CENT - Earnings call transcript Q2 2019 | Central Garden & Pet Company

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Central Garden & Pet's Second Quarter Fiscal Year 2019 Financial Results Conference Call. My name is Kevin, and I will be your conference operator for today. At this time all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session, instructions will be given at that time. reminder call a being As Instructions] this is conference recorded. [Operator the now Investor to Communications. like would call Relations, to and of I President turn over Vice Steve FP&A Zenker, ahead. go Please

Steven Zenker

you and Accounting Good Officer; SVP everyone, Business; me Kevin. Garden Howard Spielmann, the are Chief Machek, President today Officer; Finance Pet President, Consumer Roeth, call us Branded Lahanas, Executive you, Thank Officer; on and thank Niko J.D. today. President, for Walker, afternoon Rodolfo With Central's and Chief George and joining Chief Financial Products.

XXth, our to Our at on is providing call. the www.central.com results press discussed website reconciliation non-GAAP release second for quarter our measures GAAP ended March this non-GAAP XXXX, and for the contains on available

I things not for you goals, to Before savings I and introductions, would EPS including new turn like profitability. product future made revenue which organic are this long-term the that conference historical call, facts; expectations for guidance adjusted growth George, remind XXXX, call and acquisitions during to future cost over

forward-looking annual and to to XXXX. and including These in to could to report XX-K filings, Securities November information, Form subsequent XX, new reflect and our Commission update these implied on otherwise. those Central filed others obligation no that statements risks forward-looking risks by Central's uncertainties undertakes subject on publicly materially from results are forward-looking differ events Exchange actual or described cause Our statements statements.

our over the to turn Roeth. will I Now George George? call CEO,

George Roeth

Bottom the pleased EBITDA that of overall the versus organic organic let ago. excluding Thank the details lifting go financial sales, heavy to up, fish of grew my one-time results. to around impact you, keep comments relatively Steve. Good rate me we line, brief to year and everybody. the a morning sales, going are live I'm finer and report we quarter's the

and by overall in As Bell the XXXX of rates. August challenged numbers metrics by caused were year Nursery, the not which expected dilution foreshadowed, as were earnings our we seasonal ago and equity year-over-year our by losses share

remain We focused Coming second financial & strategy to are we're commitments growth rate Garden us, comping that the delivering and strong into to on for against year. the on current out knew we it our year executing had continue we quarter, on track last work as across Pet and X% our organic segments. the we for our

ended We we the robust quarter acquisitions. XX%, a sales in are growth overall pleased report large part to with due of to that

our Garden started our sales Garden grew segment. aided items customers Booster, as was driven group. the such mosquito by up of such existing organic in our well the as We're sales new gains vendor items; way season by However, up mid-single off, has key as partner X%, as digits Pennington year-to-date Amdro distribution Garden fiscal strong increased Lawn by as through encouraged by well track very line, QX a consumption

We strong optimistic continue on several our market years, and that also sales will last we profit growth. over gains delivering while to the build be share

the flattish, weather and was by the unfavorable which especially play inventory in to season. rate Overall control grew quarters, growth part peak our was businesses part collectively X.X%. last growth large professional underperformed which in The And in products, there's up depressed has to ticking still the business, due over customer in organic challenges. several Garden course Pet much our tend out later organic to Of while our segment, season pet for X%.

the fiscal half subside expect these the We year. headwinds to back in of

overall and Pet aquatics-related Treats, new our The management fourth pet; has the our pet the quarter. consumer to been a trends driven year, growth the items reformulated to our more by issue newly accelerating business, strength the we consumer headwinds business on half see rates growth we'll are did organic shipping. including entrant line and We rectified talked Dog products term business. with quarter rates Pet into in product of businesses, overall by Our about longer the Equine efforts. pet organically, and issues the behavior helping consumer digital their now and last return forecast grow second product Hence, side, on with

Pet. due the margins gross by Our down of where all significantly have acquisitions. for intangibles. amortization the ongoing were Arden margins operating and on and burdened to three purchase Bell, of accounting impact our reported depressed the operating quarter, by the impact largely latest is three General Arden

flow created forward are this reporting by actively We provide the the these EBITDA cash generated acquisitions. addressing going to by being by issue to value progress transparency

positive inflationary increases operating pressures completely Xst. on of was actions. January pricing This a the XX much since exactly our good flat margin all Our not last increase portfolio, a to price unable the was the inflation overall mitigate was over impact the versus was that relatively to of fact cumulative able the quarter the while did are we The months last our organic of during year ago. implement deal offset impact by influenced taken

