Central Garden & Pet Company (NASDAQ:CENT): -- Sales Increased
6%; Income from Operations Increased 15% -- Branded Products,
Profit Acceleration Program and Acquisitions Drive Growth --
Reiterates Fiscal 2006 EPS Guidance of $2.80 to $2.90 per Fully
Diluted Share Central Garden & Pet Company (NASDAQ:CENT) today
announced second quarter results for its fiscal year ending
September 30, 2006. For the second quarter of fiscal 2006 the
Company reported net sales of $401 million, an increase of 6% from
$379 million in the comparable 2005 period. Income from operations
for the quarter increased 15% to $45.7 million. Net income for the
quarter increased 17% to $26.2 million from $22.4 million in the
year ago period. Diluted earnings per share increased 13% to $1.17
from $1.04 in the year ago period. Branded product sales increased
9% while sales of other manufacturers' products, as planned,
declined 7%. Depreciation and amortization for the quarter was $6.0
million compared to $4.6 million in the year ago period. The
results of the second quarter of fiscal 2006 include costs of $1.6
million related to the Company's previously announced profit
acceleration program, $1.6 million related to the early retirement
of a previous credit facility, and $1.4 million related to
equity-based compensation. Also, taxes for the quarter reflect a
benefit of $2.6 million related to reversal of a tax reserve no
longer required. Net sales for the Garden Products segment were
$214 million, a decline of 3% compared to the second quarter of
fiscal 2005. Garden branded products sales were relatively flat
while sales of other manufacturers' products declined 13%. The
Garden Products segment operating income was $26.4 million in the
quarter, an increase of 9% when compared to the second quarter of
fiscal 2005. Net sales for the Pet Products segment were $187
million, an increase of 18% compared to the second quarter of
fiscal 2005. Pet branded products sales increased 23% and sales of
other manufacturers' products increased 1%. Operating income for
the Pet Products segment was $25.1 million in the quarter, an
increase of 6%, which includes $1.6 million of profit acceleration
program costs, when compared to the second quarter of fiscal 2005.
"The strength of our branded products and our ongoing profit
acceleration program produced record results," commented Glenn
Novotny, President and Chief Executive Officer. "We have made
significant progress by completing five strategic acquisitions year
to date, and we are well positioned to pursue future internal and
external growth opportunities." The Company updated its fiscal 2006
guidance to account for the impact of acquisitions and its
corporate financing initiatives. Net sales for the year are now
projected to be between $1.55 billion and $1.57 billion, an
increase of approximately $100 million when compared to previous
guidance. Operating income is expected to be between $133 million
and $137 million, an increase of approximately $17 million when
compared to previous guidance. Net income is expected to be between
approximately $65 million and $68 million, an increase of
approximately $3 million when compared to previous guidance. The
corresponding earnings per fully diluted share is expected to be
between $2.80 and $2.90, in-line with previous guidance. The fiscal
year-ending fully-diluted share count is expected to be
approximately 23.3 million, an increase of approximately 1 million
shares when compared to previous guidance reflecting the
partial-year impact of the Company's 1.98 million share offering
completed in March, 2006. These projected results do not include
the impact from any future acquisitions. For the six months ending
March 25, 2006 of fiscal 2006, the Company reported net sales of
$694 million, an increase of 8% from $644 million in the comparable
2005 period. Income from operations for the period increased 13% to
$55.5 million. Net income for the first six month period increased
16% to $28.8 million from $24.9 million in the year ago period.
Diluted earnings per share increased 12% to $1.30 from $1.16 in the
year ago period. Branded product sales increased 10% while sales of
other manufacturers' products declined 1%. Depreciation and
amortization for the first six month period was $11.2 million
compared to $9.1 million in the year ago period. Results for the
first six month period of fiscal 2006 include a benefit of $2.6
million related to a reversal of a tax reserve. The results also
include costs of $3.2 million related to the Company's previously
announced profit acceleration program and $1.6 million related to
the early retirement of a previous credit facility. Costs related
to equity-based compensation were an additional $2.5 million. The
Company will discuss its second quarter results for fiscal 2006 on
a conference call today at 4:30 p.m. EST. The conference call will
be simultaneously broadcast over the Internet through Central's
website, http://www.central.com/. To listen to the webcast, please
log on to the website prior to the scheduled call time to register
and download any necessary audio software. Central Garden & Pet
Company is a leading innovator, marketer and producer of quality
branded products for the pet and lawn and garden supplies markets.
