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 FOURTH QUARTER & FISCAL 2009 RESULTS

Strengthened Financial Position

Foundation in Place for Next Phase of Growth

 

 

WALNUT CREEK, CALIFORNIA, November 19, 2009 – Central Garden & Pet Company (NASDAQ: CENT/CENTA) today announced fourth quarter and full year results for its fiscal year ended September 26, 2009.

“During fiscal 2009, we began to show improved performance from the implementation of our financial and operational priorities,” noted William Brown, Chairman and Chief Executive Officer of Central Garden & Pet Company. “We achieved these results by maintaining a strict focus on our core operating objectives: reducing investment in working capital, lowering expenses, and improving gross margins. We believe these continuing initiatives will strengthen Central’s foundation as we move forward to a new phase of growth.”

In the fourth quarter, the Company reported net sales of $363 million, a decrease of 12 percent compared to $414 million in the comparable fiscal 2008 period. For the quarter, the Company reported operating income of $19.9 million compared to an operating loss of $12.3 million in the year ago period. Net income for the quarter was $8.0 million, or $0.12 per fully diluted share compared to a net loss of $13.9 million, or $0.20 per fully diluted share in the year ago period. Sales of branded products decreased 12 percent to $311 million and sales of other manufacturers’ products decreased 14 percent to $52 million. Depreciation and amortization was $7.3 million compared to $8.1 million in the year ago period. The quarter ending debt balance was $408 million compared to $523 million a year ago, a decrease of $115 million. The quarter ending Leverage Ratio, as defined in the Company’s credit agreement, was 2.9x compared to the covenant level of 4.5x.

 

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Net sales for the Garden Products segment in the quarter were $160 million, a decrease of 15 percent compared to $188 million in the comparable fiscal 2008 period. Garden Products segment operating income was $4.7 million compared to a loss of $30.8 million in the year ago period, which includes the impairment of goodwill, other intangibles and long-lived assets of $29.5 million. Sales of garden branded products declined 15 percent to $142 million. Sales of other garden manufacturers’ products declined 14 percent to $18 million. Net sales for the Pet Products segment in the quarter were $204 million, a decrease of 10 percent compared to $226 million in the year ago period. Operating income for the Pet Products segment was $27.6 million, a decrease of 13 percent, compared to $31.6 million in the year ago period. Sales of pet branded products declined nine percent to $169 million. Sales of other pet manufacturers’ products decreased 13 percent to $35 million.

Included in the results for the fourth quarter of fiscal 2008 is a non-cash, pre-tax charge of $27.8 million related to the impairment of goodwill, other intangibles and long-lived assets. Excluding goodwill impairment and other asset impairment charges that are not representative of the on-going results of operations of our business, operating income for the fourth quarter of fiscal 2008 was $13.8 million and the corresponding net income for the quarter was $4.0 million, or $0.06 per fully diluted share.

For the fiscal year ended September 26, 2009, the Company reported net sales of $1.61 billion compared to $1.70 billion in fiscal 2008, a decline of five percent. Operating income for the fiscal year was $126.0 million compared to an operating loss of $324.4 million in fiscal 2008. Branded product sales declined five percent and sales of other manufacturers’ products declined five percent. Depreciation and amortization for the fiscal year was $29.1 million compared to $32.5 million in the prior fiscal year. Net income for the fiscal year ended September 26, 2009 was $65.9 million compared to a net loss of $267.3 million in fiscal 2008. Earnings per diluted share were $0.94 compared to a loss of $3.76 per fully diluted share in fiscal 2008.

Included in the full year results for fiscal 2008 is a non-cash, pre-tax charge of $430 million related to the impairment of goodwill, other intangibles and long-lived assets. Also included in the results for the prior fiscal year is a pre-tax gain of $11.1 million related to the sale of properties and legal settlement proceeds. Fiscal 2008 operating income, excluding goodwill impairment and other asset impairment charges and the gains related to the sale of properties and legal settlement proceeds that are not representative of the on-going results of operations of our business, was $90.6 million, and the corresponding net income and earnings per fully diluted share were $34.6 million and $0.49, respectively.


The Company will discuss its fourth quarter and fiscal 2009 results on a conference call Thursday, November 19, 2009 at 4:30 p.m. EST / 1:30 p.m. PST. Individuals may access the call by dialing 1-888-713-4213 and passcode 6032 1821 (domestic) or 1-617-213-4865 and passcode 6032 1821 (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 3022 0524 (domestic) and 1-617-801-6888 and passcode 3022 0524 (international).

