Steven Zenker - Vice President of Investor Relations & Communications John R. Ranelli - Chief Executive Officer, President, Director and President of The Pet Segment Lori A. Varlas - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Secretary

Joseph Altobello - Oppenheimer & Co. Inc., Research Division Sarah Miller - SunTrust Robinson Humphrey, Inc., Research Division Frank A. Camma - Sidoti & Company, LLC Karru Martinson - Deutsche Bank AG, Research Division William M. Reuter - BofA Merrill Lynch, Research Division Carla Casella - JP Morgan Chase & Co, Research Division R. Gregg Hillman Hale Holden

Ladies and gentlemen, thank you for standing by. Welcome to Central Garden & Pet's Second Quarter 2014 Financial Results Conference Call. My name is George, and I will be your conference operator today. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Steven Zenker, Vice President of Investor Relations and Communications. Please go ahead.

Thank you, George. Good afternoon, everyone. Thank you for joining us. With me on the call today are John Ranelli, Central's President and Chief Executive Officer; and Lori Varlas, Central's Chief Financial Officer. Our press release providing results for our second quarter ending March 29, 2014, is available on our website at www.central.com. Before I turn the call over to John, I'd like to remind you that statements made during this conference call, which are not historical facts, including expectations for inventory reduction, new product introductions, cost reductions and improved profitability, are forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from those implied by forward-looking statements. These risks and others are described in Central's Securities and Exchange Commission filings, including our Annual Report on Form 10-K filed December 12, 2013, and our quarterly report on Form 10-Q to be filed on or about May 8, 2014. Central undertakes no obligation to publicly update these forward-looking statements to reflect new information, subsequent events or otherwise. Now I will turn the call over to John Ranelli. John? John R. Ranelli: Thank you, Steve. Good afternoon, everyone. On prior calls, I have talked with you about our priorities and a balanced approach to our business which we are implementing across the company. I have also said that it will be another year or more before we can reasonably expect to see the steps we were taking show up in a meaningful way on our bottom line and that our near-term results would be bumpy. Critical to our efforts of improving our business is putting in place a strong foundation on which to operate. We are working hard to improve our business systems, processes, procedures and the product pipeline necessary to help us generate sustained revenue and profitable growth in the future. This quarter, we saw our 2 businesses with different industry dynamics produce different outcomes, indicative of the bumpy results I mentioned earlier. With regard to Pet, sales declined from the prior year as we expected. They continue to be impacted by shelf space lost in 2013. Aside from Dog & Cat food and litter, which are not major categories for us, the marketplace has seen weaker consumer takeaway. Also, retailers have been cautious in managing their inventories in light of reduced customer traffic. Nonetheless, we continue to be positive about the Pet business. We believe the improvements we are making in fill rates and in customer service will, over time, translate into increased shelf space and turn. We expect that new products, which we will bring to market in future years, will result in stronger consumer demand and improved profitability. With regard to Garden, sales increased significantly this quarter as a result of key retailers buying product earlier than last year. This pattern was driven by pre-season forecast that predicted an early start to the season with favorable weather for the month of March. The weather turned out to be much colder than forecasted, especially in the midwest and east. This in turn led to lower consumer takeaway for Garden Products in general. So while our initial selling was strong, inventories on retailers' shelves at the end of the second quarter were high as the industry waited for the season to break. The cooler trends have continued. This, along with the heavy early sell-in, will likely adversely affect third quarter results. Of course, it is still early -- too early to know how the second half of the garden season will play out. While we are only in mid-season, the AMDRO and Pennington sprayer products we introduced for spring of 2013 are still selling less than expected. Working closely with our retail partners, we are executing aggressive pricing and promotion strategies to enhance consumer trial and takeaway. By the end of the garden season, we should have a good read on the success of these efforts. In summary, and looking at Central as a whole, as I said earlier, we expect that our results are going to be choppy. However, we are making progress. We have made changes to our management team, improved our fill rates and customer service, implemented cost reductions and most recently, completed a small acquisition. In addition, we have lowered the inventory levels, decreased our debt and improved our cash flow. These actions demonstrate our commitment to addressing near-term issues, while at the same time improving our company for the longer term. Now let me turn it over to Lori. Lori A. Varlas: Thanks, John. We issued our press release earlier today outlining the second quarter financial results. I'd like to spend some time giving some color around what drove our results. Let's begin with a brief overview of our consolidated results and then talk about our segment results. On a consolidated basis, sales for the quarter were up slightly versus a year ago. The strength in Garden sales more than offset a decline in Pet sales. Our consolidated gross margin was 29.4%, a decline of 130 basis points from the second quarter of 2013. The decline was due to a decrease in our Garden segment's gross margin, and the Pet segment's gross margin was relatively flat for last year. SG&A expense as a percentage of sales improved to 20.5% from 21.4% in the prior year, principally due to lower marketing expenses. We remain committed to investing