The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from PR Newswire

Hain Celestial Reports Record Results For Third Quarter Fiscal Year 2012

Thursday, May 03, 2012

Hain Celestial Reports Record Results For Third Quarter Fiscal Year 201216:00 EDT Thursday, May 03, 2012Net Sales Increase 31.5% to a Record Level Record GAAP Net Income Increases 43.7% to $24.1 Million Record GAAP Diluted EPS Increases 36.8% to $0.52 Adjusted Diluted EPS Increases 50.0% to $0.54 Raises Fiscal Year 2012 EPS Guidance Adjusts Sales Guidance to Reflect Discontinued OperationsMELVILLE, N.Y., May 3, 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 for the third quarter ended March 31, 2012. (Logo: http://photos.prnewswire.com/prnh/20050324/NYTH131 )Record Performance Highlights Record net sales up 31.5% over the comparable period in fiscal year 2011 Record GAAP net income up 43.7%; adjusted net income up 53.6% Record GAAP operating income increased 31.7%; adjusted operating income increased 42.0% Record GAAP diluted EPS of $0.52; adjusted diluted EPS of $0.54 Record adjusted EBITDA increased 32.8% to $51.6 million compared to $38.8 million in the prior year third quarter  Operating free cash flow improved by 30.1%, reaching $79.3 million for the 12 months ended March 31, 2012 compared to $61.0 million for the 12 months ended March 31, 2011 "Our natural and organic products continue to resonate with consumers both domestically and internationally, outpacing the trends of conventional consumer packaged goods companies.  Our focused execution drove robust top line sales and profitability across various classes of trade, led by natural and organic food retailers and followed by other retailers as consumers continue to seek out our natural and organic products," said Irwin D. Simon, Founder, President and Chief Executive Officer of Hain Celestial.  "We are delivering on our core strategies of profitable growth, expanding net income margin, leveraging our acquisitions with improved efficiencies and increasing operating free cash flow?all providing a solid foundation for sustainable long-term growth for the Company."Net sales in the third quarter of fiscal year 2012 increased 31.5% to $379.4 million as compared to net sales of $288.4 million in the third quarter of fiscal year 2011.  This year's third quarter net sales of $379.4 million does not include $21.0 million of net sales from private label chilled ready meals, which was acquired as part of the Daniels Group and is now classified as discontinued operations as further detailed below.  The Company's growth was driven by increased consumption in core categories and expanded distribution across various classes of trade in all key channels with strong contributions from its Earth's Best®, Celestial Seasonings®, Imagine®, MaraNatha®, Garden of Eatin'®, Sensible Portions®, The Greek Gods®, and JASON® brands. The Company earned a record $24.1 million of net income as compared to $16.8 million in the third quarter of the prior year and reported record earnings per diluted share of $0.52 as compared to $0.38 in the third quarter of the prior year.  Record adjusted earnings per diluted share were $0.54 on record adjusted net income of $24.9 million in the fiscal 2012 third quarter as compared to $0.36 per share on adjusted net income of $16.2 million in the prior year third quarter.  Adjusted net income and adjusted earnings per diluted share improved 53.6% and 50.0%, respectively, over the prior year third quarter.  Adjusted net income and adjusted earnings per diluted share for the third quarter of fiscal year 2012 excludes $1.7 million after tax, or $0.04 per diluted share, related to acquisition fees, expenses and integration costs, which was partially offset by a decrease in unrecognized tax benefits of $0.8 million, or $0.02 per diluted share."As an innovation leader in the natural and organic industry, we introduced over 60 new products at the Natural Products Expo in March.  The third quarter was also our first full quarter with the results of the Daniels Group, and I'm excited to see the focus on building our brands in the United Kingdom and integrating our existing business while we continue to take out costs.  We also saw great distribution growth from our Europe's Best® brand in Canada, which we owned for the full quarter," concluded Irwin Simon.  The Company also announced today in a separate press release the acquisition of Cully & Sully, Limited in Ireland, a marketer and manufacturer of natural chilled soups, savory pies and hot pots under the Cully & Sully® brand with a range of approximately 20 products.  Cully & Sully is expected to be neutral to earnings in fiscal year 2012 and accretive to earnings in fiscal year 2013.  Private Label Chilled Ready MealsThe Company announced its intention to sell the United Kingdom private label chilled ready meals operations, acquired as part of the Daniels Group in October 2011, which is now being reported as a discontinued operation.  The sales attributable to this business are not included in the Company's reported consolidated net sales for the three months ended March 31, 2012.  