CENT - Earnings call transcript Q1 2020 | Central Garden & Pet Company

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Central Garden & Pet's First Quarter Fiscal 2020 Financial Results Conference Call. My name is Diego, and I will be your conference operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. at given be will that time. Instructions As recorded. Instructions] a reminder, being is call conference this [Operator

now to would Please I like go Howard over ahead. Machek. to turn the call

Howard Machek

us. everyone. Thank John Good Central's Hanson, Business; Products. J.D. Chief Lahanas, Consumer today Thank Walker, With Niko Cofer, me Officer; President, Financial you are you, Pet Tim on afternoon, and for Chief Diego. Executive President, call the Branded joining Officer; Garden

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

I goals, Before cost including expansion, implied guidance for to cause growth made from differ call revenue, statements organic during I statements Tim, this savings and new materially and XXXX, future conference actual expectations uncertainties adjusted acquisitions future would EPS subject are for that are forward-looking could statements. to forward-looking to risks and product facts, like margin turn call, long-term introductions, remind historical that results by the profitability to those you which over not

on These XX, XX-K forward-looking risks are Central's Report in and filed Commission reflect new publicly to and statements or filings, no Annual our on events, described Exchange November obligation undertakes otherwise. XXXX. including these Central Securities to others Form update subsequent information,

call our Tim CEO, to Cofer. the over will turn Now, I Tim?

Tim Cofer

on joining and the Thank for all you phone you, Howard, thanks of to today.

conviction activity. value-creation line expansion, Central's ahead. My and over months and continued consumers growth, you sustained strengthened has four know, my customers top about smart colleagues and organic opportunities As time the with here the was M&A margin include quarter my CEO. this These attractive first last as only

view forward and the robust We have unlock call, we look later our this promised required resources potential. share providing year. platform, a strategy as on more I last when our And the the to to the people,

was the X.X% performance and Organic earnings with guidance first by seen rose press Arden principally the sales our have driven our from generally As we flat. with in gave increase release, acquisitions. quarter were sales you last Total C&S the on line call.

Our to compares of of share quarter to income close $X.XX $X.XX $X.XX guidance in share loss our of of loss This to the a per $X.XX. per XXXX. was first November

You'll inclusion recall decision Garden comparison a a loss in the fashion-oriented line to in one that the segment. our strategic first last our of include, key Arden in live a and in typically major the of that business, exit to our retailers the factors made XXXX has Arden bedding out-of-season tough quarters. fish no of for fire quarter a with in its pottery exit year's product profit facilities pet little or mid-XXXX,

of of seasonality QX Importantly, earnings, terms of our smallest our typically is because revenues Garden the segment. and in

to you spoke end, available opportunity believe if was made The from businesses identify spur response exists areas, Back businesses consumer-oriented view and success about numerous the and to Central initiatives that with sales my challenged resources to growth identified our invest To them they profits, significant in in increase I were investments. needed capabilities smart to drive years November, areas ahead. that in the help of to for where growth. to each I encouraging more to

begin very initiatives XX over months. show in likely increased plan will to activities, expenditures, to capital executing overall benefits include, begin XXXX. initiatives, this The return these months And expect on early actions soon of investments the targeted on these Examples with to of we later year. many nice XX being top to funded see up digital e-commerce line We and next select incremental promotion functions. marketing and during personnel and them enhanced additional a these

the short sustainable in ahead. growth returns in be a the may is our right there to quarter, this second while shareholder So term, income in strong the enable we including invest and negative years as path impact

embedded our Importantly, the XXXX are gave last investments quarter. planned fiscal we in EPS guidance

not We are that today. changing guidance

to XXXX XXXX to EPS or at EPS continue above $X.XX. fiscal be of modestly expect We

discussed Internally, quarter, in efforts months to Last and kicked efforts our evaluate identify prioritize to fortify strategy. these Central's effort. business be the important I most off believe success we Vision initiatives in and the units also the across long-term in We've ahead will our have and driving XXXX. important And it our functions, in leaders ahead. years we're currently we engaged calling this

