CENT Central Garden and Pet Co

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