Central Garden & Pet Company Announces Fiscal 2013 First Quarter Results

Central Garden & Pet Company Announces Fiscal 2013 First Quarter Results

Sales decrease 3% to $292 million; Net loss of $0.32 per share

WALNUT CREEK, Calif.--(BUSINESS WIRE)-- Central Garden & Pet Company (NAS: CENT) (NAS: 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 first quarter ended December 29, 2012.


The Company reported first quarter net sales of $292.5 million, a 3 percent decrease over the comparable period a year ago. Net sales decreased in both its Garden and Pet segments. The first quarter operating loss was $13.1 million compared to an operating loss of $11.3 million in the first quarter of 2012, primarily reflecting lower sales and gross margins. The net loss for the quarter was $15.3 million, or $0.32 per fully diluted share, compared with a loss of $13.1 million, or $0.27 per fully diluted share, in the year-ago period. Typically, the Company has reported a loss in its fiscal first quarter given the seasonal nature of the lawn and garden category.

"As we expected, our first quarter results were lower than the prior year," said Gus Halas, President & CEO of the Central Operating Companies. "Despite lower Garden revenues in our seasonally smaller first quarter, we are excited about the new innovations we are bringing to market and expect more favorable results for our upcoming Garden season, which encompasses our next two quarters."

Halas continued, "We continue to focus on our transformation to an integrated multi-brand consumer products company. We expect to make significant progress over the next few years as we aggressively build our brands, lower our costs, and drive meaningful revenue and profit growth."

First Quarter 2013 Details

Both the Garden and Pet segment sales declined during the quarter. Net sales for the Garden segment decreased 5 percent or $5.5 million over the same period a year ago to $97.3 million, in part due to lower seasonal décor revenues. The Garden segment's branded product sales were $85.3 million and sales of other manufacturers' products were $12.0 million. Historically, first quarter revenues for the Garden segment have been the lowest of any quarter of the year due to the seasonality of the lawn and garden market. In the first quarter, the Garden segment's operating margin improved 200 basis points, in part due to improvements in its grass seed and pottery businesses. The Garden segment's operating loss in the quarter was $8.5 million, compared to an operating loss of $11.1 million in the first quarter of 2012.

First quarter net sales for the Pet segment declined 2 percent, or $4.1 million, over the prior year to $195.2 million, due primarily to lower sales of dog and cat products. The Pet segment's branded product sales were $154.2 million and sales of other manufacturers' products were $41.0 million. The Pet segment's operating margins increased 30 basis points, due in part to improved results in its equine business. The Pet segment's operating income was $10.2 million compared to $9.7 million in the prior-year period.

At December 29, 2012, the Company's cash and short-term investments balance was $30.4 million. Net interest expense was $10.3 million for the quarter compared to $9.5 million in the prior-year period. Depreciation and amortization expense was $8.0 million in the first quarter of 2013, compared with $7.4 million in the prior-year period. The Company's effective tax rate for the first quarter of 2013 was 37 percent on its operating loss, in line with the prior-year period.

Total debt at December 29, 2012 was $450.8 million compared to $460.7 million at December 24, 2011. The quarter-ending total leverage ratio, as defined in the Company's credit agreement, was 4.1x.

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 first quarter 2013 results. The conference call will be accessible through the investor relations section of Central's website, http://www.central.com.

Alternatively, to listen to the call by telephone, dial 1-412-317-6789 and enter passcode 10023698. A replay of the call will be available for three weeks by dialing 1-412-317-0088 (domestic and international) and entering passcode 10023698.

About Central Garden & Pet

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 and the brands PENNINGTON®, SMART SEED® and THE REBELS®; wild bird feed and the brand PENNINGTON®; weed and insect control and the brands AMDRO®, SEVIN®, IRONITE® and OVER-N-OUT®; and decorative outdoor patio products and the brands NORCAL POTTERY®, NEW ENGLAND POTTERY® 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 SYSTEMS®, 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®, VITA FLEX® and HORSE HEALTHTM PRODUCTS. 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 3,600 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 improving Garden segment results through new product introductions, aggressively building our brands, lowering costs and achieving revenue growth and improved profitability from the Company's transformation initiatives, 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 Central's Annual Report on Form 10-K, filed on December 13, 2012, 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 BALANCE SHEETS

(in thousands, except share and per share amounts)


Unaudited

December 29,

December 24,

September 29,

ASSETS

2012

2011

2012

Current assets:

Cash and cash equivalents

$

12,591

$

10,289

$

48,475

Short term investments

17,820

17,820

22,705

Accounts receivable (less allowance for doubtful accounts of $18,555, $15,791 and $18,574)

150,767

139,254

202,422

Inventories

397,725

365,743

330,032

Prepaid expenses and other

66,629

62,614

48,149

Total current assets

645,532

595,720

651,783

Land, buildings, improvements and equipment—net

192,486

180,401

191,163

Goodwill

210,223

210,223

210,223

Other intangible assets—net

77,790

83,458

78,853

Deferred income taxes and other assets

20,041

18,467

17,525

Total

$

1,146,072

$

1,088,269

$

1,149,547

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

130,484

$

122,009

$

126,662

Accrued expenses

83,580

66,862

79,491

Current portion of long-term debt

309

328

331

Total current liabilities

214,373

189,199

206,484

Long-term debt

450,446

460,346

449,483

Other long-term obligations

30,968

14,253

28,697

Equity:

Common stock, $.01 par value: 12,247,359, 12,254,778, and 12,247,571 shares outstanding at December 29, 2012, December 24, 2011 and September 29, 2012

122

123

122

Class A common stock, $.01 par value: 34,765,783, 34,130,214 and 34,706,902 shares outstanding at December 29, 2012, December 24, 2011 and September 29, 2012

347

341

347

Class B stock, $.01 par value: 1,652,262 shares outstanding

16

16

16

Additional paid-in capital

383,615

377,598

382,195

Accumulated earnings

64,449

45,455

79,718

Accumulated other comprehensive income

1,497

1,110

1,539

Total Central Garden & Pet Company shareholders' equity

450,046

424,643

463,937

Noncontrolling interest

239

(172

)

946

Total equity

450,285

424,471

464,883

Total

$

1,146,072

$

1,088,269

$

1,149,547

See notes to condensed consolidated financial statements.

CENTRAL GARDEN & PET COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)


(unaudited)

Three Months Ended

December 29,

2012

December 24,

2011

Net sales

$

292,497

$

302,066

Cost of goods sold and occupancy

215,538

221,328

Gross profit

76,959

80,738

Selling, general and administrative expenses

90,053

92,018

Loss from operations

(13,094

)

(11,280

)

Interest expense

(10,315

)

(9,547

)

Interest income

65

28

Other expense

(981

)

(114

)

Loss before income taxes and noncontrolling interest

(24,325

)

(20,913

)

Income tax benefit

(8,978

)

(7,646

)

Loss including noncontrolling interest

(15,347

)

(13,267

)

Net loss attributable to noncontrolling interest

(78

)

(177

)

Net loss attributable to Central Garden & Pet Company

$

(15,269

)

$

(13,090

)

Net loss per share attributable to Central Garden & Pet Company:

Basic and diluted

$

(0.32

)

$

(0.27

)

Weighted average shares used in the computation of net loss per share:

Basic and diluted

47,871

47,823

See notes to condensed consolidated financial statements.



Central Garden & Pet Company
Steve Zenker, 925-948-3657
VP of Investor Relations & Communications

KEYWORDS: United States North America California

INDUSTRY KEYWORDS:

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