My original thesis for Central Garden & Pet ( CENT ) ( CENTA ) was that the company was sacrificing revenue for additional margin growth . Now, it appears that many of its efficiency programs have alreadyI am a freelance business writer. I formerly wrote articles for the Motley Fool Blogging Network, where I won several editor's choice awards. After that, I wrote articles for the main Motley Fool site. I typically focus on restaurants, retailers, and food manufacturers, considering both growth opportunities ...

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]. - The Garden segment reported an operating loss of $9.7 million for the first quarter of fiscal 2026, down from an income of $2.4 million in the prior year[123]. - GAAP net income attributable to Central Garden & Pet Company for the three months ended December 27, 2025, was $6.841 million, a decrease 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 previous year[132]. - Total 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 reported a GAAP operating income of $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 Cash Flow - 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]. - Net cash used by operating activities increased by $1.4 million to $70.2 million for the three months ended December 27, 2025[147]. - Net cash used in investing activities increased by $58.4 million to $67.8 million during the three months ended December 27, 2025, primarily due to increased acquisition activity[148]. Debt and Financing - Total debt outstanding as of December 27, 2025, was $1,192.2 million, slightly up from $1,190.4 million at December 28, 2024[153]. - The company has a $600 million senior secured asset-based revolving credit facility, with an additional $400 million available through an accordion feature, maturing on November 7, 2030[171]. - Net availability under the credit facility was approximately $545 million as of December 27, 2025, with no outstanding borrowings or letters of credit[172]. - The applicable margin for SOFR-based borrowings was 1.00% as of December 27, 2025, with an interest rate of 4.7% for one-month SOFR-based borrowings[173]. - The company issued $300 million of 5.125% senior notes due February 2028, with proceeds used for acquisitions and general corporate purposes[166]. - The 2030 Notes can be redeemed at various percentages starting from 102.063% on October 15, 2025, decreasing to 100.0% on October 15, 2028[163]. - The company was in compliance with all financial covenants as of December 27, 2025, including a minimum fixed charge coverage ratio of 1:1 under the credit facility[175]. - The company incurred approximately $4.8 million in debt issuance costs related to the 2028 Notes, amortized over the term of the notes[167]. - The holders of the 2030 and 2028 Notes have the right to require repurchase at 101.0% of the principal amount upon a change of control[164][169]. Acquisitions and Growth Strategy - In December 2025, the company acquired the U.S. assets of Champion USA LLC for approximately $57 million, enhancing its position in the livestock industry[110]. - The company plans to continue evaluating potential acquisition candidates as part of its growth strategy[152]. - Capital expenditures are anticipated to be approximately $50 million in fiscal 2026, with $11 million already invested through December 27, 2025[151]. Assets and Liabilities - As of December 27, 2025, total assets amounted to $5.2 billion, while total liabilities were $3.6 billion, leading to a net asset position of $1.6 billion[182].

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Core Viewpoint - Central Garden & Pet reported a decline in net sales for fiscal 2026 first quarter, primarily due to shipment timing shifts and ongoing portfolio optimization, but achieved improved gross margins and solid earnings per share [3][6][19] Financial Performance - Net sales totaled $617 million, down 6% year over year, attributed to retailer spring inventory shipment shifts and portfolio rationalization [2][6] - Non-GAAP gross margin improved by 100 basis points to 30.8%, driven by productivity gains and improved product mix [6][7] - Non-GAAP diluted EPS held steady at $0.21, above internal expectations, with GAAP diluted EPS at $0.11 [8][19] Segment Analysis - The Pet segment reported net sales of $416 million, down 3%, with strengths in rawhide and animal health, while the Garden segment saw net sales of $202 million, down 12%, affected by shipment timing and category exits [5][12] - The Garden segment experienced a small operating loss of $2 million compared to a profit of $2 million in the prior year, primarily due to shipment timing [13] Operational Initiatives - The company is transitioning to a more profitable direct export model in Europe and rationalizing lower-margin categories [2][19] - Central completed the tuck-in acquisition of Champion USA, enhancing its professional portfolio with environmentally responsible solutions [4][18] Balance Sheet and Capital Allocation - Cash and cash equivalents plus short-term investments totaled $721 million, with total debt at $1.2 billion and gross leverage at 2.9x [17] - The company repurchased approximately 660,000 shares for $18.5 million, with $28 million remaining under its authorization [17] Outlook - The company reaffirmed its fiscal 2026 guidance for non-GAAP diluted EPS of at least $2.70 and expects capital expenditures of $50 million to $60 million [4][19] - Management indicated stronger shipment trends in January, consistent with the timing shift into the second quarter, and expects to remain active in M&A and share repurchases [20]

