Central Garden & Pet Company (NASDAQ: CENT)(NASDAQ:CENTA)
today announced results for its second quarter ended March 27,
2010.
“We have continued to improve our profitability and cash flow
for the second quarter,” noted William Brown, Chairman and Chief
Executive Officer. “Higher gross margins and lower operating
expenses more than offset sales declines. Operating margins
improved to 13.7 percent for the second quarter 2010 from 12.0
percent for the second quarter last year. Our strong balance sheet,
together with the recent completion of our $400 million senior
subordinated note offering, give us the financial resources to
invest in brand building activities and new product innovations to
support future organic sales growth. We also continue to explore
potential acquisitions.”
The Company reported net sales of $442 million in the quarter, a
decline of 7 percent compared to $476 million in the comparable
fiscal 2009 period. Branded product sales decreased 10 percent to
$368 million. Sales of other manufacturers’ products increased 10
percent to $74 million. The Company reported operating income of
$60.5 million compared to $57.2 million in the year ago period. Net
interest expense was $9.8 million compared to $5.5 million a year
ago. Included in interest expense is a $3.2 million charge related
to the Company’s recent refinancing. Net income for the quarter was
$31.6 million for the second quarter of 2010 compared to $33.0
million for the second quarter of 2009. Fully diluted earnings per
share rose to $0.49 from $0.47 for the year ago period.
Net sales for the Garden Products segment were $220 million, a
decrease of 11 percent from $248 million in the comparable fiscal
2009 period. Branded product sales declined $34 million to $185
million. Sales of other manufacturers’ products increased $6
million to $35 million. The decrease in Garden Products segment
sales was due primarily to lower unit sales and price reductions
due to lower commodity costs. Operating income for the Garden
Products segment was $36.8 million, or 16.8 percent of sales,
compared to $36.7 million, or 14.8 percent of sales in the year ago
period.
Net sales for the Pet Products segment were $222 million, a
decrease of 3 percent compared to the year ago period. Branded
product sales were $183 million, a decrease of $7 million compared
to last year. Sales of other manufacturers’ products were $39
million compared to $38 million last year. Pet sales were lower
than the year ago period due primarily to decreased sales of animal
health products. The decrease in sales of animal health products
was due primarily to a supply issue for one product line, which is
expected to continue at a reduced level through our third fiscal
quarter. Operating income for the Pet Products segment was $34.8
million, or 15.6 percent of sales, compared to $31.9 million, or
13.9 percent of sales, in the year ago period.
For the six months ending March 27, 2010 of fiscal 2010, the
Company reported net sales of $711 million compared to $769 million
in the comparable 2009 period, a decline of 8 percent. Branded
products sales decreased 10 percent to $588 million. Sales of other
manufacturers’ products increased 5 percent to $123 million.
Operating income for the period was $61.0 million compared to $54.5
million in the year ago period. Operating margins increased to 8.6
percent for the six months ended March 27, 2010 from 7.1 percent in
the year ago period. Net income for the six months ending March 27,
2010 was $28.7 million compared to $26.8 million in the comparable
2009 period. Earnings per diluted share were $0.43 compared to
$0.38 per share per fully diluted share in the year ago period.
The Company will discuss its second quarter results on a
conference call today at 4:30 p.m. EDT / 1:30 p.m. PDT. Individuals
may access the call by dialing 1-888-713-4213 and passcode 9413
3044 (domestic) or 1-617-213-4865 and passcode 9413 3044
(international). The conference call will be simultaneously
broadcast over the Internet through Central’s website,
http://www.central.com/ or you may link directly to the webcast on
our website at
http://ir.central.com/phoenix.zhtml?c=93879&p=irol-calendar.
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.
In order to simplify your registration process, you may
pre-register at the following link:
https://www.theconferencingservice.com/prereg/key.process?key=P4G7PLEAQ.
By pre-registering, you may bypass the operator and go directly to
the teleconference with a unique PIN number as soon as the call
begins. At the time of the call, after dialing the number and
passcode mentioned above, enter your PIN for immediate access to
the teleconference.
Re-play dial-in numbers for the call will be available for three
weeks: 1-888-286-8010 and passcode 4416 4680 (domestic) and
1-617-801-6888 and passcode 4416 4680 (international).
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 including the brands PENNINGTON®, SMART SEED® and THE
REBELS™; wild bird feed and the brands PENNINGTON® and KAYTEE®;
weed and insect control and the brands AMDRO®, SEVIN®, and Over 'N
Out®; and decorative outdoor patio products and the brands NORCAL®,
NEW ENGLAND POTTERY®, CEDAR WORKS® 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®, 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 4,000 employees, primarily in North America and
Europe. For additional information on Central Garden & Pet
Company, including access to Central's SEC filings, please visit
Central'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 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, filed November 20, 2009 and
Central’s Quarterly Report on Form 10-Q, filed February 4, 2010,
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 Income
(Unaudited)
(In thousands, except per share
amounts)
Three Months Ended Six Months Ended March 27, March
28, March 27, March 28, 2010 2009 2010 2009 Net Sales
$ 441,936 $ 476,425 $ 711,172 $ 768,967 Cost of Goods Sold and
Occupancy 280,747 315,872
462,214 522,933 Gross Profit 161,189
160,553 248,958 246,034 Selling, General and Administrative
Expenses 100,667 103,397 187,915
191,544 Income From Operations 60,522
57,156 61,043 54,490 Interest Expense (9,814 ) (5,751 )
(14,758 ) (12,635 ) Interest Income 1 270 11 602 Other Income
(Expense) (206 ) (131 ) 386
(1,081 ) Income Before Income Taxes and Noncontrolling
Interest 50,503 51,544 46,682 41,376 Income Taxes
18,568 17,980 17,166
14,127 Income Including Noncontrolling Interest 31,935
33,564 29,516 27,249 Net Income Attributable to Noncontrolling
Interest 315 544 790
413 Net Income $ 31,620 $ 33,020
$ 28,726 $ 26,836 Net Income Per Share: Basic:
$ 0.49 $ 0.48 $ 0.44 $ 0.38 Diluted $ 0.49 $ 0.47 $ 0.43 $
0.38 Weighted Average Shares Outstanding Basic 63,988 69,122
65,408 70,122 Diluted 64,950 69,872 26 66,435 70,588
Central Garden & Pet
Company
Condensed Consolidated Balance
Sheets
(Unaudited)
(In thousands)
March 27,
2010
March 28,
2009
September 26,
2009
Assets Current Assets: Cash and Cash Equivalents $ 27,037 $ 8,545 $
85,668 Accounts Receivable 277,354 317,713 206,565 Inventories
330,570 380,156 284,834 Prepaid Expenses and Other Total Current
Assets 30,167 40,030 44,425 Total
Current Assets 665,128 746,444 621,492 Property and
Equipment - Net 162, 296 168,536 164,734 Goodwill 208,630
207,173 207,749 Other Intangible Assets – Net 101,007 105,520
103,366 Deferred Income Taxes and Other Assets 58,644
84,505 53,584 Total $ 1,195,705 $ 1,312,178 $
1,150,925 Liabilities and Shareholders’ Equity
Current Liabilities: Accounts Payable $ 147,698 $ 137,558 $ 108,836
Accrued Expenses 88,573 94,571 82,143 Current Portion of Long-Term
Debt 14,957 3,322 3,270 Total Current
Liabilities 251,228 235,451 194,249 Long-Term Debt 400,171
543,629 404,815 Other Long-Term Obligations 4,274 6,379 4,526
Shareholders’ Equity 540,032 526,719 547,335
Total $ 1,195,705 $ 1,312,178 $ 1,150,925
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