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Press release from Business Wire

Central Garden & Pet Company Announces Fiscal 2013 First Quarter Results

<p class='bwalignc'> <i><b>Sales decrease 3% to $292 million; Net loss of $0.32 per share</b></i> </p>

Thursday, February 07, 2013

Central Garden & Pet Company Announces Fiscal 2013 First Quarter Results16:05 EST Thursday, February 07, 2013 WALNUT CREEK, Calif. (Business Wire) -- Central Garden & Pet Company (NASDAQ: CENT) (NASDAQ: CENTA), a leading innovator, marketer and producer of quality branded products for the lawn and garden and pet supplies markets, today announced financial results for its fiscal first quarter ended December 29, 2012. The Company reported first quarter net sales of $292.5 million, a 3 percent decrease over the comparable period a year ago. Net sales decreased in both its Garden and Pet segments. The first quarter operating loss was $13.1 million compared to an operating loss of $11.3 million in the first quarter of 2012, primarily reflecting lower sales and gross margins. The net loss for the quarter was $15.3 million, or $0.32 per fully diluted share, compared with a loss of $13.1 million, or $0.27 per fully diluted share, in the year-ago period. Typically, the Company has reported a loss in its fiscal first quarter given the seasonal nature of the lawn and garden category. “As we expected, our first quarter results were lower than the prior year,” said Gus Halas, President & CEO of the Central Operating Companies. “Despite lower Garden revenues in our seasonally smaller first quarter, we are excited about the new innovations we are bringing to market and expect more favorable results for our upcoming Garden season, which encompasses our next two quarters.” Halas continued, “We continue to focus on our transformation to an integrated multi-brand consumer products company. We expect to make significant progress over the next few years as we aggressively build our brands, lower our costs, and drive meaningful revenue and profit growth.” First Quarter 2013 Details Both the Garden and Pet segment sales declined during the quarter. Net sales for the Garden segment decreased 5 percent or $5.5 million over the same period a year ago to $97.3 million, in part due to lower seasonal décor revenues. The Garden segment's branded product sales were $85.3 million and sales of other manufacturers' products were $12.0 million. Historically, first quarter revenues for the Garden segment have been the lowest of any quarter of the year due to the seasonality of the lawn and garden market. In the first quarter, the Garden segment's operating margin improved 200 basis points, in part due to improvements in its grass seed and pottery businesses. The Garden segment's operating loss in the quarter was $8.5 million, compared to an operating loss of $11.1 million in the first quarter of 2012. First quarter net sales for the Pet segment declined 2 percent, or $4.1 million, over the prior year to $195.2 million, due primarily to lower sales of dog and cat products. The Pet segment's branded product sales were $154.2 million and sales of other manufacturers' products were $41.0 million. The Pet segment's operating margins increased 30 basis points, due in part to improved results in its equine business. The Pet segment's operating income was $10.2 million compared to $9.7 million in the prior-year period. At December 29, 2012, the Company's cash and short-term investments balance was $30.4 million. Net interest expense was $10.3 million for the quarter compared to $9.5 million in the prior-year period. Depreciation and amortization expense was $8.0 million in the first quarter of 2013, compared with $7.4 million in the prior-year period. The Company's effective tax rate for the first quarter of 2013 was 37 percent on its operating loss, in line with the prior-year period. Total debt at December 29, 2012 was $450.8 million compared to $460.7 million at December 24, 2011. The quarter-ending total leverage ratio, as defined in the Company's credit agreement, was 4.1x. Conference Call The Company will host a conference call today at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time to discuss its first quarter 2013 results. The conference call will be accessible through the investor relations section of Central's website, http://www.central.com. Alternatively, to listen to the call by telephone, dial 1-412-317-6789 and enter passcode 10023698. A replay of the call will be available for three weeks by dialing 1-412-317-0088 (domestic and international) and entering passcode 10023698. About Central Garden & Pet Central Garden & Pet Company is a leading innovator, marketer and producer of quality branded products for the lawn & garden and pet supplies markets. Committed to new product innovation, our products are sold to specialty independent and mass retailers. Participating categories in Lawn & Garden include: Grass seed and the brands PENNINGTON®, SMART SEED® and THE REBELS®; wild bird feed and the brand PENNINGTON®; weed and insect control and the brands AMDRO®, SEVIN®, IRONITE® and OVER-N-OUT®; and decorative outdoor patio products and the brands NORCAL POTTERY®, NEW ENGLAND POTTERY® and MATTHEWS FOUR SEASONS™. We also provide a host of other regional and application-specific garden brands and supplies. Participating categories in Pet include: Animal health and the brands ADAMS™ and ZODIAC®; aquatics and reptile and the brands OCEANIC SYSTEMS®, 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®, VITA FLEX® and HORSE HEALTHTM PRODUCTS. We also provide a host of other application-specific pet brands and supplies. Central Garden & Pet Company is based in Walnut Creek, California, and has approximately 3,600 employees, primarily in North America. For additional information on Central Garden & Pet Company, including access to the Company's SEC filings, please visit the Company's website at 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 expectations for improving Garden segment results through new product introductions, aggressively building our brands, lowering costs and achieving revenue growth and improved profitability from the Company's transformation initiatives, 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 Central's Annual Report on Form 10-K, filed on December 13, 2012, 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 COMPANYCONDENSED CONSOLIDATED BALANCE SHEETS(in thousands, except share and per share amounts)Unaudited           December 29,December 24,September 29,ASSETS201220112012 Current assets: Cash and cash equivalents $ 12,591 $ 10,289 $ 48,475 Short term investments 17,820 17,820 22,705 Accounts receivable (less allowance for doubtful accounts of $18,555, $15,791 and $18,574) 150,767 139,254 202,422 Inventories 397,725 365,743 330,032 Prepaid expenses and other   66,629   62,614     48,149 Total current assets 645,532 595,720 651,783   Land, buildings, improvements and equipment—net 192,486 180,401 191,163 Goodwill 210,223 210,223 210,223 Other intangible assets—net 77,790 83,458 78,853 Deferred income taxes and other assets   20,041   18,467     17,525 Total $ 1,146,072 $ 1,088,269   $ 1,149,547     LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 130,484 $ 122,009 $ 126,662 Accrued expenses 83,580 66,862 79,491 Current portion of long-term debt   309   328     331 Total current liabilities 214,373 189,199 206,484   Long-term debt 450,446 460,346 449,483 Other long-term obligations 30,968 14,253 28,697   Equity: Common stock, $.01 par value: 12,247,359, 12,254,778, and 12,247,571 shares outstanding at December 29, 2012, December 24, 2011 and September 29, 2012 122 123 122 Class A common stock, $.01 par value: 34,765,783, 34,130,214 and 34,706,902 shares outstanding at December 29, 2012, December 24, 2011 and September 29, 2012 347 341 347 Class B stock, $.01 par value: 1,652,262 shares outstanding 16 16 16 Additional paid-in capital 383,615 377,598 382,195 Accumulated earnings 64,449 45,455 79,718 Accumulated other comprehensive income   1,497   1,110     1,539 Total Central Garden & Pet Company shareholders' equity 450,046 424,643 463,937 Noncontrolling interest   239   (172 )   946 Total equity   450,285   424,471     464,883 Total $ 1,146,072 $ 1,088,269   $ 1,149,547 See notes to condensed consolidated financial statements.   CENTRAL GARDEN & PET COMPANYCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share amounts)(unaudited)   Three Months EndedDecember 29, 2012   December 24, 2011 Net sales $ 292,497 $ 302,066 Cost of goods sold and occupancy   215,538     221,328   Gross profit 76,959 80,738 Selling, general and administrative expenses   90,053     92,018   Loss from operations (13,094 ) (11,280 ) Interest expense (10,315 ) (9,547 ) Interest income 65 28 Other expense   (981 )   (114 ) Loss before income taxes and noncontrolling interest (24,325 ) (20,913 ) Income tax benefit   (8,978 )   (7,646 ) Loss including noncontrolling interest (15,347 ) (13,267 ) Net loss attributable to noncontrolling interest   (78 )   (177 ) Net loss attributable to Central Garden & Pet Company $ (15,269 ) $ (13,090 )   Net loss per share attributable to Central Garden & Pet Company: Basic and diluted $ (0.32 ) $ (0.27 )   Weighted average shares used in the computation of net loss per share: Basic and diluted 47,871 47,823   See notes to condensed consolidated financial statements. Central Garden & Pet CompanySteve Zenker, 925-948-3657VP of Investor Relations & Communications