Central Garden & Pet Company (NASDAQ:CENT.A) Q2 2018 Earnings Conference Call - Final Transcript

May 07, 2018 • 04:30 pm ET

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Central Garden & Pet Company (NASDAQ:CENT.A) Q2 2018 Earnings Conference Call - Final Transcript

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Presentation
Executive
Niko Lahanas

proceeds of the debt offering we closed in December of last year, partially offset by our Bell Nursery acquisition at the end of the quarter. Keep in mind that seasonally this is typically the peak of cash needs for inventory buildup for the garden season.

Total debt was $691 million versus $496 million last year, up due to the December 2017 debt offering. Our leverage ratio at the end of the quarter was 3.2 times compared to 2.5 times a year ago, well within our target range. We also have $354 million of availability on our credit line at the end of the quarter.

For the quarter, cash flow used by operations was $70 million, down from $83 million in the second quarter a year ago. Capex was $9 million versus $14 million in the second quarter of 2017. The decrease is really timing versus a year ago and we expect capex activity to pick up in the second half of the year and it's expected to total $40 million to $45 million for the year.

Depreciation and amortization for the quarter was $11 million, up from $10 million a year ago, primarily due to recent acquisitions. During the quarter we did not be purchased any of our outstanding stock and approximately $35 million remains available under the Board approved stock repurchase program.

Now, I'll turn it back over to George.

Executive
George Roeth

Thank you, Niko. Looking at all the factors including the additions of Bell and General Pet, we are changing our adjusted EPS guidance for the year, raising it to a $1.90 or higher $0.05 from the previous estimate of $1.85. It should be noted that the guidance reflects the inclusion of our new Bell acquisition around its peak earnings period without containing almost two, off-season quarters when the business typically incurs a loss.

It also reflects uncertainty around how the late start to the spring season will ultimately affect our garden and animal health businesses. So, while we can't control weather, we can't control how we execute our plan to grow revenues and market share over time. We feel good about the successes that we've achieved in getting on shelf and our plans to promote our promise to drive consumer takeaway. As POS hopefully catches up in the upcoming weeks, we remain confident in our ability to continue to drive sustainable growth across the entire company.

Now, let's open up the lines to questions.