CENTA Central Garden and Pet Co

Fiscal 2025 Q1 net sales of $656 million vs. $635 million in the prior year

Fiscal 2025 Q1 EPS of $0.21 vs. $0.01 a year ago

Maintains outlook for fiscal 2025 non-GAAP EPS of $2.20 or better

Central Garden & Pet Company (NASDAQ: CENT) (NASDAQ: CENTA) (“Central”), a market leader in the pet and garden industries, today announced results for its fiscal 2025 first quarter ended December 28, 2024.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20250205965879/en/

CENTRAL GARDEN & PET ANNOUNCES Q1 FISCAL 2025 FINANCIAL RESULTS -- Fiscal 2025 Q1 net sales of $656 million vs. $635 million in the prior year -- Fiscal 2025 Q1 EPS of $0.21 vs. $0.01 a year ago -- Maintains outlook for fiscal 2025 non-GAAP EPS of $2.20 or better (Graphic: Business Wire)

“The fiscal year is off to a strong start, driven by increased first quarter shipments, productivity gains and easing inflation, all contributing to growth in both our top and bottom line,” said Niko Lahanas, CEO of Central Garden & Pet. “We are encouraged by our first quarter performance, but recognize this period is typically our smallest quarter and benefited from the favorable timing of shipments and promotional activities. We remain confident in our fiscal year outlook and committed to executing our Central to Home strategy with excellence.”

Fiscal 2025 First Quarter Financial Results

Net sales increased 3% to $656 million from $635 million a year ago.

Gross profit was $196 million compared to $179 million in the prior year quarter. Gross margin improved by 160 basis points to 29.8% driven by productivity gains and moderating inflation.

SG&A expense was $168 million compared to $170 million in the prior year. SG&A as a percentage of net sales decreased by 140 basis points to 25.5% reflecting cost discipline across the organization.

Operating income grew to $28 million from $8 million a year ago. Operating margin expanded by 300 basis points to 4.3%.

Net interest expense was $8 million compared to $10 million a year ago driven by higher interest income.

Net income was $14 million compared $0.4 million in the prior year. Earnings per share were $0.21 compared to $0.01.

Adjusted EBITDA rose to $55 million from $37 million a year ago.

The effective tax rate was 23.5%.

Pet Segment Fiscal 2025 First Quarter Results

Net sales for the Pet segment increased 4% to $427 million from $409 million in the prior year quarter driven primarily by customers shifting orders into the first quarter and the timing of promotional activities.

Pet segment operating income grew to $51 million from $43 million a year ago. Operating margin expanded by 140 basis points to 12.0% from 10.6% in the prior year quarter driven by productivity efforts and moderating inflation.

Pet segment adjusted EBITDA rose to $61 million from $54 million a year ago.

Garden Segment Fiscal 2025 First Quarter Results

Net sales for the Garden segment increased 2% to $229 million from $225 million a year ago driven primarily by customers shifting orders into the first quarter, supported by favorable weather.

Garden segment operating income was $2 million compared to an operating loss of $9 million in the prior year quarter. Operating margin improved by 500 basis points to 1.1% from negative 3.9% a year ago, driven by moderating inflation, productivity gains and exiting the low-margin pottery business.

Garden segment adjusted EBITDA was $14 million compared to $2 million in the prior year quarter.

Liquidity and Debt

The cash balance at the end of the quarter was $618 million compared to $341 million a year ago. Cash used by operations during the quarter was $69 million compared to $70 million a year ago.

Total debt as of December 28, 2024 and December 30, 2023 was $1.2 billion. The gross leverage ratio, calculated using the definitions for Indebtedness and EBITDA in Central's credit agreement, at the end of the first quarter was 2.9x compared to 3.0x at the end of the prior year quarter.

Central repurchased 1.68 million shares or $52 million of its stock during the quarter. As of the end of the fiscal first quarter, $131 million remains available for future stock repurchases.