and supporting our products and our brand. Over the last several years, we've increased our marketing expense to support our brands and introduce certain new products. In 2014, we expect our spending to remain elevated over historical levels but not the same amount as the last couple of years. We are evaluating our marketing spend and taking actions to ensure our market investments are effective and deliver the proper return. Our second quarter operating income was $44.8 million, a decline of $2 million compared to last year. Our consolidated operating margin was 8.9%, a 50 basis point decline reflecting the lower gross margin, partially offset by lower SG&A expenses. Let's move on to the segment results, starting with Garden. In the second quarter, Garden segment revenues increased 8%. Our key retailers were aggressive in upfront purchases this year based on expectations of an early spring. Grass seeds saw the largest increase, benefiting from gains in distribution in addition to the early and sizable load in. Wild bird feed also saw increased distribution and benefited from an extended winter. The gains in grass seed and wild bird feed were partially offset by a decrease in control product sales. The decrease in controls was primarily due to initial sell-in of new product line last year, which didn't reoccur this year. With respect to the new products we introduced in 2013, we are moving towards the change we've put in place last fall. To date, sales at retail are below our expectations. And as John mentioned, we're implementing aggressive pricing and promotion campaigns to improve consumer takeaway and increase retailer replenishment. By the end of the season, we should have a better sense of the success of these efforts and our ability to recoup our substantial investment. Overall, when Garden revenues are compared to last year, the significant increase in purchases made by retailers in the second quarter appeared to have resulted from a shift in sales from April into the second quarter. While this movement increased sales for our second quarter, it will likely result in Garden sales for our third quarter following the low levels achieved in the third quarter of 2013. The Garden segment increased its operating income by $2.8 million. Garden's operating margin was in line with the prior year. A decline in gross margin for our grass seed, fertilizer and control products was offset by lower SG&A expenses both in dollars and as a percentage of sales. In the prior year, Garden SG&A included marketing and promotional costs associated with the launch of the new products that did not reoccur. Our early sell-in was strong, remains to be seen how consumers takeaway and the resulting replenishment plays out for the rest of the season. Moving to the Pet segment. Sales declined 8% on lower revenues in several of our Pet businesses. Our Dog & Cat and flea and tick businesses saw the largest decreases. Lost shelf space for products in these businesses was a contributing factor, including our decision to not renew some low-margin private label business. Additionally, in our flea and tick business, we began the launch of key products in 2 of our brands with new and improved product formulation. This transition adversely impacted our sales for the quarter. Partially offsetting some of the weakness in certain of our Pet categories were higher sales in our wild bird feed and third-party distribution businesses. The operating margin in our Pet segment declined 50 basis points to 11.2%. The gross margin was flat with the second quarter of 2013. While Pet SG&A expenses declined in dollars, the SG&A expenses as a percentage of sales increased, primarily due to increased marketing investment for our flea and tick business. This adversely impacted our overall Pet operating margin. Moving back to our consolidated results. In the second quarter, net interest expense decreased $500,000 to $10.4 million. This improvement reflects lower volumes from the prior year and the lower interest rate savings from our move to an ABL last quarter. Our second quarter tax rate was 37.7% compared to 35.8% in the second quarter of 2013. This reflects lower tax credits available in the current year. Our second quarter net income was $20.9 million or $0.43 a share compared to net income of $22.2 million or $0.46 a share in the second quarter of 2013. Moving on to our cash flow and our balance sheet. Our cash flow used by operations was $90 million, an improvement of $44 million compared to the second quarter of 2013. This improvement is primarily attributable to lower inventory balances resulting from our focused efforts to reduce our investment in working capital over time. Inventories of $403 million were $33 million lower than a year ago. While we made progress on reducing our inventory balances, we believe our inventory remains too high and further opportunities remain. CapEx for the quarter was $4.6 million versus $8.1 million last year. Depreciation and amortization for the quarter was $9.2 million, up from $8.3 million last year. Our cash and short-term investment balance was $31 million, relatively unchanged from the second quarter of 2013. We reduced our net debt by $50 million even after taking into account funds used for our recent acquisition. At the end of the second quarter, we had borrowings of $95 million on our ABL credit facility, leaving $295 million available. Keep in mind that seasonally, our borrowing needs peak during our second quarter as we build inventory for the spring garden season. Our borrowings then decrease significantly as we approach fiscal year end and we collect on our trade receivables and then use those dollars to pay down our revolver. So to quickly recap, early retailer preparations for the garden season drove strong sell-in of our Garden Products during the second quarter. We are mid-season, much will depend on how the back half of the season unfolds. Consumer takeaway will be an important factor as we measure how both segments perform for the remainder of the year. We continue to focus on improving our balance sheet and making the necessary improvements to drive profitability and shareholder value over the long term. Thank you for joining us this afternoon. We'd be happy to take your questions. George, could you please open the line?

