Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Central Garden & Pet Announces Q3 Fiscal 2024 Financial Results By: Central Garden & Pet Company via Business Wire August 07, 2024 at 16:02 PM EDT Fiscal 2024 Q3 net sales of $996 million compared to $1,023 million a year ago Fiscal 2024 Q3 GAAP EPS of $1.19 vs. $1.25 a year ago, Non-GAAP EPS of $1.32 vs. $1.40 a year ago Maintains outlook for fiscal 2024 non-GAAP EPS of $2.00 or better ($2.50 or better before the February 2024 stock dividend) Central Garden & Pet Company (NASDAQ: CENT) (NASDAQ: CENTA) (“Central”), a market leader in the Pet and Garden industries, today announced financial results for its fiscal 2024 third quarter ended June 29, 2024. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20240807439810/en/ "We delivered a solid third quarter earnings performance, recognizing that we had a record third quarter in 2023," said Beth Springer, Interim CEO. "Our Cost and Simplicity program continues to prove effective as evidenced in our improved gross margins. Looking ahead, we remain committed to our long-term Central to Home strategy." Fiscal 2024 Third Quarter Financial Results Net sales were $996 million compared to $1,023 million a year ago, a decrease of 3%. Organic net sales also decreased 3%. Gross profit was $317 million compared to $318 million a year ago. Non-GAAP gross profit of $326 million was in line with the prior year. Gross margin expanded by 70 basis points to 31.8%. On a non-GAAP basis, gross margin expanded by 80 basis points to 32.7% driven by Central's Cost and Simplicity program and moderating inflation. Operating income was $116 million compared to $123 million a year ago, a decrease of 6%. Non-GAAP operating income was $127 million compared to $137 million in the prior year. Operating margin was 11.6% compared to 12.0% a year ago. On a non-GAAP basis, operating margin was 12.8% compared to 13.4% in the prior year. Net interest expense was $10 million compared to $13 million a year ago. Net income was $80 million compared to $83 million in the prior year, a decrease of 4%. Non-GAAP net income was $88 million compared to $94 million a year ago. Earnings per share were $1.19 compared to $1.25 in the prior year, a decrease of $0.06. Non-GAAP earnings per share were $1.32 compared to $1.40 a year ago. Adjusted EBITDA was $156 million compared to $166 million a year ago. The effective tax rate was 24.0% compared to 24.4% in the prior year. Pet Segment Fiscal 2024 Third Quarter Results Net sales for the Pet segment were $508 million compared to $503 million in the prior year, an increase of 1% driven by the recent TDBBS acquisition and growth in consumable pet products. Organic net sales decreased 2% excluding the impact of TDBBS. Pet segment operating income was $83 million compared to $60 million a year ago, an increase of 39%. Operating margin expanded by 450 basis points to 16.4% compared to 11.9% driven by improved gross margin. Pet segment adjusted EBITDA was $94 million compared to $84 million in the prior year. Garden Segment Fiscal 2024 Third Quarter Results Net sales for the Garden segment were $488 million compared to $520 million a year ago, a decrease of 6%. Organic net sales decreased 4% excluding the impact of the sale of the independent garden channel distribution business. Garden segment operating income was $63 million compared to $88 million in the prior year, a decrease of 29%. Non-GAAP operating income was $74 million. Operating margin contracted 410 basis points to 12.8% compared to 16.9%. On a non-GAAP basis, operating margin contracted 180 basis points to 15.1% driven by lower sell through in live plants. Garden segment adjusted EBITDA was $85 million compared to $99 million a year ago. Liquidity and Debt The cash balance at the end of the quarter was $570 million compared to $333 million a year ago driven by earnings and inventory reduction efforts over the last 12 months. Cash provided by operations during the quarter was $286 million compared to $325 million a year ago. Total debt as of June 29, 2024, and June 24, 2023 was $1.2 billion. The gross leverage ratio, as defined in Central's credit agreement, at the end of the third quarter was 3.0x compared to 3.1x at the end of the prior year quarter. Cost and Simplicity Program Central continues to advance its multi-year Cost and Simplicity program consisting of a pipeline of projects across procurement, manufacturing, logistics, portfolio management and administrative costs to simplify its business and improve efficiency across the organization. In the third quarter of fiscal 2024, Central began winding down its pottery business. As a result of Cost and Simplicity projects, Central incurred $11.1 million of one-time costs largely related to the pottery exit, including $8.6 million in cost of goods sold and $2.5 million in selling, general and administrative costs, the majority of which was non-cash. Fiscal 2024 Guidance Central continues to expect fiscal 2024 non-GAAP EPS to be $2.00 or better ($2.50 or better before the February 2024 stock dividend) despite currently anticipating a one-time charge in the range of $15-20 million in the fourth quarter. Given the recent significant decrease in market prices for grass seed, Central determined in August 2024 it will be necessary to write down the value of its grass seed inventory. This outlook reflects uncertain consumer demand and retailer dynamics and an environment of macroeconomic and geopolitical volatility. It excludes the impact of any restructuring activities that may occur during the fourth quarter of fiscal 2024, including projects under the Cost and Simplicity program or other one-time non-recurring charges. Central now expects fiscal 2024 capital spending to be approximately $60 million. Conference Call Central's senior management will hold a conference call today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss its fiscal 2024 third quarter results and provide a general business update. The conference call and 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) using confirmation #13746730. 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 40 years. With fiscal 2023 net sales of $3.3 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®, Farnam®, Ferry-Morse®, Four Paws®, Kaytee®, K&H®, Nylabone® and Pennington®, strong manufacturing and distribution capabilities, and a passionate, entrepreneurial growth culture. Central is based in Walnut Creek, California, with 6,700 employees primarily across North America. Visit www.central.com to learn more. Safe Harbor Statement “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 evolving consumer demand and unfavorable retailer dynamics, the carryover impact from pricing actions, productivity initiatives and estimated capital spending, anticipated inventory write-down, and earnings guidance for fiscal 2024, 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: impact of inflation and interest rates, and other adverse macro-economic conditions; fluctuations in market prices for seeds and grains and other raw materials, including the impact of the recent significant decline in grass seed market prices on our inventory valuation; our inability to pass through cost increases in a timely manner; our ability to recruit and retain members of our management team and employees, including a Chief Executive Officer, to support our businesses; fluctuations in energy prices, fuel and related petrochemical costs; declines in consumer spending and increased inventory risk during economic downturns; reductions in demand for product categories that benefited from the COVID-19 pandemic; adverse weather conditions; the success of our Central to Home strategy and our Cost and Simplicity program; risks associated with our acquisition strategy, including our ability to successfully integrate acquisitions and the impact of purchase accounting on our financial results; material weaknesses relating to the internal controls of recently acquired companies; seasonality and fluctuations in our operating results and cash flow; supply shortages in pet birds, small animals and fish; dependence on a small number of customers for a significant portion of our business; consolidation trends in the retail industry; risks associated with new product introductions, including the risk that our new products will not produce sufficient sales to recoup our investment; competition in our industries; continuing implementation of an enterprise resource planning information technology system; potential environmental liabilities; risks associated with international sourcing; impacts of tariffs or a trade war; access to and cost of additional capital; potential goodwill or intangible asset impairment; our ability to remediate material weaknesses in our internal control over financial reporting; our dependence upon our key executives; our ability to protect our trademarks and other proprietary rights; litigation and product liability claims; regulatory issues; the impact of product recalls; potential costs and risks associated with actual or potential cyberattacks; potential dilution from issuance of authorized shares; the voting power associated with our Class B stock; and 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. 