Central Garden & Pet Announces Third Quarter Results for Fiscal 2006
WALNUT CREEK, Calif.--(BUSINESS WIRE)--Aug. 2, 2006--
Central Garden & Pet Company (NASDAQ:CENT):
-- Sales Increased 23%; Income from Operations Increased 57%
-- Earnings per Fully Diluted Share Increased to $1.28 versus
$1.03
-- Earnings per Fully Diluted Share was $1.05 Excluding the Net
Pre-Tax Gain of $9.0 million from Litigation Settlement
-- Strong Garden Segment Performance, Branded Products and
Acquisitions Continue to Drive Growth
-- Reiterates Fiscal 2006 EPS Guidance of $2.80 to $2.90 per
Fully Diluted Share, Excluding the Net Pre-Tax Gain from the
Litigation Settlement
Central Garden & Pet Company (NASDAQ:CENT) today announced third quarter results for its fiscal year ending September 30, 2006.
For the third quarter of fiscal 2006, the Company reported net sales of $507 million, an increase of 23% over the comparable 2005 period. Income from operations for the quarter increased 57% to $59.9 million. Net income for the quarter increased 39% to $30.7 million over the year ago period. Earnings per fully diluted share increased 24% to $1.28 from $1.03 in the year ago period. Earnings per fully diluted share was $1.05, excluding the net pre-tax gain of $9.0 million in the quarter comprised of a $9.9 million gain from the Axelrod litigation settlement less expenses of approximately $0.9 million associated with accelerated brand-building and other strategic opportunities. Branded product sales increased 30% while sales of other manufacturers' products, as planned, declined 3%. Depreciation and amortization for the quarter was $7.5 million compared to $5.1 million in the year ago period.
Net sales for the Garden Products segment were $279 million, an increase of 12% compared to the third quarter of fiscal 2005. Garden branded products sales increased $33 million or 17% while sales of other manufacturers' products, as planned, declined 6%. The Garden Products segment operating income was $27 million in the quarter, an increase of 28% when compared to the third quarter of fiscal 2005. Net sales for the Pet Products segment were $228 million, an increase of 39% compared to the third quarter of fiscal 2005. Pet branded products sales increased $64 million or 51% and sales of other manufacturers' products increased 1%. Operating income for the Pet Products segment was $30 million in the quarter, an increase of 26%, when compared to the third quarter of fiscal 2005.
The Company repurchased in its fourth quarter approximately 240,000 shares, or approximately 10% of its current $100 million authorization. The Company intends to continue its repurchases from time to time through 2006 depending on market conditions.
"Strong performance in our Garden segment, the continued emphasis on branded products, and contribution from acquisitions produced solid results," commented Glenn Novotny, President and Chief Executive Officer. "We believe we are building a stronger, more effective company through our continued dedication to new product innovation and increased brand awareness initiatives. In light of the gain from the litigation settlement, we have elected to accelerate our brand building activities above our original budgets and retained external consultants to pursue strategic opportunities. We expect to invest most, if not all, of the remaining $9.0 million net gain to create long-term shareholder value. We see great value in expanding our brand building activities and expect to see meaningful returns in fiscal 2007 and beyond."
The Company reiterated its fiscal 2006 guidance. Net sales for the year are projected to be between $1.55 billion and $1.57 billion. Operating income is expected to be between $133 million and $137 million. Net income is expected to be between approximately $65 million and $68 million. The corresponding earnings per fully diluted share is expected to be between $2.80 and $2.90. These projected results do not include the impact from any future acquisitions or any net gain from the litigation settlement.
For the nine months ending June 24, 2006, the Company reported net sales of $1,201 million, an increase of 14% from $1,058 million in the comparable 2005 period. Income from operations for the period increased 32% to $115.4 million. Net income for the nine month period increased 26% to $59.5 million from $47.1 million in the year ago period. Earnings per fully diluted share increased 20% to $2.62 from $2.19 in the year ago period. Branded product sales increased 18% while sales of other manufacturers' products declined 2%. Depreciation and amortization for the first nine month period was $18.6 million compared to $14.2 million in the year ago period. Results for the first nine month period of fiscal 2006 include a $9.9 million benefit to operations relating to the settlement of outstanding litigation and expenses of approximately $0.9 million associated with accelerated brand-building and other strategic opportunities.
