Central Garden & Pet Company

ladies and gentlemen thank you for standing by welcome to central garden and pets fiscal 2025 third quarter earnings call my name is julian bell and i'll be your conference operator for today at this time all participants are in a listen only mode following the prepared remarks we will hold a question and answer session and instructions will be given at that time if you require operator assistance at any point during the call please press star followed by zero on your touch tone phone As a reminder, this conference call is being recorded. I will now turn the call over to Frederica Edelman, Vice President of Best Relations. Thank you. Please proceed.

Good afternoon, everyone, and thank you for joining Central's third quarter fiscal 2025 earnings call. Joining me today are Nicola Hannas, Chief Executive Officer, Brad Smith, Chief Financial Officer, John Hansen, President of Pet Consumer Products, and JD Walker, President of Garden Consumer Products. Nico will start by sharing today's key takeaways, followed by Brad, who will provide a more in-depth discussion of our results. After their prepared remarks, JD and John will join us for the Q&A session. Before we begin, I would like to remind everyone that all forward-looking statements made during this call are subject to risks and uncertainties that could cause our actual results to differ materially from what those forward-looking statements express or imply today. A detailed description of Central's risk factors can be found in our annual report filed with the SEC. Please note that Central undertakes no obligation to publicly update forward-looking statements to reflect new information, future events, or other developments. Our press release and related materials, including gap and reconciliation for the non-gap measures discussed on this call, are available at ir.central.com. Last but not least, unless otherwise specified, all comparisons discussed during this call are made against the same period in the prior year. If you have any questions after the call or at any time during the quarter, please don't hesitate to contact me directly. And with that, let's get started. Nico?

Thank you, Frederic, and good afternoon, everyone. Let me begin by sharing three key takeaways from today's call. First, we delivered a solid third quarter, driven by strong cross-functional collaboration, disciplined execution, and the unwavering dedication of Team Central across all business units. We advanced our operational optimization efforts, consolidating our footprint, refining our portfolio, and improving our cost structure setting the stage for long-term growth. And third, we remain confident in our full-year outlook, even as we navigate a complex and fluid macroeconomic environment. Now, let me expand on these points. First, our third quarter achievements. Our team's strong execution led to record Q3 in year-to-date GAAP and NOMGAP earnings per share, significant margin expansion, and a major improvement in workplace safety performance within the company. We achieved these results despite extended cool and rainy weather that negatively impacted the garden season, as well as top-line pressure from the recent loss of two product lines in our third-party garden distribution business and ongoing assortment rationalization and soft demand in pet durables. These outcomes reflect the dedication, teamwork, and cross-business collaboration across our more than 6,000 employees. Their collective efforts continue to drive our success and pave the way for an even stronger future. Second, progress in our cost and simplicity program. Our cost and simplicity program continues to deliver measurable impact. Highlights from the third quarter include e-commerce expansion. We are excited about our progress in consolidating two outdated distribution centers into a new modern direct-to-consumer enabled facility in Salt Lake City, Utah, which is scheduled to start shipping next month. Footprint optimization. We recently completed the sale of our UK operations aquatic brands to Sara Group and transitioned our US pet brands to a direct export model to serve UK and select European markets directly from the United States. Streamlining operations. With the consolidation of 20 outdated locations and the creation of five efficient DTC enabled hubs, we've reached a major milestone in our simplification and e-commerce expansion efforts. Strengthened operations. In our live plants business, which operates within a relatively short selling season, we recently streamlined our assortment, exited unprofitable markets, and restructured operations to enhance efficiency. These actions contributed to significantly improved operating results in the third quarter, despite challenging weather conditions. These initiatives enhance our operational efficiency, unlock organic growth potential, and support our commitments to environmental stewardship and corporate responsibility. As part of that commitment, we're proud to highlight a recent collaboration between several of our business units and teams to support animal welfare organizations assisting communities impacted by the flooding in Kerr County, Texas. Our contributions included essential pet supplies, such as dog beds, training pads and treats, as well as a cash donation to Greater Good Charities and the Hill Country Humane Society. Third, confidence in our outlook for the fiscal year. We posted record third quarter and year-to-date results, outpacing the prior year. As we look to the fourth quarter, recent tariff developments and escalated geopolitical tensions have heightened macroeconomic uncertainty and put additional pressure on consumer confidence. We continue to anticipate increased consumer value consciousness, heightened promotional activity across retail channels, and ongoing pressure in the pet specialty brick and mortar space. Internally, we expect tariff-related inflationary pressures to intensify, especially in our pet segment. Nevertheless, we are reaffirming our fiscal 2025 non-GAAP EPS guidance of approximately $2.60. This outlook excludes potential impacts from acquisitions, divestitures, or restructuring initiatives that may arise in Q4, including actions related to our ongoing cost and simplicity programs. As Brad and I approach our one-year milestone in our roles, we remain confident that our central to home strategy is not only the right one, but the foundation for long-term success. We see our unique opportunity and responsibility of blending the agility of a startup with the scale of a large enterprise, empowering our teams to act locally, test quickly, and scale winning ideas. At the same time, we leverage central scale to accelerate innovation and market share growth. By breaking down silos and sharing tools, data, and talent across our organization, we create a powerful advantage that will compound over time. Looking ahead, we remain focused on disciplined cost and cash management while making targeted investments to drive organic growth, especially in e-commerce, digital technology, and innovation. While innovation is still an emerging capability for us, We're encouraged by the early momentum we're seeing from several recent launches. These include Zilla Turtle Sticks, made with black soldier fly larvae and shrimp meal, free from artificial colors and preservatives, and Adams Botanical Spray, a plant-based solution proven to kill fleas and ticks. We also introduced Aqueon Smart LED lights with app control and Aqueon Smart Clean filtration system, which makes water changes faster and easier. Nylabone's Ocean Chew toys crafted from 30% reclaimed fishing nets and our vet-approved Best Bully Sticks with collagen offer a natural alternative to rawhide for active, aging, and sensitive dogs. Finally, our KT brand launched the All About the Little Things campaign, celebrating the importance of everyday care for small animals and pet birds. We continue to view M&A as a strategic lever to complement our internal innovation agenda and drive long-term shareholder value. While the overall environment is showing signs of improvement, deal activity in our core categories remains muted. Nevertheless, we remain disciplined in our pursuit of margin accretive opportunities, particularly in consumables, and are cautiously optimistic that the pipeline will strengthen. We plan to accelerate our M&A efforts in 2026 as conditions continue to become more favorable. With that, I'll turn it over to Brad.