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 has not filed its Form 10-Q for the fiscal quarter ended June 29, 2024, so all financial results are preliminary and subject to change. CENTRAL GARDEN & PET COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts, unaudited) June 29, 2024 June 24, 2023 September 30, 2023 ASSETS Current assets: Cash and cash equivalents $ 570,398 $ 333,139 $ 488,730 Restricted cash 13,980 13,542 14,143 Accounts receivable (less allowance for credit losses and customer allowances of $24,838, $29,245 and $25,797) 507,524 492,850 332,890 Inventories, net 784,775 865,496 838,188 Prepaid expenses and other 33,493 36,655 33,172 Total current assets 1,910,170 1,741,682 1,707,123 Plant, property and equipment, net 384,373 392,332 391,768 Goodwill 546,436 546,436 546,436 Other intangible assets, net 472,854 512,175 497,228 Operating lease right-of-use assets 188,506 172,379 173,540 Other assets 105,539 54,943 62,553 Total $ 3,607,878 $ 3,419,947 $ 3,378,648 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 191,041 $ 198,406 $ 190,902 Accrued expenses 276,751 247,517 216,241 Current lease liabilities 53,363 50,209 50,597 Current portion of long-term debt 290 255 247 Total current liabilities 521,445 496,387 457,987 Long-term debt 1,189,366 1,187,498 1,187,956 Long-term lease liabilities 151,038 132,419 135,621 Deferred income taxes and other long-term obligations 150,249 156,537 144,271 Equity: Common stock, $0.01 par value: 11,077,612, 11,098,584 and 11,077,612 shares outstanding at June 29, 2024, June 24, 2023 and September 30, 2023 111 111 111 Class A common stock, $0.01 par value: 54,719,533, 54,408,159 and 54,472,902 shares outstanding at June 29, 2024, June 24, 2023 and September 30, 2023 547 544 544 Class B stock, $0.01 par value: 1,602,374 shares outstanding at June 29, 2024, June 24, 2023 and September 30, 2023 16 16 16 Additional paid-in capital 595,646 588,597 594,282 Retained earnings 1,000,527 858,217 859,370 Accumulated other comprehensive loss (3,199 ) (1,955 ) (2,970 ) Total Central Garden & Pet Company shareholders’ equity 1,593,648 1,445,530 1,451,353 Noncontrolling interest 2,132 1,576 1,460 Total equity 1,595,780 1,447,106 1,452,813 Total $ 3,607,878 $ 3,419,947 $ 3,378,648 CENTRAL GARDEN & PET COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts, unaudited) Three Months Ended Nine Months Ended June 29, 2024 June 24, 2023 June 29, 2024 June 24, 2023 Net sales $ 996,348 $ 1,023,269 $ 2,530,971 $ 2,559,936 Cost of goods sold 679,290 705,217 1,756,188 1,810,547 Gross profit 317,058 318,052 774,783 749,389 Selling, general and administrative expenses 201,122 195,222 556,988 548,112 Operating income 115,936 122,830 217,795 201,277 Interest expense (14,720 ) (14,542 ) (43,412 ) (43,887 ) Interest income 4,504 1,408 12,016 2,287 Other income 225 853 1,047 3,147 Income before income taxes and noncontrolling interest 105,945 110,549 187,446 162,824 Income tax expense 25,468 27,000 43,733 39,446 Income including noncontrolling interest 80,477 83,549 143,713 123,378 Net income attributable to noncontrolling interest 753 423 1,572 570 Net income attributable to Central Garden & Pet Company $ 79,724 $ 83,126 $ 142,141 $ 122,808 Net income per share attributable to Central Garden & Pet Company: Basic $ 1.21 $ 1.27 $ 2.17 $ 1.87 Diluted $ 1.19 $ 1.25 $ 2.13 $ 1.84 Weighted average shares used in the computation of net income per share: Basic 65,850 65,580 65,636 65,577 Diluted 66,945 66,725 66,848 66,832 CENTRAL GARDEN & PET COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, unaudited) Nine Months Ended June 29, 2024 June 24, 2023 Cash flows from operating activities: Net income $ 143,713 $ 123,378 Adjustments to reconcile net income to net cash used by operating activities: Depreciation and amortization 68,069 65,504 Amortization of deferred financing costs 2,013 2,023 Non-cash lease expense 39,183 38,180 Stock-based compensation 15,138 20,632 Deferred income taxes 3,622 9,125 Facility closures and business exit costs 16,385 13,923 Other operating activities 3,531 (450 ) Change in assets and liabilities (excluding businesses acquired): Accounts receivable (169,867 ) (115,358 ) Inventories 58,705 69,610 Prepaid expenses and other assets (383 ) 6,530 Accounts payable (2,968 ) (12,248 ) Accrued expenses 51,213 44,221 Other long-term obligations 2,352 (55 ) Operating lease liabilities (38,902 ) (37,449 ) Net cash provided by operating activities 191,804 227,566 Cash flows from investing activities: Additions to plant, property and equipment (33,096 ) (40,850 ) Payments to acquire companies, net of cash acquired (59,818 ) — Investments (1,500 ) (500 ) Other investing activities (175 ) (100 ) Net cash used in investing activities (94,589 ) (41,450 ) Cash flows from financing activities: Repayments of long-term debt (289 ) (223 ) Borrowings under revolving line of credit — 48,000 Repayments under revolving line of credit — (48,000 ) Repurchase of common stock, including shares surrendered for tax withholding (14,755 ) (33,409 ) Payment of contingent consideration liability (63 ) (33 ) Distribution to noncontrolling interest (900 ) — Net cash used by financing activities (16,007 ) (33,665 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 297 2,046 Net increase in cash, cash equivalents and restricted cash 81,505 154,497 Cash, cash equivalents and restricted cash at beginning of period 502,873 192,184 Cash, cash equivalents and restricted cash at end of period $ 584,378 $ 346,681 Supplemental information: Cash paid for interest $ 48,853 $ 49,419 Cash paid for income taxes $ 38,027 $ 5,363 New operating lease right of use assets $ 56,849 $ 25,424 Use of Non-GAAP Financial Measures We report our financial results in accordance with GAAP. However, to supplement the financial results prepared in accordance with GAAP, we use non-GAAP financial measures including non-GAAP net income and diluted net income per share, non-GAAP operating income, adjusted EBITDA and organic net sales. Management uses these non-GAAP financial measures that exclude the impact of specific items (described below) in making financial, operating and planning decisions and in evaluating our performance. Also, Management believes that these non-GAAP financial measures 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 non-GAAP measures are 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). Adjusted EBITDA further excludes one-time charges related to facility closures. 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 these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are shown in the tables below. Non-GAAP financial measures reflect adjustments based on the following items: Facility closures and business exit: we have excluded the charges related to our decision to exit the pottery business and the closure of distribution and manufacturing facilities as they represent infrequent transactions that impact the comparability between operating periods. They exclude the impact of the expenditures related to the Cost and Simplicity program we have embarked on to improve our future operations. We believe these exclusions supplement the GAAP information with a measure that may be useful to investors in assessing the sustainability of our operating performance. From time to time in the future, there may be other items that we may exclude if we believe that doing so is consistent with the goal of providing useful supplemental information to investors and management. During the third quarter of fiscal 2024, we recognized incremental expense of $11.1 million in the consolidated statement of operations, from the decision to exit the pottery business, the closure of a live goods distribution facility in Delaware and the relocation of our grass seed research facility. During the second quarter of fiscal 2024, we recognized incremental expense of $5.3 million in the consolidated statement of operations, from the closure of a manufacturing facility in Chico, California and the consolidation of our Southeast distribution network. During the third quarter of fiscal 2023, we recognized incremental expense of $13.9 million in the consolidated statement of operations, from the closure of a leased manufacturing and distribution pet bedding facility in Athens, Texas. Net Income and Diluted Net Income Per Share Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended GAAP to Non-GAAP Reconciliation Nine Months Ended June 29, 2024 June 24, 2023 June 29, 2024 June 24, 2023 (in thousands, except per share amounts) GAAP net income attributable to Central Garden & Pet Company $ 79,724 $ 83,126 $ 142,141 $ 122,808 Facility closures & business exit (1) 11,115 (3) 13,921 (1) (2) 16,385 (3) 13,921 Tax effect of facility closures & business exit (2,590 ) (3,373 ) (3,823 ) (3,373 ) Non-GAAP net income attributable to Central Garden & Pet Company $ 88,249 $ 93,674 $ 154,703 $ 133,356 GAAP diluted net income per share $ 1.19 $ 1.25 $ 2.13 $ 1.84 Non-GAAP diluted net income per share $ 1.32 $ 1.40 $ 2.31 $ 2.00 Shares used in GAAP and non-GAAP diluted net earnings per share calculation 66,945 66,725 66,848 66,832 Operating Income Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended June 29, 2024 Nine Months Ended June 29, 2024 GAAP Facility Closure & Business Exit (1)(2) Non-GAAP GAAP Facility Closure & Business Exit (1)(2) Non-GAAP (in thousands) Net sales $ 996,348 $ — $ 996,348 $ 