Financial Performance - Consolidated net sales for fiscal 2024 were $3.2 billion, with the Pet segment contributing approximately $1.8 billion and the Garden segment approximately $1.4 billion[108]. - In the third quarter of fiscal 2025, net sales decreased by $35.4 million, or 3.6%, to $961 million, with Pet net sales down 3.1% and Garden net sales down 4.1%[113]. - For the nine months ended June 28, 2025, net sales decreased by $80 million, or 3.2%, to $2.451 billion, with Pet net sales down 1.7% and Garden net sales down 5.0%[137]. - Net sales for the three months ended June 29, 2024, were $996.3 million, with a gross profit of $317.1 million, resulting in a gross margin of 31.8%[162]. - Net sales for the nine months ended June 28, 2025, were $596,750,000, compared to $1,842,106,000 for the fiscal year ended September 28, 2024, indicating a decrease in sales[204]. Profitability - Gross profit for the third quarter of fiscal 2025 increased by $15 million, or 4.7%, to $332 million, with gross margin improving by 280 basis points to 34.6%[120]. - Gross profit for the nine months ended June 28, 2025, increased by $26 million, or 3.4%, to $800.8 million, with gross margin improving by 210 basis points to 32.7%[141]. - Non-GAAP gross profit for the nine months ended June 28, 2025 increased by $19.6 million, or 2.5%, to $805.5 million from $785.9 million for the same period in 2024[143]. - Non-GAAP gross margin improved by 180 basis points to 32.9% for the nine months ended June 28, 2025, compared to 31.1% for the same period in 2024[143]. - Operating income for the third quarter of fiscal 2025 rose by $19.2 million, or 16.6%, to $135.1 million, with operating margin increasing from 11.6% to 14.1%[128]. - Operating income increased by $38.6 million, or 17.7%, to $256.4 million for the nine months ended June 28, 2025, with an operating margin of 10.5%[147]. - Net income for the third quarter of fiscal 2025 was $95 million, or $1.52 per diluted share, compared to $79.7 million, or $1.19 per diluted share, in the prior year[135]. - Net income for the nine months ended June 28, 2025 was $172.6 million, or $2.69 per diluted share, compared to $142.1 million, or $2.13 per diluted share, for the same period in 2024[154]. Expenses and Costs - Selling, general and administrative expenses decreased by $12.6 million, or 2.3%, to $544.4 million for the nine months ended June 28, 2025[144]. - The company incurred approximately $5.3 million in one-time costs related to the wind-down of U.K. operations in fiscal 2025[111]. - The consolidation of two older distribution facilities into a new facility in Salt Lake City, Utah, resulted in approximately $2.2 million in costs during the second quarter of fiscal 2025[112]. - Pet operating income decreased by $1.0 million, or 0.5%, to $188.1 million for the nine months ended June 28, 2025, due to lower sales and higher expenses[148]. - Garden operating income increased by $33.4 million to $144.1 million for the nine months ended June 28, 2025, driven by increased gross profit and lower expenses[149]. Tax and Interest - The effective income tax rate for the quarter ended June 28, 2025, was 25.1%, up from 24.0% in the prior year, primarily due to non-deductible losses from the U.K. operations wind-down[134]. - The effective income tax rate increased to 24.4% for the nine months ended June 28, 2025, compared to 23.3% for the same period in 2024[153]. - Net interest expense decreased by $5.5 million, or 17.4%, to $25.9 million for the nine months ended June 28, 2025, due to increased interest income[151]. Cash Flow and Investments - Net cash provided by operating activities decreased by $42.0 million to $149.8 million for the nine months ended June 28, 2025, primarily due to an increase in accounts receivable[171]. - Net cash used in investing activities decreased by $60.5 million to $34.0 million for the nine months ended June 28, 2025, due to less acquisition activity compared to the prior year[172]. - Net cash used in financing activities increased by $140.3 million, from $16.0 million for the nine months ended June 29, 2024, to $156.3 million for the nine months ended June 28, 2025[173]. - Approximately 3.2 million shares of non-voting Class A common stock were repurchased at an aggregate cost of approximately $98.2 million, or approximately $30.82 per share, during the nine months ended June 28, 2025[173]. Debt and Capital Structure - Total debt outstanding was $1,191.3 million as of June 28, 2025, compared to $1,189.7 million at June 29, 2024[177]. - Long-term debt as of June 28, 2025, was $1,191,070,000, remaining relatively stable compared to $1,189,655,000 as of September 28, 2024[204]. - The company financed its growth through a combination of cash generated from operations, bank borrowings, supplier credit, and sales of equity and debt securities[167]. - Capital expenditures for fiscal 2025 are anticipated to be approximately $50 to $60 million, with approximately $31 million already invested through June 28, 2025[175]. - Net availability under the $750 million Credit Facility was approximately $565 million as of June 28, 2025[194]. - The interest rate applicable to Base Rate borrowings was 7.5%, and the interest rate applicable to one-month SOFR-based borrowings was 5.3% as of June 28, 2025[195]. - The company incurred approximately $2.4 million of debt issuance costs in conjunction with the Credit Facility, which are being amortized over its term[196]. - The company may require additional external capital for potential acquisitions, which could subject it to general acquisition risks[176]. - The 2031 Notes require semiannual interest payments and are unconditionally guaranteed by existing and future domestic restricted subsidiaries[180]. - The company was in compliance with all financial covenants under the Credit Facility as of June 28, 2025[197]. Assets and Liabilities - Total assets as of June 28, 2025, were $5,046,632,000, an increase from $4,812,102,000 as of September 28, 2024[204]. - Current liabilities as of June 28, 2025, were $169,535,000, compared to $164,607,000 as of September 28, 2024, showing a slight increase[204]. - Intercompany receivables from non-guarantor subsidiaries increased to $82,934,000 as of June 28, 2025, from $76,084,000 as of September 28, 2024[204]. - Other assets increased to $4,035,980,000 as of June 28, 2025, compared to $3,799,521,000 as of September 28, 2024[204]. Accounting and Compliance - The company has not reported any material changes to critical accounting policies or market risk exposure since the last annual report[205][207]. - The company has not disclosed any new accounting pronouncements that would materially affect its financial statements[206].
Central Garden & Pet(CENTA) - 2025 Q3 - Quarterly Report