Fiscal 2019 diluted EPS of $1.61 vs. $2.32
for fiscal 2018
Fiscal 2019 non-GAAP diluted EPS of $1.60
vs. $1.91 for fiscal 2018
Fiscal 2019 GAAP operating income of $152.1
million vs. $167.3 million for fiscal 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 year and
fourth quarter ended September 28, 2019.
Tim Cofer, Central Garden & Pet's new Chief Executive
Officer said, “My early days at Central have strengthened my
conviction that Central is well-positioned as a leader in the pet
and garden industries. One of my observations is that we have
opportunities to enhance our position by investing more in demand
creation capabilities and initiatives to drive long-term
sustainable profitable growth.”
Mr. Cofer continued, “These investments, while dampening our
earnings growth rate in fiscal 2020, are expected to yield
meaningful benefits in the years ahead. Over the next several
months - informed by further conversations with all our
stakeholders - I will be working with our team to build upon the
current Central strategy and make adjustments where appropriate. I
look forward to sharing the details of that plan in the spring.”
Cofer concluded, “We have great brands, strong leadership, talented
people and a dynamic entrepreneurial culture. I could not be more
excited about the opportunities ahead.”
Commenting on the results for fiscal 2019, Niko Lahanas, CFO of
Central Garden & Pet said, “We continue to feel confident about
the fundamentals of our underlying businesses. A number of factors
unfavorably impacted our performance in fiscal 2019, some of which
may continue into 2020. The timing of the 2018 acquisition of the
highly-seasonal Bell Nursery business, the underperformance of our
animal health businesses, impacted by unfavorable weather and other
factors, a higher amount of receivables and inventory write-offs,
and a higher number of shares outstanding, all negatively impacted
results versus the prior year.”
Mr. Lahanas continued, “Our focus on working capital has yielded
encouraging results, with our cash from operations increasingly
significantly year-over-year.”
Fiscal 2019 Summary
Net sales of $2.38 billion increased 7.6% compared to $2.22
billion a year ago, primarily due to acquisitions not present in
prior year results. Branded product sales of $1.88 billion
increased 6.7%, and sales of other manufacturers’ products
increased 11.0% to $504.5 million. Organic sales growth for the
year increased 1.5%, due to gains in the Garden segment. Gross
margin decreased 100 basis points to 29.5% compared to 30.5% in the
prior year, due in part to the impact of businesses acquired that
were not in the prior year's results, which accounted for half of
the gross margin decline. The underperformance in the Company's
animal health businesses and unfavorable product mix also
contributed to the margin decline. Price increases implemented
during the year, as well as cost reductions, partially offset the
negative impact of higher labor and freight costs and tariffs.
Fiscal 2019 GAAP Operating Income, Net
Earnings and EPS
- Operating income of $152.1 million decreased 9.1% from $167.3
million in fiscal 2018, primarily impacted by lower results in the
Company's animal health businesses, and the inclusion of seasonal
losses of Bell Nursery that were not part of the results in the
prior year period;
- Operating margin of 6.4% was down 120 basis points compared to
fiscal 2018, impacted by a lower gross margin, as well as higher
logistics expenses. Lower marketing expenses as a percent of sales
mitigated a portion of the decline;
- Net income of $92.8 million, decreased 24.9% compared to $123.6
million in fiscal 2018;
- Earnings per share decreased 30.6% to $1.61 per fully diluted
share on an 8.0% increase in the number of shares outstanding
compared to the prior year; and
- Cash flow from operations increased to $205.0 million, up 79.6%
or $90.9 million compared to the prior year.