2,530,971 $ — $ 2,530,971 Cost of goods sold and occupancy 679,290 8,613 670,677 1,756,188 11,140 1,745,048 Gross profit $ 317,058 $ (8,613 ) $ 325,671 $ 774,783 $ (11,140 ) $ 785,923 Selling, general and administrative expenses 201,122 2,502 198,620 556,988 5,245 551,743 Income from operations $ 115,936 $ (11,115 ) $ 127,051 $ 217,795 $ (16,385 ) $ 234,180 Operating Income Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended June 24, 2023 Nine Months Ended June 24, 2023 GAAP Facility closure (3) Non-GAAP GAAP Facility closure (3) Non-GAAP (in thousands) Net sales $ 1,023,269 $ — $ 1,023,269 $ 2,559,936 $ — $ 2,559,936 Cost of goods sold and occupancy 705,217 8,010 697,207 1,810,547 8,010 1,802,537 Gross profit $ 318,052 $ (8,010 ) $ 326,062 $ 749,389 $ (8,010 ) $ 757,399 Selling, general and administrative expenses 195,222 5,911 189,311 548,112 5,911 542,201 Income from operations $ 122,830 $ (13,921 ) $ 136,751 $ 201,277 $ (13,921 ) $ 215,198 Pet Segment Operating Income Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended GAAP to Non-GAAP Reconciliation Nine Months Ended June 29, 2024 June 24, 2023 June 29, 2024 June 24, 2023 (in thousands) GAAP operating income $ 83,068 $ 59,969 $ 189,115 $ 154,779 Facility closure (3) — 13,921 — 13,921 Non-GAAP operating income $ 83,068 $ 73,890 $ 189,115 $ 168,700 GAAP operating margin 16.4 % 11.9 % 13.5 % 11.1 % Non-GAAP operating margin 16.4 % 14.7 % 13.5 % 12.1 % Garden Segment Operating Income Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended GAAP to Non-GAAP Reconciliation Nine Months Ended June 29, 2024 June 24, 2023 June 29, 2024 June 24, 2023 (in thousands) GAAP operating income $ 62,519 $ 88,088 $ 110,699 $ 126,887 Facility closure & business exit (1) 11,115 — (1) (2) 16,385 — Non-GAAP operating income $ 73,634 $ 88,088 $ 127,084 $ 126,887 GAAP operating margin 12.8 % 16.9 % 9.8 % 10.9 % Non-GAAP operating margin 15.1 % 16.9 % 11.2 % 10.9 % Organic Net Sales Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended June 29, 2024 Nine Months Ended June 29, 2024 Net sales (GAAP) Effect of acquisitions & divestitures on net sales Net sales organic Net sales (GAAP) Effect of acquisitions & divestitures on net sales Net sales organic (in millions) Q3 FY 24 $ 996.3 $ 15.8 $ 980.5 $ 2,531.0 $ 48.4 $ 2,482.6 Q3 FY 23 1,023.3 13.0 1,010.3 2,559.9 44.4 2,515.5 $ decrease $ (27.0 ) $ (29.8 ) $ (28.9 ) $ (32.9 ) % decrease (2.6 )% (2.9 )% (1.1 )% (1.3 )% Organic Pet Segment Net Sales Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended June 29, 2024 Nine Months Ended June 29, 2024 Net sales (GAAP) Effect of acquisitions & divestitures on net sales Net sales organic Net sales (GAAP) Effect of acquisitions & divestitures on net sales Net sales organic (in millions) Q3 FY 24 $ 508.0 $ 15.8 $ 492.2 $ 1,397.5 $ 48.4 $ 1,349.1 Q3 FY 23 503.3 — 503.3 1,394.3 — 1,394.3 $ increase (decrease) $ 4.7 $ (11.1 ) $ 3.2 $ (45.2 ) % increase (decrease) 0.9 % (2.2 )% 0.2 % (3.2 )% Organic Garden Segment Net Sales Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended June 29, 2024 Nine Months Ended June 29, 2024 Net sales (GAAP) Effect of acquisitions & divestitures on net sales Net sales organic Net sales (GAAP) Effect of acquisitions & divestitures on net sales Net sales organic (in millions) Q3 FY 24 $ 488.3 $ — $ 488.3 $ 1,133.5 $ — $ 1,133.5 Q3 FY 23 520.0 13.0 507.0 1,165.6 44.4 1,121.2 $ increase (decrease) $ (31.7 ) $ (18.7 ) $ (32.1 ) $ 12.3 % increase (decrease) (6.1 )% (3.7 )% (2.8 )% 1.1 % Adjusted EBITDA Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended June 29, 2024 Pet Garden Corporate Total (in thousands) Net income attributable to Central Garden & Pet Company $ — $ — $ — $ 79,724 Interest expense, net — — — 10,216 Other income — — — (225 ) Income tax expense — — — 25,468 Net income attributable to noncontrolling interest — — — 753 Income (loss) from operations $ 83,068 $ 62,519 $ (29,651 ) $ 115,936 Depreciation & amortization 10,979 11,008 725 22,712 Noncash stock-based compensation — — 6,211 6,211 Facility closures & business exit (1) — 11,115 — 11,115 Adjusted EBITDA $ 94,047 $ 84,642 $ (22,715 ) $ 155,974 Adjusted EBITDA Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended June 24, 2023 Pet Garden Corporate Total (in thousands) Net income attributable to Central Garden & Pet Company $ — $ — $ — $ 83,126 Interest expense, net — — — 13,134 Other income — — — (853 ) Income tax expense — — — 27,000 Net income attributable to noncontrolling interest — — — 423 Income (loss) from operations $ 59,969 $ 88,088 $ (25,227 ) $ 122,830 Depreciation & amortization 10,060 10,823 818 21,701 Noncash stock-based compensation — — 7,305 7,305 Facility closure (3) 13,921 — — 13,921 Adjusted EBITDA $ 83,950 $ 98,911 $ (17,104 ) $ 165,757 Adjusted EBITDA Reconciliation GAAP to Non-GAAP Reconciliation Nine Months Ended June 29, 2024 Pet Garden Corporate Total (in thousands) Net income attributable to Central Garden & Pet Company $ — $ — $ — $ 142,141 Interest expense, net — — — 31,396 Other income — — — (1,047 ) Income tax expense — — — 43,733 Net income attributable to noncontrolling interest — — — 1,572 Income (loss) from operations $ 189,115 $ 110,699 $ (82,019 ) $ 217,795 Depreciation & amortization 32,901 33,028 2,140 68,069 Noncash stock-based compensation — — 15,138 15,138 Facility closures & business exit (1) (2) — 16,385 — 16,385 Adjusted EBITDA $ 222,016 $ 160,112 $ (64,741 ) $ 317,387 Adjusted EBITDA Reconciliation GAAP to Non-GAAP Reconciliation Nine Months Ended June 24, 2023 Pet Garden Corporate Total (in thousands) Net income attributable to Central Garden & Pet Company $ — $ — $ — $ 122,808 Interest expense, net — — — 41,600 Other income — — — (3,147 ) Income tax expense — — — 39,446 Net income attributable to noncontrolling interest — — — 570 Income (loss) from operations $ 154,779 $ 126,887 $ (80,389 ) $ 201,277 Depreciation & amortization 30,647 32,483 2,374 65,504 Noncash stock-based compensation — — 20,632 20,632 Facility closure (3) 13,921 — — 13,921 Adjusted EBITDA $ 199,347 $ 159,370 $ (57,383 ) $ 301,334 View source version on businesswire.com: https://www.businesswire.com/news/home/20240807439810/en/Contacts Investor/Media Contact Friederike Edelmann VP, Investor Relations & Corporate Sustainability (925) 412-6726 fedelmann@central.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Central Garden & Pet Announces Q3 Fiscal 2024 Financial Results By: Central Garden & Pet Company via Business Wire August 07, 2024 at 16:02 PM EDT Fiscal 2024 Q3 net sales of $996 million compared to $1,023 million a year ago Fiscal 2024 Q3 GAAP EPS of $1.19 vs. $1.25 a year ago, Non-GAAP EPS of $1.32 vs. $1.40 a year ago Maintains outlook for fiscal 2024 non-GAAP EPS of $2.00 or better ($2.50 or better before the February 2024 stock dividend) Central Garden & Pet Company (NASDAQ: CENT) (NASDAQ: CENTA) (“Central”), a market leader in the Pet and Garden industries, today announced financial results for its fiscal 2024 third quarter ended June 29, 2024. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20240807439810/en/ "We delivered a solid third quarter earnings performance, recognizing that we had a record third quarter in 2023," said Beth Springer, Interim CEO. "Our Cost and Simplicity program continues to prove effective as evidenced in our improved gross margins. Looking ahead, we remain committed to our long-term Central to Home strategy." Fiscal 2024 Third Quarter Financial Results Net sales were $996 million compared to $1,023 million a year ago, a decrease of 3%. Organic net sales also decreased 3%. Gross profit was $317 million compared to $318 million a year ago. Non-GAAP gross profit of $326 million was in line with the prior year. Gross margin expanded by 70 basis points to 31.8%. On a non-GAAP basis, gross margin expanded by 80 basis points to 32.7% driven by Central's Cost and Simplicity program and moderating inflation. Operating income was $116 million compared to $123 million a year ago, a decrease of 6%. Non-GAAP operating income was $127 million compared to $137 million in the prior year. Operating margin was 11.6% compared to 12.0% a year ago. On a non-GAAP basis, operating margin was 12.8% compared to 13.4% in the prior year. Net interest expense was $10 million compared to $13 million a year ago. Net income was $80 million compared to $83 million in the prior year, a decrease of 4%. Non-GAAP net income was $88 million compared to $94 million a year ago. Earnings per share were $1.19 compared to $1.25 in the prior year, a decrease of $0.06. Non-GAAP earnings per share were $1.32 compared to $1.40 a year ago. Adjusted EBITDA was $156 million compared to $166 million a year ago. The effective tax rate was 24.0% compared to 24.4% in the prior year. Pet Segment Fiscal 2024 Third Quarter Results Net sales for the Pet segment were $508 million compared to $503 million in the prior year, an increase of 1% driven by the recent TDBBS acquisition and growth in consumable pet products. Organic net sales decreased 2% excluding the impact of TDBBS. Pet segment operating income was $83 million compared to $60 million a year ago, an increase of 39%. Operating margin expanded by 450 basis points to 16.4% compared to 11.9% driven by improved gross margin. Pet segment adjusted EBITDA was $94 million compared to $84 million in the prior year. Garden Segment