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Central Garden & Pet Co.$34.26$.862.57%

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 Central Garden & Pet Company Announces Fiscal 2015 & Fourth Quarter Results
   Monday, December 07, 2015 4:02:00 PM ET

--Fiscal 2015 adjusted diluted EPS of $0.74 vs. adjusted diluted EPS of $0.33 for fiscal 2014

Central Garden & Pet Company (CENT ) (CENTA ), a leading innovator, marketer and producer of quality branded products for the lawn and garden and pet supplies markets, today announced financial results for its full year and fourth quarter ended September 26, 2015.

"2015 was a year of major accomplishments for Central. The operational and financial success we are achieving is now very evident in our financial results and is validation that the multi-year plan we outlined in 2013 is working, and we are on plan and the right path, said John Ranelli, President & CEO of Central Garden & Pet. "In addition to realizing the positive results from our efforts to put our customers first, lower our expenses and operate more efficiently, we are now beginning to see the effects of the initiatives we undertook during 2015 to grow our top line." Ranelli concluded, "I couldn’t be more pleased with the progress that we are continuing to make and expect another year of solid progress in 2016."

The Company currently expects continued growth in 2016, with adjusted earnings per fully diluted share expected to increase at least 28% to $0.95 or higher. This includes the interest savings from its recent refinancing, but adjusting for a one-time call premium, 30 days of extra interest expense and unamortized financing costs. While adjusted earnings for the year are expected to be higher, adjusted earnings for the first quarter are expected to be relatively flat vs. the prior year due to revenue timing differences.

Fiscal 2015 Financial Highlights

Fiscal 2015 adjusted operating income and adjusted earnings per share exclude a Pet non-cash intangible impairment charge of $7.3 million. Fiscal 2014 adjusted operating income and earnings per share exclude a $16.9 million Garden charge for the discontinuance of products and a $4.9 million gain on the sale of plant manufacturing assets.

-- Sales increased 3% to $1.65 billion compared to $1.60 billion a year ago. Adjusted sales were $1.61 billion a year-ago;

-- Branded product sales increased 1% to $1.32 billion compared to $1.31 billion for the same period a year ago. Sales of other manufacturers’ products increased 12% to $335.7 million compared to $300.0 million a year ago;

-- Gross profit increased 7.5% to $488.1 million compared to $454.0 million a year ago. Gross margin rose 130 basis points to 29.6% compared to 28.3% a year ago;

-- SG&A expense as a percentage of sales declined 120 basis points to 23.6% compared to 24.8% a year ago. Adjusted SG&A as a percentage of sales declined 140 basis points to 23.6% compared to 25.0% a year ago;

-- Operating income increased 63% to $91.4 million compared to $56.2 million a year ago. Adjusted operating income was up 45% to $98.7 million compared to $68.2 million a year ago;

-- Pet operating income increased 12% to $98.8 million, compared to $88.1 million a year ago. Adjusted Pet operating income was up 20% to $106.1 million, compared to $88.1 million (GAAP) a year ago;

-- Garden operating income increased 47% to $60.1 million, compared to $41.0 million a year ago, and was up 13% compared to adjusted operating income of $53.1 million a year ago;

-- Operating margin increased 200 basis points to 5.5% compared to 3.5% a year ago. Adjusted operating margin increased 180 basis points to 6.0% compared to 4.2% a year ago;

-- Net income increased 264% to $32.0 million compared to $8.8 million a year ago. Adjusted net income increased 123% to $36.6 million compared to $16.4 million a year ago; and

-- Earnings per fully-diluted share increased 256% to $0.64 compared to $0.18 a year ago. Adjusted earnings per fully-diluted share increased 124% to $0.74 compared to $0.33 a year ago.

