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Press release from PR Newswire

Hain Celestial Reports Sales and Earnings Records in its Second Quarter Fiscal Year 2012 Results

Wednesday, February 01, 2012

Hain Celestial Reports Sales and Earnings Records in its Second Quarter Fiscal Year 2012 Results16:00 EST Wednesday, February 01, 2012Record Net Sales of $385.6 Million A 32% Increase Record GAAP Diluted EPS Increases 19% Adjusted Diluted EPS Increases 33% Operating Free Cash Flow of $72.3 Million In the 12 Months Ended December 31, 2011MELVILLE, N.Y., Feb. 1, 2012 /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 record results in the second quarter ended December 31, 2011 as net sales, net income and earnings per diluted share reached the highest levels in the Company's history. (Logo:  http://photos.prnewswire.com/prnh/20050324/NYTH131 )Performance Highlights Record net sales, up 32.1% over the comparable period in fiscal year 2011 Record GAAP net income, up 23.2%; adjusted net income, up 34.5%GAAP operating income increased 17.6%, adjusted operating income increased 30.9%Record Diluted GAAP EPS of $0.44; diluted adjusted EPS of $0.52Adjusted EBITDA increased 29.4% to $49.8 million compared to $38.5 million in the prior year second quarter.  Operating free cash flow improved by 21.3%, reaching $72.3 million for the 12 months ended December 31, 2011 compared to $59.6 million in the 12 months ended December 31, 2010."At a time when many consumer packaged goods companies are experiencing one to two percent consumption growth in the grocery channel, we are achieving consumption growth at more than three times that rate.  In the United States, we continue to drive sales growth in our core distribution channels.  We are pleased and delighted to see that consumers continue to be attracted to our more healthful food and personal care products," said Irwin D. Simon, Founder, President and Chief Executive Officer of Hain Celestial.  "Based on our experience during the last few months, we are even more excited today about working with the Daniels Group management team, and we can see the high potential they have to contribute to the future overall growth of Hain Celestial."  Net sales in the second quarter of fiscal year 2012 increased 32.1% to a record of $385.6 million as compared to net sales of $291.9 million in the second quarter of fiscal year 2011. The Company's growth was driven by increased consumption in core categories with strong contributions from its Earth's Best®, Celestial Seasonings®, MaraNatha®, Garden of Eatin'®, Sensible Portions®, The Greek Gods®, Imagine®, Linda McCartney® and JASON® brands and expanded distribution principally in the grocery and mass channels. The acquisitions of the Daniels Group and Europe's Best® brand, which were completed in October, also contributed to the Company's growth.   The Company earned a record $20.0 million of net income as compared to $16.3 million in the second quarter of the prior year and reported earnings per diluted share of $0.44 as compared to $0.37 in the second quarter of the prior year.  Adjusted earnings per diluted share were $0.52 on adjusted net income of $23.5 million in the fiscal 2012 second quarter as compared to $0.39 per share on adjusted net income of $17.5 million in the prior year second quarter.  Adjusted net income and adjusted earnings per diluted share improved 34.5% and 33.3%, respectively, over the prior year second quarter.  Adjusted net income and adjusted earnings per diluted share for these periods exclude acquisition-related fees, expenses and integration costs of $5.5 million before taxes, or $0.08 per diluted share.As expected with the acquisition of the Daniels Group, changes in the Company's gross profit and selling, general and administrative expenses as percentages of net sales resulted in virtually no change to operating margin.  Input cost inflation amounted to 6.1% in the second quarter this year measured against the second quarter of the prior year.Fiscal Year 2012 Company EstimatesThe Company reconfirmed its annual guidance for fiscal year 2012:Total net sales of $1.455 billion to $1.480 billionEarnings of $1.63 to $1.73 per diluted shareGuidance is provided on a non-GAAP basis and therefore excludes acquisition and integration expenses that may be incurred, which the Company will identify when it reports its financial results.  Historically, the Company's sales and earnings have been strongest in its second and third quarters. WebcastHain Celestial will host a conference call and webcast at 4:30 PM Eastern Time today to review its second quarter fiscal year 2012 results.  The conference call will be webcast and available under the Investor Relations section of the Company's website at www.hain-celestial.com.Non-GAAP Financial MeasuresThis press release and the accompanying tables include non-GAAP financial measures, including adjusted net income, earnings before interest, taxes, depreciation, and amortization ("EBITDA"), adjusted EBITDA and operating free cash flow. 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, 2011 and 2010 and in the paragraphs below.  Management 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.  The Company defines EBITDA as net income (a GAAP measure) before income taxes, net interest expense, depreciation and amortization, equity in the earnings of non-consolidated affiliates and stock based compensation. Adjusted EBITDA is defined as net income before income taxes, net interest expense, depreciation and amortization, equity in the earnings of non-consolidated affiliates, stock based compensation and acquisition-related expenses and integration costs.   The Company's management believes that these presentations provide useful information to management, analysts and investors regarding certain additional financial and business trends relating to its results of operations and financial condition.  