Fiscal 2024 Third Quarter Results Net sales for the Garden segment were $488 million compared to $520 million a year ago, a decrease of 6%. Organic net sales decreased 4% excluding the impact of the sale of the independent garden channel distribution business. Garden segment operating income was $63 million compared to $88 million in the prior year, a decrease of 29%. Non-GAAP operating income was $74 million. Operating margin contracted 410 basis points to 12.8% compared to 16.9%. On a non-GAAP basis, operating margin contracted 180 basis points to 15.1% driven by lower sell through in live plants. Garden segment adjusted EBITDA was $85 million compared to $99 million a year ago. Liquidity and Debt The cash balance at the end of the quarter was $570 million compared to $333 million a year ago driven by earnings and inventory reduction efforts over the last 12 months. Cash provided by operations during the quarter was $286 million compared to $325 million a year ago. Total debt as of June 29, 2024, and June 24, 2023 was $1.2 billion. The gross leverage ratio, as defined in Central's credit agreement, at the end of the third quarter was 3.0x compared to 3.1x at the end of the prior year quarter. Cost and Simplicity Program Central continues to advance its multi-year Cost and Simplicity program consisting of a pipeline of projects across procurement, manufacturing, logistics, portfolio management and administrative costs to simplify its business and improve efficiency across the organization. In the third quarter of fiscal 2024, Central began winding down its pottery business. As a result of Cost and Simplicity projects, Central incurred $11.1 million of one-time costs largely related to the pottery exit, including $8.6 million in cost of goods sold and $2.5 million in selling, general and administrative costs, the majority of which was non-cash. Fiscal 2024 Guidance Central continues to expect fiscal 2024 non-GAAP EPS to be $2.00 or better ($2.50 or better before the February 2024 stock dividend) despite currently anticipating a one-time charge in the range of $15-20 million in the fourth quarter. Given the recent significant decrease in market prices for grass seed, Central determined in August 2024 it will be necessary to write down the value of its grass seed inventory. This outlook reflects uncertain consumer demand and retailer dynamics and an environment of macroeconomic and geopolitical volatility. It excludes the impact of any restructuring activities that may occur during the fourth quarter of fiscal 2024, including projects under the Cost and Simplicity program or other one-time non-recurring charges. Central now expects fiscal 2024 capital spending to be approximately $60 million. Conference Call Central's senior management will hold a conference call today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss its fiscal 2024 third quarter results and provide a general business update. The conference call and 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) using confirmation #13746730. 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 40 years. With fiscal 2023 net sales of $3.3 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®, Farnam®, Ferry-Morse®, Four Paws®, Kaytee®, K&H®, Nylabone® and Pennington®, strong manufacturing and distribution capabilities, and a passionate, entrepreneurial growth culture. Central is based in Walnut Creek, California, with 6,700 employees primarily across North America. Visit www.central.com to learn more. Safe Harbor Statement “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 evolving consumer demand and unfavorable retailer dynamics, the carryover impact from pricing actions, productivity initiatives and estimated capital spending, anticipated inventory write-down, and earnings guidance for fiscal 2024, 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: impact of inflation and interest rates, and other adverse macro-economic conditions; fluctuations in market prices for seeds and grains and other raw materials, including the impact of the recent significant decline in grass seed market prices on our inventory valuation; our inability to pass through cost increases in a timely manner; our ability to recruit and retain members of our management team and employees, including a Chief Executive Officer, to support our businesses; fluctuations in energy prices, fuel and related petrochemical costs; declines in consumer spending and increased inventory risk during economic downturns; reductions in demand for product categories that benefited from the COVID-19 pandemic; adverse weather conditions; the success of our Central to Home strategy and our Cost and Simplicity program; risks associated with our acquisition strategy, including our ability to successfully integrate acquisitions and the impact of purchase accounting on our financial results; material weaknesses relating to the internal controls of recently acquired companies; seasonality and fluctuations in our operating results and cash flow; supply shortages in pet birds, small animals and fish; dependence on a small number of customers for a significant portion of our business; consolidation trends in the retail industry; risks associated with new product introductions, including the risk that our new products will not produce sufficient sales to recoup our investment; competition in our industries; continuing implementation of an enterprise resource planning information technology system; potential environmental liabilities; risks associated with international sourcing; impacts of tariffs or a trade war; access to and cost of additional capital; potential goodwill or intangible asset impairment; our ability to remediate material weaknesses in our internal control over financial reporting; our dependence upon our key executives; our ability to protect our trademarks and other proprietary rights; litigation and product liability claims; regulatory issues; the impact of product recalls; potential costs and risks associated with actual or potential cyberattacks; potential dilution from issuance of authorized shares; the voting power associated with our Class B stock; and 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. 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 has not filed its Form 10-Q for the fiscal quarter ended June 29, 2024, so all financial results are preliminary and subject to change. CENTRAL GARDEN & PET COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts, unaudited) June 29, 2024 June 24, 2023 September 30, 2023 ASSETS Current assets: Cash and cash equivalents $ 570,398 $ 333,139 $ 488,730 Restricted cash 13,980 13,542 14,143 Accounts receivable (less allowance for credit losses and customer allowances of $24,838, $29,245 and $25,797) 507,524 492,850 332,890 Inventories, net 784,775 865,496 838,188 Prepaid expenses and other 33,493 36,655 33,172 Total current assets 1,910,170 1,741,682 1,707,123 Plant, property and equipment, net 384,373 392,332 391,768 Goodwill 546,436 546,436 546,436 Other intangible assets, net 472,854 512,175 497,228 Operating lease right-of-use assets 188,506 172,379 173,540 Other assets 105,539 54,943 62,553 Total $ 3,607,878 $ 3,419,947 $ 3,378,648 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 191,041 $ 198,406 $ 190,902 Accrued expenses 276,751 247,517 216,241 Current lease liabilities 53,363 50,209 50,597 Current portion of long-term debt 290 255 247 Total current liabilities 521,445 496,387 457,987 Long-term debt 1,189,366 1,187,498 1,187,956 Long-term lease liabilities 151,038 132,419 135,621 Deferred income taxes and other long-term obligations 150,249 156,537 144,271 Equity: Common stock, $0.01 par value: 11,077,612, 11,098,584 and 11,077,612 shares outstanding at June 29, 2024, June 24, 2023 and September 30, 2023 111 111 111 Class A common stock, $0.01 par value: 54,719,533, 54,408,159 and 54,472,902 shares outstanding at June 29, 2024, June 24, 2023 and September 30, 2023 547 544 544 Class B stock, $0.01 par value: 1,602,374 shares outstanding at June 29, 2024, June 24, 2023 and September 30, 2023 16 16 16 Additional paid-in capital 595,646 588,597 594,282 Retained earnings 1,000,527 858,217 859,370 Accumulated other comprehensive loss (3,199 ) (1,955 ) (2,970 ) Total Central Garden & Pet Company shareholders’ equity 1,593,648 1,445,530 1,451,353 Noncontrolling interest 2,132 1,576 1,460 Total equity 1,595,780 1,447,106 1,452,813 Total $ 3,607,878 $ 3,419,947 $ 3,378,648 CENTRAL GARDEN & PET COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts, unaudited) Three Months Ended Nine Months Ended June 29, 2024 June 24, 2023 June 29, 2024 June 24, 2023 Net sales $ 996,348 $ 1,023,269 $ 2,530,971 $ 2,559,936 Cost of goods sold 679,290 705,217 1,756,188 1,810,547 Gross profit 317,058 318,052 774,783 749,389 Selling, general and administrative expenses 201,122 195,222 556,988 548,112 Operating income 115,936 122,830 217,795 201,277 Interest expense (14,720 ) (14,542 ) (43,412 ) (43,887 ) Interest income 4,504 1,408 12,016 2,287 Other income 225 853 1,047 3,147 Income before income taxes and noncontrolling interest 105,945 110,549 187,446 162,824 Income tax expense 25,468 27,000 43,733 39,446 Income including noncontrolling interest 80,477 83,549 143,713 123,378 Net income attributable to noncontrolling interest 753 423 1,572 