Third Quarter and Year-To-Date Details
Net sales for the Pet segment increased 19 percent, or $44.0 million, from the same period a year ago to $271.3 million, on strength across many of its categories, especially flea and tick. The Pet segment’s branded product sales were $228.9 million and sales of other manufacturers’ products were $42.4 million. The Pet segment’s gross and operating margins rose from a year ago, due primarily to a favorable change in the mix of sales including higher flea & tick sales and lower third party product sales. The Pet segment’s operating income was $40.5 million compared to operating income of $27.2 million in the prior-year period, a $13.3 million or 49 percent increase. Net sales for the Garden segment rose 2 percent, or $5.5 million, from the same period a year ago to $262.5 million, in large part due to stronger chemical and control sales. The Garden segment’s branded product sales were $221.3 million and sales of other manufacturers’ products were $41.2 million. In the third quarter, the Garden segment’s gross and operating margins increased relative to the same period a year ago, aided by increased sales of higher-margin control products and improved margins on bird seed products. The Garden segment’s operating income in the quarter was $22.6 million, compared to operating income of $18.0 million in the third quarter of 2011, a $4.6 million or 26 percent increase. For the nine months ending June 23, 2012, the Company reported net sales of $1.30 billion, an increase of 4% from $1.25 billion in the comparable 2011 period. Branded products sales equaled $1.09 billion, increasing 3% over the comparable 2011 period. Sales of other manufacturers' products rose 9% to $214.6 million. Operating income for the period was $82.9 million compared to $89.7 million in the prior year. Net income for the nine months ended June 23, 2012 was $31.2 million compared to $39.3 million in the comparable 2011 period. Earnings per fully diluted share were $0.65 compared to $0.68 per fully diluted share in the year ago period.At June 23, 2012, the Company’s cash and short-term investments balance was $58.5 million compared to $26.6 million in the prior year-period. Total debt at June 23, 2012 was $449.9 million compared to $450.5 million at June 25, 2011. The quarter-ending total leverage ratio, as defined in the Company’s senior credit facility, was 3.9x. Depreciation and amortization expense was $8.0 million in the third quarter of 2012, compared with $7.1 million in the prior-year period. The Company’s effective tax rate for the third quarter of 2012 was 37.9 percent, compared with 36.4 percent in the prior-year 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 fiscal third quarter 2012 results. The conference call will be accessible through the investor relations section of Central’s website, http://ir.central.com. Alternatively, to listen to the call by telephone, dial 1-412-317-6789 and enter passcode 10015876. A replay of the call will be available for three weeks by dialing 1-412-317-0088 (domestic and international) and entering passcode 10015876. 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 3,800 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 the Central’s Annual Report on Form 10-K, filed on November 21, 2011, as well as the Company’s 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 BALANCE SHEETS | ||||||||||
(in thousands, except share and per share amounts) | ||||||||||
Unaudited | ||||||||||
June 25, | June 23, | September 24, | ||||||||
ASSETS | 2011 | 2012 | 2011 | |||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 11,233 | $ | 40,699 | $ | 12,031 | ||||
Short term investments | 15,320 | 17,820 | 17,820 | |||||||
Accounts receivable (less allowance for doubtful accounts of $18,782, $18,297 and $15,590) | 257,418 | 245,780 | 195,417 | |||||||
Inventories | 343,788 | 334,796 | 329,546 | |||||||
Prepaid expenses and other | 40,095 | 46,107 | 47,772 | |||||||
Total current assets | 667,854 | 685,202 | 602,586 | |||||||
Land, buildings, improvements and equipment—net | 171,187 | 185,225 | 176,402 | |||||||
Goodwill | 209,348 | 210,223 | 210,223 | |||||||
Other intangible assets—net | 85,705 | 80,529 | 84,526 | |||||||
Deferred income taxes and other assets | 21,638 | 18,539 | 19,266 | |||||||
Total | $ | 1,155,732 | $ | 1,179,718 | $ | 1,093,003 | ||||
LIABILITIES AND EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 115,380 | $ | 125,111 | $ | 116,524 | ||||
Accrued expenses | 92,678 | 106,818 | 75,128 | |||||||
Current portion of long-term debt | 198 | 347 | 279 | |||||||
Total current liabilities | 208,256 | 232,276 | 191,931 | |||||||
Long-term debt | 450,266 | 449,530 | 435,330 | |||||||
Deferred income taxes and other long-term obligations | 4,104 | 23,478 | 8,960 | |||||||
Equity: | ||||||||||
Common stock, $.01 par value: 13,755,693, 12,247,571 and 12,949,593 shares outstanding at June 25, 2011, June 23, 2012 and September 24, 2011 | 137 | 122 | 129 | |||||||
Class A common stock, $.01 par value: 38,191,629, 34,506,329 and 35,941,360 shares outstanding at June 25, 2011, June 23, 2012 and September 24, 2011 | 382 | 345 | 359 | |||||||
Class B stock, $.01 par value: 1,652,262 shares outstanding | 16 | 16 | 16 | |||||||
Additional paid-in capital | 421,351 | 381,751 | 396,208 | |||||||
Retained earnings | 69,234 | 89,777 | 59,045 | |||||||
Accumulated other comprehensive income | 1,386 | 1,127 | 1,019 | |||||||
Total Central Garden & Pet Company shareholders’ equity | 492,506 | 473,138 | 456,776 | |||||||
Noncontrolling interest | 600 | 1,296 | 6 | |||||||
Total equity | 493,106 | 474,434 | 456,782 | |||||||
Total | $ | 1,155,732 | $ | 1,179,718 | $ | 1,093,003 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
June 25, 2011 | June 23, 2012 | June 25, 2011 | June 23, 2012 | |||||||||||||
Net sales | $ | 484,303 | $ | 533,808 | $ | 1,251,746 | $ | 1,302,777 | ||||||||
Cost of goods sold and occupancy | 334,914 | 353,156 | 856,031 | 893,691 | ||||||||||||
Gross profit | 149,389 | 180,652 | 395,715 | 409,086 | ||||||||||||
Selling, general and administrative expenses | 112,795 | 131,683 | 305,974 | 326,175 | ||||||||||||
Income from operations | 36,594 | 48,969 | 89,741 | 82,911 | ||||||||||||
Interest expense | (9,948 | ) | (10,723 | ) | (28,330 | ) | (30,738 | ) | ||||||||
Interest income | 140 | 28 | 333 | 84 | ||||||||||||
Other income (expense) | 318 | 102 | 116 | (19 | ) | |||||||||||
Income before income taxes and noncontrolling interest | 27,104 | 38,376 | 61,860 | 52,238 | ||||||||||||
Income taxes | 9,879 | 14,554 | 21,952 | 19,716 | ||||||||||||
Income including noncontrolling interest | 17,225 | 23,822 | 39,908 | 32,522 | ||||||||||||
Net income attributable to noncontrolling interest | 144 | 1,123 | 653 | 1,290 | ||||||||||||
Net income attributable to Central Garden & Pet Company | $ | 17,081 | $ | 22,699 | $ | 39,255 | $ | 31,232 | ||||||||
Net income per share attributable to Central Garden & Pet Company: | ||||||||||||||||
Basic | $ | 0.32 | $ | 0.48 | $ | 0.68 | $ | 0.66 | ||||||||
Diluted | $ | 0.31 | $ | 0.47 | $ | 0.68 | $ | 0.65 | ||||||||
Weighted average shares used in the computation of net income per share: | ||||||||||||||||
Basic | 54,020 | 47,661 | 57,635 | 47,580 | ||||||||||||
Diluted | 54,498 | 48,388 | 58,115 | 48,253 |