Central Garden & Pet Company · NASDAQ:CENT
Central Garden & Pet — BofA Securities 2021 Consumer and Retail Technology Conference
38 slides from Central Garden & Pet's conference presentation, March 2021
Slide 1: BofA Securities 2021 Consumer and Retail Technology Conference
BofA Securities 2021 Consumer and Retail Technology Conference March 2021
Slide 2: Disclaimer
Disclaimer Central Garden & Pet Company (“we” or “Central”) emphasizes that certain statements about future results made in this presentation constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include proj
Slide 3: Today's Presenters
Today’s Presenters Niko Lahanas CFO BofA Securities 2021 Consumer and Retail Technology Conference
Slide 4: Agenda
Agenda Company Overview Investment Highlights FY21 Outlook Q&A Appendix BofA Securities 2021 Consumer and Retail Technology Conference 4
Slide 5: Company Overview
Company Overview BofA Securities 2021 Consumer and Retail Technology Conference 5
Slide 6: Central Garden & Pet at a Glance
Central Garden & Pet FY20 Sales by Segment at a Glance Garden 42% Pet Market leader in the lawn & garden and 58% pet industries Leading portfolio of more than 65 high- quality brands Nationwide Presence Net sales of $2.7B in FY20, of which approx. 95% generated in the U.S. Sales & Distribution Manuf
Slide 7: Central to Home Strategy
OUR PURPOSE Nurture happy and healthy homes Central to Home OUR MISSION Strategy Lead the future of the Garden and Pet industries… one blade of grass and one wagging tail at a time OUR STRATEGIC PILLARS CONSUMER CUSTOMER CENTRAL COST CULTURE Build and grow brands Win with winning Fortify the Reduce
Slide 8: COVID-19 Update
We remain vigilant in our efforts to operate and conduct business safely. COVID-19 Our facilities have diligently maintained strict health and safety standards. Update All our manufacturing facilities and distribution centers remain open and fully operational. COVID-19 continues to accelerate the tr
Slide 9: Investment Highlights
Investment Highlights BofA Securities 2021 Consumer and Retail Technology Conference 9
Slide 10: Investment Highlights
Investment Highlights 1 Garden & Pet are Highly Attractive, Resilient Growth Industries With Favorable Long-Term Trends 2 Central’s Broad Portfolio of Brands Across Garden and Pet is Leading in the Industry 3 Competitive Advantages Driven by Retailer Relationships and Strong Distribution Networks 4
Slide 11: Garden is an Attractive Industry
Strong industry trends: Central plays in ~$30B of $33B sustainability, homesteading Lawn & Garden and eCommerce Consumables Industry Insect Growing Media, Mulch Repellent Garden is an Wild Bird $0.7B $1.8B Seasonal business Attractive $1.6B Grass & Industry Lawn & Dominated by home centers Other Liv
Slide 12: Pet is a Dynamic Growth Industry
Strong industry trends: humanization, health & wellness, Central plays in ~$28B of eCommerce and convenience $101B Pet industry $7B $1B Household penetration of 90% Treats & Chews Live Pets & Fish Pet is a Dynamic $20B Fragmented competitive Growth Industry Pet Supplies Pet $39B Services set across
Slide 13: Leading Brands Across Attractive Segments
#2 in Pet Supplies #2 in Lawn & Garden Professional Consumables #1 in Pet Bird #1 in Small Animal #1 in Wild Bird #1 in Farm Leading Brands Insect Control Across Attractive Segments #1 in Suet #2 in Aquatics #2 in Grass Seed #1 in Municipal Mosquito Control #2 in Dog Toys #2 in Dog Pads #2 in Fertil
Slide 14: Central is a Leader in the Pet Segment
