{"id":387109,"date":"2020-11-23T16:04:10","date_gmt":"2020-11-23T21:04:10","guid":{"rendered":"http:\/\/www.marketnewsdesk.com\/?p=387109"},"modified":"2020-11-23T16:04:10","modified_gmt":"2020-11-23T21:04:10","slug":"central-garden-pet-company-announces-record-fourth-quarter-and-fiscal-2020-operating-results","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/central-garden-pet-company-announces-record-fourth-quarter-and-fiscal-2020-operating-results\/","title":{"rendered":"Central Garden & Pet Company Announces Record Fourth Quarter and Fiscal 2020 Operating Results"},"content":{"rendered":"

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Central Garden & Pet Company Announces Record Fourth Quarter and Fiscal 2020 Operating Results<\/b><\/p>\n

Fiscal 2020 net sales increased 13.1% to $2.7 billion<\/i><\/b><\/p>\n

Fiscal 2020 diluted EPS of $2.20 vs. $1.61 for Fiscal 2019 <\/i><\/b><\/p>\n

Initial outlook for Fiscal 2021 EPS of $1.90 or better, adjusted EPS of $2.05 or better<\/i><\/b><\/p>\n

Investor Day to be held on December 3, 2020<\/i><\/b><\/p>\n

WALNUT CREEK, Calif.–(BUSINESS WIRE<\/a>)–
\nCentral Garden & Pet Company (NASDAQ: CENT) (NASDAQ: CENTA) (“Central”), a leading innovator, producer and distributor of branded and private label products for the lawn & garden and pet supplies markets, announced today record operating results for its fourth quarter and fiscal year 2020 ended September 26, 2020.\n<\/p>\n

\n“Central delivered another record quarter and completed a truly extraordinary year in the company’s history thanks to the hard work and dedication of our employees and our relentless focus on meeting the needs of our customers and consumers. I could not be more proud of what our team has accomplished in my first full year at the helm of this great company,” said Tim Cofer, CEO of Central Garden & Pet.\n<\/p>\n

\nCofer continued, “I continue to be excited about the long-term growth potential of Central as we make progress against our new Vision2025 strategy, which will be shared during our Investor Day on December 3, 2020. At this event, you will hear more about our new strategy, engage with our senior leaders and learn about how the company is poised to deliver significant shareholder value in the future.”\n<\/p>\n

Fiscal 2020 Summary<\/b><\/p>\n

\nNet sales of $2.7 billion increased 13.1% compared to $2.4 billion a year ago, principally driven by organic strength in both the Garden and Pet segments as well as the inorganic contribution of the Company’s Arden and C&S acquisitions. Pet net sales for fiscal 2020 increased 12.8% to $1,562.2, and Garden net sales for fiscal 2020 increased 13.5% to $1,133.3 million. Total Company organic net sales increased 10.7%, with the most significant contributions coming from distribution, dog treats and chews, wild bird feed, controls and fertilizers. These gains were partially offset by the impact of exiting the pottery business.\n<\/p>\n

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\nFiscal year gross margin increased 10 basis points to 29.6%, primarily due to favorable mix of products, including the favorable impact of businesses acquired in 2019, partially offset by higher COVID-19 related costs.\n<\/p>\n

\nOperating income of $198.0 million increased 30.2% from $152.1 million in fiscal 2019. Operating margin increased 90 basis points to 7.3% compared to 6.4% in fiscal 2019, due to improved overhead leverage, pandemic-related reductions in promotional activity and travel as well as gross margin gains.\n<\/p>\n

\nOther expense was $4.3 million compared to other income of $0.2 million in the prior year. The difference was primarily due to a non-cash impairment charge of $3.6 million in the third quarter of fiscal 2020, related to the Company’s investment in two joint ventures impacted by the COVID-19 pandemic. Net interest expense was $40 million compared to $33.1 million in fiscal 2019. The increase was primarily driven by lower interest income on our cash balance resulting from lower market interest rates.\n<\/p>\n

\nThe Company’s net income was $120.7 million, an increase of 30.1% compared to $92.8 million in fiscal 2019. Diluted earnings per share grew 36.6% to $2.20, compared to $1.61 in the prior year driven by strong operating results as well as a 5.0% decrease in the number of shares outstanding compared to the prior year. EBITDA increased 24.9%, or $50.4 million, to $253.3 million compared with fiscal 2019.\n<\/p>\n

\nCash flow from operations increased to $264.3 million, up 28.9% or $59.3 million compared to the prior year.\n<\/p>\n

Fiscal 2020 Fourth Quarter Financial Results <\/b><\/p>\n

\nNet sales increased 25.0% to $676.0 million compared to $540.7 million in the fourth quarter a year ago. The Company has now lapped its most recent acquisitions, Arden and C&S Products, and as such the entire net sales gain was driven by organic growth in both segments.\n<\/p>\n

\nGross margin increased to 29.0%, an improvement of 150 basis points compared to the fourth quarter a year ago, primarily driven by favorable mix of product sales and pricing. Operating income for the quarter increased to $25.2 million compared to $10.9 million in the prior year quarter. Operating margin increased 170 basis points to 3.7% compared to 2.0% in the prior year quarter, due to gross margin gains and improved operating leverage.\n<\/p>\n

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\nThe Company’s net income was $13.6 million compared to $2.4 million in the prior year quarter, and earnings per fully-diluted share grew to $0.25 versus $0.04 in the fourth quarter of fiscal 2019. EBITDA for the quarter was $40.9 million, up 67.9% from $24.4 million in the fourth quarter a year ago.\n<\/p>\n

