Central Garden & Pet Company Announces Fiscal 2018 & Fourth Quarter Results

WALNUT CREEK, Calif.–(BUSINESS WIRE)–Central Garden Pet Company (NASDAQ: CENT) (NASDAQ: CENTA), a leading
innovator, producer and distributor of branded and private label
products for the lawn garden and pet supplies markets, today announced
financial results for its fiscal year and fourth quarter ended
September 29, 2018.

Fiscal 2018 Summary

Net sales of $2.22 billion increased 7.8% compared to $2.05 billion a
year ago, primarily due to acquisitions closed in fiscal 2018 and
despite fiscal 2018 containing one less week compared to fiscal 2017.
Branded product sales of $1.76 billion increased 7.0% and sales of other
manufacturers’ products increased 11.1% to $454.4 million. Organic sales
growth for the year, excluding the extra week a year ago, increased 2.6%
due to strength in the Pet segment. Gross margin decreased 30 basis
points to 30.5% compared to 30.8% in the prior year, due to the impact
of businesses acquired during the year. Cost reductions achieved during
the year, consistent with the Company’s annual target of 1% to 2%, aided
in keeping organic margins from declining despite an unfavorable mix of
sales and inflationary pressures on raw materials, freight, and labor
costs. Going forward, the Company intends to raise prices in fiscal 2019
to help offset the impact of these inflationary pressures on its margins.

Fiscal 2018 GAAP Operating Income, Net Earnings
and EPS

  • Operating income of $167.3 million increased 7.2% from $156.1 million
    in fiscal 2017;
  • Operating margin of 7.6% was flat compared to fiscal 2017;
  • Net income of $123.6 million, increased 56.8% compared to $78.8
    million in fiscal 2017. Fiscal 2018 included a $21.5 million one-time
    gain from a revaluation of the Company’s deferred tax accounts; and
  • Earnings per share increased 52.6% to $2.32 per fully diluted share.

Fiscal 2018 Non-GAAP Operating Income, Net
Earnings and EPS

  • Non-GAAP results for fiscal 2018 exclude a favorable tax impact of
    $21.5 million for the revaluation of the Company’s deferred tax
    accounts;
  • Non-GAAP results for fiscal 2017 exclude a $2.0 million gain from the
    sale of a Garden distribution facility in the first quarter;
  • Non-GAAP operating income for fiscal 2018, was $167.3 million with an
    operating margin of 7.6%, compared to $154.1 million and 7.5% in
    fiscal 2017, aided by tight expense control;
  • Non-GAAP net income for fiscal 2018 was $102.1 million, a 31.7% gain
    compared to $77.5 million in fiscal 2017, positively impacted by a
    lower Federal statutory tax rate, offset somewhat by higher interest
    expense;
  • Non-GAAP earnings per fully diluted share increased 27.3% to $1.91
    from $1.50 in the prior fiscal year; and
  • EBITDA increased 7.9%, or $15.7 million, to $214.5 million compared
    with fiscal 2017.

“We are pleased with how Central executed in fiscal 2018, as market
share gains and increased distribution continued to drive revenue and
earnings growth, even in the face of headwinds which made for some
challenges during the year,” said George Roeth, President CEO of
Central Garden Pet. “By focusing on what we could control, we were
able to overcome the effects of unfavorable weather, which impacted
several of our businesses, an unfavorable mix of sales, and unexpected
inflationary pressures on our costs. Our continued efforts around
reducing costs 1% to 2% annually and judicious expense control were big
factors in keeping margins stable for the year despite the unfavorable
environment.” Roeth continued, “Looking forward, we would expect organic
margins to improve, as we make efforts to offset the effects of
inflation and tariffs with price increases, and to continue to reap
advantages from our cost savings initiatives. However, it should be
noted that overall Company margins and operating income will be
negatively impacted in the first two quarters of fiscal 2019, due
largely to timing differences related to our recent Bell Nursery
acquisition.”

