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Press release from PR Newswire

The Hain Celestial Group Announces Strong Second Quarter Fiscal Year 2011 Results

Thursday, February 03, 2011

The Hain Celestial Group Announces Strong Second Quarter Fiscal Year 2011 Results16:00 EST Thursday, February 03, 2011Sales Increase 21% to $291.9 Million Record Quarterly Net Income of $16.3 Million, a 45% Increase GAAP Earnings Increase 37% to $0.37 Per Diluted Share Adjusted Earnings Increase 39% to $0.39 Per Share Before Acquisition Related ExpensesMELVILLE, N.Y., Feb. 3, 2011 /PRNewswire/ -- The Hain Celestial Group, Inc. (Nasdaq: HAIN), a leading natural and organic products company providing consumers with A Healthy Way of Life?, today reported results for the second quarter ended December 31, 2010.  Reflecting strong sales performance, net sales for the second quarter totaled $291.9 million, an increase of 21% over sales of $242.0 million in the prior year second quarter.  The Company earned $16.3 million in net income, a record quarter for the Company and a 45% increase from $11.2 million in the prior year second quarter.  The Company reported GAAP earnings of $0.37 per diluted share as compared to $0.27 per diluted share in the prior year second quarter.  On an adjusted basis earnings per diluted share were $0.39 on adjusted net income of $17.5 million before pre-tax acquisition related expenses of $1.4 million(1).  Operating margin was 10.2% on a GAAP basis, a 127 basis point improvement, up from 8.9% in the prior year second quarter.  On an adjusted basis operating margin was 10.5%, improving from 9.4% in the prior year second quarter(1). (Logo:  http://photos.prnewswire.com/prnh/20050324/NYTH131 )?Our solid financial performance in the quarter reflected the continued strength of the consumption trends the Company started to experience over a year ago.  Consumers remain committed to maintaining healthy lifestyles and enjoying our products, and we?re seeing improved sales across various classes of trade as we drive core distribution in these channels,? said Irwin D. Simon, President and Chief Executive Officer.  ?Celestial Seasonings® tea, Earth?s Best® infant and toddler products, Arrowhead Mills® cereals and grains, Terra® chips, Spectrum® oils, and our Avalon®, Alba® and Jason® personal care brands led our strong sales.  Sensible Portions® snacks and The Greek Gods® yogurt brands, acquired in June and July 2010, also contributed to the Company?s performance this quarter.  Bottom-line results improved across each of our worldwide locations.  While the United Kingdom environment remains difficult for us, we are seeing sales growth and margin improvement.? Gross profit in this year?s second quarter improved by 37 basis points to 29.3% of sales compared to 28.9% in the prior year second quarter.  On an adjusted basis, gross profit in this year?s second quarter was 29.4%, an improvement of 46 basis points over the prior year second quarter gross profit.(1) The improved gross profit resulted from the mix of product sales worldwide, including the sales of higher margin products from recently acquired businesses in the United States, which together with cost savings more than offset increased input costs that affected the Company.  The Company did not realize the full benefit of the price increase made effective during the second quarter.  Selling, general and administrative expenses were 18.8% of net sales in this year?s second quarter compared to 19.5% in the prior year second quarter.  This improvement resulted from the leverage achieved from the Company?s existing expense base, which more than offset higher amortization expenses related to recent acquisitions and a higher level of product demonstrations and store level sampling employed by the acquired businesses.Operating free cash flow for the 12-month period ended December 31, 2010 improved to $59.6 million, an increase of $21.9 million from a year ago(1). The Company had working capital of $171.4 million at December 31, 2010.  Debt was $240.1 million, or 29.7% of equity of $807.2 million at December 31, 2010. ?At the beginning of fiscal year 2010 we embarked on a long-term strategy of sustainable growth with an emphasis on our sales and earnings and focused execution on cost containment, productivity and cash flow and margin enhancement.  We see those results today in our financial performance.  Our expectation is to achieve stronger year-over-year results as we move through the balance of fiscal year 2011, which is evidenced by our improved financial metrics, including our strong sales and improved profitability, despite the challenges of increased commodity costs,? commented Irwin Simon.      The Company also announced today in a separate press release the acquisitions of Danival SAS and GG UniqueFiber AS in Europe.  