Central Garden & Pet Company Announces Fiscal 2014 First Quarter Results

  Central Garden & Pet Company Announces Fiscal 2014 First Quarter Results

    Sales decrease 1% to $291 million; Net loss narrows to $0.26 per share

Business Wire

WALNUT CREEK, Calif. -- February 4, 2014

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 28, 2013.

The Company reported first quarter net sales of $290.5 million, compared with
$292.5 million in the first quarter of the prior year. The Company’s first
quarter operating loss improved to $8.4 million compared to an operating loss
of $13.1 million in the first quarter of 2013, reflecting improved gross
margins and lower SG&A expense as a percent of sales. The net loss for the
quarter was $12.7 million, or $0.26 per fully diluted share, compared to a net
loss of $15.3 million, or $0.32 per fully diluted share in the year-ago
period. The Company historically has reported a loss in its fiscal first
quarter given the seasonal nature of the lawn and garden category.

“Our first quarter showed some improvement. Our focus on the customer and
operational and financial fundamentals is beginning to yield results. I am
pleased we are starting to see improved performance from the changes we are
making,” said John Ranelli, President & CEO of Central Garden & Pet. Ranelli
continued, “Although we are encouraged by our progress, there is still much
work to be done to get the business consistently operating as it should. I am
optimistic about the Company’s future and our ability to deliver improved
returns to our shareholders and the highest level of service and innovative
products to our customers.”

Quarter 2014 Details

Net sales for the Garden segment increased $8.6 million, or nine percent, from
the same period a year ago to $105.9 million, due primarily to higher seasonal
décor, wild bird feed, and professional fertilizer revenues. The Garden
segment’s branded product sales were $92.8 million and sales of other
manufacturers’ products were $13.1 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 290 basis points, due
in large part to higher profitability in the segment’s seasonal décor and wild
bird feed businesses. The Garden segment’s operating loss in the quarter was
$6.2 million, compared to an operating loss of $8.5 million in the first
quarter of 2013.

First quarter net sales for the Pet segment declined $10.6 million, or five
percent, from the same period a year ago to $184.6 million, due in part to
lower sales of wild bird feed and aquatics products. The Pet segment’s branded
product sales were $140.5 million and sales of other manufacturers’ products
were $44.1 million. The Pet segment’s operating margin increased 260 basis
points, due in part to improved results in its dog & cat businesses. The Pet
segment’s operating income was $14.4 million compared to $10.2 million in the
prior-year period.

At December 28, 2013, the Company’s cash and short-term investments balance
was $30.9 million. Net interest expense was $12.2 million for the quarter
compared to $10.3 million in the prior-year period. The increase was due
primarily to a non-cash charge of $1.7 million for unamortized deferred
financing costs related to the previous revolving credit facility which was
replaced on December 5, 2013. Depreciation and amortization expense was $8.3
million in the first quarter of 2014, compared with $8.0 million in the
prior-year period. The Company’s effective tax rate for the first quarter of
2014 was 38 percent on its operating loss, compared with 37 percent in the
prior-year period.

Total debt at December 28, 2013 was $449.5 million compared to $450.8 million
at December 29, 2012. As of December 28, 2013, there were no borrowings
outstanding on the Company’s senior secured asset-based revolving credit
facility. The Company was in compliance with all debt covenants at the end of
the first quarter.

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 2014 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 (480) 629-9819 and
enter pass code 4662074. A replay of the call will be available for three
weeks by dialing (303) 590-3030 (domestic and international) and entering pass
code 4662074.

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 3,300 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.

Amdro, Aqueon, Avo-Derm, Ironite, Matthews Four Seasons, New England Pottery,
Norcal, Oceanic, Pinnacle, and Zilla are trademarks of Central Garden & Pet
Company. Zodiac is a registered trademark of Wellmark International.
Over-N-Out is a registered trademark of Tech Pac, L.L.C. Kaytee is a
registered trademark of Kaytee Products, Incorporated. Super Pet and Critter
Trail are registered trademarks of Pets International, Ltd. T.F.H. and
Nylabone are registered trademarks of T.F.H. Publications, Inc. Four Paws is a
registered trademark of Four Paws Products, Ltd. Pennington, Smart Seed, and
The Rebels are registered trademarks of Pennington Seed, Inc. Farnam, Horse
Health, Red Cell, and Vita Flex are trademarks of Farnam Companies, Inc. Sevin
is a registered trademark of Tessenderlo Kerley, Inc. All other trademarks are
property of their respective owners.