Although in increases price by effect. end, all quarter were announced

of favorable we targeted margins that for estimate gains. impact comp QX pricing the second year-over-year year will show full meaningful pricing, year for additional prior of comparisons, the more with versus half plan So and the more

in solid expected the that year, X% X% long-term organic season, annual pickup of strong well as optimistic growth, will look that year Pet fourth Garden be fourth results to the organic As our an we forward sales within start to to we in that consecutive the goal. a growth in quarter the are rest as

We are a $XX guidance affirming of or our share per higher.

CEO associated transition. costs one-time our significant of impact any Excluding with

We've address Finally, the and CEO is for generating to who resources are not point direction the a the work right both successor committed looking I is until the a are will Central can headed I for Rather build upon a find and company leader we organically committed further announced. Board Board acquisitions. successor. that dramatically Central time partner or is momentum they my Central the lead for outside to looking through leader, its with finding organization undertaking in Committee can to search the that for the want to is leader, a Board continue is growth with a will and a change to hired The moment, success. the Succession in which CEO, strategy. to do who to

We continue to expect that will fiscal be before end September. in year

I over more quarter. Niko the to turn Now, will it on to specifics discuss

Niko Lahanas

our release the Thank George today. quarter deeper issued you, results George. earlier with dwell it and second We to Good into then numbers for closing turn our afternoon, back his remarks. everyone. press I'll financial

year. quarter million $XXX from increased sales $XX.X $XXX million of million XX% last to quarter or Second the in second

the recent top in of and $XX Pet gain, The General to aided X% on primary $XX gains million the was, Companies, quarter. came less X% gains drivers and sales mix Nursery the the rate versus a million second Arden increases revenue a of the had by organic $XX quarter price XXX quarter the a for in as Our implemented the Bell quarter ago. to good SG&A the expense and start increased growth Consolidated points the XX% recent acquisitions. were segment, quarter in the acquisitions sales. sales of acquisitions, to year growth Organic cost gross revenues significantly season. our million the robust of million unchanged was of up margin last Absent of in the Garden gross a favorable offset -- pressures of which three impacted three year. inflationary organic or accounting for XX.X% basis the gross of our the inclusion by for increased decreased margin profit $XX

we Central's non-cash to XX income since million in that basis was, noted of up a of retailer an in the own of of million our the early margin a and purchase impairment and we several freight decreased percent basis exit on seen intangible its that Garden have million Arden. last With headwind for we X.X%. Included earnings higher a been write-up to particular results to primarily Fish the major by in items, $X.X a points assets and many for quarters. SG&A quarter due companies, sales, X% charge Like our previous increase position the February As segment. $X.X Arden, operating SG&A, declined call; our XXX% has and XXX operating XX.X%, in from our the minority Live of last business costs due now trucking have the points to two to $XX company our consolidated a costs.

million, the but the the non-cash for was and gain two just $XX and excluding operating flat. decreased from Excluding relatively increased income acquisitions, two non-cash mentioned, up was operating the items to the items. X.X% quarter net and acquisitions the I EBITDA margin

basis declined same animal also Pet which had the behavior last behavior health XX%, and in million. include results the businesses. and quarters. sales the impact business XXX and businesses, has sales customer performance the to and back continued margins. now product increased up the both the issues, for the organic or Pet by our while write-down continue shipping professional management Turning to The modification volumes benefit been half the Pet segment. X% a that the segment formulation to the year Fish reasons new were was operating million and on $XX now compared Pet have few the to behavior XX% issues, decreased prior quarter our Aquatic business with new inclusive health which has as for us decreased asset to the points management for were behavior experienced segment Live inventory expect $X.X EBITDA $XXX by margins Pet as management the margin or to $X income weather competition of in Dog for million sales Organic are mix slightly. million impacted lower income. and million decline businesses. organic their of professional both business impacted for by quarter by year to quarter in animal the products. operating aided improvement operating products and offset The with we show Cat, and X%. $XX professional stronger down million to intangible in But negative weakness $XX Pet

as as wild Turning well quarter, timing by Organic part increased sales now as the growth $XX in as positive was X%. and shift large for of to one led well XX% million feed, Arden segment or million, from growth retailer. large organic Garden seed $XXX due to Bell bird grass and to acquisitions, the Garden;

in acquired the interest of was the XXXX in of $XX $X.X quarter Arden second lower strongest As you in operating the income third year while million may our increases the Garden's opposite. sales, experienced last the others our in driver million quarter year. industry in initial we of quarter the the saw from in write-up to last million $XX we of quarter, sales recall The the second compared XX% with gain was that increase.