Fiscal 2018 Fourth Quarter Financial Results

Net sales increased 2.4% to $502.3 million compared to $490.5 million in
the fourth quarter a year ago, benefiting from acquisitions, which more
than offset the negative impact of the comparison with the prior year
that included an extra week. Branded product sales of $395.5 million
increased 0.5%, and sales of other manufacturers’ products of $106.8
million increased 10.1%. Organic sales growth, excluding the extra week
in 2017, increased 2.8%, driven by gains in the Pet segment. Gross
margin decreased 30 basis points compared to the fourth quarter a year
ago to 29.3%, due to the impact of businesses acquired during the year.
However, gross margin increased meaningfully on an organic basis.

Fourth Quarter GAAP Operating Income, Net Earnings
and EPS

  • Operating income of $18.2 million was up $3.8 million or 26.6%
    compared to $14.4 million in the fourth quarter a year ago. Operating
    margin of 3.6% increased 70 basis points compared to the fourth
    quarter a year ago, despite a negative impact from the Company’s two
    recent acquisitions and higher corporate expenses. Lower selling and
    marketing expenses compared to the fourth quarter of 2017 were the
    primary drivers of the improvement;
  • Net income increased to $10.6 million from $4.3 million in the fourth
    quarter a year ago, benefiting from a significantly lower tax rate
    compared to the fourth quarter a year ago; and
  • Earnings per fully-diluted share increased to $0.19 from $0.08 in the
    fourth quarter a year ago.

Fourth Quarter Non-GAAP Operating Income, Net
Earnings and EPS

  • Non-GAAP results for the fourth quarter of 2018 exclude a favorable
    tax impact of $5.2 million in the quarter from the revaluation of the
    Company’s deferred tax accounts;
  • Non-GAAP operating income was $18.2 million and non-GAAP operating
    margin was 3.6% compared to $14.4 million and 2.9% in the fourth
    quarter of fiscal 2017. The increase was attributable to lower selling
    and marketing expenses;
  • Non-GAAP net income increased to $5.4 million from $4.3 million in the
    fourth quarter a year ago;
  • Non-GAAP earnings per diluted share increased to $0.10 from $0.08 in
    the fourth quarter a year ago, despite higher shares outstanding in
    the fourth quarter this year, as a result of the Company’s equity
    offering in August 2018; and
  • EBITDA increased $4.8 million, or 18.7%, to $30.5 million compared to
    the fourth quarter a year ago.

Pet Segment Fiscal 2018 Fourth Quarter Results

Fourth quarter net sales for the Pet segment increased 2.7% from the
same period a year ago, to $339.4 million, despite one less week in the
quarter versus a year ago. The gain was due to the inclusion of the
General Pet acquisition and organic growth, which more than offset lower
animal health sales. The Pet segment’s branded product sales were $262.2
million, down 1.9% compared to the fourth quarter a year ago, and sales
of other manufacturers’ products were $77.2 million, an increase of
22.3%. Pet organic sales, excluding the extra week last year, grew 4.8%,
with gains in the sales of other manufacturers’ products and strength in
the dog cat businesses leading the growth.

The Pet segment’s operating income rose 17.0% to $32.2 million and
operating margin increased 120 basis points, to 9.5%, from $27.5 million
and 8.3% in the fourth quarter a year ago. The improvement was due in
part to a higher gross margin, as well as lower marketing expenditures,
which more than offset lower animal health profitability.

Garden Segment Fiscal 2018 Fourth Quarter
Results

Net sales for the Garden segment increased 1.8% compared to the fourth
quarter a year ago to $162.9 million, due to the acquisition of Bell
Nursery, which more than offset the impact of one less week in the
quarter versus the prior year period. The Garden segment’s branded
product sales were $133.3 million in the quarter, up 5.7% compared to
the fourth quarter a year ago. Sales of other manufacturers’ products
decreased 12.6% to $29.6 million. Organic sales, excluding the extra
week, were down 1.4%, as the impact of unfavorable weather during the
quarter and lower sales of other manufacturers’ products impacted
results.

The Garden segment’s operating income in the quarter increased to $1.6
million compared to $0.2 million in the fourth quarter a year ago, and
Garden operating margin increased 80 basis points to 1.0%. Despite a
negative impact from the Bell Nursery business, which is highly seasonal
and typically loses money in the fourth quarter, lower marketing
expenditures compared to a year ago aided results and drove the increase
in operating margin.