[Operator Instructions] Our first question is from the line of Joe Altobello with Oppenheimer. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: A couple of questions here. I guess first on Garden, we heard from Scotts last night. They said the same thing that you had a strong sell-in in March and the POS just basically did not keep pace. So is there a way to quantify, I mean, how much you effectively over-shipped in the March quarter that got unwound at retail inventory in April? Lori A. Varlas: So I think there's a couple of things going on. You mentioned both our sell-in as well as POS. From a sell-in perspective, if you look at our second quarter, the increase in sales, we think, was largely due to if the April sales moving into the second quarter. It's really hard to tell. I think as you're aware, if you look at our Garden season, it spans the second quarter and the third quarter, and it never quite marries up year-to-year. So to quantify that, I think, is pretty difficult until we see the season as a whole. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: Okay. But you do think that June quarter sales in Garden will be down year-over-year given that shift? Lori A. Varlas: In April, we think the April shift to the second quarter likely to have an impact in the overall quarter. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: Okay. And in terms of innovation, you mentioned that you're looking for a lot of new products in '15 and beyond, particularly on the Pet side to really jump-start growth there. Could you help us understand what you're doing differently on the R&D side and on the innovation side that's going to give us a little bit of confidence that there is something in the pipeline to look forward to? John R. Ranelli: Sure, Joe. In the past, or the most recent past, we had centralized our R&D function. Most recently, we put individual business unit managers in place running each and every one of our businesses. And as you know, the R&D that goes into our different businesses has a different science to it and a different customer to them. The people that we have put in are experienced in product development and experienced in their particular business. So what we did is we decentralized the product development process under each of the individual businesses and put in place under them specific product development people who are experts in that particular business, i.e., aquatics versus small animal, et cetera. On top of that, we have established as one of our criteria is what I'd call our three-pronged strategy going forward called product, product and product. And we meet every Monday and we look at the status of the new product, which ones are being developed, where they are in the cycle and continue to evaluate what we believe their success might be. So we are very comfortable with the new people in place and the processes and the procedures in place to develop and deliver the R&D product. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: Okay. So on the decentralization, I guess, 2 things strike me. One, is there still cross-collaboration going on between the businesses that could help in the R&D side, on the innovation side? And then two, is there a risk that leads to cost inefficiencies when you have each business unit effectively running their own R&D department? John R. Ranelli: I think on your first question, the answer is no, and that's why we have our meeting every Monday to cross fertilize ideas. And I think from my perspective, right now we have not increased the cost, but it is such a critical aspect of our business. Going forward, if we believe that we need to increase the cost to get the product -- proper development of product given our strategy in giving the need that we have to increase our shelf space and to keep our customers and our consumers happy, that is one of the areas that I would be comfortable in spending additional money. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: Okay. Great. And just one last one if I could, the gross margin on the Garden side was down year-over-year despite the fact that sales and revenue percent -- I would've thought you'd gotten a little more sales leverage from that. But it sounds like it was mixed with grass seed and bird feed up and controls down. Is that fair to say? Lori A. Varlas: Yes, Joe, you're right. Mix absolutely impacted from the Garden side. If you think about last year, we had the strong sell-in of the new products, which had high margins and some control. And then we also had a decline in grass seed margin based on higher input cost. So -- and then a couple other factors weighing into that would be the mix around our private label impact our margins, and that the offsetting piece of that was distribution. While it grew in sales, it also was a contributor in lower margins. So those [ph] sales increase, we have third-party sales of products that have lower margins, and so that was also a factor. So those combination of factors, with the largest being overall mix in the fertilizer and control product impact our margins for Garden.