570 Net income attributable to Central Garden & Pet Company $ 79,724 $ 83,126 $ 142,141 $ 122,808 Net income per share attributable to Central Garden & Pet Company: Basic $ 1.21 $ 1.27 $ 2.17 $ 1.87 Diluted $ 1.19 $ 1.25 $ 2.13 $ 1.84 Weighted average shares used in the computation of net income per share: Basic 65,850 65,580 65,636 65,577 Diluted 66,945 66,725 66,848 66,832 CENTRAL GARDEN & PET COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, unaudited) Nine Months Ended June 29, 2024 June 24, 2023 Cash flows from operating activities: Net income $ 143,713 $ 123,378 Adjustments to reconcile net income to net cash used by operating activities: Depreciation and amortization 68,069 65,504 Amortization of deferred financing costs 2,013 2,023 Non-cash lease expense 39,183 38,180 Stock-based compensation 15,138 20,632 Deferred income taxes 3,622 9,125 Facility closures and business exit costs 16,385 13,923 Other operating activities 3,531 (450 ) Change in assets and liabilities (excluding businesses acquired): Accounts receivable (169,867 ) (115,358 ) Inventories 58,705 69,610 Prepaid expenses and other assets (383 ) 6,530 Accounts payable (2,968 ) (12,248 ) Accrued expenses 51,213 44,221 Other long-term obligations 2,352 (55 ) Operating lease liabilities (38,902 ) (37,449 ) Net cash provided by operating activities 191,804 227,566 Cash flows from investing activities: Additions to plant, property and equipment (33,096 ) (40,850 ) Payments to acquire companies, net of cash acquired (59,818 ) — Investments (1,500 ) (500 ) Other investing activities (175 ) (100 ) Net cash used in investing activities (94,589 ) (41,450 ) Cash flows from financing activities: Repayments of long-term debt (289 ) (223 ) Borrowings under revolving line of credit — 48,000 Repayments under revolving line of credit — (48,000 ) Repurchase of common stock, including shares surrendered for tax withholding (14,755 ) (33,409 ) Payment of contingent consideration liability (63 ) (33 ) Distribution to noncontrolling interest (900 ) — Net cash used by financing activities (16,007 ) (33,665 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 297 2,046 Net increase in cash, cash equivalents and restricted cash 81,505 154,497 Cash, cash equivalents and restricted cash at beginning of period 502,873 192,184 Cash, cash equivalents and restricted cash at end of period $ 584,378 $ 346,681 Supplemental information: Cash paid for interest $ 48,853 $ 49,419 Cash paid for income taxes $ 38,027 $ 5,363 New operating lease right of use assets $ 56,849 $ 25,424 Use of Non-GAAP Financial Measures We report our financial results in accordance with GAAP. However, to supplement the financial results prepared in accordance with GAAP, we use non-GAAP financial measures including non-GAAP net income and diluted net income per share, non-GAAP operating income, adjusted EBITDA and organic net sales. Management uses these non-GAAP financial measures that exclude the impact of specific items (described below) in making financial, operating and planning decisions and in evaluating our performance. Also, Management believes that these non-GAAP financial measures 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 non-GAAP measures are 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). Adjusted EBITDA further excludes one-time charges related to facility closures. 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 these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are shown in the tables below. Non-GAAP financial measures reflect adjustments based on the following items: Facility closures and business exit: we have excluded the charges related to our decision to exit the pottery business and the closure of distribution and manufacturing facilities as they represent infrequent transactions that impact the comparability between operating periods. They exclude the impact of the expenditures related to the Cost and Simplicity program we have embarked on to improve our future operations. We believe these exclusions supplement the GAAP information with a measure that may be useful to investors in assessing the sustainability of our operating performance. From time to time in the future, there may be other items that we may exclude if we believe that doing so is consistent with the goal of providing useful supplemental information to investors and management. During the third quarter of fiscal 2024, we recognized incremental expense of $11.1 million in the consolidated statement of operations, from the decision to exit the pottery business, the closure of a live goods distribution facility in Delaware and the relocation of our grass seed research facility. During the second quarter of fiscal 2024, we recognized incremental expense of $5.3 million in the consolidated statement of operations, from the closure of a manufacturing facility in Chico, California and the consolidation of our Southeast distribution network. During the third quarter of fiscal 2023, we recognized incremental expense of $13.9 million in the consolidated statement of operations, from the closure of a leased manufacturing and distribution pet bedding facility in Athens, Texas. Net Income and Diluted Net Income Per Share Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended GAAP to Non-GAAP Reconciliation Nine Months Ended June 29, 2024 June 24, 2023 June 29, 2024 June 24, 2023 (in thousands, except per share amounts) GAAP net income attributable to Central Garden & Pet Company $ 79,724 $ 83,126 $ 142,141 $ 122,808 Facility closures & business exit (1) 11,115 (3) 13,921 (1) (2) 16,385 (3) 13,921 Tax effect of facility closures & business exit (2,590 ) (3,373 ) (3,823 ) (3,373 ) Non-GAAP net income attributable to Central Garden & Pet Company $ 88,249 $ 93,674 $ 154,703 $ 133,356 GAAP diluted net income per share $ 1.19 $ 1.25 $ 2.13 $ 1.84 Non-GAAP diluted net income per share $ 1.32 $ 1.40 $ 2.31 $ 2.00 Shares used in GAAP and non-GAAP diluted net earnings per share calculation 66,945 66,725 66,848 66,832 Operating Income Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended June 29, 2024 Nine Months Ended June 29, 2024 GAAP Facility Closure & Business Exit (1)(2) Non-GAAP GAAP Facility Closure & Business Exit (1)(2) Non-GAAP (in thousands) Net sales $ 996,348 $ — $ 996,348 $ 2,530,971 $ — $ 2,530,971 Cost of goods sold and occupancy 679,290 8,613 670,677 1,756,188 11,140 1,745,048 Gross profit $ 317,058 $ (8,613 ) $ 325,671 $ 774,783 $ (11,140 ) $ 785,923 Selling, general and administrative expenses 201,122 2,502 198,620 556,988 5,245 551,743 Income from operations $ 115,936 $ (11,115 ) $ 127,051 $ 217,795 $ (16,385 ) $ 234,180 Operating Income Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended June 24, 2023 Nine Months Ended June 24, 2023 GAAP Facility closure (3) Non-GAAP GAAP Facility closure (3) Non-GAAP (in thousands) Net sales $ 1,023,269 $ — $ 1,023,269 $ 2,559,936 $ — $ 2,559,936 Cost of goods sold and occupancy 705,217 8,010 697,207 1,810,547 8,010 1,802,537 Gross profit $ 318,052 $ (8,010 ) $ 326,062 $ 749,389 $ (8,010 ) $ 757,399 Selling, general and administrative expenses 195,222 5,911 189,311 548,112 5,911 542,201 Income from operations $ 122,830 $ (13,921 ) $ 136,751 $ 201,277 $ (13,921 ) $ 215,198 Pet Segment Operating Income Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended GAAP to Non-GAAP Reconciliation Nine Months Ended June 29, 2024 June 24, 2023 June 29, 2024 June 24, 2023 (in thousands) GAAP operating income $ 83,068 $ 59,969 $ 189,115 $ 154,779 Facility closure (3) — 13,921 — 13,921 Non-GAAP operating income $ 83,068 $ 73,890 $ 189,115 $ 168,700 GAAP operating margin 16.4 % 11.9 % 13.5 % 11.1 % Non-GAAP operating margin 16.4 % 14.7 % 13.5 % 12.1 % Garden Segment Operating Income Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended GAAP to Non-GAAP Reconciliation Nine Months Ended June 29, 2024 June 24, 2023 June 29, 2024 June 24, 2023 (in thousands) GAAP operating income $ 62,519 $ 88,088 $ 110,699 $ 126,887 Facility closure & business exit (1) 11,115 — (1) (2) 16,385 — Non-GAAP operating income $ 73,634 $ 88,088 $ 127,084 $ 126,887 GAAP operating margin 12.8 % 16.9 % 9.8 % 10.9 % Non-GAAP operating margin 15.1 % 16.9 % 11.2 % 10.9 % Organic Net Sales Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended June 29, 2024 Nine Months Ended June 29, 2024 Net sales (GAAP) Effect of acquisitions & divestitures on net sales Net sales organic Net sales (GAAP) Effect of acquisitions & divestitures on net sales Net sales organic (in millions) Q3 FY 24 $ 996.3 $ 15.8 $ 980.5 $ 2,531.0 $ 48.4 $ 2,482.6 Q3 FY 23 1,023.3 13.0 1,010.3 2,559.9 44.4 2,515.5 $ decrease $ (27.0 ) $ (29.8 ) $ (28.9 ) $ (32.9 ) % decrease (2.6 )% (2.9 )% (1.1 )% (1.3 )% Organic Pet Segment Net Sales Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended June 29, 2024 Nine Months Ended June 29, 2024 Net sales (GAAP) Effect of acquisitions & divestitures on net sales Net sales organic Net sales (GAAP) Effect of acquisitions & divestitures on net sales Net sales organic (in millions) Q3 FY 24 $ 508.0 $ 15.8 $ 492.2 $ 1,397.5 $ 48.4 $ 1,349.1 Q3 FY 23 503.3 — 503.3 1,394.3 — 1,394.3 $ increase (decrease) $ 4.7 $ (11.1 ) $ 3.2 $ (45.2 ) % increase (decrease) 0.9 % (2.2 )% 0.2 % (3.2 )% Organic Garden Segment Net Sales Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended June 