Fiscal 2015 Fourth Quarter Financial Highlights

-- Fourth quarter adjusted earnings per share were positive for the first time in recent years;

-- Sales increased 3% to $386.4 million compared to $374.2 million in the fourth quarter a year ago;

-- Branded product sales increased 2% to $309.3 million compared to $304.4 million in the fourth quarter a year ago. Sales of other manufacturers’ products increased 10% to $77.1 million from $69.8 million in the in the fourth quarter a year ago;

-- Gross profit was flat at $108.0 million compared to $107.6 million in the fourth quarter a year ago. Gross margin for the fourth quarter declined 80 basis points to 27.9% compared to 28.7% in the fourth quarter a year ago;

-- SG&A expense as a percentage of sales for the fourth quarter decreased 270 basis points to 25.7% compared to 28.4% in the fourth quarter a year ago. Adjusted SG&A as a percentage of sales for the fourth quarter of 2015 declined 340 basis points to 25.7% compared to 29.1% in the fourth quarter a year ago;

-- Operating income decreased 7% to $1.3 million compared to $1.4 million in the same period a year ago. Adjusted operating income increased to $8.6 million compared to an adjusted operating loss of $1.5 million in the fourth quarter a year ago;

-- Operating margin decreased 10 basis points to 0.3% compared to 0.4% in the fourth quarter a year ago. Adjusted operating margin for the fourth quarter of 2015 increased 260 basis points to 2.2% compared to (0.4%) in the fourth quarter a year ago;

-- Net loss increased 7% to $4.4 million compared to a loss of $4.1 million in the fourth quarter a year ago. Adjusted net income for the fourth quarter of 2015 was $0.3 million versus a net loss of $5.9 million in the fourth quarter a year ago; and

-- Loss per fully-diluted share increased to $0.09 compared to $0.08 in the fourth quarter a year ago. Adjusted earnings per fully-diluted share were $0.01 compared with a loss of $0.12 in the fourth quarter a year ago

Pet Segment Fourth Quarter Details

Fourth quarter sales for the Pet segment increased $18.5 million, or 8.5 percent to $235.6 million, from the same period a year ago. Sales rose in most pet categories, particularly in the dog and cat and professional categories, as well as in sales of other manufacturers’ products. The dog and cat category benefitted from including two months revenue from the IMS acquisition, which closed during the fourth quarter. The Pet segment’s branded product sales were $180.9 million in the fourth quarter of 2015, and sales of other manufacturers’ products were $54.8 million.

The Pet segment’s operating income on a GAAP basis for the fourth quarter was $18.2 million compared to $21.1 million in the fourth quarter of 2014. On an adjusted basis, excluding a $7.3 million non-cash intangibles impairment charge, the Pet segment’s operating income increased $4.4 million to $25.5 million. The increase in adjusted operating income was largely due to higher sales during the period as well as lower SG&A expenses. The Pet segment’s adjusted operating margin increased 110 basis points, primarily due to lower SG&A expenses in the Company’s flea & tick, dog and cat, and small animal businesses.

Garden Segment Fourth Quarter Details

Sales for the Garden segment were $150.8 million, a decrease of $6.4 million or 4.1 percent compared to the fourth quarter of 2014. The decrease in sales was largely due to a decline in grass seed and decor revenue. Higher wild bird feed sales and sales of other manufacturers’ products moderated the Garden sales decline. The Garden segment’s branded product sales were $128.5 million in the fourth quarter of 2015, and sales of other manufacturers’ products were $22.3 million.

The Garden segment’s operating income in the fourth quarter of 2015 decreased by $5.5 million, to $0.9 million, compared to reported operating income in the fourth quarter of 2014 of $6.4 million. Adjusted operating income for the fourth quarter of 2014, excluding a $2.9 million gain on the sale of plant manufacturing assets, was $3.6 million. The Garden segment’s operating margin declined to 0.6% compared to the operating margin in the prior year period of 4.1% on a GAAP basis and declined to 2.3% on an adjusted basis. The decline in operating income and margin was primarily due to lower profitability in the decor category. Partially offsetting the decor decline were higher operating margins in the grass seed and wild bird feed businesses.

Additional Information

At September 26, 2015, the Company’s cash and short-term investments balance was $47.6 million, compared to $88.7 million a year ago. For fiscal year 2015, cash flow from operations was $87.4 million. Cash flow from operations for the fourth quarter of 2015 was $30.8 million, compared to $57.6 million in the fourth quarter of 2014. The Company’s inventory balance rose by $9.6 million from a year ago, due to increasing sales and a fourth quarter acquisition.

