SMG
#Sure.
So over the last couple of years, we've said we would like to stay in a range of 2 to 2.5 times leverage.
When we spoke at the Analyst Day in Boca Raton a few months ago, we said given the operational soundness of our business and the predictability, we are comfortable going 2 to 3 times on, call it, an everyday basis normal run rate.
We also said depending on the deal, if it's the right strategic fit at the right price, we would be willing to go well above that on a temporary basis, knowing that over time we would want to be back to that 2 to 3 times range.
So from conversations with our banks, we feel like if we need to, there's more money out there at a good price right now.
So that's not a concern.
And we even just have enough capacity given our existing capital structure with our credit facility that we can borrow quite a bit more money without even having to go back to the credit markets or banks.
So that's not necessarily a concern, but again we prefer to be in the 2 to 3 times range over time.
But right deal, right price, right fit, we would go above that and not be concerned in the short-term.
I would just add to that that, again, we just had our board meeting.
We basically played a little bit of chess with the board, showing them various opportunities that we believe are out there, and none of the leverage numbers look particularly scary, that if you said like maybe one turn on top of three on a temporary basis, and a commitment to management to work its way down.
And that's if everything we wanted to happen happened.
So the numbers did not look scary, and it's a management team that has operated with leverage before.
We have a nice consistent cash flow.
So we feel that it's really ---+ the question is how important are the strategic opportunities that are placed in front of us and how did the sort of board and the management team feel about it.
So I don't think that we felt that this was irresponsible.
So just sort of talking ---+ we're talking like an additional turn, that's all.
I don't know.
If you listen to the sellers, it's a zillion people.
Private equity, they're going public.
I would say who knows the truth.
I think that a lot of times we feel like we are the strategic out there.
So I think we are realistic about it, but if you listen to the sellers, it's a super competitive world out there.
I do think ---+ multiples are still like kind of crazy, I think.
But some of these are pretty strategic for us, but whether it's sort of ---+ if you just look at historic deals, Hydro sort of rodenticides, we are paying pretty fair money for the stuff.
So it is not like the stuff is super cheap, and I think that does get back a little bit to the competition is that I don't think they would begin these kind of multiples if there was no competition.
So from a customer point of view, there's really not a mix component.
From a product mix component, we have seen a little bit of a headwind in the quarter.
If you recall back to last year, we ended our fiscal year with higher inventories than we have in the past.
So we've been doing a build of mulch and growing media products this year more aggressively than in the past.
And we shipped that in earlier in March than we would have typically done in the past to avoid any kind of distribution hiccups that we had a year ago.
But that's going really well for us, but it did provide a little bit of a mix headwind for us in the quarter on a year-to-date basis but not remarkably so.
Thank you, Shelley.
One point of clarification.
I apparently misspoke at the beginning of the call.
<UNK> and I will be at the BMO conference on May 21, and we will put a press release out related to that next week.
If there are follow-up questions for anybody, feel free to call me directly today.
I am at 937-578-5622.
Other than that, thanks for joining us today, and have a great day.
Goodbye.