29, 2024 Nine Months Ended June 29, 2024 Net sales (GAAP) Effect of acquisitions & divestitures on net sales Net sales organic Net sales (GAAP) Effect of acquisitions & divestitures on net sales Net sales organic (in millions) Q3 FY 24 $ 488.3 $ — $ 488.3 $ 1,133.5 $ — $ 1,133.5 Q3 FY 23 520.0 13.0 507.0 1,165.6 44.4 1,121.2 $ increase (decrease) $ (31.7 ) $ (18.7 ) $ (32.1 ) $ 12.3 % increase (decrease) (6.1 )% (3.7 )% (2.8 )% 1.1 % Adjusted EBITDA Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended June 29, 2024 Pet Garden Corporate Total (in thousands) Net income attributable to Central Garden & Pet Company $ — $ — $ — $ 79,724 Interest expense, net — — — 10,216 Other income — — — (225 ) Income tax expense — — — 25,468 Net income attributable to noncontrolling interest — — — 753 Income (loss) from operations $ 83,068 $ 62,519 $ (29,651 ) $ 115,936 Depreciation & amortization 10,979 11,008 725 22,712 Noncash stock-based compensation — — 6,211 6,211 Facility closures & business exit (1) — 11,115 — 11,115 Adjusted EBITDA $ 94,047 $ 84,642 $ (22,715 ) $ 155,974 Adjusted EBITDA Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended June 24, 2023 Pet Garden Corporate Total (in thousands) Net income attributable to Central Garden & Pet Company $ — $ — $ — $ 83,126 Interest expense, net — — — 13,134 Other income — — — (853 ) Income tax expense — — — 27,000 Net income attributable to noncontrolling interest — — — 423 Income (loss) from operations $ 59,969 $ 88,088 $ (25,227 ) $ 122,830 Depreciation & amortization 10,060 10,823 818 21,701 Noncash stock-based compensation — — 7,305 7,305 Facility closure (3) 13,921 — — 13,921 Adjusted EBITDA $ 83,950 $ 98,911 $ (17,104 ) $ 165,757 Adjusted EBITDA Reconciliation GAAP to Non-GAAP Reconciliation Nine Months Ended June 29, 2024 Pet Garden Corporate Total (in thousands) Net income attributable to Central Garden & Pet Company $ — $ — $ — $ 142,141 Interest expense, net — — — 31,396 Other income — — — (1,047 ) Income tax expense — — — 43,733 Net income attributable to noncontrolling interest — — — 1,572 Income (loss) from operations $ 189,115 $ 110,699 $ (82,019 ) $ 217,795 Depreciation & amortization 32,901 33,028 2,140 68,069 Noncash stock-based compensation — — 15,138 15,138 Facility closures & business exit (1) (2) — 16,385 — 16,385 Adjusted EBITDA $ 222,016 $ 160,112 $ (64,741 ) $ 317,387 Adjusted EBITDA Reconciliation GAAP to Non-GAAP Reconciliation Nine Months Ended June 24, 2023 Pet Garden Corporate Total (in thousands) Net income attributable to Central Garden & Pet Company $ — $ — $ — $ 122,808 Interest expense, net — — — 41,600 Other income — — — (3,147 ) Income tax expense — — — 39,446 Net income attributable to noncontrolling interest — — — 570 Income (loss) from operations $ 154,779 $ 126,887 $ (80,389 ) $ 201,277 Depreciation & amortization 30,647 32,483 2,374 65,504 Noncash stock-based compensation — — 20,632 20,632 Facility closure (3) 13,921 — — 13,921 Adjusted EBITDA $ 199,347 $ 159,370 $ (57,383 ) $ 301,334 View source version on businesswire.com: https://www.businesswire.com/news/home/20240807439810/en/Contacts Investor/Media Contact Friederike Edelmann VP, Investor Relations & Corporate Sustainability (925) 412-6726 fedelmann@central.com
Fiscal 2024 Q3 net sales of $996 million compared to $1,023 million a year ago Fiscal 2024 Q3 GAAP EPS of $1.19 vs. $1.25 a year ago, Non-GAAP EPS of $1.32 vs. $1.40 a year ago Maintains outlook for fiscal 2024 non-GAAP EPS of $2.00 or better ($2.50 or better before the February 2024 stock dividend)
Central Garden & Pet Company (NASDAQ: CENT) (NASDAQ: CENTA) (“Central”), a market leader in the Pet and Garden industries, today announced financial results for its fiscal 2024 third quarter ended June 29, 2024. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20240807439810/en/ "We delivered a solid third quarter earnings performance, recognizing that we had a record third quarter in 2023," said Beth Springer, Interim CEO. "Our Cost and Simplicity program continues to prove effective as evidenced in our improved gross margins. Looking ahead, we remain committed to our long-term Central to Home strategy." Fiscal 2024 Third Quarter Financial Results Net sales were $996 million compared to $1,023 million a year ago, a decrease of 3%. Organic net sales also decreased 3%. Gross profit was $317 million compared to $318 million a year ago. Non-GAAP gross profit of $326 million was in line with the prior year. Gross margin expanded by 70 basis points to 31.8%. On a non-GAAP basis, gross margin expanded by 80 basis points to 32.7% driven by Central's Cost and Simplicity program and moderating inflation. Operating income was $116 million compared to $123 million a year ago, a decrease of 6%. Non-GAAP operating income was $127 million compared to $137 million in the prior year. Operating margin was 11.6% compared to 12.0% a year ago. On a non-GAAP basis, operating margin was 12.8% compared to 13.4% in the prior year. Net interest expense was $10 million compared to $13 million a year ago. Net income was $80 million compared to $83 million in the prior year, a decrease of 4%. Non-GAAP net income was $88 million compared to $94 million a year ago. Earnings per share were $1.19 compared to $1.25 in the prior year, a decrease of $0.06. Non-GAAP earnings per share were $1.32 compared to $1.40 a year ago. Adjusted EBITDA was $156 million compared to $166 million a year ago. The effective tax rate was 24.0% compared to 24.4% in the prior year. Pet Segment Fiscal 2024 Third Quarter Results Net sales for the Pet segment were $508 million compared to $503 million in the prior year, an increase of 1% driven by the recent TDBBS acquisition and growth in consumable pet products. Organic net sales decreased 2% excluding the impact of TDBBS. Pet segment operating income was $83 million compared to $60 million a year ago, an increase of 39%. Operating margin expanded by 450 basis points to 16.4% compared to 11.9% driven by improved gross margin. Pet segment adjusted EBITDA was $94 million compared to $84 million in the prior year. Garden Segment Fiscal 2024 Third Quarter Results Net sales for the Garden segment were $488 million compared to $520 million a year ago, a decrease of 6%. Organic net sales decreased 4% excluding the impact of the sale of the independent garden channel distribution business. Garden segment operating income was $63 million compared to $88 million in the prior year, a decrease of 29%. Non-GAAP operating income was $74 million. Operating margin contracted 410 basis points to 12.8% compared to 16.9%. On a non-GAAP basis, operating margin contracted 180 basis points to 15.1% driven by lower sell through in live plants. Garden segment adjusted EBITDA was $85 million compared to $99 million a year ago. Liquidity and Debt The cash balance at the end of the quarter was $570 million compared to $333 million a year ago driven by earnings and inventory reduction efforts over the last 12 months. Cash provided by operations during the quarter was $286 million compared to $325 million a year ago. Total debt as of June 29, 2024, and June 24, 2023 was $1.2 billion. The gross leverage ratio, as defined in Central's credit agreement, at the end of the third quarter was 3.0x compared to 3.1x at the end of the prior year quarter. Cost and Simplicity Program Central continues to advance its multi-year Cost and Simplicity program consisting of a pipeline of projects across procurement, manufacturing, logistics, portfolio management and administrative costs to simplify its business and improve efficiency across the organization. In the third quarter of fiscal 2024, Central began winding down its pottery business. As a result of Cost and Simplicity projects, Central incurred $11.1 million of one-time costs largely related to the pottery exit, including $8.6 million in cost of goods sold and $2.5 million in selling, general and administrative costs, the majority of which was non-cash. Fiscal 2024 Guidance Central continues to expect fiscal 2024 non-GAAP EPS to be $2.00 or better ($2.50 or better before the February 2024 stock dividend) despite currently anticipating a one-time charge in the range of $15-20 million in the fourth quarter. Given the recent significant decrease in market prices for grass seed, Central determined in August 2024 it will be necessary to write down the value of its grass seed inventory. This outlook reflects uncertain consumer demand and retailer dynamics and an environment of macroeconomic and geopolitical volatility. It excludes the impact of any restructuring activities that may occur during the fourth quarter of fiscal 2024, including projects under the Cost and Simplicity program or other one-time non-recurring charges. Central now expects fiscal 2024 capital spending to be approximately $60 million. Conference Call Central's senior management will hold a conference call today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss its fiscal 2024 third quarter results and provide a general business update. The conference call and 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) using confirmation #13746730. 