Central Garden & Pet Company (NASDAQ:CENT) (NASDAQ:CENTA), a
leading innovator, marketer and producer of quality branded
products for the lawn and garden and pet supplies markets, today
announced financial results for its fiscal first quarter ended
December 24, 2011.
The Company reported first quarter net sales of $302.1 million,
a 7 percent increase over the comparable period a year ago. Net
sales increased in both its Garden Products and Pet Products
segments by 8 and 7 percent, respectively. The first quarter
operating loss was $11.3 million compared to an operating loss of
$6.5 million in the first quarter of 2011, primarily reflecting the
continuing impact of higher grain and other raw material costs as
well as a change in product mix. The net loss for the quarter was
$13.1 million, or $0.27 per fully diluted share, compared with a
loss of $9.6 million, or $0.16 per fully diluted share, in the
year-ago period. Typically, the Company has reported a loss in its
fiscal first quarter given the seasonal nature of the lawn and
garden category.
“We continued to drive solid revenue growth this quarter, with
gains in both our Garden and Pet businesses,” said Bill Brown,
Chairman and CEO. “As expected, it was a challenging quarter, as
raw material costs remained high and the mix of sales favored
lower-margin products which impacted our bottom line results. We
are dually focused on managing our operations in this challenging
economic environment, while moving forward with the transformation
of Central into an integrated, multi-brand company. We believe our
strong portfolio of products and talented employee base will be
keys in achieving our goal of sustainable long-term growth and
improved profitability.”
Gus Halas, President and CEO of Central Operating Companies,
commented, “We are progressing on our planned actions to
significantly improve our execution and reduce costs across the
organization while positioning our sales and marketing teams for
continued success in growing revenues. We remain as committed as
ever to exceeding our customers’ expectations, providing consumers
with innovative product solutions, and benefitting our shareholders
by increasing our efficiency and profitability.”
First Quarter 2012 Details
Both the Garden Products and Pet Products segments contributed
to the Company’s sales gains for the quarter. Net sales for the
Garden Products segment rose 8 percent or $7.9 million over the
same period a year ago to $102.8 million. The Garden Products
segment’s branded product sales were $89.9 million and sales of
other manufacturers’ products were $12.9 million. Historically,
first quarter revenues for the Garden Products segment have been
the lowest of any quarter of the year due to the seasonality of the
lawn and garden market. In the first quarter, the Garden Products
segment’s gross and operating margins continued to be impacted by
high raw material costs for bird feed and by product mix. The
Garden Products segment’s operating loss in the quarter was $11.1
million, compared to an operating loss of $8.0 million in the first
quarter of 2011.
First quarter net sales for the Pet Products segment increased 7
percent, or $12.5 million, over the prior year to $199.3 million.
The Pet Products segment’s branded product sales were $156.6
million and sales of other manufacturers’ products were $42.7
million. The Pet Product segment’s gross and operating margins
declined, due in part to product mix, increased raw material costs,
and higher trade and consumer spending. The Pet Products segment’s
operating income was $9.7 million compared to operating income of
$11.4 million in the prior-year period.
At December 24, 2011, the Company’s cash and short-term
investments balance was $28.1 million. Net interest expense was
$9.5 million for the quarter compared to $8.9 million in the
prior-year period. Depreciation and amortization expense was $7.4
million in the first quarter of 2012, compared with $7.0 million in
the prior-year period. The Company’s effective tax rate for the
first quarter of 2012 was 37 percent on its operating loss,
compared with 39 percent in the prior-year period.
Total debt at December 24, 2011 was $460.7 million compared to
$400.3 million at December 25, 2010. The quarter-ending total
leverage ratio, as defined in the Company’s credit agreement, was
3.9x. During the first quarter of 2012, the Company repurchased 2.6
million shares of its voting common and non-voting Class A common
stock, for $20.9 million, as part of a $100 million authorized
share repurchase program announced in June 2011.
Conference Call
The Company will host a conference call today at 4:30 p.m.
Eastern Time / 1:30 p.m. Pacific Time to discuss its first quarter
2012 results. The conference call will be accessible through the
investor relations section of Central’s website,
http://www.central.com.
Alternatively, to listen to the call by telephone, dial
1-412-317-6789 and enter passcode 10009247. A replay of the call
will be available for three weeks by dialing 1-412-317-0088
(domestic and international) and entering passcode 10009247.
