Central Garden & Pet Co. (CENT) recorded adjusted loss per share of 12 cents in fourth-quarter fiscal 2014, significantly narrower than the Zacks Consensus Estimate of a loss of 25 cents and year-ago loss of 22 cents.
Further, including one-time items, loss of 8 cents per share narrowed considerably from the loss of 47 cents reported in the prior-year quarter.
The company’s net sales grew 1.5% year over year to $374.2 million and was way ahead of the Zacks Consensus Estimate of $361 million. However, on an adjusted basis including garden charge in the prior-year period, net sales grew 0.6%.
Adjusted gross profit increased 16.3% to $107.6 million, while gross margin expanded to 28.7% from 24.9% in the prior-year quarter. Adjusted selling, general and administrative (SG&A) expenses as a percentage of sales increased 220 bps to 29.1%.
Adjusted operating loss came at $1.5 million as against loss of $7.5 million reported in the prior-year quarter. Higher gross margin in the Garden segment along with well performing dog & cat business in the Pet segment were the driving factors.
Segment Details
Revenues at the Garden segment grew 5.9% year over year to $157.2 million.
The segment’s adjusted branded product revenues increased 5% to $138 million, while sale of other manufacturers’ products was down 5% to $19.2 million in the quarter. Adjusted operating profit for the segment came in at $3.6 million as against operating loss of $11.9 million reported in the prior-year quarter. Improvement in grass seeds and control offset the lower margins in seasonal décor and wild bird feed categories.
The Pet segment’s net sales decreased 2% year over year to $217.1 million. Weakness in the sector and increased competition in certain businesses, such as flea and tick, were the primary factors.
The segment’s branded product sales were down 5% to $166.5 million, while sales of other manufacturers’ products surged 13% to $50.6 million in the quarter. The segment’s operating income slumped nearly 14.6% year over year to $21.1 million and its operating margin contracted 150 bps to 9.7%. Unfavorable product mix, lower margin from flea and tick business offset the higher margin registered across the company’s dog and cat business.
Other Financial Details
The company, which competes with NUTRISYSTEM, INC. (NTRI), Prestige Brands Holdings, Inc. (PBH) and Summer Infant, Inc. (SUMR), ended the year with cash and cash equivalents of $78.7 million, a total debt of $450.2 million and shareholders’ equity of $484.7 million, excluding non-controlling interest of $1.7 million.
As of Sep 27, 2014, this Zacks Rank# 3 (Hold) stock had no outstanding borrowings under the senior secured asset-based revolving credit facility of $329.6 million.
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