Net Sales of Consumer & ~65% Branded professional $1.6B businesses with ~20% Distribution in FY20 ~15% Private Label leading brands Central is a Leader in the Pet Segment Outstanding FY20 performance in COVID-19 challenged environment +13% +26% +37% Net Sales EBIT eCommerce BofA Securities 2021 Cons
Slide 15: Central is a Leader in the Garden Segment
Net Sales of >70% ~60% Brands $1.1B Sales from ~20% Distribution in FY20 Top 3 customers ~20% Private Label Central is a Leader in the Garden Segment Outstanding FY20 performance in COVID-challenged environment +14% +30% +192% Net Sales EBIT eCommerce BofA Securities 2021 Consumer and Retail Technol
Slide 16: Long-standing, Deep Relationships With Our Retail Partners
Long-standing, Deep Relationships With Our Retail Partners • 40 years of outstanding partnerships with top tier retailers • Strong joint business planning • Private label producer for many retailers in key categories • Emerging eCommerce leadership BofA Securities 2021 Consumer and Retail Technology
Slide 17: Generating Fuel for Growth
Generating Fuel for Growth Scaling Investing in Optimizing Procurement Efficient Capacity G&A BofA Securities 2021 Consumer and Retail Technology Conference 17
Slide 18: Innovation Expands our Industry Leadership
Innovation Expands our Industry Leadership Clean & Cozy Bone Broth Food From Extreme Odor Bedding Dog Bones the Wild +50% +$10MM +2.6pp Share gain in Sales in Share gain in Small Animal Paper Bedding(1) year one Food at launch customers(2) (1) L4W ending 10/10/20 at Nielsen + Amazon combined for Kay
Slide 19: Investing Behind Winning Innovation
Investing Behind Winning Innovation Pennington Lawn Booster Marketing Campaign +$10MM +130% +145% 56% Sales in Conversion Page Of engagement year one rate views from women BofA Securities 2021 Consumer and Retail Technology Conference 19
Slide 20: Build a Leading eCommerce Platform
Build a Leading eCommerce Platform Developing Winning Capabilities Activation Assortment $209MM +55% FY20 eCommerce FY20 Sales Sales growth Availability Content eCommerce Flywheel ~20% Of business in Pet, 3% in Garden Top10 Search Customers for Central BofA Securities 2021 Consumer and Retail Techno
Slide 21: History of Growth through M&A
History of Growth through M&A 50 Acquisitions over the last 25 years BofA Securities 2021 Consumer and Retail Technology Conference 21
Slide 22: Our Metrics Accelerated Over the Last Five Years
Net Sales Gross Profit & Margin (in $ millions) (in $ millions) 2,696 797 2,283 675 704 2,215 633 2,054 1,829 553 Our Metrics Accelerated 30.2% 30.8% 30.5% 29.5% 29.6% Over the Last FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 Five Years Operating Income & Margin (in $ millions) EBITDA & Margin
Slide 23: Strong Cash Flow and Leverage Metrics
Cash & Cash Equivalents Cash Flow from Operations (in $ millions) 653 (in $ millions) 482 498 264 205 151 93 114 114 32 Strong Cash Flow FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 and Leverage Long-Term Debt (in $ millions) Total Leverage(1) Metrics 692 693 694 395 395 3.1 3.2 2.6 2.2 1.9 FY1
Slide 24: Continued Strong Performance in Q1 FY21
Continued Strong Performance in Q1 FY21 Net Sales Gross Profit Operating Income Diluted EPS (in $ millions) (as a percentage of Net Sales) (in $ millions) (in $) +23% +70bps +$25MM +$0.18 592 0.10 483 27.9% 27.2% 27 (0.08) 2 Q1 FY20 Q1 FY21 Q1 FY20 Q1 FY21 Q1 FY20 Q1 FY21 Q1 FY20 Q1 FY21 BofA Securi
Slide 25: Long-Term Algorithm for Profitable Growth
Long-Term Algorithm for Profitable Growth Organic Net Sales EBIT EPS Growth Outlook: Growth Outlook: Growth Outlook: Low Single Digit Mid Single Digit Mid-High Single Digit Grow at or above category Grow faster than Net Sales Grow faster than EBIT average Drivers: Drivers: Driver: Strengthened capab
