Fiscal 2Q 2019 sales increased 9.9% to
$673.7 million; Organic sales up 2.1%
Fiscal 2Q 2019 GAAP diluted EPS decreased to
$0.73 vs. $0.86 in Fiscal 2Q 2018
Central Garden & Pet Company (NASDAQ: CENT) (NASDAQ: CENTA),
a leading innovator, producer and distributor of branded and
private label products for the lawn & garden and pet supplies
markets, today announced financial results for its fiscal 2019
second quarter ended March 30, 2019.
Fiscal 2019 Second Quarter Financial
Results
Total net sales increased 9.9% to $673.7 million compared to
$613.1 million in the second quarter a year ago, driven in large
part by the Company's three recent acquisitions, Arden Companies,
Bell Nursery and General Pet. Total Company organic sales increased
2.1%, due to strength in the Garden segment. Branded product sales
of $543.2 million increased 9.2%, and sales of other manufacturers’
products of $130.5 million increased 13.0%. Gross margin of 30.6%
declined 110 basis points compared to the second quarter a year
ago, due to the inclusion of the three recent acquisitions. Organic
gross margin was relatively flat.
Second Quarter GAAP Operating Income, Net
Earnings and EPS
- Operating income decreased to $62.2
million from $65.8 million in the second quarter a year ago and
operating margin decreased 150 basis points to 9.2% compared to
10.7%, due to seasonal losses of Bell Nursery that were not part of
the results in the prior year period.
- Other income was $0.5 million compared
to $1.5 million in the second quarter a year ago. The difference
was primarily due to the absence of two months of income from the
Company's minority interest in Arden Companies this quarter,
compared to a full quarter of Arden income in the quarter a year
ago. The Arden business is now consolidated in Central's Garden
segment results, due to the Company's February 2019 purchase of the
remaining interest of 55% in Arden it did not already own.
- Net income of $42.4 million decreased
from $45.2 million in the second quarter a year ago.
- Earnings per diluted share decreased to
$0.73 in the quarter on a GAAP basis, compared to $0.86 on a GAAP
basis in the second quarter a year ago. The decrease was attributed
to the increase in the number of shares outstanding compared to a
year ago, as well as seasonal losses from Bell Nursery that were
not part of the results in the prior year period.
- EBITDA for the quarter was $74.0
million versus $76.9 million in the second quarter a year ago.
Second Quarter Non-GAAP Operating Income,
Net Earnings and EPS
- Non-GAAP results for the second quarter
of 2019 exclude the non-cash impairment of $2.5 million of
intangible value associated with the Company's live fish business,
due to the exit of the category by a large retailer, as well as a
preliminary non-cash $3.2 million gain from the write-up of the
Company's previous 45% ownership of Arden Companies. Both the
adjustments are reflected in operating income.
- Operating income was $61.5 million,
down 6.5% from the second quarter a year ago. Non-GAAP operating
margin of 9.1% decreased 160 basis compared to 10.7% in the same
quarter a year ago. Excluding the impact of the Company's three
recent acquisitions, operating income and margin were up and flat
respectively.
- Net income was $41.9 million a decrease
from $45.2 million in the second quarter a year ago, due in large
part to the decline in other income.
- Earnings per diluted share decreased to
$0.72 in the quarter on a non-GAAP basis, compared to $0.86, in the
second quarter a year ago, due primarily to an increase in shares
outstanding as well as seasonal losses of Bell Nursery that were
not part of the results in the prior year period.
- EBITDA for the quarter was $73.4
million versus $76.9 million in the second quarter a year ago.
"Overall, we showed good progress in the quarter, and had a
favorable start to the Garden season. We knew coming into the
quarter that it would be a challenging one, as we were comparing
against strong 6% organic revenue growth in the second quarter a
year ago, and were impacted by the short-term earnings drag of the
Company's recent acquisitions," said George Roeth, President &
CEO of Central Garden & Pet. "While these acquisitions have
negatively impacted our short-term results due to timing and
seasonality factors, as well as accounting rules, we remain focused
on acquiring companies with strong cash flows, attractive margins
and superior returns over the long term." Roeth continued,
"Importantly, this quarter we saw a return not only to organic
sales growth but also to growth in organic EBITDA, when excluding
the non-cash intangible asset impairment charge. We expect margins
to expand and profitability to significantly improve in the back
half of the year behind the full impact of price increases and more
favorable cost comparisons."
