CENT Posts Narrower-Than-Expected Q4 Loss, Sales Down 11% Y/Y

Core Insights - Central Garden & Pet Company (CENT) reported fourth-quarter fiscal 2024 results, with net sales missing estimates but adjusted earnings exceeding expectations, although both metrics declined year over year [1][3][4]. Financial Performance - The company reported an adjusted quarterly loss of 18 cents per share, which was better than the Zacks Consensus Estimate of a loss of 20 cents, but down from earnings of 8 cents per share in the prior year [3]. - Net sales totaled $669.5 million, falling short of the Zacks Consensus Estimate of $724 million and representing an 11% decline from the previous year [4]. - Organic net sales decreased by 13%, excluding the impact of the TDBBS acquisition and the sale of the independent garden channel distribution business [4]. - Adjusted gross profit was $174.2 million, down from $199.2 million in the year-ago period, with adjusted gross margin contracting by 60 basis points to 26% due to grass seed inventory impairment in the Garden segment [5]. - Adjusted SG&A expenses were $185.5 million, a decrease from $187.2 million in the prior year, but as a percentage of net sales, it increased by 270 basis points to 27.7% [6]. - The adjusted operating loss was $11.4 million, down from an operating income of $12 million reported in the prior year, with adjusted EBITDA at $16.8 million compared to $41.6 million in the prior-year period [7]. Segment Performance - In the Pet segment, net sales were $435.3 million, a 9.8% decrease year over year, with organic net sales falling by 13.6% [8]. - The Pet segment's adjusted operating income was $34.6 million, down from $47.8 million in the prior year, with an adjusted operating margin contracting by 190 basis points to 8% [9]. - The Garden segment reported net sales of $234.2 million, a decline of 12.4% from the previous year, with organic net sales down by 11.2% [10]. - The Garden segment's adjusted operating loss was $24.9 million, worsening from an adjusted operating loss of $5.3 million in the prior year due to lower volume and grass seed inventory impairment [10]. Financial Health - At the end of the quarter, the company had cash and cash equivalents of $753.6 million, long-term debt of $1,189.8 million, and shareholders' equity of $1,555.7 million [11]. - The company repurchased approximately 270,032 shares for $9 million during the quarter and expects capital expenditures for fiscal 2025 to be between $60 million and $70 million [12]. Outlook - For fiscal 2025, CENT estimates adjusted earnings to be $2.20 per share or more, anticipating deflationary pressures in certain commodity sectors and a challenging retail environment [13]. - For the first quarter of fiscal 2025, the company expects an adjusted loss of 5 cents per share or more, compared to adjusted earnings of 1 cent in the same period of fiscal 2024 [13].