gain, is its that operating that inclusion to business, the Excluding slightly the loss for makes which for the all ago, due a normal profit down of was year significant, Garden Bell's results income quarter Bell in third versus fiscal quarter. quarter. our in which was

decreased income increased versus with XX.X% Bell, to points was Excluding year a decline. operating ago, Garden in and organic the Bell Nursery was more much Garden responsible single-digits. was up, the even EBITDA up to for Garden of operating of XXX basis high Organic Arden margin million Operating up organically. margin and $XX

in a Arden compared of to our to the The getting $X.X primarily of quarter, second $X.X income to was this absence of decline other quarter interest million, million, of from ago. In back two second quarter. other last income full our the income a minority to months income quarter, we consolidated year's compared Now in results. due of Arden had year

at at Garden As consolidated time I said entity that fully at the reporting and and the Arden write-up earlier, our we Arden of accounting Garden's because other the purchase we of time income, segment. recoup beginning rules. line in the began we Arden gains under inventory not Though purchased lost were those we the as income item in a February, income operating required in purchase price did Arden's

$X decreased million, XX% our the income excluded the interest year cash quarter. interest very to write-up interest primarily the balances ago. Garden segment the So, Arden on little of a earned part has operating million Net generated the for due here to versus higher $X expense of

cash We also balance. higher that benefited from earned a interest on rate

Our ago. was for as quarter to year XX.X% tax the second a XX.X%, compared the quarter rate in

from was second last cash was Cash end up balance quarter year. quarter second Turning at now unchanged at the relatively end flow we inclusion increase the equity our and XXXX. the of from the year. statements. debt million of million The the $XXX reflects $XXX the closed Total million, sheet $XXX proceeds the in of of last August of offering to

Our gross well leverage ratio our quarter as ago the and range. target at remained within a the end of at the year times, X.X same

line end availability of $XXX our We the at credit of million quarter. on also had the

cash the in million cash $X a to by quarter was by for amortization the primarily $XX from ago, the in million $XX year For used the second acquisitions. to of used due from quarter changes. primarily $X million, quarter of due million capital second versus down working operations operations $XX Depreciation a ago, CapEx year $XX million quarter XXXX. million up was and recent was

During the million any program. not approved repurchased we stock board of remains stock the repurchase and quarter, $XX available outstanding have under our approximately

Now George. to it I'll turn over back

George Roeth

that at associated half timing our are these year commitments outset risk to with our to this due earnings and track we the will But back that in Thanks, into associated plan, long-term any what to time, it's This Niko. raising believe just with saying I this interest the our puts strategy was the the in early not We deliver in the be issues company. game. way for knew pricing, by the to always we the point continue we loaded. all wrap-up believe the commitments and the is was just at projections best of we execution want financial acquisitions but fiscal on that of order growth with do too of we year. more unavoidable in

over turn with questions listeners. for I'd our And thanks said the your So meeting like engagement. continued from that to to

Operator

Thank you.

[Operator question today SunTrust first Chappell Instructions] from Humphrey. coming session. be Our is conducting Bill question-and-answer we'll from Now Robinson

now Your line live. is

Bill Chappell

guess that side still I -- on Fish impact the afternoon. come? any good Pet was there or first to Thanks, the customer last the the side or from Live is on

George Roeth

available Yes, you was business, started, And for the need model. for to the exited impact minimum. -- remind that we

the over For is total QX. small for issues in were company Pet There this surroundings.

Bill Chappell

know obviously George, in now even division's lot the that whole hasn't somebody, affects months I then didn't a from M&A, with seven There we're And further mean, if -- been that's necessarily know done, terms of, understand. we kind where having planned How going since departure, just months I now? offering. your of, so and with trying to -- six it's not postponed equity

George Roeth

and partnering Board Yes, the no, on say board down. that front. investor our I'd hasn't I engaged. doing actively few say and us with a would I'm for it committee things slowed the that is

is have very obviously engaged actively of that. also a here; key a Niko We team member

So our full and philosophy unchanged is effort against and it [ph].