And our next question comes from the line of Bill Chappell with SunTrust. Sarah Miller - SunTrust Robinson Humphrey, Inc., Research Division: This is Sarah Miller on for Bill. We just had a couple of questions. First being, can you guys talk a little bit more about some of the retail distribution losses that you've had? I know that you said that some of those were planned, but it seems like some of the other ones were a surprise. If we could get any more color around that. Lori A. Varlas: Yes, sure. So from -- our Pet sales down year-over-year. If you look at the category in general, the POS in that area is down. If you exclude an area, which is primarily the Dog & Cat food category which is growing, the other categories [ph] have seen some decline. And certainly, we're following that, exasperating that in addition to the industry trends aside from food, which we're not a big player in. We did lose some shelf space in certain categories. We've talked about that on previous calls, and then we also walked away some marginal, unprofitable business. So we were willing to sacrifice the sales to improve profitability, and we continue to look for opportunities in that area. So I think that the third or fourth item on the Pet sales declined. Regarding our flea and tick, we did launch some new formulations in the quarter. And so while we did that transition, it had an overall impact on our sales hopefully to, obviously, benefit future quarters. But in the quarter, that transition... Sarah Miller - SunTrust Robinson Humphrey, Inc., Research Division: Just taking the returns? Lori A. Varlas: Yes, we had to swap out product on the shelf, that's right. So there's a few product launches that are in flight[ph] that span quarters and impacted the sales for the quarter. Sarah Miller - SunTrust Robinson Humphrey, Inc., Research Division: Okay. And is there any way that you can quantify for us what some of the -- what the shelf space loss impact and in addition to the walking away from some of the unprofitable business what is on an annual run rate basis? Lori A. Varlas: We haven't quantified those specifically. We have talked about a few of the instances in aquatics, but we haven't quantified those specifically. John R. Ranelli: And really specific going after our strategy going forward, this is exactly the reason that we've implemented our balanced strategy and are so focused on our product, product and product program is to introduce new products to the marketplace and to provide better customer service and get our fill rates up, which is specifically addressed to the issue that you're referring to. Sarah Miller - SunTrust Robinson Humphrey, Inc., Research Division: Okay. Perfect. And then our last question, last night on the Scotts call, they talked about how they sold their bird feed business. And would this be a business -- I'm guessing, if that business would be up for bid now, is that a business that you would want? If you won that business, would it change the market dynamics? Can you just kind of talk about your views on that? John R. Ranelli: That business is already been sold, and I'm sure the new competitor that we have will be just as good as Scotts and we have no problems competing with them. We're very confident in our past success in competing with Scotts, and we're very happy in competing with the new competitor as well.

