EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

FOR IMMEDIATE RELEASE

 

         Contact:    Paul Warburg
            Central Garden & Pet
            925.948.3686

CENTRAL GARDEN & PET ANNOUNCES FISCAL SECOND QUARTER RESULTS

Reports Second Quarter Sales Increase of 21% to $486 Million and Earnings Per Fully

Diluted Share of 30 Cents

Higher Grain Costs Continue to Negatively Impact Operating Earnings

Organic Sales Increased 11%

Reiterates Fiscal 2007 Financial Outlook of $0.83 to $0.88 Per Share

 


WALNUT CREEK, CALIFORNIA, May 7, 2007 – Central Garden & Pet Company (NASDAQ: CENT) today announced results for its second quarter ended March 31, 2007.

The Company reported net sales of $486 million, an increase of 21% from $401 million in the comparable fiscal 2006 period. Income from operations for the quarter increased 1% to $46.2 million from $45.7 million in the year ago period. The Company reported net income for the quarter of $21.4 million, or $0.30 per fully diluted share, compared to net income of $26.2 million, or $0.39 per fully diluted share, in the year ago period. Branded product sales increased 25%. Sales of other manufacturers’ products increased 2%. Organic sales increased 11%. Depreciation and amortization for the quarter was $7.4 million compared to $6.0 million in the year ago period.

“Our continued focus on new product innovation supported by our brand building initiatives, contribution from acquisitions completed in fiscal 2006, and favorable early season weather conditions drove our strong sales performance,” noted Glenn Novotny, President and Chief Executive Officer of Central Garden & Pet. “Operating income and margins continued to be adversely impacted primarily by higher grain costs related to our wild bird feed operations. In addition, higher interest expense associated with recent acquisitions and a higher tax rate than prior year further impacted net income.”

Net sales for the Garden Products segment were $256 million, an increase of 20% from $214 million in the comparable fiscal 2006 period. Garden Products income from operations increased 9% to $28.8 million from $26.3 million in the year ago period. Branded product sales increased 24%. Sales of other manufacturers’ products declined 2%. Recent acquisitions contributed $9 million. Organic sales increased 15%. Net sales for the Pet Products segment were $230 million, an increase of 23% from $187 million in the comparable fiscal 2006 period. Pet Products income from operations increased 17% to $29.3

 

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million from $25.1 million in the year ago period. Branded product sales increased 27%. Sales of other manufacturers’ products increased 6%. Recent acquisitions contributed $30 million. Organic sales increased 7%.

For the six months ending March 31, 2007 of fiscal 2007, the Company reported net sales of $803 million, an increase of 16% from $694 million in the comparable 2006 period. Income from operations for the period decreased 6% to $52.2 million. Net income for the first six month period decreased 36% to $18.5 million from $28.8 million in the year ago period. Diluted earnings per share were $0.26 compared to $0.43 in the year ago period. Branded product sales increased 21% while sales of other manufacturers’ products declined 4%. Depreciation and amortization for the first six month period was $14.3 million compared to $11.2 million in the year ago period.

“We are reiterating our sales and earnings guidance for the year,” concluded Mr. Novotny. “However, we are closely watching the performance of our Garden business, which experienced lower than anticipated sales in April, and the continued volatility of the grain cost environment.”

The Company will discuss its second quarter results and 2007 guidance on a conference call today at 4:30 p.m. EDT / 1:30 p.m. PDT. Individuals may access the call by dialing 1-866-510-0704 and passcode 36512381 (domestic) or 1-617-597-5362 and passcode 36512381 (international). The conference call will be simultaneously broadcast over the Internet through Central’s website, http://www.central.com/. To listen to the webcast, please log on to the website prior to the scheduled call time to register and download any necessary audio software.


Re-play dial-in numbers for the call will be available for three weeks: 1-888-286-8010 and passcode 45356257 (domestic) and 1-617-801-6888 and passcode 45356257 (international).

