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- **Record Fiscal 2025 Performance**: $371M EBITDA and $2.55 EPS, up 12% and 24% YoY, driven by cost efficiency and portfolio optimization.
- **2026 Margin Expansion**: Guide to $2.70+ EPS with 1% pricing to offset $20M annual tariffs, supported by $50-60M CapEx in productivity and innovation.
- **Garden Growth Catalysts**: 8%+ distribution growth (excluding exited businesses), digital sales >10% of segment, and cautious optimism on weather-driven 2026 season.
- **M&A and Capital Allocation**: $18M Q4 buybacks (vs. $150M+ annualized pace) and active pursuit of margin-accretive M&A in pet consumables.

**【CEO Summary Section】**
- Fiscal 2025 was a year of operational rigor, with record EBITDA ($371M) and EPS ($2.55), driven by portfolio optimization and cost management.
- **Cost and Simplicity Agenda**: Completed multiyear supply chain redesign, closing 16 legacy facilities and modernizing fulfillment centers in Salt Lake City, Eastern PA, and Covington, GA.
- **Fiscal 2026 Outlook**: Guide to non-GAAP EPS of $2.70+ with margin expansion, offsetting $20M annual tariff exposure through pricing and supply chain actions.
- **Strategic Investments**: $50-60M in CapEx for productivity and innovation, e.g., digital marketing and e-commerce growth (Garden e-commerce >10% of segment sales).

**【CFO Financial Commentary】**
- FY25 Results:
  - Net Sales: $3.1B (-2% YoY), driven by strategic exits (U.K. operations, low-margin durables) and direct-to-retail transitions.
  - Non-GAAP Gross Margin: 32.1% (+210bps YoY), supported by $15M in productivity gains.
  - Non-GAAP Operating Income: $265M (+19% YoY), with operating margin 8.5%.
  - Cash Flow: $333M (vs. $395M prior year), with $36M inventory reduction.
- Q4 Results:
  - Net Sales: $678M (+1% YoY), Garden segment up 7% on favorable weather.
  - Non-GAAP Gross Margin: 29.1% (+310bps YoY), offsetting $7-8M quarterly tariff impact.
  - Non-GAAP EPS: $0.09 (vs. $0.18 prior year), impacted by one-time U.K. wind-down costs.

**【Q&A Highlights】**
- **Tariffs and Pricing**: 2026 pricing actions (+1%) to offset tariffs, with 50% of negotiations completed with key customers.
- **Garden Outlook**: Cautiously optimistic for FY26, with 8%+ distribution growth (excluding exited pottery business) and digital sales >10% of segment.
- **M&A Pipeline**: Actively pursuing margin-accretive pet consumables, despite limited deal flow.
- **Share Repurchases**: $18M in Q4, with $150M+ annualized pace, reflecting confidence in valuation.
- **Durables Decline**: 16% of Pet sales, with double-digit Q4 decline driven by SKU rationalization, expected to stabilize in H2 2026.

Central Garden & Pet Company (CENT) Q4 2025 Earnings Call Transcript

Pet Segment

Garden Segment

CENT

CENT fundamentals

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