# To our Shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/consumer-defensive-packaged-foods/NASDAQ_CENT_2020/NASDAQ_CENT_2020.mmd` · pages 2-8_

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To our Shareholders:

This has been an extraordinary fiscal year. COVID-19 tested the world and our business in ways we could not have predicted and presented the most challenging operating environment in our company's 40-year history. And yet, despite the uncertainty that the coronavirus continues to present each day, our more than 6,300 employees have seamlessly navigated the challenges and opportunities, and we have delivered the strongest year in our company's history.

These historic results were not by happenstance. The record numbers are a result of the continued dedication of our people, the strength of our industries, unparalleled consumer demand and early results of our long-term strategy.

Over the past fiscal year, I've been proud to witness how our teams prioritized the safety and well-being of their colleagues while also responding to the constant changes to ensure our business could continue to run efficiently and with excellence. It's been a chapter that has reinforced our commitment to our employees and their unwavering dedication to each other and our consumers. I continue to be sincerely grateful to our employees for their commitment, creativity, and collaboration I have seen throughout the year. Together with our customers and supply-chain partners, they have done a tremendous job to ensure our business operates as safely and as seamlessly as possible in these challenging times.

## Fiscal 2020 Performance

Net sales of \(2.7 billion increased 13% versus the prior year. The increase was largely driven by organic growth with broad strength in both segments, and to a smaller extent by our 2019 acquisitions, Arden and C&S. Operating income also significantly expanded to \)198 million, an increase of 30% compared to the prior year driven by sales increases and enhanced operating leverage. Earnings per share of \(2.20 grew by 37% or \)0.59 versus the prior year.

In addition to strong financial results, we ended the year generating cash flow of \(264 million, representing an increase of \)59 million compared to the prior year. With over \(650 million of cash on the balance sheet, we are well positioned to make accretive acquisitions. We are also increasing our investments in demand creation, eCommerce and innovation to drive organic growth and take Central to the next level. After fiscal year-end, taking advantage of the low interest rates, we successfully issued \)500 million senior notes which we used to redeem all of our outstanding $400 million notes.

## Central to Home Strategy

Earlier in December, at our first Investor Day, we unveiled our long-term strategic roadmap, called "Central to Home," which we developed over the last few quarters. A team effort by many, only

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accelerated by COVID-19. I'm proud of our past and our accomplishments over the last 40 years, and I'm even more excited about our future.

Today, it is more important than ever that companies are grounded in a purpose. For Central, our business revolves around enabling our consumers through our brands and products – whether we are helping them care for their pets, grow their gardens, or support their farms and communities. Therefore, our company purpose is to nurture happy and healthy homes. When we talk about homes, we think of a place of comfort, shelter, and connection to the ones we love – home is at the center of our lives, and we want to be central to home. To accompany this new purpose, we also needed a new mission to define our future aspirations and how we will achieve them. At Central, our mission is to lead the future of the garden and pet industries... one blade of grass and one wagging tail at a time.

Our Central to Home strategy culminates with our five strategic pillars:

☐ Consumer – Build and grow brands consumers love

☐ Customer – Win with winning customers and channels

☐ Central – Fortify our Central portfolio, including through acquisitions

☐ Cost – Reduce costs to improve margins and fuel growth

☐ Culture – Strengthen our entrepreneurial business unit-led growth culture

I firmly believe that our greatest asset is our people. Our goal is to become a destination for top talent in our industries. Over the past year, we've been steadily bringing new talent into our Central family, including four hires on my Leadership Team. This combination of deep Central experience and relevant consumer products industry expertise supports our winning growth culture.

Our new strategy sets a bold ambition for the future. We are encouraged by some early results, and we are confident in our plans to deliver significant shareholder value. We are excited to embark on the journey and will keep you updated on our progress as we execute our new strategic roadmap.

Thank you for your continued support. I'm confident that our exceptional employees, our commitment to consumers and customers, our attractive and resilient industries, and our ongoing dedication to innovate, grow, and deliver will take us to even greater heights in the years ahead.

Sincerely,

![](images/3_0.jpg)

Tim Cofer

Chief Executive Officer