities in front of us are simply too obvious and to consequential to ignore.
If we're successful in executing our strategy, this will be a much bigger and more profitable business that will drive meaningful value for our shareholders.
I'm not going to tell you we won't have challenges along the way.
The degree of difficulty associated with some of our efforts is high, but any path worth pursuing can be slippery at times.
I'm confident those who choose to travel with us in the years ahead will be glad they did.
We have a lot of exciting pieces coming together in the months and quarters ahead, and I look forward to tracking our progress with you along the way.
For now, I'm going to turn things over to Cory to cover the first quarter financials.
But there are a few key themes I want to cover, specifically about the adjustments we've made to our guidance, the current trends with cost of goods and how we're thinking about capital allocation as we look ahead.
On the P&L, there were no real surprises on the top line.
Total company sales were down 24%, against a 105% comp a year ago.
U.S. consumer sales were down 16% on a 147% comparison.
And Hawthorne was down 38%, against 71% growth a year ago.
In U.S. consumer, we saw good POS, as Jim already mentioned.
And retailers finished the quarter with inventory in line with where they were a year ago.
That was the best-case scenario for us.
They remain committed to the category through the fall season and kept appropriate levels of inventory in their stores as we approach the slowest weeks of the year.
That leaves them well positioned as we pivot into our key selling season, and the shipments we saw through January leave us optimistic.
The midpoint of our increase in our sales guidance for the segment assumes an eight-point decline in volume for the full year, offset entirely by pricing.
The trends through four months suggest this might be a conservative estimate.
But as Jim said, were less than 10% of the way through the year, and it's way too early to predict what will happen in the spring.
The sales decline was due primarily to the slowness of the broader cannabis market.
The supply chain challenges we've mentioned previously are difficult to precisely quantify, but we believe they caused around 5% of the downward pressure in the quarter.
Those challenges, primarily in the LED lighting space, have been remedied and we are back in stock with the components we need to once again be manufacturing and shipping LED lights, which remain in strong demand.
Let's move on to gross margins because this is an area that's important to understand.
As you know, Q1 results often fall prey to the law of small numbers, and that's exactly what happened with gross margin.
The adjusted rate was down 570 basis points in the quarter driven by the year-over-year decline in volume and its impact on manufacturing, distribution, and other fixed costs.
Commodity prices were also a headwind in the quarter but offset by a 400 basis point improvement from pricing actions.
Jim mentioned the importance of looking at the gross margin rate in historical context, and I totally agree.
The result in the quarter was more than 600 basis points better than in fiscal '20 and more than 850 basis points better than fiscal '19.
Over the past several years, we have effectively moved business into Q1 to ensure retailers are properly set for the season, which should keep us at a level of profitability that is higher going forward.
As I look at the balance of the year, we are maintaining our gross margin rate guidance for a decline of 100 to 150 basis points.
Right now, I'd expect us to be at the lower or worse end of that range.
Margins for the balance of the year should be relatively flat but could vary a bit each quarter, positively or negatively, based primarily on timing and mix.
In total, we are 70% locked on commodities for the year, which is slightly behind normal.
We would normally have all of our costs locked right now on pallets, but we're only at 30% because vendors are not currently entering into long-term contracts due to the volatility of lumber prices.
On everything else, we're actually in good shape, including urea, where we're nearly 80% locked for the year.
The better news is that we're starting to see some relief.
Resin has been retreating for a couple of months now.
Urea has begun to do the same.
No one has been accurately predicting input costs for the last year, so I want to be cautious.
Still, I'm increasingly optimistic that the pricing moves we've taken should offset these commodity headwinds on a full year basis.
SG&A was down 2% after a sharp increase last year.
Recall that our guidance calls for SG&A to decline up to 6% for the year, and it's an area we're keeping an eye on as we move closer to the season.
The only other issue on the P&L that merits your attention is the $7 million loss on the equity income line, which is related to our 50% ownership in Bonnie.