About Central Garden & Pet
Central Garden & Pet Company is a leading innovator,
marketer and producer of quality branded products for the lawn
& garden and pet supplies markets. Committed to new product
innovation, our products are sold to specialty independent and mass
retailers. Participating categories in Lawn & Garden include:
Grass seed and the brands PENNINGTON®, SMART SEED® and THE REBELS®;
wild bird feed and the brand PENNINGTON®; weed and insect control
and the brands AMDRO®, SEVIN®, IRONITE® and OVER-N-OUT®; and
decorative outdoor patio products and the brands NORCAL POTTERY®,
NEW ENGLAND POTTERY® and MATTHEWS FOUR SEASONS™. We also provide a
host of other regional and application-specific garden brands and
supplies. Participating categories in Pet include: Animal health
and the brands ADAMS™ and ZODIAC®; aquatics and reptile and the
brands OCEANIC SYSTEMS®, AQUEON® and ZILLA®; bird & small
animal and the brands KAYTEE®, SUPER PET® and CRITTER TRAIL®; dog
& cat and the brands TFH™, NYLABONE®, FOUR PAWS®, PINNACLE® and
AVODERM®; and equine and the brands FARNAM®, BRONCO® and SUPER
MASK®. We also provide a host of other application-specific pet
brands and supplies. Central Garden & Pet Company is based in
Walnut Creek, California, and has approximately 4,100 employees,
primarily in North America. For additional information on Central
Garden & Pet Company, including access to the Company's SEC
filings, please visit the Company’s website at www.central.com
.
“Safe Harbor” Statement under the Private Securities Litigation
Reform Act of 1995: The statements contained in this release which
are not historical facts, including achieving sustainable long-term
growth and improved profitability, forecasted cost reductions and
sales increases and improved efficiency and profitability from the
Company’s transformation initiatives, are forward-looking
statements that are subject to risks and uncertainties that could
cause actual results to differ materially from those set forth in
or implied by forward-looking statements. These risks are described
in the Central’s Annual Report on Form 10-K, filed on November 21,
2011, and other Securities and Exchange Commission filings. Central
undertakes no obligation to publicly update these forward-looking
statements to reflect new information, subsequent events or
otherwise.
Central Garden & Pet Company
Condensed Consolidated Statements of
Income
(Unaudited)
(In thousands, except per share
amounts)
December 25,
2010
December 24,
2011
Net sales $ 281,719 $ 302,066 Cost of goods sold and occupancy
198,662 221,328 Gross profit 83,057
80,738 Selling, general and administrative expenses 89,540
92,018 Loss from operations (6,483 ) (11,280 )
Interest expense (9,039 ) (9,547 ) Interest income 133 28 Other
expense (406 ) (114 ) Loss before income taxes and
noncontrolling interest (15,795 ) (20,913 ) Income tax benefit
(6,117 ) (7,646 ) Loss including noncontrolling
interest (9,678 ) (13,267 ) Net loss attributable to noncontrolling
interest (86 ) (177 ) Net loss attributable to
Central Garden & Pet Company $ (9,592 ) $ (13,090 ) Net
loss per share attributable to Central Garden & Pet Company:
Basic and diluted $ (0.16 ) $ (0.27 ) Weighted average
shares used in the computation of net loss per share: Basic and
diluted 60,941 47,823
Central Garden & Pet Company
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
December 25, December
24, September 24, ASSETS 2010 2011
2011 Current assets: Cash and cash equivalents $ 75,317 $
10,289 $ 12,031 Short term investments 15,320 17,820 17,820
Accounts receivable 130,618 139,254 195,417 Inventories 341,621
365,743 329,546 Prepaid expenses and other 52,610
62,614 47,772 Total current assets
615,486 595,720 602,586 Land, buildings, improvements and
equipment—net
165,959
180,401 176,402 Goodwill 208,348 210,223
210,223 Other intangible assets—net 85,768 83,458 84,526 Deferred
income taxes and other assets 37,419 18,467
19,266 Total $ 1,112,980 $ 1,088,269
$ 1,093,003
LIABILITIES AND
EQUITY Current liabilities: Accounts payable $ 115,651 $
122,009 116,524 Accrued expenses 84,931 66,862 75,128 Current
portion of long-term debt 147 328
279 Total current liabilities 200,729 189,199 191,931
Long-term debt 400,141 460,346 435,330 Other long-term
obligations 4,462 14,253 8,960 Equity: Common stock 157 123
129 Class A common stock 429 341 359 Class B stock 16 16 16
Additional paid-in capital 473,412 377,598 396,208 Accumulated
earnings 33,053 45,455 59,045 Accumulated other comprehensive
income 720 1,110 1,019
Total Central Garden & Pet Company Shareholders’ equity 507,787
424,643 456,776 Noncontrolling interest (139 ) (172 )
6 Total equity 507,648 424,471
456,782 Total $ 1,112,980 $ 1,088,269
$ 1,093,003
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