Sales increase 5 percent; 3 percent on
adjusted basis to $459 million; Diluted EPS increases to
$0.38 compared to adjusted diluted EPS of $0.28
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 third quarter ended June
27, 2015.
Fiscal 2015 Third Quarter Financial
Highlights
- Third quarter sales increased to $459.4
million compared to $438.0 million for the third quarter of 2014.
Adjusted sales for the third quarter of 2014 were $445.0
million;
- Gross margin for the third quarter
improved to 30.9% compared to 27.2% for the third quarter of 2014.
Adjusted gross margin for the third quarter of 2014 was 30.6%;
- Operating income for the third quarter
increased to $39.0 million compared to $18.4 million for the third
quarter of 2014. Adjusted operating income for the third quarter of
2014 was $33.3 million;
- SG&A expenses as a percentage of
sales improved to 22.4% compared to 23.0% for the third quarter of
2014. Adjusted SG&A as a percentage of sales for the third
quarter of 2014 was 23.1%;
- Operating margin for the third quarter
improved to 8.5% compared to 4.2% for the third quarter of 2014.
Adjusted operating margin for the third quarter of 2014 was
7.5%;
- Net income for the third quarter
increased to $18.8 million compared to $4.7 million for the third
quarter of 2014. Adjusted net income for the third quarter of 2014
was $14.1 million; and
- Earnings per fully-diluted share for
the third quarter increased to $0.38 compared to $0.09 for the
third quarter of 2014. Adjusted earnings per fully-diluted share
for the third quarter of 2014 was $0.28
On an adjusted basis, net sales improved 3 percent, gross margin
improved by 30 basis points, and SG&A as a percentage of sales
improved by 70 basis points. The combination of these improvements
generated an operating margin of 8.5%, a 100 basis point
improvement over the prior year.
“The positive impact of the actions we have taken over the past
two years to increase revenue, lower SG&A expenses and improve
operating margins are clearly reflected in our third quarter
financial results, which came in significantly above last year’s
reported and adjusted results, as well as above our earlier
expectations,” said John Ranelli, President & CEO of Central
Garden & Pet. “The trend in Pet revenues continues to be on the
upswing, and both our Garden and Pet segments showed solid gains in
operating income. We are focused on continuing to drive earnings
growth in the years ahead through our initiatives to increase
revenues and lower costs.”
While it is still early in the quarter, and there are a number
of variables that could impact the Company’s fourth quarter
results, an improvement in earnings is expected. The Company
currently expects fiscal 2015 earnings per share of $0.63 or
higher, well ahead of adjusted earnings per share of $0.33 in the
prior year.
Garden Segment Third Quarter
Details
Sales for the Garden segment were $221.3 million, an increase of
$10.4 million or 4.9 percent compared to reported GAAP numbers from
the third quarter of 2014 and up 1.6 percent over adjusted third
quarter 2014 results. The increase in sales was primarily due to
higher control product revenues and increased sales of other
manufacturers’ products, partially offset by declines in wild bird
feed sales. The Garden segment’s branded product sales were $180.4
million in the third quarter of 2015, and sales of other
manufacturers’ products were $40.9 million.
The Garden segment’s operating income in the quarter improved by
$19.5 million, to $23.5 million, compared to reported GAAP
operating income of $4.0 million. Adjusted operating income for the
third quarter of 2014 was $18.9 million. The Garden segment’s
operating margin improved 870 basis points compared to reported
GAAP operating margin and 190 basis points compared to adjusted
operating margin in the prior year period. Higher profitability in
the grass seed and private label controls and fertilizers
businesses drove the increase, more than offsetting lower
profitability in the décor and wild bird feed businesses.