Slide 26: Strong & Experienced Leadership Team
Strong & Tim Cofer CEO Niko Lahanas CFO John Hanson President, J.D. Walker President, Glen Axelrod Senior Vice President, Dan Pennington Senior Vice President, Wild Experienced Consumer 30 years 14 years Pet Consumer Products 29 years Garden Consumer Products 39 years Dog & Cat Brands 25 years Bird,
Slide 27: FY21 Outlook
FY21 Outlook BofA Securities 2021 Consumer and Retail Technology Conference 27
Slide 28: FY21 Outlook
Continued Business Momentum in Q1 FY21 • Strong POS across both pet and garden • Executing well online and in store Investing for Growth • Expanding long-term capacity to meet increased demand FY21 Outlook • Investing in capabilities and demand creation Challenges and Uncertainty Around COVID-19 Rem
Slide 29: Q&A
Q&A BofA Securities 2021 Consumer and Retail Technology Conference 29
Slide 30: Appendix
Appendix BofA Securities 2021 Consumer and Retail Technology Conference 30
Slide 31: Notes & Disclosures
Notes & Disclosures Use of Non-GAAP Financial Measures We report our financial results in accordance with accounting principles generally accepted in the United States (GAAP). However, to supplement the financial results prepared in accordance with GAAP, we use non-GAAP financial measures including
Slide 32: Notes & Disclosures
Notes & Disclosures EBITDA: Defined by us as income before income tax, net other expense, net interest expense and depreciation and amortization (or operating income plus depreciation and amortization expense). Other companies may calculate EBITDA differently and it may not be comparable. Organic ne
Slide 33: GAAP to Non-GAAP Reconciliation for the Fiscal Quarter Ended
GAAP to Non-GAAP Reconciliation for the Fiscal Quarter Ended (in $ thousands, except for per share amounts) 26-Dec-20 28-Dec-19 Net Income & Diluted Net Income Per Share Reconciliation GAAP net income (loss) attributable to Central Garden & Pet Company 5,613 (4,417) Incremental expenses from note re
Slide 34: GAAP to Non-GAAP Reconciliation for the Fiscal Quarter ended December 26, 2020
GAAP to Non-GAAP Reconciliation for the Fiscal Quarter ended December 26, 2020 (in $ millions) Consolidated Pet Segment Garden Segment % Change % Change % Change Organic Net Sales Reconciliation Reported net sales Q1 FY21 (GAAP) 592.2 436.4 155.8 Reported net sales Q1 FY20 (GAAP) 482.8 366.6 116.2 I
Slide 35: GAAP to Non-GAAP Reconciliation for the First Fiscal Quarter FY21 and FY20
GAAP to Non-GAAP Reconciliation for the First Fiscal Quarter FY21 and FY20 (in $ thousands) LTM Q1 FY21 LTM Q1 FY20 EBITDA Reconciliation Net income attributable to Central Garden & Pet Company 130,706 86,566 Income tax expense (benefit) 35,327 24,603 Other (income) expense 3,803 (740) Interest expe
Slide 36: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation (in $ thousands) FY20 FY19 FY18 FY17 FY16 EBITDA Reconciliation Net income attributable to Central Garden & Pet 120,676 92,786 123,594 78,828 44,514 Company Income tax expense (benefit) 32,218 26,604 3,305 46,699 24,053 Other (income) expense 4,250 (243) 3,860 1,621 1
Slide 37: About Central Garden & Pet
About Central Garden & Pet Central Garden & Pet (NASDAQ: CENT, CENTA) understands that home is central to life and has proudly nurtured happy and healthy homes for over 40 years. With 2020 net sales of $2.7 billion, Central is on a mission to lead the future of the pet and garden industries. The Com
Slide 38: Please reach out to us with any comments or questions
Please reach out to us with any comments or questions: IR@Central.com (925) 412-6726
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