CENTRAL GARDEN & PET CO
For the period ended Dec 28, 2024. Filed Feb 6, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 28, 2024 · Filed Feb 6, 2025
CENT$47.78-0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-29; filed 2024-08-08.
0000887733-24-000023
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-28; filed 2025-02-06.
0000887733-25-000006
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
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32 unchanged; 53 reworded; 80 added; 65 removed; 1 previous and 125 current paragraphs rearranged.
Tables are not compared: 14 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (80)
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Central has marketed innovative and trusted solutions helping lawns grow greener, gardens bloom bigger, pets live healthier, and
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million.
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Fiscal 2025 First Quarter Financial Performance:
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•Net sales increased$21.9 million, or 3.5%, from the prior year quarter to$656.4 million. Pet segment sales increased
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$18.3 million, and Garden segment sales increased$3.6 million.
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percentage of net sales decreased 140 basis points to 25.5%.
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•Operating income increased$19.6 million from the prior year quarter to$28.0 million.
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•Net Income in thefirst quarter of fiscal 2025 was$14.0 million, or$0.21 per diluted share, compared to$0.4 million, or
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$0.01 per diluted share, in thefirst quarter of fiscal 2024.
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Net sales for the three months ended December 28, 2024, increased$21.9 million, or 3.5%, to$656.4 million from$634.5 million for
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the three months ended December 30, 2023. Net sales increased in both segments and was volume-based, benefitting from the timing of
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shipments, which was favorably impacted by a shift forward of sales previously expected in our second fiscal quarter and the timing of
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promotional activities in our Pet business. Branded product sales increased$21.6 million, and sales of other manufacturers’ products
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increased$0.3 million.
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Pet net sales increased$18.3 million, or 4.5%, to$427.5 million for the three months December 28, 2024, from$409.2 million for the
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in Pet were volume-based and benefitted from the favorable timing of shipments. Sales of consumables increased while sales of durable
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products declined, though the decline was at a lower rate than in previous quarters. Pet branded product sales increased$13.6 million, and
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sales of other manufacturers' products increased$4.7 million.
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Garden net sales increased$3.6 million, or 1.6%, to$228.9 million for the three months ended December 28, 2024, from$225.3 million
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for the three months ended December 30, 2023, benefitting from the timing of shipments supported by favorable weather. The increase in
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Garden net sales was due primarily to increased sales in our control and fertilizer businesses. Garden branded sales increased$8.0 million,
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and sales of other manufacturers' products decreased$4.4 million.
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Gross profit for the three months ended December 28, 2024, increased$16.9 million, or 9.4%, to$195.7 million from$178.8 million for
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the three months ended December 30, 2023. Gross margin increased 160 basis points to 29.8% for the three months ended December 28,
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2024, from 28.2% for the three months ended December 30, 2023. Both segments contributed to the gross profit increase due to higher
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sales and improved gross margins. The gross margin improvement in both segments was driven by productivity gains resulting from our cost
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and simplicity program (e.g., prior year facility consolidations and the exit of lower margin businesses) and moderating inflation.
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Selling, general and administrative expenses decreased$2.7 million, or 1.6%, to$167.7 million for the three months ended December
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28, 2024. As a percentage of net sales, selling, general and administrative expenses decreased to 25.5% for the three months ended
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December 28, 2024, compared to 26.9% in the comparable prior year quarter. Decreased selling, general and administrative expenses in
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both Garden and corporate was partially offset by increased expense in Pet.
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$69.3 million in the prior year quarter. The increase was in the Pet segment due primarily to higher media and digital marketing spend and
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increased delivery costs related to the higher sales volume.
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Warehouse and administrative expense declined$6.1 million, or 6.0%, to$95.0 million for the three months ended December 28, 2024,
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from$101.1 million for the three months ended December 30, 2023. Both Pet and Garden warehouse and administrative expense
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decreased due primarily to savings from the recent closure of several facilities and headcount reductions. Corporate expense decreased
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$0.4 million, or 1.5%, to $25.7 million for the three months ended December 28, 2024, due primarily to lower insurance costs partially offset
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Operating income increased$19.6 million to$28.0 million for the three months ended December 28, 2024. Our operating margin
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increased to 4.3% in the current year quarter from 1.3% in the prior year quarter. The increase in operating income was due to a$21.9
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million increase in net sales, a 160 basis point increase in gross margin and a$2.7 million decrease in selling, general and administrative
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Fiscal 2024 Third Quarter Financial Performance:
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•Net sales decreased $27.0 million, or 2.6%, from the prior year quarter to $996 million. Organic net sales decreased 2.9% with Pet organic sales decreasing 2.2% and Garden organic sales decreasing 3.7%.
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•Operating income declined $6.9 million from the prior year quarter to $115.9 million. On a non-GAAP basis, operating income declined $9.7 million from the prior year quarter.