Pet Segment Third Quarter
Details
Third quarter sales for the Pet segment increased $11.0 million,
or 4.8 percent, from the same period a year ago to $238.1 million,
due in large part to higher professional revenues and higher sales
of other manufacturers’ products. Professional sales benefitted
from increased sales of the Company’s active ingredient products,
including higher sales from its Envincio division, which was
acquired last year. Sales of other manufacturers’ products also
increased, primarily due to higher sales in the e-commerce channel.
Partially offsetting the revenue gains were lower revenues in the
flea and tick and wild bird feed categories. The Pet segment’s
branded product sales were $183.3 million in the third quarter of
2015, and sales of other manufacturers’ products were $54.8
million.
The Pet segment’s operating income was $32.9 million compared to
$28.4 million in the third quarter of 2014. The increase in
operating income was largely due to the increase in sales. The Pet
segment’s operating margin increased 130 basis points, benefitting
from increased efficiencies due to higher volume in the Company’s
professional business, a favorable mix shift inclusive of more
professional sales, lower marketing expenditures in its flea &
tick business, and a higher gross margin in its dog & cat
business. The aquatics and equine businesses experienced lower
operating margins during the quarter, partially offsetting the
gains.
Year-to-Date Fiscal 2015 Financial
Highlights
- Sales increased to $1.26 billion
compared to $1.23 billion for the same period a year ago. Adjusted
sales for the year-ago period were $1.24 billion;
- Branded product sales increased 1% to
$1.01 billion. Sales of other manufacturers’ products increased 13%
to $258.7 million;
- Operating income increased to $90.1
million compared to $54.8 million for the same period a year ago.
Adjusted operating income for the year-ago period was $69.8
million;
- Reported operating margin improved to
7.1% compared to 4.5% for the same period a year ago. Adjusted
operating margin for the year-ago period was 5.6%; and
- Reported earnings per fully-diluted
share increased to $0.73 compared to $0.26 for the same period a
year ago. Adjusted earnings per fully-diluted share for the period
was $0.45
Additional Information
At June 27, 2015, the Company’s cash and short-term investments
balance was $43.8 million, compared to $46.1 million a year ago.
Cash flow from operations for the third quarter of 2015 was $155.1
million, compared to $128.9 million in the third quarter of 2014.
The Company reduced its inventory balance by $24.8 million during
the quarter compared to the same period a year ago, in addition to
a $48.1 million inventory reduction in the third quarter of 2014
compared to the prior year.
The Company’s long term debt was $400.2 million compared to
$450.3 million at June 28, 2014. Net interest expense was $9.0
million for the period compared to $10.4 million in the prior-year
period. The lower debt and interest expense is reflective of lower
average borrowings including the redemption of $50 million of the
Company’s 8.25% senior subordinated notes due March 2018 earlier
this year.
Depreciation and amortization expense was $8.3 million, compared
with $9.2 million in the prior-year period. The Company’s effective
tax rate for the third quarter of 2015 was 37.5 percent, compared
with 37.0 percent for the third quarter of 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 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 (201)
689-8345 (domestic and international) using confirmation #
13615304. A replay of the call will be available for ten days by
dialing (201) 612-7415 and entering confirmation #13615304.
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 under the PENNINGTON® brand. 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®, 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.
