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 third quarter ended June 29,
2013.
The Company reported net sales of $494.1 million, a 7 percent
decrease from the comparable fiscal 2012 period. Revenues declined
in both the Company’s Pet and Garden segments. The Company’s third
quarter operating income was $32.9 million, compared to operating
income of $49.0 million in the third quarter of 2012. Net income
was $13.7 million, or $0.28 per fully diluted share, compared with
net income of $22.7 million or $0.47 per fully diluted share in the
third quarter of 2012.
“We anticipated lower results this quarter compared to strong
sales and earnings gains a year ago; and although Pet performed
in-line with our expectations, our Garden business did not,” said
John Ranelli, President and CEO of Central Garden & Pet. “While
our results for the quarter were disappointing, we are taking the
right steps to strengthen our business for the future, including
improving customer service and innovation, and identifying
additional ways to take costs out of the business. In addition, we
are leveraging a new matrix operating structure to bring decision
making closer to the customer.” Mr. Ranelli continued, “There is
much work to be done. Much of the recent progress we have made is
not yet visible in our financial statements. Our business remains
fundamentally strong with many opportunities ahead.”
Third Quarter and Year-to-Date
Details
Net sales for the Garden segment for the quarter were $256.3
million, a decline of 2 percent from the third quarter of 2012, due
in part to lower sales of controls products. In the prior year
quarter, controls and fertilizers benefitted from the shipment of
delayed orders. The Garden segment’s branded product sales for the
quarter decreased $5.8 million, or 3 percent, to $215.5 million
while sales of other manufacturers’ products decreased $0.4
million, to $40.8 million, a decrease of 1 percent compared with
the third quarter of 2012. The Garden segment’s operating margin
declined during the quarter, reflecting lower profitability in the
company’s controls, fertilizer and decor businesses, due in part to
higher promotion and marketing expenses. For the third quarter, the
Garden segment’s operating income was $13.7 million, down from
$22.6 million in the third quarter of 2012.
Net sales for the Pet segment for the quarter were $237.8
million, a decline of 12 percent from the third quarter of 2012,
which included the benefit of the initial sell-in of high-margin
flea and tick products to a new channel. The Pet segment’s branded
product sales for the quarter decreased $34.4 million, or 15
percent, to $194.5 million while sales of other manufacturers’
products were $43.3 million, an increase of 2 percent compared with
the third quarter of 2012. The Pet segment’s operating margin fell
during the quarter due in part to lower flea & tick sales than
a year ago partially offset by lower selling, general and
administrative expenses. For the third quarter, the Pet segment’s
operating income was $33.1 million, down from $40.4 million in the
prior year period.
For the nine months ending June 29, 2013, the Company reported
net sales of $1.28 billion, down from $1.30 billion in the
comparable 2012 period. Branded products sales were $1.07 billion,
down 2 percent from the comparable 2012 period. Sales of other
manufacturers' products decreased 1 percent to $213.1 million.
Operating income for the period was $66.5 million compared to $82.9
million in the prior year. Net income for the nine months ended
June 29, 2013 was $20.7 million compared to $31.2 million in the
comparable 2012 period. Earnings per fully diluted share were $0.42
compared to $0.65 per fully diluted share in the year ago
period.
At June 29, 2013, the Company’s cash and short term investments
balance totaled $38.3 million. Net interest expense was $11.3
million for the quarter and $10.7 million in the prior year period.
Depreciation and amortization expense was $7.8 million, a decrease
from $8.0 million in the third quarter of 2012. The Company’s
effective tax rate for the third quarter was 34 percent compared to
38 percent in the prior year period.
Total debt at June 29, 2013 was $509.6 million compared to
$449.9 million at June 23, 2012. The quarter ending total leverage
ratio, as defined in the Company’s senior credit facility, was
4.9x. The Company was in compliance with all debt covenants at June
29, 2013. On August 1, 2013, the Company amended its Credit
Facility to reduce the Minimum Interest Coverage ratio from 2.50x
to 2.25x, and to add a minimum asset coverage ratio at 1.10x. Both
covenant modifications are effectitive through the fiscal quarter
ending March 29, 2014.
