CENTRAL GARDEN & PET CO

Previous wording

•Net sales decreased $39.0 million, or 6.0%, from the prior year quarter to $617 million, with Pet net sales decreasing 2.7% and Garden net sales decreasing 12.0%.

Current wording

•Net sales increased $73 million, or 9%, from the prior year quarter to $906 million, with Pet net sales increasing 5% and Garden net sales increasing 13%.

Previous wording

•Gross profit decreased $5.1 million from the prior year quarter, while gross margin increased 110 basis points to 30.9%.

Current wording

•Gross profit increased $26 million from the prior year quarter, while gross margin increased 30 basis points to 33.1%.

Previous wording

Net sales for the three months ended December 27, 2025, decreased $39.0 million, or 6.0%, to $617.4 million from $656.4 million for the three months ended December 28, 2024. Net sales decreased in both segments and was volume-based. The decrease was due primarily to the timing of shipments, with certain volumes shifting into our second fiscal quarter, compared with the prior year quarter where certain volumes shifted into the first quarter from the second quarter, and the impact of portfolio optimization actions. Our branded product sales decreased $29.9 million, and sales of other manufacturers’ products decreased $9.1 million.

Current wording

Net sales for the three months ended March 28, 2026, increased $72.6 million, or 8.7%, to $906.1 million from $833.5 million for the three months ended March 29, 2025. Net sales increased in both segments and was primarily volume-based. The increase was due primarily to the timing of shipments, with certain volumes shifting into our second fiscal quarter, from the first quarter, and the benefit of new listings and products. Our branded product sales increased $75.4 million, and sales of other manufacturers’ products decreased $2.8 million.

Previous wording

Selling, general and administrative expenses increased $6.4 million, or 3.8%, to $174.1 million for the three months ended December 27, 2025. As a percentage of net sales, selling, general and administrative expenses increased to 28.2% for the three months ended December 27, 2025, compared to 25.5% in the comparable prior year quarter due primarily to $8.3 million in facility closure costs. On a non-GAAP basis, selling, general and administrative expenses decreased $2.0 million to $165.7 million for the three months ended December 27, 2025, and was 26.8% of net sales.

Current wording

Selling, general and administrative expenses increased $5.9 million, or 3.3%, to $185.6 million for the three months ended March 28, 2026. As a percentage of net sales, selling, general and administrative expenses decreased to 20.5% for the three months ended March 28, 2026, compared to 21.6% in the comparable prior year quarter. Selling, general and administrative expenses increased in both corporate and Garden, while Pet was relatively flat as compared to the prior year quarter.

Previous wording

Selling and delivery expense increased $1.1 million to $73.8 million for the three months ended December 27, 2025 as compared to $72.7 million in the prior year quarter. The increased expense was in the Garden segment due primarily to incremental wild bird marketing expenses.

Current wording

Selling and delivery expense increased $5.5 million to $87.2 million for the three months ended March 28, 2026 as compared to $81.7 million in the prior year quarter. The increased expense in both Pet and Garden was due primarily to incremental marketing expenses.

Previous wording

Operating income decreased $11.5 million, or 40.9%, to $16.5 million for the three months ended December 27, 2025 from $28.0 million for the three months ended December 28, 2024. Our operating margin decreased from 4.3% in the prior year quarter to 2.7% in the current year quarter. The decrease in operating income was due to a $39.1 million decrease in net sales and a $6.4 million increase in selling, general and administrative expense partially offset by a 110 basis point increase in gross margin. On a non-GAAP basis, operating income decreased $3.7 million to $24.3 million and operating margin was 3.9%.

Current wording

Operating income increased $20.6 million, or 22.1%, to $113.9 million for the three months ended March 28, 2026 from $93.3 million for the three months ended March 29, 2025. Our operating margin improved from 11.2% in the prior year quarter to 12.6% in the current year quarter. The increase in operating income was due to a $72.6 million increase in net sales and a 30 basis point increase in gross margin, partially offset by a $5.9 million increase in selling, general and administrative expense.

Previous wording

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 increased $1.9 million to $0.2 million for the three months ended December 27, 2025 as compared to an expense of $1.7 million in the prior quarter. The increase in other income (expense) was due primarily to foreign currency gains in the current year quarter as compared to foreign currency losses in the prior year quarter.

Current wording

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 (expense) decreased $1.1 million to an expense of $0.4 million for the quarter ended March 28, 2026 as compared to income of $0.7 million in the prior quarter. The decrease in other income (expense) was due primarily to foreign currency losses in the current year quarter as compared to foreign currency gains in the prior year quarter.

Previous wording

Our effective income tax rate was 23.3% for the quarter ended December 27, 2025 relatively consistent with 23.5% for the quarter ended December 28, 2024.

Current wording

Our effective income tax rate was 23.5% for each of the quarters ended March 28, 2026, and March 29, 2025.

