Central Garden & Pet | 8-K: FY2026 Q3 Revenue Misses Estimate at USD 882.36 M

Revenue: As of FY2026 Q3, the actual value is USD 882.36 M, missing the estimate of USD 892.38 M.

EPS: As of FY2026 Q3, the actual value is USD 1.45, missing the estimate of USD 1.547.

EBIT: As of FY2026 Q3, the actual value is USD 133.61 M.

Fiscal 2026 Third Quarter Financial Results (Compared to Q3 FY 2025)

Consolidated Performance

• Net sales decreased by 8% to $882 million from $961 million.
• Organic net sales increased by 2% to $862 million from $842 million.
• Gross profit was $317 million, a decrease of 5% from $332 million, with gross margin expanding by 130 basis points to 35.9% from 34.6%.
• Selling, general and administrative (SG&A) expenses decreased by 3% to $191 million from $197 million.
• Non-GAAP SG&A decreased by 6% to $182 million from $193 million.
• Operating income decreased by 7% to $126 million from $135 million, with operating margin expanding by 20 basis points to 14.3% from 14.1%.
• Non-GAAP operating income decreased by 2% to $136 million from $139 million, with non-GAAP operating margin expanding by 90 basis points to 15.4% from 14.5%.
• Other income was $2 million, slightly above the prior year.
• Net interest expense was $8 million, lower than a year ago.
• Net income decreased by 5% to $90 million from $95 million.
• Non-GAAP net income decreased by 2% to $96 million from $98 million.
• Adjusted EBITDA was $162 million, a decrease of $5 million from $167 million, with margin expanding by 100 basis points to 18.3% from 17.3%.

Pet Segment

• Net sales decreased by 19% to $400 million from $493 million, reflecting the exit of the pet distribution business.
• Organic net sales increased by 2% to $380 million.
• Operating income decreased by 12% to $67 million from $76 million, with margin expanding by 120 basis points to 16.7% from 15.5%.
• Non-GAAP operating income decreased by 2% to $76 million from $78 million, with non-GAAP operating margin expanding by 320 basis points to 19.0% from 15.8%.
• Adjusted EBITDA decreased by $2 million to $86 million from $88 million, with margin expanding by 350 basis points to 21.4% from 17.9%.

Garden Segment

• Net sales increased by 3% to $482 million from $468 million, primarily driven by Wild Bird, Fertilizer and Controls, and Grass Seeds.
• Operating income increased by 9% to $90 million from $83 million, with margin expanding by 100 basis points to 18.7% from 17.7%.
• Non-GAAP operating income increased by 7% to $91 million from $85 million, with non-GAAP operating margin expanding by 70 basis points to 18.9% from 18.2%.
• Adjusted EBITDA increased by $5 million to $101 million from $96 million, with margin expanding by 50 basis points to 20.9% from 20.4%.

Liquidity and Debt (Compared to Q3 FY 2025)

• Cash provided by operations was $327 million, compared with $265 million.
• Cash and cash equivalents at June 27, 2026, totaled $997 million, compared with $713 million.
• Total debt was $1.2 billion, consistent with the prior year period.
• Gross leverage ended the third quarter at 2.8x, compared with 2.9x in the prior year.
• Net leverage was 0.5x.
• As of June 27, 2026, $128 million remained available for future stock repurchases.

Strategic Initiatives

• Following the quarter, Central Garden & Pet Company entered into a definitive agreement to acquire an 80% interest in TRIXIE Heimtierbedarf GmbH & Co. KG, a leading European pet supplies and pet snacks company, for up to €400 million including earn-out payments.
• The transaction is expected to close in the first half of fiscal 2027.

Fiscal 2026 Guidance

Central Garden & Pet Company raised its outlook for fiscal 2026 non-GAAP diluted EPS from $2.70 or better to $2.85 or better. This revised outlook is driven by continued margin discipline, ongoing investment in growth initiatives, and portfolio optimization. Capital expenditures for fiscal 2026 are projected to be approximately $50 million, focused on maintenance, productivity initiatives, and targeted growth investments.