Pet Segment Fiscal 2020 Fourth Quarter Results<\/b><\/p>\n

\nFourth quarter net sales for the Pet segment increased 22.0% from the same period a year ago, to $434.1 million. The most significant contributions to the segment’s strong growth came from dog treats and chews, distribution, as well as small animal consumables and supplies.\n<\/p>\n

\nThe Pet segment\u2019s operating income grew 28.0% as compared to the same period a year ago to $39.6 million. Operating margin of 9.1% reflected an increase of 40 basis points compared to the fourth quarter a year ago, primarily driven by volume strength, favorable product mix and overhead efficiencies, partially offset by cost increases in key commodities and freight.\n<\/p>\n

Garden Segment Fiscal 2020 Fourth Quarter Results<\/b><\/p>\n

\nNet sales for the Garden segment increased 30.9% from the same period a year ago, to $241.9 million. The most significant contributions to the segment’s strong growth came from distribution, controls and fertilizers, wild bird feed and live plants supported by highly favorable weather conditions.\n<\/p>\n

\nThe Garden segment\u2019s operating income increased to $10.2 million as compared to $0.3 million in the fourth quarter a year ago. Operating margin increased by 400 basis points to 4.2% compared to 0.2% in the prior year quarter, primarily driven by improved operating leverage, favorable product mix and pricing partially offset by cost inflation.\n<\/p>\n

Additional Information<\/b><\/p>\n

\nAt September 26, 2020, the Company\u2019s cash and cash equivalents was $652.7 million, compared to $497.7 million a year ago. Cash flow from operations for the fourth quarter of fiscal 2020 was $175.4 million, compared to $112.2 million in the fourth quarter of fiscal 2019.\n<\/p>\n

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\nTotal debt at September 26, 2020 was $694.1 million compared to $693.2 million at September 28, 2019. Net interest expense was $10.5 million for the fourth quarter compared to $8.1 million in the prior-year period, primarily due to lower interest income resulting from lower market interest rates. The Company’s leverage ratio at the end of the quarter and the year, as defined in the Company’s credit agreement, was 2.2x compared to 3.1x in the prior year quarter.\n<\/p>\n

\nThe Company’s effective tax rate for the full fiscal year was 21.0% compared with 22.3% in the prior year, principally due to lower state taxes.\n<\/p>\n

2021 Outlook<\/b><\/p>\n

\nThe Company currently projects fiscal 2021 GAAP EPS of $1.90 or better. This translates to fiscal 2021 adjusted EPS of $2.05 or better.\n<\/p>\n

\nThe projected decline compared to fiscal 2020 reflects increased investments in capacity expansion, brand building and eCommerce as the Company continues to invest in sustainable growth, increases in labor and freight cost as well as key commodities, in addition to resuming more normal levels of promotional activity and travel.\n<\/p>\n

\nThe Company also anticipates second-half headwinds associated with lapping almost ideal weather for the gardening season and the COVID-19 tailwinds in 2020.\n<\/p>\n

\nIn addition, the Company anticipates an incremental interest expense in the range of $0.14-$0.16 related to recognizing the impacts of the call premium and unamortized debt issuance cost on the debt being retired.\n<\/p>\n

Conference Call<\/b><\/p>\n

\nThe 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 year 2020 results. The conference call will be accessible through Central\u2019s website, http:\/\/ir.central.com<\/a>.\n<\/p>\n

\nAlternatively, to listen to the call by telephone, dial (201) 689-8345 (domestic and international) using confirmation #13711013. A replay of the call will be available for three days by dialing (201) 612-7415 and entering confirmation #13711013.\n<\/p>\n

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About Central Garden & Pet<\/b><\/p>\n

\nCentral 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\u00ae<\/sup>, and THE REBELS\u00ae<\/sup>; wild bird feed and the brand PENNINGTON\u00ae<\/sup>; weed and insect control and the brands AMDRO\u00ae<\/sup>, SEVIN\u00ae, and OVER-N-OUT\u00ae<\/sup>; fertilizer and the brands PENNINGTON\u00ae<\/sup> and IRONITE\u00ae<\/sup>; live plants from BELL NURSERY; outdoor cushions and pillows from ARDEN COMPANIES; and decorative outdoor patio products under the PENNINGTON\u00ae<\/sup> 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\u2122<\/sup>, COMFORT ZONE\u00ae<\/sup>, FARNAM\u00ae<\/sup>, HORSE HEALTH\u2122<\/sup> and VITAFLEX\u00ae<\/sup>; aquatics and reptile and the brands AQUEON\u00ae<\/sup>, CORALIFE\u00ae<\/sup>, SEGREST\u2122<\/sup> and ZILLA\u00ae<\/sup>; bird & small animal and the brands KAYTEE\u00ae<\/sup>, Forti-Diet\u00ae<\/sup> and CRITTER TRAIL\u00ae<\/sup>; and dog & cat and the brands TFH\u2122<\/sup>, NYLABONE\u00ae<\/sup>, FOUR PAWS\u00ae<\/sup>, IMS\u00ae<\/sup>, CADET\u00ae<\/sup>, DMC\u2122<\/sup>, and K&H Pet Products\u2122<\/sup>. 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 6,300 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\u2019s website at www.central.com<\/a>.<\/span><\/p>\n

Safe Harbor Statement<\/b><\/p>\n

\n\u201cSafe Harbor\u201d 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 investment levels to drive capacity expansion, brand building and eCommerce, increases in labor and freight cost as well as key commodities, in addition to resuming more normal levels of travel and entertainment and promotional activity and their impact on future growth, and earnings guidance for the full fiscal 2021, 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\u2019s 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:\n<\/p>\n

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