Central Garden & Pet Company (NASDAQ:CENT.A) Q2 2016 Earnings Conference Call - Final Transcript

May 04, 2016 • 04:30 pm ET


Central Garden & Pet Company (NASDAQ:CENT.A) Q2 2016 Earnings Conference Call - Final Transcript


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Greetings, and welcome to the Central Garden & Pet's Second Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Steve Zenker, Vice President of Investor Relations and Communications for Central Garden & Pet. Please go ahead, sir.

Steven Zenker

Thank you, Kevin. Good afternoon, everyone. Thank you for joining us. With me on the call today are John Ranelli, Central's President and Chief Executive Officer; Howard Machek, Senior Vice President of Finance and Chief Accounting Officer; J.D. Walker, Executive Vice President and GM, Garden Brands; Niko Lahanas, Senior Vice President, Operations and Management Reporting; and George Roeth, the member of our Board of Directors, who will become CEO on June 1st. Our press release providing results for our second quarter ended March 26, 2016 is available on our website at www.central.com.

Before I turn the call over to John, I would like to remind you that statements made during this conference call, which are not historical facts, including adjusted EPS guidance for 2016, expectations for new product introductions, future acquisitions, and improved revenue and profitability are forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from those implied by forward-looking statements.

These risks and others are described in Central's Securities and Exchange Commission filings, including our Annual Report on Form 10-K filed on December 10, 2015. Central undertakes no obligation to publicly update these forward-looking statements to reflect new information, subsequent events or otherwise.

Now, I would turn the call over to John Ranelli. John?

John R. Ranelli

Thank you, Steve. Good afternoon, everyone. Thank you for joining us today. Revenues in the second quarter of $541 million were the highest for any quarter in Central's history. Our earnings of $0.65 per share were the highest for any quarter in the last 10 years. These results exemplify the very strong performance we have enjoyed over the past two years. In fact, it was our fourth consecutive quarter of revenue increases, which have averaged almost 8% over the period.

These results reflect our balanced strategy of focusing relentlessly on increasing sales while lowering costs at the same time. We are committed to growing organically. We are increasing the pace of new product introductions, we are investing in capital expenditures to provide capacity for our fastest growing businesses and expanding our products to new channels and new markets.

Another driver in increasing our revenues and profits is actively managing and improving our portfolio of businesses. Our three most recent acquisitions, DMC, IMS, and Hydro-Organics accounted for $38 million of sales this quarter. This more than offset the loss of $10 million in revenue due to our exit from two pieces of business that were only marginally profitable.

We have worked hard to bring down costs. We began by driving out inefficiencies. We also reduced ineffective marketing spend. We did