Central Garden & Pet Company (CENT) Q3 2026 earnings summary

Executive summary

• Organic sales grew 2% year-over-year in both garden and pet segments, with operating and gross margins expanding and strong execution across the business, despite an 8% net sales decline due to the pet distribution exit.

• Project Horizon, a multi-year logistics modernization, is 95% complete, consolidating logistics, closing 13 facilities, and opening two, delivering improved productivity and service with minimal disruption and under budget.

• Announced acquisition of an 80% stake in TRIXIE, a leading European pet supplies company, for up to €400 million, expected to close in the first half of fiscal 2027, to expand international presence and innovation capabilities.

• Raised fiscal 2026 non-GAAP diluted EPS guidance to $2.85 or better, reflecting strong year-to-date performance, margin discipline, and confidence in execution.

• Recent product innovations in pet and garden segments continue to perform well, driving market share gains.

Financial highlights

• Net sales declined 8% year-over-year to $882 million due to the exit of the pet distribution business; organic net sales rose 2% to $862 million.

• Non-GAAP gross profit was $318 million (down 4%), with gross margin up 140 bps to 36%; GAAP gross margin improved by 130 bps to 35.9%.

• Non-GAAP operating income was $136 million (down 2%), with operating margin up 90 bps to 15.4%; GAAP operating income was $126 million (down 7%), margin 14.3%.

• Non-GAAP net income was $96 million (down 2%); non-GAAP diluted EPS was $1.54 (down $0.02); GAAP net income was $90 million ($1.45 per share, down from $1.52).

• Adjusted EBITDA was $162 million (down from $167 million), with margin expanding to 18.3% from 17.3%.

Outlook and guidance

• Fiscal 2026 non-GAAP diluted EPS guidance raised to $2.85 or better, excluding future acquisitions, divestitures, or restructuring.

• Expect continued reduction in reported revenue from pet distribution exit, with minimal earnings impact; TRIXIE acquisition to offset some revenue loss and strengthen business mix.

• Long-term organic growth targets: Pet 1%-4%, Garden 1%-2%, with additional growth from M&A.

• Capital expenditures for fiscal 2026 projected at approximately $50 million, focused on maintenance, productivity, and targeted growth.

• Management expects principal sources of funds to be cash from operations and available credit; liquidity is considered adequate for at least the next 12 months.