Niko will begin by highlighting today's key takeaways, followed by Brad, who will walk through our financial performance and the acquisition of TRIXIE in greater detail. Organic sales grew, operating margins expanded, and our teams continued to execute well across the business. As utilization continues to increase, we're seeing meaningful improvements in productivity, service levels, and customer responsiveness. Project Horizon reflects the kind of disciplined operational execution that strengthens our competitive position while creating capacity to invest in growth.
Across Central, we're focused on making the business easier to operate, better serving our customers, and allocating capital to the highest return opportunities. We believe these investments will support sustainable growth while continuing to improve our returns over time. TRIXIE serves more than 30,000 pet retail stores worldwide with a portfolio that is approximately 90% branded products, a business built on strong customer relationships, differentiated products, and a long history of profitable growth. Approximately 10% of combined sales generated outside the United States and an attractive platform from which to participate in the continued growth and consolidation of the European pet specialty market.
We believe this transaction meaningfully enhances our long-term growth opportunities, and we're excited to welcome the TRIXIE team to the Central family. While the macroeconomic environment remains dynamic, our diversified portfolio, strong customer relationships, operational flexibility, and disciplined capital allocation position us well to continue delivering profitable growth. Consumers continue to seek value and performance, while eCommerce and, in certain categories, private label remain in important areas of growth. These investments are generating encouraging results today while positioning us to create sustainable growth and continued margin expansion over the long term.
| Metric | Period | Current guidance |
|---|---|---|
| Full-year non-GAAP diluted EPS | FY2026 | $2.85 or better (raised) |
| TRIXIE acquisition close | First half FY2027 | Expected to close in H1 FY2027; ~10% of combined sales outside the U.S.; synergies expected beginning in year two |
| Long-term organic growth | Long-term | Pet 1%-4%, Garden ~1%-2%, plus M&A on top |
| Capital expenditures | FY2026 | ~$50 million (mostly maintenance plus targeted productivity/growth) |
| Leverage | Current | Gross leverage 2.8x, net leverage 0.5x (all-time low); TRIXIE funding not expected to meaningfully affect leverage |
| Metric | YoY | Note |
|---|---|---|
| Net sales | -8% to $882M (organic +2% to $862M) | Reported decline from the pet distribution exit; underlying organic growth in both Garden and Pet. |
| GAAP operating income | $126M (14.3% margin, +20 bps) | Margin expansion despite lower absolute income; distribution exit and productivity offset higher freight and TRIXIE/data spend. |
| GAAP diluted EPS | $1.45 (vs $1.52) | GAAP net income of $95 million, down 5%. |
| Non-GAAP operating income | $136M (15.4% margin, +90 bps) | Higher corporate spend on TRIXIE and data capabilities more than accounted for the 2% decline in operating income. |
| Adjusted EBITDA | $162M (18.3% margin, up from 17.3%) | Margin expansion on favorable mix and productivity despite lower absolute EBITDA. |
| Pet segment | Net sales $400M (-19%); organic +2% to $380M | Distribution exit reduced reported sales; broad organic gains offset lower Dog & Cat on promo timing and a plant fire; non-GAAP operating margin up 320 bps to 19%. |
| Garden segment | Net sales $482M (+3%) | Distribution wins and strong demand in fertilizer, Wild Bird, and grass seed; non-GAAP operating income up 7% to $91 million (18.9% margin). |
| Operating cash flow | Record $327M (vs $265M) | Strong cash conversion plus inventory unwind from the distribution exit and grass seed. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| TRIXIE and European M&A | Central to Home strategy | Agreed to acquire 80% of TRIXIE (Europe's leading pet supplies/snacks company) for up to €400 million; management sees synergies in manufacturing margin (shifting China-sourced Dog & Cat to Central plants), sourcing, and innovation, and views Europe as a fertile, lower-multiple M&A hunting ground. | — |
| Portfolio reshaping | Cost & Simplicity focus | Exit of the low-margin pet distribution business and the Phillips JV are removing 'noise' and sharpening focus on higher-margin businesses, reducing reported revenue but improving mix; reported revenue will keep declining near term. | — |
| Project Horizon / Cost & Simplicity | Multi-year logistics modernization | ~95% complete (13 facilities closed, two opened into a four-node Central Logistics Network), all projects under budget; next phase focuses on AI and robotics, with C&S now embedded in the culture. | — |
| Pet stabilization | Post-COVID trough | Management sees real stabilization with share gains in Rawhide, Dog Treats, Flea & Tick, and professional; small/live animal up low single digits; Dog & Cat softness attributed to promo timing (~two-thirds) and a one-time plant fire. | — |
| Garden execution | — | Delivered a record garden quarter despite mixed weather (cold/wet, then a heat dome, plus wildfire smoke), with brands up mid-to-high single digits; the heat dome bodes well for fall overseeding (grass seed) and fertilizer. | — |
| Consumer value-seeking | Trade-down pressure | Consumers are seeking a price-plus-quality-plus-performance 'value equation' rather than pure trade-down; branded outperformed private label in Pet this quarter, with value brands like Rebel grass seed and Bully Hide taking off, alongside a channel shift toward club/Walmart and eCommerce. | — |