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 fiscal third
quarter 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
412-317-6062. A replay of the call will be available for three
weeks by dialing 858-384-5517 and entering passcode 105408.
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 3,500 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 future growth
and cost reduction opportunities, 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:
- the success of and costs and expenses
associated with the Company’s transformational 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
June
29,
June
23,
September 29, ASSETS 2013 2012
2012 Current assets: Cash and cash equivalents $ 20,482 $
40,699 $ 48,475 Short term investments 17,820 17,820 22,705
Accounts receivable (less allowance for doubtful accounts of
$23,355, $18,297 and $18,574) 243,650 245,780 202,422 Inventories
413,070 334,796 330,032 Prepaid expenses and other 53,751
46,107 48,149 Total current assets 748,773 685,202
651,783 Land, buildings, improvements and equipment—net
190,921 185,225 191,163 Goodwill 210,223 210,223 210,223 Other
intangible assets—net 75,670 80,529 78,853 Deferred income taxes
and other assets 19,049 18,539 17,525 Total $
1,244,636 $ 1,179,718 $ 1,149,547
LIABILITIES AND
EQUITY Current liabilities: Accounts payable $ 112,313 $
125,111 $ 126,662 Accrued expenses 93,213 106,818 79,491 Current
portion of long-term debt 205 347 331 Total
current liabilities 205,731 232,276 206,484 Long-term debt
509,430 449,530 449,483 Other long-term obligations 37,845 23,478
28,697 Equity: Common stock, $.01 par value: 12,246,751,
12,247,571, and 12,247,571 shares outstanding at June 29, 2013,
June 23, 2012 and September 29, 2012 122 122 122 Class A common
stock, $.01 par value: 35,240,576, 34,506,329 and 34,706,902 shares
outstanding at June 29, 2013, June 23, 2012 and September 29, 2012
352 345 347 Class B stock, $.01 par value: 1,652,262 shares
outstanding 16 16 16 Additional paid-in capital 388,443 381,751
382,195 Retained earnings 100,173 89,777 79,718 Accumulated other
comprehensive income 840 1,127 1,539 Total
Central Garden & Pet Company shareholders’ equity 489,946
473,138 463,937 Noncontrolling interest 1,684 1,296
946 Total equity 491,630 474,434
464,883 Total $ 1,244,636 $ 1,179,718 $ 1,149,547
CENTRAL GARDEN & PET
COMPANYCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share
amounts)
(unaudited)
Three Months Ended Nine Months Ended
June
29, 2013
June
23, 2012
June
29, 2013
June
23, 2012
Net sales $ 494,130 $ 533,808 $ 1,284,796 $ 1,302,777 Cost of goods
sold and occupancy 341,664 353,156
902,201 893,691 Gross profit 152,466
180,652 382,595 409,086 Selling, general and administrative
expenses 119,574 131,683 316,051
326,175 Income from operations 32,892 48,969
66,544 82,911 Interest expense (11,347 ) (10,723 ) (32,599 )
(30,738 ) Interest income 28 28 120 84 Other income (expense)
353 102 (676 ) (19 )
Income before income taxes and noncontrolling interest 21,926
38,376 33,389 52,238 Income taxes 7,520 14,554
11,370 19,716 Income including
noncontrolling interest 14,406 23,822 22,019 32,522 Net income
attributable to noncontrolling interest 681
1,123 1,367 1,290 Net income
attributable to Central Garden & Pet Company $ 13,725 $
22,699 $ 20,652 $ 31,232 Net income per
share attributable to Central Garden & Pet Company: Basic $
0.28 $ 0.48 $ 0.43 $ 0.66 Diluted $
0.28 $ 0.47 $ 0.42 $ 0.65
Weighted average shares used in the computation of net income per
share: Basic 48,173 47,661 48,037 47,580 Diluted 48,822 48,388
48,766 48,253
Central Garden and Pet (NASDAQ:CENT)
Historical Stock Chart
From Sep 2024 to Oct 2024
Central Garden and Pet (NASDAQ:CENT)
Historical Stock Chart
From Oct 2023 to Oct 2024