Central Garden & Pet Announces Fourth Quarter and Fiscal Year 2024 Financial Results
Central Garden & Pet Company, a market leader in the pet and garden industries, today announced results for its fourth quarter and fiscal year ended Sept. 28, 2024.
“We have a lot to be proud of this year. We increased non-GAAP EPS, continued margin expansion, made significant progress on our Cost and Simplicity program and achieved strong profits in our pet segment and record cash flow for the company. We accomplished this despite continued soft demand across our pet segment, in particular in durable pet products and a difficult garden season,” said Niko Lahanas, Central Garden & Pet’s new CEO. “While we expect the external environment to remain challenging, I am confident we have the right strategy and people in place to deliver profitable growth in fiscal 2025 and for the long term.”
Fiscal 2024 Results
Net sales were $3.2 billion compared to $3.3 billion in the prior year, a decrease of 3 percent. Fiscal 2023 benefited from an additional week in the fourth quarter. Organic net sales decreased 4 percent excluding the impact of the acquisition of TDBBS in fiscal 2024 and the sale of the independent garden channel distribution business in fiscal 2023.
Net sales for the Pet segment were $1.83 billion compared to $1.88 billion a year ago, a decrease of 2 percent. Pet organic net sales decreased 6 percent. Net sales for the Garden segment were $1.37 billion compared to $1.43 billion in the prior year, a decrease of 5 percent. Garden organic net sales decreased 1 percent.
Gross margin expanded by 90 basis points to 29.5 percent from 28.6 percent in the prior year. On a non-GAAP basis, gross margin expanded by 110 basis points to 30 percent from 28.9 percent a year ago driven by productivity efforts and moderating inflation.
Operating income was $185 million compared to $211 million in the prior year, a decrease of 12 percent. On a non-GAAP basis, operating income was $223 million compared to $227 million a year ago. Operating margin was 5.8 percent compared to 6.4 percent in the prior year. On a non-GAAP basis, operating margin expanded to 7 percent from 6.9 percent a year ago due to improved gross margin and continued cost discipline in selling, general and administrative expense.
Net interest expense was $38 million compared to $50 million in the prior year driven by higher interest income.
Other expense was $5.1 million compared to other income of $1.5 million a year ago due to the impairment of two underperforming equity investments in the fourth quarter.
Net income was $108 million compared to $126 million in the prior year. On a non-GAAP basis, net income increased to $142 million from $138 million a year ago. Earnings per share were $1.62 compared to $1.88 in the prior year. On a non-GAAP basis, earnings per share increased to $2.13 from $27 a year ago.
Adjusted EBITDA was $334 million compared to $343 million in the prior year.
The effective tax rate for the fiscal year was 23.2 percent compared to 22.4 percent a year ago primarily due to an increase in the blended state income tax rate in the current year compared to the prior year.
Fourth Quarter Fiscal 2024 Results
Net sales were $669 million compared to $750 million a year ago, a decrease of 11 percent. The prior year quarter benefited from an extra week. Organic net sales decreased 13 percent excluding the impact of the acquisition of TDBBS and the sale of the independent garden channel distribution business.
Gross margin contracted by 110 basis points to 25.2 percent compared to 26.3 percent a year ago primarily driven by the impairment of grass seed inventory more than offsetting moderating inflation and productivity efforts. On a non-GAAP basis, gross margin contracted by 60 basis points to 26 percent from 26.6 percent in the prior year.
Operating loss was $32 million compared to operating income of $9 million a year ago. On a non-GAAP basis, operating loss was $11 million compared to operating income of $12 million reflecting lower volumes, the inventory impairment and the timing of expenses related to productivity and commercial initiatives. Operating margin was (4.8) percent compared to 1.2 percent in the prior year. On a non-GAAP basis, operating margin contracted to (1.7) percent from 1.6 percent a year ago.
Other expense was $6 million compared to $2 million in the prior year.
Net interest expense was $6 million compared to $8 million a year ago.
Net loss was $34 million compared to net income of $3 million in the prior year. On a non-GAAP basis, net loss was $12 million compared to net income $5 million a year ago. Loss per share was $0.51 compared to earnings per share of $04 in the prior year. On a non-GAAP basis, loss per share was $0.18 compared to earnings per share of $08 a year ago.
Adjusted EBITDA was $17 million compared to $42 million in the prior year.
Pet Segment Fourth Quarter Fiscal 2024 Results
Net sales for the Pet segment were $435 million compared to $483 million in the prior year, a decrease of 10 percent. The decrease was primarily due to an extra week in the prior year quarter. Organic net sales decreased 14 percent excluding the impact of the acquisition of TDBBS.
The Pet segment’s operating income was $14 million compared to $43 million a year ago. On a non-GAAP basis, operating income was $35 million compared to $48 million in the prior year due to lower volume and the timing of expenses related to productivity and commercial initiatives. Operating margin was 3.3 percent compared to 9 percent in the prior year. On a non-GAAP basis, operating margin was 8 percent compared to 9.9 percent a year ago.
Pet segment adjusted EBITDA was $45 million compared to $58 million in the prior year quarter.