We get and plan more date about further expect investors you as and tell information of this share to we closer. format we'll specific the with this summer

my of potential want do, Pet. I that to & but Garden deliver. got can confident long-term reinforce Finally, I'm to Central confidence We've we in work the

that, over share our turn across with Pet to to details company let me CFO, segments. And the of QX for it our and more Niko and Garden the

Niko Lahanas

Thank afternoon Good you, Tim. everyone.

the First quarter from million total last company of million or $XXX in first million quarter increased sales X.X% to $XX year. $XXX

profit basis businesses. million XX.X%, lower our of in live main drivers the gain. sales by and of came an points mix negatively impact increased and relatively mentioned decor and gross were Tim the acquisitions sales of quarter the earlier. gross impacted volumes recent by $X Our sales for unfavorable factors Consolidated the fish margin to negatively in impacted the decreased flat, Organic the XXX

a -- year the transaction million recent versus or to ago, SG&A expense acquisitions. the due quarter for $X rose X%

corporate, expense last Our the expenses. increased expense to third-party year, first due and higher increased compensation versus variable of primarily quarter

XX.X%. of percent to As increased points SG&A XX basis sales, a

the the quarter the operating to part Ardent and million points SG&A million. Central's margin higher decreased for basis for decreased acquisition, due margin the and in $X expenses. decreased quarter X.X% gross XXX $XX XX% to EBITDA income operating lower the to to

$X.X for to declines the quarter fish $XXX X% and $XX despite segment aided by or to pet the basis, now compared other organic increased C&S prior to increased the Pet segment. sales the and growth. organic earlier. to of had Pet bedding X% the acquisition. the approximately Most or million million categories for an by income million, on Pet $XX the operating X% Turning quarter, mentioned grew Pet million live positive segment year

at basis X%. Pet and operating margin decreased XX remains points

decline, the impacted factor main to Pet quarter as constraints period. in from behind to the the carried over was business prior now EBITDA that challenges for the those aquatics X% be increased Our expect $XX We us. quarter would the supply million.

Turning now to Garden.

Sales the the in fashion-oriented of the acquisition. in were by quarter, which increase $XXX to to part X% or seed distribution. negatively For despite factors our for Arden to and country Garden sales sales a exit the from increased $X much from X% the due decreased weakness some and impacted lower sales, temperatures decor early in Bell sales million fall segment higher business million X% benefited due business, the in factors part grass stronger timing quarter. the control were in in POS Nursery decline, also our with new offsetting than the normal eastern of Organic

you, two-thirds the decreased quarter the and X.X%. to Arden, a million the smallest remind increased quarter was loss a for year Garden's just which negative the to Garden Garden in $X segment. a of XXX to And the volumes inventory the disposition was million million Garden's first the not quarter Almost typically first $X $X of in versus due year's of our of decline basis Garden loss obsolete compared ago. of is to margin of operating points year. in loss to $X operating and lower the was EBITDA results of by was decor the impacted exited million inclusion category which last businesses. last

$X.X compared ago. of results. quarter, $XXX,XXX ago. lower earned getting we Now year to other to million other due had the interest back In expense versus income cash million, to balances year increased a primarily year on interest $XXX,XXX our $X.X our first this expense of consolidated a to Net

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

million cash the Turning $XXX our Cash statements. the balance million, from of last first was to end the end year. sheet down $XXX quarter and at the of flow at first quarter

higher of was first ago, million For an in CapEx primarily cash the versus $X by a of first XXXX. in million, the the million million and period was quarter loss quarter inventories. from operations quarter, generated $X the $X cash $XX the to million year for due used of increase $XX

million, from $XXX was relatively unchanged debt last year. Total

ratio at from target range. X.X million end had under the of well We no our Depreciation our quarter at for a borrowings $XX to quarter quarter. decreased within of $XXX year leverage amortization times, million, and end gross Our up the the the $XX in ago. the credit line was million

