Central Garden & Pet Company (NASDAQ:CENT)(NASDAQ:CENTA)
today announced fourth quarter and full year results for its fiscal
year ended September 26, 2009.
“During fiscal 2009, we began to show improved performance from
the implementation of our financial and operational priorities,”
noted William Brown, Chairman and Chief Executive Officer of
Central Garden & Pet Company. “We achieved these results by
maintaining a strict focus on our core operating objectives:
reducing investment in working capital, lowering expenses, and
improving gross margins. We believe these continuing initiatives
will strengthen Central’s foundation as we move forward to a new
phase of growth.”
In the fourth quarter, the Company reported net sales of $363
million, a decrease of 12 percent compared to $414 million in the
comparable fiscal 2008 period. For the quarter, the Company
reported operating income of $19.9 million compared to an operating
loss of $12.3 million in the year ago period. Net income for the
quarter was $8.0 million, or $0.12 per fully diluted share compared
to a net loss of $13.9 million, or $0.20 per fully diluted share in
the year ago period. Sales of branded products decreased 12 percent
to $311 million and sales of other manufacturers’ products
decreased 14 percent to $52 million. Depreciation and amortization
was $7.3 million compared to $8.1 million in the year ago period.
The quarter ending debt balance was $408 million compared to $523
million a year ago, a decrease of $115 million. The quarter ending
Leverage Ratio, as defined in the Company’s credit agreement, was
2.9x compared to the covenant level of 4.5x.
Net sales for the Garden Products segment in the quarter were
$160 million, a decrease of 15 percent compared to $188 million in
the comparable fiscal 2008 period. Garden Products segment
operating income was $4.7 million compared to a loss of $30.8
million in the year ago period, which includes the impairment of
goodwill, other intangibles and long-lived assets of $29.5 million.
Sales of garden branded products declined 15 percent to $142
million. Sales of other garden manufacturers’ products declined 14
percent to $18 million. Net sales for the Pet Products segment in
the quarter were $204 million, a decrease of 10 percent compared to
$226 million in the year ago period. Operating income for the Pet
Products segment was $27.6 million, a decrease of 13 percent,
compared to $31.6 million in the year ago period. Sales of pet
branded products declined nine percent to $169 million. Sales of
other pet manufacturers’ products decreased 13 percent to $35
million.
Included in the results for the fourth quarter of fiscal 2008 is
a non-cash, pre-tax charge of $27.8 million related to the
impairment of goodwill, other intangibles and long-lived assets.
Excluding goodwill impairment and other asset impairment charges
that are not representative of the on-going results of operations
of our business, operating income for the fourth quarter of fiscal
2008 was $13.8 million and the corresponding net income for the
quarter was $4.0 million, or $0.06 per fully diluted share.
For the fiscal year ended September 26, 2009, the Company
reported net sales of $1.61 billion compared to $1.70 billion in
fiscal 2008, a decline of five percent. Operating income for the
fiscal year was $126.0 million compared to an operating loss of
$324.4 million in fiscal 2008. Branded product sales declined five
percent and sales of other manufacturers’ products declined five
percent. Depreciation and amortization for the fiscal year was
$29.1 million compared to $32.5 million in the prior fiscal year.
Net income for the fiscal year ended September 26, 2009 was $65.9
million compared to a net loss of $267.3 million in fiscal 2008.
Earnings per diluted share were $0.94 compared to a loss of $3.76
per fully diluted share in fiscal 2008.
Included in the full year results for fiscal 2008 is a non-cash,
pre-tax charge of $430 million related to the impairment of
goodwill, other intangibles and long-lived assets. Also included in
the results for the prior fiscal year is a pre-tax gain of $11.1
million related to the sale of properties and legal settlement
proceeds. Fiscal 2008 operating income, excluding goodwill
impairment and other asset impairment charges and the gains related
to the sale of properties and legal settlement proceeds that are
not representative of the on-going results of operations of our
business, was $90.6 million, and the corresponding net income and
earnings per fully diluted share were $34.6 million and $0.49,
respectively.
The Company will discuss its fourth quarter and fiscal 2009
results on a conference call Thursday, November 19, 2009 at 4:30
p.m. EST / 1:30 p.m. PST. Individuals may access the call by
dialing 1-888-713-4213 and passcode 6032 1821 (domestic) or
1-617-213-4865 and passcode 6032 1821 (international). The
conference call will be simultaneously broadcast over the Internet
through Central’s website, http://www.central.com/. To listen to
the webcast, please log on to the website prior to the scheduled
call time to register and download any necessary audio
software.
Re-play dial-in numbers for the call will be available for three
weeks: 1-888-286-8010 and passcode 3022 0524 (domestic) and
1-617-801-6888 and passcode 3022 0524 (international).