Additional Information

At September 29, 2018, the Company’s cash and short-term investment
balance was $482.1 million, compared to $32.4 million a year ago. The
increase reflects the proceeds of approximately $500 million from debt
and equity financings in fiscal 2018. Cash flow from operations for the
fourth quarter of fiscal 2018 was $96.4 million, compared to $71.7
million in the fourth quarter of fiscal 2017.

Total debt at September 29, 2018 was $692.2 million compared to $395.7
million at September 30, 2017. Net interest expense was $8.9 million for
the fourth quarter compared to $7.2 million in the prior-year period.
The increases in total debt and interest expense were due primarily to
the issuance of $300 million of senior notes in December 2017. The
Company’s leverage ratio at the end of the quarter and year, as defined
in the Company’s credit agreement, was 3.0x compared to 1.9x in the
prior year quarter.

Other expense for the quarter increased to $4.4 million from $1.3
million in the fourth quarter a year ago due to timing in a seasonal
joint venture. The Company does not expect the business investment
losses to continue at this rate in fiscal 2019.

The Company’s effective tax rate for the fourth quarter was negative
compared to 35.3% in the fourth quarter of 2017. For the full fiscal
year, the tax rate was 2.6% compared with 36.9% last year. The fiscal
2018 tax rate reflects the revaluation of the Company’s deferred tax
accounts and a reduction in the U.S. Federal corporate tax rate.
Excluding the impact of the revaluation of the deferred tax accounts,
the Company’s tax rate was 19.5%. This reflects a lower weighted average
tax rate for the year as well as a favorable impact from recent changes
in accounting standards around non-cash equity compensation expense,
which is not currently expected to continue to any meaningful degree
going forward. The Company’s tax rate for fiscal 2019 is expected to
approximate the current Federal and state statutory rates for 2019 which
combined are 24.5%.

2019 Guidance

The Company expects overall revenue growth in the mid-single digits for
fiscal 2019 with organic revenue growth consistent with its long-term
annual target of 2% to 3%. In addition, EBITDA, which the Company
defines as operating income plus depreciation and amortization, is
expected to grow in the mid-single-digits, with organic EBITDA growth in
the upper-single digits. The Company also expects earnings per
fully-diluted share of $1.80 or higher for fiscal 2019, a decrease from
fiscal 2018 GAAP and non-GAAP earnings. There are a number of factors
that the Company expects will negatively impact the comparability of
fiscal 2019 EPS with fiscal 2018 EPS, with the greatest impact in the
Company’s first half of the fiscal year. The first factor is the timing
of the Company’s recent Bell Nursery acquisition. The Company previously
estimated that its fiscal 2018 earnings were approximately $0.10 higher
in fiscal 2018 than if it had Bell Nursery in its results for the full
fiscal year. Fiscal 2019 will have a full year of Bell Nursery,
including two quarters of losses that were prior to the acquisition in
fiscal 2018 and not present in fiscal 2018 results. The second factor
expected to negatively impact EPS is the higher projected tax rate for
fiscal 2019 compared with fiscal 2018. The impact of these two items is
expected to negatively impact fiscal 2019 EPS by approximately $0.25
when compared with fiscal 2018. A third factor is the increase in shares
outstanding from the Company’s equity offering in August 2018 and its
dilutive effect on EPS of approximately $0.15 per share when factoring
in net interest earned on the proceeds. Adjusting for all these factors,
the EPS comparison for the guidance of fiscal 2019 over fiscal 2018
would be EPS growth of 15% or higher. Importantly, the fiscal 2019
guidance excludes the impact of any potential acquisitions.

The Company’s first quarter comparisons versus the prior year will have
additional challenges, as price increases, intended to offset
inflationary pressures, are not taking effect until January 1, 2019.
Interest expense is expected to also be higher than a year ago, due to
the timing of the Company’s debt issuance in December 2018. Therefore,
earnings comparisons are expected to be most challenging in the
Company’s first fiscal quarter.

Mr. Roeth concluded, “We are focused on continuing the substantial
progress we have made over the last few years. With the additional
capital raised in fiscal 2018, as well as our ample cash flow and solid
balance sheet, we are well-capitalized and well-positioned to grow
organically and through MA in the year ahead. Importantly, we plan to
continue to drive our core business by significantly growing organic
operating income during the year.”