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•Net Income in the third quarter of fiscal 2024 was $79.7 million, or $1.19 per diluted share, compared to $83.1 million, or $1.25 per diluted share, in the third quarter of fiscal 2023. On a non-GAAP basis, net income was $88.2 million, or $1.32 per diluted share, in the third quarter of fiscal 2024.
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Facility Closures and business exit
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During the third quarter of fiscal year 2024, as part of our Cost and Simplicity program and in response to changing market conditions, we decided to exit the pottery business which we expect to be completed by fiscal year-end 2025. Additionally, we closed a live goods distribution facility in Delaware and are relocating our grass seed research facility. These activities reflect our ongoing network optimization initiative to achieve a simpler, more efficient manufacturing and distribution network. As a result, we incurred approximately $11.1 million of one-time costs, including $8.6 million in cost of goods sold and $2.5 million in selling, general and administrative costs, comprised of charges for the impairment of inventory and facility closures, the majority of which were non-cash.
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During the second quarter of fiscal year 2024, as part of our Cost and Simplicity program we decided to close a manufacturing facility in Chico, California. Additionally, in the second quarter, we began the Southeast consolidation of four distribution locations into one new modern facility, which we expect to be completed by year-end. As a result, we incurred approximately $5.3 million of one-time costs, including $2.5 million in cost of goods sold and $2.8 million in selling, general and administrative costs, comprised of charges for facility closures, severance, and impairment of inventory, the majority of which were non-cash.
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Anticipated Inventory Write-Down in Fourth Quarter
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In August 2024, given the recent significant decrease in market prices for grass seed, we determined it will be necessary to write down the value of our grass seed inventory. We currently anticipate a charge in the range of $15-20 million in our fourth quarter of fiscal 2024.
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Stock Dividend
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In December 2023, our Board of Directors approved a stock dividend in the form of one share of the Company's Class A Common Stock for every four outstanding shares of its Common Stock, Class A Common Stock and Class B Stock. Dividend shares of Class A Common Stock were distributed on February 8, 2024, to stockholders of record as of January 8, 2024. The Company believes the stock dividend will increase liquidity, which should benefit stockholders and provide the Company with more flexibility to pursue its growth objectives.
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The stock dividend did not affect the number of the Company's authorized shares and the par value of each share of stock remained unchanged. Proportionate adjustments were made to the per share exercise price and/or the number of shares issuable upon the exercise or vesting of all stock options, restricted stock and performance share units outstanding at January 8, 2024, which resulted in a proportional increase in the vesting of such stock options, restricted stock and performance share units, and, in the case of stock options, a proportional decrease in the exercise price of all such stock options.
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Unless noted, all Class A Common share and per share amounts contained in the condensed consolidated financial statements and this management's discussion and analysis have been retroactively adjusted to reflect the one-for-four stock dividend.
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Net sales for the three months ended June 29, 2024 decreased $27.0 million, or 2.6%, to $996.3 million from $1,023.3 million for the three months ended June 24, 2023. Organic net sales, which excludes the impact of our acquisition of TDBBS in November 2023 and the sale of our independent garden channel distribution business in July 2023, decreased 2.9%. Our branded product sales decreased $21.8 million, and sales of other manufacturers’ products decreased $5.2 million.
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Garden net sales decreased $31.7 million, or 6.1%, to $488.3 million for the three months ended June 29, 2024 from $520.0 million for the three months ended June 24, 2023. Garden organic net sales, which excludes the impact of the sale of our independent garden channel distribution business in July 2023, decreased 3.7%. The decrease in Garden organic net sales was due primarily to decreased sales in our live plant business, partially offset by increased sales of grass seed. Garden branded product sales decreased $23.2 million, and sales of other manufacturers' products decreased $8.5 million.
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Gross profit for the three months ended June 29, 2024 decreased $1.0 million, or 0.3%, to $317.1 million from $318.1 million for the three months ended June 24, 2023. Gross margin increased 70 basis points to 31.8% for the three months ended June 29, 2024 from 31.1% for the three months ended June 24, 2023. The gross margin improvement was driven by the benefits from the prior year initiatives under our Cost and Simplicity program and moderating inflation.
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An increase in gross margin in the Pet segment was partially offset by a decrease in the Garden segment. Both Pet and Garden benefited from prior year projects under our Cost and Simplicity program and moderating inflation. Pet was positively impacted by our exit of the private-label pet bed business and closure of the associated manufacturing and distribution facility in the third quarter of fiscal 2023. The Garden gross margin was negatively impacted by the lower sell through of live plants which was only partially offset by the positive impact of moderating inflation.
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On a non-GAAP basis, which excludes the impact of the charges for the facility closures in the current and prior year periods and the charges in the current year related to our decision to exit the pottery business, gross profit for the three months ended June 29, 2024 decreased $0.4 million, or 0.1%, to $325.7 million from $326.1 million for the three months ended June 24, 2023. Non-GAAP gross margin increased 80 basis points to 32.7% for the three months ended June 29, 2024 from 31.9% for the three months ended June 24, 2023.
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Selling, general and administrative expenses increased $5.9 million, or 3.0%, to $201.1 million for the three months ended June 29, 2024. As a percentage of net sales, selling, general and administrative expenses increased to 20.2% for the three months ended June 29, 2024, compared to 19.1% in the comparable prior year quarter. Increased expense at corporate and in the Pet segment was partially offset by a small decrease in expense in the Garden segment.
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Operating income decreased $6.9 million, or 5.6%, to $115.9 million for the three months ended June 29, 2024 from $122.8 million for the three months ended June 24, 2023. Our operating margin decreased from 12.0% in the prior year quarter to 11.6% in the current year quarter. The decrease in operating income was due to reduced net sales and a $5.9 million increase in selling, general and administrative expense partially offset by a 70 basis point increase in gross margin.
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Pet operating income increased $23.1 million, or 38.5%, to $83.1 million for the three months ended June 29, 2024 from $60.0 million for the three months ended June 24, 2023. Pet operating income increased due to a $4.7 million increase in net sales and an improved gross margin, partially offset by increased selling, general and administrative expense.
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Garden operating income decreased $25.6 million to $62.5 million for the three months ended June 29, 2024 from $88.1 million for the three months ended June 24, 2023. Garden operating income decreased due to lower sales and a decrease in gross margin partially offset by lower selling, general and administrative expense.
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Corporate operating expense increased $4.5 million, or 17.5%, to $29.7 million for the three months ended June 29, 2024 from $25.2 million for the three months ended June 24, 2023. Corporate expense increased due primarily to increased third-party expenses, primarily legal costs, and increased salary and variable compensation expense.
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Other Income
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Our effective income tax rate was 24.0% for the quarter ended June 29, 2024 and 24.4% for the three months ended June 24, 2023. The decrease in our effective income tax rate was due primarily to an increased tax benefit from stock compensation compared to the prior year quarter.
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Net income in the third quarter of fiscal 2024 was $79.7 million, or $1.19 per diluted share, compared to $83.1 million, or $1.25 per diluted share, in the third quarter of fiscal 2023. The decrease in net income and earnings per share was due to $6.9 million decrease in operating income partially offset by decreased net interest expense in the current year quarter. On a non-GAAP basis, net income in the third quarter of fiscal 2024 was $88.2 million, or $1.32 per diluted share, compared to $93.7 million, or $1.40 per diluted share, in the third quarter of fiscal 2023.
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Nine Months Ended June 29, 2024
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Compared with Nine Months Ended June 24, 2023
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Net Sales
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Net sales for the nine months ended June 29, 2024 decreased $29 million, or 1.1%, to $2,531 million from $2,560 million for the nine months ended June 24, 2023. Organic net sales decreased $33 million, or 1.3%, as compared to the prior year nine-month period. Our branded product sales decreased $16 million, and sales of other manufacturers’ products decreased $13 million.
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Pet net sales increased $3 million, or 0.2%, to $1,397 million for the nine months ended June 29, 2024 from $1,394 million for the nine months ended June 24, 2023. Pet organic sales, which exclude net sales from the acquisition of TDBBS in November 2023, declined $45 million, or 3.2%, as compared to the prior year nine-month period. The decline in organic net sales was due primarily to lower sales of durable items impacting outdoor cushions, pet beds and aquatics. Pet branded sales decreased $2 million, and sales of other manufacturer's products increased $5 million.
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Garden net sales decreased $32 million, or 2.8%, to $1,134 million for the nine months ended June 29, 2024 from $1,166 million for the nine months ended June 24, 2023. Garden organic net sales increased $12 million, or 1.1%. The increase in organic net sales was primarily in our branded controls business and in grass seed, partially offset by lower sales in wild bird feed. Garden branded sales decreased $14 million, and sales of other manufacturers’ products decreased $18 million.
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Gross Profit
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Gross profit for the nine months ended June 29, 2024 increased $25.4 million, or 3.4%, to $774.8 million from $749.4 million for the nine months ended June 24, 2023. Gross margin improved 130 basis points to 30.6% for the nine months ended June 29, 2024 from 29.3% for the nine months ended June 24, 2023. An increase in gross profit and gross margin in Pet was partially offset by declines in Garden.
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Pet was positively impacted by our exit of the private-label pet bed business and closure of the associated manufacturing and distribution facility in the prior year, other smaller productivity initiatives and moderating inflation. Garden was negatively impacted by lower sales of live goods and by two fiscal 2024 initiatives under our Cost and Simplicity program, the closure of a manufacturing facility in the second quarter and our decision to exit the pottery business in the third quarter.
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On a non-GAAP basis, which excludes the impact of the charges for the facility closures in the current and prior year and the charges related to our decision to exit the pottery business in the current year, gross profit for the nine months ended June 29, 2024 increased $28.5 million, or 3.8%, to $785.9 million from $757.4 million for the nine months ended June 24, 2023. Non-GAAP gross margin increased 150 basis points to 31.1% for the nine months ended June 29, 2024 from 29.6% for the nine months ended June 24, 2023. Both Pet and Garden contributed to the increase in gross margin.
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Selling, General and Administrative Expenses
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Selling, general and administrative expenses increased $8.9 million, or 1.6%, to $557.0 million for the nine months ended June 29, 2024 from $548.1 million for the nine months ended June 24, 2023. As a percentage of net sales, selling, general and administrative expenses increased to 22.0% for the nine months ended June 29, 2024 from 21.4% for the comparable prior year nine-month period. The increase was primarily in the Pet segment although both corporate and Garden contributed to a lesser extent.
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Selling and delivery expense decreased $2.2 million, or 0.9%, to $248.6 million for the nine months ended June 29, 2024 from $250.8 million for the nine months ended June 24, 2023. The reduction in expense was due primarily to lower delivery expense due to our exit from the independent garden channel distribution business and lower marketing costs partially offset by an increase from our recent acquisition of TDBBS in the Pet segment.
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Warehouse and administrative expense increased $11.1 million, or 3.7%, to $308.4 million for the nine months ended June 29, 2024 from $297.3 million for the nine months ended June 24, 2023. The increase in warehouse and administration expense was due primarily to the expense incurred from our recent acquisition, TDBBS, in the Pet segment and the increased expense associated with the closure of manufacturing and distribution facilities and our decision to exit the pottery business in our Garden segment. Corporate expense increased $1.6 million due primarily to increased third-party expenses, primarily legal costs, partially offset by lower equity compensation expense. Corporate expenses are included within administrative expense and relate to the costs of unallocated executive, administrative, finance, legal, human resources, and information technology functions.
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Reworded paragraphs (53)
Previous wording
Central Garden & Pet Company (“Central”) is a market leader in the garden and pet industries in the United States. For over 40 years, Central has proudly nurtured happy and healthy homes by bringing innovative and trusted solutions to consumers and its customers. We manage our operations through two reportable segments: Pet and Garden.
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Central Garden & Pet Company (“Central”) is a market leader in the pet and garden industries in the United States. For over 45 years,
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Our Pet segment includes dog and cat supplies such as dog treats and chews, toys, pet beds and grooming products, waste management and training pads, pet containment; supplies for aquatics, small animals, reptiles and pet birds including toys, cages and habitats, bedding, food and supplements; products for equine and livestock, animal and household health and insect control products; live fish and small animals as well as outdoor cushions. These products are sold under brands such as Aqueon®, Cadet®, Comfort Zone®, Farnam®, Four Paws®, K&H Pet Products®("K&H"), Kaytee®, Nylabone®and Zilla®.
Current wording
Our Pet segment includes dog and cat supplies such as treats and chews, toys, beds and containment, grooming products, waste
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Our Garden segment includes lawn and garden consumables such as grass seed, vegetable, flower and herb packet seed; wild bird feed, bird houses and other birding accessories; weed, grass, and other herbicides, insecticide and pesticide products; fertilizers and live plants. These products are sold under brands such as Amdro®, Ferry-Morse®, Pennington® and Sevin®.
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Our Garden segment includes lawn and garden consumables such as grass seed, vegetable, flower and herb packet seed; wild bird
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In fiscal 2023, our consolidated net sales were $3.3 billion, of which our Pet segment, or Pet, accounted for approximately $1.9 billion and our Garden segment, or Garden, accounted for approximately $1.4 billion. In fiscal 2023, our operating income was $211 million consisting of income from our Pet segment of $198 million, income from our Garden segment of $123 million and corporate expenses of $111 million.
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In fiscal 2024, our consolidated net sales were $3.2 billion, of which our Pet segment, or Pet, accounted for approximately $1.8 billion
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We were incorporated in Delaware in May 1992 as the successor to a California corporation that was formed in 1955. Our executive offices are located at 1340 Treat Boulevard, Suite 600, Walnut Creek, California 94597, and our telephone number is (925) 948-4000. Our website is www.central.com. The information on our website is not incorporated by reference in this quarterly report.
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We were incorporated in Delaware in May 1992 as the successor to a California corporation that was formed in 1955. Our executive
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•Gross profit decreased $1.0 million from the prior year quarter, and gross margin increased 70 basis points to 31.8%.
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•Gross profit increased$16.9 million from the prior year quarter, and gross margin increased 160 basis points to 29.8%.
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•Selling, general and administrative expense increased $5.9 million from the prior year quarter to $201.1 million and as a percentage of net sales increased 110 basis points to 20.2%.
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•Selling, general and administrative expense decreased$2.7 million from the prior year quarter to$167.7 million and as a
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Pet net sales increased $4.7 million, or 0.9%, to $508.0 million for the three months ended June 29, 2024 from $503.3 million for the three months ended June 24, 2023. Pet organic net sales, which excludes the impact of our acquisition of TDBBS in November 2023, declined 2.2%. The decline in Pet organic net sales was due primarily to lower demand for durable pet products, particularly in our outdoor cushion and pet bed businesses, partially offset by increased sales in consumable pet products, especially in our dog and cat treats and toys and professional businesses. Pet branded product sales increased $1.4 million, and sales of other manufacturers' products increased $3.3 million.
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three months ended December 30, 2023, due primarily to increased sales in our dog and cat treats and toys business. The increased sales
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Selling and delivery expense increased $4.6 million to $96.9 million for the three months ended June 29, 2024 as compared to $92.3 million in the prior year quarter. The increased expense was in the Pet segment due primarily to our acquisition of TDBBS in November 2023.
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Selling and delivery expense increased$3.4 million to$72.7 million for the three months ended December 28, 2024, as compared to
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Warehouse and administrative expense increased $1.3 million, or 1.2%, to $104.2 million for the three months ended June 29, 2024 from $102.9 million for the three months ended June 24, 2023. The increase in warehouse and administrative expense was due primarily to an increase in corporate expense partially offset by a decrease in the Pet segment. Corporate expense increased $4.5 million due primarily to increased third-party expenses, primarily legal costs, and increased salary and variable compensation expense. Corporate expenses are included within administrative expense and relate to the costs of unallocated executive, administrative, finance, legal, human resources, and information technology functions.
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by increased third-party spend. Corporate expenses are included within administrative expense and relate to the costs of unallocated
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Net interest expense for the three months ended June 29, 2024 decreased $2.9 million, or 22.2%, to $10.2 million from $13.1 million for the three months ended June 24, 2023. The decrease in net interest expense was due to increased interest income resulting from both higher rates of interest earned and a higher cash balance during the current quarter. Debt outstanding on June 29, 2024 was $1,189.7 million compared to $1,187.8 million at June 24, 2023.
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for the three months ended December 30, 2023. The decrease in net interest expense was due to increased interest income resulting from
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Other income is comprised of income or losses from investments accounted for under the equity method of accounting and foreign currency exchange gains and losses. Other income decreased $0.6 million to $0.2 million of income for the three months ended June 29, 2024 from $0.8 million of income for the three months ended June 24, 2023. The decrease in other income was due primarily to foreign currency losses in the current year quarter as compared to foreign currency gains.
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Other income is comprised of income or losses from investments accounted for under the equity method of accounting and foreign
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We report our financial results in accordance with GAAP. However, to supplement the financial results prepared in accordance with GAAP, we use non-GAAP financial measures including non-GAAP net income and diluted net income per share, non-GAAP operating income, adjusted EBITDA and organic net sales. Management uses these non-GAAP financial measures that exclude the impact of specific items (described below) in making financial, operating and planning decisions and in evaluating our performance. Also, Management believes that these non-GAAP financial measures 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. While Management believes that non-GAAP measures 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.
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We report our financial results in accordance with generally accepted accounting principles ("GAAP"). However, to supplement the
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Adjusted EBITDA is defined by us as income before income tax, net other expense, net interest expense and depreciation and amortization and stock-based compensation expense (or operating income plus depreciation and amortization expense and stock-based compensation expense). Adjusted EBITDA further excludes one-time charges related to facility closures. We present adjusted EBITDA because we believe that adjusted 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. Adjusted EBITDA is used by our management to perform such evaluations. Adjusted 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 adjusted EBITDA is frequently used by investors, securities analysts and other interested parties in their evaluation of companies, many of which present adjusted EBITDA when reporting their results. Other companies may calculate adjusted EBITDA differently and it may not be comparable.
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Adjusted EBITDA is defined by us as income before income tax, net other expense, net interest expense and depreciation and
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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.
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The reconciliations of adjusted EBITDA to the most directly comparable financial measures calculated and presented in accordance
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Our revenues and margins are dependent on various economic factors, including rates of inflation, energy costs, consumer behavior, currency fluctuations, and other macro-economic factors which may impact levels of consumer spending. In certain fiscal periods, we have been adversely impacted by rising input costs related to domestic inflation, particularly relating to grain and seed prices, fuel prices and the ingredients used in our garden controls and fertilizers. Rising costs in those periods have made it difficult for us to increase prices to our retail customers at a pace sufficient to enable us to maintain margins.
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Our revenues and margins are dependent on various economic factors, including rates of inflation, energy costs, interest rates,
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Our sales of lawn and garden products are influenced by weather conditions in the different markets we serve. Our Garden segment’s business is highly seasonal. In fiscal 2023, approximately 67% of our Garden segment’s net sales and 58% of our total net sales occurred during our second and third fiscal quarters. Substantially all of the Garden segment’s operating income is typically generated in this period, which has historically offset any operating loss incurred during the first fiscal quarter of the year.
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Our sales of lawn and garden products are impacted by weather conditions in the different markets we serve. Our Garden segment’s
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We finance our growth through a combination of cash generated from operations, bank borrowings, supplier credit, and sales of equity and debt securities.
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We have financed our growth through a combination of cash generated from operations, bank borrowings, supplier credit, and sales of
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Our business is seasonal, and our working capital requirements and capital resources track closely to this seasonal pattern. Generally, during the first fiscal quarter, accounts receivable reach their lowest level while inventory, accounts payable and short-term borrowings begin to increase. During the second fiscal quarter, receivables, accounts payable and short-term borrowings increase, reflecting the build-up of inventory and related payables in anticipation of the peak lawn and garden selling season. During the third fiscal quarter, inventory levels remain relatively constant while accounts receivable peak and short-term borrowings start to decline as cash collections are received during the peak selling season. During the fourth fiscal quarter, inventory levels are at their lowest, and accounts receivable and payables are substantially reduced through conversion of receivables to cash.
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Our business is seasonal, and our working capital requirements and capital resources track closely to this seasonal pattern. Generally,
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We service two broad markets: pet supplies and lawn and garden supplies. Our pet supplies businesses have a year round selling cycle with a slight degree of seasonality. As a result, it is not necessary to maintain large quantities of inventory to meet peak demands. Our lawn and garden businesses are highly seasonal with approximately 67% of our Garden segment’s net sales occurring during the second and third fiscal quarters. This seasonality requires the shipment of large quantities of product well ahead of the peak consumer buying periods. To encourage retailers and distributors to stock large quantities of inventory, industry practice has been for manufacturers to give extended credit terms and/or promotional discounts.
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We service two broad markets: pet supplies and lawn and garden supplies. Our pet supplies businesses have a year round selling
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Net cash provided by operating activities decreased by $35.8 million, from $227.6 million for the nine months ended June 24, 2023, to $191.8 million for the nine months ended June 29, 2024. The decrease in cash provided by operating activities was due primarily to changes in our working capital accounts for the nine-month period ended June 29, 2024, as compared to the prior year period, primarily decreased inventory and accounts receivables.
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$68.8 million for thethree months ended December 28, 2024. The decrease in cash used by operating activities was due primarily to
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Net cash used in investing activities increased $53.1 million, from $41.5 million for the nine months ended June 24, 2023 to $94.6 million during the nine months ended June 29, 2024. The increase in cash used in investing activities was due primarily to acquisition activity partially offset by decreased capital expenditures in the current year.
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million during thethree months ended December 28, 2024. The decrease in cash used in investing activities was due primarily to greater
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Net cash used by financing activities decreased $17.7 million, from $33.7 million for the nine months ended June 24, 2023, to $16.0 million for the nine months ended June 29, 2024. The decrease in cash used by financing activities during the current year was due primarily to decreased open market purchases of our common stock during the current year as compared to the prior year. During the nine months ended June 29, 2024, we repurchased approximately 0.1 million shares of our non-voting Class A common stock (CENTA) on the open market at an aggregate cost of approximately $1.4 million, or approximately $28.75 per share. During the nine months ended June 24, 2023, we repurchased approximately 0.3 million shares of our voting common stock (CENT) on the open market at an aggregate cost of approximately $7.7 million, and approximately 0.7 million shares of our non-voting Class A common stock (CENTA) on the open market at an aggregate cost of approximately $20.6 million.
Current wording
$55.4 million for thethree months ended December 28, 2024. The increase in cash used by financing activities during the current year was
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We expect that our principal sources of funds will be cash generated from our operations and, if necessary, borrowings under our $750 million Credit Facility. Based on our anticipated cash needs, availability under our Credit Facility and the scheduled maturity of our debt, we believe that our sources of liquidity should be adequate to meet our working capital, capital spending and other cash needs for at least the next 12 months. However, we cannot assure you that these sources will continue to provide us with sufficient liquidity and, should we require it, that we will be able to obtain financing on terms satisfactory to us, or at all.
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We expect that our principal sources of funds will be cash generated from our operations and, if necessary, borrowings under our $750
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We believe that cash flows from operating activities, funds available under our Credit Facility, and arrangements with suppliers will be adequate to fund our presently anticipated working capital and capital expenditure requirements for the foreseeable future. We anticipate that our capital expenditures, which are related primarily to replacements and expansion of and upgrades to plant and equipment and also investment in our continued implementation of a scalable enterprise-wide information technology platform, will be approximately $60 million in fiscal 2024, of which we have invested approximately $33 million through June 29, 2024.
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We believe that cash flows from operating activities, funds available under our Credit Facility, and arrangements with suppliers will be
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As part of our growth strategy, we have acquired a number of companies in the past, and we anticipate that we will continue to evaluate potential acquisition candidates in the future. If one or more potential acquisition opportunities, including those that would be material, become available in the near future, we may require additional external capital. In addition, such acquisitions would subject us to the general risks associated with acquiring companies, particularly if the acquisitions are relatively large.
