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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. 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 in 1980 as a distribution company.

Operations

Central Garden & Pet operates two primary business lines, Pet and Garden. The Pet segment generates about 60% 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 40% 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 more than 40 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 sales network to promote its proprietary brands to thousands of independent specialty stores.

Central Garden & Pet advertising costs were $27.5 million, $29.7 million, and $34.5 million in fiscal 2019, 2018, and 2017, respectively.

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 income also achieved year-to-year gains during this time, except for 2019.

In fiscal year 2019 (ending in September) revenue rose to $2.4 billion, up from $2.2 billion in 2018. Pet segment sales increased about 3%, and Garden segment sales increased about 14%.

Net income for the year dropped to $92.6 billion, down from $124.1 million in 2018. The decline was due primarily to reduced operating income at its Pet segment, specifically by the weaker performance of its animal health business. Also, the US Tax Cuts and Jobs Act lowered Central Garden & Pet's income taxes some $43 million in 2018.

Cash at the end of 2019 was $497.7 million, up from $482.1 million the prior year. Cash provided by operations was $205.0 million while investing activities used $76.2 million, primarily to acquire businesses. Financing activities used another $110.8 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 40 companies over its lifespan. In 2019 it acquired Iowa-based C&S Products (bird food) and the remaining stake in Michigan-based Arden Companies (outdoor cushions and pillows). 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 focused on building its digital capabilities to gain a competitive advantage, It is doing so by optimizing 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 May 2019 Central Garden & Pet purchased C&S Products, a manufacturer of bird feed products, for approximately $30 million, to complement our existing wild bird feed business. Earlier in 2019, it purchased the remaining 55% ownership interest in Arden Companies, a manufacturer of outdoor cushions and pillows, for $13.4 million. The acquisition complements its existing garden portfolio.

 

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