The Company will discuss its third quarter results for fiscal 2006 on a conference call today at 4:30 p.m. EST. 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.
Central Garden & Pet Company is a leading innovator, marketer and producer of quality branded products for the pet and lawn and garden supplies markets. Our pet products include pet bird and small animal food, aquarium products, flea, tick, mosquito and other pest control products, edible bones, cages, carriers, pet books, and other dog, cat, reptile and small animal products. These products are sold under a number of brand names, including Kaytee, SuperPet, All-Glass Aquarium, Oceanic, Kent Marine, Energy Savers Unlimited, Zodiac, Pre-Strike, Altosid, Nylabone, TFH, Four Paws, Interpet, Breeder's Choice and Farnam. Our lawn and garden products include grass seed, wild bird food, weed and insect control products, and decorative outdoor patio products. These products are sold under a number of brand names, including Pennington, Norcal Pottery, New England Pottery, GKI/Bethlehem Lighting, Lilly Miller, Ironite, Matthews Four Seasons, Cedar Works, AMDRO, Grant's, Sevin and Over'n Out. 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 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 Operations
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
June 24, June 25, June 24, June 25,
2006 2005 2006 2005
--------- --------- ----------- -----------
Net Sales $506,694 $413,193 $1,200,757 $1,057,623
Cost of Goods Sold and
Occupancy 334,983 282,941 800,296 714,456
--------- --------- ----------- -----------
Gross Profit 171,711 130,252 400,461 343,167
Selling, General and
Administrative Expenses 111,842 92,037 285,083 255,760
--------- --------- ----------- -----------
Income from Operations 59,869 38,215 115,378 87,407
Interest Expense (12,213) (6,130) (28,784) (17,038)
Interest Income 1,582 127 2,869 337
Other Income 1,371 2,939 3,223 4,593
--------- --------- ----------- -----------
Income Before Income
Taxes and Minority
Interest 50,609 35,151 92,686 75,299
Income Taxes 19,070 12,968 32,362 28,228
Minority Interest 809 -- 809 --
--------- --------- ----------- -----------
Net Income $ 30,730 $ 22,183 $ 59,515 $ 47,071
========= ========= =========== ===========
Basic Earnings Per Common
Share $ 1.31 $ 1.06 $ 2.70 $ 2.27
========= ========= =========== ===========
Diluted Earnings Per
Common Share $ 1.28 $ 1.03 $ 2.62 $ 2.19
========= ========= =========== ===========
Weighted Average Shares
Outstanding:
Basic 23,377 20,890 22,060 20,735
Diluted 24,066 21,603 22,730 21,454
Central Garden & Pet Company
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
June 24, September 24,
2006 2005
----------- -------------
Assets
Current Assets:
Cash & Cash Equivalents $ 8,021 $ 28,792
Accounts Receivable - Net 278,591 184,896
Inventories 342,604 270,736
Other Current Assets 36,109 25,853
----------- -----------
Total Current Assets 665,325 510,277
Property & Equipment - Net 139,609 110,595
Goodwill 379,076 364,847
Unallocated Purchase Price 287,904 --
Other Assets 71,345 70,630
----------- -----------
Total $1,543,259 $1,056,349
=========== ===========
Liabilities & Shareholders' Equity
Current Liabilities:
Accounts Payable $ 103,250 $ 96,455
Accrued Expenses 97,260 68,152
Current Portion of Long-Term Debt 3,022 2,210
----------- -----------
Total Current Liabilities 203,532 166,817
Long-Term Liabilities 591,107 320,854
Other Long-Term Obligations 20,254 18,500
Convertible Redeemable Preferred Stock 3,000 3,000
Minority Interest 1,887 --
Shareholders' Equity 723,479 547,178
----------- -----------
Total $1,543,259 $1,056,349
=========== ===========
Source: Central Garden & Pet Company
Contact: Central Garden & Pet Paul Warburg, 925-948-3686Released August 2, 2006
