The following is a summary of the Central Garden & Pet Company (CENT) Q4 2024 Earnings Call Transcript:

Financial Performance:

• Central Garden & Pet reported fiscal year 2024 net sales of $3.2 billion, a decrease of 3% compared to the prior year.

• Non-GAAP gross profit for the year was $960 million with a gross margin expansion of 110 basis points to 30%.

• Non-GAAP net income was $142 million with earnings per share (EPS) of $2.13, up from the prior year and above guidance.

• The company achieved a record cash flow year, with operations providing $395 million.

• Fourth-quarter net sales were $669 million, down 11%, primarily attributed to lapping an extra week from the previous year.

Business Progress:

• Central implemented significant steps in its Cost and Simplicity program, aiming to streamline operations and enhance efficiency.

• The company focused on consolidating operations such as merging their Arden outdoor cushion, dog bed, and K&H businesses which led to the closure of two leased facilities and shifted production to own facilities.

• As part of sustainability initiatives, Central participated in community events sponsored by Lowe's and Home Depot Foundations and released an impact report aligning operational goals with environmental responsibility.

Opportunities:

• Central continues to expand and optimize ecommerce capabilities, significantly growing its ecommerce sales to 29% of total pet sales.

• The company is prepared to leverage opportunities presented by a favorable M&A environment post-elections, equipped with a solid liquidity position to pursue high-growth consumables companies with accretive margins.

Risks:

• The company forecasts a challenging external environment with macroeconomic and geopolitical uncertainties including pressure on consumer spending and competitive market conditions.

• Anticipated significant headwinds in the brick-and-mortar retail sector, alongside the threat of extreme weather impacting the seasonal garden business.

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