Central Garden & Pet third quarter sales up 4.9%
Company says trend in pet revenues continues to be on the upswing
Central Garden & Pet Co. has announced its third quarter sales increased to US$459.4 million compared with US$438.0 million for the third quarter of 2014. Adjusted sales for the third quarter of 2014 were US$445.0 million.
Gross margin for the third quarter improved to 30.9% compared with 27.2% for the third quarter of 2014. Adjusted gross margin for the third quarter of 2014 was 30.6%.
Operating income for the period increased to US$39.0 million compared with US$18.4 million for the third quarter of 2014. Adjusted operating income for the third quarter of 2014 was US$33.3 million. Operating margin for the third quarter improved to 8.5% compared with 4.2% for the third quarter of 2014. Adjusted operating margin for the third quarter of 2014 was 7.5%.
Net income increased to US$18.8 million compared with US$4.7 million for the third quarter of 2014. Adjusted net income for the third quarter of 2014 was US$14.1 million. Earnings per fully diluted share for the third quarter increased to US$0.38 compared to US$0.09 for the third quarter of 2014. Adjusted earnings per fully diluted share for the third quarter of 2014 was US$0.28
On an adjusted basis, net sales improved 3 percent, gross margin improved by 30 basis points, and selling, general and administrative expenses (SG&A) as a percentage of sales improved by 70 basis points. The combination of these improvements generated an operating margin of 8.5%, a 100 basis point improvement over the prior year.
"The positive impact of the actions we have taken over the past two years to increase revenue, lower SG&A expenses and improve operating margins are clearly reflected in our third quarter financial results, which came in significantly above last year's reported and adjusted results, as well as above our earlier expectations," said John Ranelli, president & CEO of Central Garden & Pet. "The trend in Pet revenues continues to be on the upswing, and both our Garden and Pet segments showed solid gains in operating income. We are focused on continuing to drive earnings growth in the years ahead through our initiatives to increase revenues and lower costs."
While it is still early in the quarter, and there are a number of variables that could impact the company's fourth quarter results, an improvement in earnings is expected. The company expects fiscal 2015 earnings per share of US$0.63 or higher, well ahead of adjusted earnings per share of US$0.33 in the prior year.
Third quarter sales for the Pet segment increased US$11.0 million, or 4.8 percent, from the same period a year ago to US$238.1 million, due in large part to higher professional revenues and higher sales of other manufacturers' products. Professional sales benefitted from increased sales of the company's active ingredient products, including higher sales from its Envincio division, which was acquired last year. Sales of other manufacturers' products also increased, primarily due to higher sales in the e-commerce channel. Partially offsetting the revenue gains were lower revenues in the flea and tick and wild bird feed categories. The Pet segment's branded product sales were US$183.3 million in the third quarter of 2015, and sales of other manufacturers' products were US$54.8 million.
The Pet segment's operating income was US$32.9 million compared to US$28.4 million in the third quarter of 2014. The increase in operating income was largely due to the increase in sales. The Pet segment's operating margin increased 130 basis points, benefitting from increased efficiencies due to higher volume in the company's professional business, a favorable mix shift inclusive of more professional sales, lower marketing expenditures in its flea and tick business, and a higher gross margin in its dog and cat business. The aquatics and equine businesses experienced lower operating margins during the quarter, partially offsetting the gains.