Pet Segment Fiscal 2019 Second Quarter
Results
Second quarter net sales for the Pet segment increased 5.1% to
$338.2 million, from the same period a year ago, driven by the
acquisition of General Pet. Organic Pet sales were up 0.1%, with
strength in the dog and cat, aquatics and live fish businesses,
offset by a decline in animal health sales, particularly the
Professional business, due in part to unfavorable weather and
inventory challenges. The Pet segment’s second quarter branded
product sales were $260.0 million, up 1.0% compared to a year ago,
and sales of other manufacturers’ products were $78.2 million, an
increase of 21.6%, driven by the impact of General Pet.
The Pet segment’s operating income decreased 17.7% compared to
the second quarter a year ago to $27.0 million; however, the
decline was 9.9% to $29.5 million excluding the $2.5 million
impairment charge for the live fish business. Pet operating margin
decreased to 8.0%, a decline of 220 basis points compared to the
second quarter a year ago, due in part to the lower margins
associated with the General Pet acquisition and the live fish
impairment charge. Pet's organic operating margin, excluding the
impairment charge, also declined, primarily due to weakness in the
Animal Health business, where lower volumes negatively impacted
margins and mix, more than offsetting the positive impact of
pricing actions across the Pet segment. Improved results are
expected in the back half of the year due to expectations of a more
normal weather environment, improved mix, and the full benefit of
pricing. Pet EBITDA, excluding the live fish impairment charge of
$2.5 million, was $37.6 million down from $39.7 million in the
second quarter a year ago.
Garden Segment Fiscal 2019 Second
Quarter Results
Second quarter net sales for the Garden segment rose 15.1% to
$335.5 million, driven largely by the Bell and Arden acquisitions.
Organic growth increased 4.4% over the period, driven by strength
in the grass seed and wild bird feed categories as well as a shift
in timing of orders from a key customer. It is important to note
that Garden consumption at key customers was up mid-single-digits
fiscal year-to-date through March 30th, driven by more favorable
weather, new products and increased distribution of existing
products. The Garden segment’s branded product sales were $283.2
million in the quarter, up 17.9% compared to the second quarter a
year ago. Sales of other manufacturers’ products increased 2.1% to
$52.3 million.
The Garden segment's operating income increased 5.1% to $53.4
million in the quarter compared to an operating gain of $50.7
million in the second quarter of fiscal 2018. Operating margin
decreased 150 basis points to 15.9%, due to the inclusion of Bell
Nursery and Arden Companies, which were not in results a year ago.
The second quarter is very unprofitable for Bell, which is
extremely seasonal and typically only earns a profit in the
Company's third fiscal quarter. Arden's operating margin, while
favorably impacted by a $3.2 million gain from the write-up of the
Company's previous 45% ownership of Arden Companies, was also
negatively impacted by purchase price accounting, which resulted in
inventory acquired being written up to fair market value at the
time Central acquired the business. Absent the impact of the two
acquisitions, Garden operating margin increased. Garden EBITDA,
excluding the $3.2 million gain from the Arden write-up, was $52.5
million compared to $52.5 million in the second quarter a year ago,
and increased excluding the two acquisitions.
Year-to-date 2019 Summary:
- Year-to-date net sales of $1,135.7
million increased 7.6% compared with $1,055.1 million a year ago,
due in large part to acquisitions. Organic sales increased
0.5%.
- Gross margin decreased 130 basis points
to 29.6% compared to 30.9% in the first six months of fiscal 2018,
principally due to acquisitions and to the lack of price increases
in the first fiscal quarter.
Year-to-date 2019 GAAP Operating Income,
Net Earnings and EPS
For the six months ended March 30, 2019, the Company
reported:
- Operating income of $72.3 million
decreased 18.1% or $16.0 million from $88.3 million in the first
six months of 2018, due in large part to the three recent
acquisitions and lack of pricing increases in the first fiscal
quarter.
- Operating margin of 6.4% decreased 200
basis points from 8.4% in the first six months of fiscal 2018.
- Net income decreased 38.2% to $44.2
million from $71.5 million a year ago.