stock. additional XXX,XXX the $XX of There shares remains program, authorization. repurchase XXX,XXX shares, During equity dilution million authorized an under Board's on our share The $XXX million previously Board the repurchased we quarter, approximately or

to new a quarter, to our of had our GAAP right-of-use the and change related to It effect balance $XXX by liability substantial The million. now adopted added sheet. have quarter sheet leases At is standard noting, million gross we about accounting we and a $XXX end, the lease of sheet worth $XXX million. balance up balance asset was this our

earlier, mentioned very we is and still gave of the the year or It early quarter earnings and the guidance XXXX $X.XX. typically quarter sales of last above year in the are smallest EPS year's diluted maintaining slightly terms last Tim we at our is As of profitability. in first

Garden a call. position next on plays in needed, guidance, As out, if update season we we the be see to how the our will better earnings

the line open Now, operator, please for questions.

Operator

first we gentlemen, come conduct will question-and-answer and Chris question Bank [Operator America. Carey time Thank Our from of your you. Please Ladies our at with Instructions] this question. state Session.

Chris Carey

Hi. Good evening.

Niko Lahanas

Hi, Chris.

Tim Cofer

Chris. Hey,

Chris Carey

ask Hi. adjusting you? & around, thinking you'll last wanted before -- expected. which comment the Niko, see I just I quickly three QX how more year just what to And shapes a the guidance. Lawn ask of there are of about had Garden the earnings, up context season your typical, How next than the is you given weighted to the this in on quarters clearly

you other how change embedded Or that on wildcard? season a a view referring were the to fact out? potential is guidance to only So the that seeing there Law after bit shaped were into weather earnings always of Garden the & comments

Niko Lahanas

the like to there season of or the really still call. because this played too out guidance exit in out. it's No. for remains be And really it front would to every hasn't after at us wise year, And stage, The that, for not of adjust largest the QX, part year change us just early is us.

Chris Carey

Okay. That makes sense.

Tim Cofer

said, that on which just news talking it's the you is And the QX. quarter is, I'm good thing what our within is expectations. said build Tim. result the what Chris, was Niko to And other

we're a our position full of that that in and And puts plan on confirming year guidance. so us with far, track

Chris Carey

Yes.

just see the might impact fire business bedding the the Okay. you of live you year, of the sense. fish a the Pet of frame get a kind able has the more that pet business of then, out attention to And Makes trend given behind required sense over the playing has been might of and of some underlying bit in exit segment with one to that the these recently, retailer that, And be? remainder headwinds the you? what are how

John Hanson

John. is this Yes,

mentioned, payments it's the The Pet position dealing sales something we in, QX. impact by on very as as it an forward. fire very all fully fish in downs some quarterly currently orders, it. that We feel live that's covered. may of was insurance mean, X% good all less filling may going are come a total fully As in insurance. when our And be did the than on be that, say would good on and there addition, ups we quarterly well – and covered impact But we have we there is I customers combined. fire see based

Chris Carey

it -- okay. But Okay.

more small the perhaps of indicative in and that that this underlying to trend is less? we've seen the business that or assume quarter of trend impact reasonable So the that's relatively business

John Hanson

Yes.

Chris Carey

some the fruition expecting of P&L. investments next XX to hence come suppose, starting then, be the the just the impact to this outlook earnings the I the business, of and feel into investment outlook. last And to spending you're you these right? had context putting going And months Okay. over year the that one, In and to for XX to mentioned, the of

of fiscal this I expecting year? that wonder in these your in impact Said of upside the order be investments whether you're year to any hit of the way to half positive course you'll in have embedding from year some back the the you're if any getting investments numbers? this another over

Tim Cofer

Yes, Chris.

in investment of EPS embedded was we provided prepared said overall in and down remarks, the the broadly that at therefore the envelope I plan part the guidance the line. As

back mode. line really for into that. investment little beginning those see as would news favorability in I top no see in since half is go here versus So we the course, unfavorability we're But on now, on we're investments greenlight new pickup to opportunity organic or there maybe of the say the we to a QX. what

