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About Kaytee Products Incorporated

Central Garden & Pet tends to all things pets and pests. The company is among the leading US producers and distributors of consumer lawn, garden, and pet supplies, providing its products to retailers, home improvement centers, nurseries, and mass merchandisers. Wal-Mart is a key customer which accounted for over 15% of total net sales. Central Garden & Pet operates more than 40 manufacturing plants and over 55 distribution centers throughout the US. The company sells private label brands as well as brands from other manufacturers. It offers product lines such as AMDRO fire ant bait, Four Paws animal products, Kaytee bird seed, Nylabone dog chews, and TFH pet books. The company was founded by Bill Brown in 1980 as Central Garden Supply.

Operations

Central Garden & Pet operates two primary business lines, Pet and Garden. 

The Pet segment generates about 45% of revenue by producing, distributing, marketing, and selling a wide variety of pet related products for the US. This segment includes: products for dogs and cats, including edible bones, premium healthy edible and non-edible chews, rawhide, toys, pet beds, pet carriers, grooming supplies and other accessories; products for birds, small animals and specialty pets, including cages and habitats, toys, chews, and related accessories; animal and household health and insect control products; products for fish, reptiles and other aquarium-based pets, including aquariums, furniture and lighting fixtures, pumps, filters, water conditioners and supplements, and information and knowledge resources; and products for horses and livestock. 

The Garden segment accounts for over 30% of total revenue. It produces and markets proprietary and non-proprietary grass seed; wild bird feed, bird feeders, bird houses and other birding accessories; weed, grass, and other herbicides, insecticide and pesticide products; fertilizers; and decorative outdoor lifestyle products including pottery, as well as live plants and outdoor cushions and pillows. 

While the firm relies on its sales and logistics network to promote its proprietary brands to thousands of independent specialty stores, other manufacturers' products account for over 20% of Central Garden & Pet's total revenue. The network sells other manufacturers' brands of pet and garden supplies and combines these products with its branded products into single shipments. 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 trade tensions between the US and China.

Geographic Reach

Central Garden & Pet is headquartered in Walnut Creek, California. The company operates nearly 45 manufacturing facilities and approximately 60 sales and logistics facilities, including office and warehouse space. In addition, its garden segment leases approximately 130 acres of land in Oregon and Virginia used in its grass seed and live plant operations and owns approximately 415 acres of land in Virginia, North Carolina, Maryland, and Ohio for live plant operations. Although most operations are in the US, the company has two distribution facilities in China, one distribution facility in Canada, and another one in the UK.

Sales and Marketing

Central Garden & Pet relies heavily on just a few national retail chains for much of its sales. Walmart, its largest customer, represents more than 15% of total sales while Home Depot, its second largest, accounts for over 10%. Lowe's, Costco, and PetSmart are also significant customers, and together with Walmart and Home Depot, the five companies generate around half of sales. The company relies on a domestic and international distribution network to deliver its proprietary brands to thousands of independent specialty stores and mass market customers. 

Central Garden & Pet advertising costs were $37 million, $27.5 million, and $29.7 million in fiscal 2020, 2019, and 2018.

Financial Performance

Central Garden & Pet runs a steady financial organization. In the most recent five-year period the company reported year-over-year revenue growth.  

Net sales in 2020 increased by $312.5 million, or around 13%, to $2.7 billion from $2.4 billion in 2019. Pet segment sales increased nearly 13%, and Garden segment sales increased about 14%. 

 Net income for 2020 was $120.7 million compared to net income in 2019 of $92.8 million. The 2020 36.6% improvement in earnings per diluted share was due to strong revenue and operating income growth and a 5% reduction in fully diluted shares.

Cash at the end of 2020 was $652.7 million, up from $497.7 million the prior year. Cash provided by operations was about $265 million while investing activities used $48 million, primarily to acquire businesses. Financing activities used about $61 million.

Strategy

The company's strategic pillars include: Acceleration of the Growth Momentum of Its Portfolio; Keeping the Core Healthy; Building Digital Capabilities for Competitive Advantage and a Compelling Consumer Experience; Driving Cost Savings and Productivity Improvements to Fuel Growth; and Attracting, Retaining and Developing Exceptional Employees. Central Garden & Pet is no stranger to acquisitions having purchased more than 50 companies over its lifespan. In 2020, the garden net sales increased primarily due to organic sales growth and secondarily to non-organic sales from Arden which was fully acquired by the company in 2019. The company is advancing its digital capabilities to create one-to-one customer relationships through personalization as more consumers are increasingly researching and buying products online. The company also continues to optimize its supply chain for high-demand e-commerce items to ensure customer and consumer availability requirements are met at optimal cost. It is also expanding its data analytics capability to improve and accelerate business insight. 

Mergers and Acquisitions

In 2020, Central Garden & Pet acquired DoMyOwn.com, a fast-growing online retailer of high-grade control products in the US. The transaction adds best-in-class e-commerce fulfillment platform and digital capabilities to the company. Purchase price and other terms of the transaction were not disclosed. 

In 2020, Central Garden & Pet agreed to acquire Green Garden Products ("Green Garden"), previously known as Plantation Products, for $532 million from private equity firm Freeman Spogli & Co and other shareholders. Green Garden, headquartered in Norton, Mass., is a leading provider of vegetable, herb and flower seed packets, seed starters and plant nutrients in North America, shipping over 250 million seed packets annually. The addition of Green Garden's leading brands will expand the Central portfolio into an attractive adjacent category and strengthen the Company's relationship with major retailers.

Also in late 2020, Central Garden & Pet agreed to Hopewell Nursery, a leading live goods grower serving retail nurseries, landscape contractors, wholesalers and garden centers across the Northeast. The addition of Hopewell Nursery to the Central portfolio further bolsters its position as a leading live goods provider in the garden segment. Purchase price and other terms of the transaction are not disclosed.

Company Background

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).

Kaytee Products Incorporated

521 Clay St
Chilton, WI 53014-1477
Phone: 1 (920) 849-2321

Firm Stats

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

Major Office Locations

Chilton, WI

Other Locations

Cressona, PA