Central Garden & Pet Company (CENT) Q1 2026 Earnings Call Transcript
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4d ago
0mins
Should l Buy CENT?
Source: SeekingAlpha
Net Sales $617 million, a 6% year-over-year decline. Reasons: Timing of retailer spring inventory shipments in the Garden and Pet segments, portfolio optimization efforts, rationalizing lower-margin categories, closure of U.K. operations, and transitioning European business to a direct export model.
Non-GAAP Gross Profit $190 million compared with $196 million, while non-GAAP gross margin expanded 100 basis points to 30.8%. Reasons: Productivity gains and improved mix.
Non-GAAP SG&A Expense $166 million, down 1% versus the prior year. As a percentage of sales, it was 26.8% compared with 25.5%. Reasons: Disciplined cost management.
Non-GAAP Operating Income $24 million compared with $28 million. Non-GAAP operating margin was 3.9% compared with 4.3%. Reasons: Shipment timing and portfolio optimization efforts.
Non-GAAP Net Income $13 million compared with $14 million in the prior year. Reasons: Shipment timing and portfolio optimization efforts.
Adjusted EBITDA $50 million compared to $55 million. Reasons: Shipment timing and portfolio optimization efforts.
Pet Segment Net Sales $416 million, a 3% year-over-year decline. Reasons: Portfolio optimization efforts, shipments shifting into the second quarter, and temporary shipment hold. Partially balanced by growth in Rawhide and Animal Health businesses.
Pet Segment Non-GAAP Operating Income $50 million compared with $51 million. Non-GAAP operating margin improved to 12.1% from 12%. Reasons: Consistent execution across core categories.
Garden Segment Net Sales $202 million, a 12% decline. Reasons: Shipment timing, transition of third-party distribution product lines, and rationalization of live plants categories. Partially balanced by growth in Wild Bird business.
Garden Segment Non-GAAP Operating Loss $2 million compared with income of $2 million. Non-GAAP operating margin was negative 1.2% compared to positive 1.1%. Reasons: Shipment timing offsetting productivity gains and cost management.
Cash Used by Operations $70 million for the quarter compared with $69 million a year ago. Reasons: Timing of shipments.
CapEx $11 million compared to $6 million. Reasons: Focused investment approach centered on productivity initiatives and essential maintenance.
Cash and Cash Equivalents $721 million, up $103 million. Reasons: Strong liquidity position and cash generation profile.
Total Debt $1.2 billion, unchanged from the prior year. Reasons: Maintenance of financial resilience.
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Analyst Views on CENT
Wall Street analysts forecast CENT stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for CENT is 43.33 USD with a low forecast of 30.00 USD and a high forecast of 50.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
3 Analyst Rating
2 Buy
1 Hold
0 Sell
Moderate Buy
Current: 36.600
Low
30.00
Averages
43.33
High
50.00
Current: 36.600
Low
30.00
Averages
43.33
High
50.00
About CENT
Central Garden & Pet Company is engaged in the garden and pet industries. The Company offers a portfolio of over 60 brands, including Amdro, Aqueon, Best Bully Sticks, Cadet, C&S, Farnam, Ferry-Morse, Kaytee, Nylabone, Pennington, Sevin, Zoecon, and JustiFLY. Its segments include Pet and Garden. The Pet segment includes dog and cat supplies such as treats and chews, toys, beds and containment, grooming products, waste management and training pads; supplies for aquatics, small animals, reptiles and pet birds including toys, enclosures and habitats, bedding, food and supplements; products for equine and livestock, animal and household health and insect control products; live fish and small animals as well as outdoor cushions. The Garden segment includes lawn and garden consumables such as grass seed; vegetable, flower and herb packet seed; wild bird feed, bird houses and other birding accessories; weed, grass, and other herbicides, insecticide and pesticide products, and live plants.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Central Garden & Pet Company Q1 2026 Earnings Call Insights
- Financial Performance Overview: Central Garden & Pet reported net sales of $617 million for Q1, reflecting a 6% year-over-year decline primarily due to spring inventory shipment timing and portfolio optimization, although non-GAAP gross margin improved to 30.8%, indicating ongoing cost management efforts.
- Acquisition and Innovation Strategy: The company completed the acquisition of Champion USA at quarter-end, enhancing its market position in the livestock sector, while management emphasized continued investments in digital capabilities and innovation to drive future organic growth.
- Earnings Guidance Reaffirmed: Management reaffirmed its fiscal 2026 non-GAAP diluted EPS expectation of $2.70 or better, indicating confidence in future performance despite ongoing pressures from shipment timing and portfolio optimization.
- Market Outlook and Challenges: Despite challenges from SKU rationalization and shipment timing, management expressed optimism about stabilization in pet categories and anticipated a positive market rebound during the spring gardening season, showcasing the company's potential for market share gains and long-term profitability.