Cost and Simplicity Program

Central continues to make significant progress in its multi-year Cost and Simplicity program, which encompasses a comprehensive pipeline of initiatives across procurement, manufacturing, logistics, portfolio management, and administrative costs. These efforts aim to streamline operations, enhance efficiency, and simplify the business across the organization.

Fiscal 2025 Guidance

Central continues to expect fiscal 2025 non-GAAP EPS to be $2.20 or better.

This outlook reflects the expected impact of the recently announced tariffs, deflationary pressure in certain commodity businesses, shifting consumer behavior amid macroeconomic and geopolitical uncertainty, and challenges within the brick-and-mortar retail landscape. This outlook excludes the potential impact of acquisitions, divestitures, or restructuring activities that may occur during fiscal 2025, including initiatives associated with the Cost and Simplicity program. Central anticipates fiscal 2025 capital expenditures to range between $60 million and $70 million.

Conference Call

Central's senior management will host a conference call today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to review the fiscal 2025 first quarter results and provide a general business update. The call, along with related materials, can be accessed at http://ir.central.com.

Alternatively, to listen to the call by telephone, dial (201) 689-8345 (domestic and international) entering confirmation #13750497.

About Central Garden & Pet

Central Garden & Pet Company (NASDAQ: CENT) (NASDAQ: CENTA) understands home is central to life and has proudly nurtured happy and healthy homes for over 45 years. With fiscal 2024 net sales of $3.2 billion, Central is on a mission to lead the future of the pet and garden industries. The Company’s innovative and trusted products are dedicated to helping lawns grow greener, gardens bloom bigger, pets live healthier, and communities grow stronger. Central is home to a leading portfolio of more than 65 high-quality brands including Amdro®, Aqueon®, Cadet®, C&S®, Farnam®, Ferry-Morse®, Four Paws®, Kaytee®, Nylabone® and Pennington®, strong manufacturing and distribution capabilities, and a passionate, entrepreneurial growth culture. Central is based in Walnut Creek, California, with 6,450 employees primarily across North America. Visit www.central.com to learn more.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995

The statements contained in this release which are not historical facts, including statements concerning productivity initiatives and earnings guidance for fiscal 2025, 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 Central's current expectations and various assumptions. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements contained in this release including, but not limited to, the following factors:

• economic uncertainty and other adverse macroeconomic conditions;
• impacts of tariffs or a trade war;
• risks associated with international sourcing, including from China;
• fluctuations in energy prices, fuel and related petrochemical costs;
• declines in consumer spending and the associated increased inventory risk;
• seasonality and fluctuations in our operating results and cash flow;
• adverse weather conditions and climate change;
• the success of our Central to Home strategy and our Cost and Simplicity program;
• fluctuations in market prices for seeds and grains and other raw materials, including the impact of significant declines in grass seed market prices on our inventory valuation;
• risks associated with new product introductions, including the risk that our new products will not produce sufficient sales to recoup our investment;
• dependence on a small number of customers for a significant portion of our business;
• consolidation trends in the retail industry;
• supply shortages in pet birds, small animals and fish;
• reductions in demand for our product categories;
• competition in our industries;
• continuing implementation of an enterprise resource planning information technology system;
• regulatory issues;
• potential environmental liabilities;
• access to and cost of additional capital;
• the impact of product recalls;
• risks associated with our acquisition strategy, including our ability to successfully integrate acquisitions and the impact of purchase accounting on our financial results;
• potential goodwill or intangible asset impairment;
• the potential for significant deficiencies or material weaknesses in internal control over financial reporting, particularly of acquired companies;
• our dependence upon our key executives;
• our ability to recruit and retain members of our management team and employees to support our businesses;
• potential costs and risks associated with actual or potential cyberattacks;
• our ability to protect our trademarks and other proprietary rights;
• litigation and product liability claims;
• the impact of new accounting regulations and the possibility our effective tax rate will increase as a result of future changes in the corporate tax rate or other tax law changes;
• potential dilution from issuance of authorized shares; and
• the voting power associated with our Class B stock.