So not based over obviously of the credentials. Over we're on time, good much couple bottom line. next on ROI so these years, on the investing

a we so about feel frame. on ROI the good broader And it over time

marketing it's I we've already mean important really the encourages thing the I'd the there's positions. to again, digital There doing you towards of few up one an that the last that is that long-term step long-term areas shared; brand positions and view company. a investment couple where the step some build two to I right tell to few take been we focus five that for at some an a of But we're I there's the guidance not especially share more we're is business. expand all this And certain think up. if returns e-commerce in the built investment bit takeaways places capabilities would little up investment to couple curve years my four to I -- returns. we a some where is: company for in some and of our into still needed and area nice But is of There are areas for point we sustainable a in of opportunity the I've setting highlighted. this have smartly where need

Chris Carey

Okay. Thanks Make much. sense. very

Operator

Thank you.

SunTrust from Chappell Our your Bill next Humphrey. question Please state question. comes with Robinson

Bill Chappell

Thanks, good afternoon.

Tim Cofer

Bill. Hi,

Bill Chappell

I the changes better the update guidance last making. release the And some moved then slightly this than financial to the spring of one, year of we've the you're slightly From think inclusive better now summer. I was last to guess the to from that

little Or maybe $X.XX that is not so there guidance? spend $X.XX then also, cushion you anyway further? are year it's quantify So big I much to a of can to why that color bit you guess there or give some been difference out a us maybe difference? And there your is it's if pushed not going of this some a to

Tim Cofer

Sure. I'll seasons. spring I are mean start Look adjacent Bill. This Tim. is summer and

think we're I Bill, an to and that's us get going I A my where we're going folks date from a as we're work you. So for date. participation looking still comments for like to said appropriate rate in

So back we'll be that season. that. late somewhere It will spring in on be shortly early summer

year today. point, I a That guided think big and On it so end change reconfirming second that last modestly guess see above EPS. no, investment to the And I or there. I We don't at be your Bill that don't plans XXXX at way. of included our we're

So I a Bill. don't see change

Bill Chappell

is another investment year's to quantify asked guess I EPS? a way way, to this there are changes doing what the

Niko Lahanas

don't those plays to how investments. on know ROI We have the we of out because yet see still a lot that

it's So us little to bit a predict. hard for

an why into obviously are year And to to next reluctant some dribble them little the year over give which of after, is going and exact a we're number.

Tim Cofer

this play that you'll investment not within stage our terms think commercial incremental you'll competitive willing see Again at quarter. investment of Bill that number I I a quarters the Yes. share we're and to -- mean little in nothing all guidance on quarter But bit is. if shared investment. else incremental reasons, numbers see the I this last think reaffirmed in up contemplated as show what out,

Niko Lahanas

If to in we year And and it's Garden incrementally. the lean too out. not weather weather to investments, we're plays the have see side mind those that Bill how still on keep send horrific that going a into

going still to play the to and how have pretty out. we're in be So approach see disciplined things we

Bill Chappell

some you've the read of both on core growth guess of which your if seeing the numbers Garden impacts some reaccelerating and gears their and at place, just should I call Scott's where Walmart, or your kind that. Switching four you're into years. five if share they're outlook, customer your Didn't has implied core know over past that that their gained segment. that Garden season? upcoming Okay. been kind your in actually for we How

J.D. Walker

it's question. different on is to portfolio retailer. the a say, we comment wouldn't on a know ours. and Bill, specific their it's than take I'd J.D. you I'll as difficult But retailer impact on tell that specific

they in goods They and we things possible in it's segment in categories and are big rodent like in and which food much gains we're wild and And pottery. we're soils. still bird mulch now have So compete. could we're in in bigger and bigger don't some cotta the traps of pottery some terra in live the

But to optimistic retailer and the going we're -- no -- at a we feel of others. and that bullish we we're feel like all our don't good year. upcoming We on specific first about plans feel have

us but for don't plans have So deterring that achieving out, see they I may that our year. from the called

Bill Chappell

so guys. Okay, much. Thanks

Operator

question Merrill William Reuter next question. Lynch. Please from America comes of with your Our Bank state

William Reuter

channel if color is provide seeing the any is the Good growth brick-and-mortar My you segment. in of guess, I afternoon. you're question e-commerce versus first how a the customers? on could in that Pet trending your growth

John Hanson

Yes.

