Central Garden & Pet Company (CENT) Q3 2024 earnings summary

Executive summary

• Q3 FY24 net sales were $996 million, down 2.6–3% year-over-year; organic net sales also declined 2.9–3%.

• GAAP EPS was $1.19 (vs. $1.25 prior year); non-GAAP EPS was $1.32 (vs. $1.40 prior year).

• Gross margin expanded by 70 basis points to 31.8%; non-GAAP gross margin rose 80 basis points to 32.7%.

• Cost and Simplicity program drove margin improvements, including exiting the pottery business and closing a live plants distribution facility.

• Maintained non-GAAP EPS guidance of $2.00 or better for FY24, despite challenging weather and softness in pet durables.

Financial highlights

• Gross profit was $317 million, nearly flat year-over-year; non-GAAP gross profit was $326 million.

• Operating income was $116 million, down 6%; non-GAAP operating income was $127 million.

• Adjusted EBITDA was $156 million, down from $166 million prior year.

• Effective tax rate was 24.0%.

• Cash and cash equivalents at quarter-end were $570 million (vs. $333 million prior year); total debt stood at $1.2 billion.

Outlook and guidance

• Fiscal 2024 non-GAAP EPS outlook maintained at $2.00 or better, despite a $15–20 million grass seed inventory write-down expected in Q4.

• Capital expenditures for FY24 expected to be about $60 million.

• Guidance excludes impact of any Q4 restructuring activities.

• Management believes liquidity is sufficient for at least the next 12 months, supported by cash flow and a $750 million credit facility.

• Risks include volatile weather, retailer inventory uncertainty, and value-seeking consumer behavior.