“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 future favorable results and lower borrowing costs,
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. All forward-looking statements are
based upon the Company’s current expectations and various assumptions. There
are a number of risks and uncertainties that could cause our actual results to
differ materially from the forward-looking statements contained in this
release including, but not limited to, the following factors:

  *disruptions in the Company’s business; and increased costs and expenses
    associated with the Company’s change initiatives;
  *seasonality and fluctuations in the Company’s operating results and cash
    flow;
  *fluctuations in market prices for seeds and grains and other raw materials
    and the Company’s ability to pass through cost increases in a timely
    manner;
  *adverse weather conditions;
  *dependence on a small number of customers for a significant portion of our
    business;
  *uncertainty about new product innovations and marketing programs; and
  *implementation of a new enterprise resource planning information
    technology system.

These risks and others 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

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

Unaudited
                                                             
                                   December 28,   December 29,   September 28,
ASSETS                             2013           2012           2013
Current assets:
Cash and cash equivalents          $  16,711      $  12,591      $  15,156
Short term investments                14,220         17,820         17,820
Accounts receivable (less
allowance for doubtful accounts       143,105        150,767        194,260
of $20,547, $18,555 and $21,158)
Inventories                           427,439        397,725        391,934
Prepaid expenses and other           69,100        66,629        53,484
Total current assets                  670,575        645,532        672,654
                                                                 
Land, buildings, improvements         187,138        192,486        188,913
and equipment—net
Goodwill                              205,756        210,223        205,756
Other intangible assets—net           78,856         77,790         79,868
Deferred income taxes and other      13,643        20,041        13,969
assets
Total                              $  1,155,968   $  1,146,072   $  1,161,160
                                                                 
                                                                 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable                   $  120,548     $  130,484     $  103,569
Accrued expenses                      88,512         83,580         78,618
Current portion of long-term         73            309           142
debt
Total current liabilities             209,133        214,373        182,329
                                                                 
Long-term debt                        449,465        450,446        472,445
Other long-term obligations           38,867         30,968         36,362
                                                                 
Equity:
Common stock, $.01 par value:
12,246,751, 12,247,359 and
12,246,751 shares outstanding at      122            122            122
December 28, 2013, December 29,
2012 and September 28, 2013
Class A common stock, $.01 par
value: 35,423,560, 34,765,783
and 35,291,001 shares                 354            347            353
outstanding at December 28,
2013, December 29, 2012 and
September 28, 2013
Class B stock, $.01 par value:        16             16             16
1,652,262 shares outstanding
Additional paid-in capital            390,991        383,615        389,153
Accumulated earnings                  64,884         64,449         77,592
Accumulated other comprehensive      1,527         1,497         1,442
income
Total Central Garden & Pet            457,894        450,046        468,678
Company shareholders’ equity
Noncontrolling interest              609           239           1,346
Total equity                         458,503       450,285       470,024
Total                              $  1,155,968   $  1,146,072   $  1,161,160
                                                                    

CENTRAL GARDEN & PET COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)
                                                 
                                                   Three Months Ended
                                                   December 28,  December 29,
                                                   2013           2012
Net sales                                          $  290,521     $  292,497
Cost of goods sold and occupancy                     210,780      215,538 
Gross profit                                          79,741         76,959
Selling, general and administrative expenses         88,096       90,053  
Loss from operations                                  (8,355  )      (13,094 )
Interest expense                                      (12,217 )      (10,315 )
Interest income                                       13             65
Other expense                                        (168    )     (981    )
Loss before income taxes and noncontrolling           (20,727 )      (24,325 )
interest
Income tax benefit                                   (7,915  )     (8,978  )
Loss including noncontrolling interest                (12,812 )      (15,347 )
Net loss attributable to noncontrolling interest     (104    )     (78     )
Net loss attributable to Central Garden & Pet      $  (12,708 )   $  (15,269 )
Company
                                                                  
Net loss per share attributable to Central
Garden & Pet Company:
Basic and diluted                                  $  (0.26   )   $  (0.32   )
                                                                  
Weighted average shares used in the computation
of net loss per share:
Basic and diluted                                     48,368         47,871

Contact:

Central Garden & Pet Company
Steve Zenker, 925-948-3657
VP of Investor Relations & Communications
 
Press spacebar to pause and continue. Press esc to stop.