Fiscal 2019 Non-GAAP Operating Income, Net
Earnings and EPS
- Non-GAAP results for fiscal 2019 exclude the second quarter
non-cash $3.2 million gain from the write-up of the Company's
previous 45% ownership of the Arden Companies as well as a 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;
- Non-GAAP results for fiscal 2018 exclude a favorable tax impact
of $21.5 million for the revaluation of the Company's deferred tax
accounts;
- Non-GAAP operating income for fiscal 2019 was $151.4 with an
operating margin of 6.4%, compared to $167.3 million and 7.6%,
respectively, in fiscal 2018;
- Non-GAAP net income for fiscal 2019 was $92.3 million, a 9.6%
decrease compared to $102.1 million in fiscal 2018, negatively
impacted by a higher effective tax rate;
- Non-GAAP earnings per fully diluted share decreased 16.2% to
$1.60 from $1.91 in the prior fiscal year on a greater number of
shares outstanding;
- EBITDA decreased 5.4%, or $11.6 million, to $202.9 million
compared with fiscal 2018. The decrease was primarily due to the
inclusion of two quarters of Bell Nursery results not in the prior
year period. This negatively impacted fiscal 2019 EBITDA by $7
million.
Fiscal 2019 Fourth Quarter Financial
Results
Net sales increased 7.7% to $540.7 million compared to $502.3
million in the fourth quarter a year ago, while organic sales grew
4.6%, driven by gains in both the Garden and Pet segments. Branded
product sales of $415.0 million increased 4.9%, and sales of other
manufacturers’ products of $125.7 million increased 17.7%. Gross
margin decreased 180 basis points compared to the fourth quarter a
year ago to 27.5%, with the inventory write-off in the Pet segment
and unfavorable mix changes in the Garden segment the primary
causes of the decline.
Fourth Quarter GAAP Operating Income, Net
Earnings and EPS
- Operating income of $10.9 million was down $7.3 million or
40.3% compared to $18.2 million in the fourth quarter a year ago.
Operating margin of 2.0% decreased 160 basis points compared to the
fourth quarter a year ago, due to higher expenses related to
writing off of receivables and inventory as well as one-time CEO
transition costs;
- Net income decreased to $2.4 million from $10.6 million in the
fourth quarter a year ago, as lower operating income and a higher
tax rate compared to the fourth quarter a year ago more than offset
a decrease in other expense. The tax rate last year included a
favorable impact from the revaluation of the Company's deferred tax
accounts. The decrease in other expense resulted principally from
the remainder of the Arden business being purchased during the year
and residing in the Garden segment during the quarter as opposed to
being classified as other income in the fourth quarter a year ago;
and
- Earnings per fully-diluted share decreased to $0.04 from $0.19
in the fourth quarter a year ago.
Fourth Quarter Non-GAAP Operating Income,
Net Earnings and EPS
- Non-GAAP results for the fourth quarter of fiscal 2018 exclude
a favorable tax impact of $5.1 million from the revaluation of the
Company's deferred tax accounts;
- Non-GAAP net income decreased to $2.4 million from $5.4 million
in the fourth quarter a year ago;
- Non-GAAP earnings per diluted share decreased to $0.04 from
$0.10 in the fourth quarter a year ago; and
- EBITDA decreased $6.2 million, or 20.2%, to $24.4 million
compared to the fourth quarter a year ago.
Pet Segment Fiscal 2019 Fourth Quarter
Results
Fourth quarter net sales for the Pet segment increased 4.9% from
the same period a year ago, to $355.9 million. The gain was due in
part to the inclusion of the C&S acquisition as well as organic
growth. The Pet segment’s branded product sales were $272.3
million, up 3.9% compared to the fourth quarter a year ago, and
sales of other manufacturers’ products were $83.6 million, an
increase of 8.3%. Pet organic sales grew 2.2%, on higher sales of
other manufacturers products, as well as strength in the dog &
cat and wild bird businesses. The gains more than offset lower
sales in the aquatics and live fish businesses.
The Pet segment’s operating income declined 3.8% to $30.9
million and operating margin decreased 80 basis points, to 8.7%,
from $32.2 million and 9.5%, respectively, in the fourth quarter a
year ago. The declines were primarily due to lower results in the
Company's animal health and pet bedding businesses, which included
write-offs and expenses taken during the quarter related to
receivables and inventory.