Central Garden & Pet Company is a leading innovator,
marketer and producer of quality branded products for the lawn
& garden and pet supplies markets. We are committed to new
product innovation and our products are sold to specialty
independent and mass retailers in the following categories: In Lawn
& Garden: Grass seed including the brands PENNINGTON® and THE
REBELS™ wild bird feed and the brands PENNINGTON® and KAYTEE®weed
and insect control and the brands AMDRO®, SEVIN®, IRONITE® and Over
‘N Out®; and decorative outdoor patio products and the brands
NORCAL®, NEW ENGLAND POTTERY® and MATTHEWS FOUR SEASONS™. We also
provide a host of other regional and application-specific garden
brands and supplies. Pet categories include: Animal health and the
brands ADAMS™ and ZODIAC®; aquatics and reptile and the brands
OCEANIC®, AQUEON™ and ZILLA™; bird & small animal and the
brands KAYTEE®, SUPER PET® and CRITTER TRAIL®; dog & cat and
the brands TFH®, NYLABONE®, FOUR PAWS®, PINNACLE® and Avoderm®; and
equine and the brands FARNAM®, BRONCO® and SUPER MASK®. Central
Garden & Pet Company is based in Walnut Creek, California, and
has approximately 5,000 employees, primarily in North America and
Europe. For additional information on Central Garden & Pet
Company, including access to the Company's SEC filings, please
visit the Company’s website at http://www.central.com/.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995: The statements contained in this release which
are not historical facts, including future growth expectations, and
margin improvements are forward-looking statements that are subject
to risks and uncertainties that could cause actual results to
differ materially from those set forth in or implied by
forward-looking statements. These risks are described in the
Company's Annual Report on Form 10-K, to be filed November 20,
2009, and other Securities and Exchange Commission filings. Central
undertakes no obligation to publicly update these forward-looking
statements to reflect new information, subsequent events or
otherwise.
Central Garden & Pet
Company
Condensed Consolidated Statements
of Operations
(In thousands, except per share
amounts)
Three Months Ended Fiscal Year Ended
September 26, September 27, September 26, September
27, 2009 2008 2009
2008 Net Sales $ 363,171 $ 413,976 $ 1,614,300 $
1,705,386 Cost of Goods Sold and Occupancy 246,933
299,727 1,086,974 1,184,058
Gross Profit 116,238 114,249 527,326 521,328
Selling, General and Administrative Expenses 96,312 98,803 401,340
415,978 Goodwill and other impairments
-
27,764
-
429,764 Income from Operations 19,926
(12,318 ) 125,986 (324,414 ) Interest Expense (4,864 )
(7,695 ) (22,710 ) (38,326 ) Interest Income 35 139 649 1,053 Other
Income (Expense) (28 ) (341 ) 52
2,116 Income (Loss) Before Income Taxes and Minority
Interest 15,069 (20,215 ) 103,977 (359,571 ) Income Tax
Expense (Benefit) 6,870 (6,232 ) 36,368 (93,069 ) Minority Interest
163 (73 ) 1,661 833
Net Income (Loss) 8,036 $ (13,910 )
65,948 (267,335 ) Basic Earnings (Loss)
Per Common Share $ 0.12 $ (0.20 ) $ 0.95 $ (3.76 ) Diluted
Earnings (Loss) Per Common Share $ 0.12 $ (0.20 ) $ 0.94 $ (3.76 )
Weighted Average Shares Outstanding Basic 68,502 70,330
69,499 71,117 Diluted 69,768 70,330 70,264 71,117
Central Garden & Pet
Company
Condensed Consolidated Balance
Sheets
(In thousands)
September 26,
2009
September 27,
2008
Assets Current Assets: Cash and Cash Equivalents $ 85,668 $ 26,929
Accounts Receivable - Net 206,565 260,639 Inventories 284,834
349,499 Other Current Assets 44,425 34,686
Total Current Assets 621,492 671,753 Property and Equipment
- Net 164,734 174,013 Goodwill 207,749 201,499 Other
Intangible Assets – Net 103,366 107,404 Deferred Income Taxes and
Other Assets 53,584 104,649 Total $ 1,150,925
$ 1,259,318 Liabilities and Shareholders’ Equity
Current Liabilities: Accounts Payable $ 108,836 $ 133,364 Accrued
Expenses 82,143 84,345 Current Portion of Long-Term Debt
3,270 3,340 Total Current Liabilities 194,249 221,049
Long-Term Debt 404,815 519,807 Other Long-Term Obligations
4,526 7,037 Minority Interest 2,250 2,667 Shareholders’ Equity
545,085 508,758 Total $ 1,150,925 $ 1,259,318
Non-GAAP Financial
Measures
This press release includes adjustments to GAAP net
loss for the fourth quarter and fiscal year ended
September 27, 2008. Adjusted net income and adjusted earnings per
share, are non-GAAP financial measures which exclude the impact
of the impairment of goodwill, other intangibles and
long-lived assets plus gains related to the sale of properties and
legal settlement proceeds. We believe that they are useful
as supplemental measures in assessing the operating
performance of our business. These measures are used by
our management, including our chief operating decision maker, to
evaluate business results. We exclude goodwill
impairment and other asset impairment charges which are not
representative of the on-going results of operations of our
business and are not used to determine compliance with the
financial covenants in our credit facility.
We provide this information to investors and other users of the
financial statements, such as lenders, to assist in comparisons of
past, present and future operating results and to assist in
highlighting the results of on-going operations. While management
believes adjusted earnings and adjusted earnings per share are
useful supplemental information, such adjusted results are not
intended to replace our GAAP financial results and should be used
in conjunction with those GAAP results.
Below is a reconciliation of this non-GAAP measure to net
loss for the fourth quarter and fiscal year ended September
27, 2008.
Fourth Quarter Fiscal 2008
Dollars EPS Dollars
EPS (in millions) (in millions) Reconciliation
of net loss to adjusted net income: Net loss, as reported $ (13.9 )
$ (0.20 ) $ (267.3 ) $ (3.76 ) Adjustment for goodwill impairment
and other asset impairment charges that are not representative of
the on-going results of operations of our business, net of taxes
17.9 0.26
308.9
4.35 Adjustment for building sales, legal settlement and sale of a
business, net of tax
-
-
(7.0 ) (0.10 ) Adjusted net income $ 4.0
$ 0.06 $ 34.6 $ 0.49
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