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 in the following categories: Lawn & Garden: Grass seed including the brands PENNINGTON® and THE REBELS™; wild bird feed and the brands PENNINGTON® and KAYTEE®; weed and insect control and the brands AMDRO®, SEVIN®, IRONITE® and Over ‘N Out and; decorative outdoor patio products and the brands NORCAL®, NEW ENGLAND POTTERY® and MATTHEWS FOUR SEASONS™. We also provide a host of other regional and application-specific garden brands and supplies. Pet categories include: Animal health and the brands ADAMS™ and ZODIAC®; aquatics and reptile and the brands OCEANIC®, AQUEON™ and RZILLA™; 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®, BRONCO® and SUPER MASK®. We also provide a host of other application-specific pet brands and supplies. Central Garden & Pet is based in Walnut Creek, California, and has approximately 5,000 employees, primarily in North America and Europe. For additional information on Central Garden & Pet, including access to the Company’s SEC filings, please visit the Company’s website at http://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 future earnings guidance, 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 Company’s Annual Report on Form 10-K 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.

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(Tables Follow)


Central Garden & Pet Company

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

 

     Three Months Ended     Six Months Ended  
    

March 31,

2007

   

March 25,

2006

   

March 31,

2007

   

March 25,

2006

 
        

Net Sales

   $ 485,660     $ 401,332     $ 803,058     $ 694,063  

Cost of Goods Sold and Occupancy

     321,814       264,580       537,342       465,313  
                                

Gross Profit

     163,846       136,752       265,716       228,750  

Selling, General and Administrative

        

Expenses

     117,616       91,018       213,561       173,241  
                                

Income from Operations

     46,230       45,734       52,155       55,509  

Interest Expense

     (12,693 )     (10,227 )     (24,098 )     (16,571 )

Interest Income

     289       602       965       1,287  

Other Income

     1,596       1,803       1,685       1,852  
                                

Income Before Income Taxes
and Minority Interest

     35,422       37,912       30,707       42,077  

Income Taxes

     13,258       11,687       11,409       13,292  

Minority Interest

     714       —         814       —    
                                

Net Income

   $ 21,450     $ 26,225     $ 18,484     $ 28,785  
                                

Basic Earnings Per Common Share:

   $ 0.30     $ 0.40     $ 0.26     $ 0.45  

Diluted Earnings Per Common Share:

   $ 0.30     $ 0.39     $ 0.26     $ 0.43  

Weighted Average Shares Outstanding

        

Basic

     71,422       65,082       71,358       64,275  

Diluted

     72,028       67,245       72,102       66,288  

Earnings per share have been restated to reflect the Class A common stock dividend issued February 2007.


Central Garden & Pet Company

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

     March 31,
2007
  

September 30,

2006

Assets

     

Current Assets:

     

Cash and Cash Equivalents

   $ 14,599    $ 28,406

Accounts Receivable

     332,510      239,172

Inventories

     409,237      332,214

Other Current Assets

     41,316      34,910
             

Total Current Assets

     797,662      634,702

Property and Equipment—Net

     185,023      162,604

Goodwill

     564,348      557,820

Deferred Income Taxes and Other Assets

     185,060      178,697
             

Total

   $ 1,732,093    $ 1,533,823
             

Liabilities and Shareholders’ Equity

     

Current Liabilities:

     

Accounts Payable

   $ 149,037    $ 122,960

Accrued Expenses

     83,133      81,305

Current Portion of Long-Term Debt

     3,345      3,039
             

Total Current Liabilities

     235,515      207,304

Long-Term Debt

     709,863      565,410

Other Long-Term Obligations

     28,751      29,583

Convertible Redeemable Preferred Stock

     750      3,000

Minority Interest

     1,280      1,167

Shareholders’ Equity

     755,934      727,359
             

Total

   $ 1,732,093    $ 1,533,823