See More
Central Garden & Pet Q1 Earnings Report
- Earnings Performance: Central Garden & Pet reported a Q1 non-GAAP EPS of $0.21, beating expectations by $0.07, indicating some resilience in profitability despite broader market challenges.
- Revenue Decline: The company’s revenue of $617 million represents a 6.0% year-over-year decline, missing estimates by $14.02 million, which reflects soft market demand impacting overall sales.
- Margin Improvement: Gross margin expanded by 110 basis points to 30.9%, up from 29.8%, primarily driven by improved productivity, suggesting effective cost management strategies in place.
- Operating Income Drop: Operating income fell to $17 million from $28 million year-over-year, with operating margin decreasing from 4.3% to 2.7%, highlighting challenges in maintaining operational efficiency amidst declining revenues.
See More
Central Garden & Pet Appoints New Chief Legal Officer
- Executive Appointment: Central Garden & Pet Company has appointed Apur Patel as the new Chief Legal Officer, effective January 26, 2026, aiming to align legal matters closely with corporate strategy.
- Succession Context: Patel succeeds the retiring George Yuhas, who served as interim Chief Legal Officer during the transition, highlighting the company's commitment to a smooth executive handover.
- Extensive Experience: With over 30 years of global legal experience, Patel previously served as Vice President & Deputy General Counsel at Clorox, leading a team of over 20 legal professionals, showcasing his ability to manage legal risks in complex global organizations.
- Strategic Vision: Patel expressed excitement about building a strong legal foundation at Central and collaborating with CEO Niko Lahanas and the leadership team to support the company's long-term success and value creation.
See More
JPMorgan Downgrades CENTA and HNST Ratings, Mixed Outlook Ahead of Earnings
- Rating Downgrade: JPMorgan downgraded Central Garden & Pet (CENTA) from Neutral to Underweight due to subdued demand in the pet category, projecting low single-digit sales and EPS growth, which reflects the company's reliance on the U.S. consumer and market uncertainties.
- Increased Competitive Pressure: The firm issued a double downgrade for The Honest Company (HNST) from Overweight to Underweight, primarily due to heightened competition in the diaper market, which is expected to necessitate increased price promotions to maintain market share, impacting profitability.
- Market Reaction: Following the downgrades, CENTA shares fell 3.3% in early Friday afternoon trading, while HNST shares dropped 3.1%, indicating heightened investor concerns about future performance and reflecting a cautious sentiment towards household personal care stocks.
- Strategic Adjustments: The Honest Company is implementing a new productivity program that involves exiting lower-margin, non-strategic categories and channels, which, while aimed at improving efficiency, also necessitates finding new revenue sources to offset potential income losses, increasing future growth uncertainties.
See More
Arden Launches Heated Cushions and Partners with USA Curling to Support Athletes' Families
- Product Innovation: Arden introduces a portable heated stadium cushion priced at $44.95, aimed at providing comfort for athletes' families, thereby enhancing the positive impact of family support on athletes' performance.
- Partnership Development: Arden partners with USA Curling to support the families of Team USA athletes Korey Dropkin and Cory Thiesse as they travel to Cortina, reflecting the brand's commitment to community values.
- Emotional Connection: By offering heated cushions, Arden not only enhances spectator comfort but also strengthens the emotional bond between athletes and their families, allowing them to feel supported during competitions.
- Market Positioning: Since its founding in 1964, Arden has been a leading manufacturer of outdoor cushions and pillows, continuously innovating to elevate everyday consumer experiences, thereby solidifying its leadership in the outdoor home market.
See More
Central Garden & Pet Acquires Champion USA to Expand Sustainable Livestock Business
- Acquisition Expansion: Central Garden & Pet has acquired the U.S. assets of Champion USA, known for its JustiFLY® product line, which will further solidify Central's market position in the rapidly growing animal health sector.
- Market Impact: Champion USA has provided effective fly control solutions to over 300,000 cattle producers over the past 15 years, treating more than 50 million head of cattle, and is expected to reach a broader customer base through Central's resources and distribution network.
- Product Integration: The acquisition integrates Champion USA's employees into Central's Professional business unit, ensuring a priority on product quality and customer service, thereby enhancing Central's competitiveness in the livestock sector.
- Future Outlook: The transaction closed on December 12, 2025, with Central set to provide more details during its first quarter earnings call in February 2026, reflecting the company's confidence and strategic planning for future growth.
See More
Central Garden & Pet Company Q1 2026 Earnings Call Insights
- Financial Performance Overview: Central Garden & Pet reported net sales of $617 million for Q1, reflecting a 6% year-over-year decline primarily due to spring inventory shipment timing and portfolio optimization, although non-GAAP gross margin improved to 30.8%, indicating ongoing cost management efforts.
- Acquisition and Innovation Strategy: The company completed the acquisition of Champion USA at quarter-end, enhancing its market position in the livestock sector, while management emphasized continued investments in digital capabilities and innovation to drive future organic growth.