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 fourth quarter and fiscal 2018
results. The conference call will be accessible via the internet through
Central’s website, http://ir.central.com.

Alternatively, to listen to the call by telephone, dial (201) 689-8345
(domestic and international) using confirmation #13684806. A replay of
the call will be available for three days by dialing (201) 612-7415 and
entering confirmation #13684806.

About Central Garden Pet

Central Garden Pet Company is a leading innovator, producer and
distributor of branded and private label 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®, and THE REBELS®; wild bird
feed and the brand PENNINGTON®; weed and insect control and
the brands AMDRO®, SEVIN®, and OVER-N-OUT®;
fertilizer and the brands PENNINGTON® and IRONITE®;
live plants from BELL NURSERY; and decorative outdoor patio products
under the PENNINGTON® brand. 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, COMFORT ZONE®, FARNAM®, HORSE
HEALTH and VITAFLEX®; aquatics and reptile and
the brands AQUEON®, CORALIFE®, SEGREST
and ZILLA®; bird small animal and the brands KAYTEE®,
Forti-Diet® and CRITTER TRAIL®; and dog cat and
the brands TFH, NYLABONE®, FOUR PAWS®,
IMS®, CADET®, DMC, KH Pet Products,
PINNACLE® and AVODERM®. 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
5,400 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 future price increases and
cost reductions, operating margin expansion, potential acquisitions and
earnings guidance for fiscal 2019 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. All forward-looking statements are based
upon the Company’s current expectations and various assumptions. There
are a number of risks and uncertainties that could cause our actual
results to differ materially from the forward-looking statements
contained in this release including, but not limited to, the following
factors:

  • seasonality and fluctuations in the Company’s operating results and
    cash flow;
  • fluctuations in market prices for seeds and grains and other raw
    materials and the Company’s ability to pass through cost increases in
    a timely manner;
  • adverse weather conditions;
  • our dependence upon our key executives;
  • potential acquisitions;
  • the impact of new accounting regulations and the U.S. Tax Cuts and
    Jobs Act on the Company’s tax rate;
  • dependence on a small number of customers for a significant portion of
    our business;
  • the impact of recent tariffs or a potential trade war;
  • risk associated with litigation arising from our business;
  • uncertainty about new product innovations and marketing programs; and
  • competition in our industries.

These risks and others are described in the Company’s Securities and
Exchange Commission filings. The Company undertakes no obligation to
publicly update these forward-looking statements to reflect new
information, subsequent events or otherwise.

 

 

CENTRAL GARDEN PET COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

Unaudited

 

ASSETS

September 29, 2018

September 30, 2017

Current assets:

Cash and cash equivalents

$

482,106

$

32,397

Restricted cash

10,899

12,645

Accounts receivable, net

275,908

237,868

Inventories

427,823

382,101

Prepaid expenses and other

20,562

 

18,045

 

Total current assets

1,217,298

683,056

 

Plant, property and equipment, net

217,647

180,913

Goodwill

281,177

256,275

Other intangible assets, net

152,265

116,067

Other assets

38,822

 

70,595

 

Total

$

1,907,209

 

$

1,306,906

 

 

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

110,259

$

103,283

Accrued expenses

102,583

116,549

Current portion of long-term debt

122

 

375

 

Total current liabilities

212,964

220,207

 

Long-term debt

692,031

395,278

Deferred income taxes and other long-term obligations

49,380

54,279

 

Equity:

Common stock

121

122

Class A common stock

439

380

Class B stock

16

16

Additional paid-in capital

590,168

396,790

Retained earnings

362,923

239,329

Accumulated other comprehensive income (loss)

(1,218

)

(951

)

Total Central Garden Pet shareholders’ equity

952,449

635,686

Noncontrolling interest

385

 

1,456

 

Total equity

952,834

 

637,142

 

Total

$

1,907,209

 

$

1,306,906

 

 

 

 

CENTRAL GARDEN PET COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

 

Three Months Ended

Fiscal Year Ended

September 29,
2018

 

September 30,
2017

September 29,
2018

 