And our next question comes from the line of Frank Camma with Sidoti & Company. Frank A. Camma - Sidoti & Company, LLC: Just a couple quick questions. Obviously, you don't give guidance, but you gave us some good flavor on the Garden sales at least for the next quarter here and directionally. And I was wondering if you could do kind of the same for Pet. Pet, you're coming up against, arguably, an easy comp if you look at what you were down last year. I mean, can you comment on that? Lori A. Varlas: Sure. And you're right, we don't give specific guidance. But just to give you a little color. From an industry perspective, we don't see any near-term catalysts that would change the whole category. We think there's just the weaker trends, and we're certainly impacted by those trends, as far as foot traffic in the stores. We continue to face some challenges in that area. Our goal obviously is to reclaim that shelf space that we've lost and expand on that. We're working hard in that area. But from an overall trend in the industry, I don't see any near-term catalysts significantly change that in the near term. Frank A. Camma - Sidoti & Company, LLC: Okay. Can you just remind me, was some of that shelf space lost last year, or was it all beginning of this year? Lori A. Varlas: We talked about some of this in 2013. Frank A. Camma - Sidoti & Company, LLC: Okay. That's what I thought. Okay. And my other question is just mostly for John with kind of the cost controls that you've put in place. I guess you're starting to see at least some on SG&A. But it sounded like that was -- a lot of that was largely marketing related. I was just wondering, is that sustainable? Or can you just comment on that? John R. Ranelli: Sure. If you look at our marketing spend, it's actually up in the Pet business and it's down in the Garden business. What we're doing is we are specifically looking at how we would like to allocate our marketing dollars to the brands that we would like to build that have the highest economics of leverage. And so we're pleased with the changes that we're making. We're looking at every dollar that we're spending with a new set of eyes and the new team -- management team that we put in place and evaluating the programs that we currently have and how we can get the most bang for our buck for each of the most consumers that we got -- can possibly can and to get the most turn that we can. So we're going through an evaluation period with regard to our marketing expenses going forward.

And our next question is from the line of Karru Martinson with Deutsche Bank. Karru Martinson - Deutsche Bank AG, Research Division: Kind of taking a step back just on Pets for the broader market. It's been an area that's been resilient through kind of good times and the bad. And so I wanted to get [indiscernible] sense of what do you feel is driving the weaker consumer takeaway for Pet as a category as a whole? John R. Ranelli: Well, I think there has been a significant growth in the Dog & Cat food area as well as the litter area as the adoption of pets has increased over the past year or so. I think there's a significant amount of humanization of pets that has caused, especially the food category, to grow. But there's also been some dynamics, economic dynamics and social dynamics that have caused the non-Dog & Cat food area to decline. Unfortunately, we're -- have been more -- I should say our portfolio was more weighted towards the non-Dog & Cat food area, and that's why you'll see some of the challenges that we have in the Pet area. Karru Martinson - Deutsche Bank AG, Research Division: And when you guys look forward in that new product development cycle for 2015, I mean, is there an opportunity for you to move more towards the companion animal mix, or it's kind of the mix that we have? John R. Ranelli: Obviously, there is opportunities when you're going out into '15 and '16, and the dates that we're really talking about is going to be sell-in in '15. As you know, it takes a year, 1.5 years to get products out into the marketplace, and you really won't see them until the '16 set because we'll be selling them in, in '15. With regard to which specific areas we're going to be emphasizing, I believe from a competitive standpoint, it would be unwise for us to indicate in which areas that we're going after in the marketplace. Karru Martinson - Deutsche Bank AG, Research Division: All right. And then just lastly, I mean, when you look at the uptick in marketing spend especially for the flea and tick side, but not necessarily seeing the return on that investment, I mean, how quickly can you kind of reallocate those dollars? Or would you think of reallocating those dollars perhaps more towards price to help clear that inventory? Lori A. Varlas: Right. So -- and John will probably answer in combination. From the market investment in the quarter, again, relates to the launch of some new innovations in the flea and tick area, new formulation. The flea and tick is a very attractive category. It has good margins. Anything with an active ingredient. Typically, there's a little bit higher margin, and it's an area that's important to the company. And so we definitely want to invest in those products and those brands going forward. Again, you've got to switch over in the given quarter, but we're obviously making those investments for the future. John R. Ranelli: And most specifically, we got caught in sort of a timing aspect because what we did is we reduced the inventory at retail by not selling in during the month of March. And that what happened was that the new inventory that's going on the shelves is going out in April and May. Lori A. Varlas: Related to the new product. John R. Ranelli: Related to the new formulations.

