Central Garden & Pet Company Announces Fourth Quarter & Fiscal 2012 Results

  Central Garden & Pet Company Announces Fourth Quarter & Fiscal 2012 Results

       Fourth quarter sales of $397.2 million; EPS of $(0.21) per share

          Fiscal 2012 sales of $1.7 billion; EPS of $0.44 per share

Business Wire

WALNUT CREEK, Calif. -- December 11, 2012

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 reported financial results for the
fourteen and fifty-three week periods ended September 29, 2012.

The Company reported net sales of $397.2 million for the fourth quarter of
2012, a 5 percent increase over the comparable fiscal 2011 period. Sales
benefitted from the inclusion of an extra week in the quarter versus the prior
year, as well as strength in the Company’s Pet segment. The Company’s fourth
quarter operating loss for 2012 was $8.5 million compared to an operating loss
of $4.6 million in the fourth quarter of 2011. The net loss for the fourth
quarter of 2012 was $10.1 million or $0.21 per fully diluted share compared
with a loss of $10.9 million or $0.21 per fully diluted share in the fourth
quarter of 2011.

Gus Halas, President & CEO of Central Operating Companies commented, “Our
fourth quarter bottom line was impacted by several factors, including declines
in our décor business, higher marketing and innovation expenditures, and
investments related to our transformation. With the first year of the
transformation behind us and much work still to do, we remain committed to
delivering a more integrated company which delivers greater innovation and
value to our customers and improved profitability to our shareholders.”

The Company also announced today that it believes its sales and earnings for
the first quarter will be below the results of the prior year.

Fourth Quarter 2012 Details

Reported net sales for the Pet segment for the quarter were $237.6 million, a
gain of 12 percent over the fourth quarter of 2011, benefitting from higher
animal health sales and strength in its pet distribution business as well as
the inclusion of an extra week in the quarter versus the prior year. The Pet
segment’s branded product sales for the quarter increased $19.9 million, or 12
percent, to $191.7 million while sales of other manufacturers’ products were
$45.9 million, an increase of 15 percent compared with the fourth quarter of
2011. The Pet segment’s operating margin declined during the quarter, impacted
by higher marketing and innovation expenses. For the fourth quarter, the Pet
segment’s operating income was $16.3 million, up from $15.6 million in the
fourth quarter of 2011.

Fourth quarter net sales for the Garden segment decreased 3 percent, or $5.5
million compared with the prior year, to $159.6 million, impacted by lower
décor revenues. The Garden segment’s branded product sales decreased $8.3
million, or 6 percent, to $140.2 million. Sales of other manufacturers’
products were $19.4 million, an increase of 17% compared with the fourth
quarter of 2011. The Garden segment’s operating margin decreased during the
quarter, impacted by higher marketing costs as well as lower profitability in
its décor businesses, due primarily to product returns in the seasonal décor
business. The Garden segment’s operating loss was $7.7 million compared to an
operating loss of $6.9 million in the prior year period.

At September 29, 2012, the Company’s cash and short term investments balance
totaled $71.2 million. Net interest expense was $9.5 million for the quarter
and $9.8 million in the prior year period. Depreciation and amortization
expense was $7.3 million in the fourth quarter of 2012, consistent with the
prior year. The Company’s effective tax rate for the fourth quarter of 2012
was 39.9 percent on its operating loss compared to 17.0 percent in the fourth
quarter of 2011. The 2011 effective tax rate was lower than historical norms,
impacted by the Company’s inability to use tax benefits due to decreased
fiscal 2011 income and increased tax valuation allowances.

Total debt at September 29, 2012 was $449.8 million compared to $435.6 million
at fiscal year-end 2011. The quarter ending total leverage ratio, as defined
in the Company’s credit agreement, was 4.0x.