The Company’s long-term debt declined to $400.1 million at September 26, 2015 compared to $450.2 million at September 27, 2014. Net interest expense for the fourth quarter of fiscal 2015 was $8.6 million for the period compared to $9.7 million in the prior-year period. The lower debt and interest expense is reflective of lower average borrowings due to the redemption of $50 million of the Company’s 8.25% senior subordinated notes due March 2018 earlier this year.

Subsequent to the end of the fiscal year, the Company issued $400 million of 6.125% senior unsecured notes and redeemed its remaining outstanding 8.25% senior subordinated notes. This issuance is expected to result in annualized interest savings of approximately $8.5 million. The issuance is also expected to result in a charge in our fiscal 2016 first quarter of approximately $8.3 million related to the payment of the call premium and a $3.2 million non-cash charge for the write-off of unamortized financing costs in interest expense. The first quarter of 2016 will also include 30 days of overlapping interest payments, resulting in one-time additional interest expense of approximately $2.8 million.

Depreciation and amortization expense for fiscal year 2015 was $33.7 million, compared with $35.8 million in fiscal year 2014. The Company’s effective tax rate for the fiscal year 2015 was 36.0 percent, compared with 29.2 percent for fiscal year 2014. The prior year benefitted from a release of valuation allowances.

Conference Call

The Company will host a conference call today at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time to discuss its full year and fourth quarter results. The conference call will be accessible via the internet through Central’s website, http://ir.central.com .

Alternatively, to listen to the call by telephone, dial (201) 689-8345 (domestic and international) using confirmation # 13623200. A replay of the call will be available for ten days by dialing (201) 612-7415 and entering confirmation #13623200.

About Central Garden & Pet

Central Garden & Pet Company is a leading innovator, marketer and producer of quality branded products for the lawn & garden and pet supplies markets. Committed to new product innovation, our products are sold to specialty, independent and mass retailers. Participating categories in Lawn & Garden include: Grass seed and the brands PENNINGTON(R), and THE REBELS(R); wild bird feed and the brand PENNINGTON(R); weed and insect control and the brands AMDRO(R), SEVIN(R), IRONITE(R) and OVER-N-OUT(R); and decorative outdoor patio products under the PENNINGTON (R) brand. We also provide a host of other regional and application-specific garden brands and supplies. Participating categories in Pet include: Animal health and the brands ADAMS(TM) and ZODIAC(R); aquatics and reptile and the brands AQUEON(R), CORALIFE(R) and ZILLA(R); bird & small animal and the brands KAYTEE(R), Forti-Diet(R) and CRITTER TRAIL(R); dog & cat and the brands TFH(TM), NYLABONE(R), FOUR PAWS(R), IMS(TM), PINNACLE(R) and AVODERM(R); and equine and the brands FARNAM(R), HORSE HEALTH(TM) and VITAFLEX(R). We also provide a host of other application-specific pet brands and supplies. Central Garden & Pet Company is based in Walnut Creek, California, and has approximately 3,300 employees, primarily in North America. For additional information on Central Garden & Pet Company, including access to the Company’s SEC filings, please visit the Company’s website at www.central.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this release which are not historical facts, including earnings guidance for fiscal 2016 and expectations for future favorable results are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. All forward-looking statements are based upon the Company’s current expectations and various assumptions. There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this release including, but not limited to, the following factors:

-- seasonality and fluctuations in the Company’s operating results and cash flow;

-- fluctuations in market prices for seeds and grains and other raw materials and the Company’s ability to pass through cost increases in a timely manner;

-- adverse weather conditions;

-- dependence on a small number of customers for a significant portion of our business;

-- uncertainty about new product innovations and marketing programs;

-- dependence upon key executives and the ability to execute on our succession plan; and

-- competition in our industries

-- failure of acquired businesses to achieve expected results

These risks and others are described in the Company’s Securities and Exchange Commission filings. The Company undertakes no obligation to publicly update these forward-looking statements to reflect new information, subsequent events or otherwise.