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 40 years. With fiscal 2023 net sales of $3.3 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®, Farnam®, Ferry-Morse®, Four Paws®, Kaytee®, K&H®, Nylabone® and Pennington®, strong manufacturing and distribution capabilities, and a passionate, entrepreneurial growth culture. Central is based in Walnut Creek, California, with 6,700 employees primarily across North America. Visit www.central.com to learn more. Safe Harbor Statement “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 evolving consumer demand and unfavorable retailer dynamics, the carryover impact from pricing actions, productivity initiatives and estimated capital spending, anticipated inventory write-down, and earnings guidance for fiscal 2024, 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: impact of inflation and interest rates, and other adverse macro-economic conditions; fluctuations in market prices for seeds and grains and other raw materials, including the impact of the recent significant decline in grass seed market prices on our inventory valuation; our inability to pass through cost increases in a timely manner; our ability to recruit and retain members of our management team and employees, including a Chief Executive Officer, to support our businesses; fluctuations in energy prices, fuel and related petrochemical costs; declines in consumer spending and increased inventory risk during economic downturns; reductions in demand for product categories that benefited from the COVID-19 pandemic; adverse weather conditions; the success of our Central to Home strategy and our Cost and Simplicity program; risks associated with our acquisition strategy, including our ability to successfully integrate acquisitions and the impact of purchase accounting on our financial results; material weaknesses relating to the internal controls of recently acquired companies; seasonality and fluctuations in our operating results and cash flow; supply shortages in pet birds, small animals and fish; dependence on a small number of customers for a significant portion of our business; consolidation trends in the retail industry; risks associated with new product introductions, including the risk that our new products will not produce sufficient sales to recoup our investment; competition in our industries; continuing implementation of an enterprise resource planning information technology system; potential environmental liabilities; risks associated with international sourcing; impacts of tariffs or a trade war; access to and cost of additional capital; potential goodwill or intangible asset impairment; our ability to remediate material weaknesses in our internal control over financial reporting; our dependence upon our key executives; our ability to protect our trademarks and other proprietary rights; litigation and product liability claims; regulatory issues; the impact of product recalls; potential costs and risks associated with actual or potential cyberattacks; potential dilution from issuance of authorized shares; the voting power associated with our Class B stock; and 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. 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 has not filed its Form 10-Q for the fiscal quarter ended June 29, 2024, so all financial results are preliminary and subject to change. CENTRAL GARDEN & PET COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts, unaudited) June 29, 2024 June 24, 2023 September 30, 2023 ASSETS Current assets: Cash and cash equivalents $ 570,398 $ 333,139 $ 488,730 Restricted cash 13,980 13,542 14,143 Accounts receivable (less allowance for credit losses and customer allowances of $24,838, $29,245 and $25,797) 507,524 492,850 332,890 Inventories, net 784,775 865,496 838,188 Prepaid expenses and other 33,493 36,655 33,172 Total current assets 1,910,170 1,741,682 1,707,123 Plant, property and equipment, net 384,373 392,332 391,768 Goodwill 546,436 546,436 546,436 Other intangible assets, net 472,854 512,175 497,228 Operating lease right-of-use assets 188,506 172,379 173,540 Other assets 105,539 54,943 62,553 Total $ 3,607,878 $ 3,419,947 $ 3,378,648 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 191,041 $ 198,406 $ 190,902 Accrued expenses 276,751 247,517 216,241 Current lease liabilities 53,363 50,209 50,597 Current portion of long-term debt 290 255 247 Total current liabilities 521,445 496,387 457,987 Long-term debt 1,189,366 1,187,498 1,187,956 Long-term lease liabilities 151,038 132,419 135,621 Deferred income taxes and other long-term obligations 150,249 156,537 144,271 Equity: Common stock, $0.01 par value: 11,077,612, 11,098,584 and 11,077,612 shares outstanding at June 29, 2024, June 24, 2023 and September 30, 2023 111 111 111 Class A common stock, $0.01 par value: 54,719,533, 54,408,159 and 54,472,902 shares outstanding at June 29, 2024, June 24, 2023 and September 30, 2023 547 544 544 Class B stock, $0.01 par value: 1,602,374 shares outstanding at June 29, 2024, June 24, 2023 and September 30, 2023 16 16 16 Additional paid-in capital 595,646 588,597 594,282 Retained earnings 1,000,527 858,217 859,370 Accumulated other comprehensive loss (3,199 ) (1,955 ) (2,970 ) Total Central Garden & Pet Company shareholders’ equity 1,593,648 1,445,530 1,451,353 Noncontrolling interest 2,132 1,576 1,460 Total equity 1,595,780 1,447,106 1,452,813 Total $ 3,607,878 $ 3,419,947 $ 3,378,648 CENTRAL GARDEN & PET COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts, unaudited) Three Months Ended Nine Months Ended June 29, 2024 June 24, 2023 June 29, 2024 June 24, 2023 Net sales $ 996,348 $ 1,023,269 $ 2,530,971 $ 2,559,936 Cost of goods sold 679,290 705,217 1,756,188 1,810,547 Gross profit 317,058 318,052 774,783 749,389 Selling, general and administrative expenses 201,122 195,222 556,988 548,112 Operating income 115,936 122,830 217,795 201,277 Interest expense (14,720 ) (14,542 ) (43,412 ) (43,887 ) Interest income 4,504 1,408 12,016 2,287 Other income 225 853 1,047 3,147 Income before income taxes and noncontrolling interest 105,945 110,549 187,446 162,824 Income tax expense 25,468 27,000 43,733 39,446 Income including noncontrolling interest 80,477 83,549 143,713 123,378 Net income attributable to noncontrolling interest 753 423 1,572 570 Net income attributable to Central Garden & Pet Company $ 79,724 $ 83,126 $ 142,141 $ 122,808 Net income per share attributable to Central Garden & Pet Company: Basic $ 1.21 $ 1.27 $ 2.17 $ 1.87 Diluted $ 1.19 $ 1.25 $ 2.13 $ 1.84 Weighted average shares used in the computation of net income per share: Basic 65,850 65,580 65,636 65,577 Diluted 66,945 66,725 66,848 66,832 CENTRAL GARDEN & PET COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, unaudited) Nine Months Ended June 29, 2024 June 24, 2023 Cash flows from operating activities: Net income $ 143,713 $ 123,378 Adjustments to reconcile net income to net cash used by operating activities: Depreciation and amortization 68,069 65,504 Amortization of deferred financing costs 2,013 2,023 Non-cash lease expense 39,183 38,180 Stock-based compensation 15,138 20,632 Deferred income taxes 3,622 9,125 Facility closures and business exit costs 16,385 13,923 Other operating activities 3,531 (450 ) Change in assets and liabilities (excluding businesses acquired): Accounts receivable (169,867 ) (115,358 ) Inventories 58,705 69,610 Prepaid expenses and other assets (383 ) 6,530 Accounts payable (2,968 ) (12,248 ) Accrued expenses 51,213 44,221 Other long-term obligations 2,352 (55 ) Operating lease liabilities (38,902 ) (37,449 ) Net cash provided by operating activities 191,804 227,566 Cash flows from investing activities: Additions to plant, property and equipment (33,096 ) (40,850 ) Payments to acquire companies, net of cash acquired (59,818 ) — Investments (1,500 ) (500 ) Other investing activities (175 ) (100 ) Net cash used in investing activities (94,589 ) (41,450 ) Cash flows from financing activities: Repayments of long-term debt (289 ) (223 ) Borrowings under revolving line of credit — 48,000 Repayments under revolving line of credit — (48,000 ) Repurchase of common stock, including shares surrendered for tax withholding (14,755 ) (33,409 ) Payment of contingent consideration liability (63 ) (33 ) Distribution to noncontrolling interest (900 ) — Net cash used by financing activities (16,007 ) (33,665 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 297 2,046 Net increase in cash, cash equivalents and restricted cash 81,505 154,497 Cash, cash equivalents and restricted cash at beginning of period 502,873 192,184 Cash, cash equivalents and restricted cash at end of period $ 584,378 $ 346,681 Supplemental information: Cash paid for interest $ 48,853 $ 49,419 Cash paid for income taxes $ 38,027 $ 5,363 New operating lease right of use assets $ 56,849 $ 25,424 Use of Non-GAAP Financial Measures We report our financial results in accordance with GAAP. However, to supplement the financial results prepared in accordance with GAAP, we use non-GAAP financial measures including non-GAAP net income and diluted net income per share, non-GAAP operating income, adjusted EBITDA and organic net sales. Management uses these non-GAAP financial measures that exclude the impact of specific items (described below) in making financial, operating and planning decisions and in evaluating our performance. Also, Management believes that these non-GAAP financial measures 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 non-GAAP measures are 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). Adjusted EBITDA further excludes one-time charges related to facility closures. 