Central Garden & Pet Co (CENT) Reports Steady Year-End Earnings Amidst Market Challenges
Central Garden & Pet Co (NASDAQ:CENT) maintains $3.3 billion net sales year-over-year in fiscal 2023.
Non-GAAP EPS for fiscal 2023 stands at $2.59, meeting revised guidance despite market headwinds.
Strong liquidity position with $489 million in cash and cash equivalents as of September 30, 2023.
Fiscal 2024 non-GAAP EPS outlook set at $2.50 or better, reflecting ongoing strategic initiatives.
On November 21, 2023, Central Garden & Pet Co (NASDAQ:CENT) released its 8-K filing, announcing its financial results for the fourth quarter and fiscal year ended September 30, 2023. Despite a challenging market environment, the company reported steady year-end earnings, demonstrating resilience in its business operations.
Fiscal 2023 Financial Highlights
Central Garden & Pet Co (NASDAQ:CENT) reported net sales of $3.3 billion for fiscal 2023, consistent with the previous year, even with an additional week factored into the fiscal calendar. The Pet segment maintained its net sales at $1.9 billion, while the Garden segment saw a slight decrease to $1.4 billion from $1.5 billion in the prior year.
Gross margin declined to 28.6% from 29.7% in the previous year, attributed to inflation and lower volumes affecting overhead absorption, despite improved pricing and productivity efforts. Operating income fell to $211 million from $260 million year-over-year, with a non-GAAP operating income of $227 million. The operating margin also saw a decrease, coming in at 6.4% compared to 7.8% in the prior year, with a non-GAAP operating margin of 6.9%.
Net income for fiscal 2023 was $126 million, down from $152 million in the previous year, with non-GAAP net income at $138 million. Earnings per share (EPS) were reported at $2.35, compared to $2.80 in the prior year, with non-GAAP EPS at $2.59, aligning with Central's revised fiscal 2023 guidance. Adjusted EBITDA also experienced a decline to $343 million from $367 million in the previous year.
Liquidity, Debt, and Capital Management
As of September 30, 2023, Central Garden & Pet Co (NASDAQ:CENT) boasted a strong liquidity position with $489 million in cash and cash equivalents, a significant increase from $177 million a year ago. This improvement was primarily driven by effective inventory management and reduced capital expenditures. The company generated $382 million in cash from operations in fiscal 2023, a substantial improvement from the $34 million used in the prior year.
Total debt remained stable at $1.2 billion, with a gross leverage ratio of 3.1x compared to 2.9x in the previous year. Central Garden & Pet Co (NASDAQ:CENT) also repurchased approximately 65,268 shares or $2.4 million of its stock during the quarter.
Strategic Initiatives and Outlook
The company continues to advance its multi-year Cost and Simplicity program, aiming to streamline operations and enhance efficiency. This included the closure of several facilities in fiscal 2023 and the sale of its independent garden center distribution business, resulting in a gain of approximately $6 million.
Looking ahead to fiscal 2024, Central Garden & Pet Co (NASDAQ:CENT) anticipates a non-GAAP EPS of $2.50 or better, considering deflationary pressures, consumer behavior shifts, and retailer inventory dynamics amidst macroeconomic and geopolitical uncertainty. The company expects capital spending to be around $70 million, excluding potential impacts from acquisitions, divestitures, or restructuring activities.
Central Garden & Pet Co (NASDAQ:CENT) will hold a conference call to discuss these results and provide a general business update, further demonstrating its commitment to transparency and shareholder communication.
Conclusion
In conclusion, Central Garden & Pet Co (NASDAQ:CENT) has navigated a complex fiscal year with strategic focus and operational discipline. The company's stable financial performance and strong liquidity position, coupled with ongoing strategic initiatives, position it well for the coming fiscal year despite the challenging external environment.
Explore the complete 8-K earnings release (here) from Central Garden & Pet Co for further details.
This article first appeared on GuruFocus.