Fiscal 2012 Details

For the year ending September 29, 2012, the Company reported net sales of $1.7
billion, an increase of 4 percent, compared to $1.6 billion in fiscal 2011.
The Company benefitted from an extra week in the fiscal year compared to a
year ago. Branded products sales were $1.4 billion, up 3 percent over fiscal
2011. Sales of other manufacturers’ products increased 11 percent to $280.0
million. Depreciation and amortization for the fiscal year period was $30.4
million compared with $28.6 million in the prior year. Operating income for
the period totaled $74.4 million compared to $85.2 million in the prior year.
The Company’s results included transformational costs of $12.1 million that
were incurred throughout the year as the Company moves from a portfolio model
to an integrated, multi-brand organization. Net income for the year ended
September 29, 2012 was $21.2 million compared to $28.3 million in fiscal 2011.
Earnings per fully diluted share were $0.44 compared to $0.50 per fully
diluted share in the year ago period.

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 fourth quarter and fiscal 2012 results. The
conference call will be accessible via the internet through Central’s website,
http://ir.central.com.

Alternatively, to listen to the call by telephone, dial 412-317-6789 and enter
passcode 10019773. A replay of the call will be available for three weeks by
dialing 412-317-0088 and entering passcode 10019773.

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 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 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 Central’s 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

CONSOLIDATED BALANCE SHEETS
                                                              
                                                 September 29,   September 24,
                                                 2012            2011
ASSETS                                           (in thousands)
Current assets:
Cash and cash equivalents                        $  48,475       $  12,031
Short term investments                              22,705          17,820
Accounts receivable, net                            202,422         195,417
Inventories                                         330,032         329,546
Prepaid expenses, deferred income taxes and        48,149         47,772
other
Total current assets                                651,783         602,586
Plant, property and equipment, net                  191,163         176,402
Goodwill                                            210,223         210,223
Other intangible assets, net                        78,853          84,526
Other assets                                       17,525         19,266
Total                                            $  1,149,547    $  1,093,003
                                                                    
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable                                 $  126,662      $  116,524
Accrued expenses                                    79,491          75,128
Current portion of long-term debt                  331            279
Total current liabilities                           206,484         191,931
Long-term debt                                      449,483         435,330
Deferred income taxes and other long-term           28,697          8,960
obligations
                                                                 
Commitments and contingencies (Note 11)
                                                                 
Equity:
Common stock                                        122             129
Class A common stock                                347             359
Class B stock                                       16              16
Additional paid-in capital                          382,195         396,208
Retained earnings                                   79,718          59,045
Accumulated other comprehensive income             1,539          1,019
Total Central Garden & Pet shareholders’           463,937        456,776
equity
Noncontrolling interest                            946            6
Total equity                                       464,883        456,782
Total                                            $  1,149,547    $  1,093,003
                                                                    

Central Garden & Pet Company

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)
                                              
                   Three Months Ended            Fiscal Year Ended
                   September      September      September 29,   September 24,
                   29,           24,            2012           2011
                   2012           2011
Net sales          $  397,236     $  376, 906    $  1,700,013    $  1,628,652
Cost of goods
sold and             292,164       278,702       1,185,855      1,134,733
occupancy
Gross profit          105,072        98,204         514,158         493,919
Selling, general
and                  113,562       102,770       439,737        408,744
administrative
expenses
Income (loss)         (8,490)        (4,566)        74,421          85,175
from operations
Interest expense      (9,577)        (9,786)        (40,315)        (38,044)
Interest income       61             35             145             296
Other income,        697           434           678            550
net
Income (loss)
before income
taxes and             (17,309)       (13,883)       34,929          47,977
noncontrolling
interest
Income taxes         (6,900)       (2,357)       12,816         19,595
Income (loss)
including             (10,409)       (11,526)       22,113          28,382
noncontrolling
interest
Net income
attributable to      (350)         (594)         940            59
noncontrolling
interest
Net income
(loss)
attributable to    $  (10,059)    $  (10,932)    $  21,173       $  28,323
Central Garden &
Pet Company
                                                                 
Net income
(loss) per share
attributable to
Central Garden &
Pet Company:
Basic              $  (0.21)      $  (0.21)      $  0.44         $  0.50
Diluted            $  (0.21)      $  (0.21)      $  0.44         $  0.50
                                                                 
Weighted average
shares used in
the computation
of net income
per share:
Basic                 47,704         51,943         47,622          56,217
Diluted               47,704         51,943         48,374          56,645

Contact:

Central Garden & Pet Company
Steve Zenker, 925-948-3657
Investor Relations
 
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