Bill Chappell

I we terms we've both not mean Garden? sales? all that XQ? Can us And then year. on is the pricing whether standpoint, this idea, and I have mean, for for some pick now Garden? just does volumes for remind Pet might much of that either overall see or and us been was you kind pricing to that that of XQ Pet Or or how up in you And assume of as said give it's impacting move in kind

George Roeth

and say particular I on answer for it there all QX. I'll to segments. in a over J.D. then taken say tactical in year, for I'd Bill, some pricing be their pricing businesses turn some that couple Rodolfo and wouldn't will of likely the things

want So clear on be front. I that to

segments. I'll their JD, start In volumes, for expect And although pricing, some is terms you dollar it's with about why dollar. impact, J.D. elasticity specific of volume Garden? and there talk would Rodolfo so to let don't you some not

JD Walker

Right.

in as say we're pricing surgical January some commodity well. has QX the market Xst, that the type some George customers. accepted obviously items, So we'll by but with have been seeing Garden, move it said, on as I'd And into effect all went pricing

away, think entire because moved. So the having on POS it's big impact or market I take a don't

Bill Chappell

And then… it. Got

George Roeth

similarly in the new was QX. throughout I in pricing But customer same we do the in was trickled in Pet accepted of time, and is the QX. majority during coming at all research Not case every but some trickling pricing presented the still mean, does of QX, it most QX, the quarter. place have vast it so

is pricing. categories the be offset what fact honest, in in we but enough so to to volume, way not many a have So and decrease been

Bill Chappell

one remember year I some they they've was by just I Scott, key your towards And last weighted in strong of company, their were growth gains in Garden customer every a trying incremental just some me, shelf then that to has that are can know or every was out customers I certainly but customers other very quarter, understand oneness you there? seeing that space. said been indicated had from gaining --

JD Walker

is that take this I'll question. Bill, JD,

also weighted customer I'm having bit time one a So data competition of increase, year gains in I'm some quarter to but what and against of of [ph] our they're between make hard a we're during a that the across their playing ago. we where can't single-digits the stronger POS period, we're points, where difficult digit categories quoted a it's don't seeing another. triangulating mulch of they XX% -- our same I we're a really a strong said, double lot than because all high two a customers, comping quarter toward aware a more little like say apples-to-apples had they comparison It's increase.

about us, right now, now. say feel that in left I'd feel the our lot year-over-year but season POS we of good sell-in, about a and we where are in gains in where and with right we like front So of we good still we are

Bill Chappell

it. so Got Thanks much.

George Roeth

Bill. Thanks,

Operator

Chris today from America. question of Our Bank coming next is Carey from

Your line is now live.

Chris Carey

completely separately; if get you why on taken on for you long and cost QX a why comment your fiscal Garden that, to secondly, expectations well. on And as thought, question. can shift acquisitions for and maybe in Can then the fiscal the I Maybe QX I so then Garden? that segment. elaborate about sales has QX elaborate so something thanks -- in just from much alliance? heard just Hi, it in to

JD Walker

in Sure, QX. J.D., take this in really was spring The typically and question. start that QX December, shipments push January. they customer, of I'll the And to who shipments first to set part is stores the that shifted into between would for season, sales those those their the shift receive some a they've shipments

saw shift, it today. have would I shift organic we was referenced and that for believe mentioned the that accounting say it a year-over-year even in that So increase factoring that did earlier George out. and we script, even shipments I

Niko Lahanas

Niko. is this Chris,

would goes, activity reflective I just the on. M&A so as make of not that going result comment the far far As that the been is

lot that So going folks we're That is three behind some last over very line there said, activity pushing continue have unaware of deals a of. here. most get the year, done over to scenes obviously active hard deals to we and are the have pipeline we the

So, we're press it. to continuing

Chris Carey

higher acquisitions, multiple potentially something long-term. more would could sort size positive you of that basis, you you're Thanks. if that thought at up get And margin could growth comment deliver My is deals you that pay the on looking into or deal the growth over a at. could at that the of looking are if flavor maybe understanding on times you the, pipeline

George Roeth

Yes.

is go have in pipeline you that So numerous and and after in I the leg deals higher pipeline. I we with What full to the is valuations. a mean filled right numerous right the bias so about to a nothing stages accretive tell And now third Garden margin, again, continue and at it's there's deals; it's now. pipeline can Pet margin deals

of hundreds looking from dollars. millions $XX of at to we're several So million deals everywhere

it's the margin be but board, across the bias again entire So would accretive.