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As part of our growth strategy, we have acquired a number of companies in the past, and we anticipate that we will continue to
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At June 29, 2024, our total debt outstanding was $1,189.7 million, as compared with $1,187.8 million at June 24, 2023.
Current wording
At December 28, 2024, our total debt outstanding was$1,190.4 million, as compared with$1,189.6 million at December 30, 2023.
Previous wording
In April 2021, we issued $400 million aggregate principal amount of 4.125% senior notes due April 2031 (the "2031 Notes"). We used a portion of the net proceeds from the offering to repay all outstanding borrowings under our Credit Facility, with the remainder used for general corporate purposes.
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a portion of the net proceeds from the offering to repay all outstanding borrowings under our Credit Facility, with the remainder used for
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We incurred approximately $6.0 million of debt issuance costs in conjunction with this issuance, which included underwriter fees and legal, accounting and rating agency expenses. The debt issuance costs are being amortized over the term of the 2031 Notes.
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We incurred approximately$6 million of debt issuance costs in conjunction with this issuance, which included underwriter fees and
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The 2031 Notes require semi-annual interest payments on April 30 and October 30. The 2031 Notes are unconditionally guaranteed on a senior basis by each of our existing and future domestic restricted subsidiaries which are borrowers under or guarantors of our Credit Facility. The 2031 Notes were issued in a private placement under Rule 144A and will not be registered under the Securities Act of 1933.
Current wording
The 2031 Notes require semi-annual interest payments on April 30 and October 30. The 2031 Notes are unconditionally guaranteed on
Previous wording
The 2030 Notes require semiannual interest payments on October 15 and April 15. The 2030 Notes are unconditionally guaranteed on a senior basis by each of our existing and future domestic restricted subsidiaries which are borrowers under or guarantors of our Credit Facility.
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a senior basis by each of our existing and future domestic restricted subsidiaries which are borrowers under or guarantors of our Credit
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We may redeem some or all of the 2031 Notes at any time, at our option, prior to April 30, 2026 at the principal amount plus a "make whole" premium. We may redeem some or all of the 2031 Notes at our option, at any time on or after April 30, 2026 for 102.063%, on or after April 30, 2027 for 101.375%, on or after April 30, 2028 for 100.688% and on or after April 30, 2029 for 100.0%, plus accrued and unpaid interest.
Current wording
We may redeem some or all of the 2031 Notes at any time, at our option, prior to April 30, 2026 at the principal amount plus a "make
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We may redeem some or all of the 2028 Notes at our option, at any time during 2024 for 101.708%, on or after January 1, 2025 for 100.854% and on or after January 1, 2026 for 100.0%, plus accrued and unpaid interest.
Current wording
whole" premium. We may redeem some or all of the 2031 Notes at our option, at any time on or after April 30, 2026 for 102.063%, on or after
Previous wording
The holders of the 2031 Notes have the right to require us to repurchase all or a portion of the 2031 Notes at a purchase price equal to 101% of the principal amount of the notes repurchased, plus accrued and unpaid interest, upon the occurrence of a change of control.
Current wording
The holders of the 2031 Notes have the right to require us to repurchase all or a portion of the 2031 Notes at a purchase price equal to
Previous wording
In October 2020, we issued $500 million aggregate principal amount of 4.125% senior notes due October 2030 (the "2030 Notes"). We used a portion of the net proceeds to redeem all of our outstanding 6.125% senior notes due November 2023 (the "2023 Notes") at a redemption price of 101.531% plus accrued and unpaid interest, and to pay related fees and expenses, with the remainder used for general corporate purposes.
Current wording
used a portion of the net proceeds to redeem all of our outstanding 6.125% senior notes due November 2023 (the "2023 Notes") at a
Previous wording
We incurred approximately $8.0 million of debt issuance costs associated with this transaction, which included underwriter fees and legal, accounting and rating agency expenses. The debt issuance costs are being amortized over the term of the 2030 Notes.
Current wording
We incurred approximately $8.0 million of debt issuance costs associated with this transaction, which included underwriter fees and
Previous wording
We may redeem some or all of the 2030 Notes at any time, at our option, prior to October 15, 2025 at a price equal to 100% of the principal amount plus a “make-whole” premium. We may redeem some or all of the 2030 Notes, at our option, in whole or in part, at any time on or after October 15, 2025 for 102.063%, on or after October 15, 2026 for 101.375%, on or after October 15, 2027 for 100.688% and on or after October 15, 2028 for 100.0%, plus accrued and unpaid interest.
Current wording
We may redeem some or all of the 2030 Notes at any time, at our option, prior to October 15, 2025 at a price equal to 100% of the
Previous wording
The holders of the 2030 Notes have the right to require us to repurchase all or a portion of the 2030 Notes at a purchase price equal to 101.0% of the principal amount of the notes repurchased, plus accrued and unpaid interest upon the occurrence of a change of control.