Previous wording

•Net income in the first quarter of fiscal 2026 was $6.8 million, or $0.11 per diluted share, compared to $14.0 million, or $0.21 per diluted share, in the first quarter of fiscal 2025. On a non-GAAP basis, net income was $12.8 million, or $0.21 per diluted share, in the first quarter of fiscal 2026 compared to $14.0 million, or $0.21 per diluted share, in the first quarter of fiscal 2025.

Current wording

Net income in the second quarter of fiscal 2026 was $79.4 million, or $1.28 per diluted share, compared to $63.6 million, or $0.98 per diluted share, in the second quarter of fiscal 2025. On a non-GAAP basis, which excludes the impact of charges related to facility closures, net income in the second quarter of fiscal 2026 was $79.6 million, or $1.29 per diluted share, compared to $67.7 million, or $1.04 per diluted share, in the second quarter of fiscal 2025.

Previous wording

Warehouse and administrative expense increased $5.2 million, to $100.2 million for the three months ended December 27, 2025 from $95.0 million for the three months ended December 28, 2024. The increase in warehouse and administrative expense was primarily in Garden and due to $7.8 million in facility closure costs, partially offset by a decrease in corporate expense. On a non-GAAP basis, warehouse and administrative expense decreased $3.1 million for the quarter ended December 27, 2025, as compared to the prior-year quarter. Corporate expense decreased $2.1 million due primarily to lower third-party provider expense and lower 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.

Current wording

Warehouse and administrative expense increased $5.5 million, or 2.8%, to $198.6 million for the six months ended March 28, 2026 from $193.1 million for the six months ended March 29, 2025. Increased expense in both Garden and corporate was partially offset by a decrease in Pet. The increase in Garden was due primarily to $7.8 million in facility closure costs incurred in the first quarter of fiscal 2026, while the decrease in Pet was due primarily to the benefits obtained from prior year facility closures. Corporate expenses increased $1.7 million due primarily to higher third-party provider expense driven by M&A activity expenditures. Corporate expenses are included within administrative expense and relate to the costs of unallocated executive, administrative, finance, legal, human resources, and information technology functions.

Previous wording

Pet operating income decreased $1.5 million, or 2.8%, to $49.8 million for the three months ended December 27, 2025 from $51.3 million for the three months ended December 28, 2024. Pet operating income decreased due to a $11.7 million decline in net sales and a $0.3 million increase in selling, general and administrative expense partially offset by a 70 basis point improvement in gross margin.

Current wording

Operating income increased $9.2 million, or 7.5%, to $130.5 million for the six months ended March 28, 2026 from $121.3 million for the six months ended March 29, 2025. Our operating margin increased to 8.6% for the six months ended March 28, 2026 from 8.1% for the six months ended March 29, 2025. Operating income increased due to a $33.5 million increase in net sales and a 70 basis point improvement in gross margin, partially offset by a $12.2 million increase in selling, general and administrative expense.

Previous wording

During the first quarter of fiscal 2026, we recognized incremental expense of $7.7 million in the consolidated statement of operations, $7.2 million in our Garden segment related to the closure of three distribution centers in fiscal 2025 and 2024, and an incremental $0.5 million in our Pet segment related to the closure of a sales and logistics facility in Pennsylvania.

Current wording

During the first quarter of fiscal 2026, we recognized incremental expense of $7.7 million in the consolidated statement of operations, of which $7.2 million in our Garden segment related to the closure of three distribution centers in fiscal 2025 and 2024. During the first and second quarters of fiscal 2026, we recognized incremental expense of $0.5 million and $0.2 million, respectively, in our Pet segment related to the closure of a sales and logistics facility in Pennsylvania.

Previous wording

Our revenues and margins are dependent on various economic factors, including fluctuating rates of inflation on various input costs (e.g., commodities and energy), interest rates, tariffs, currencies and consumer attitudes toward discretionary spending. Inflation moderated in fiscal 2024 and into the first half of fiscal 2025 before increasing in the second half of fiscal 2025 and first quarter of fiscal 2026 due primarily to the increasing impact of tariffs. We have benefited from lower cost inventory and significant productivity gains resulting in improved margins. However, the continued imposition of tariffs and a global trade war could result in higher inflation as the year progresses.

Current wording

Our revenues and margins are dependent on various economic factors, including fluctuating rates of inflation on various input costs (e.g., commodities and energy), interest rates, tariffs, currencies and consumer attitudes toward discretionary spending. Inflation moderated in fiscal 2024 and into the first half of fiscal 2025 before increasing in the second half of fiscal 2025 and first half of fiscal 2026 due primarily to the increasing impact of tariffs. We have benefited from lower cost inventory and significant productivity gains resulting in improved margins. However, the continued imposition of tariffs and a global trade war could result in higher inflation as the year progresses.

