Central Garden & Pet Q1 Earnings Top Estimates, Sales Rise 3% Y/Y

Core Insights - Central Garden & Pet Company (CENT) reported strong first-quarter fiscal 2025 results, with both revenue and earnings exceeding expectations and showing year-over-year growth [1][2] Financial Performance - The company achieved earnings of 21 cents per share, surpassing the Zacks Consensus Estimate of a loss of 3 cents, and increased from 1 cent per share in the prior-year period [3] - Consolidated net sales reached $656.4 million, exceeding the Zacks Consensus Estimate of$ 630 million, and reflecting a 3% increase from $634.5 million in the previous year [4] - Gross profit was$ 196 million, up from $178.8 million year-over-year, with a gross margin expansion of 160 basis points to 29.8% due to productivity improvements and moderating inflation [5] - SG&A expenses decreased to$ 167.7 million from $170.4 million in the prior year, with a percentage of net sales dropping 140 basis points to 25.5% [6] - Operating income rose to$ 28 million from $8.4 million in the previous year, with an operating margin expansion of 300 basis points to 4.3% [6] - Adjusted EBITDA was reported at$ 55.4 million compared to $37 million in the prior-year period [7] Segment Performance - The Pet segment generated net sales of$ 427 million, a 4% increase, driven by order shifts and promotional activities [8] - Operating income for the Pet segment was $51 million, up from$ 43 million, with an adjusted operating margin of 12%, an increase of 140 basis points [9] - The Garden segment reported net sales of $229 million, a 2% increase, benefiting from favorable weather and order shifts [9] - The Garden segment's operating income improved to$ 2 million from an operating loss of $9 million, with an operating margin increase of 500 basis points to 1.1% [10] Financial Health - At the end of the quarter, the company had cash and cash equivalents of$ 618 million, long-term debt of $1,190.3 million, and shareholders' equity of$ 1,519.1 million [11] - The company repurchased approximately 1.68 million shares, totaling $52 million, and expects capital expenditures for fiscal 2025 to be between$ 60 million and $70 million [12] Outlook - Central Garden & Pet estimates adjusted earnings for fiscal 2025 to be$ 2.20 per share or more, considering various economic factors and challenges in the retail market [13] - The company anticipates a softer second quarter of fiscal 2025 compared to the previous year [14]