And our next question is from the line of William Reuter with Bank of America Merrill Lynch. William M. Reuter - BofA Merrill Lynch, Research Division: With regard to some of the products that you rolled out last summer that you guys were hopeful that this summer you would be getting stronger takeaway from, do you guys ever have agreements where you have to repurchase product from your customers, and could that be a risk? Lori A. Varlas: As we look at inventories, particularly obviously selling with the then consumer in mind, it depends what category in our portfolio would it apply to. So it would be speculative at this point how that would play out. William M. Reuter - BofA Merrill Lynch, Research Division: Okay. So at this point, you're not worried about that, or you haven't really been thinking about it too much? Lori A. Varlas: Well, again, I think if you dial back at the end of 2013, we took a significant write-off with inventory and then products and packaging changes we made to improve consumer takeaway. Today, as we mentioned, it's selling below expectations. It is early in the season, and we still have much of the season ahead of us. And so it's just a little too early to call. We're certainly mindful. And as John described, we're putting together some aggressive pricing promotions to increase takeaway. It's just too early to call it. William M. Reuter - BofA Merrill Lynch, Research Division: Okay. And then I guess with regard to some of these promotions, is this going to be in the kind of more marketing spending around some of these products? Or is this going to be kind of more point-of-sale stuff that could negatively impact the margins in those? How should we think about that? John R. Ranelli: We would see it mostly in the pricing that we have out into the marketplace and we'll be introducing into the marketplace and in promotions. William M. Reuter - BofA Merrill Lynch, Research Division: Okay. And then just one last one for me, housekeeping item. Your stock-based compensation in the quarter, do you know what that number is? Lori A. Varlas: We'll get back to you on that one.

And our next question is from the line of Carla Casella with JPMorgan. Carla Casella - JP Morgan Chase & Co, Research Division: Did you say which retailers you had lost the distribution in? Lori A. Varlas: We didn't call that out, no, not specifically. Carla Casella - JP Morgan Chase & Co, Research Division: Okay. Is it a specific type of retailer that you think -- where that you think you could be additional attrition? Lori A. Varlas: Well, for instance, there's one retailer who, on the Pet side, got out of the pet business. So they're not purchasing products from vendors in the pet space anymore. So it varies. There's different dynamics going on. Carla Casella - JP Morgan Chase & Co, Research Division: Okay. And is there any -- or any of them just -- they just lost RFPs to a competitor? John R. Ranelli: Some space was and some space was gained. It's really hard to outline any of the specifics. But yes, some of it was lost to a competitor. Carla Casella - JP Morgan Chase & Co, Research Division: Okay. Great. And then -- go ahead, sorry. Lori A. Varlas: Sorry. In answer to your early question, the noncash comp in the quarter was $2.8 million. Carla Casella - JP Morgan Chase & Co, Research Division: And then I had a question on your view of the cap structure in terms of the bonds being callable. What is your thoughts there? Are you considering a refi at this point? Or are you waiting for a year to see if the results of your initiatives improve -- materialize? Lori A. Varlas: Yes, so if you look at our capitalization, we have both an ABL, which we put in place last quarter. We think that will help us save significantly on some interest expense. And then we have the bonds. When we refinanced those a couple of years ago, it got a more favorable term. As we look at how the company is capitalized, I think we really -- you have to step back and look at our prioritization of cash and what we do with our cash. The first is obviously to invest those dollars in growing our company, our brands, our portfolio internally to improve profitability. The second is around M&A. We're always in the market looking for something that would be accretive at the right price to add to our portfolio. And the third is stock buyback. Certainly, looking at the bonds, that certainly is something that wouldn't be off the table. We look at our capitalization structure all the time, but we haven't talked about specific buyback of bonds. It's just something that we consider as part of our overall capitalization.