 
                                                                                   CENTRAL GARDEN & PET COMPANY
                                                                                        
                                                                                    CONSOLIDATED BALANCE SHEETS
                                                                                                                  
                                                                                                              September 26,                                             September 27,
                                                                                                                  2015                                                      2014
                                                                                                     -----------------------------                       ----------------------------------------
                                     ASSETS
-------------------------------------------------------------------------------
 
Current assets:
                                                                                                                        (in thousands)
-------------------------------------------------------------------------------
Cash and cash equivalents                                                                                               $    47,584                                         $               78,676
Restricted cash                                                                                                              13,157                                                         14,283
Short term investments                                                                                                            0                                                          9,990
Accounts receivable, net                                                                                                    207,402                                                        193,729
Inventories                                                                                                                 335,946                                                        326,386
Prepaid expenses, deferred income taxes and other                                                         49,731                                      48,488
                                                                                                     -------------------- ---------                      -------------------- --------------------
     Total current assets                                                                                                   653,820                                                        671,552
Plant, property and equipment, net                                                                                          162,809                                                        166,849
Goodwill                                                                                                                    209,089                                                        208,233
Other intangible assets, net                                                                                                 75,460                                                         87,997
Other assets                                                                                              33,576                                      14,096
                                                                                                     -------------------- ---------                      -------------------- --------------------
     Total                                                                                                              $ 1,134,754                                         $            1,148,727
                                                                                                     ==================== =========                      ==================== ====================
                             LIABILITIES AND EQUITY
Current liabilities:
 Accounts payable                                                                                                       $    88,889                                         $               88,428
 Accrued expenses                                                                                                            87,724                                                         84,379
 Current portion of long-term debt                                                                           291                                         291
                                                                                                     -------------------- ---------                      -------------------- --------------------
     Total current liabilities                                                                                              176,904                                                        173,098
Long-term debt                                                                                                              399,848                                                        449,948
Deferred income taxes and other long-term obligations                                                                        51,622                                                         39,228
                                                                                                                                                          
Equity:
 Common stock                                                                                                                   119                                                            124
 Class A common stock                                                                                                           364                                                            369
 Class B stock                                                                                                                   16                                                             16
 Additional paid-in capital                                                                                                 388,636                                                        396,586
 Retained earnings                                                                                                          115,987                                                         86,396
 Accumulated other comprehensive income                                                                      164                                       1,232
                                                                                                     -------------------- ---------                      -------------------- --------------------
     Total Central Garden & Pet shareholders’ equity                                             505,286                                                        484,723
   Noncontrolling interest                                                                                 1,094                                       1,730
                                                                                                     -------------------- ---------                      -------------------- --------------------
     Total equity                                                                                        506,380                                     486,453
                                                                                                     -------------------- ---------                      -------------------- --------------------
     Total                                                                                                              $ 1,134,754                                         $            1,148,727
                                                                                                     ==================== =========                      ==================== ====================
                                                                                                                                                                               