These risks and others are described in more detail in Central’s Annual Report on Form 10-K for the fiscal year ended September 28, 2024, filed with the Securities and Exchange Commission on November 27, 2024. 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)

 

ASSETS

December 28, 2024

 

December 30, 2023

 

September 28, 2024

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

618,020

 

 

$

341,419

 

 

$

753,550

 

Restricted cash

 

14,649

 

 

 

14,200

 

 

 

14,853

 

Accounts receivable (less allowances of $22,264, $24,973 and $21,035)

 

399,443

 

 

 

370,996

 

 

 

326,220

 

Inventories, net

 

815,782

 

 

 

948,398

 

 

 

757,943

 

Prepaid expenses and other

 

39,919

 

 

 

39,047

 

 

 

34,240

 

Total current assets

 

1,887,813

 

 

 

1,714,060

 

 

 

1,886,806

 

Plant, property and equipment, net

 

370,673

 

 

 

389,440

 

 

 

379,166

 

Goodwill

 

551,361

 

 

 

546,436

 

 

 

551,361

 

Other intangible assets, net

 

465,914

 

 

 

489,058

 

 

 

473,280

 

Operating lease right-of-use assets

 

195,775

 

 

 

177,499

 

 

 

205,137

 

Other assets

 

64,319

 

 

 

105,841

 

 

 

57,689

 

Total

$

3,535,855

 

 

$

3,422,334

 

 

$

3,553,439

 

LIABILITIES AND EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

221,903

 

 

$

212,193

 

 

$

212,606

 

Accrued expenses

 

262,952

 

 

 

230,477

 

 

 

245,226

 

Current lease liabilities

 

58,623

 

 

 

51,035

 

 

 

57,313

 

Current portion of long-term debt

 

173

 

 

 

466

 

 

 

239

 

Total current liabilities

 

543,651

 

 

 

494,171

 

 

 

515,384

 

Long-term debt

 

1,190,271

 

 

 

1,189,093

 

 

 

1,189,809

 

Long-term lease liabilities

 

163,271

 

 

 

136,708

 

 

 

173,086

 

Deferred income taxes and other long-term obligations

 

118,831

 

 

 

149,776

 

 

 

117,615

 

Equity:

 

 

 

 

 

Common stock, $0.01 par value: 10,718,231, 11,077,612 and 11,074,620 shares outstanding at December 28, 2024, December 30, 2023 and September 28, 2024

 

107

 

 

 

111

 

 

 

111

 

Class A common stock, $0.01 par value: 53,128,604, 54,515,853 and 54,446,194 shares outstanding at December 28, 2024, December 30, 2023 and September 28, 2024

 

531

 

 

 

545

 

 

 

544

 

Class B stock, $0.01 par value: 1,602,374 shares outstanding at December 28, 2024, December 30, 2023 and September 28, 2024

 

16

 

 

 

16

 

 

 

16

 

Additional paid-in capital

 

586,777

 

 

 

594,512

 

 

 

598,098

 

Retained earnings

 

936,344

 

 

 

858,817

 

 

 

959,511

 

Accumulated other comprehensive loss

 

(4,661

)

 

 

(2,112

)

 

 

(2,626

)

Total Central Garden & Pet Company shareholders’ equity

 

1,519,114

 

 

 

1,451,889

 

 

 

1,555,654

 

Noncontrolling interest

 

717

 

 

 

697

 

 

 

1,891

 

Total equity

 

1,519,831

 

 

 

1,452,586

 

 

 

1,557,545

 

Total

$

3,535,855

 

 

$

3,422,334

 

 

$

3,553,439

 

 

CENTRAL GARDEN & PET COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts, unaudited)

 

 

Three Months Ended

 

December 28, 2024

 

December 30, 2023

Net sales

$

656,436

 

 

$

634,533

 

Cost of goods sold

 

460,737

 

 

 

455,688

 

Gross profit

 

195,699

 

 

 

178,845

 

