And I think the team has not shied away from this. That does not mean we have all the plans in place. But I think this does answer to your question, which is where we were at the end of our sort of current plan and then my challenge to them to go faster, which is, in part, we heard from our shareholders and — my family wouldn’t say anything different, which is hurry up — is, I think, a theme that we’re trying to be responsive to. And in addition, we’re having very significant conversations right now, live, like today, with our comp and work committee about developing long-term incentives that are tied to achieving these goals. So I don’t know, Matt, where you take it from.
Matt Garth: Which everything is aligned. This is a big statement — with how we see driving shareholder value into the future and getting to our net leverage target which, yes, it used to be 3.5. Jim and I have kicked around, given the volatility of the environment, given the risk that is in inflation rates, given how we want to manage this company going forward with 2.5 to 3 be better. Of course, it would be better. So putting plans into place to not only accelerate de-leveraging and also look at getting to a lower target level, so let’s say, 3 to 3.5 is where we ended up. That’s the mission. But what does that allow us to do? This is not just the financial strategy. This is the Scotts model that is so super exciting. And Jim and I have been saying to Nate and his team we’re going to sustainably give you pockets of expense so that we reinvest in what is Scotts Miracle-Gro.
What is our purpose? Grow more good, make everybody feel great about their own piece of the earth and be able to enjoy it to the maximum level. That requires innovation. That requires marketing. That requires a sales force that’s differentiated. Those are our moats. And strategically, that’s what drives an extremely high free cash flow yield that Scotts Miracle-Gro can deliver. Now what we do with that cash, what we’ve said is, we delever in the short term, and then we return to shareholder-friendly activities and investments to sustainably grow that free cash flow into the future, which will, in turn, be used for higher shareholder-friendly actions. So we feel really good about the near term. And we feel exceptional around the future for Scotts Miracle-Gro and for what we can deliver to shareholders and creating value both for our consumers and for our shareholders.
And that’s what this long-term plan is about. And so everyone here in this room is shaking their head up and down. Well, nodding their head up and down.
Jim Hagedorn: Look, and part of this which is included in here is very strategic investment in the business. For instance, within the plan we’re developing, the assumption is at least a 50% increase in brand support, at least a 50% increase in innovation support. And so these are big numbers. So this is not acting short-term. This is long-term. And by the way, mid-30s is historically where we ought to be. So this is not reinventing anything. This is just coming out of COVID. And demand was a little squirrelly, particularly on the cannabis side, but cost of goods pressures were really significant. And so where we’re seeing that recovery, we will naturally unwind that. But it gets back to the — like the math that Matt threw out there, you’re dealing with kind of 900 basis points of margin we’re at to — while making these investments.
And again, not everything is software [ph], but I think people understand the major buckets that they’re going after, and nobody is hiding. And this is a really good thing for this team. The team is working together really well. And I was really sad about Mike moving on and Denise. I didn’t know, like how it was going to be. But the team has really come together well. You guys — I’m sort of desperate to get you guys out to show off to people here. And it’s not just the team — people are on this table right now, there’s a whole level down of people who came out of last year, beaten up pretty bad, dude. Incentives weren’t paying out, the equity was in the frigging toilet. You know what I mean. And we made a lot of personnel changes, particularly at the senior level.
People — King used to say a spring in their step or something. It would show up in my scripts a lot. But I think there is a kind of hotty attitude developing in the business kind of everywhere. And so it’s a pretty good feeling place right now. And the plans we’re talking about, which will go back to value creation guys, at the end of the day, nobody wants the thought price here. And I think we know what we have to do. And if the markets are rational, we will recover a lot of share price. And that’s kind of how we get paid. And I think what you guys ought to want from us. But we’re doing this in a way while if you look at the things that drive value, our ability to execute in the field, our sales force, our relationships with the retailers all the way up to the CEO level.
We have the crazy brands. We’re going to be investing in all that stuff. I think it’s — Matt sort of said it, which is if you want one of those things, you probably have challenges on — you’re spending less. But I think a lot of that work has already happened. And people have sort of gotten used to their Ozempic diet, but we’re investing in the future.
William Reuter: Great. Thanks so much.
Jim Hagedorn: Yes.
Operator: Ladies and gentlemen, this does conclude the Q&A portion of today’s conference, and it also concludes the conference call itself. We thank you for your participation. You may all disconnect, and have a wonderful day.