                                                                                                                                                                                              
                                                                                                                                                                   CENTRAL GARDEN & PET COMPANY
                                                                                                                                                                        
                                                                                                                                                               CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                                                                                                                                                                                      
                                                                                                                                          Three Months Ended                                                                                                                               Fiscal Year Ended
                                                                                       -------------------------------------------------------------------------------------------------------------------------                     -----------------------------------------------------------------------------------------------------------------------------
                                                                                                          September 26,                                       September 27,                                                           September 26,                                         September 27,
                                                                                                              2015                                                                   2014                                                                    2015                                                                     2014
                                                                                       -----------------------------------------------                        -----------------------------------------------                        -------------------------------------------------                        -------------------------------------------------
                                                                                                                                                                                                        (in thousands, except per share amounts)
Net sales                                                                                                 $ 386,369                                                              $ 374,238                                                              $ 1,650,737                                                              $ 1,604,357
Cost of goods sold and occupancy                                                         278,397                          266,682                          1,162,685                          1,150,333  
                                                                                       -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
   Gross profit                                                                                             107,972                                                                107,556                                                                  488,052                                                                  454,024
Selling, general and administrative expenses                                                                 99,367                                                                106,183                                                                  389,345                                                                  397,811
Intangible asset and goodwill impairment                                                   7,272                                0                              7,272                                  0  
                                                                                       -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
   Income from operations                                                                                     1,333                                                                  1,373                                                                   91,435                                                                   56,213
Interest expense                                                                                             (8,670 )                                                               (9,793 )                                                                (40,027 )                                                                (42,844 )
Interest income                                                                                                  33                                                                     51                                                                      129                                                                       94
Other income (expense)                                                                       (83 )                                                 7                                 13                                403  
                                                                                       -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
Income (loss) before income taxes and noncontrolling interest                                                (7,387 )                                                               (8,362 )                                                                 51,550                                                                   13,866
Income tax expense (benefit)                                                              (2,992 )                                            (4,172 )                                              18,535                              4,045  
                                                                                       -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
Net income (loss) including noncontrolling interest                                                          (4,395 )                                                               (4,190 )                                                                 33,015                                                                    9,821
Net income attributable to noncontrolling interest                                           (26 )                                              (120 )                                               1,044                              1,017  
                                                                                       -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
Net income (loss) attributable to Central Garden & Pet Company                                            $  (4,369 )                                                            $  (4,070 )                                                            $    31,971                                           $     8,804  
                                                                                       ==================== ======= ====================                      ==================== ======= ====================                      ==================== ========= ====================                      ==================== ========= ====================
Net income (loss) per share attributable to Central Garden & Pet
Company:
   Basic                                                                                                  $   (0.09 )                                                            $   (0.08 )                                                            $      0.66                                                              $      0.18
   Diluted                                                                                                $   (0.09 )                                                            $   (0.08 )                                                            $      0.64                                                              $      0.18
Weighted average shares used in the computation of net income per
share:
   Basic                                                                                                     48,322                                                                 49,324                                                                   48,562                                                                   48,880
   Diluted                                                                                                   48,322                                                                 49,324                                                                   49,638                                                                   49,397
                                                                                                                                                                                                                                                                                                                                              

Use of Non-GAAP Financial Measures

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures that exclude the impact of Pet segment charges related to a non-cash intangible asset impairment in fiscal 2015 and Garden segment charges in fiscal 2014 and Garden segment gains recognized during fiscal 2014 related to the sale of plant assets may be useful in certain instances to provide additional meaningful comparisons between current results and results in prior periods that should be considered when assessing our ongoing performance. The Company believes that these non-GAAP financial measures provide useful information to investors and other users of its financial statements, such as lenders. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company’s performance. While the Company’s management believes that non-GAAP measurements are useful supplemental information, such adjusted results are not intended to replace the Company’s GAAP financial results and should be read in conjunction with those GAAP results.

 
                                                                                                                                CENTRAL GARDEN & PET COMPANY
                                                                                                                       CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                                                                                                                     (unaudited, in thousands, except per share amounts)
                                                                                               GAAP Fourth                                        Intangible                                        Adjusted Fourth
                                                                                                                 Quarter 2015                                                         Impairment (A)                                                          Quarter 2015
                                                                                              -----------------------------------------------                        ----------------------------------------------                        -----------------------------------------------
Net sales                                                                                                        $ 386,369                                                              $      -                                                              $ 386,369
Cost of goods sold and occupancy                                                                278,397                                                                             278,397  
                                                                                              -------------------- ------- --------------------                      -------------------------------------------------                     -------------------- ------- --------------------
Gross profit                                                                                                       107,972                                                                     -                                                                107,972
Selling, general and admin expenses and impairment                                              106,639                          (7,272 )                                            99,367  
                                                                                              -------------------- ------- --------------------                      -------------------- ------ --------------------                      -------------------- ------- --------------------
Income (loss) from operations                                                                     1,333                           7,272                            8,605  
                                                                                              -------------------- ------- --------------------                      -------------------- ------ --------------------                      -------------------- ------- --------------------
Net income (loss) attributable to Central Garden & Pet Company                                                   $  (4,369 )                                                            $  4,654                                           $     285  
                                                                                              ==================== ======= ====================                      ==================== ====== ====================                      ==================== ======= ====================
                                                                                                                                                                                                                                            
