Central Garden & Pet Company, a marketer and producer of branded products for the lawn and garden and pet supplies markets, announced financial results for its fiscal first quarter ended December 28, 2013.
In a release on February 4, the Company noted that it reported first quarter net sales of $290.5 million, compared with $292.5 million in the first quarter of the prior year. The Company's first quarter operating loss improved to $8.4 million compared to an operating loss of $13.1 million in the first quarter of 2013, reflecting improved gross margins and lower SG&A expense as a percent of sales. The net loss for the quarter was $12.7 million, or $0.26 per fully diluted share, compared to a net loss of $15.3 million, or $0.32 per fully diluted share in the year-ago period. The Company historically has reported a loss in its fiscal first quarter given the seasonal nature of the lawn and garden category.
"Our first quarter showed some improvement. Our focus on the customer and operational and financial fundamentals is beginning to yield results. I am pleased we are starting to see improved performance from the changes we are making," said John Ranelli, President & CEO of Central Garden & Pet. Ranelli continued, "Although we are encouraged by our progress, there is still much work to be done to get the business consistently operating as it should. I am optimistic about the Company's future and our ability to deliver improved returns to our shareholders and the highest level of service and innovative products to our customers."
Net sales for the Garden segment increased $8.6 million, or nine percent, from the same period a year ago to $105.9 million, due primarily to higher seasonal decor, wild bird feed, and professional fertilizer revenues. The Garden segment's branded product sales were $92.8 million and sales of other manufacturers' products were $13.1 million. Historically, first quarter revenues for the Garden segment have been the lowest of any quarter of the year due to the seasonality of the lawn and garden market. In the first quarter, the Garden segment's operating margin improved 290 basis points, due in large part to higher profitability in the segment's seasonal decor and wild bird feed businesses. The Garden segment's operating loss in the quarter was $6.2 million, compared to an operating loss of $8.5 million in the first quarter of 2013.
First quarter net sales for the Pet segment declined $10.6 million, or five percent, from the same period a year ago to $184.6 million, due in part to lower sales of wild bird feed and aquatics products. The Pet segment's branded product sales were $140.5 million and sales of other manufacturers' products were $44.1 million. The Pet segment's operating margin increased 260 basis points, due in part to improved results in its dog & cat businesses. The Pet segment's operating income was $14.4 million compared to $10.2 million in the prior-year period.
At December 28, 2013, the Company's cash and short-term investments balance was $30.9 million. Net interest expense was $12.2 million for the quarter compared to $10.3 million in the prior- year period. The increase was due primarily to a non-cash charge of $1.7 million for unamortized deferred financing costs related to the previous revolving credit facility which was replaced on December 5, 2013. Depreciation and amortization expense was $8.3 million in the first quarter of 2014, compared with $8.0 million in the prior-year period. The Company's effective tax rate for the first quarter of 2014 was 38 percent on its operating loss, compared with 37 percent in the prior-year period.
Total debt at December 28, 2013 was $449.5 million compared to $450.8 million at December 29, 2012. As of December 28, 2013, there were no borrowings outstanding on the Company's senior secured asset- based revolving credit facility. The Company was in compliance with all debt covenants at the end of the first quarter.
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