Central Garden & Pet Company (NASDAQ: CENT) (NASDAQ: CENTA),
a leading innovator, marketer and producer of quality branded
products for the lawn and garden and pet supplies markets, today
reported financial results for the fourteen and fifty-three week
periods ended September 29, 2012.
The Company reported net sales of $397.2 million for the fourth
quarter of 2012, a 5 percent increase over the comparable fiscal
2011 period. Sales benefitted from the inclusion of an extra week
in the quarter versus the prior year, as well as strength in the
Company’s Pet segment. The Company’s fourth quarter operating loss
for 2012 was $8.5 million compared to an operating loss of $4.6
million in the fourth quarter of 2011. The net loss for the fourth
quarter of 2012 was $10.1 million or $0.21 per fully diluted share
compared with a loss of $10.9 million or $0.21 per fully diluted
share in the fourth quarter of 2011.
Gus Halas, President & CEO of Central Operating Companies
commented, “Our fourth quarter bottom line was impacted by several
factors, including declines in our décor business, higher marketing
and innovation expenditures, and investments related to our
transformation. With the first year of the transformation behind us
and much work still to do, we remain committed to delivering a more
integrated company which delivers greater innovation and value to
our customers and improved profitability to our shareholders.”
The Company also announced today that it believes its sales and
earnings for the first quarter will be below the results of the
prior year.
Fourth Quarter 2012 Details
Reported net sales for the Pet segment for the quarter were
$237.6 million, a gain of 12 percent over the fourth quarter of
2011, benefitting from higher animal health sales and strength in
its pet distribution business as well as the inclusion of an extra
week in the quarter versus the prior year. The Pet segment’s
branded product sales for the quarter increased $19.9 million, or
12 percent, to $191.7 million while sales of other manufacturers’
products were $45.9 million, an increase of 15 percent compared
with the fourth quarter of 2011. The Pet segment’s operating margin
declined during the quarter, impacted by higher marketing and
innovation expenses. For the fourth quarter, the Pet segment’s
operating income was $16.3 million, up from $15.6 million in the
fourth quarter of 2011.
Fourth quarter net sales for the Garden segment decreased 3
percent, or $5.5 million compared with the prior year, to $159.6
million, impacted by lower décor revenues. The Garden segment’s
branded product sales decreased $8.3 million, or 6 percent, to
$140.2 million. Sales of other manufacturers’ products were $19.4
million, an increase of 17% compared with the fourth quarter of
2011. The Garden segment’s operating margin decreased during the
quarter, impacted by higher marketing costs as well as lower
profitability in its décor businesses, due primarily to product
returns in the seasonal décor business. The Garden segment’s
operating loss was $7.7 million compared to an operating loss of
$6.9 million in the prior year period.
At September 29, 2012, the Company’s cash and short term
investments balance totaled $71.2 million. Net interest expense was
$9.5 million for the quarter and $9.8 million in the prior year
period. Depreciation and amortization expense was $7.3 million in
the fourth quarter of 2012, consistent with the prior year. The
Company’s effective tax rate for the fourth quarter of 2012 was
39.9 percent on its operating loss compared to 17.0 percent in the
fourth quarter of 2011. The 2011 effective tax rate was lower than
historical norms, impacted by the Company’s inability to use tax
benefits due to decreased fiscal 2011 income and increased tax
valuation allowances.
Total debt at September 29, 2012 was $449.8 million compared to
$435.6 million at fiscal year-end 2011. The quarter ending total
leverage ratio, as defined in the Company’s credit agreement, was
4.0x.
Fiscal 2012 Details
For the year ending September 29, 2012, the Company reported net
sales of $1.7 billion, an increase of 4 percent, compared to $1.6
billion in fiscal 2011. The Company benefitted from an extra week
in the fiscal year compared to a year ago. Branded products sales
were $1.4 billion, up 3 percent over fiscal 2011. Sales of other
manufacturers’ products increased 11 percent to $280.0 million.
Depreciation and amortization for the fiscal year period was $30.4
million compared with $28.6 million in the prior year. Operating
income for the period totaled $74.4 million compared to $85.2
million in the prior year. The Company’s results included
transformational costs of $12.1 million that were incurred
throughout the year as the Company moves from a portfolio model to
an integrated, multi-brand organization. Net income for the year
ended September 29, 2012 was $21.2 million compared to $28.3
million in fiscal 2011. Earnings per fully diluted share were $0.44
compared to $0.50 per fully diluted share in the year ago
period.
Conference Call
The Company will host a conference call today at 4:30 p.m.
Eastern Time / 1:30 p.m. Pacific Time to discuss its fourth quarter
and fiscal 2012 results. The conference call will be accessible via
the internet through Central’s website, http://ir.central.com.
Alternatively, to listen to the call by telephone, dial
412-317-6789 and enter passcode 10019773. A replay of the call will
be available for three weeks by dialing 412-317-0088 and entering
passcode 10019773.