Operator

Thank you.

Christina is question Brathwaite from coming J.P. from Morgan. next Our

perhaps live. your mute. on line now is Ms. is Your phone Brathwaite,

Christina Brathwaite

you hear Can now? about me Sorry that.

JD Walker

Christina. Hi,

Christina Brathwaite

Sorry about that.

for So impact the talk us the year. give color $X.XX bit a Arden, you and just within little for can this just about financial guidance first from

in top and know, the You margin implication for both line Arden end what's there?

George Roeth

Arden has mentioned we because as no of so the earlier Well, script, purchase in real impact the really accounting.

from to highest the accounting year. it bulk So that business that no the so buying so we inventory mark-up It peak. of the it's -- purchase we out really ended a really up profit, which standpoint the impact wipes this at seasonal has; level and had and is inventory

give we've typically we got deals far on don't on about all as size, Arden. so out that As that's

Christina Brathwaite

about continue things how are season? And the Garden to Okay. on What you guess so -- in for seeing just of Just the couple sets terms for how your been be about the I merchandise end it initial of the quarters? of difficult, the last side; shaping it's idea peak there? up business Bell are Nursery since trying we and lastly performance an to nurseries the get should thinking

JD Walker

this Yes. is Christina, J.D., I'll that question. take

business and in it of the in quarters we about everything company. right great their couple year. knew when the they one the And be you feel going would we purchased as last this we we the mentioned really of quarter It's now. So make all money thought

quarters financial the it's accretive position. and couple it's we're our last of So because tough, overall been to --

with strong now However, the their they've They they've by they markets the grow up year competition. we're in flowers some vegetable some high came that's this that have from we're that consumers. to Bell picked which quality time fantastic, so and our up great team, as business, first the geographies, season, consumption, execution adjacent new resonating seeing well the picked including new in sub-classes some been there, directly also as vegetables;

executing business. and we it's good So very about they're well that against that, feel extremely so --

Christina Brathwaite

I guess last from me. Okay, one And the great. then

headwind for quarters. of do and guidance a When you stabilize but couple environment, any freight kind just overall of helpful. going kind really would us be a for that the that Just forward to expect

Niko Lahanas

effect where we're second of stabilization of the year, of that price expecting last half the much the half also year seeing year. over of increases cost We're that experienced full the seeing second to we're the better increases in we've be the the

is weather The other as well. the going too normalized thing we're is, assuming into pattern year the

pro-business, in bump nice tech as as So, [ph]. our we'll be well expecting a

that expansion assumptions. under So margin we see half feel into and going assumptions the we'll those those like second are some

George Roeth

I'll just to build that. Niko, And on

see many just starting mentioned that are northern some weather consumption. of are but you there the to markets we're now coming As board, on

weather so Garden whether that our getting front is in demand when consumed in side, and of it's decent good the One highly things seen there, the still that is we've the Christina, we is having of category us. on plenty about feel engaged we're runway the positive of

Christina Brathwaite

Thanks, Yes. guys.

Operator

you. Thank

Brad next Markets. is coming from from Thomas KeyBanc Our question Capital

line Your now live. is

Brad Thomas

Good afternoon. my for Thank questions. you taking

a to from just in cadence for the that of third the should timing on that maybe of we JD XQ slipped this already be there anticipate did follow-up Just here; impacts Garden guess XQ season on quarter current business. you in are or clear in the any I terms here? that into deliveries

JD Walker

issues of No us it's no performance Brad. in into but do QX. have and And call I'd has for factor right comps some consumption Garden the that reported, No, about we're say timing feel the we too We May been quarter, so to as front June, in now, it's in April. unusual position been for early widely to strong circumstances. strong good very but

Brad Thomas

else full Two little And below you're of new to of your of great. tracking as was some growth product comparisons the Anything X%, as prior in, X% expect weather easier here? we just couple then we of sales for Okay, sound growth in think year bit about you Pet, should as guidance, help quarters the does you that. like in next organic the about rate. quarters terms the about believe organic think it I to contemplate well we that growth accelerate as

JD Walker

it. captured No, you've

back QX, the to be expect half to particularly in within year, do and expect accelerate we over our long-term the We guidance. it

Brad Thomas

you from new just perspective? e-commerce shift. me; in that look as from at that one happening Maybe last all channel Great. Anything thing