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 these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are shown in the tables below. Non-GAAP financial measures reflect adjustments based on the following items: Facility closures and business exit: we have excluded the charges related to our decision to exit the pottery business and the closure of distribution and manufacturing facilities as they represent infrequent transactions that impact the comparability between operating periods. They exclude the impact of the expenditures related to the Cost and Simplicity program we have embarked on to improve our future operations. We believe these exclusions supplement the GAAP information with a measure that may be useful to investors in assessing the sustainability of our operating performance. From time to time in the future, there may be other items that we may exclude if we believe that doing so is consistent with the goal of providing useful supplemental information to investors and management. During the third quarter of fiscal 2024, we recognized incremental expense of $11.1 million in the consolidated statement of operations, from the decision to exit the pottery business, the closure of a live goods distribution facility in Delaware and the relocation of our grass seed research facility. During the second quarter of fiscal 2024, we recognized incremental expense of $5.3 million in the consolidated statement of operations, from the closure of a manufacturing facility in Chico, California and the consolidation of our Southeast distribution network. During the third quarter of fiscal 2023, we recognized incremental expense of $13.9 million in the consolidated statement of operations, from the closure of a leased manufacturing and distribution pet bedding facility in Athens, Texas. Net Income and Diluted Net Income Per Share Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended GAAP to Non-GAAP Reconciliation Nine Months Ended June 29, 2024 June 24, 2023 June 29, 2024 June 24, 2023 (in thousands, except per share amounts) GAAP net income attributable to Central Garden & Pet Company $ 79,724 $ 83,126 $ 142,141 $ 122,808 Facility closures & business exit (1) 11,115 (3) 13,921 (1) (2) 16,385 (3) 13,921 Tax effect of facility closures & business exit (2,590 ) (3,373 ) (3,823 ) (3,373 ) Non-GAAP net income attributable to Central Garden & Pet Company $ 88,249 $ 93,674 $ 154,703 $ 133,356 GAAP diluted net income per share $ 1.19 $ 1.25 $ 2.13 $ 1.84 Non-GAAP diluted net income per share $ 1.32 $ 1.40 $ 2.31 $ 2.00 Shares used in GAAP and non-GAAP diluted net earnings per share calculation 66,945 66,725 66,848 66,832 Operating Income Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended June 29, 2024 Nine Months Ended June 29, 2024 GAAP Facility Closure & Business Exit (1)(2) Non-GAAP GAAP Facility Closure & Business Exit (1)(2) Non-GAAP (in thousands) Net sales $ 996,348 $ — $ 996,348 $ 2,530,971 $ — $ 2,530,971 Cost of goods sold and occupancy 679,290 8,613 670,677 1,756,188 11,140 1,745,048 Gross profit $ 317,058 $ (8,613 ) $ 325,671 $ 774,783 $ (11,140 ) $ 785,923 Selling, general and administrative expenses 201,122 2,502 198,620 556,988 5,245 551,743 Income from operations $ 115,936 $ (11,115 ) $ 127,051 $ 217,795 $ (16,385 ) $ 234,180 Operating Income Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended June 24, 2023 Nine Months Ended June 24, 2023 GAAP Facility closure (3) Non-GAAP GAAP Facility closure (3) Non-GAAP (in thousands) Net sales $ 1,023,269 $ — $ 1,023,269 $ 2,559,936 $ — $ 2,559,936 Cost of goods sold and occupancy 705,217 8,010 697,207 1,810,547 8,010 1,802,537 Gross profit $ 318,052 $ (8,010 ) $ 326,062 $ 749,389 $ (8,010 ) $ 757,399 Selling, general and administrative expenses 195,222 5,911 189,311 548,112 5,911 542,201 Income from operations $ 122,830 $ (13,921 ) $ 136,751 $ 201,277 $ (13,921 ) $ 215,198 Pet Segment Operating Income Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended GAAP to Non-GAAP Reconciliation Nine Months Ended June 29, 2024 June 24, 2023 June 29, 2024 June 24, 2023 (in thousands) GAAP operating income $ 83,068 $ 59,969 $ 189,115 $ 154,779 Facility closure (3) — 13,921 — 13,921 Non-GAAP operating income $ 83,068 $ 73,890 $ 189,115 $ 168,700 GAAP operating margin 16.4 % 11.9 % 13.5 % 11.1 % Non-GAAP operating margin 16.4 % 14.7 % 13.5 % 12.1 % Garden Segment Operating Income Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended GAAP to Non-GAAP Reconciliation Nine Months Ended June 29, 2024 June 24, 2023 June 29, 2024 June 24, 2023 (in thousands) GAAP operating income $ 62,519 $ 88,088 $ 110,699 $ 126,887 Facility closure & business exit (1) 11,115 — (1) (2) 16,385 — Non-GAAP operating income $ 73,634 $ 88,088 $ 127,084 $ 126,887 GAAP operating margin 12.8 % 16.9 % 9.8 % 10.9 % Non-GAAP operating margin 15.1 % 16.9 % 11.2 % 10.9 % Organic Net Sales Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended June 29, 2024 Nine Months Ended June 29, 2024 Net sales (GAAP) Effect of acquisitions & divestitures on net sales Net sales organic Net sales (GAAP) Effect of acquisitions & divestitures on net sales Net sales organic (in millions) Q3 FY 24 $ 996.3 $ 15.8 $ 980.5 $ 2,531.0 $ 48.4 $ 2,482.6 Q3 FY 23 1,023.3 13.0 1,010.3 2,559.9 44.4 2,515.5 $ decrease $ (27.0 ) $ (29.8 ) $ (28.9 ) $ (32.9 ) % decrease (2.6 )% (2.9 )% (1.1 )% (1.3 )% Organic Pet Segment Net Sales Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended June 29, 2024 Nine Months Ended June 29, 2024 Net sales (GAAP) Effect of acquisitions & divestitures on net sales Net sales organic Net sales (GAAP) Effect of acquisitions & divestitures on net sales Net sales organic (in millions) Q3 FY 24 $ 508.0 $ 15.8 $ 492.2 $ 1,397.5 $ 48.4 $ 1,349.1 Q3 FY 23 503.3 — 503.3 1,394.3 — 1,394.3 $ increase (decrease) $ 4.7 $ (11.1 ) $ 3.2 $ (45.2 ) % increase (decrease) 0.9 % (2.2 )% 0.2 % (3.2 )% Organic Garden Segment Net Sales Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended June 29, 2024 Nine Months Ended June 29, 2024 Net sales (GAAP) Effect of acquisitions & divestitures on net sales Net sales organic Net sales (GAAP) Effect of acquisitions & divestitures on net sales Net sales organic (in millions) Q3 FY 24 $ 488.3 $ — $ 488.3 $ 1,133.5 $ — $ 1,133.5 Q3 FY 23 520.0 13.0 507.0 1,165.6 44.4 1,121.2 $ increase (decrease) $ (31.7 ) $ (18.7 ) $ (32.1 ) $ 12.3 % increase (decrease) (6.1 )% (3.7 )% (2.8 )% 1.1 % Adjusted EBITDA Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended June 29, 2024 Pet Garden Corporate Total (in thousands) Net income attributable to Central Garden & Pet Company $ — $ — $ — $ 79,724 Interest expense, net — — — 10,216 Other income — — — (225 ) Income tax expense — — — 25,468 Net income attributable to noncontrolling interest — — — 753 Income (loss) from operations $ 83,068 $ 62,519 $ (29,651 ) $ 115,936 Depreciation & amortization 10,979 11,008 725 22,712 Noncash stock-based compensation — — 6,211 6,211 Facility closures & business exit (1) — 11,115 — 11,115 Adjusted EBITDA $ 94,047 $ 84,642 $ (22,715 ) $ 155,974 Adjusted EBITDA Reconciliation GAAP to Non-GAAP Reconciliation Three Months Ended June 24, 2023 Pet Garden Corporate Total (in thousands) Net income attributable to Central Garden & Pet Company $ — $ — $ — $ 83,126 Interest expense, net — — — 13,134 Other income — — — (853 ) Income tax expense — — — 27,000 Net income attributable to noncontrolling interest — — — 423 Income (loss) from operations $ 59,969 $ 88,088 $ (25,227 ) $ 122,830 Depreciation & amortization 10,060 10,823 818 21,701 Noncash stock-based compensation — — 7,305 7,305 Facility closure (3) 13,921 — — 13,921 Adjusted EBITDA $ 83,950 $ 98,911 $ (17,104 ) $ 165,757 Adjusted EBITDA Reconciliation GAAP to Non-GAAP Reconciliation Nine Months Ended June 29, 2024 Pet Garden Corporate Total (in thousands) Net income attributable to Central Garden & Pet Company $ — $ — $ — $ 142,141 Interest expense, net — — — 31,396 Other income — — — (1,047 ) Income tax expense — — — 43,733 Net income attributable to noncontrolling interest — — — 1,572 Income (loss) from operations $ 189,115 $ 110,699 $ (82,019 ) $ 217,795 Depreciation & amortization 32,901 33,028 2,140 68,069 Noncash stock-based compensation — — 15,138 15,138 Facility closures & business exit (1) (2) — 16,385 — 16,385 Adjusted EBITDA $ 222,016 $ 160,112 $ (64,741 ) $ 317,387 Adjusted EBITDA Reconciliation GAAP to Non-GAAP Reconciliation Nine Months Ended June 24, 2023 Pet Garden Corporate Total (in thousands) Net income attributable to Central Garden & Pet Company $ — $ — $ — $ 122,808 Interest expense, net — — — 41,600 Other income — — — (3,147 ) Income tax expense — — — 39,446 Net income attributable to noncontrolling interest — — — 570 Income (loss) from operations $ 154,779 $ 126,887 $ (80,389 ) $ 201,277 Depreciation & amortization 30,647 32,483 2,374 65,504 Noncash stock-based compensation — — 20,632 20,632 Facility closure (3) 13,921 — — 13,921 Adjusted EBITDA $ 199,347 $ 159,370 $ (57,383 ) $ 301,334 View source version on businesswire.com: https://www.businesswire.com/news/home/20240807439810/en/
Investor/Media Contact Friederike Edelmann VP, Investor Relations & Corporate Sustainability (925) 412-6726 fedelmann@central.com