Login
Central Garden (CENT) Q3 EPS Jumps 18%
Key Points
Non-GAAP earnings per share of $1.56 exceeded analyst estimates by 9.1%, even as GAAP revenue fell 3.1% short of forecasts.
Both the Pet and Garden segments reported declining GAAP net sales, but company-wide margins improved significantly, with gross margin (GAAP) up 280 basis points.
Management reaffirmed its full-year FY2025 non-GAAP EPS guidance, maintaining capital spending plans and reporting higher share repurchase activity.
Central Garden & Pet (NASDAQ:CENT), a leading supplier of pet supplies and garden products, released its fiscal third quarter 2025 earnings on August 6, 2025. Despite reporting GAAP net sales of $961 million—falling 3.1% below analyst expectations—the company delivered strong profit growth, with non-GAAP earnings per share of $1.56 beating the consensus estimate of $1.43. Margin improvement stood out as the core highlight, offsetting lower top-line results. The quarter saw continued bottom-line gains from operational efficiency, but GAAP net sales in both major segments declined year over year, signaling demand headwinds. Overall, the results reflect a mixed performance: profit improvement was robust, yet ongoing revenue pressure remains an area of concern.
| Metric | Q3 FY25(Ended June 28, 2025) | Q3 Estimate | Q3 FY24(Ended June 29, 2024) | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.56 | $1.43 | $1.32 | 18.2% |
| Revenue (GAAP) | $961 million | $991.88 million | $996 million | (3.5%) |
| Operating Income (Non-GAAP) | $139 million | $127 million | N/A | |
| Adjusted EBITDA | $167 million | $156 million | 7.1% | |
| Net Income (Non-GAAP) | N/A | $88 million | N/A |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Focus Areas
Central Garden & Pet specializes in branded pet and garden products distributed through retailers such as Home Depot and Walmart. Its brand portfolio includes pet treats, chews, and lawn and garden supplies, offering well-known names like Aqueon (aquarium products), Nylabone (durable pet chews), and Pennington (grass seed and lawn solutions).
The company’s recent focus has centered on cost management, digital expansion, and optimizing its manufacturing and distribution footprint. Key success factors include keeping its brand portfolio strong and relevant, investing in eCommerce capabilities to capture shifting consumer behavior, and improving supply chain efficiency. The company’s Cost and Simplicity program is a cornerstone of its current strategy, aimed at streamlining operations to reduce expenses while maintaining product quality and supply reliability.
Third Quarter Performance: Key Developments
Margin improvement was the standout story. Gross margin, which represents the percentage of sales left after accounting for production costs, rose noticeably to 34.6%, up 280 basis points from the prior year period (GAAP). Management credited this to ongoing productivity efforts and the Cost and Simplicity program, which delivered operational efficiencies across both business segments. Operating income (GAAP and non-GAAP) and adjusted EBITDA also saw solid year-over-year gains, as operating margins (GAAP) improved despite weaker revenue.
Notably, GAAP sales in both the Pet and Garden segments fell from the prior year. In the Pet segment, net sales dropped 3%—management cited “assortment rationalization” and softer demand in durable pet products as key drivers for the decline. Adjusted EBITDA for Pet declined to $88 million, from $94 million in Q3 FY2024.
The Garden segment also posted a 4% GAAP revenue decrease. The lower sales result was attributed to the loss of two product lines in the company’s third-party distribution business and unfavorable weather, specifically a late spring that delayed key selling weeks. However, the segment’s operating income (GAAP) jumped 33%, and Gross margin (GAAP) expanded by 280 basis points to 34.6%, with management pointing to operational improvements and productivity programs as the reason. Garden segment adjusted EBITDA increased by $11 million.
Restructuring charges impacted both divisions, with $1.7 million related to a U.K. facility wind-down in Pet and $2.2 million due to Garden facility consolidation. The company also repurchased 1.7 million shares for $55 million, leaving $46 million authorized for future buybacks. While these moves support per-share earnings, restructuring activities reflect a business in transition and signal ongoing adjustment costs. Central Garden & Pet does not currently pay a dividend.
Looking Ahead: Guidance and Watch Items
Management reaffirmed its non-GAAP earnings per share target for FY2025 at approximately $2.60. This outlook factors in ongoing margin initiatives but includes caution about a potential shift in consumer behavior, lingering macro uncertainty, and retail industry pressures. Capital expenditures guidance remained at $50 million to $60 million for FY2025. The company provided no additional detail on expected revenue or margin expansions in individual segments, nor did it issue updated forward-looking sales guidance beyond the existing earnings projection.
Investors should monitor future sales trends in both Pet and Garden, as each posted a GAAP revenue decline. Management highlighted potential risks from weaker brick-and-mortar retail partners and flagged “potential credit risk associated with certain brick-and-mortar retailers in the pet specialty segment.”
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
Where to invest $1,000 right now
When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 1,026%* — a market-crushing outperformance compared to 180% for the S&P 500.
They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.
*Stock Advisor returns as of August 4, 2025
JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