Our pet products include pet bird and small animal food, aquarium
products, flea, tick, mosquito and other pest control products,
edible bones, cages, carriers, pet books, and other dog, cat,
reptile and small animal products. These products are sold under a
number of brand names, including Kaytee, SuperPet, All-Glass
Aquarium, Oceanic, Kent Marine, Energy Savers Unlimited, Zodiac,
Pre-Strike, Altosid, Nylabone, TFH, Four Paws, Interpet, Breeder's
Choice and Farnam. Our lawn and garden products include grass seed,
wild bird food, weed and insect control products, and decorative
outdoor patio products. These products are sold under a number of
brand names, including Pennington, Norcal Pottery, New England
Pottery, GKI/Bethlehem Lighting, Lilly Miller, Matthews Four
Seasons, Cedar Works, AMDRO, Grant's, Sevin and Over'n Out. For
additional information on Central Garden & Pet, including
access to the Company's SEC filings, please visit the Company's
website at http://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 future earnings guidance, 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 Company'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. -0- *T Central Garden & Pet Company
Consolidated Statements of Income (Unaudited) (In thousands, except
per share amounts) Three Months Ended Six Months Ended
------------------- ------------------- March 25, March 26, March
25, March 26, 2006 2005 2006 2005 --------- --------- ---------
--------- Net Sales $401,332 $378,854 $694,063 $644,430 Cost of
Goods Sold and Occupancy 264,580 251,980 465,313 431,515 ---------
--------- --------- --------- Gross Profit 136,752 126,874 228,750
212,915 Selling, General and Administrative Expenses 91,018 87,198
173,241 163,723 --------- --------- --------- --------- Income from
Operations 45,734 39,676 55,509 49,192 Interest Expense (10,227)
(5,610) (16,571) (10,908) Interest Income 602 107 1,287 210 Other
Income 1,803 1,974 1,852 1,654 --------- --------- ---------
--------- Income Before Income Taxes 37,912 36,147 42,077 40,148
Income Taxes 11,687 13,775 13,292 15,260 --------- ---------
--------- --------- Net Income $26,225 $22,372 $28,785 $24,888
========= ========= ========= ========= Basic Earnings Per Common
Share: 1.21 1.08 1.34 $1.20 Diluted Earnings Per Common Share: 1.17
1.04 1.30 $1.16 Weighted Average Shares Outstanding Basic 21,694
20,760 21,425 20,658 Diluted 22,415 21,515 22,096 21,391 Central
Garden & Pet Company Condensed Consolidated Balance Sheets
(Unaudited) (In thousands) March 25, September 24, 2006 2005
-------------- ------------- Assets Current Assets: Cash & Cash
Equivalents $19,147 $28,792 Accounts Receivable 289,096 184,896
Inventories 364,504 270,736 Other Current Assets 34,184 25,853
-------------- ------------- Total Current Assets 706,931 510,277
Property & Equipment - Net 130,311 110,595 Goodwill 369,209
364,847 Other Assets 378,625 70,630 -------------- -------------
Total $1,585,076 $1,056,349 ============== =============
Liabilities & Shareholders' Equity Current Liabilities:
Accounts Payable $139,051 $96,455 Accrued Expenses 79,399 68,152
Current Portion of Long-Term Debt 3,022 2,210 --------------
------------- Total Current Liabilities 221,472 166,817 Long-Term
Debt 652,790 320,854 Other Long-Term Obligations 19,812 18,500
Convertible Redeemable Preferred Stock 3,000 3,000 Shareholders'
Equity 688,002 547,178 -------------- ------------- Total
$1,585,076 $1,056,349 ============== ============= *T
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