- Diluted earnings per share of $0.76
declined 44.1% from $1.36 per share a year ago, due largely to the
impact of the acquisitions, a higher tax rate, and a greater number
of shares outstanding.
Year-to-date 2019 Non-GAAP Operating
Income, Net Earnings and EPS
For the six months ended March 30, 2019, the Company
reported:
- Non-GAAP results for the 2019 fiscal
year-to-date period exclude the non-cash impairment of $2.5 million
of intangible value associated with the Company's live fish
business, and a $3.2 million gain from the write-up of the
Company's Arden acquisition, both of which occurred in the
Company's second fiscal quarter this year.
- Non-GAAP results for the fiscal 2018
year-to-date period exclude $16.3 million for the tax impact of the
revaluation of the Company's deferred tax accounts.
- Operating income of $71.7 million
decreased 18.8% or $16.6 million from $88.3 million in the first
six months of 2018, due in large part to the three recent
acquisitions and the lack of pricing increases in the first fiscal
quarter.
- Operating margin of 6.3% decreased 210
basis points from 8.4% in the first six months of fiscal 2018,
primarily due to the impact of acquisitions.
- Net income declined 20.8% to $43.7
million from $55.1 million a year ago.
- Diluted earnings per share of $0.76
declined 44.1% from $1.36 per share a year ago, due largely to the
impact of the acquisitions, and a greater number of shares
outstanding. Non-GAAP earnings per diluted share decreased 28.6% to
$0.75 from $1.05 in the first six months of 2018.
Additional Information
The Company's cash balance at the end of the quarter increased
to $329.7 million compared to $132.3 million in the second quarter
a year ago, reflecting the proceeds of the Company's equity
offering in August 2018. Total debt at March 30, 2019 was
$697.8 million compared to $691.1 million at March 31, 2018.
Net interest expense of $8.4 million for the second quarter
decreased $1.5 million from $9.9 million in the prior-year period,
mainly due to interest earned on the Company's higher cash balance
during the quarter. The Company's leverage ratio at the end of the
second quarter, as defined in the Company's credit agreement, was
3.2x compared to 3.2x at the end of the prior year quarter.
The Company’s effective tax rate for the second quarter of 2019
was 21.3%, compared with 20.3% for the second quarter of 2018.
2019 Guidance
The Company is maintaining its fiscal 2019 guidance of earnings
per fully-diluted share of $1.80 or higher for the year.
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 second quarter
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 (201)
689-8345 (domestic and international) using confirmation #13689204.
A replay of the call will be available for three days by dialing
(201) 612-7415 and entering confirmation #13689204.
About Central Garden &
Pet
Central Garden & Pet Company is a leading innovator,
producer and distributor of branded and private label 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®, and THE REBELS®;
wild bird feed and the brand PENNINGTON®; weed and insect control
and the brands AMDRO®, SEVIN®, and OVER-N-OUT®; fertilizer and the
brands PENNINGTON® and IRONITE®; live plants from BELL NURSERY;
outdoor cushions and pillows from ARDEN COMPANIES; and decorative
outdoor patio products under the PENNINGTON® brand. 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™, COMFORT ZONE®, FARNAM®, HORSE HEALTH™ and
VITAFLEX®; aquatics and reptile and the brands AQUEON®, CORALIFE®,
SEGREST™ and ZILLA®; bird & small animal and the brands
KAYTEE®, Forti-Diet® and CRITTER TRAIL®; and dog & cat and the
brands TFH™, NYLABONE®, FOUR PAWS®, IMS®, CADET®, DMC™, K&H Pet
Products™, PINNACLE® and AVODERM®. 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 5,400 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 future
financial results, earnings guidance for fiscal 2019 expected cost
and mix improvements in the second half of fiscal 2019 and new
product offerings, 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. All forward-looking statements are
based upon the Company’s current expectations and various
assumptions. There are a number of risks and uncertainties that
could cause our actual results to differ materially from the
forward-looking statements contained in this release including, but
not limited to, the following factors:
- seasonality and fluctuations in the
Company’s operating results and cash flow;
- fluctuations in market prices for seeds
and grains and other raw materials and the Company’s inability to
pass through cost increases in a timely manner;
- adverse weather conditions;
- our dependence upon our key executives,
including our success in replacing our current CEO who has
announced his intention to retire at the end of the current fiscal
year;
- potential acquisitions;
- the impact of new accounting
regulations and the U.S. Tax Cuts and Jobs Act on the Company's tax
rate;
- dependence on a small number of
customers for a significant portion of our business;
- the impacts of recent tariffs or a
potential trade war;
- risk associated with litigation arising
from our business;
- uncertainty about new product
innovations and marketing programs; and
- competition in our industries.