Both of these acquisitions are expected to be neutral to earnings in fiscal year 2011 and to be accretive to earnings in fiscal year 2012.  ?I?m excited today to expand our core natural and organic portfolio of brands with a broadened geographic reach and breadth of product with the strategic acquisitions of the Danival® and GG UniqueFiber? brands,? commented Irwin Simon.(1) See Non-GAAP Financial Measures and related Reconciliation of GAAP Results to Non-GAAP PresentationFiscal Year 2011 Guidance The Company updated its fiscal year 2011 sales guidance to $1.060 to $1.080 billion and reconfirmed its fiscal year 2011 earnings guidance of $1.24 to $1.31 per diluted share.  The guidance excludes transaction costs and integration expenses from recent acquisitions that may be incurred during the Company?s fiscal year 2011 and includes five months of sales from the acquisitions announced today.  When the Company reports its financial results each quarter, transaction costs and integration expenses will be identified.    WebcastHain Celestial will host a conference call and webcast at 4:30 PM Eastern Time today to review its second quarter fiscal year 2011 results. The conference call will be webcast and available under the Investor Relations section of the Company?s website at www.hain-celestial.com.The Hain Celestial Group, Inc.The Hain Celestial Group (NASDAQ: HAIN), headquartered in Melville, NY, is a leading natural and organic products company in North America and Europe. Hain Celestial participates in many natural categories with well-known brands that include Celestial Seasonings®, Earth?s Best®, Terra®, Garden of Eatin?®, Sensible Portions®, Health Valley®, Arrowhead Mills®, MaraNatha®, SunSpire®, DeBoles®, Gluten Free Cafe?, Hain Pure Foods®, Hollywood®, Spectrum Naturals®, Spectrum Essentials®, Walnut Acres Organic®, Imagine®, Almond Dream®, Rice Dream®, Soy Dream®, WestSoy®, The Greek Gods®, Ethnic Gourmet®, Yves Veggie Cuisine®, Granose®, Realeat®, Linda McCartney®, Daily Bread?, Lima®, GG UniqueFiber?, Grains Noirs®, Natumi®, JASON®, Zia® Natural Skincare, Avalon Organics®, Alba Botanica®, Queen Helene®, Earth?s Best TenderCare® and Martha Stewart Clean?.  Hain Celestial has been providing ?A Healthy Way of Life?? since 1993.  For more information, visit www.hain-celestial.com.Safe Harbor StatementThis press release contains forward-looking statements under Rule 3b-6 of the Securities Exchange Act of 1934, as amended.  Words such as ?expect,? ?expected,? ?anticipate,? ?estimate,? ?believe,? ?may,? ?potential,? ?can,? ?position,? ?positioned,? ?should,? ?plan,? ?continue,? ?future,? ?look forward? and similar expressions, or the negative of those expressions, may identify forward-looking statements.  Forward-looking statements involve known and unknown risks and uncertainties, which could cause our actual results to differ materially from those described in the forward-looking statements. These forward-looking statements include our expectations relating to (i) our year-over-year results, and (ii) the acquisition of the Danival and GG UniqueFiber brands and the potential improvements to the Company?s earnings resulting therefrom.  These risks include but are not limited to our ability to achieve our guidance for net sales and earnings per diluted share in fiscal year 2011 given the environment in the U.S. and other markets in which we sell products as well as economic and business conditions generally and their effect on our customers and consumers? product preferences, and our business, financial condition and results of operations; changes in estimates or judgments related to our impairment analysis of goodwill and other intangible assets; our ability to implement our business and acquisition strategy, including our strategy for improving results in Europe; Hain Pure Protein Corporation?s (?HPP?) ability to implement its business strategy; our ability to realize sustainable growth generally and from investing in core brands, offering new products and focusing on cost containment, productivity, cash flow and margin enhancement in particular; our ability to effectively integrate our acquisitions; our ability to successfully execute our joint ventures; competition; the success and cost of introducing new products as well as our ability to increase prices on existing products; the availability and retention of key personnel; our reliance on third party distributors, manufacturers and suppliers; our ability to maintain existing contracts and secure and integrate new customers; our ability to respond to changes and trends in customer  and consumer demand, preferences and consumption; international sales and operations; increases in fuel and commodity costs; the effects on our results of operations from adverse impacts of foreign exchange; changes in, or the failure to comply with, government regulations; and other risks detailed from time-to-time in the Company?s reports filed with the Securities and Exchange Commission, including the annual report on Form 10-K for the fiscal year ended June 30, 2010.  