Central Garden & Pet Company Announces Fiscal 2010 First Quarter Results

Improved Gross Margins and Lower Interest Expense Offset Sales Decline

WALNUT CREEK, Calif.--(BUSINESS WIRE)-- Central Garden & Pet Company (NASDAQ: CENT)(NASDAQ: CENTA) today announced results for its first quarter ended December 26, 2009.

"We continued to make progress on our core initiatives of reducing working capital, improving gross margins and controlling costs," noted William Brown, Chairman and Chief Executive Officer. "We reduced our investment in working capital by $98 million compared to this time last year and lowered debt by $84 million. Gross margins improved by 3.4 percentage points and in our seasonally slow garden quarter, we reduced our per share loss to less than half of year ago levels. With a stronger balance sheet, we are beginning to accelerate new product introductions and once again explore potential acquisitions."

The Company reported net sales of $269 million in the quarter, a decline of eight percent compared to $293 million in the comparable fiscal 2009 period. The Company reported operating income of $0.5 million compared to a loss of $2.7 million in the year ago period. Net interest expense was $4.9 million compared to $6.6 million a year ago. The net loss for the quarter was $2.9 million, or $0.04 per share compared to a net loss of $6.2 million or $0.09 per share in the year ago period. Branded product sales decreased 9% percent to $220 million. Sales of other manufacturers' products declined 2% percent to $49.2 million. Depreciation and amortization was $7.2 million compared to $7.5 million in the year ago period. The quarter ending leverage ratio was 2.6x.

Net sales for the Garden Products segment in its seasonally slow quarter were $88 million, a decrease of 18 percent from $107 million in the comparable fiscal 2009 period. The Garden Products operating loss was $6.3 million compared to a loss of $7.8 million in the year ago period. Branded product sales declined $20 million to $74 million. Sales of other manufacturers' products increased $1 million to $14 million. Net sales for the Pet Products segment were $182 million, a decrease of two percent compared to $186 million in the year ago period. Operating income for the Pet Products segment was $17.6 million, compared to $12.9 million in the year ago period. Branded product sales were $146 million, a decrease of $2 million compared to last year. Sales of other manufacturers' products were $36 million compared to $38 million last year.

The Company will discuss its first quarter results on a conference call today at 4:30 p.m. EST / 1:30 p.m. PST. Individuals may access the call by dialing 1-888-713-4216 and passcode 7630 9971 (domestic) or 1-617-213-4868 and passcode 7630 9971 (international). The conference call will be simultaneously broadcast over the Internet through Central's website, http://www.central.com/ or you may link directly to the webcast on our website at http://ir.central.com/phoenix.zhtml?c=93879&p=irol-calendar. 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.

In order to simplify your registration process, you may pre-register at the following link: https://www.theconferencingservice.com/prereg/key.process?key=PEVBRKRLU . By pre-registering, you may bypass the operator and go directly to the teleconference with a unique PIN number as soon as the call begins. At the time of the call, after dialing the number and passcode mentioned above, enter your PIN for immediate access to the teleconference.

Re-play dial-in numbers for the call will be available for three weeks: 1-888-286-8010 and passcode 1504 3145 (domestic) and 1-617-801-6888 and passcode 1504 3145 (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(R) and THE REBELS(TM); wild bird feed and the brands PENNINGTON(R) and KAYTEE(R); weed and insect control and the brands AMDRO(R), SEVIN(R), IRONITE(R) and Over 'N Out(R); and decorative outdoor patio products and the brands NORCAL(R), NEW ENGLAND POTTERY(R) and MATTHEWS FOUR SEASONS(TM). We also provide a host of other regional and application-specific garden brands and supplies. Pet categories include: animal health and the brands ADAMS(TM) and ZODIAC(R); aquatics and reptile and the brands OCEANIC(R), AQUEON(TM) and ZILLA(TM); bird & small animal and the brands KAYTEE(R), SUPER PET(R) and CRITTER TRAIL(R); dog & cat and the brands TFH(R), NYLABONE(R), FOUR PAWS(R), PINNACLE(R) and Avoderm(R); and equine and the brands FARNAM(R), BRONCO(R) and SUPER MASK(R). Central Garden & Pet Company is based in Walnut Creek, California, and has approximately 4,000 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 those relating to the new product introductions and potential acquisitions 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, 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.

Central Garden & Pet Company

Condensed Consolidated Statements of Income


(In thousands, except per share amounts)

                                                  Three Months Ended

                                                  December 27,     December 26,

                                                    2008             2009

Net Sales                                         $ 292,542        $ 269,236

Cost of Goods Sold and Occupancy                    207,061          181,467

Gross Profit                                        85,481           87,769

Selling, General and Administrative

Expenses                                            88,147           87,248

Income (Loss) from Operations                       (2,666  )        521

Interest Expense                                    (6,884  )        (4,944  )

Interest Income                                     332              10

Other Income (Expense)                              (950    )        592

Loss Before Income Tax Benefit                      (10,168 )        (3,821  )

Income Tax Benefit                                  (3,853  )        (1,402  )

Loss Including Non Controlling Interest             (6,315  )        (2,419  )

Net Income (Loss) Attributable

Non Controlling Interest                            (131    )        475

Net Loss Attributable to Central Garden & Pet     $ (6,184  )      $ (2,894  )

Basic and Diluted Loss Per Common Share:          $ (.09    )      $ (0.04   )

Weighted Average Shares Outstanding:

Basic and Diluted                                   70,519           66,828

Central Garden & Pet Company

Condensed Consolidated Balance Sheets


(In thousands)

                                  December 27,    December 26,    September 26,

                                  2008            2009            2009


Current Assets:

Cash and Cash Equivalents         $ 8,862         $ 91,791        $ 85,668

Accounts Receivable                 165,681         128,991         206,565

Inventories                         393,702         327,403         284,834

Other Current Assets                41,207          48,023          44,425

Total Current Assets                609,452         596,208         621,492

Property and Equipment - Net        171,616         162,336         164,734

Goodwill                            201,499         207,749         207,749

Other Intangible Assets - Net       106,493         102,236         103,366

Deferred Income Taxes and           105,301         53,448          53,584
Other Assets

Total                             $ 1,194,361     $ 1,121,977     $ 1,150,925

Liabilities and Shareholders'

Current Liabilities:

Accounts Payable                  $ 120,936       $ 117,635       $ 108,836

Accrued Expenses                    78,268          83,091          82,143

Current Portion of Long-Term        3,332           3,256           3,270

Total Current Liabilities           202,536         203,982         194,249

Long-Term Debt                      487,721         404,007         404,815

Other Long-Term Obligations         6,663           4,405           4,526

Total Central Garden & Pet

Shareholders' Equity                496,982         509,623         545,085

Non Controlling Interest            459             (40       )     2,250

Total Shareholders' Equity          497,441         509,583         547,335

Total                             $ 1,194,361     $ 1,121,977     $ 1,150,925

    Source: Central Garden & Pet Company