These risks and others are described in the Company’s Securities
and Exchange Commission filings. The Company 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)
ASSETS March 30, 2019 March
31, 2018 September 29, 2018 Current assets: Cash and
cash equivalents $ 329,724 $ 132,265 $ 482,106 Restricted cash
16,115 13,948 10,899 Accounts receivable (less allowance for
doubtful accounts of $16,818, $20,976 and $24,125) 456,129 395,151
275,908 Inventories, net 517,158 465,522 427,823 Prepaid expenses
and other 33,161 26,677 20,562 Total current
assets 1,352,287 1,033,563 1,217,298 Land, buildings,
improvements and equipment—net 217,538 210,563 217,647 Goodwill
281,177 268,243 281,177 Other intangible assets—net 142,798 141,530
152,265 Other assets 52,340 50,064 38,822
Total $ 2,046,140 $ 1,703,963 $ 1,907,209
LIABILITIES AND EQUITY Current liabilities: Accounts
payable $ 157,596 $ 150,975 $ 110,259 Accrued expenses 136,413
116,414 102,583 Current portion of long-term debt 5,119 20
122 Total current liabilities 299,128 267,409 212,964
Long-term debt 692,646 691,084 692,031 Deferred taxes and
other long-term obligations 55,064 40,368 49,380 Equity:
Common stock, $0.01 par value: 12,145,135 shares outstanding
at March 30, 2019, March 31, 2018 and September 29, 2018 121 121
121 Class A common stock, $0.01 par value: 44,386,792,
38,171,595 and 43,953,265 shares outstanding at March 30, 2019,
March 31, 2018 and September 29, 2018 444 382 439 Class B
stock, $0.01 par value: 1,652,262 shares outstanding 16 16 16
Additional paid-in capital 592,331 393,852 590,168 Accumulated
earnings 407,117 310,810 362,923 Accumulated other comprehensive
loss (1,280 ) (673 ) (1,218 ) Total Central Garden & Pet
Company shareholders’ equity 998,749 704,508 952,449 Noncontrolling
interest 553 594 385 Total equity 999,302
705,102 952,834 Total $ 2,046,140 $
1,703,963 $ 1,907,209
CENTRAL GARDEN & PET
COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share
amounts)
(Unaudited)
Three Months Ended Six Months Ended
March 30, 2019 March 31, 2018 March 30,
2019 March 31, 2018 Net sales $ 673,701 $ 613,094
$ 1,135,691 $ 1,055,105 Cost of goods sold and occupancy 467,650
418,637
799,458
728,811 Gross profit 206,051 194,457
336,233
326,294 Selling, general and administrative expenses 143,898
128,671
263,899
237,987
Operating income 62,153 65,786
72,334
88,307 Interest expense (10,640 ) (10,575 )
(21,254 )
(17,980 ) Interest income 2,255 693 4,792 880 Other income
(expense) 500 1,505
308
(1,584 ) Income before income taxes and noncontrolling interest
54,268 57,409
56,180
69,623 Income tax expense (benefit) 11,546 11,643
11,819
(2,593 ) Income including noncontrolling interest 42,722 45,766
44,361
72,216 Net income attributable to noncontrolling interest 331
532
167
735
Net income attributable to Central Garden
& Pet Company $ 42,391 $ 45,234 $ 44,194
$ 71,481 Net income per share attributable to
Central Garden & Pet Company: Basic $ 0.74 $ 0.89
$ 0.78 $ 1.41 Diluted $ 0.73 $ 0.86 $
0.76 $ 1.36 Weighted average shares used in
the computation of net income per share: Basic 57,050 50,871 56,976
50,816 Diluted 58,026 52,658 58,013 52,693
Use of Non-GAAP Financial Measures
We report our financial results in accordance with U.S.
generally accepted accounting principles (GAAP). However, to
supplement the financial results prepared in accordance with GAAP,
we use non-GAAP financial measures including non-GAAP net sales and
operating income on a consolidated and segment basis, and non-GAAP
net income and diluted net income per share. Management believes
these non-GAAP financial measures that exclude the impact of
specific items (described below) may be useful to investors in
their assessment of our ongoing operating performance and provide
additional meaningful comparisons between current results and
results in prior operating periods.