About Central Garden & Pet
Central Garden & Pet Company is a leading innovator,
marketer and producer of quality branded products for the lawn
& garden and pet supplies markets. Committed to new product
innovation, our products are sold to specialty independent and mass
retailers. Participating categories in Lawn & Garden include:
Grass seed and the brands PENNINGTON®, SMART SEED® and THE REBELS®;
wild bird feed and the brand PENNINGTON®; weed and insect control
and the brands AMDRO®, SEVIN®, IRONITE® and OVER-N-OUT®; and
decorative outdoor patio products and the brands NORCAL POTTERY®,
NEW ENGLAND POTTERY® and MATTHEWS FOUR SEASONS™. We also provide a
host of other regional and application-specific garden brands and
supplies. Participating categories in Pet include: Animal health
and the brands ADAMS™ and ZODIAC®; aquatics and reptile and the
brands OCEANIC SYSTEMS®, AQUEON® and ZILLA®; bird & small
animal and the brands KAYTEE®, SUPER PET® and CRITTER TRAIL®; dog
& cat and the brands TFH™, NYLABONE®, FOUR PAWS®, PINNACLE® and
AVODERM®; and equine and the brands FARNAM®, BRONCO® and SUPER
MASK®. We also provide a host of other application-specific pet
brands and supplies. Central Garden & Pet Company is based in
Walnut Creek, California, and has approximately 3,600 employees,
primarily in North America. For additional information on Central
Garden & Pet Company, including access to the Company's SEC
filings, please visit the Company’s website at www.central.com.
“Safe Harbor” Statement under the Private Securities Litigation
Reform Act of 1995: The statements contained in this release which
are not historical facts, including expectations for improved
efficiency and profitability from the Company’s transformation
initiatives, 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 Central’s Securities and
Exchange Commission filings. Central undertakes no obligation to
publicly update these forward-looking statements to reflect new
information, subsequent events or otherwise.
CENTRAL GARDEN & PET
COMPANY
CONSOLIDATED BALANCE SHEETS
September 29, 2012 September
24,2011
ASSETS
(in thousands)
Current assets:
Cash and cash equivalents $ 48,475 $ 12,031 Short term investments
22,705 17,820 Accounts receivable, net 202,422 195,417 Inventories
330,032 329,546 Prepaid expenses, deferred income taxes and other
48,149 47,772 Total current assets 651,783 602,586
Plant, property and equipment, net 191,163 176,402 Goodwill 210,223
210,223 Other intangible assets, net 78,853 84,526 Other assets
17,525 19,266
Total
$ 1,149,547 $ 1,093,003
LIABILITIES AND EQUITY
Current liabilities: Accounts payable $ 126,662 $ 116,524 Accrued
expenses 79,491 75,128 Current portion of long-term debt 331
279 Total current liabilities 206,484 191,931 Long-term debt
449,483 435,330 Deferred income taxes and other long-term
obligations 28,697 8,960 Commitments and contingencies (Note
11)
Equity:
Common stock 122 129 Class A common stock 347 359 Class B stock 16
16 Additional paid-in capital 382,195 396,208 Retained earnings
79,718 59,045 Accumulated other comprehensive income 1,539
1,019 Total Central Garden & Pet shareholders’ equity
463,937 456,776 Noncontrolling interest 946
6 Total equity 464,883 456,782 Total $
1,149,547 $ 1,093,003
Central Garden & Pet
Company
Condensed Consolidated Statements of
Operations
(In thousands, except per share
amounts)
Three Months Ended Fiscal Year Ended
September 29,2012
September 24,2011
September 29,2012
September 24,2011
Net sales $ 397,236 $ 376, 906 $ 1,700,013 $ 1,628,652 Cost of
goods sold and occupancy 292,164 278,702
1,185,855 1,134,733 Gross profit 105,072 98,204 514,158
493,919 Selling, general and administrative expenses 113,562
102,770 439,737 408,744 Income (loss) from
operations (8,490) (4,566) 74,421 85,175 Interest expense (9,577)
(9,786) (40,315) (38,044) Interest income 61 35 145 296 Other
income, net 697 434 678 550 Income
(loss) before income taxes and noncontrolling interest (17,309)
(13,883) 34,929 47,977 Income taxes (6,900) (2,357)
12,816 19,595 Income (loss) including noncontrolling
interest (10,409) (11,526) 22,113 28,382 Net income attributable to
noncontrolling interest (350) (594) 940
59 Net income (loss) attributable to Central Garden & Pet
Company $ (10,059) $ (10,932) $ 21,173 $ 28,323 Net income
(loss) per share attributable to Central Garden & Pet Company:
Basic $ (0.21) $ (0.21) $ 0.44 $ 0.50 Diluted $ (0.21) $ (0.21) $
0.44 $ 0.50 Weighted average shares used in the computation
of net income per share: Basic 47,704 51,943 47,622 56,217 Diluted
47,704 51,943 48,374 56,645
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