Central Garden & Pet Company Announces Fiscal 2016 & Fourth Quarter Results

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 announced financial results for its fiscal year and fourth quarter ended September 24, 2016.

Fiscal 2016 Summary

Net sales increased 10.8% to $1.83 billion compared to $1.65 billion a year ago. Branded product sales of $1.44 billion increased 9.7% and sales of other manufacturers' products of $386.2 million rose 15.0%. Organic sales growth, adjusting for businesses purchased or exited that impacted the year, rose 4.2%. The Pet and Garden segments both experienced organic growth. Gross margin improved 60 basis points to 30.2% compared to 29.6% in the prior year despite the dilutive effects of the Company's recent acquisitions, which negatively impacted fiscal 2016 gross margin by 100 basis points. The Company's gross margin benefited from a favorable mix of product sales, reduced raw material input costs, as well as its exit from the holiday decor business.

Fiscal 2016 GAAP Operating Income, Net Earnings and EPS
  • Operating income of $129.4 million was up 41.5% over fiscal 2015 from $91.4 million;
  • Operating margin of 7.1% increased 160 basis points compared to fiscal 2015;
  • Net income was $44.5 million, a 39.2% increase compared to $32.0 million in fiscal 2015; and
  • Earnings per share increased 35.9% to $0.87 per fully diluted share.

Fiscal 2016 Non-GAAP Operating Income, Net Earnings and EPS
  • Non-GAAP results for fiscal 2016 exclude $14.3 million of charges in the first quarter related to the Company's refinancing of its fixed rate notes, $2.4 million of income related to the sale of a manufacturing plant in the third quarter, and non-cash impairment charges of $18.4 million in the fourth quarter primarily related to the Company's investment in two joint ventures. Only $1.8 million of the impairment charge impacted operating income;
  • Non-GAAP results for fiscal 2015 exclude a Pet non-cash intangible impairment charge of $7.3 million, all of which impacted operating income;
  • Non-GAAP operating income for the year, excluding the items above, was $128.8 million and an operating margin of 7.0% compared to $98.7 million and 6.0% in the prior year;
  • Non-GAAP net income was $64.4 million, a 75.8% gain compared to $36.6 million in the period a year ago;
  • Non-GAAP earnings per fully diluted share increased 70.3% to $1.26 per fully diluted share.

Fiscal 2016 Fourth Quarter Financial Results

Net sales increased 7.0% to $413.4 million compared to $386.4 million in the fourth quarter a year ago. Branded product sales of $330.0 million increased 6.7% and sales of other manufacturers' products of $83.5 million rose 8.3%. Organic sales growth, adjusting for businesses purchased or exited that impacted the year, rose 2.6%. The Pet and Garden segments both experienced organic growth; Gross margin improved 120 basis points compared to the fourth quarter a year ago to 29.1%, benefiting primarily from the Company's exit from the holiday decor business.

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