Garden Segment Fiscal 2019 Fourth
Quarter Results
Net sales for the Garden segment increased 13.4% compared to the
fourth quarter a year ago to $184.8 million, aided by the
acquisition of Arden but primarily driven by organic growth. The
Garden segment’s branded product sales were $142.7 million in the
quarter, up 7.1% compared to the fourth quarter a year ago. Sales
of other manufacturers’ products increased 42.2% to $42.1 million.
Organic sales rose 9.7%, despite the impact of unfavorable weather
during the quarter on controls product sales. Higher sales of other
manufacturers' products were the primary driver of the improved
organic revenue, with meaningful gains also contributed by the wild
bird, grass seed, and live plants businesses.
The Garden segment’s operating income in the quarter decreased
to $0.3 million compared to $1.6 million in the fourth quarter a
year ago, and Garden operating margin decreased 80 basis points to
0.2%. The inclusion of Arden in the Garden segment, which was not
in last year's Garden results, negatively impacted both measures.
Mix of products sold was also a detractor to margins.
Additional Information
At September 28, 2019, the Company’s cash and short-term
investment balance was $497.7 million, compared to $482.1 million a
year ago. Cash flow from operations for the fourth quarter of
fiscal 2019 was $112.2 million, compared to $96.4 million in the
fourth quarter of fiscal 2018.
Total debt at September 28, 2019 was $693.2 million compared to
$692.2 million at September 29, 2018. Net interest expense was $8.1
million for the fourth quarter of fiscal 2019 compared to $8.9
million in the prior-year period. The Company's leverage ratio at
the end of the quarter and year, as defined in the Company's credit
agreement, was 3.1x compared to 3.0x in the prior year quarter.
Other expense for the quarter decreased to $0.2 million from
$4.4 million in the fourth quarter a year ago due to the absence of
Arden in the other expense line.
The Company's effective tax rate for the fourth quarter was
22.8% compared to a tax benefit of 112.9% in the fourth quarter of
2018. For the full fiscal year, the tax rate was 22.3% compared
with 2.6% last year. The fiscal 2018 tax rate reflects the
revaluation of the Company's deferred tax accounts and a reduction
in the U.S. Federal corporate tax rate in fiscal 2018. Excluding
the impact of the revaluation of the deferred tax accounts in
fiscal 2018, the Company's tax rate for fiscal 2018 was 19.5%.
Fiscal 2019 tax rates reflect a higher weighted average tax rate
for the year due to a less favorable impact from changes in
accounting standards around non-cash equity compensation expense
than in the prior fourth quarter and fiscal year periods.
During the fourth quarter, the Company repurchased 1.8 million
shares of its stock. As of the end of its fiscal year, the Company
had $100 million remaining on its Board authorized share repurchase
program, as well as an additional 1.2 million shares remaining on
the Board's equity dilution authorization.
Guidance
The Company currently believes diluted EPS for fiscal 2020 will
be at or modestly above its fiscal 2019 results. Increased demand
creation spending and continuing challenges in its animal health
businesses will be headwinds to earnings growth for the year. In
addition, the Company's first quarter diluted EPS is currently
expected to be a loss of $0.10 to $0.15, principally due to the
timing of orders in the first quarter compared to a year ago,
continuing challenges in the animal health businesses, and higher
corporate expenses. The guidance for the quarter does not take into
consideration the effects of a recent fire at one of the Company’s
facilities, which may impact the first quarter but is currently not
expected to materially impact full year results. Updated guidance
for the fiscal year is expected to be provided in early February,
after the initial assessment and proposed actions of the new CEO
can be factored into the Company's expectations.
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 fourth quarter
and fiscal 2019 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 #13696804.
A replay of the call will be available for three days by dialing
(201) 612-7415 and entering confirmation #13696804.