EBITDA is defined by us as income before income tax, net other
expense, net interest expense and depreciation and amortization. We
present EBITDA because we believe that EBITDA is a useful
supplemental measure in evaluating the cash flows and performance
of our business and provides greater transparency into our results
of operations. EBITDA is used by our management to perform such
evaluation. EBITDA should not be considered in isolation or as
substitutes for cash flow from operations, income from operations
or other income statement measure prepared in accordance with GAAP.
We believe that EBITDA is frequently used by investors, securities
analysts and other interested parties in their evaluation of
companies, many of which present EBITDA when reporting their
results. Other companies may calculate EBITDA differently, it may
not be comparable.
We have also provided organic net sales, a non-GAAP measure that
excludes the impact of businesses purchased or exited in the prior
12 months, because we believe it permits investors to better
understand the performance of our historical business without the
impact of recent acquisitions or dispositions.
The reconciliations of these non-GAAP measures to the most
directly comparable financial measures calculated and presented in
accordance with GAAP are shown in the tables below. We have not
provided a reconciliation of non-GAAP guidance measures to the
corresponding GAAP measures on a forward-looking basis due to the
potential significant variability and limited visibility of the
excluded items. We believe that the non-GAAP financial measures
provide useful information to investors and other users of our
financial statements, by allowing for greater transparency in the
review of our financial and operating performance. Management also
uses these non-GAAP financial measures in making financial,
operating and planning decisions and in evaluating our performance,
and we believe these measures similarly may be useful to investors
in evaluating our financial and operating performance and the
trends in our business from management's point of view. While our
management believes that non-GAAP measurements are useful
supplemental information, such adjusted results are not intended to
replace our GAAP financial results and should be read in
conjunction with those GAAP results.
Non-GAAP financial measures reflect adjustments based on the
following items:
- Gains from the fair value remeasurement
of previously held investment interests: we have excluded the
impact of the fair value remeasurement of a previously held
investment interest as it represents an infrequent transaction that
occurs in limited circumstances that impacts the comparability
between operating periods. We believe the adjustment of these gains
supplements the GAAP information with a measure that may be used to
assess the sustainability of our operating performance.
- Asset impairment charges: we have
excluded the impact of asset impairments on intangible assets as
such non-cash amounts are inconsistent in amount and frequency. We
believe that the adjustment of these charges supplements the GAAP
information with a measure that can be used to assess the
sustainability of our operating performance.
- The U.S. government enacted
comprehensive tax legislation commonly referred to as the Tax Cuts
and Job Act (the "Tax Reform Act") in December 2017. We have
excluded the transitional impact of the Tax Reform Act as the
remeasurement of our deferred tax assets and liabilities does not
reflect the ongoing impact of the lower U.S. statutory rate on our
current year or future year earnings.
From time to time in the future, there may be other items that
we may exclude if we believe that doing so is consistent with the
goal of providing useful information to investors and
management.
The non-GAAP adjustments reflect the following:
(1) During the second quarter of fiscal 2019, we recorded a
preliminary, pending the finalization of the related purchase
accounting, non-cash $3.2 million gain in our Garden segment from
the fair value remeasurement of our previously held 45% interest in
Arden upon our acquisition of the remaining 55% interest. The gain
was recorded as part of selling, general and administrative costs
in the condensed consolidated statements of operations. (2) During
the second quarter of fiscal 2019, we recognized a non-cash
impairment charge in our Pet segment of $2.5 million related to the
impairment of intangible assets caused by a retail customer exiting
the live fish business. The adjustment was recorded as part of
selling, general and administrative costs. (3) Transitional impact
of U.S. Tax Reform: As a result of the Tax Reform Act, the Company
recorded a provisional tax benefit of $16.3 million in the quarter
ended December 30, 2017, due to the remeasurement of its deferred
tax assets and liabilities. We have excluded only this transitional
impact and have not included in the adjustment the ongoing impact
of the lower U.S. statutory rate on our current or future year
earnings.
