Central Garden & Pet Co. (CENT) reported first-quarter fiscal 2014 net loss of 26 cents per share, which was narrower than the Zacks Consensus Estimate of loss of 31 cents and loss of 32 cents reported in the year-ago quarter.
The company’s top line dropped 0.7% year over year to $290.5 million in the quarter and also fell short of the Zacks Consensus Estimate of $298 million.
However, gross profit grew 3.6% to $79.7 million, while gross margin increased approximately 110 basis points (bps) to 27.4%.
Improved gross profit, along with lower selling, general and administrative expenses as a percentage of sales led to the narrowed operating loss for the quarter. The company’s operating loss came in $8.4 million, compared with a loss of $ 13.1 million in prior-year quarter.
The Pet segment’s net sales decreased 5% year over year to $184.6 million due to sales decline in both wild bird feed and aquatic products. The segment’s branded product sales came in at $140.5 million while sales of other manufacturers’ products were $44.1 million in the quarter. The segment’s operating income increased nearly 41.2% year over year to $14.4 million and its operating margin expanded 260 bps driven by strong performance in the dog and cat businesses.
Revenues at the Garden segment increased 9% year over year to $105.9 million on the back of higher seasonal décor and rise in wild bird feed and professional fertilizer revenues. The segment’s branded product revenues were $92.8 million, while sale of other manufacturers’ products was $13.1 million in the quarter. The segment reported an operating loss of $6.2 million, as against $8.5 million of operating loss in the prior-year quarter. Operating margin increased 290 bps, mainly attributable to increased profitability across seasonal décor and wild bird feed businesses.
Other Financial Details
The company, which competes with NUTRISYSTEM, INC. (NTRI), Jarden Corp. (JAH) and Conns Inc. (CONN), ended the year with cash and cash equivalents of $16.7 million, total debt of $449.5 million and shareholders’ equity of $457.9 million, excluding non-controlling interest of $0.6 million. The company incurred capital expenditures of $5.4 million for the said quarter.
As of Dec 28, 2013, the company had no borrowings outstanding under the senior secured asset-based revolving credit facility.
During the quarter, the company did not repurchase shares. Nearly $50 million worth of shares remains to be repurchased under the current share buyback authorization.
Currently, Central garden carries a Zacks Rank #3 (Hold).