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 5,800 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 increased
marketing activities and capital expenditures and their impact on
future growth, the expected continuing challenges in the animal
health businesses, and earnings guidance for the first quarter and
full fiscal 2020 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 ability to pass through cost
increases in a timely manner;
- adverse weather conditions;
- our dependence upon our key executives;
- potential acquisitions;
- the impact of new accounting regulations on the Company's tax
rate;
- our ability to recover losses and mitigate business
interruption caused by the November 2019 fire at our DMC facility
in Texas;
- dependence on a small number of customers for a significant
portion of our business;
- the impact of tariffs or further expansion of the 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)
Unaudited
ASSETS
September 28, 2019
September 29, 2018
Current assets:
Cash and cash equivalents
$
497,749
$
482,106
Restricted cash
12,952
10,899
Accounts receivable, net
300,135
275,908
Inventories
466,197
427,823
Prepaid expenses and other
30,160
20,562
Total current assets
1,307,193
1,217,298
Plant, property and equipment, net
245,405
217,647
Goodwill
286,077
281,177
Other intangible assets, net
146,137
152,265
Other assets
40,208
38,822
Total
$
2,025,020
$
1,907,209
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
149,246
$
110,259
Accrued expenses
129,166
102,583
Current portion of long-term debt
113
122
Total current liabilities
278,525
212,964
Long-term debt
693,037
692,031
Deferred income taxes and other long-term
obligations
57,281
49,380
Equity:
Common stock
115
121
Class A common stock
430
439
Class B stock
16
16
Additional paid-in capital
575,380
590,168
Retained earnings
421,742
362,923
Accumulated other comprehensive income
(loss)
(1,676
)
(1,218
)
Total Central Garden & Pet
shareholders’ equity
996,007
952,449
Noncontrolling interest
170
385
Total equity
996,177
952,834
Total
$
2,025,020
$
1,907,209
CENTRAL GARDEN & PET
COMPANY
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per
share amounts)
(unaudited)
Three Months Ended
Fiscal Year Ended
September 28, 2019
September 29, 2018
September 28, 2019
September 29, 2018
Net sales
$
540,744
$
502,314
$
2,383,010
$
2,215,362
Cost of goods sold and occupancy
392,220
355,296
1,678,969
1,539,986
Gross profit
148,524
147,018
704,041
675,376
Selling, general and administrative
expenses
137,661
128,808
551,973
508,040
Operating income
10,863
18,210
152,068
167,336
Interest expense
(10,684
)
(10,619
)
(42,614
)
(39,196
)
Interest income
2,584
1,681
9,554
3,145
Other income (expense), net
(245
)
(4,402
)
243
(3,860
)
Income before income taxes and
noncontrolling interest
2,518
4,870
119,251
127,425
Income tax (benefit) expense
573
(5,497
)
26,604
3,305
Net income including noncontrolling
interest
1,945
10,367
92,647
124,120
Net income (loss) attributable to
noncontrolling interest
(495
)
(201
)
(139
)
526
Net income attributable to Central Garden
& Pet Company
$
2,440
$
10,568
$
92,786
$
123,594
Net income per share attributable to
Central Garden & Pet Company:
Basic
$
0.04
$
0.20
$
1.63
$
2.39
Diluted
$
0.04
$
0.19
$
1.61
$
2.32
Weighted average shares used in the
computation of net income per share:
Basic
56,017
54,059
56,770
51,716
Diluted
56,618
55,376
57,611
53,341
Use of Non-GAAP Financial Measures
We report our financial results in accordance with accounting
principles generally accepted in the United States (GAAP). However,
to supplement the financial results prepared in accordance with
GAAP, we use non-GAAP financial measures including EBITDA, organic
sales, non-GAAP 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 (or
operating income plus depreciation and amortization expense). 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 a
substitute for cash flow from operations, income from operations or
other income statement measures 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 and 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 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 this gain 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.
- Gains on disposals of significant plant assets: we have
excluded the impact of gains on the disposal of significant plant
assets as these represent infrequent transactions that impact 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.
- Tax impact: adjustment represents the impact of the tax effect
of the pre-tax non-GAAP adjustments excluded from non-GAAP net
income. The tax impact of the non-GAAP adjustments is calculated
based on the consolidated effective tax rate on a GAAP basis,
applied to the non-GAAP adjustments, unless the underlying item has
a materially different tax treatment.
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 made reflect the following:
(1)
During the second quarter of fiscal 2019,
we recorded a $3.2 million non-cash 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)
As a result of the Tax Reform Act, during
fiscal 2018, we recorded a tax benefit of $21.5 million, of which
$16.3 million was recorded in the first quarter and $5.2 million in
the fourth quarter, due to the remeasurement of our deferred tax
assets and liabilities. We excluded only this transitional impact
and did not include in the adjustment the ongoing impact of the
lower U.S. statutory rate on our earnings.
GAAP to Non-GAAP
Reconciliation (in thousands) For the Fiscal Year Ended
Consolidated
September 28, 2019
September 29, 2018
Operating Income Reconciliation
GAAP operating income
$
152,068
$
167,336
Previously held investment interest fair
value remeasurement
(1)
(3,215
)
—
Intangible asset impairment
(2)
2,540
—
Non-GAAP operating income
$
151,393
$
167,336
Pet Segment Operating Income
Reconciliation
GAAP Pet segment operating income
$
122,727
$
140,353
Intangible asset impairment
(2)
2,540
—
Non-GAAP Pet segment operating income
$
125,267
$
140,353
Garden Segment Operating Income
Reconciliation
GAAP Garden segment operating income
$
102,170
$
95,551
Previously held investment interest fair
value remeasurement
(1)
(3,215
)
—
Non-GAAP Garden segment operating
income
$
98,955
$
95,551
GAAP to Non-GAAP
Reconciliation (in thousands, except per share amounts) For the
Fiscal Year Ended
Net Income and Diluted Net Income Per
Share Reconciliation
September 28, 2019
September 29, 2018
GAAP net income attributable to Central
Garden & Pet
$
92,786
$
123,594
Previously held investment interest fair
value remeasurement
(1)
(3,215
)
—
Intangible asset impairment
(2)
2,540
—
Tax effect of remeasurement and
impairment
151
—
Tax effect of revaluation of deferred tax
amounts
(3)
—
(21,485
)
Non-GAAP net income attributable to
Central Garden & Pet
$
92,262
$
102,109
GAAP diluted net income per share
$
1.61
$
2.32
Non-GAAP diluted net income per share
$
1.60
$
1.91
Shares used in GAAP and non-GAAP diluted
net earnings per share calculation
57,611
53,341
GAAP to Non-GAAP
Reconciliation (in thousands) For the Quarter Ended
Net income and diluted net income per
share
September 28, 2019
September 29, 2018
GAAP net income (loss)
$
2,440
$
10,568
Tax effect of revaluation of deferred tax
amounts
(1)
—
5,142
Non-GAAP net income
$
2,440
$
5,426
GAAP diluted income (loss) per share
$
0.04
$
0.19
Non-GAAP diluted income per share
$
0.04
$
0.10
Shares used in GAAP and non-GAAP diluted
net earnings per share calculation
56,618
55,376
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 For the Fiscal Year Ended September 28, 2019
Consolidated
Pet Segment
Garden Segment
Percent Change
Percent Change
Percent Change
Reported net sales FY 2019 (GAAP)
$
2,383.0
$
1,384.7
$
998.3
Reported net sales FY 2018 (GAAP)
2,215.4
1,340.9
874.5
Increase in net sales
167.6
7.6
%
43.8
3.3
%
123.8
14.2
%
Effect of acquisitions and dispositions on
increase in net sales
134.7
46.3
88.4
Increase (decrease) in organic net
sales
$
32.9
1.5
%
$
(2.5
)
(0.2
)%
$
35.4
4.0
%
GAAP to Non-GAAP
Reconciliation For the Fiscal Year Ended September 29, 2018
Consolidated
Pet Segment
Garden Segment
Percent Change
Percent Change
Percent Change
Reported net sales FY 2018 (GAAP)
