We closed the quarter with improved gross margins and solid earnings per share, especially when compared to a strong prior-year first quarter that benefited from favorable shipment timing, promotional activity, and weather. At the same time, we're increasingly focused on positioning Central for sustainable long-term growth. With that foundation in place, we're applying the same clarity, focus, and consistency to fostering a growth mindset and embedding innovation more deeply across the organization. Alongside organic growth and innovation, we continue to be thoughtful and selective in how we use M&A to refine our portfolio.
After quarter-end, we completed the acquisition of Champion USA, a small tuck-in business serving the livestock industry with EPA-approved feed-through fly control solutions. As we build on the foundation already put in place, innovation will play a progressively larger role in driving growth across the business. Our diversified portfolio, operational flexibility, and a disciplined approach to cost management give us confidence in our ability to deliver profitable growth even as we navigate an evolving global macroeconomic and policy environment. As we look to the rest of the year, we'll continue to balance prudent cost and cash management with targeted investments that support organic growth, especially in innovation, digital capabilities, and e-commerce.
We continue to focus on margin-accretive consumable businesses that complement our portfolio and expand our presence in attractive categories, and we expect our activity to increase as market conditions continue to normalize. Based on these factors and our current operating plans, we are reaffirming our expectation for Fiscal 2026 non-GAAP diluted EPS of $2.70 or better. As always, our outlook excludes potential impacts from future acquisitions, divestitures, or restructuring actions, including those related to our cost and simplicity agenda. First, the timing of retailer spring inventory shipments in the garden segment and, to a lesser extent, in the pet segment.
| Metric | Period | Current guidance |
|---|---|---|
| Non-GAAP diluted EPS | FY2026 | $2.70 or better (Reaffirmed) |
| CapEx | FY2026 | Approximately $50 million to $60 million |
| Incremental gross tariff exposure | FY2026 | Roughly $20 million (concentrated in pet) (Unchanged) |
| Metric | YoY | Note |
|---|---|---|
| Net sales | -6% to $617 million | Shift of seasonal garden shipments into Q2 and continued portfolio optimization |
| Non-GAAP gross margin | +100 bps to 30.8% | Productivity gains and improved mix |
| Non-GAAP operating income | -$4 million to $24 million (margin 3.9% vs 4.3%) | Lower sales volume |
| Non-GAAP net income | -$1 million to $13 million | Lower operating income partially offset by favorable other income |
| Non-GAAP diluted EPS | Flat at $0.21 | Favorable mix and higher-margin offsetting orders |
| Adjusted EBITDA | -$5 million to $50 million | Lower sales |
| Pet segment net sales | -3% to $416 million | Portfolio optimization, shipment timing, and temporary shipment hold |
| Garden segment net sales | -12% to $202 million | Shipment timing, garden distribution transition, and live plants rationalization |
| Garden non-GAAP operating result | Loss of $2 million vs income of $2 million | Shipment timing more than offset productivity gains |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Shipment timing | FY2025 load-ins concentrated in Q1 | Larger portion shifted into Q2 this year; biggest driver of Q1 decline | Reversing |
| Cost and Simplicity | Project horizon largely complete | Foundational transformation behind; incremental benefits more measured | Maturing |
| Strategic pivot to growth | Cost focus | Pivoting to a growth mindset across innovation, private label, M&A, and digital | Shifting |
| Pet category / live animals | Live animal positive in Q4 | Stabilizing; live animal posted positive growth again in Q1; possible modest H2 growth | Improving |
| Pet durables | ~16% of pet sales, double-digit decline | ~16% of sales, declined north of 20% on cushion timing and tank exit | Declining (intentional) |
| M&A environment | Keeping dry powder | More activity, several discussions, notably more pet activity | Improving |