In addition, management uses these measures for reviewing the financial results of the Company as well as a component of performance-based executive compensation.  For the three-, six- and twelve-month periods ended December 31, 2011 and 2010, EBITDA and adjusted EBITDA were calculated as follows:Three months ended 12/31/11Three months ended12/ 31/10Six  months ended 12/31/11Six months ended12/31/10Twelve months ended 12/31/11Twelve months ended12/ 31/10Net income$20,038$16,267$31,728$25,362$61,348$34,709Income taxes11,02810,36118,74517,52538,52834,455Interest expense, net4,0193,3966,9186,79713,41111,384Depreciation and amortization8,2785,77014,59211,71327,00312,126Equity in earnings of non-consolidated affiliates(751)(443)(819)(616)1,945(9)Stock based compensation1,9692,1613,7633,9118,8837,611EBITDA44,58137,51274,92764,692151,118109,276Acquisition related fees and expenses5,2069626,9522,8005,1497,724Adjusted EBITDA$49,787$38,474$81,879$67,492$156,267$117,000The Company defines Operating Free Cash Flow as cash provided from or used in operating activities (a GAAP measure) less capital expenditures.  We view operating free cash flow as an important measure because it is one factor in evaluating the amount of cash available for discretionary investments.  For the 12-month periods ended December 31, 2011 and 2010, operating free cash flow was calculated as follows: Twelve Months ended 12/31/2011Twelve Months ended 12/31/2010Cash flow provided by operating activities$85,921$70,866Purchases of property, plant and equipment(13,578)(11,295)Operating free cash flow$72,343$59,571Safe Harbor Statement This press release contains forward-looking statements under Rule 3b-6 of the Securities Exchange Act of 1934, as amended.  Words such as "plan," "continue," "expect," "expected," "anticipate," "estimate," "believe," "may," "potential," "can," "positioned," "should," "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 the Company's actual results to differ materially from those described in the forward-looking statements.  These forward-looking statements include the Company's expectations relating to (i) the Company's guidance for net sales and earnings per diluted share in fiscal year 2012, (ii) consumer demand for the Company's products, (iii) the Company's ability to continue to achieve consumption growth in the grocery channel and sales growth in its core distribution channels and (iv) the contribution of the Daniels Group management team to the future overall growth of the Company.  These risks include but are not limited to the Company's ability to achieve its guidance for net sales and earnings per diluted share in fiscal year 2012 given the economic environment in the U.S. and other markets that it sells products as well as economic, political and business conditions generally and their effect on the Company's customers and consumers' product preferences, and the Company's business, financial condition and results of operations; the Company's expectations for its business for fiscal year 2012 and its positioning for the future; changes in estimates or judgments related to the Company's impairment analysis of goodwill and other intangible assets, as well as with respect to the Company's valuation allowances of its deferred tax assets; the Company's ability to implement its business and acquisition strategy, including its strategy for improving results in the United Kingdom and the integration of the Daniels Group acquisition; the ability of the Company's joint venture investments, including Hain Pure Protein Corporation, to successfully execute their business plans; the Company's ability to realize sustainable growth generally and from investment in core brands, offering new products and its focus on cost containment, productivity, cash flow and margin enhancement in particular; the Company's ability to effectively integrate its acquisitions; competition; the success and cost of introducing new products as well as the Company's ability to increase prices on existing products; the availability and retention of key personnel; the Company's reliance on third party distributors, manufacturers and suppliers; the Company's ability to maintain existing customers and secure and integrate new customers; the Company's ability to respond to changes and trends in customer and consumer demand, preferences and consumption; international sales and operations; changes in fuel, raw materials and commodity costs; the effects on the Company's results of operations from the impacts of foreign exchange; changes in, or the failure to comply with, government regulations; the availability of natural and organic ingredients; the loss of one or more of our manufacturing facilities; our ability to use our trademarks; reputational damage; product liability; seasonality; the Company's reliance on its information technology systems; 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, 2011.  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.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®, Europe's Best®, New Covent Garden Soup Co.®, Johnson's Juice Co.