Central Garden & Pet(US:CENT)2022-02-03 17:23Financial Performance - Consolidated net sales for fiscal 2021 were $3.3 billion, with the Pet segment contributing approximately $1.9 billion and the Garden segment approximately $1.4 billion[108]. - In Q1 fiscal 2022, net sales increased by $69.2 million, or 11.7%, to $661.4 million, primarily driven by sales from four fiscal 2021 acquisitions[110]. - Organic net sales in Q1 fiscal 2022 increased by 0.5%, with a 0.8% increase in the Pet segment and a 0.3% decline in the Garden segment[110]. - The company reported a GAAP net income of $9.009 million for the three months ended December 25, 2021, compared to $5.613 million for the same period in 2020, representing a 60.5% increase[134]. - Non-GAAP net income attributable to the company was $15.706 million for the three months ended December 25, 2021, compared to $9.009 million for the same period in 2020, reflecting a 74.5% increase[134]. - The company’s adjusted EBITDA for the three months ended December 25, 2021, was $51.603 million, compared to $44.624 million for the same period in 2020, indicating a 15.4% increase[138]. - Organic net sales for the company were $591.4 million for the three months ended December 25, 2021, up from $588.3 million for the same period in 2020, showing a 0.5% increase[135]. - The company experienced a 44.7% increase in net sales for its Garden segment, reaching $225.4 million for the three months ended December 25, 2021, compared to $155.8 million for the same period in 2020[138]. Profitability and Expenses - Gross profit for Q1 fiscal 2022 rose by $32.8 million, or 19.8%, to $198.2 million, with gross margin increasing by 210 basis points to 30.0%[117]. - Selling, general and administrative expenses increased by $33.6 million, or 24.3%, to $172.0 million, representing 26.0% of net sales[118]. - Operating income for Q1 fiscal 2022 decreased by $0.8 million, or 3.1%, to $26.2 million, with an operating margin of 4.0%[122]. - The effective income tax rate for Q1 fiscal 2022 was 20.7%, up from 19.7% in the prior year, primarily due to increased foreign earnings in higher tax jurisdictions[125]. - The company’s GAAP diluted net income per share was $0.16 for the three months ended December 25, 2021, compared to $0.10 for the same period in 2020[134]. - The company’s non-GAAP diluted net income per share was $0.16 for the three months ended December 25, 2021, compared to $0.29 for the same period in 2020[134]. Cash Flow and Debt - Net cash used by operating activities increased by $56.4 million, from $36.1 million for the three months ended December 26, 2020, to $92.5 million for the three months ended December 25, 2021[143]. - Net cash used in investing activities decreased by $67.3 million, from $93.4 million for the three months ended December 26, 2020, to $26.1 million for the three months ended December 25, 2021[144]. - Total debt outstanding increased to $1,185.5 million at December 25, 2021, compared to $789.0 million at December 26, 2020[147]. - The company incurred approximately $6 million of debt issuance costs in conjunction with the issuance of 4.125% Senior Notes due 2031[149]. Capital Expenditures and Acquisitions - The company anticipates capital expenditures of approximately $80 million to $90 million in fiscal 2022, with $24 million already invested through December 25, 2021[146]. - The company expects to continue evaluating potential acquisition candidates in the future as part of its growth strategy[146]. Operational Challenges - The company faced operational challenges due to COVID-19, including increased demand and supply chain disruptions, impacting service and fill rates[112]. - Inflationary pressures have impacted the company's revenues and margins, particularly due to rising costs for key commodities, labor, and freight during fiscal 2021 and continuing into fiscal 2022[140]. Credit Facilities - The company entered into an amended credit agreement providing up to $750 million in a senior secured asset-based revolving credit facility, maturing on December 16, 2026[111]. - The Amended Credit Facility provides for a $750 million principal amount, with net availability of approximately $414 million as of December 25, 2021[160]. - The applicable interest rate for Base Rate borrowings was 3.3%, and for one-month LIBOR-based borrowings was 1.1% as of December 25, 2021[161]. - The Amended Credit Facility requires a minimum fixed charge coverage ratio of 1.00:1.00 upon triggered quarterly testing[163]. Parent/Issuer Financials - For the three months ended December 25, 2021, net sales for the Parent/Issuer were $185,406 thousand, while Guarantors reported net sales of $427,511 thousand[168]. - The gross profit for the Parent/Issuer was $42,619 thousand, and for Guarantors, it was $143,599 thousand for the same period[168]. - The net income (loss) for the Parent/Issuer was $(16,353) thousand, while Guarantors reported net income of $29,530 thousand[168]. - Total assets for the Parent/Issuer as of December 25, 2021, were $3,733,912 thousand, compared to Guarantors' total assets of $3,226,679 thousand[168]. - Current liabilities for the Parent/Issuer were $176,072 thousand, while Guarantors had current liabilities of $294,189 thousand[168]. - Long-term debt for the Parent/Issuer was $1,184,479 thousand, with no long-term debt reported for Guarantors[168]. - Total liabilities for the Parent/Issuer were $2,735,392 thousand, while Guarantors reported total liabilities of $449,308 thousand[168]. - There have been no material changes to off-balance sheet arrangements or contractual obligations since the last annual report[169][170].