Central Garden & Pet Company is a leading innovator, marketer and producer of quality branded products for the lawn & garden and pet supplies markets. We are committed to new product innovation and our products are sold to specialty independent and mass retailers in the following categories: In 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 ZILLA™; bird & small animal and the brands KAYTEE®, SUPER PET® and CRITTER TRAIL®; dog & cat and the brands TFH®, NYLABONE®, FOUR PAWS®, PINNACLE® and Avoderm®; and equine and the brands FARNAM®, BRONCO® and SUPER MASK®. Central Garden & Pet Company 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 Company, 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 growth expectations, and margin improvements 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, to be filed November 20, 2009, 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

(In thousands, except per share amounts)

 

     Three Months Ended     Fiscal Year Ended  
     September 26,
2009
    September 27,
2008
    September 26,
2009
    September 27,
2008
 

Net Sales

   $ 363,171      $ 413,976      $ 1,614,300      $ 1,705,386   

Cost of Goods Sold and Occupancy

     246,933        299,727        1,086,974        1,184,058   
                                

Gross Profit

     116,238        114,249        527,326        521,328   

Selling, General and Administrative

        

Expenses

     96,312        98,803        401,340        415,978   

Goodwill and other impairments

     —          27,764        —          429,764   
                                

Income from Operations

     19,926        (12,318     125,986        (324,414

Interest Expense

     (4,864     (7,695     (22,710     (38,326

Interest Income

     35        139        649        1,053   

Other Income (Expense)

     (28     (341     52        2,116   
                                

Income (Loss) Before Income Taxes and Minority Interest

     15,069        (20,215     103,977        (359,571

Income Tax Expense (Benefit)

     6,870        (6,232     36,368        (93,069

Minority Interest

     163        (73     1,661        833   
                                

Net Income (Loss)

     8,036      $ (13,910     65,948        (267,335
                                

Basic Earnings (Loss) Per Common Share

   $ 0.12      $ (0.20   $ 0.95      $ (3.76

Diluted Earnings (Loss) Per Common Share

   $ 0.12      $ (0.20   $ 0.94      $ (3.76

Weighted Average Shares Outstanding

        

Basic

     68,502        70,330        69,499        71,117   

Diluted

     69,768        70,330        70,264        71,117   


Central Garden & Pet Company

Condensed Consolidated Balance Sheets

(In thousands)

 

     September 26,
2009
   September 27,
2008

Assets

     

Current Assets:

     

Cash and Cash Equivalents

   $ 85,668    $ 26,929

Accounts Receivable - Net

     206,565      260,639

Inventories

     284,834      349,499

Other Current Assets

     44,425      34,686
             

Total Current Assets

     621,492      671,753

Property and Equipment - Net

     164,734      174,013

Goodwill

     207,749      201,499

Other Intangible Assets – Net

     103,366      107,404

Deferred Income Taxes and Other Assets

     53,584      104,649
             

Total

   $ 1,150,925    $ 1,259,318
             

Liabilities and Shareholders’ Equity

     

Current Liabilities:

     

Accounts Payable

   $ 108,836    $ 133,364

Accrued Expenses

     82,143      84,345

Current Portion of Long-Term Debt

     3,270      3,340
             

Total Current Liabilities

     194,249      221,049

Long-Term Debt

     404,815      519,807

Other Long-Term Obligations

     4,526      7,037

Minority Interest

     2,250      2,667

Shareholders’ Equity

     545,085      508,758
             

Total

   $ 1,150,925    $ 1,259,318
             


Non-GAAP Financial Measures

This press release includes adjustments to GAAP net loss for the fourth quarter and fiscal year ended September 27, 2008. Adjusted net income and adjusted earnings per share, are non-GAAP financial measures which exclude the impact of the impairment of goodwill, other intangibles and long-lived assets plus gains related to the sale of properties and legal settlement proceeds. We believe that they are useful as supplemental measures in assessing the operating performance of our business. These measures are used by our management, including our chief operating decision maker, to evaluate business results. We exclude goodwill impairment and other asset impairment charges which are not representative of the on-going results of operations of our business and are not used to determine compliance with the financial covenants in our credit facility.

We provide this information to investors and other users of the financial statements, such as lenders, to assist in comparisons of past, present and future operating results and to assist in highlighting the results of on-going operations. While management believes adjusted earnings and adjusted earnings per share are useful supplemental information, such adjusted results are not intended to replace our GAAP financial results and should be used in conjunction with those GAAP results. 

Below is a reconciliation of this non-GAAP measure to net loss for the fourth quarter and fiscal year ended September 27, 2008.

 

     Fourth Quarter     Fiscal 2008  
     Dollars     EPS     Dollars     EPS  
     (in millions)     (in millions)  

Reconciliation of net loss to adjusted net income:

        

Net loss, as reported

   $ (13.9   $ (0.20   $ (267.3   $ (3.76

Adjustment for goodwill impairment and other asset impairment charges that are not representative of the on-going results of operations of our business, net of taxes

     17.9        0.26        308.9        4.35   

Adjustment for building sales, legal settlement and sale of a business, net of tax

     —          —          (7.0     (0.10
                                

Adjusted net income

   $ 4.0      $ 0.06      $ 34.6      $ 0.49