Current wording
101.0% of the principal amount of the notes repurchased, plus accrued and unpaid interest upon the occurrence of a change of control.
Previous wording
In December 2017, we issued $300 million aggregate principal amount of 5.125% senior notes due February 2028 (the "2028 Notes"). We used the net proceeds from the offering to finance acquisitions and for general corporate purposes.
Current wording
In December 2017, we issued$300 million aggregate principal amount of 5.125% senior notes due February 2028 (the "2028 Notes").
Previous wording
The 2028 Notes require semiannual interest payments on February 1 and August 1. The 2028 Notes are unconditionally guaranteed on a senior basis by our existing and future domestic restricted subsidiaries who are borrowers under or guarantors of our Credit Facility.
Current wording
a senior basis by our existing and future domestic restricted subsidiaries who are borrowers under or guarantors of our Credit Facility.
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communities grow stronger. We manage our operations through two reportable segments: Pet and Garden.
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management and training pads; supplies for aquatics, small animals, reptiles and pet birds including toys, enclosures and habitats, bedding,
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food and supplements; products for equine and livestock, animal and household health and insect control products; live fish and small
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animals as well as outdoor cushions. These products are sold under brands such as Aqueon®, Cadet®, C&S®, Comfort Zone®, Farnam®,
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Four Paws®, Kaytee®, Nylabone® and Zilla®.
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feed, bird houses and other birding accessories; weed, grass, and other herbicides, insecticide and pesticide products; fertilizers and live
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plants. These products are sold under brands such as Amdro®, Ferry-Morse®, Pennington® and Sevin®.
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and our Garden segment, or Garden, accounted for approximately $1.4 billion. In fiscal 2024, our operating income was $185 million
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consisting of income from our Pet segment of $203 million, income from our Garden segment of $82 million and Corporate expenses of $100
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offices are located at 1340 Treat Boulevard, Suite 600, Walnut Creek, California 94597, and our telephone number is (925) 948-4000. Our
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website is www.central.com. The information on our website is not incorporated by reference in this quarterly report.
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executive, administrative, finance, legal, human resources, and information technology functions.
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our higher cash balance during the current quarter. Debt outstanding on December 28, 2024 was$1,190.4 million compared to$1,189.6
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currency exchange gains and losses. Other income decreased$2.7 million to an expense of$1.7 million for the quarter ended December 28,
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2024 from income of$1.0 million for the quarter ended December 30, 2023. The decrease in other income was due primarily to foreign
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currency losses in the current year quarter as compared to foreign currency gains in the prior year quarter.
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financial results prepared in accordance with GAAP, we use non-GAAP financial measures including adjusted EBITDA. Management uses
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adjusted EBITDA in making financial, operating and planning decisions and in evaluating our performance. Management believes this non-
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GAAP financial measure may be useful to investors in their assessment of our ongoing operating performance and provide additional
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meaningful comparisons between current results and results in prior operating periods. While Management believes that this non-GAAP
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measure is useful supplemental information, such adjusted results are not intended to replace our GAAP financial results and should be read
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in conjunction with those GAAP results.
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amortization and stock-based compensation expense (or operating income plus depreciation and amortization expense and stock-based
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compensation expense). We present adjusted EBITDA because we believe that adjusted EBITDA is a useful supplemental measure in
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evaluating the cash flows and performance of our business and provides greater transparency into our results of operations. Adjusted
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EBITDA is used by our management to perform such evaluations. Adjusted EBITDA should not be considered in isolation or as a substitute
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for cash flow from operations, income from operations or other income statement measures prepared in accordance with GAAP. We believe
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that adjusted EBITDA is frequently used by investors, securities analysts and other interested parties in their evaluation of companies, many
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of which present adjusted EBITDA when reporting their results. Other companies may calculate adjusted EBITDA differently and it may not
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with GAAP are shown in the tables below.
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consumer attitudes toward discretionary spending, currency fluctuations, and other macro-economic factors which may impact levels of
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business is highly seasonal. In fiscal 2024, approximately 66% of our Garden segment’s net sales and 59% of our total net sales occurred
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during our second and third fiscal quarters. Substantially all of the Garden segment’s operating income is typically generated in this period.
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during the first fiscal quarter, accounts receivable reach their lowest level while inventory, accounts payable and short-term borrowings begin
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to increase. During the second fiscal quarter, receivables, accounts payable and short-term borrowings increase, reflecting the build-up of
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inventory and related payables in anticipation of the peak lawn and garden selling season. During the third fiscal quarter, inventory levels
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remain relatively constant while accounts receivable peak and short-term borrowings start to decline as cash collections are received during
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the peak selling season. During the fourth fiscal quarter, inventory levels are at their lowest, and accounts receivable and payables are
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substantially reduced through conversion of receivables to cash.
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cycle with a slight degree of seasonality. As a result, it is not necessary to maintain large quantities of inventory to meet peak demands. Our
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Net Income and Earnings Per Share