Central Garden & Pet (CENT)

Risks

• The COVID-19 pandemic has impacted how we are operating our business, and the duration and extent to which this will impact our future results of operations and overall financial performance remains uncertain.
• Our operating results and cash flow are susceptible to fluctuations.
• Seeds and grains we use to produce bird feed and grass seed are commodity products subject to price volatility that has had, and could have, a negative impact on us.
• Supply chain delays and interruptions may result in lost sales, reduced fill rates and service levels and delays in expanding capacity and automating processes.
• We are subject to significant risks associated with innovation, including the risk that our new product innovations will not produce sufficient sales to recoup our investment.
• A decline in consumers’ discretionary spending or a change in consumer preferences could reduce our sales and harm our business.
• Supply disruptions in pet birds, small animals and fish may negatively impact our sales.
• Our lawn and garden sales are highly seasonal and subject to adverse weather.
• We depend on a few customers for a significant portion of our business.
• Tariffs or a global trade war could increase the cost of our products, which could adversely impact the competitiveness of our products and our financial results.
• We may be adversely affected by trends in the retail industry.
• Issues with products may lead to product liability, personal injury or property damage claims, recalls, withdrawals, replacements of products, regulatory actions by governmental authorities that could divert resources, affect business operations, decrease sales, increase costs, and put us at a competitive disadvantage, any of which could have a significant adverse effect on our results of operations and financial condition.
• Competition in our industries may hinder our ability to execute our business strategy, increase our profitability or maintain relationships with existing customers.
• We continue to implement enterprise resource planning information technology systems.
• Some of the products that we manufacture and distribute require governmental permits and also subject us to potential environmental liabilities.
• Our business is dependent upon our ability to continue to source products from China.
• Deterioration in operating results could prevent us from fulfilling our obligations under the terms of our indebtedness or impact our ability to refinance our debt on favorable terms as it matures.
• Our acquisition strategy involves a number of risks.
• If our goodwill, indefinite-lived intangible assets or other long-term assets become impaired, we will be required to record impairment charges, which may be significant.
• Our success depends upon our retaining and recruiting key personnel.
• Inflation, economic uncertainty and other adverse macro-economic conditions may harm our business.
• Our inability to protect our trademarks and any other proprietary rights may have a significant, negative impact on our business.
• Rising energy prices could adversely affect our operating results.
• The products that we manufacture and distribute could expose us to product liability claims.
• We have unresolved litigation which could adversely impact our operating results.
• We are subject to cyber security risks and may incur increasing costs in an effort to minimize those risks.
• We do not expect to pay dividends in the foreseeable future.
• We may issue additional shares of our common stock or Class A common stock that could dilute the value and market price of our stock.
• Our founder, through his holdings of our Class B common stock, exercises effective control of the Company, which may discourage potential acquisitions of our business and could have an adverse effect on the market price of our stock.
• We have authorized the issuance of shares of common stock, Class A common stock and preferred stock, which may discourage potential acquisitions of our business and could have an adverse effect on the market price of our common stock and our Class A common stock.