Operating Income Reconciliation
GAAP to Non-GAAP
Reconciliation(in thousands) For the Three Months
Ended
GAAP to Non-GAAP Reconciliation(in thousands)
For the Six Months Ended Consolidated
Consolidated March 30, 2019 March 31,
2018 March 30, 2019 March 31, 2018 GAAP
operating income $ 62,153 $ 65,786 $ 72,334 $ 88,307 Previously
held investment interest fair value remeasurement
(1)
(3,215 ) — (3,215 ) — Intangible asset impairment
(2)
2,540 — 2,540 — Non-GAAP operating income $
61,478 $ 65,786 $ 71,659 $ 88,307
Pet Segment Operating Income Reconciliation GAAP to
Non-GAAP Reconciliation(in thousands) For the Three
Months Ended GAAP to Non-GAAP Reconciliation(in
thousands) For the Six Months Ended Pet
Pet March 30, 2019 March 31, 2018
March 30, 2019 March 31, 2018 GAAP operating
income $ 26,984 $ 32,784 $ 56,739 $ 68,960 Intangible asset
impairment
(2)
2,540 — 2,540 — Non-GAAP
operating income $ 29,524 $ 32,784 $ 59,279
$ 68,960
Garden Segment Operating Income
Reconciliation GAAP to Non-GAAP Reconciliation(in
thousands) For the Three Months Ended GAAP to
Non-GAAP Reconciliation(in thousands) For the Six
Months Ended Garden Garden March 30, 2019
March 31, 2018 March 30, 2019 March 31, 2018
GAAP operating income $ 53,355 $ 50,746 $ 48,718 $ 53,046
Previously held investment interest fair value remeasurement
(1)
(3,215 ) — (3,215 ) — Non-GAAP operating income $ 50,140
$ 50,746 $ 45,503 $ 53,046
GAAP to Non-GAAP
Reconciliation(in thousands, except per share amounts)
For the Three Months Ended
Net Income and Diluted Net Income Per Share Reconciliation
March 30, 2019 March 31, 2018 GAAP net income
attributable to Central Garden & Pet $ 42,391 $ 45,234
Previously held investment interest fair value remeasurement
(1)
(3,215 ) — Intangible asset impairment
(2)
2,540 — Tax effect of remeasurement and impairment $ 144 $ —
Non-GAAP net income attributable to Central Garden & Pet $
41,860 $ 28,891 GAAP diluted net income per share $ 0.73 $
0.86 Non-GAAP diluted net income per share $ 0.72 $ 0.86
Shares used in GAAP and non-GAAP diluted net earnings per share
calculation 58,026 52,658
GAAP to Non-GAAP
Reconciliation(in thousands, except per share amounts)
For the Six Months Ended Net Income and Diluted Net
Income Per Share Reconciliation March 30, 2019
March 31, 2018 GAAP net income attributable to Central
Garden & Pet $ 44,194 $ 71,481 Previously held investment
interest fair value remeasurement
(1)
(3,215 ) — Intangible asset impairment
(2)
2,540 — Tax effect of remeasurement and impairment 142 — Tax effect
of revaluation of deferred tax amounts
(3)
— 16,343 Non-GAAP net income attributable to Central Garden
& Pet $ 43,661 $ 55,138 GAAP diluted net income per
share $ 0.76 $ 1.36 Non-GAAP diluted net income per share $ 0.75 $
1.05 Shares used in GAAP and non-GAAP diluted net earnings
per share calculation 58,013 52,693
Organic Net Sales Reconciliation
We have provided organic net sales, a non-GAAP measure that
excludes the impact of recent acquisitions and dispositions,
because we believe it permits investors to better understand the
performance of our historical business. We define organic net sales
as net sales from our historical business derived by excluding the
net sales from businesses acquired or exited in the preceding 12
months. After an acquired business has been part of our
consolidated results for 12 months, the change in net sales
thereafter is considered part of the increase or decrease in
organic net sales.
