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 29, 2012.
The Company reported first quarter net sales of $292.5 million,
a 3 percent decrease over the comparable period a year ago. Net
sales decreased in both its Garden and Pet segments. The first
quarter operating loss was $13.1 million compared to an operating
loss of $11.3 million in the first quarter of 2012, primarily
reflecting lower sales and gross margins. The net loss for the
quarter was $15.3 million, or $0.32 per fully diluted share,
compared with a loss of $13.1 million, or $0.27 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.
“As we expected, our first quarter results were lower than the
prior year,” said Gus Halas, President & CEO of the Central
Operating Companies. “Despite lower Garden revenues in our
seasonally smaller first quarter, we are excited about the new
innovations we are bringing to market and expect more favorable
results for our upcoming Garden season, which encompasses our next
two quarters.”
Halas continued, “We continue to focus on our transformation to
an integrated multi-brand consumer products company. We expect to
make significant progress over the next few years as we
aggressively build our brands, lower our costs, and drive
meaningful revenue and profit growth.”
First Quarter 2013 Details
Both the Garden and Pet segment sales declined during the
quarter. Net sales for the Garden segment decreased 5 percent or
$5.5 million over the same period a year ago to $97.3 million, in
part due to lower seasonal décor revenues. The Garden segment’s
branded product sales were $85.3 million and sales of other
manufacturers’ products were $12.0 million. Historically, first
quarter revenues for the Garden 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 segment’s operating margin
improved 200 basis points, in part due to improvements in its grass
seed and pottery businesses. The Garden segment’s operating loss in
the quarter was $8.5 million, compared to an operating loss of
$11.1 million in the first quarter of 2012.
First quarter net sales for the Pet segment declined 2 percent,
or $4.1 million, over the prior year to $195.2 million, due
primarily to lower sales of dog and cat products. The Pet segment’s
branded product sales were $154.2 million and sales of other
manufacturers’ products were $41.0 million. The Pet segment’s
operating margins increased 30 basis points, due in part to
improved results in its equine business. The Pet segment’s
operating income was $10.2 million compared to $9.7 million in the
prior-year period.
At December 29, 2012, the Company’s cash and short-term
investments balance was $30.4 million. Net interest expense was
$10.3 million for the quarter compared to $9.5 million in the
prior-year period. Depreciation and amortization expense was $8.0
million in the first quarter of 2013, compared with $7.4 million in
the prior-year period. The Company’s effective tax rate for the
first quarter of 2013 was 37 percent on its operating loss, in line
with the prior-year period.
Total debt at December 29, 2012 was $450.8 million compared to
$460.7 million at December 24, 2011. The quarter-ending total
leverage ratio, as defined in the Company’s credit agreement, was
4.1x.
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
2013 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 10023698. A replay of the call
will be available for three weeks by dialing 1-412-317-0088
(domestic and international) and entering passcode 10023698.
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®, VITA FLEX® and HORSE
HEALTHTM PRODUCTS. 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 3,600 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 expectations for improving
Garden segment results through new product introductions,
aggressively building our brands, lowering costs and achieving
revenue growth and improved 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 December 13, 2012,
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 BALANCE
SHEETS
(in thousands, except share and per
share amounts)
Unaudited
December 29, December
24, September 29, ASSETS 2012 2011
2012 Current assets: Cash and cash equivalents $ 12,591 $
10,289 $ 48,475 Short term investments 17,820 17,820 22,705
Accounts receivable (less allowance for doubtful accounts of
$18,555, $15,791 and $18,574) 150,767 139,254 202,422 Inventories
397,725 365,743 330,032 Prepaid expenses and other 66,629
62,614 48,149 Total current assets 645,532
595,720 651,783 Land, buildings, improvements and
equipment—net 192,486 180,401 191,163 Goodwill 210,223 210,223
210,223 Other intangible assets—net 77,790 83,458 78,853 Deferred
income taxes and other assets 20,041 18,467
17,525 Total $ 1,146,072 $ 1,088,269 $ 1,149,547
LIABILITIES AND EQUITY Current liabilities:
Accounts payable $ 130,484 $ 122,009 $ 126,662 Accrued expenses
83,580 66,862 79,491 Current portion of long-term debt 309
328 331 Total current liabilities 214,373
189,199 206,484 Long-term debt 450,446 460,346 449,483 Other
long-term obligations 30,968 14,253 28,697 Equity: Common
stock, $.01 par value: 12,247,359, 12,254,778, and 12,247,571
shares outstanding at December 29, 2012, December 24, 2011 and
September 29, 2012 122 123 122
Class A common stock, $.01 par value:
34,765,783, 34,130,214 and 34,706,902 shares outstanding at
December 29, 2012, December 24, 2011 and September 29, 2012
347 341 347 Class B stock, $.01 par value: 1,652,262 shares
outstanding 16 16 16 Additional paid-in capital 383,615 377,598
382,195 Accumulated earnings 64,449 45,455 79,718 Accumulated other
comprehensive income 1,497 1,110 1,539
Total Central Garden & Pet Company shareholders’ equity 450,046
424,643 463,937 Noncontrolling interest 239 (172 )
946 Total equity 450,285 424,471
464,883 Total $ 1,146,072 $ 1,088,269 $ 1,149,547
See notes to condensed consolidated financial
statements.
CENTRAL GARDEN & PET
COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share
amounts)
(unaudited)
Three Months Ended December 29,
2012
December 24,
2011
Net sales $ 292,497 $ 302,066 Cost of goods sold and occupancy
215,538 221,328 Gross profit 76,959
80,738 Selling, general and administrative expenses 90,053
92,018 Loss from operations (13,094 ) (11,280
) Interest expense (10,315 ) (9,547 ) Interest income 65 28 Other
expense (981 ) (114 ) Loss before income taxes and
noncontrolling interest (24,325 ) (20,913 ) Income tax benefit
(8,978 ) (7,646 ) Loss including noncontrolling
interest (15,347 ) (13,267 ) Net loss attributable to
noncontrolling interest (78 ) (177 ) Net loss
attributable to Central Garden & Pet Company $ (15,269 ) $
(13,090 ) Net loss per share attributable to Central Garden
& Pet Company: Basic and diluted $ (0.32 ) $ (0.27 )
Weighted average shares used in the computation of net loss per
share: Basic and diluted 47,871 47,823
See notes to condensed consolidated
financial statements.
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