[Operator Instructions] Our next question is from the line of Gregg Hillman with First Wilshire Securities Management. R. Gregg Hillman: Maybe you can talk about the flea and tick area? Is FRONTLINE Plus gaining market share right now, or is it losing market share, or for that particular active ingredient that goes into it? John R. Ranelli: Basically, from what we can tell, there's been no major change with regard to FRONTLINE in the marketplace. R. Gregg Hillman: Okay. And I think you have a license agreement with -- I think it's Mitsui [ph] for the active ingredient etofenprox I think it is. And when does that expire, that license agreement? And... John R. Ranelli: I believe that's already expired. R. Gregg Hillman: Okay. And do you have -- is it off patent? Or I mean, or do you have a license? Do you still get it from them? Or is that an issue? John R. Ranelli: Hold on, excuse me? It is continuing. R. Gregg Hillman: And so it was like renewed? You have another extension? Lori A. Varlas: So I think if you look at the clean tech [ph] space, and we're reading the same thing as you are, it's a very competitive space. There are various active ingredients out there that are coming on and off market and with different expirations in the future. We're certainly mindful of that, and we've got -- we talked about some new product formulations. So I think that landscape is evolving over time. R. Gregg Hillman: Okay. And presumably, your new product formulations are improvement over -- do you like -- they will be better than FRONTLINE Plus, I take it? Is that correct? It will work better? John R. Ranelli: That's exactly what we have planned. R. Gregg Hillman: Okay. And then in moving to the Pennington side, I know you introduced another product recently that would -- the Smart Feed for the spray fertilizer. And what's your take on that right now, or what's the lessons to be learned from that experience? John R. Ranelli: Say that -- could you repeat? R. Gregg Hillman: Yes, I think you introduced a product last year. It was -- I think it was called the Smart Feeder. It was a Pennington product where you put like these -- the canisters inside a sprayer for hose and then you spray fertilizer on your lawn. John R. Ranelli: Yes, of course. R. Gregg Hillman: Okay. Could you tell me about the status of that product introduction and whether there's any lessons to be learned from it? John R. Ranelli: Specifically, with the regard to that product, as we mentioned, our sell-through is less than expected. However, we did modify the product and we changed the packaging, and we're currently in the process of doing aggressive pricing and promotions to better evaluate the product. Unfortunately, because of the weather and the season, it's too early to tell. The season broke late. It's not really a true test of what we can see going on in the marketplace at the current time. And on top of that, competitors who've issued similar products in this category, it's taken a while to introduce them. And therefore, it is just too early to read from a season or a life cycle perspective. R. Gregg Hillman: Okay. And is that a product that needs to be demonstrated or shown on a video for people to understand it, do you think? Or... John R. Ranelli: What we do find when we intercept customers in the marketplace with the merchandisers that it does significantly increase the sales of the product. R. Gregg Hillman: You mean having a little video screen that has somebody applying it? Is that what you mean? John R. Ranelli: A video screen, but -- would be okay, but much more important would be to have a merchandiser who demonstrated that. R. Gregg Hillman: Okay. Okay. Fine. So that increases the uptake on it. Okay. Okay. Great. And so basically, you're still tinkering with that to find the right formula to make it go, because it seems to be a really good product. You just haven't find the right combination yet to make it go? John R. Ranelli: And I think that's what we're trying to do. We're trying to test the product. We're trying to try different strategies with the product to find the niche.

[Operator Instructions] Our next question is from the line of Hale Holden with Barclays.

Lisa [ph], I just wanted to circle back to Carla's question. I think it was more around your desire to potentially call the bonds and extend out the maturity rather than buyback the bonds in the open market. So I was wondering if the company was thinking about potentially calling those bonds or and/or if you want extra duration or lower rates on them? Lori A. Varlas: Yes, again, I think we're continually looking at how the company is capitalized. We want to make sure that we have adequate bandwidth as we grow this company. And as you look at how the ABL and the bonds we put in place, it really give us capacity. So as we think about growing the company, we want to make sure that we don't do anything that would hinder our ability to grow. So again, I think we look at our capitalization often. We discussed that we look at it. But we haven't -- and as I described, we've got the prioritization of how we use our cash. It's just more a matter of making sure we've got the right capitalization for growth.

And then just as a follow-on on that, any update you can give us on kind of what your M&A pipeline looks like, or if you're looking for more bolt-on like the one you did or potentially larger deals or kind of what's out there in the market? John R. Ranelli: From a competitive standpoint, we do not discuss what our M&A program or what specific deals that we may be looking at because we look at so many. The chances that they get ultimately consummated are so small. So at a point in time where we believe that a deal is appropriate to be announced, we do, but we do not give any advance to the discussion of what kind of mergers and acquisitions we'd be looking at.

And I'm showing no further questions. I'll turn the call back to John Ranelli for closing comments. John R. Ranelli: Thank you. Just one last comment. The contract with Mitsui [ph] is a continuing contract. I just wanted to make sure that, that is very clear. And secondly, I would like to thank everyone of you for your questions and for joining us on the call today. We look forward to our next call. Thank you very much.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect.