About Kaytee Products Incorporated
Central Garden & Pet tends to all things pets and pests. It is among the largest US producers and distributors of lawn, garden, and pet supplies, providing its products to retailers, home improvement centers, nurseries, and mass merchandisers, among them Wal-Mart. The company operates some 35 manufacturing plants and about 20 distribution centers throughout the US. Central Garden & Pet's sells private label and also branded lines such as AMDRO fire ant bait, Four Paws animal products, Kaytee bird seed, Nylabone dog chews, and TFH pet books.
The company operates two businesses, Pet and Garden. The Pet segment generates a little more than 60% of revenue by producing, distributing, marketing, and selling a wide variety of pet-related products for the US. The company mainly targets the pet supplies market, which includes edible bones, chew toys, rawhide, pet beds and carriers, grooming supplies, animal health products, aquariums, water conditioners, and other items. Recognizable brands include Four Paws, Coralife, Kaytee, Breeder’s Choice, and Life Sciences. The US pet market is highly fragmented with about 1,400 manufacturers. Central Garden & Pet has a competitive advantage in that it operates its own sales and logistics network.
The Garden segment accounts for a little less than 40% of total revenue. It markets and produces grass seed, wild bird feed, insect control products, lawn and garden care items, fertilizers, and outdoor patio products. Notable brands include Pennington Seed, AMDRO, Lilly Miller, the Pottery Group, and Gulfstream.
About 10% of the products sold by Central Garden & Pet are made in China, making it susceptible to tariffs placed on Chinese-made goods in the ongoing tensions between the US and China over trade.
Walnut Creek, California-headquartered Central Garden & Pet operates 35 manufacturing facilities totaling approximately 5.5 million square feet and 60 sales and logistics facilities totaling approximately 4.4 million square feet. Most sales and logistics centers are comprised of office and warehouse space, and several large bays for loading and unloading. Each sales and logistics center provides warehouse, distribution, sales and support functions for its geographic area.
Although most operations and facilities are in the US, the company has a presence in Canada, China, Mexico, and the UK.
Sales and Marketing
Central Garden & Pet relies heavily on just a few national retail chains for much of its sales. The company's largest customer, Wal-Mart, accounts for about 15% of total sales, and about 30% of sales for the company's Garden segment. The Home Depot, Lowe's, Costco, PetSmart, along with Wal-Mart, generate about half of overall revenue. PETCO is also a big customer.
The company relies on a domestic sales network to promote its proprietary brands to thousands of independent specialty stores.
Central Garden & Pet runs a steady financial organization. For over a decade its revenue remained in a tight range between $1.6 billion and $1.8 billion, before breaking the $2 billion mark in 2017 and 2018 (ended September). Net income followed with large gains in the past two years.
In 2018, Central Garden & Pet's built on the previous year’s 12% sales increase. Revenue rose 8% to $2.2 billion on 8% increases in sales of pet and garden products. Acquisitions helped the pet segment to the tune of $56 million, as well as the garden segment with $84 million.
Net income for the year leaped 58% higher, to $123.6 million in 2018, beating the company high established the year before. Costs associated with acquisitions were higher in 2018, but the US Tax Cuts and Jobs Act lowered Central Garden & Pet’s income taxes some $43 million.
Cash at the end of 2018 was $482 million, up $450 million from the prior year. Cash from operations was stable at $114 million year-to-year while investing activities used $139 million, primarily to acquire businesses. Financing activities, however, provided about $475 million due to about $300 million in debt issued in 2018. In 2017, financing activities used about $10 million, mainly for stock buybacks.
Central Garden & Pet focuses on building leading brand names by introducing innovative products and packaging, extending existing product lines, and entering new product categories. It also continues to make selected strategic acquisitions of companies that complement existing brands and product offerings.
Central Garden & Pet is no stranger to acquisitions having purchased more than 40 companies over its lifespan. In 2018, it bought General Pet Supply, based in Milwaukee, Wisconsin, and Bell Nursery, which operates in the mid-Atlantic region.
Because a significant portion of its revenue comes from a handful of retailers, the company views customer relationships as a key performance indicator. In 2018, it received awards from Lowe’s, Petco, and Pet Valu for products and service.
The company is streamlining and improving its technologies to enhance efficiency. It has reduced the number of enterprise resource systems from 37 (accumulated through acquisitions) to fewer than 10.
Mergers and Acquisitions
In 2018 Central Garden & Pet purchased General Pet Supply, a Midwestern pet food and supplies purveyor, for $24 million. The acquisition was expected to expand the company’s pet food and supply distribution footprint and provide access to the veterinary channel.
Also in 2018 the company acquired Bell Nursery, a distributor in the mid-Atlantic region, for $61 million.
In 2017 Central Garden & Pet purchased K&H Manufacturing, a producer of premium pet supplies and the largest marketer of heated pet products in the US, for $48 million.
Central Garden & Pet Company's roots go back to 1955, when it was founded as a small California distributor of lawn and garden supplies. After nearly three decades of unremarkable growth, it was purchased in 1980 by William Brown, a former VP of finance at camera maker Vivitar. The company acquired small distributors but let them operate autonomously. By 1987 Central had sales of $25 million with distribution in California.
The company's first major acquisition was the result of a restructuring of forestry giant Weyerhaeuser, which had diversified into insurance, home building, and diapers, among other products, but was selling noncore divisions to focus solely on timber. It sold Weyerhaeuser Garden Supply to Central in 1990 for $32 million.
Overnight, Central became a national powerhouse with 25 distribution centers serving 38 states. In 1991 sales reached $280 million, of which acquired operations accounted for nearly 70%. The purchase also gave Central 10 high-volume retail customers -- including Costco, Kmart, and Wal-Mart -- which accounted for half of its business. That year the company also acquired a pet distributor, its first move into pet supplies.
To pay down debt associated with the Weyerhaeuser acquisition, the company (then officially known as Central Garden & Pet Company) went public in 1993 (a 1992 IPO was withdrawn when a warehouse fire damaged inventory). With the capital for growth, Central continued to acquire other distributors (from early 1993 to early 1994, it acquired six distributors with about $70 million in sales).
In 1994 the company's largest supplier, Solaris (then a unit of Monsanto and maker of Ortho and Roundup products), decided to bypass Central as its distributor and sell products directly. Solaris products accounted for nearly 40% of the company's sales, and revenues dipped in 1995. However, that year Solaris decided that self-distribution was too difficult and made Central its exclusive distributor. Total sales increased about 65% in 1996.
Broadening its pet supply distribution network, in 1996 Central paid $33 million for Kenlin Pet Supply, the East Coast's largest pet distributor, and Longhorn Pet Supply in Texas. The following year the company bought Four Paws Products and Sandoz Agro.
In 1997 Central paid $132 million for TFH Publications, one of the nation's largest producers of pet books and maker of Nylabone dog snacks, and Kaytee Products, a maker of bird seed. It added Pennington Seed, a maker of grass and bird seed, in 1998.
The company broadened its scope in 1999 with the purchase of Norcal Pottery Products. It also tried to buy Solaris, but that year Monsanto sold its Solaris unit to grass firm The Scotts Co. (now Scotts Miracle-Gro). In a familiar refrain for Central, Scotts then decided to shift partially toward self-distribution, costing Central between $200 million and $250 million in annual sales; Scotts would completely sever distribution ties with Central the following year, leading to countering lawsuits.
Central said in early 2000 it would spin off its lawn and garden distribution business to shareholders, but the company abandoned the plan less than a year later. In March 2000 the company acquired AMDRO fire ant killer and IMAGE, a weed herbicide, from American Home Products (now Wyeth) for $28 million. Later that year Central purchased All-Glass Aquarium Company, a manufacturer and marketer of aquariums and related products.
521 CLAY ST
Chilton, WI 53014-1477
Phone: 1 (920) 849-2321
Employer Type: Privately Owned
Vice President Sales National Accounts: Glenn Darney
Vice President Manufacturing and Plant Manager: Steve Parker
Associate Vice President and Director Environmental Safety: Lori Pethan
Employees (This Location): 360
Employees (All Locations): 500