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Central Garden & Pet Company Announces Fiscal 2013 First Quarter Results



  Central Garden & Pet Company Announces Fiscal 2013 First Quarter Results

        Sales decrease 3% to $292 million; Net loss of $0.32 per share

Business Wire

WALNUT CREEK, Calif. -- February 7, 2013

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 HEALTH^TM 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           150,767       139,254              202,422
accounts of $18,555,
$15,791 and $18,574)
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                 192,486       180,401              191,163
equipment—net
Goodwill                         210,223       210,223              210,223
Other intangible assets—net      77,790        83,458               78,853
Deferred income taxes and        20,041        18,467               17,525
other assets
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               309           328                  331
long-term debt
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            122           123                  122
December 29, 2012, December
24, 2011 and September 29,
2012
Class A common stock, $.01
par value: 34,765,783,
34,130,214 and 34,706,902
shares outstanding at            347           341                  347
December 29, 2012, December
24, 2011 and September 29,
2012
Class B stock, $.01 par
value: 1,652,262 shares          16            16                   16
outstanding
Additional paid-in capital       383,615       377,598              382,195
Accumulated earnings             64,449        45,455               79,718
Accumulated other                1,497         1,110                1,539
comprehensive income
Total Central Garden & Pet
Company shareholders’            450,046       424,643              463,937
equity
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,   December 24,
                                                                 
                                                   2012           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           (24,325 )      (20,913 )
interest
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      $  (15,269 )   $  (13,090 )
Company
                                                                   
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.

Contact:

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