Central Garden & Pet Company (NASDAQ:CENT.A) Q2 2017 Earnings Conference Call - Final Transcript

May 03, 2017 • 04:30 pm ET


Central Garden & Pet Company (NASDAQ:CENT.A) Q2 2017 Earnings Conference Call - Final Transcript


Loading Event

Loading Transcript


Ladies and gentlemen, thank you for standing by. Welcome to Central Garden & Pet's Second Quarter Fiscal Year 2017 Financial Results Conference Call. My name is Jessie, and I will be your conference operator for today. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the call over to Steven Zenker, VP of IR and Communications. Please go ahead.

Steve Zenker

Thank you, Jessie. Good afternoon, everyone. Thank you for joining us. With me on the call today are George Roeth, Central's President and CEO; Howard Machek, SVP, Finance and CAO; J.D. Walker, President, Garden Branded Business; Rodolfo Spielmann, President, Pet Consumer Products; and Niko Lahanas, SVP, Finance Operations and Management Reporting. Our press release providing results for our second quarter ended March 25th, 2017, is available on our website at www.central.com and contains the GAAP to non-GAAP reconciliation for the non-GAAP measures discussed on this call.

(Forward-Looking Cautionary Statements)

Now I will turn the call over to our CEO, George Roeth. George?

George Roeth

Thank you, Steve. Good afternoon, everybody. Let me start by saying we are pleased with how our second quarter played out and the progress we are making on the business. During the quarter, we continue to grow faster than our categories gaining market share in the majority of the businesses in which we compete, driven in large part by distribution gains, accelerated new product introductions and our continued ability to be faster, more flexible and more responsive to our customers' needs including helping drive the private labels business.

For the entire Company, we grew sales by 5% in the second quarter. Organic sales were up 2% despite seeing a decline in the product pricing for our wild bird feed due to lower raw material costs as well as some timing offsets for the first quarter.

Year-to-date, our organic sales growth is up 4% compared to the same period last year. In our Pet business, sales grew 8% during the quarter, with much of that growth coming from the Segrest acquisition. Pet organic growth while up just over 1% during the period and while positive, is not representative from a trend perspective.

As we foreshadowed on our last call, comparisons versus a year ago benefited our first quarter but disadvantaged our second quarter in part due to the timing of orders around certain retailer promotions. Our POS data for the pet channels, that are publicly reported to Nielsen, for the last 13 weeks ending March 25th is strong, showing Central consumer takeaway is plus 3% well above the category averages.

In the aquatics, dog toys and treats, waste management and small animal categories, we are doing particularly well, aided by increased distribution and new product activity. Keep in mind this is just for the Nielsen universe which does not include independent Pet stores as well as some of the club channels and e-commerce. The latter two are growing faster than the channels represented by the Nielsen numbers and our estimates suggest we are growing