So John. this is

would First see us. the got runway both of our but than happy much in in categories our faster growth, e-com and ahead -- all, think long we're business. we We growing a brick-and-mortar with of we've we

We about build e-com. capability growth side and we're invest future the continue excited marketing in side and on capability to that of the the and very both

very future brick-and-mortar, we have with we customers -- customers, very to continue We we major about make speak feel to continue progress. well. as don't Relative good but in our to the and there partner individual we to the also relationships

William Reuter

helpful. That's

and where of the maybe forward? more in allocate You should during that that expect you of some share continue the to going be you reflect large the we repurchases the Does up the M&A put expect cash? repurchases pipeline have you quarter. do pace may did what Or a to share cash balance pick will for quarter

Niko Lahanas

shares where every at we're back obviously look to makes going that sense. it and day buy We Yes.

purchase then right And we there's levels we where again going invest have what's M&A. do or play in would we in low-cost producer at stock be and business of initiatives have which place. tremendous type in to program think repurchase I M&A also more the the then We be preference and different on off think with that now CapEx value. My of organically third

William Reuter

guess to then or remember two number. have for increases this is now I CapEx you we're a increase And mentioned right. are that I maybe larger last up me, that to the a target are quarter this going don't Do are that in? And you year. think contributing I hearing one All items year? lastly call the of one be

Niko Lahanas

Yes.

I in $XX million from to think we year. the low you bit -- we was gave a recall of expect little this $XX year range of last side. if year. million of terms that is Last CapEx what last year's And some on a carryover

seeing a - in renewed CapEx a board. stepping you're Tim here why and invest XXXX with the willingness on that's So to the higher little little business in also bit

the to it. really that's at look I So think way

There's or call really two not any out. projects I would one that

breadth there's Garden. I think and it's Pet good across

And So we're pretty pleased on too all evaluate is them with those merit. their other the part we projects.

at CapEx look the whole a gets before around committee we process the and project done. of have we ROI And each it So that.

William Reuter

Great. you. That’s all will for Thank me. to others. pass I

Operator

Thank you.

Our next Please Markets. with Capital KeyBanc from question. your Thomas Brad question comes state

Brad Thomas

been how that? for and further timing And had door my a year? been any just shaping then I Hey little how sell-in questions. Thanks sure for trends up little and your I up had a that good make XQ to and And you're understood quantification this shelf more wanted bit to seeing. count space afternoon. if XQ? about there want any -- thoughts follow just just between taking of on, J.D. were shift

J. D. Walker

Sure. Thanks Brad.

to and big volume were significant. QX. all some two wouldn't I a between called into there QX. timing out shifted minor the it The regard minor on versus there that with impact That were had drivers call had in of differences script. some First QX timing

of the addition pottery of the exit business. One the was other and the was Arden our -- intentional fashion

drivers the were those So big there.

it. would of timing In terms about that be

part. and opening for stocking or a retailers smaller than year bit year intentional orders of that's I think are their on little the were seeing that staffing how terms are ago the year, up we're up In they a for

one the being way I stores. they're they think lot We by retailer they're smart. the inventory bit last major an little flowing Think surgical the year, more early stores in probably goods to in had a the way And of on. that awful the put that's

to consumption. smaller this it opening did orders think that little year a we're closer I bit be there they to prove will And a be point. and seeing

it said feel Having that, QX the they'll be ready going good our of good and We continue will into engagement the about for listings. retailers season, about throughout feel build we season. and level to the

things were on of inventory. retail level controllable So inventory We like into our if engaged weren't need. if weren't the in exit inventory year. mid-single up distribution great SKUs, I'd pottery year, digits our say we the have levels The in the on the retailers customers you heavy levels, out we heavy out from shape standpoint of year-over-year. our for The support coming And at this points you are and intentional some inventory. of – factor this distribution were of terms of factor that

about we good very feel So that.

