Central Garden & Pet (CENT) risk factors, FY2024 10-K

Other

1. 01Economic uncertainty and other adverse macro-economic conditions, including high interest rates and potential tariffs, may harm our business
2. 02Tariffs 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
3. 03Our business is dependent upon our ability to continue to source products from China
4. 04High energy prices could adversely affect our operating results
5. 05A decline in consumers’ discretionary spending or a change in consumer preferences could reduce our sales and harm our business
6. 06Our operating results and cash flow are susceptible to fluctuations
7. 07Our lawn and garden sales are highly seasonal and subject to adverse weather and climate change
8. 08We are in the process of implementing our Central to Home strategy, which could result in increased expenses over the next few years
9. 09If we are unable to execute on our Cost and Simplicity Program, our ability to maintain or grow margins may be negatively impacted
10. 10Seeds and grains we use to produce bird feed and grass seed are commodity products subject to price volatility that could have a negative impact on us
11. 11We 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
12. 12and introduce them successfully and in a timely manner could harm our ability to grow our business and could have a material adverse effect on our business, results of operations and financial condition
13. 13We depend on a few customers for a significant portion of our business
14. 14We may be adversely affected by trends in the retail industry
15. 15If we underestimate or overestimate demand for our products and do not maintain appropriate inventory levels, our results of operations and financial condition could be negatively impacted
16. 16Supply disruptions in pet birds, small animals and fish may negatively impact our sales
17. 17Competition in our industries may hinder our ability to execute our business strategy, increase our profitability or maintain relationships with existing customers
18. 18We continue to implement enterprise resource planning information technology systems
19. 19Some of the products that we manufacture and distribute require governmental permits and also subject us to potential environmental liabilities
20. 20Deterioration 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

Risks Relating to Acquisitions

1. 21Our acquisition strategy involves a number of risks
2. 22These risks could have a material adverse effect on our business, results of operations and financial condition
3. 23If 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

General Risks

1. 24Our success depends upon our retaining and recruiting key personnel
2. 25A significant information security or operational technology incident, including a cyber attack or data breach, could disrupt our operations and adversely impact our operating results, cash flows and reputation
3. 26detect for periods of time, we may face difficulties in anticipating and implementing adequate preventative measures or fully mitigating harms after such an attack
4. 27Our inability to protect our trademarks and any other proprietary rights may have a significant, negative impact on our business
5. 28The products that we manufacture and distribute could expose us to product liability claims
6. 29We have unresolved litigation which could adversely impact our operating results
7. 30The adoption of new tax legislation, unanticipated changes in our tax provisions, or exposure to additional tax liabilities could affect our profitability and cash flows

Risks Relating to our Capital Stock

1. 31We do not expect to pay cash dividends in the foreseeable future
2. 32We may issue additional shares of our common stock or Class A common stock that could dilute the value and market price of our stock
3. 33Our Chairman and 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
4. 34We 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