GAAP to Non-GAAP
Reconciliation(in millions) For the Three Months
Ended March 30, 2019
Consolidated
Pet Segment
Garden Segment
Percentchange
Percentchange
Percentchange
Reported net sales - Q2 FY19 (GAAP) $ 673.7 $
338.2 $ 335.5 Reported net sales - Q2 FY18 (GAAP) 613.1
321.7 291.4 Increase in net sales 60.6 9.9% 16.5 5.1%
44.1 15.1% Effect of acquisition and divestitures on increase in
net sales 47.6 16.3 31.3 Increase in organic
net sales - Q2 2019 $ 13.0 2.1% $ 0.2 0.1% $ 12.8
4.4%
GAAP to Non-GAAP Reconciliation(in
millions) For the Six Months Ended March 30, 2019
Consolidated Pet Segment Garden
Segment
Percentchange
Percentchange
Percentchange
Reported net sales - Q2 FY19 YTD (GAAP) $ 1,135.7 $ 678.6 $
457.1 Reported net sales - Q2 FY18 YTD (GAAP) 1,055.1
646.7 408.4 Increase in net sales 80.6 7.6%
31.9 4.9% 48.7 11.9% Effect of acquisition and divestitures on
increase in net sales 74.9 33.5 41.4 Increase
(decrease) in organic net sales - Q2 2019 YTD $ 5.7 0.5% $
(1.6 ) (0.2)% $ 7.3 1.8%
EBITDA Reconciliation
GAAP to Non-GAAP Reconciliation(in thousands, except per
share amounts) For the Three Months Ended March 30, 2019
Garden Pet Corp
Total Net income attributable to Central Garden & Pet —
— — $ 42,391 Interest expense, net — — — 8,385 Other income — — —
(500 ) Income tax expense — — — 11,546 Net income attributable to
noncontrolling interest — — — 331 Sum
of items below operating income — — — 19,762
Income (loss) from operations $ 53,355 $ 26,984 $ (18,186 )
$ 62,153 Depreciation & amortization 2,312 8,039
1,526 11,877 EBITDA $ 55,667 $ 35,023 $ (16,660 ) $
74,030
EBITDA Reconciliation GAAP to Non-GAAP
Reconciliation(in thousands, except per share amounts)
For the Three Months Ended March 31, 2018 Garden
Pet Corp Total Net income attributable to
Central Garden & Pet — — — $ 45,234 Interest expense, net — — —
9,882 Other income — — — (1,505 ) Income tax expense — — — 11,643
Net income attributable to noncontrolling interest — — — 532
Sum of items below operating income — — — 20,552 Income
(loss) from operations $ 50,746 $ 32,784 $ (17,744 ) $ 65,786
Depreciation & amortization 1,707 6,944 2,471
11,122 EBITDA $ 52,453 $ 39,728 $ (15,273 ) $ 76,908
EBITDA Reconciliation GAAP to Non-GAAP
Reconciliation(in thousands, except per share amounts)
For the Six Months Ended March 30, 2019 Garden
Pet Corp Total Net income attributable
to Central Garden & Pet — — — $ 44,194 Interest expense, net —
— — 16,462 Other income — — — (308 ) Income tax benefit — — —
11,819 Net income attributable to noncontrolling interest —
— — 167 Sum of items below operating income —
— — 28,140 Income (loss) from
operations $ 48,718 $ 56,739 $ (33,123 ) $ 72,334 Depreciation
& amortization 5,138 16,095 2,996 24,229
EBITDA $ 53,856 $ 72,834 $ (30,127 ) $ 96,563
EBITDA Reconciliation GAAP to Non-GAAP
Reconciliation(in thousands, except per share amounts)
For the Six Months Ended March 31, 2018 Garden
Pet Corp Total Net income attributable to
Central Garden & Pet — — — $ 71,481 Interest expense, net — — —
17,100 Other income (expense) — — — 1,584 Income tax benefit — — —
(2,593 ) Net income attributable to noncontrolling interest —
— — 735 Sum of items below operating
income — — — 16,826 Income (loss) from
operations $ 53,046 $ 68,960 $ (33,699 ) $ 88,307 Depreciation
& amortization 3,276 14,089 4,920 22,285
EBITDA $ 56,322 $ 83,049 $ (28,779 ) $ 110,592
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version on businesswire.com: https://www.businesswire.com/news/home/20190506005717/en/
Steve ZenkerVP Finance - Investor Relations, FP&A, &
Corporate CommunicationsCentral Garden & Pet
Company925.948.3657
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