- Earnings Guidance Reaffirmed: Management reaffirmed its fiscal 2026 non-GAAP diluted EPS expectation of $2.70 or better, indicating confidence in future performance despite ongoing pressures from shipment timing and portfolio optimization.
- Market Outlook and Challenges: Despite challenges from SKU rationalization and shipment timing, management expressed optimism about stabilization in pet categories and anticipated a positive market rebound during the spring gardening season, showcasing the company's potential for market share gains and long-term profitability.
See More
Central Garden & Pet Q1 Earnings Report
- Earnings Performance: Central Garden & Pet reported a Q1 non-GAAP EPS of $0.21, beating expectations by $0.07, indicating some resilience in profitability despite broader market challenges.
- Revenue Decline: The company’s revenue of $617 million represents a 6.0% year-over-year decline, missing estimates by $14.02 million, which reflects soft market demand impacting overall sales.
- Margin Improvement: Gross margin expanded by 110 basis points to 30.9%, up from 29.8%, primarily driven by improved productivity, suggesting effective cost management strategies in place.
- Operating Income Drop: Operating income fell to $17 million from $28 million year-over-year, with operating margin decreasing from 4.3% to 2.7%, highlighting challenges in maintaining operational efficiency amidst declining revenues.
See More
Central Garden & Pet Appoints New Chief Legal Officer
- Executive Appointment: Central Garden & Pet Company has appointed Apur Patel as the new Chief Legal Officer, effective January 26, 2026, aiming to align legal matters closely with corporate strategy.
- Succession Context: Patel succeeds the retiring George Yuhas, who served as interim Chief Legal Officer during the transition, highlighting the company's commitment to a smooth executive handover.
- Extensive Experience: With over 30 years of global legal experience, Patel previously served as Vice President & Deputy General Counsel at Clorox, leading a team of over 20 legal professionals, showcasing his ability to manage legal risks in complex global organizations.
- Strategic Vision: Patel expressed excitement about building a strong legal foundation at Central and collaborating with CEO Niko Lahanas and the leadership team to support the company's long-term success and value creation.
See More
JPMorgan Downgrades CENTA and HNST Ratings, Mixed Outlook Ahead of Earnings
- Rating Downgrade: JPMorgan downgraded Central Garden & Pet (CENTA) from Neutral to Underweight due to subdued demand in the pet category, projecting low single-digit sales and EPS growth, which reflects the company's reliance on the U.S. consumer and market uncertainties.
- Increased Competitive Pressure: The firm issued a double downgrade for The Honest Company (HNST) from Overweight to Underweight, primarily due to heightened competition in the diaper market, which is expected to necessitate increased price promotions to maintain market share, impacting profitability.
- Market Reaction: Following the downgrades, CENTA shares fell 3.3% in early Friday afternoon trading, while HNST shares dropped 3.1%, indicating heightened investor concerns about future performance and reflecting a cautious sentiment towards household personal care stocks.
- Strategic Adjustments: The Honest Company is implementing a new productivity program that involves exiting lower-margin, non-strategic categories and channels, which, while aimed at improving efficiency, also necessitates finding new revenue sources to offset potential income losses, increasing future growth uncertainties.
See More
Arden Launches Heated Cushions and Partners with USA Curling to Support Athletes' Families
- Product Innovation: Arden introduces a portable heated stadium cushion priced at $44.95, aimed at providing comfort for athletes' families, thereby enhancing the positive impact of family support on athletes' performance.
- Partnership Development: Arden partners with USA Curling to support the families of Team USA athletes Korey Dropkin and Cory Thiesse as they travel to Cortina, reflecting the brand's commitment to community values.
- Emotional Connection: By offering heated cushions, Arden not only enhances spectator comfort but also strengthens the emotional bond between athletes and their families, allowing them to feel supported during competitions.
- Market Positioning: Since its founding in 1964, Arden has been a leading manufacturer of outdoor cushions and pillows, continuously innovating to elevate everyday consumer experiences, thereby solidifying its leadership in the outdoor home market.
See More
Central Garden & Pet Acquires Champion USA to Expand Sustainable Livestock Business
- Acquisition Expansion: Central Garden & Pet has acquired the U.S. assets of Champion USA, known for its JustiFLY® product line, which will further solidify Central's market position in the rapidly growing animal health sector.
- Market Impact: Champion USA has provided effective fly control solutions to over 300,000 cattle producers over the past 15 years, treating more than 50 million head of cattle, and is expected to reach a broader customer base through Central's resources and distribution network.
- Product Integration: The acquisition integrates Champion USA's employees into Central's Professional business unit, ensuring a priority on product quality and customer service, thereby enhancing Central's competitiveness in the livestock sector.
- Future Outlook: The transaction closed on December 12, 2025, with Central set to provide more details during its first quarter earnings call in February 2026, reflecting the company's confidence and strategic planning for future growth.
See More