Selling, general and administrative expenses

 

167,707

 

 

 

170,433

 

Operating income

 

27,992

 

 

 

8,412

 

Interest expense

 

(14,470

)

 

 

(14,316

)

Interest income

 

6,740

 

 

 

4,609

 

Other income (expense)

 

(1,717

)

 

 

993

 

Income (Loss) before income taxes and noncontrolling interest

 

18,545

 

 

 

(302

)

Income tax expense (benefit)

 

4,364

 

 

 

(869

)

Income including noncontrolling interest

 

14,181

 

 

 

567

 

Net income attributable to noncontrolling interest

 

172

 

 

 

137

 

Net income attributable to Central Garden & Pet Company

$

14,009

 

 

$

430

 

Net income per share attributable to Central Garden & Pet Company:

 

 

 

Basic

$

0.22

 

 

$

0.01

 

Diluted

$

0.21

 

 

$

0.01

 

Weighted average shares used in the computation of net income per share:

 

 

 

Basic

 

64,552

 

 

 

65,415

 

Diluted

 

65,449

 

 

 

66,785

 

 

CENTRAL GARDEN & PET COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)

 

 

Three Months Ended

 

December 28, 2024

 

December 30, 2023

Cash flows from operating activities:

 

 

 

Net income

$

14,181

 

 

$

567

 

Adjustments to reconcile net income to net cash used by operating activities:

 

 

 

Depreciation and amortization

 

21,934

 

 

 

22,545

 

Amortization of deferred financing costs

 

673

 

 

 

666

 

Non-cash lease expense

 

15,131

 

 

 

12,772

 

Stock-based compensation

 

5,510

 

 

 

6,021

 

Deferred income taxes

 

1,276

 

 

 

1,498

 

Other operating activities

 

(600

)

 

 

(727

)

Change in assets and liabilities (excluding businesses acquired):

 

 

 

Accounts receivable

 

(73,439

)

 

 

(32,952

)

Inventories

 

(59,356

)

 

 

(92,808

)

Prepaid expenses and other assets

 

(7,522

)

 

 

(5,275

)

Accounts payable

 

10,342

 

 

 

19,145

 

Accrued expenses

 

17,450

 

 

 

9,533

 

Other long-term obligations

 

(73

)

 

 

3,310

 

Operating lease liabilities

 

(14,339

)

 

 

(14,079

)

Net cash used by operating activities

 

(68,832

)

 

 

(69,784

)

Cash flows from investing activities:

 

 

 

Additions to plant, property and equipment

 

(6,100

)

 

 

(10,127

)

Payments to acquire companies, net of cash acquired

 

(3,318

)

 

 

(59,498

)

Investments

 

—

 

 

 

(850

)

Net cash used in investing activities

 

(9,418

)

 

 

(70,475

)

Cash flows from financing activities:

 

 

 

Repayments of long-term debt

 

(78

)

 

 

(85

)

Repurchase of common stock, including shares surrendered for tax withholding

 

(54,022

)

 

 

(6,775

)

Payment of contingent consideration liability

 

—

 

 

 

(25

)

Distribution to noncontrolling interest

 

(1,346

)

 

 

(900

)

Net cash used by financing activities

 

(55,446

)

 

 

(7,785

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

(2,038

)

 

 

790

 

Net decrease in cash, cash equivalents and restricted cash

 

(135,734

)

 

 

(147,254

)

Cash, cash equivalents and restricted cash at beginning of period

 

768,403

 

 

 

502,873

 

Cash, cash equivalents and restricted cash at end of period

$

632,669

 

 

$

355,619

 

Supplemental information:

 

 

 

Cash paid for interest

$

19,903

 

 

$

19,756

 

Lease liabilities arising from obtaining right-of-use assets

$

4,789

 

 

$

13,170

 

 

Use of Non-GAAP Financial Measures

We report our financial results in accordance with generally accepted accounting principles ("GAAP"). However, to supplement the financial results prepared in accordance with GAAP, we use non-GAAP financial measures including adjusted EBITDA. Management uses adjusted EBITDA in making financial, operating and planning decisions and in evaluating our performance. Management believes this non-GAAP financial measure may be useful to investors in their assessment of our ongoing operating performance and provide additional meaningful comparisons between current results and results in prior operating periods. While Management believes that this non-GAAP measure is useful supplemental information, such adjusted results are not intended to replace our GAAP financial results and should be read in conjunction with those GAAP results.

