Central Garden & Pet(CENTA) - 2026 Q1 - Quarterly Report

Financial Performance - In fiscal 2025, consolidated net sales were $3.1 billion, with the Pet segment contributing approximately $1.8 billion and the Garden segment approximately $1.3 billion[106]. - For the first quarter of fiscal 2026, net sales decreased by $39.0 million, or 6.0%, to $617 million, with Pet net sales down 2.7% and Garden net sales down 12.0%[108]. - Gross profit for the first quarter of fiscal 2026 decreased by $5.1 million, or 2.6%, to $190.6 million, while gross margin increased by 110 basis points to 30.9%[115]. - Operating income for the first quarter of fiscal 2026 declined by $11.5 million, or 40.9%, to $16.5 million, with an operating margin decrease from 4.3% to 2.7%[121]. - Net income for the first quarter of fiscal 2026 was $6.8 million, or $0.11 per diluted share, compared to $14.0 million, or $0.21 per diluted share, in the prior year[128]. - GAAP net income attributable to Central Garden & Pet Company for the three months ended December 27, 2025, was $6.841 million, down from $14.009 million for the same period in 2024[132]. - Non-GAAP net income attributable to Central Garden & Pet Company for the three months ended December 27, 2025, was $12.779 million, unchanged from the same period in 2024[132]. - Net sales for the three months ended December 27, 2025, were $617.373 million, with a gross profit of $190.608 million, resulting in a gross margin of 30.9%[135]. - The Pet segment's GAAP operating income was $49.800 million, while the Garden segment reported a GAAP operating loss of $9.679 million for the three months ended December 27, 2025[136][137]. - Adjusted EBITDA for the three months ended December 27, 2025, was $49.763 million, compared to $55.436 million for the same period in 2024[139][140]. Expenses and Income - Selling, general and administrative expenses increased by $6.4 million, or 3.8%, to $174.1 million, representing 28.2% of net sales for the first quarter of fiscal 2026[117]. - Pet operating income decreased by $1.5 million, or 2.8%, to $49.8 million, while Garden operating income turned to a loss of $9.7 million, down from a profit of $2.4 million[122][123]. - Net interest expense for the first quarter of fiscal 2026 was $7.8 million, consistent with $7.7 million in the prior year[125]. - The effective income tax rate for the quarter ended December 27, 2025, was 23.3%, relatively consistent with 23.5% for the prior year[127]. Cash Flow and Investments - Net cash used by operating activities increased by $1.4 million, from $68.8 million for the three months ended December 28, 2024, to $70.2 million for the three months ended December 27, 2025[147]. - Net cash used in investing activities increased by $58.4 million, from $9.4 million for the three months ended December 28, 2024, to $67.8 million for the three months ended December 27, 2025, primarily due to increased acquisition activity[148]. - Capital expenditures are anticipated to be approximately $50 million in fiscal 2026, with $11 million already invested through December 27, 2025[151]. Debt and Financing - Total debt outstanding as of December 27, 2025, was $1,192.2 million, compared to $1,190.4 million at December 28, 2024[153]. - The Credit Facility provides for a $600 million principal amount senior secured asset-based revolving credit facility, with an additional $400 million available[171]. - As of December 27, 2025, net availability under the Credit Facility was approximately $545 million, with no borrowings outstanding[172]. - The applicable margin for SOFR-based borrowings was 1.00% as of December 27, 2025[173]. - The company incurred approximately $4.8 million of debt issuance costs related to the 2028 Notes, amortized over the term of the notes[167]. - The 2030 Notes can be redeemed at 102.063% on or after October 15, 2025, with accrued and unpaid interest[163]. - The 2028 Notes require semiannual interest payments and can be redeemed at 100.0% on or after January 1, 2026[168]. Acquisitions - The company acquired the U.S. assets of Champion USA LLC for approximately $57 million in December 2025, enhancing its position in the livestock industry[110]. - The company expects to continue evaluating potential acquisition candidates, which may require additional external capital[152]. Parent/Issuer Guarantors - As of December 27, 2025, net sales for the Parent/Issuer Guarantors were $162.8 million for the three months ended and $456.65 million for the fiscal year ended[182]. - Gross profit for the Parent/Issuer Guarantors was $38.145 million for the three months ended and $152.319 million for the fiscal year ended[182]. - The net income (loss) for the Parent/Issuer Guarantors was $(15.363) million for the three months ended and $(45.373) million for the fiscal year ended[182]. - The total assets for the Parent/Issuer as of December 27, 2025, were $5.219 billion, while total liabilities were $3.615 billion[182].