“Safe Harbor” Statement under the Private Securities Litigation
Reform Act of 1995: The statements contained in this release which
are not historical facts, including earnings guidance for the
fourth quarter and fiscal 2015 and expectations for future
favorable results 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:
- 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;
- dependence on management and the
ability to execute on our succession plan; and
- competition in our industries
These risks and others are described in the Company’s Securities
and Exchange Commission filings. The Company 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 27, June 28,
September 27,
ASSETS 2015 2014
2014 Current assets: Cash and cash equivalents $ 43,841 $
31,846 $ 78,676 Restricted cash 12,590 0 14,283 Short term
investments 0 14,220 9,990 Accounts receivable (less allowance for
doubtful accounts of $18,573, $29,221 and $25,212) 223,149 214,120
193,729 Inventories 340,233 365,035 326,386 Prepaid expenses and
other 54,558 53,689 48,488 Total current
assets 674,371 678,910 671,552 Land, buildings, improvements
and equipment—net 162,969 177,660 166,849 Goodwill 209,089 205,756
208,233 Other intangible assets—net 83,841 76,923 87,997 Deferred
income taxes and other assets 28,951 26,689
14,096 Total $ 1,159,221 $ 1,165,938 $ 1,148,727
LIABILITIES AND EQUITY Current liabilities: Accounts payable
$ 90,423 $ 89,959 $ 88,428 Accrued expenses 110,070 89,521 84,379
Current portion of long-term debt 290 296 291
Total current liabilities 200,783 179,776 173,098 Long-term
debt 399,879 449,994 449,948 Other long-term obligations 47,147
43,236 39,228 Equity: Common stock, $.01 par value:
11,908,317, 12,308,802, and 12,437,307 shares outstanding at June
27, 2015, June 28, 2014 and September 27, 2014 119 123 124 Class A
common stock, $.01 par value: 35,970,174, 36,479,590 and 36,887,311
shares outstanding at June 27, 2015, June 28, 2014 and September
27, 2014 360 365 369 Class B stock, $.01 par value: 1,652,262
shares outstanding 16 16 16 Additional paid-in capital 388,762
398,244 396,586 Accumulated earnings 120,356 90,466 86,396
Accumulated other comprehensive income 679 1,868
1,232 Total Central Garden & Pet Company shareholders’
equity 510,292 491,082 484,723 Noncontrolling interest 1,120
1,850 1,730 Total equity 511,412
492,932 486,453 Total $ 1,159,221 $ 1,165,938 $ 1,148,727
CENTRAL GARDEN & PET
COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share
amounts)
(Unaudited)
Three Months Ended Nine Months Ended June
27,
2015
June 28,
2014
June 27, 2015 June 28, 2014 Net
sales $ 459,446 $ 437,987 $ 1,264,368 $ 1,230,119 Cost of goods
sold and occupancy 317,409 318,856
884,288 883,651 Gross profit 142,037
119,131 380,080 346,468 Selling, general and administrative
expenses 103,044 100,705 289,978
291,628 Income from operations 38,993 18,426
90,102 54,840 Interest expense (8,978 ) (10,429 ) (31,357 ) (33,051
) Interest income 7 14 96 43 Other income 585
456 96 396 Income before income
taxes and noncontrolling interest 30,607 8,467 58,937 22,228 Income
taxes 11,484 3,133 21,527
8,217 Income including noncontrolling interest 19,123
5,334 37,410 14,011 Net income attributable to noncontrolling
interest 323 647 1,070
1,137 Net income attributable to Central Garden &
Pet Company $ 18,800 $ 4,687 $ 36,340 $ 12,874
Net income per share attributable to Central Garden
& Pet Company: Basic $ 0.39 $ 0.10 $ 0.75
$ 0.26 Diluted $ 0.38 $ 0.09 $ 0.73 $
0.26 Weighted average shares used in the computation
of net income per share: Basic 48,167 49,148 48,642 48,732 Diluted
49,290 49,841 49,496 49,201
Use of Non-GAAP Financial Measures
The Company reports its financial results in accordance with
U.S. generally accepted accounting principles (GAAP). However,
management believes that certain non-GAAP financial measures that
exclude the impact of the garden charge and a gain recognized
during the quarter ended June 28, 2014 in the garden segment
related to the sale of plant assets may be useful in certain
instances to provide additional meaningful comparisons between
current results and results in prior operating periods that should
be considered when assessing our ongoing performance and providing
consistency with our prior year disclosure. The Company believes
that these non-GAAP financial measures provide useful information
to investors and other users of its financial statements, such as
lenders. Management also uses these non-GAAP financial measures in
making financial, operating and planning decisions and in
evaluating the Company's performance. While the Company's
management believes that non-GAAP measurements are useful
supplemental information, such adjusted results are not intended to
replace the Company's GAAP financial results and should be read in
conjunction with those GAAP results.