Brad Thomas

Very I you was the maybe aptitude itself? about, if or give how J.D. to And the of you ask question take any if helpful. just bigger Tim, for mind acquisitions you on about a are could us your there's your it portfolio thinking brands on to sense worth you're state of that presented opportunity hoping and and acquisition Just a today medium pruning? a maybe Thank

Tim Cofer

just me a of And Central real critical building many points company part Sure. attraction I was Look, know, one playbook at I the the Garden M&A expect for Pet. I think in this mean, it been has of company, you that to of joining of and as well continue. this &

more and adjacencies Garden some so today there's in then I categories the play. segments, what strong of much compete attractive. that are more of terms in and both in segments to ourselves. good we are And niches call we've across brands other in number strengthen there and leadership positions which our got there's fortify a think very and I to places, a at of positions businesses, Pet, number And look I when So, but

fair in it's that yet. say So, months, that no number there's putting in the proof to last of

that But on. few past, mean, as yet And report the times. the swing for I can to Niko lack got you And are of have and But swinging mistake we I appetite lack has bat shared of a as assure and don't activity. M&A nothing feel bat, Niko allocation in but it a the platform. me, you the Then, about said from some if our opportunities. that, standpoint then, reinvesting buybacks. capital strategy for about on adding we business price smart and to And growth in it's it's makes sense based to

Brad Thomas

as Tim. helpful, XQ, is on of maybe more for up any explicit commentary Very squeeze second XQ? modeling modeling think to quarter. here take we reference Does we are headwind. that earnings was I on It a a seem Niko in about the looks I little I bit If being there's there to a how for could should real perhaps think think one there little but considerations about there the like think bit to a year-over-year. other you? investments Street's reasonable Or don't

Tim Cofer

No.

I the And numbers assuming right weather. think is Street a think I are fairly fairly have where It a great to normal not quarter, relatively normalized we now one. does a have reasonable the weather but reasonable. be

Brad Thomas

all Thank helpful. so you much. Very

Operator

Please question. Our Hale next Holden question your comes Barclays. state with from

Hale Holden

year, this muscle the SG&A. here. taking The investment it was for on quick sounded I morning. that's marketing Hi. ones like two and it increased Good guidance Thanks more had for baked into or one your question.

innovation feel is you do also – set? would wondering have the there if you product be like – was right also for in Or new there increased investment I SKUs? So product

Tim Cofer

are pretty much is growth today the We business the couple or year. different supporting of of initiatives against in a that will balance Very shelves innovation. that investment either the is part innovation of do set. some part hitting have in the consideration of units exciting And that

and I orientation general, in the capability further right in of our that & build leadership consumer of a at we still our recognition innovation there's to innovation. me now on improve rate team top Pet the and think that Central can increase Garden success with

capabilities. So of key some – some part And in of envelope a earlier said investment building like set the personnel areas. your select some the innovation also is – including definitely is, But those things the book I is core question as of part of additional of back investments. to that

Hale Holden

sense growth you you then in for flywheel maybe when more you out what achieve your one currently get versus moving, either of of you're capture be a how on would the what core the much category terms could the in of categories? do And have rate missing two

