Central Garden & Pet Announces Record Second Quarter Results for Fiscal 2006
WALNUT CREEK, Calif.--(BUSINESS WIRE)--May 3, 2006--Central Garden & Pet Company (NASDAQ:CENT):
-- Sales Increased 6%; Income from Operations Increased 15%
-- Branded Products, Profit Acceleration Program and Acquisitions
Drive Growth
-- Reiterates Fiscal 2006 EPS Guidance of $2.80 to $2.90 per
Fully Diluted Share
Central Garden & Pet Company (NASDAQ:CENT) today announced second quarter results for its fiscal year ending September 30, 2006.
For the second quarter of fiscal 2006 the Company reported net sales of $401 million, an increase of 6% from $379 million in the comparable 2005 period. Income from operations for the quarter increased 15% to $45.7 million. Net income for the quarter increased 17% to $26.2 million from $22.4 million in the year ago period. Diluted earnings per share increased 13% to $1.17 from $1.04 in the year ago period. Branded product sales increased 9% while sales of other manufacturers' products, as planned, declined 7%. Depreciation and amortization for the quarter was $6.0 million compared to $4.6 million in the year ago period. The results of the second quarter of fiscal 2006 include costs of $1.6 million related to the Company's previously announced profit acceleration program, $1.6 million related to the early retirement of a previous credit facility, and $1.4 million related to equity-based compensation. Also, taxes for the quarter reflect a benefit of $2.6 million related to reversal of a tax reserve no longer required.
Net sales for the Garden Products segment were $214 million, a decline of 3% compared to the second quarter of fiscal 2005. Garden branded products sales were relatively flat while sales of other manufacturers' products declined 13%. The Garden Products segment operating income was $26.4 million in the quarter, an increase of 9% when compared to the second quarter of fiscal 2005. Net sales for the Pet Products segment were $187 million, an increase of 18% compared to the second quarter of fiscal 2005. Pet branded products sales increased 23% and sales of other manufacturers' products increased 1%. Operating income for the Pet Products segment was $25.1 million in the quarter, an increase of 6%, which includes $1.6 million of profit acceleration program costs, when compared to the second quarter of fiscal 2005.
"The strength of our branded products and our ongoing profit acceleration program produced record results," commented Glenn Novotny, President and Chief Executive Officer. "We have made significant progress by completing five strategic acquisitions year to date, and we are well positioned to pursue future internal and external growth opportunities."
The Company updated its fiscal 2006 guidance to account for the impact of acquisitions and its corporate financing initiatives. Net sales for the year are now projected to be between $1.55 billion and $1.57 billion, an increase of approximately $100 million when compared to previous guidance. Operating income is expected to be between $133 million and $137 million, an increase of approximately $17 million when compared to previous guidance. Net income is expected to be between approximately $65 million and $68 million, an increase of approximately $3 million when compared to previous guidance. The corresponding earnings per fully diluted share is expected to be between $2.80 and $2.90, in-line with previous guidance. The fiscal year-ending fully-diluted share count is expected to be approximately 23.3 million, an increase of approximately 1 million shares when compared to previous guidance reflecting the partial-year impact of the Company's 1.98 million share offering completed in March, 2006. These projected results do not include the impact from any future acquisitions.
For the six months ending March 25, 2006 of fiscal 2006, the Company reported net sales of $694 million, an increase of 8% from $644 million in the comparable 2005 period. Income from operations for the period increased 13% to $55.5 million. Net income for the first six month period increased 16% to $28.8 million from $24.9 million in the year ago period. Diluted earnings per share increased 12% to $1.30 from $1.16 in the year ago period. Branded product sales increased 10% while sales of other manufacturers' products declined 1%. Depreciation and amortization for the first six month period was $11.2 million compared to $9.1 million in the year ago period. Results for the first six month period of fiscal 2006 include a benefit of $2.6 million related to a reversal of a tax reserve. The results also include costs of $3.2 million related to the Company's previously announced profit acceleration program and $1.6 million related to the early retirement of a previous credit facility. Costs related to equity-based compensation were an additional $2.5 million.
The Company will discuss its second 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, 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
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
------------------- -------------------
March 25, March 26, March 25, March 26,
2006 2005 2006 2005
--------- --------- --------- ---------
Net Sales $401,332 $378,854 $694,063 $644,430
Cost of Goods Sold and
Occupancy 264,580 251,980 465,313 431,515
--------- --------- --------- ---------
Gross Profit 136,752 126,874 228,750 212,915
Selling, General and
Administrative
Expenses 91,018 87,198 173,241 163,723
--------- --------- --------- ---------
Income from Operations 45,734 39,676 55,509 49,192
Interest Expense (10,227) (5,610) (16,571) (10,908)
Interest Income 602 107 1,287 210
Other Income 1,803 1,974 1,852 1,654
--------- --------- --------- ---------
Income Before Income Taxes 37,912 36,147 42,077 40,148
Income Taxes 11,687 13,775 13,292 15,260
--------- --------- --------- ---------
Net Income $26,225 $22,372 $28,785 $24,888
========= ========= ========= =========
Basic Earnings Per Common
Share: 1.21 1.08 1.34 $1.20
Diluted Earnings Per Common
Share: 1.17 1.04 1.30 $1.16
Weighted Average Shares
Outstanding
Basic 21,694 20,760 21,425 20,658
Diluted 22,415 21,515 22,096 21,391
Central Garden & Pet Company
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
March 25, September 24,
2006 2005
-------------- -------------
Assets
Current Assets:
Cash & Cash Equivalents $19,147 $28,792
Accounts Receivable 289,096 184,896
Inventories 364,504 270,736
Other Current Assets 34,184 25,853
-------------- -------------
Total Current Assets 706,931 510,277
Property & Equipment - Net 130,311 110,595
Goodwill 369,209 364,847
Other Assets 378,625 70,630
-------------- -------------
Total $1,585,076 $1,056,349
============== =============
Liabilities & Shareholders' Equity
Current Liabilities:
Accounts Payable $139,051 $96,455
Accrued Expenses 79,399 68,152
Current Portion of Long-Term Debt 3,022 2,210
-------------- -------------
Total Current Liabilities 221,472 166,817
Long-Term Debt 652,790 320,854
Other Long-Term Obligations 19,812 18,500
Convertible Redeemable Preferred Stock 3,000 3,000
Shareholders' Equity 688,002 547,178
-------------- -------------
Total $1,585,076 $1,056,349
============== =============
CONTACT: Central Garden & Pet
Paul Warburg, 925-948-3686
SOURCE: Central Garden & Pet Company
Released May 3, 2006