JD Walker

rapidly. you go. They -- in Pet it's look well, continue systems say basically very things side all would Amazon at of grow I continue to the truly when

previously, with we they is do day have customer to team food feel good than were You good benefiting for, that sophisticated have we're be who there, at particularly tools we and top of [ph] to models on where way put has very much stronger largely facing of lot decided we've their customer Pet it we from and supplies business. go day feel they We're a quite in and we're that to place they to but way Chewy is after faster Amazon at, business about really changing a a significantly. have really a a who company, we're and the sophisticated grow in

Rodolfo Spielmann

is only partnership and open Rodolfo. fantastic you Chewy, I would We us. omni-channel the This a new that their growth to you avenue, which is through with year, opened of how is the manage understanding all go customer that last then customer well and and on seeing area and add both, for QX Amazon e-commerce grow after together. brick-and-mortar to really sort growing how are the in we both

growth So in area. also good that

Brad Thomas

helpful. you, Very Thank guys.

Operator

you. Thank

question Martinson next today is [ph] Our from Jefferies. from coming

now line Your live. is

Unidentified Analyst

are if just the I was products? you Good roundup go wondering afternoon. shelves what seeing, up impact on any store the against you when

JD Walker

I'll JD, is take This that question.

velocity see yes, close still private space. on retail roundup compete directly into in it. out branded know competitors bit products we've takeaway directly So strong making overtime of from And that future -- where some grass not goes. monitoring I We're what that to quite at and plans I have and And do the said they reported may be been roundup first well. seen roundup what heard the out against that the reporting, that competes closely We the brand, that's public brand brand, opinion taken that. when and very I court as the you related for think of we'll that And know sales we're think our brands label on a is not enough seeing we're have roundup I that they've wheat that because [ph] that they're that. and also other attention against there's product about but not a a of publicity to paying there. don't We it

Unidentified Analyst

missed I that if the apologies pricing My the about surgical the for third you quarter implemented? being magnitude that's it, did talk of

George Roeth

in out tactical did but businesses. few it's we're say so relative would Yes, we giving not I QX, to what specifics, very a

Unidentified Analyst

my of -- with? the that on ignorance part go is and a what little detail are with lastly, color just behavior business drag; And management what Okay. you could provide struggling a little into

Rodolfo Spielmann

you -- comes mainly into call modification, brand, So then stock plug we capital behavior so your wall, what the is talked modification. house, you behavior it destructive behavior with really about that's amounts our in fair we this which comfort zone get the down,

our things going in obviously, entering segment a we growing this former hit. the so for after second one on rapidly two the a bit pretty that's have of had And vendor We years, our category, QX. aroma several change chipping minimum A) the a that have drug we of [ph] -- is, now issues amount the product we're aroma had in consumers to so and new new with started product, the had of

challenge household, around that a we're just this so and penetration category XX% has important is starting. the Now understand a X.X%, of it's that's to of the

of yes, an -- we're bit number new does have very alone So with product QX, the comfortable one, area afterwards have where we improved year-over-year, in that new a it competing still issue competitor but a innovation to actually and before, new we're on have launching an lot so we're bother we we're more launched we going coming here. in year; the the a

Unidentified Analyst

so guys now? CBD products Okay. seeing And do where and pet that for since reading so stand we're much on much Oil and infused then you about

Rodolfo Spielmann

the this category, we I nothing that time, obviously you in see to area I but is trend some mean there we're would exploring. tell report at

very fairly that division having of closely. benefits is on everything that is the includes this which can large we of One going track portfolio

So whenever be is time, we'll the ready.

Unidentified Analyst

appreciate Okay. Thank it. guys, very much you

Operator

Thank you.

Our Jim from Chartier Crespi next Hardt. from is question Monness coming today

live. line Your is now

Jim Chartier

questions. for Thanks my taking afternoon. Good

think I half in it it bill year come be in think bigger year the I the did Yet -- about to into EPS. for that $X.XX come drag than was that? first the smaller or of you So range; had expected

George Roeth

year. for impact say giving specifically, as we remember will a don't been the $X.XX pretty has thought I much target for Bell Bell's tracking Obviously, the I but

Jim Chartier

on then the first at that pretty year. last and it quarter was in quarter distributor like And was second organically down Pet down X% after growth good looks business,

So there going grocery the on that's of anything ramp selling that's -- last of [ph] laughter kind noteworthy -- the large the year? whether customer

George Roeth

concerns I'm fine; not not adding there. but distribution ago can we're that businesses we're you when Pet sure business year is new are now as coming our I growing the business the -- tell growing so major a up that's what is numbers fine, that no fast

Jim Chartier

Okay. in you're same modification customers on behavior that at how the new And And the are buying started have knocking issues? confident then you formulation the then that?

