Central Garden & Pet Co (NASDAQ:CENT) stock fell 10.03% (As on November 21, 11:21:33 AM UTC-4, Source: Google Finance) after the company reported fiscal fourth quarter results that beat analysts’ expectations. The company expects increased promotional activity in the Garden segment and plans to be competitive in driving foot traffic. In the Pet segment, there was a decline in durables and live animal sales, with the possibility of consumers trading down. The company expects stable point-of-sale (POS) trends, with the impact of Total Distribution Points (TDP) growth expected to be seen in the spring. The company also mentioned their recent acquisition in the pet treats business, which fits well with their Dog and Cat platform. The company believes the valuation of potential acquisitions has become more realistic and is optimistic about their M&A pipeline. Central Garden & Pet has exited the distribution of third-party vendor items to independent garden nurseries, reducing complexity and eliminating a marginally profitable business. The company will continue to distribute their branded products through a national distributor, BFG Supply, to the independent channel. The company also stated that it is open to M&A opportunities and is willing to go over a leverage ratio of 4 for the right deal, with the intention of quickly deleveraging back to their target range of 3 to 3.5.

CENT in the fourth quarter of FY 23 has reported the adjusted earnings per share of 10 cents, beating the analysts’ estimates for the adjusted earnings per share of 8 cents, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 6 percent to $750.15 million in the fourth quarter of FY 23, beating the analysts’ estimates for revenue by 2.51%. Gross margin was 26.3% compared to 28.2% a year ago. On a non-GAAP basis, gross margin was 26.6%. The decrease was due to inflation and lower volumes resulting in unfavorable overhead absorption, partially offset by improved pricing and productivity efforts. Operating income was $9 million compared to $13 million in the prior year. On a non-GAAP basis, operating income was $12 million. Operating margin was 1.2% compared to 1.8% in the prior year. On a non-GAAP basis, operating margin was 1.6%. Net income was $2.8 million compared to a net loss of $2.0 million in the prior year quarter. On a non-GAAP basis, net income was $5.1 million. Adjusted EBITDA was $42 million, in line with the prior year.