Previous wording

Net cash used by operating activities increased by $1.4 million, from $68.8 million for the three months ended December 28, 2024, to $70.2 million for the three months ended December 27, 2025. The minor increase in cash used by operating activities was due primarily to changes in our working capital accounts for the three-month period ended December 27, 2025, primarily an increase in inventory, partially offset by a decrease in accounts receivable and the net of changes in other working capital accounts.

Current wording

Net cash used by operating activities increased by $4.2 million, from $115.7 million for the six months ended March 29, 2025, to $119.9 million for the six months ended March 28, 2026. The increase in cash used by operating activities was due primarily to changes in our working capital accounts for the six-month period ended March 28, 2026, primarily an increase in accounts receivable, partially offset by a decrease in prepaid expenses and other assets and the net of changes in other working capital accounts.

Previous wording

Net cash used in investing activities increased $58.4 million, from $9.4 million for the three months ended December 28, 2024 to $67.8 million during the three months ended December 27, 2025. The increase in cash used in investing activities was due primarily to more significant acquisition activity in the current year as compared to the prior year.

Current wording

Net cash used in investing activities increased $58.1 million, from $20.2 million for the six months ended March 29, 2025 to $78.3 million during the six months ended March 28, 2026. The increase in cash used in investing activities was due primarily to more significant acquisition activity in the current year as compared to the prior year.

Previous wording

Net cash used in financing activities decreased $32 million, from $55.4 million for the three months ended December 28, 2024, to $23.5 million for the three months ended December 27, 2025. The decrease in cash used in financing activities during the current year was due primarily to decreased open market purchases of our common stock as compared to the prior year. During the three months ended December 27, 2025, we repurchased approximately 0.7 million shares of our non-voting Class A common stock (CENTA) on the open market at an aggregate cost of approximately $18.5 million, or approximately $28.01 per share. During the three months ended December 28, 2024, we repurchased approximately 1.3 million shares of our non-voting Class A common stock (CENTA) on the open market at an aggregate cost of approximately $39.9 million and 0.4 million shares of our voting common stock (CENT) on the open market at an aggregate cost of approximately $12.3 million.

Current wording

Net cash used in financing activities decreased $68.3 million, from $99.7 million for the six months ended March 29, 2025, to $31.4 million for the six months ended March 28, 2026. The decrease in cash used in financing activities during the current year was due primarily to decreased open market purchases of our common stock as compared to the prior year. During the six months ended March 28, 2026, we repurchased approximately 0.8 million shares of our non-voting Class A common stock (CENTA) on the open market at an aggregate cost of approximately $21.9 million, or approximately $28.45 per share. During the six months ended March 29, 2025, we repurchased approximately 2.1 million shares of our non-voting Class A common stock (CENTA) on the open market at an aggregate cost of approximately $63.2 million, or approximately $30.75 per share, and approximately 0.9 million shares of our voting common stock (CENT) on the open market at an aggregate cost of approximately $30.2 million, or approximately $35.28 per share. .

Previous wording

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 $50 million in fiscal 2026, of which we have invested approximately $11 million through December 27, 2025.

Current wording

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 $50 million in fiscal 2026, of which we have invested approximately $21 million through March 28, 2026.

Previous wording

At December 27, 2025, our total debt outstanding was $1,192.2 million, as compared with $1,190.4 million at December 28, 2024.

Current wording

At March 28, 2026, our total debt outstanding was $1,192.6 million, as compared with $1,190.8 million at March 29, 2025.

Previous 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 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 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.

Previous wording

The Credit Facility is subject to a borrowing base that is calculated using a formula based upon eligible receivables and inventory, and at our election, eligible real property, minus certain reserves. Proceeds of the Credit Facility may be used for general corporate purposes. Net availability under the Credit Facility was approximately $545 million as of December 27, 2025. The Credit Facility includes a $50 million sublimit for the issuance of standby and commercial letters of credit and a $75 million sublimit for swing loan borrowings. As of December 27, 2025, there were no borrowings outstanding and no letters of credit outstanding under the Credit Facility. Outside of the Credit Facility, there were other standby and commercial letters of credit of $3.0 million outstanding as of December 27, 2025.

Current wording

The Credit Facility is subject to a borrowing base that is calculated using a formula based upon eligible receivables and inventory, and at our election, eligible real property, minus certain reserves. Proceeds of the Credit Facility may be used for general corporate purposes. Net availability under the Credit Facility was approximately $600 million as of March 28, 2026. The Credit Facility includes a $50 million sublimit for the issuance of standby and commercial letters of credit and a $75 million sublimit for swing loan borrowings. As of March 28, 2026, there were no borrowings outstanding and no letters of credit outstanding under the Credit Facility. Outside of the Credit Facility, there were other standby and commercial letters of credit of $2.9 million outstanding as of March 28, 2026.