September 30,
2017

Net sales

$

502,314

$

490,464

$

2,215,362

$

2,054,478

Cost of goods sold and occupancy

355,296

 

345,136

 

1,539,986

 

1,421,670

 

Gross profit

147,018

145,328

675,376

632,808

Selling, general and administrative expenses

128,808

130,947

508,040

476,696

Operating income

18,210

14,381

167,336

156,112

Interest expense

(10,619

)

(7,233

)

(39,196

)

(28,209

)

Interest income

1,681

48

3,145

147

Other expense, net

(4,402

)

(1,315

)

(3,860

)

(1,621

)

Income before income taxes and noncontrolling interest

4,870

5,881

127,425

126,429

Income tax (benefit) expense

(5,497

)

2,078

 

3,305

 

46,699

 

Net income including noncontrolling interest

10,367

3,803

124,120

79,730

Net income attributable to noncontrolling interest

(201

)

(456

)

526

 

902

 

Net (loss) income attributable to Central Garden Pet Company

$

10,568

 

$

4,259

 

$

123,594

 

$

78,828

 

 

Net income per share attributable to Central Garden Pet Company:

Basic

$

0.20

 

$

0.08

 

$

2.39

 

$

1.57

 

Diluted

$

0.19

 

$

0.08

 

$

2.32

 

$

1.52

 

 

Weighted average shares used in the computation of net income per
share:

Basic

54,059

50,654

51,716

50,230

Diluted

55,376

51,935

53,341

51,820

 

Use of Non-GAAP Financial Measures

We report our financial results in accordance with U.S. generally
accepted accounting principles (GAAP). However, to supplement the
financial results prepared in accordance with GAAP, we use non-GAAP
financial measures including non-GAAP net sales on a consolidated and
segment basis, non-GAAP selling, general and administrative (SGA)
expense, non-GAAP operating income on a consolidated and segment basis,
non-GAAP interest expense, non-GAAP other income (expense), non-GAAP net
income and diluted net income per share. and EBITDA. Management believes
these non-GAAP financial measures that exclude the impact of specific
items (described below) may be useful to investors in their assessment
of our ongoing operating performance and provide additional meaningful
comparisons between current results and results in prior operating
periods.

EBITDA is defined by us as income before income tax expense, net other
expense, net interest expense and depreciation and amortization. We
present EBITDA because we believe that EBITDA is a useful supplemental
measure in evaluating the cash flows and performance of our business and
provides greater transparency into our results of operations. EBITDA is
used by our management to perform such evaluation. EBITDA should not be
considered in isolation or as substitutes for cash flow from operations,
income from operations or other income statement measure prepared in
accordance with GAAP. We believe that EBITDA is frequently used by
investors, securities analysts and other interested parties in their
evaluation of companies, many of which present EBITDA when reporting
their results. Other companies may calculate EBITDA differently so it
may not be comparable.

The reconciliations of these non-GAAP measures to the most directly
comparable financial measures calculated and presented in accordance
with GAAP are shown in the tables below. We believe that the non-GAAP
financial measures provide useful information to investors and other
users of our financial statements, by allowing for greater transparency
in the review of our financial and operating performance. Management
also uses these non-GAAP financial measures in making financial,
operating and planning decisions and in evaluating our performance, and
we believe these measures similarly may be useful to investors in
evaluating our financial and operating performance and the trends in our
business from management’s point of view. While our management believes
that non-GAAP measurements are useful supplemental information, such
adjusted results are not intended to replace our GAAP financial results
and should be read in conjunction with those GAAP results.

Non-GAAP financial measures reflect adjustments based on the following
items:

  • Tax reform impacts: The U.S. government enacted comprehensive tax
    legislation commonly referred to as the Tax Cuts and Job Act (the “Tax
    Reform Act”) in December 2017. We have excluded the transitional
    impact of the Tax Reform Act as the remeasurement of our deferred tax
    assets and liabilities does not reflect the ongoing impact of the
    lower U.S. statutory rate on our current year or future earnings.
  • Gains on disposals of significant plant assets: we have excluded the
    impact of gains on the disposal of significant plant assets as these
    represent infrequent transactions that impact the comparability
    between operating periods. We believe the adjustment of these gains
    supplements the GAAP information with a measure that may be used to
    assess the sustainability of our operating performance.
  • Tax impact: adjustment represents the impact of the tax effect of the
    pre-tax non-GAAP adjustments excluded from non-GAAP net income. The
    tax impact of the non-GAAP adjustments is calculated based on the
    consolidated effective tax rate on a GAAP basis, applied to the
    non-GAAP adjustments, unless the underlying item has a materially
    different tax treatment.
  • We have also provided organic net sales, a non-GAAP measure that
    excludes the impact of businesses purchased or exited in the prior 12
    months, because we believe it permits investors to better understand
    the performance of our historical business without the impact of
    recent acquisitions or dispositions. For fiscal 2018, we have also
    adjusted our organic net sales for our estimate of the impact of the
    extra week on our 2017 fiscal year net sales.

From time to time in the future, there may be other items that we may
exclude if we believe that doing so is consistent with the goal of
providing useful information to investors and management.

The non-GAAP adjustments made reflect the following:

 

 

GAAP to Non-GAAP Reconciliation
(in thousands)
For
the Fiscal Year Ended September

Non-GAAP Adjustments

2018

 

2017

(Gain)/loss on disposal of plant assets

(2)

$

 

$

(2,050

)

Total non-GAAP adjustments

(2,050

)

Tax effects of non-GAAP adjustments

(1)

(757

)

Tax effect of revaluation of deferred tax amounts

(1)

 

(21,485

)

 

 

Total net income impact from non-GAAP adjustments

$

21,485

 

$

(1,293

)

 

SGA Expense Reconciliation

$

508,040

$

476,696

GAAP SGA expense

 

 

 

2,050

 

SGA expense impact from non-GAAP adjustments

(2)

$

508,040

 

$

478,746

 

Non-GAAP SGA expense

22.9

%

23.2

%

GAAP SGA expense as a percentage of net sales

22.9

%

23.3

%

 

Operating Income Reconciliation

GAAP operating income

$

167,336

$

156,112

Total operating income impact from non-GAAP adjustments

(2)

 

 

 

(2,050

)

Non-GAAP operating income

$

167,336

 

$

154,062

 

GAAP operating margin

7.6

%

7.6

%

Non-GAAP operating margin

7.6

%

7.5

%

 

 

 

GAAP to Non-GAAP Reconciliation
(in thousands)
For
the Fiscal Year Ended September

Garden Segment Operating Income Reconciliation

2018

 

2017

GAAP Garden segment operating income

$

95,551

87,298

Total operating income impact from non-GAAP adjustments

(2)

 

(2,050

)

Non-GAAP Garden segment operating income

$

95,551

 

$

85,248

 

GAAP Garden segment operating margin

10.9

%

10.8

%

Non-GAAP Garden segment operating margin

10.9

%

10.5

%

 

 

 

GAAP to Non-GAAP Reconciliation
(in thousands, except
per share amounts)

For the Fiscal Year Ended September

Net Income and Diluted Net Income Per Share Reconciliation

2018

 

2017

 

GAAP net income attributable to Central Garden Pet

$

123,594

$

78,828

Total non-GAAP adjustments

(2)

(2,050

)

Tax effects of non-GAAP adjustments

(1)

757

Tax effect of revaluation of deferred tax amounts

(1)

(21,485

)

 

Total net income impact from non-GAAP adjustments

$

(21,485

)

$

(1,293

)

Non-GAAP net income attributable to Central Garden Pet

$

102,109

 

$

77,535

 

GAAP diluted net income per share

$

2.32

$

1.52

Non-GAAP diluted net income per share

$

1.91

$

1.50

Shares used in GAAP and non-GAAP diluted net earnings per share
calculation

53,341

51,820

 

 

 

GAAP to Non-GAAP Reconciliation
(in thousands)
For
the Quarter Ended September 29, 2018

Net income and diluted net income per share

September 29, 2018

 

September 30, 2017

GAAP net income (loss)

$

10,568

$

4,259

Tax effect of revaluation of deferred tax amounts

(1)

5,142

 