Adjusted EBITDA is defined by us as income before income tax, net other expense, net interest expense and depreciation and amortization and stock-based compensation expense (or operating income plus depreciation and amortization expense and stock-based compensation expense). We present adjusted EBITDA because we believe that adjusted EBITDA is a useful supplemental measure in evaluating the cash flows and performance of our business and provides greater transparency into our results of operations. Adjusted EBITDA is used by our management to perform such evaluations. Adjusted EBITDA should not be considered in isolation or as a substitute for cash flow from operations, income from operations or other income statement measures prepared in accordance with GAAP. We believe that adjusted EBITDA is frequently used by investors, securities analysts and other interested parties in their evaluation of companies, many of which present adjusted EBITDA when reporting their results. Other companies may calculate adjusted EBITDA differently and it may not be comparable.

The reconciliations of adjusted EBITDA to the most directly comparable financial measures calculated and presented in accordance with GAAP are shown in the tables below.

  Adjusted EBITDA Reconciliation

 

GAAP to Non-GAAP Reconciliation

 

 

Three Months Ended December 28, 2024

 

 

Pet

 

Garden

 

Corporate

 

Total

 

 

(in thousands)

Net income attributable to Central Garden & Pet Company

 

$

—

 

$

—

 

$

—

 

 

$

14,009

Interest expense, net

 

 

—

 

 

—

 

 

—

 

 

 

7,730

Other expense

 

 

—

 

 

—

 

 

—

 

 

 

1,717

Income tax expense

 

 

—

 

 

—

 

 

—

 

 

 

4,364

Net income attributable to noncontrolling interest

 

 

—

 

 

—

 

 

—

 

 

 

172

Income (loss) from operations

 

 

51,257

 

 

2,423

 

 

(25,688

)

 

 

27,992

Depreciation & amortization

 

 

10,080

 

 

11,131

 

 

723

 

 

 

21,934

Noncash stock-based compensation

 

 

—

 

 

—

 

 

5,510

 

 

 

5,510

Adjusted EBITDA

 

$

61,337

 

$

13,554

 

$

(19,455

)

 

$

55,436

 

Adjusted EBITDA Reconciliation

 

GAAP to Non-GAAP Reconciliation

 

 

Three Months Ended December 30, 2023

 

 

Pet

 

Garden

 

Corporate

 

Total

 

 

(in thousands)

Net income attributable to Central Garden & Pet Company

 

$

—

 

$

—

 

 

$

—

 

 

$

430

 

Interest expense, net

 

 

—

 

 

—

 

 

 

—

 

 

 

9,707

 

Other income

 

 

—

 

 

—

 

 

 

—

 

 

 

(993

)

Income tax benefit

 

 

—

 

 

—

 

 

 

—

 

 

 

(869

)

Net income attributable to noncontrolling interest

 

 

—

 

 

—

 

 

 

—

 

 

 

137

 

Income (loss) from operations

 

 

43,388

 

 

(8,886

)

 

 

(26,090

)

 

 

8,412

 

Depreciation & amortization

 

 

10,798

 

 

11,006

 

 

 

741

 

 

 

22,545

 

Noncash stock-based compensation

 

 

—

 

 

—

 

 

 

6,021

 

 

 

6,021

 

Adjusted EBITDA

 

$

54,186

 

$

2,120

 

 

$

(19,328

)

 

$

36,978

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250205965879/en/

Investor Relations Contact Friederike Edelmann VP, Investor Relations & Corporate Sustainability fedelmann@central.com | (925) 412-6726