Central Garden & Pet(US:CENT)2025-11-26 15:21Financial Performance - Consolidated net sales for fiscal 2025 were $3.1 billion, with the Pet segment contributing approximately $1.8 billion and the Garden segment approximately $1.3 billion[220]. - Operating income increased by $64.7 million, or 34.9%, to $250 million in fiscal 2025, with an operating margin improvement to 8.0% from 5.8% in fiscal 2024[240]. - Gross profit rose by $53.6 million, or 5.7%, to $997.3 million, with gross margin improving 240 basis points to 31.9% in fiscal 2025[232]. - Net income for fiscal 2025 was $162.8 million, or $2.55 per diluted share, compared to $108.0 million, or $1.62 per diluted share in fiscal 2024[225]. - Total net sales for fiscal 2025 were $3,129.1 million, compared to $3,200.5 million for fiscal 2024, reflecting a decrease of 2.2%[260]. - Non-GAAP net income for fiscal 2025 was $174.2 million, or $2.73 per diluted share, compared to $142.4 million, or $2.13 per diluted share for fiscal 2024, indicating a 22.3% increase in non-GAAP net income[259]. Segment Performance - Pet net sales decreased by $30.8 million, or 1.7%, to $1.8 billion, primarily due to lower sales of durable items[230]. - Garden net sales decreased by $40.6 million, or 3.0%, to $1.3 billion, attributed to decreased sales of third-party products and the planned exit of the pottery business[231]. - The Garden segment's operating income for fiscal 2025 was $142.4 million, up from $81.9 million in fiscal 2024, showing a significant increase of 74.0%[262]. - The Pet segment's operating income for fiscal 2025 was $215.7 million, compared to $203.4 million in fiscal 2024, representing a 6.0% increase[261]. Expenses and Costs - Selling, general and administrative expenses decreased by $11.0 million, or 1.5%, to $747.3 million, but as a percentage of net sales, it increased to 23.9%[236]. - The company incurred approximately $10 million in one-time closure costs related to the wind-down of U.K. operations during fiscal 2025[222]. - The effective income tax rate increased to 24.4% in fiscal 2025 from 23.2% in fiscal 2024, primarily due to non-deductible losses from the U.K. operations wind-down[247]. - Inflation moderated in fiscal 2024 but increased in the second half of fiscal 2025, primarily due to tariffs, impacting margins and input costs[266]. Cash Flow and Financing - Net cash provided by operating activities decreased by $62.4 million, from $394.9 million in fiscal 2024 to $332.5 million in fiscal 2025[272]. - Net cash used in investing activities decreased by $60.3 million, from $105.2 million in fiscal 2024 to $44.9 million in fiscal 2025, primarily due to the acquisition of TDBBS, LLC in fiscal 2024[273]. - Net cash used in financing activities increased by $131.2 million, from $25.4 million in fiscal 2024 to $156.6 million in fiscal 2025, mainly due to higher stock repurchases[274]. - The company financed its growth through a combination of internally generated funds, bank borrowings, supplier credit, and sales of equity and debt securities[269]. Shareholder Activities - The company repurchased 3.2 million shares of non-voting common stock and 1.4 million shares of voting common stock at an aggregate cost of $148.4 million during fiscal 2025[224]. - The company has a $600 million asset-backed loan facility, which is expected to be sufficient for working capital and capital spending needs for at least the next 12 months[275]. Assets and Liabilities - Total debt outstanding as of September 27, 2025, was $1,191.7 million, slightly up from $1,190.0 million at September 28, 2024[283]. - The company has significant contractual cash obligations totaling $1.83 billion, with long-term debt obligations of $1.20 billion and interest payment obligations of $230.2 million[313]. - Long-term debt for the Parent/Issuer was $1.19 billion, with total liabilities amounting to $3.59 billion, while Guarantors had long-term debt of $100,000 and total liabilities of $580.9 million[312]. Impairments and Risks - The company recognized a non-cash impairment charge of $12.8 million in the Pet segment during fiscal 2024 due to changing market conditions[256]. - The company recognized impairment losses on intangible assets of $1.0 million, $12.8 million, and $11.5 million in fiscal years 2025, 2024, and 2023 respectively[328]. - The company performed annual goodwill impairment testing and determined that it was more likely than not that the fair values of its reporting segments were greater than their carrying amounts, thus no impairment was required for fiscal years 2024 and 2025[322][323]. Market and Currency Exposure - The company has minimal exposure to foreign currency exchange risk due to limited sales outside the United States[333]. - Purchases by U.S. subsidiaries from foreign vendors are primarily made in U.S. dollars, reducing currency risk[333]. - The international subsidiary primarily transacts in British pounds and Canadian dollars, but overall exposure remains minimal[333]. - The company does not hedge against foreign currency risks, considering them immaterial to current business operations[333].