As a result of the foregoing and other factors, no assurance can be given as to future results, levels of activity and achievements and neither the Company nor any person assumes responsibility for the accuracy and completeness of these statements.Non-GAAP Financial MeasuresManagement believes that the non-GAAP financial measures presented provide useful additional information to investors about current trends in the Company?s operations and are useful for period-over-period comparisons of operations.  These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures.  In addition, these non-GAAP measures may not be the same as similar measures provided by other companies due to potential differences in methods of calculation and items being excluded.  They should be read only in connection with the Company?s Consolidated Statements of Income presented in accordance with GAAP.Operating Free Cash Flow is a non-GAAP financial measure.  The Company defines Operating Free Cash Flow as cash provided from or used in operating activities less capital expenditures.  For the 12-month period ended December 31, 2010, cash provided by operating activities was $70.9 million and capital expenditures were $11.3 million for a net total of $59.6 million.  For the 12-month period ended December 31, 2009, cash provided by operating activities was $49.4 million and capital expenditures were $11.7 million for a net total of $37.7 million.  This press release and the accompanying tables also include non-GAAP financial measures which are referred to as ?adjusted?. The reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are presented in the tables Consolidated Statements of Income with Adjustments for the three months and six months ended December 31, 2010 and 2009. These non-GAAP financial measures exclude the items listed at the bottom of the tables.THE HAIN CELESTIAL GROUP, INC.Consolidated Balance Sheets(In thousands)December 31,June 30,20102010(Unaudited)ASSETSCurrent assets:Cash and cash equivalents$            26,308$            17,266Trade receivables, net130,558114,215Inventories169,979157,012Deferred income taxes10,92710,738Other current assets15,51014,586Total current assets353,282313,817Property, plant and equipment,  net105,253106,985Goodwill, trademarks and other intangibles, net759,087714,584Investments in and advances to affiliates45,34046,041Other assets19,07416,660Total assets $       1,282,036$       1,198,087LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable and accrued expenses$          172,495$          129,282Income taxes payable9,3349,530Current portion of long-term debt3838Total current liabilities181,867138,850Deferred income taxes 40,58238,283Other noncurrent liabilities12,32130,227Long-term debt, less current portion240,087225,004Total liabilities474,857432,364Stockholders' equity:Common stock441437Additional paid-in capital559,996548,782Retained earnings266,266240,904Treasury stock(17,852)(17,529)Accumulated other comprehensive income(1,672)(6,871)Total stockholders' equity807,179765,723Total liabilities and stockholders' equity$       1,282,036$       1,198,087THE HAIN CELESTIAL GROUP, INC. Consolidated Statements of Income (in thousands, except per share amounts) Three Months Ended December 31,Six Months Ended December 31,2010200920102009(Unaudited)(Unaudited)Net sales$             291,878$             241,967$             549,839$             472,451Cost of sales206,486172,067394,345340,743Gross profit85,39269,900155,494131,708Selling, general and administrative expenses55,00447,182105,15089,746Acquisition related expenses including integration and restructuring charges6761,1572,0892,936Operating income29,71221,56148,25539,026Interest expense  and other expenses3,5273,5155,9846,557Income before income taxes and equity in earnings of equity-method investees26,18518,04642,27132,469Income tax provision10,3616,72817,52512,065After-tax income (loss) of equity-method investees(443)136(616)1,132Net income$               16,267$               11,182$               25,362$               19,272Basic net income per share$                   0.38$                   0.27$                   0.59$                   0.47Diluted net income per share$                   0.37$                   0.27$                   0.57$                   0.47Weighted average common shares outstanding:Basic42,92940,77442,87640,737Diluted44,33441,35244,12641,225THE HAIN CELESTIAL GROUP, INC. Consolidated Statements of Income With Adjustments Reconciliation of GAAP Results to Non-GAAP Presentation (in thousands, except per share amounts) Three Months Ended December 31,2010 GAAPAdjustments2010 Adjusted2009 Adjusted (Note)(Unaudited)Net sales$               291,878$                  291,878$                    241,967Cost of Sales206,486$                    (286)206,200172,067Gross profit85,39228685,67869,900Selling, general and administrative expenses55,00455,00447,182Acquisition related expenses including integration and restructuring charges676(676)--Operating income29,71296230,67422,718Interest and other expenses, net3,527(483)3,0442,305Income before income taxes and equity in earnings of equity-method investees26,1851,44527,63020,413Income tax provision10,36145910,8209,050After-tax (income) loss of equity-method investees(443)(252)(695)(379)Net income$                 16,267$                   1,238$                    17,505$                      11,742Basic net income per share$                     0.38$                     0.03$                        0.41$                          0.29Diluted net income per share$                     0.37$                     0.02$                        0.39$                          0.28Weighted average common shares outstanding:Basic42,92942,92940,774Diluted44,33444,33441,352FY 2011FY 2010 (Note)Impact on Income Before Income TaxesImpact on Income Tax ProvisionImpact on Income Before Income TaxesImpact on Income Tax Provision(Unaudited)  Acquisition related integration costs $                      286$                        69Cost of sales28669--  Acquisition related expenses565209  Severance and other reorganization costs11111$                      1,157Acquisition related expenses and restructuring charges6762201,157-  Accretion on acquisition related contingent consideration483170  Unrealized loss on investment1,210$                           450Interest and other expenses, net4831701,210450  Net loss from HPP discontinued operation252-515-Equity in net (income) loss of HPP252-515-  Valuation allowance recorded on UK deferred tax assets1,872Total adjustments$                   1,697$                      459$                      2,882$                        2,322Note:  The fiscal year 2010 non-GAAP presentation reflects the treatment by HPP of Kosher Valley as a discontinued operation beginning in the fourth quarter as applied to the first three quarters.THE HAIN CELESTIAL GROUP, INC. Consolidated Statements of Income With Adjustments Reconciliation of GAAP Results to Non-GAAP Presentation (in thousands, except per share amounts) Six Months Ended December 31,2010 GAAPAdjustments2010 Adjusted2009 Adjusted (Note)(Unaudited)Net sales$               549,839$                  549,839$                    472,451Cost of Sales394,345$                    (711)393,634340,743Gross profit155,494711156,205131,708Selling, general and administrative expenses105,150105,15089,746Acquisition related expenses including integration and restructuring charges2,089(2,089)--Operating income48,2552,80051,05541,962Interest and other expenses, net5,984(905)5,0795,347Income before income taxes and equity in earnings of equity-method investees42,2713,70545,97636,615Income tax provision17,5251,01918,54415,667After-tax (income) loss of equity-method investees(616)(252)(868)195Net income$                 25,362$                   2,938$                    28,300$                      20,753Basic net income per share$                     0.59$                     0.07$                        0.66$                          0.51Diluted net income per share$                     0.57$                     0.07$                        0.64$                          0.50Weighted average common shares outstanding:Basic42,87642,87640,737Diluted44,12644,12641,225FY 2011FY 2010 (Note)Impact on Income Before Income TaxesImpact on Income Tax ProvisionImpact on Income Before Income TaxesImpact on Income Tax Provision(Unaudited)  Acquisition related integration costs $                      711$                        69Cost of sales71169--  Acquisition related expenses1,777620  Severance and other reorganization costs31211$                      2,936Acquisition related expenses and restructuring charges2,0896312,936-  Accretion on acquisition related contingent consideration905319  Unrealized loss on investment1,210$                           450Interest and other expenses, net9053191,210450  Net loss from HPP discontinued operation252-937-Equity in net (income) loss of HPP252-937-  Valuation allowance recorded on UK deferred tax assets3,152Total adjustments$                   3,957$                   1,019$                      5,083$                        3,602Note:  The fiscal year 2010 non-GAAP presentation reflects the treatment by HPP of Kosher Valley as a discontinued operation beginning in the fourth quarter as applied to the first three quarters.   SOURCE The Hain Celestial Group, Inc.For further information: Ira Lamel/Mary Anthes, both of The Hain Celestial Group, Inc., +1-631-730-2200