Core Insights - Central Garden (CENT) reported quarterly earnings of $0.21 per share, exceeding the Zacks Consensus Estimate of $0.11 per share, and matching the earnings from the previous year [1] - The earnings surprise was +85.35%, with the company previously expected to post a loss of $0.20 per share but instead reporting a loss of $0.09, resulting in a surprise of +55% [2] - The company has surpassed consensus EPS estimates in all four of the last quarters [2] Revenue Performance - Central Garden posted revenues of $617.37 million for the quarter ended December 2025, which was 4.18% below the Zacks Consensus Estimate and down from $656.44 million year-over-year [3] - The company has only topped consensus revenue estimates once in the last four quarters [3] Stock Performance and Outlook - Central Garden shares have increased by approximately 7.3% since the beginning of the year, outperforming the S&P 500's gain of 1.1% [4] - The future performance of the stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4][5] Earnings Estimates - The current consensus EPS estimate for the upcoming quarter is $1.05 on revenues of $845.55 million, and for the current fiscal year, it is $2.75 on revenues of $3.14 billion [8] - The estimate revisions trend for Central Garden was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [7] Industry Context - The Consumer Products - Discretionary industry, to which Central Garden belongs, is currently in the top 40% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [9]

Central Garden & Pet Company (NasdaqGS:CENT) Q1 2026 Earnings call February 04, 2026 04:30 PM ET Company ParticipantsBrad Smith - CFOBrad Thomas - Managing DirectorFriederike Edelmann - Head of Investor RelationsJ.D. Walker - President of Garden Consumer ProductsJohn Hanson - President of Pet Consumer ProductsNiko Lahanas - CEOConference Call ParticipantsBrian McNamara - AnalystJim Chartier - AnalystOperatorLadies and gentlemen, thank you for standing by. Welcome to Central Garden & Pet's Fiscal 2026 First ...

Central Garden & Pet Company (NasdaqGS:CENT) Q1 2026 Earnings call February 04, 2026 04:30 PM ET Company ParticipantsBrad Smith - CFOBrad Thomas - Managing DirectorFriederike Edelmann - Head of Investor RelationsJ.D. Walker - President of Garden Consumer ProductsJohn Hanson - President of Pet Consumer ProductsNiko Lahanas - CEOConference Call ParticipantsBrian McNamara - AnalystJim Chartier - AnalystOperatorLadies and gentlemen, thank you for standing by. Welcome to Central Garden & Pet's Fiscal 2026 First ...

Central Garden & Pet Company (NasdaqGS:CENT) Q1 2026 Earnings call February 04, 2026 04:30 PM ET Speaker7Ladies and gentlemen, thank you for standing by. Welcome to Central Garden & Pet's Fiscal 2026 First Quarter Earnings Call. My name is Vaughn, and I will be your conference operator for today. At this time, all participants are in a listen-only mode. Following the prepared remarks, we will hold a question-and-answer session, and instructions will be given at that time. If you require assistance at any po ...

Q1 FY2026 Investor Presentation 2.4.2026 Q1 Highlights & Outlook Niko Lahanas, CEO Financials & Segments Brad Smith, CFO Management Q&A Niko Lahanas, Brad Smith, J.D. Walker, John Hanson Q1 FY26 Investor Presentation 2 Forward-looking Statements The statements contained in this presentation which are not historical facts, including statements concerning productivity initiatives and earnings guidance for fiscal 2026, are forward-looking statements that are subject to risks and uncertainties that could cause ...

CENTRAL GARDEN & PET ANNOUNCES Q1 FISCAL 2026 FINANCIAL RESULTS Exhibit 99.1 Delivers fiscal 2026 Q1 GAAP diluted EPS of $0.11 and non-GAAP diluted EPS of $0.21 compared with $0.21 a year ago Reaffirms outlook for fiscal 2026 non-GAAP diluted EPS of $2.70 or better WALNUT CREEK, Calif. – Central Garden & Pet Company (NASDAQ: CENT) (NASDAQ: CENTA) ("Central"), a leading consumer goods company in the pet and garden industries, today announced financial results for its fiscal 2026 first quarter ended December ...