George Roeth

customers all with comfortable still new bearing are missed had formulation, the item [indiscernible]. of still with make them are the care new product, been us since that partnered has they have year we're And we we and done all on aroma the us the last new So, taken of. all the area in to that the they testing sure

Niko Lahanas

D -- typically portfolio the don't not business by businesses, flat. out referring usually flat. I effectively it more business to is overall, the individual call overall are that is Well, fits way within Pet think you flat, as we third-party -- Jim, business don't down, the business our that's PetD so is we but the

Jim Chartier

you. Thank Okay.

Operator

[Operator Holden Hale you. Thank coming from from next is Instructions] Our Barclays. question today

live. now is line Your

Hale Holden

market months or Thanks seen the two with I the multiples still to questions. holding kind for had and over equity you of in your had you the inflation the I taking call. commentary, just if Circling if terms of the six line any price was last discipline? M&A back were wondering discussions in

George Roeth

haven't you extent any months tracking as And mean far you seen top still XX previous what think for great as get some to pretty margins, from that the six pay looking great to for last or XX, inflation multiples expect if can multiple you I are you're growing I and for; have are high. we companies Well, the that have pay fairly the brands, line higher so those. their aggressively

last fortunate, not they're We've some been where think brand look out in lot that's again, good we've land. that's got a exactly but if businesses, ones just crushing So, they're of paying you've been multiples. I But you acquisitions, lower that's killer rough, there, diamonds of businesses, category. at the the sort laying two the finding the just our

So higher that. we'll expect to growth more pay simple as businesses, it's margin, for as higher

Hale Holden

input Got or basket, quarter out it. would talked your costs to commodity little second know, or transport at about you but have of, is, you wondering, call last if want look are the trucking broader, you that others there question bit costs changed over was a And kind any my the that you or I as so?

George Roeth

you be like overall, labor to know, mean, freight an stabilized, looks it's continues issue. I

category; pockets bit inflation, know, see within seeing little little grain there. run millet, a our we're you up where a we have of some We

going fairly won't example, good little And if to are to forecast Bermuda, tell, until then early comment. too are there year. that those Long-term on so looks so now. would of the a say, just in in we inputs I a a there are won't well, favorable, the going business, grains your flat, [indiscernible] but we later some have later of are it's year, the we being up weather yield. to fertilizer had and for like it's And some some until be are in subsided those those good our think Our harvest, overall, it's to dependent planted bit, grass of know pockets I seeds handle as of on crop a

JD Walker

add through the I'd thing forecast contemplated increases we're you. this be is only would that The that the giving year's in would P&L flow cost

Hale Holden

so you Thank appreciate Great. much, I it.

JD Walker

Thanks.

Operator

you. Thank

William Lynch. today Reuter from question Bank Merrill Our is next from coming of America

now Your line is live.

Unidentified Analyst

Can Justin just with [ph] tariff weekend? Obviously, Thanks. one guys, to US-China talk the in over having the you for current Bill, there me. regards Hi current news about for you're was conversations big retailers the situation. on

Rodolfo Spielmann

cost, a to this of at we charge and or tariffs was sourcing. increase. what clear that repealed, as And a more, in tariffs also get increase if is, add price were tariffs approach, hours very more; we from reduce increase would spoke that surcharge few the we rounds say Clearly, doing I every place. you long we're tell last of conversation they because can what doing a a of place last with would take what them we explained opportunities was came, we're when principle that be that, as took news. is that If what And out. the retailer, made we which to tell we increase couple cannot tariff in did new very I what it's from But we the did it would you point it what we

transparent, So behavior. accepted we of they them XXX% appreciated very were our that,

that. thing the comes to happen We expect if it to same

Unidentified Analyst

Thanks.

Operator

Thank end closing for like any or you. answer-session. George floor I'd to the comments. our further We've over question-and of to back reached turn

George Roeth

just the day. attending have a call, for want great and I thank to everybody

Operator

Thank you. That conclude does today's teleconference.

thank your You and time, today. at a day. We you line for this may disconnect your have participation wonderful

Central Garden & Pet (CENT) 6 May 192019 Q2 Earnings call transcript