Central Garden & Pet Co.: Tight spreads soil a positive outlook; maintain Underweight

Research evidence excerpt

Central Garden & Pet Co.: Tight spreads soil a positive outlook; maintain Underweight

Leverage target maintained

The company maintains a total leverage target of 3.0x to 3.5x.

Liquidity remains abundant

Central Garden ended the quarter with cash of $653 million and revolver availability of

$600 million.

Share repurchases

Central Garden repurchased $3 million of shares in 2Q26 and $22 million in 1H26. The

company had $128 million of repurchase authorization remaining at quarter end.

Strategy and operations

New joint venture

Central Garden announced a joint venture with Phillips Pet Food and Supplies in April

2026. Central Garden will be given 20% ownership of the combined entity. The newly

formed entity will be focused on distribution of pet food and pet supplies.

Tariffs are relatively benign

Approximately 13% of CENT’s cost of goods sold (COGS) are subject to tariffs, and 80%

of this amount is sourced from China. Most of these products are in the Pet segment.

Champion USA acquisition

In December 2025, Central Garden acquired Champion USA, a cattle fly-control company,

for $57 million.

Pricing to provide modest tailwind in FY26

The company is expecting to increase prices by ~1% in FY26.

Industry

Industry sales have stabilized

According to BAC aggregated credit and debit card data, Pet Store spending increased

by an average of 1% over the last three months. Long-term tailwinds include: (1) delayed

marriages and (2) lower human birth rates.

Exhibit 3: YoY change in monthly pet store spending based upon BAC aggregated credit and

debit card spending

Pet store spending increased by an average of 1% over the last three months

3%

0%

-3%

-6%

-9%

Source: BAC internal data

BofA GLOBAL RESEARCH

For disclaimers, methodology and limitations on BAC aggregated credit and debit card