Remember, we did not have that ownership stake a year ago, and Q1 is a seasonal loss quarter for Bonnie.
As Jim said, the business has had a solid start for the year, and we're optimistic about the upcoming season.
On the bottom line, our seasonal loss on a GAAP basis was $0.90 a share, compared with income of $0.43 last year.
Adjusted earnings, which excludes restructuring, impairment, and nonrecurring charges, was a loss of $0.88, compared with earnings a year ago of $0.39.
You might recall that fiscal '21 marked the first time in company history that we reported a first quarter profit.
Chris mentioned in his remarks the realignment we've made at Hawthorne.
We expect those actions to result in a restructuring charge of up to $5 million in the second quarter.
That charge will be excluded from our full year guidance.
Let me briefly touch on the balance sheet, specifically focusing on inventories, which are up about $590 million from last year.
First, recall that inventory levels were lower than we had wanted a year ago as we were shipping product nearly as fast as we could build it in both major segments.
Second, recall that we consciously built an inventory cushion last year to ensure we are able to keep our retailers at the appropriate levels throughout the season.
And finally, about 25% of this increase is due to the higher input costs we've been experiencing over the past year.
We remain comfortable with inventory at this level and continue to see it as a competitive advantage.
We expect to see some competitors continue to struggle to meet demand this year, which we believe will work to our advantage.
Finally, I want to focus on capital allocation.
We are still planning for capex to be approximately $200 million for the year as we continue to improve our supply chain and invest in our e-commerce infrastructure.
Remember, we had been investing based on the assumption that our U.S. consumer segment would grow at a point or two per year.
Since fiscal 2019, it's up around 40%, and we've pushed our capacity to its limit.
So these investments are necessary.
Jim commented several times about the M&A opportunities in front of us.
So let me provide some context.
We are currently budgeting slightly more than $200 million for future transactions over the balance of the year.
The opportunities that remain on the table, if executed, should be immediately accretive to earnings and go a long way in advancing our strategy.
In terms of returning cash to shareholders, we repurchased $125 million of our shares in Q1 and have a 10b5-1 in place for another $50 million in our Q2.
We currently do not have a 10b5-1 in place for the second half of the year and would expect that any share repurchase activity during that period would occur in the open market.
Additionally, we have no current plans for a special dividend this year.
Given our current outlook for the business and our expected outlay of capital, we could slightly exceed our leverage target of three and a half times by the end of the fiscal year.
We were at 3.3 times at the end of Q1.
If we exceed our three and a half times target, we expect to get back below that level within a quarter or two, and we will still be well within our current debt covenants.
We know we have some near-term challenges in Hawthorne, but we are focusing on the demand that we can't control.
What we're focusing on is what we can control, and that is what we look like when the growth does return.
I'm convinced we'll be better positioned than ever with a better margin profile and competitive advantages that have been strengthened over the past several months.
consumer, I share Jim's optimism.
There's no need to make further adjustments in our guidance right now, but the trends are certainly tilting in our favor for the upcoming season and beyond.
And finally, on a personal note, I've recently completed my first full year in this role.
My engagement with all of you was a new experience for me, and it's given me a better appreciation of the issues on the minds of our shareholders.
Through this new lens, I'm working closely with my colleagues to ensure we're acting as proper stewards of our capital and focusing on driving value for all of you.
And while I've also grown to appreciate the importance of this quarterly discussion with all of you, it's also reinforced my view that we can't run the business on a quarter-to-quarter basis.
Value is driven over the long term, and I'm convinced that the steps we're taking to strengthen the business will do exactly that.

user
scottsmiracle-gro increases full-year sales outlook for u.s. consumer segment.
q1 sales fell 24 percent to $566 million.
q1 non-gaap loss per share $0.88 excluding items.
q1 gaap loss per share $0.90 from continuing operations.
to consolidate u.s. lighting manufacturing for hawthorne into single location and to close another recently acquired assembly facility.
compname says restructuring charge of up to $5 million expected to be recorded in q2, will be excluded from co's fy adjusted results.

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