GAAP to Non-GAAP
Reconciliation
(unaudited, in thousands, except per
share amounts)
For the Three Months Ended June 28, 2014
GAAP
Garden Charge (A)
Gain on Sale
Of
Fixed Assets (B)
June 28, 2014 As Adjusted
June 27, 2015
GAAP
Net sales $ 437,987 $ 7,035
$ - $ 445,022 $ 459,446 Cost of goods
sold and occupancy 318,856
(9,873 ) -
308,983 317,409 Gross profit
119,131 16,908 - 136,039 142,037 Selling, general and
administrative expenses 100,705
- 1,996
102,701 103,044 Income
from operations 18,426 16,908 (1,996 ) 33,338 38,993 Net Income $
4,687 $ 10,652 $ (1,258 ) $ 14,081 $ 18,800 Earnings per share -
Diluted $ 0.09 $ 0.21 $ (0.02 ) $ 0.28 $ 0.38 Weighted Shares
Outstanding 49,841 49,841 49,841 49,841 49,290 Gross margin
27.2 % 30.6 % 30.9 % Selling, general and administrative expenses
as a percentage of sales 23.0 % 23.1 % 22.4 % Operating margin 4.2
% 7.5 % 8.5 %
For the
Nine Months Ended June 28, 2014
GAAP
Garden Charge (A)
Gain on Sale
Of
Fixed Assets (B)
June 28, 2014 As Adjusted
June 27, 2015
GAAP
Net sales $ 1,230,119 $ 7,035
$ - $ 1,237,154 $ 1,264,368 Cost of
goods sold and occupancy 883,651
(9,873 ) -
873,778 884,288 Gross profit
346,468 16,908 - 363,376 380,080 Selling, general and
administrative expenses 291,628
- 1,996
293,624 289,978 Income
from operations 54,840 16,908 (1,996 ) 69,752 90,102 Net Income $
12,874 $ 10,652 $ (1,258 ) $ 22,268 $ 36,340 Earnings per share -
Diluted $ 0.26 $ 0.22 $ (0.03 ) $ 0.45 $ 0.73 Weighted Shares
Outstanding 49,201 49,201 49,201 49,201 49,496 Gross margin
28.2 % 29.4 % 30.1 % Selling, general and administrative expenses
as a percentage of sales 23.7 % 23.7 % 22.9 % Operating margin 4.5
% 5.6 % 7.1 %
For the Three Months Ended For the
Nine Months Ended Garden Segment: Net
Sales Net Sales June 28, 2014 as reported (GAAP) $
210,905 $ 601,688 Garden charge (A) 7,035 7,035 June
28, 2014 as adjusted $ 217,940 $ 608,723 June 27,
2015 as reported (GAAP) $ 221,320 $ 605,437
Income from
Operations Operating Margin Income from
Operations Operating Margin June 28, 2014 as reported
(GAAP) $ 4,011 1.9 % $ 34,579 5.7 % Garden charge (A) 16,908 16,908
Gain on sale of fixed assets (B) (1,996 ) (1,996 )
June 28, 2014 as adjusted $ 18,923 8.7 % $ 49,491 8.1
% June 27, 2015 as reported (GAAP) $ 23,458
10.6 % $ 59,248 9.8 %
(A) The Non-GAAP financial information excludes the impact of a
garden segment charge to write off inventory, account for product
returns and promotional allowances and other costs related to the
discontinuance of certain products introduced in 2013.
(B) The gain on sale of fixed assets correlates to the sale of
plant assets during the quarter ended June 28, 2014 related to a
product the garden segment will now purchase rather than
produce.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150804006776/en/
Central Garden & Pet CompanySteve Zenker, 925-948-3657VP of
Investor Relations & Communications
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