Earnings per share - Diluted                                                                                     $   (0.09 )                                                                                                                                  $    0.01
                                                                                                                                                                                                                                            
Weighted shares outstanding - Diluted                                                                               48,322                                                                                                                                       49,922
   Gross margin                                                                                                       27.9 %                                                                                                                                       27.9 %
   Selling, general and administrative expenses as a percentage of sales                                              25.7 %                                                                                                                                       25.7 %
   Operating margin                                                                                                    0.3 %                                                                                                                                        2.2 %
                                                                                                                                                                                                                                                                         
 
                                                                                                                                                      CENTRAL GARDEN & PET COMPANY
                                                                                                                                             CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                                                                                                                                           (unaudited, in thousands, except per share amounts)
                                                                                               GAAP Fourth                          Garden Charge                         Gain on Plant                                      Adjusted Fourth
                                                                                                                 Quarter 2014                                                                                                     Assets Sale (B)                                                         Quarter 2014
                                                                                              -----------------------------------------------                        ---------------------                       ----------------------------------------------                        -----------------------------------------------
Net sales                                                                                                        $ 374,238                                                              $ -                                         $      -                                                              $ 374,238
Cost of goods sold and occupancy                                                                266,682                                                                                                      266,682  
                                                                                              -------------------- ------- --------------------                      -----------------------                     -------------------------------------------------                     -------------------- ------- --------------------
Gross profit                                                                                                       107,556                                                                -                                                -                                                                107,556
Selling, general and admin expenses                                                             106,183                                                    2,879                          109,062  
                                                                                              -------------------- ------- --------------------                      -----------------------                     -------------------- ------ --------------------                      -------------------- ------- --------------------
Income (loss) from operations                                                                     1,373                          -                        (2,879 )                                            (1,506 )
                                                                                              -------------------- ------- --------------------                      -------------------- -                      -------------------- ------ --------------------                      -------------------- ------- --------------------
Net loss                                                                                                         $  (4,070 )                                                            $ -                                         $ (1,814 )                                                            $  (5,884 )
                                                                                              ==================== ======= ====================                      ==================== =                      ==================== ====== ====================                      ==================== ======= ====================
                                                                                                                                                                                                                                                                                        
Loss per share - Diluted                                                                                         $   (0.08 )                                                                                                                                                                              $   (0.12 )
                                                                                                                                                                                                                                                                                        
Weighted shares outstanding                                                                                         49,324                                                                                                                                                                                   49,324
   Gross margin                                                                                                       28.7 %                                                                                                                                                                                   28.7 %
   Selling, general and administrative expenses as a percentage of sales                                              28.4 %                                                                                                                                                                                   29.1 %
   Operating margin                                                                                                    0.4 %                                                                                                                                                                                   (0.4 %)
                                                                                                                                                                                                                                                                                        
(A) In the fourth quarter of fiscal 2015, we recognized a non-cash
intangible asset impairment charge within our Pet segment.
 
(B) The garden charges reflect the impact of a Garden segment charge
in fiscal 2014 related to the discontinuance of certain products.
                                                                     