$
2,215.4
$
1,340.9
$
874.5
Reported net sales FY 2017 (GAAP)
2,054.5
1,246.4
808.1
Increase in net sales
160.9
7.8
%
94.5
7.6
%
66.4
8.2
%
Effect of acquisitions and dispositions on
increase in net sales
140.3
56.2
84.1
Increase in organic net sales
20.6
1.0
%
38.3
3.1
%
(17.7
)
(2.2
)%
Estimated impact of extra week in fiscal
2017 on organic sales
32.8
21.4
11.4
Organic net sales adjusted for extra
week
$
53.4
2.6
%
$
59.7
4.8
%
$
(6.3
)
(0.8
)%
GAAP to Non-GAAP
Reconciliation For the Quarter Ended September 28, 2019
Consolidated
Pet Segment
Garden Segment
Percent Change
Percent Change
Percent Change
Reported net sales Q4 FY19 (GAAP)
$
540.7
$
355.9
$
184.8
Reported net sales Q4 FY18 (GAAP)
502.3
339.4
162.9
Increase in net sales
38.4
7.7
%
16.5
4.9
%
21.9
13.4
%
Effect of acquisition and divestitures on
increase in net sales
15.1
9.0
6.1
Adjusted organic net sales
$
23.3
4.6
%
$
7.5
2.2
%
$
15.8
9.7
%
GAAP to Non-GAAP
Reconciliation For the Quarter Ended September 29, 2018
Consolidated
Pet Segment
Garden Segment
Percent Change
Percent Change
Percent Change
Reported net sales Q4 FY18 (GAAP)
$
502.3
$
339.4
$
162.9
Reported net sales Q4 FY17 (GAAP)
490.5
330.5
160.0
Increase in net sales
11.8
2.4
%
8.9
2.7
%
2.9
1.8
%
Effect of acquisition and divestitures on
increase in net sales
31.1
14.6
16.5
Decrease in organic net sales
(19.3
)
(3.9
)%
(5.7
)
(1.7
)%
(13.6
)
(8.5
)%
Impact estimate of extra week in Q4
FY17
32.8
21.4
11.4
Adjusted organic net sales
$
13.5
2.8
%
$
15.7
4.8
%
$
(2.2
)
(1.4
)%
EBITDA Reconciliation
The following is a reconciliation of net income to EBITDA:
GAAP to non-GAAP
Reconciliation Fiscal Year Ended September 28, 2019
EBITDA Reconciliation
Total
Garden
Pet
Corp
Net income attributable to Central Garden
& Pet
$
92,786
—
—
—
Interest expense, net
33,060
—
—
—
Other income
(243
)
—
—
—
Income tax expense
26,604
—
—
—
Net income attributable to noncontrolling
interest
(139
)
—
—
—
Sum of items below operating income
59,282
—
—
—
Income from Operations
152,068
102,170
122,727
(72,829
)
Depreciation & Amortization
50,828
11,959
32,803
6,066
EBITDA
$
202,896
$
114,129
155,530
(66,763
)
GAAP to non-GAAP
Reconciliation Fiscal Year Ended September 29, 2018
EBITDA Reconciliation
Total
Garden
Pet
Corp
Net income attributable to Central Garden
& Pet
$
123,594
—
—
—
Interest expense, net
36,051
—
—
—
Other income
3,860
—
—
—
Income tax expense
3,305
—
—
—
Net income attributable to noncontrolling
interest
526
—
—
—
Sum of items below operating income
43,742
—
—
—
Income from Operations
167,336
95,551
140,353
(68,568
)
Depreciation & Amortization
47,199
8,744
29,889
8,566
EBITDA
$
214,535
$
104,295
170,242
(60,002
)
GAAP to non-GAAP
Reconciliation Quarter Ended
EBITDA Reconciliation
September 28, 2019
September 29, 2018
Net income attributable to Central Garden
& Pet
$
2,440
$
10,568
Interest expense, net
8,100
8,938
Other expense
245
4,402
Income tax expense
573
(5,497
)
Net income attributable to noncontrolling
interest
(495
)
(201
)
Sum of items below operating income
8,423
7,642
Income from Operations
10,863
18,210
Depreciation & Amortization
13,517
12,327
EBITDA
$
24,380
$
30,537
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191126005796/en/
Steve Zenker VP of Investor Relations, FP&A and
Communications Central Garden & Pet Company 925.948.3657
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