Financial Performance - Consolidated net sales for fiscal 2024 were $3.2 billion, a decrease of $109.6 million, or 3.3%, compared to fiscal 2023[150] - Operating income declined by $25.3 million, or 12.0%, to $185.4 million in fiscal 2024[152] - Net income for fiscal 2024 was $108.0 million, or $1.62 per diluted share, down from $125.6 million, or $1.88 per diluted share in fiscal 2023[153] - Gross profit decreased by $3.1 million, or 0.3%, to $943.7 million, while gross margin improved by 90 basis points to 29.5%[165] - Organic net sales decreased by 3.9%, with Pet organic sales down 5.9% and Garden organic sales down 1.2%[151] - Net income for fiscal 2024 was $108.0 million, or $1.62 per diluted share, compared to $125.6 million, or $1.88 per diluted share, for fiscal 2023[173] - GAAP net income for the year ended September 28, 2024, was $107,983 thousand, compared to $125,643 thousand for the year ended September 30, 2023, reflecting a decrease of 14.1%[184] - Non-GAAP net income for fiscal 2024 was $142.4 million, or $2.13 per diluted share, compared to $138.5 million, or $2.07 per diluted share, for fiscal 2023[173] Segment Performance - The Pet segment accounted for approximately $1.8 billion in sales, while the Garden segment accounted for approximately $1.4 billion[150] - Pet operating income increased by $5.4 million, or 2.7%, to $203.4 million in fiscal 2024, with an operating margin improvement from 10.5% to 11.1%[167] - Garden operating income decreased by $41.6 million, or 33.7%, to $81.9 million in fiscal 2024, with a non-GAAP operating margin decline to 7.5%[167] - Organic net sales for the Pet Segment decreased by 2.4% in FY 2024, with reported sales of $1,832.8 million compared to $1,877.2 million in FY 2023[186] - The Garden Segment reported a GAAP operating income of $81,893 thousand for FY 2024, down from $123,455 thousand in FY 2023, a decline of 33.7%[186] Expenses and Costs - Selling, general and administrative expenses increased by $22.1 million, or 3.0%, to $758.3 million, representing 23.7% of net sales[166] - The company incurred approximately $7.5 million in one-time costs related to facility closures in the Pet segment[154] - Other income (expense) was an expense of $5.1 million in fiscal 2024, compared to income of $1.5 million in fiscal 2023, mainly due to a $7.5 million impairment for private company investments[171] - Corporate expenses decreased by $10.9 million, primarily due to lower equity compensation and a gain from a litigation settlement[168] Debt and Financing - Debt outstanding was $1,190.0 million as of September 28, 2024, with an average borrowing rate of 4.5%[170] - The company issued $500 million of 4.125% senior notes due October 2030, using proceeds to redeem $300 million of 6.125% senior notes due November 2023 at a redemption price of 101.531%[206] - The company has a $750 million senior secured asset-based revolving credit facility, with net availability of approximately $481 million as of September 28, 2024[208] - Total debt outstanding as of September 28, 2024, was $1,190.0 million, slightly up from $1,188.2 million at September 30, 2023[202] Cash Flow and Investments - Net cash provided by operating activities increased by $13.3 million, from $381.6 million in fiscal 2023 to $394.9 million in fiscal 2024[193] - Net cash used in investing activities increased by $70.6 million, from $34.6 million in fiscal 2023 to $105.2 million in fiscal 2024, primarily due to the acquisition of TDBBS, LLC[194] - Capital expenditures are anticipated to be approximately $70 million over the next 12 months, focusing on plant and equipment upgrades[200] Acquisitions and Growth Strategy - In November 2023, the company acquired TDBBS, LLC for approximately $60 million, enhancing its portfolio in the pet supplies market[159] - The company anticipates continued focus on market expansion and new product development to drive future growth[186] - The company plans to continue evaluating potential acquisition candidates as part of its growth strategy[200] Tax and Interest - Effective income tax rate increased to 23.2% in fiscal 2024 from 22.4% in fiscal 2023, primarily due to a higher blended state income tax rate[172] - Net interest expense decreased by $11.8 million, or 23.7%, to $37.9 million in fiscal 2024 due to increased interest income from higher cash balances[170] Market and Economic Factors - Inflationary pressures impacted gross and operating margins in fiscal 2023, but moderation was noted in fiscal 2024, leading to improved margins[189] - Approximately 66% of the Garden segment's net sales occurred during the second and third fiscal quarters, highlighting the seasonality of the business[191] Compliance and Obligations - The company was in compliance with all financial covenants as of September 28, 2024, under both the 2030 and 2028 Notes[207][212] - Total contractual obligations amount to $1,891.2 million, with $1,200.5 million due thereafter[215] - Estimated interest payments on long-term debt for fiscal years 2025 to 2029 total approximately $282.7 million[215] Impairments and Goodwill - Impairment losses on indefinite-lived intangible assets were recognized at $12.8 million and $11.5 million for fiscal years 2024 and 2023, respectively[224] - The company completed its qualitative assessment of goodwill impairment and determined that fair values of reporting segments were greater than their carrying amounts in fiscal year 2024[221] - The company’s goodwill is associated with its Pet and Garden segments, with no impairment testing required in fiscal 2024[221]
Central Garden & Pet(CENTA) - 2024 Q4 - Annual Report