®, Farmhouse Fare®, Linda McCartney®, Daily Bread?, Lima®, Danival®, 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.THE HAIN CELESTIAL GROUP, INC.Consolidated Balance Sheets(In thousands) December 31, June 30, 20112011 (Unaudited) ASSETSCurrent assets:Cash and cash equivalents$            23,928$            27,517Trade receivables, net200,973143,348Inventories189,514171,098Deferred income taxes13,95213,993Other current assets20,16815,110Total current assets448,535371,066Property, plant and equipment,  net171,944110,423Goodwill, net683,447568,374Trademarks and other intangible assets, net288,013220,429Investments and joint ventures42,42650,557Other assets14,07012,655Total assets $       1,648,435$       1,333,504LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable and accrued expenses$          210,254$          167,078Income taxes payable1,9802,974Current portion of long-term debt424633Total current liabilities212,658170,685Deferred income taxes 73,65452,915Other noncurrent liabilities16,06613,661Long-term debt, less current portion450,409229,540Total liabilities752,787466,801Stockholders' equity:Common stock455451Additional paid-in capital596,687582,972Retained earnings327,614295,886Treasury stock(21,123)(19,750)Accumulated other comprehensive income(7,985)7,144Total stockholders' equity895,648866,703Total liabilities and stockholders' equity$       1,648,435$       1,333,504THE HAIN CELESTIAL GROUP, INC. Consolidated Statements of Income (in thousands, except per share amounts) Three Months Ended December 31,Six Months Ended December 31,2011201020112010(Unaudited)(Unaudited)Net sales$             385,552$             291,878$             677,911$             549,839Cost of sales280,024206,486492,546394,345Gross profit105,52885,392185,365155,494Selling, general and administrative expenses65,38455,004120,615105,150Acquisition related expenses including integration and restructuring charges5,2066766,9522,089Operating income34,93829,71257,79848,255Interest expense  and other expenses4,6233,5278,1445,984Income before income taxes and equity in earnings of equity-method investees30,31526,18549,65442,271Income tax provision11,02810,36118,74517,525After-tax (income) loss of equity-method investees(751)(443)(819)(616)Net income$               20,038$               16,267$               31,728$               25,362Basic net income per share$                   0.45$                   0.38$                   0.72$                   0.59Diluted net income per share$                   0.44$                   0.37$                   0.70$                   0.57Weighted average common shares outstanding:Basic44,15842,92944,04442,876Diluted45,65244,33445,50444,126THE 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 31,2011 GAAPAdjustments2011 Adjusted2010 Adjusted(Unaudited)Net sales$               385,552-$                  385,552$                    291,878Cost of Sales280,024-280,024206,200Gross profit105,528-105,52885,678Selling, general and administrative expenses65,384-65,38455,004Acquisition related expenses including integration and restructuring charges5,206(5,206)--Operating income34,9385,20640,14430,674Interest and other expenses, net4,623(331)4,2923,044Income before income taxes and equity in earnings of equity-method investees30,3155,53735,85227,630Income tax provision11,0281,95212,98010,820After-tax (income) loss of equity-method investees(751)77(674)(695)Net income$                 20,038$                   3,508$                    23,546$                      17,505Basic net income per share$                     0.45$                     0.08$                        0.53$                          0.41Diluted net income per share$                     0.44$                     0.08$                        0.52$                          0.39Weighted average common shares outstanding:Basic44,15844,15842,929Diluted45,65245,65244,334FY 2012FY 2011Impact 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 sales--28669Acquisition related fees and expenses and restructuring charges$                   5,206$                   1,878676220Acquisition related expenses and restructuring charges5,2061,878676220  Accretion on acquisition related contingent consideration33174483170Interest and other expenses, net33174483170  Net (income) loss from HPP discontinued operation(77)-252-After-tax (income) loss of equity-method investees(77)-252-Total adjustments$                   5,460$                   1,952$                      1,697$                           459THE 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 31,2011 GAAPAdjustments2011 Adjusted2010 Adjusted(Unaudited)Net sales$               677,911-$                  677,911$                    549,839Cost of Sales492,546-492,546393,634Gross profit185,365-185,365156,205Selling, general and administrative expenses120,615-120,615105,150Acquisition related expenses including integration and restructuring charges6,952(6,952)--Operating income57,7986,95264,75051,055Interest and other expenses, net8,144(460)7,6845,079Income before income taxes and equity in earnings of equity-method investees49,6547,41257,06645,976Income tax provision18,7452,56721,31218,544After-tax (income) loss of equity-method investees(819)77(742)(868)Net income$                 31,728$                   4,768$                    36,496$                      28,300Basic net income per share$                     0.72$                     0.11$                        0.83$                          0.66Diluted net income per share$                     0.70$                     0.10$                        0.80$                          0.64Weighted average common shares outstanding:Basic44,04444,04442,876Diluted45,50445,50444,126FY 2012FY 2011Impact 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 sales--71169  Acquisition related fees and expenses and restructuring charges$                   6,052$                   2,1142,089631  Contingent consideration expense900338--Acquisition related expenses and restructuring charges6,9522,4522,089631  Accretion on acquisition related contingent consideration460115905319Interest and other expenses, net460115905319  Net (income) loss from HPP discontinued operation(77)-252-After-tax (income) loss of equity-method investees(77)-252-Total adjustments$                   7,335$                   2,567$                      3,957$                        1,019SOURCE The Hain Celestial Group, Inc.For further information: Ira Lamel/Mary Anthes, The Hain Celestial Group, Inc., +1-631-730-2200