                                                                                                                                                                               GAAP to Non-GAAP Reconciliation
                                                                                                                                                                                       (unaudited, in
                                                                                                                                                                            thousands, except per share amounts)
                                                                                                                                                                            For the Year Ended September 26, 2015
                                                                                         -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Fiscal 2015                                             Intangible                                               Fiscal 2015
                                                                                                                 GAAP                                                                  Impairment (A)                                                                As Adjusted
                                                                                         -------------------------------------------------                        ------------------------------------------------------                        -------------------------------------------------
Net sales                                                                                                   $ 1,650,737                                                              $ --                                                              $ 1,650,737
Cost of goods sold and occupancy                                                           1,162,685                          --                          1,162,685  
                                                                                         -------------------- --------- --------------------                      -------------------- -------------- --------------------                      -------------------- --------- --------------------
Gross profit                                                                                                    488,052                                                                --                                                                  488,052
Selling, general and administrative expenses and impairment                                  396,617                                  (7,272 )                                             389,345  
                                                                                         -------------------- --------- --------------------                      -------------------- -------------- --------------------                      -------------------- --------- --------------------
Income from operations                                                                        91,435                                   7,272                             98,707  
                                                                                         -------------------- --------- --------------------                      -------------------- -------------- --------------------                      -------------------- --------- --------------------
Net income attributable to Central Garden & Pet Company                                                     $    31,971                                           $          4,654                                           $    36,625  
                                                                                         ==================== ========= ====================                      ==================== ============== ====================                      ==================== ========= ====================
Earnings per share - Diluted                                                                                $      0.64                                                                                                                                            $      0.74
Weighted shares outstanding                                                                                      49,638                                                                                                                                                 49,638
   Gross margin                                                                                                    29.6 %                                                                                                                                                 29.6 %
   Selling, general and administrative expenses and impairment as a                                                24.0 %                                                                                                                                                 23.6 %
   percentage of sales
   Operating margin                                                                                                 5.5 %                                                                                                                                                  6.0 %
                                                                                                                                                                                                                                                                                
                                                                             
                                                                                                                                                                                                               GAAP to Non-GAAP Consolidated Reconciliation
                                                                                                                                                                                                                                (unaudited,
                                                                                                                                                                                                                  in thousands, except per share amounts)
                                                                                                                                                                                                                 For Fiscal Year Ended September 27, 2014
                                                                                                 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                      Fiscal 2014                                        Garden Charge                                     Gain on Sale of                                        Fiscal 2014
                                                                                                                         GAAP                                                                    (B)                                                            Plant Assets (C)                                                           As Adjusted
                                                                                                 -------------------------------------------------                        ----------------------------------------------                        ----------------------------------------------                        -------------------------------------------------
                                                                                                                                                                                                                                                                                                                       
Net sales                                                                                                           $ 1,604,357                                                              $  7,035                                                              $      -                                                              $ 1,611,392
Cost of goods sold and occupancy                                                                   1,150,333                          (9,873 )                                                                                              1,140,460  
                                                                                                 -------------------- --------- --------------------                      -------------------- ------ --------------------                      -------------------------------------------------                     -------------------- --------- --------------------
Gross profit                                                                                                            454,024                                                                16,908                                                                                                                                        470,932
Selling, general and administrative expenses                                                         397,811                                                                              4,875                            402,686  
                                                                                                 -------------------- --------- --------------------                      -------------------------------------------------                     -------------------- ------ --------------------                      -------------------- --------- --------------------
Income from operations                                                                                              $    56,213                                           $ 16,908                                           $ (4,875 )                                                            $    68,246  
                                                                                                 -------------------- --------- --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- --------- --------------------
Net income (loss)                                                                                                   $     8,804                                           $ 10,652                                           $ (3,071 )                                                            $    16,385  
                                                                                                 ==================== ========= ====================                      ==================== ====== ====================                      ==================== ====== ====================                      ==================== ========= ====================
Net loss per share attributable to Central Garden & Pet Co.
Earnings per share - Diluted                                                                           $      0.18                                                                                                                                                                                                          $      0.33
Weighted shares outstanding                                                                                              49,397                                                                                                                                                                                                               49,397
   Gross margin                                                                                                            28.3 %                                                                                                                                                                                                               29.2 %
      Selling, general and administrative expenses as a percentage of sales                                                24.8 %                                                                                                                                                                                                               25.0 %
   Operating margin                                                                                                         3.5 %                                                                                                                                                                                                                4.2 %
   (A) In the fourth quarter of fiscal 2015, we recognized a non-cash
   intangible asset impairment charge within our Pet segment.
 
   (B) The garden charges reflect the impact of a Garden segment charge
   in fiscal 2014 related to the discontinuance of certain products.
 
   (C) In fiscal 2014, we recognized a gain from the sale of
   manufacturing plant assets related to a product the Garden segment
   will now purchase rather than produce.
 