Non-GAAP net income

$

5,426

$

4,259

GAAP diluted income (loss) per share

$

0.19

$

0.08

Non-GAAP diluted income per share

$

0.10

$

0.08

Shares used in GAAP and non-GAAP diluted net earnings per share
calculation

55,376

51,935

 

Organic Net Sales Reconciliation

We have provided organic net sales, a non-GAAP measure that excludes the
impact of recent acquisitions and dispositions, because we believe it
permits investors to better understand the performance of our historical
business. We define organic net sales as net sales from our historical
business derived by excluding the net sales from businesses acquired or
exited in the preceding 12 months. After an acquired business has been
part of our consolidated results for 12 months, the change in net sales
thereafter is considered part of the increase or decrease in organic net
sales.

 

GAAP to Non-GAAP Reconciliation
For the Fiscal Year
Ended September 29, 2018

Consolidated

 

Pet Segment

 

Garden Segment

 

 

Percent
Change

 

 

Percent
Change

 

 

Percent
Change

Reported net sales FY 2018 (GAAP)

$

2,215.4

 

 

$

1,340.9

 

 

$

874.5

 

Reported net sales FY 2017 (GAAP)

2,054.5

 

1,246.4

 

808.1

 

Increase in net sales

160.9

7.8

%

94.5

7.6

%

66.4

8.2

 %

Effect of acquisitions and dispositions on increase in net sales

140.3

 

56.2

 

84.1

 

 

Increase (decrease) in organic net sales

20.6

1.0

%

38.3

3.1

%

(17.7

)

(2.2

)%

Estimated impact of extra week in fiscal 2017 on organic sales

32.8

 

21.4

 

11.4

 

Organic net sales adjusted for extra week

$

53.4

 

2.6

%

$

59.7

 

4.8

%

$

(6.3

)

(0.8

)%

 

 

GAAP to Non-GAAP Reconciliation
For the Quarter Ended
September 29, 2018

Consolidated

 

Pet Segment

 

Garden Segment

 

 

Percent
Change

 

 

Percent
Change

 

 

Percent
Change

Reported net sales Q4 FY18 (GAAP)

$

502.3

 

$

339.4

 

$

162.9

 

Reported net sales Q4 FY17 (GAAP)

$

490.5

 

$

330.5

 

$

160.0

 

Increase in net sales

$

11.8

2.4

 %

$

8.9

2.7

 %

$

2.9

1.8

 %

Effect of acquisition and divestitures on increase in net sales

$

31.1

 

$

14.6

 

$

16.5

 

Decrease in organic net sales

$

(19.3

)

(3.9

)%

$

(5.7

)

(1.7

)%

$

(13.6

)

(8.5

)%

Impact estimate of extra week in Q4 FY17

$

32.8

 

$

21.4

 

$

11.4

 

Adjusted organic net sales

$

13.5

2.8

 %

$

15.7

4.8

 %

$

(2.2

)

(1.4

)%

 

EBITDA Reconciliation

The following is a reconciliation of net income to EBITDA:

 

GAAP to non-GAAP Reconciliation
Fiscal Year Ended

EBITDA Reconciliation

September 29, 2018

 

September 30, 2017

Net income attributable to Central Garden Pet

$

123,594

$

78,828

 

Interest expense, net

36,051

28,062

Other expense

3,860

1,621

Income tax expense

3,305

46,699

Net income attributable to noncontrolling interest

526

 

902

Sum of items below operating income

43,742

$

77,284

 

Income from Operations

167,336

156,112

Depreciation Amortization

47,199

 

42,719

EBITDA

$

214,535

 

$

198,831

 

 

GAAP to non-GAAP Reconciliation
Quarter Ended

EBITDA Reconciliation

September 29, 2018

 

September 30, 2017

Net income attributable to Central Garden Pet

$

10,568

$

4,259

 

Interest expense, net

8,938

7,185

Other expense

4,402

1,315

Income tax (benefit) expense

(5,497

)

2,078

Net loss attributable to noncontrolling interest

(201

)

(456

)

Sum of items below operating income

7,642

 

10,122

 

 

Income from Operations

18,210

14,381

Depreciation Amortization

12,327

 

11,345

 

EBITDA

$

30,537

 

$

25,726

 

 

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