Tim Cofer

will I year share more would to we perspective that I first the expect answer think on to is later able I our Sure. what Yes. strategy. of do share. part be the give a to when this and -- have you part that out evolved be chance of And come we

been territory. Garden the M&A. through But majority last couple growth's the I been would flat the tell And of of & Central you it's in of years, if more you look growth at the Pet organic the

that to we're sure and we to profitable than could a do a collectively few an it do do better need think we have that. going we basis way. course a in of But assure I on there's sustainable things make that ambition that to

to there'll So think be little little a give ambition I an you that had a preview a if I more of set to bit to up, see later. but come

Hale Holden

issues Great. are the I extended quickly. very you. any supply virus? China on shutdowns you maybe from Are guys related just then because of factors to And having -- Thank that

Tim Cofer

out as Year. monitoring right broke New everybody. virus And around we're Chinese situation that Well, interestingly, this is

New bit order advance in quite Chinese typically to we So a Year.

I long going how to this come don't short-term So really of in inventory good we the go But on. is we really think about again, have feel our more a position standpoint. from an sense to

lot And a to it'll I that obviously, monitor to goes on people so continue affect think going our to company. that's the to get. come the of longer this just more But not we're tougher going

Hale Holden

you Thank much. so Great.

Operator

Thank you. question Crespi Jim Our your state [Operator from comes Monness, next Instructions] Chartier with Hardt. question. Please &

Jim Chartier

for Thanks taking my Hi. questions.

just and Live the Bedding. Pet clarify First, on the the impact to of Fish wanted I

closer to been two X%. items Pet excluding would've So organic Is those that correct? sales for

John Hanson

No.

as -- we in the all some think short-term quarter. of the in total. on mentioned, $X focused impact that did shortages that Pet making And we business, so have our on customers. sales And Bedding in very the we serviced less about heavily on million is X% than the I I sure it

June fish We're to it April-May out seeing of the majority lap a of time we'll bit in period. through year. continue decline and that the see we Live of But year-over-year our Walmart. as will a it be base of

helps. So hopefully that

Jim Chartier

meaningful guess the last I was talking for been channel what on that year your the year? you've business? where And upcoming for Great. our a And headwind. about thoughts that Health inventories Animal the business are in

Niko Lahanas

we pretty in volumes have spend to the they're said they last farmer that a was we expansion. seen. but and to But can about to and that What nice The P&L we mix volume think that we you role really their down. remains extra a about on levels. tell provide? looks down health weather good going We margin were are be the and Well, really like Animal about And this the feel some like? the see I But what the again health, So will quarter play the crazy. -- still little there. lean had products the don't inventory that of we in

So, that control to products one the really controls most Garden see we really business again the of -- really And haul. over mirrors pets. Garden recovers have how these that long

QX as more down know into we'll winds so, QX. and And

Jim Chartier

the it impacted that the Garden business us And from guys would the exited seasonality decor the business you sense the then standpoint a business? can to business, of was? how be you on quarter guess is that from that give of given big And the a fair most percentage say of exit first I just Okay. pottery

J.D. Walker

So Jim, its J.D.

of the disclosed fair the would business. haven't that be that, to QX X. said percentage in that size We and be Having assume it would largest

Jim Chartier

the the rest to Garden of Is seasonality business? similar the

J.D. Walker

so say It's the May, the the to that's and typically seasonality in month is. I'd to It of closely Yes. the be say the peak -- would QX it rest tracks of for pottery the business. -- of rest I'd QX very

Jim Chartier

increase spending was of terms in related first spending year? quarter Okay. there the investment plans And investment to then finally, your any the for in

Tim Cofer

over quarter, And in the I increases was investment in back first higher. -- us the half. QX see you'll material think there year. up limited what go incremental prior the then

Jim Chartier

That’s Great. Thanks I for had. time. the all

Operator

I'll Ladies for you. to this and Cofer remarks. questions gentlemen, closing it no turn there back Thank Tim at are time. further

Tim Cofer

Thanks today soon. and everyone joining the to a talking for forward Have to look call good day. you again

Operator

Have Thank great you. disconnect. day. call. All may a This parties concludes today's

Central Garden & Pet (CENT) 5 Feb 202020 Q1 Earnings call transcript