                                                                       
                                                                                                                                                       Non-GAAP Consolidated Comparative Summary
                                                                                                                                                  (unaudited, in thousands, except per share amounts)
                                                                                              Three Months           Three Months        Fiscal Year Ended              Fiscal Year Ended
                                                                                                  Ended                                     Ended                             September 26, 2015                                September 27, 2014
                                                                                           September 26, 2015                        September 27, 2014
                                                                                           ----------------                        -------------------                        ----------------                        -----------------------------------
Adjusted net sales                                                                              $ 386,369                               $ 374,238                                  $ 1,650,737                             $ 1,611,392
Adjusted gross profit                                                                             107,972                                 107,556                                  $   488,052                             $   470,932
Adjusted gross margin                                                                                27.9 %                                  28.7 %                                       29.6 %                                  29.2 %
Adjusted selling, general and administrative expenses                                           $  99,367                               $ 109,062                                  $   389,345                             $   402,686
Adjusted selling, general and administrative as a percentage of sales                                25.7 %                                  29.1 %                                       23.6 %                                  25.0 %
Adjusted income from operations                                                                 $   8,605                               $  (1,506 )                                $    98,707                             $    68,246
Adjusted operating margin                                                                             2.2 %                                  (0.4 %)                                       6.0 %                                   4.2 %
Adjusted EPS - diluted                                                                          $    0.00                                  ($0.12 )                                $      0.74                             $      0.33
                                                                                                                                                                                                                                        
Pet Segment:                                                  Fiscal 2015                                                Fiscal 2014
                                                            ------------------------------------------------------------------------ ---------------------------------------------------------------
                                                                 Income from        Operating       Income from             Operating
                                                                 Operations                             Margin                            Operations                                  Margin
                                                            --------------------                      ---------                      --------------------                      --------------------
Fiscal year as reported (GAAP)                                          $ 98,798                          11.0%                                  $ 88,077                                     10.4%
Intangible asset impairment charge (A)                                     7,272                                                      
                                                            --------------------                                                     --------------------
Fiscal year as adjusted                                                $ 106,070                          11.9%                                  $ 88,077                                     10.4%
                                                            ====================                                                     ====================
                                                                                                                                                                                
Garden Segment                                                   Fiscal 2015                                                                                   Fiscal 2014
                                                                  Net Sales                                                                                     Net Sales
                                                            --------------------                                                     ------------------------------------------------------------
Fiscal year as reported (GAAP)                                         $ 756,188                                                                                                          $ 758,852
     Garden charge (B)                                                         -                                                                                                              7,035
                                                            --------------------                                                     ---------------------------------------------------------------
Fiscal year as adjusted                                                $ 756,188                                                                                                          $ 765,887
                                                            ====================                                                     ===============================================================
                                                                                                                                      
                                                                 Income from                           Operating                          Income from                                Operating
                                                                 Operations                             Margin                            Operations                                  Margin
                                                            --------------------                      ---------                      --------------------                      --------------------
Fiscal year as reported (GAAP)                                          $ 60,145                           8.0%                                  $ 41,020                                      5.4%
Garden charge (B)                                                                                                                                  16,908
Gain on sale of plant assets (C)                                                                                               (4,875)
                                                            --------------------                                                     --------------------
Fiscal year as adjusted                                                 $ 60,145                           8.0%                                  $ 53,053                                      6.9%
                                                            ====================                                                     ====================
   (A) In fiscal 2015, we recognized a non-cash intangible asset
   impairment charge within our Pet segment.
 
   (B) The garden charges reflect the impact of a Garden segment charge
   in fiscal 2014 related to the discontinuance of certain products.
 
   (C) In fiscal 2014, we recognized a gain from the sale of
   manufacturing plant assets related to a product the Garden segment
   will now purchase rather than produce.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20151207006274r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20151207006274/en/

SOURCE: Central Garden & Pet Company

Central Garden & Pet Company 
Contact: Steve Zenker, 925-948-3657 
VP of Investor Relations & Communications


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