Accounting rules require these sales to be included separately in a single item in "Income from discontinued operations, net of tax."   During the third quarter net sales of the discontinued operation were $21.0 million and operating income was $94,000.  The business unit was not a category leader and produced only private label products.  Several strategic parties have expressed an interest in acquiring the unit.  Fiscal Year 2012 Company EstimatesThe Company raised its annual earnings guidance for fiscal year 2012 and adjusted its sales guidance to reflect the discontinued operations of private label chilled ready meals as follows:  Total net sales of $1.40 billion to $1.41 billion Earnings of $1.76 to $1.80 per diluted share Guidance 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 third 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, adjusted operating income, adjusted diluted EPS, 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 nine months ended March 31, 2012 and 2011 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-, nine- and twelve-month periods ended March 31, 2012 and 2011, EBITDA and adjusted EBITDA were calculated as follows:Threemonths3/31/12Threemonths3/31/11Ninemonths3/31/12Ninemonths3/31/11Twelvemonths3/31/12Twelvemonths3/31/11Net income$24,107$16,772$55,835$42,134$68,683$48,825Income taxes12,39711,07631,14228,60139,84931,523Interest expense, net4,1973,38211,11510,17914,22612,503Depreciation and amortization7,7795,94822,37117,66128,83422,371Equity in earnings of non-  consolidated affiliates (28) 121 (847) (495) 1,796 (541)Stock based compensation2,5583,3776,3217,2888,0649,055EBITDA51,01040,676125,937105,368161,452123,736Acquisition related expenses   and restructuring charges 549 (1,837) 7,501 963 7,534 5,888Adjusted EBITDA$51,559$38,839$133,438$106,331$168,986$129,624The 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 March 31, 2012 and 2011, operating free cash flow was calculated as follows: Twelvemonths3/31/2012Twelvemonths3/31/2011Cash flow provided by operating activities$95,947$72,870Purchases of property, plant and equipment                                     (16,622)(11,916)Operating free cash flow$79,325$60,954Safe 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 strategy for sustainable growth, (iv) the integration of the Daniels Group acquisition and growth in the United Kingdom, (v) the impact of the Cully & Sully acquisition on the Company's earnings in fiscal years 2012 and 2013 and (vi) the sale of the Company's private label chilled ready meals operations in the United Kingdom.  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 Café?, 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®, Cully & Sully®, 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) March 31,  June 30, 20122011 (Unaudited) ASSETSCurrent assets:Cash and cash equivalents$         41,164$      27,517Trade receivables, net192,871143,348Inventories179,754171,098Deferred income taxes14,01413,993Other current assets19,65315,110Assets of business held for sale30,452-Total current assets477,908371,066Property, plant and equipment,  net147,350110,423Goodwill, net682,256568,374Trademarks and other intangible assets, net318,543220,429Investments and joint ventures43,02350,557Other assets14,17012,655Total assets $    1,683,250$ 1,333,504LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable and accrued expenses$       200,608$    167,078Income taxes payable5,0602,974Current portion of long-term debt380633Liabilities of business held for sale10,379-Total current liabilities216,427170,685Deferred income taxes 81,65152,915Other noncurrent liabilities12,28613,661Long-term debt, less current portion430,358229,540Total liabilities740,722466,801Stockholders' equity:Common stock459451Additional paid-in capital607,832582,972Retained earnings351,721295,886Treasury stock(21,776)(19,750)Accumulated other comprehensive income4,2927,144Total stockholders' equity942,528866,703Total liabilities and stockholders' equity$    1,683,250$ 1,333,504   THE HAIN CELESTIAL GROUP, INC. Consolidated Statements of Income  (in thousands, except per share amounts) Three Months Ended March 31,Nine Months Ended March 31,2012201120122011(Unaudited)(Unaudited)Net sales$ 379,357$ 288,386$ 1,041,022$ 838,225Cost of sales275,028205,822752,640600,167Gross profit104,32982,564288,382238,058Selling, general and administrative expenses63,18353,664182,765158,814Acquisition related expenses including integration andrestructuring charges549(1,920)7,501169Operating income40,59730,82098,11679,075Interest expense  and other expenses4,1722,85112,2738,835Income before income taxes and equity in earnings of equity-method investees36,42527,96985,84370,240Income tax provision12,38411,07631,06328,601After-tax (income) loss of equity-method investees(28)121(847)(495)Income from continuing operations24,06916,77255,62742,134Income from discontinued operations, net of tax38-208-Net income$   24,107$   16,772$      55,835$   42,134Basic net income per share:     From continuing operations$       0.54$       0.39$          1.26$       0.98     From discontinued operations----Net income per share - basic$       0.54$       0.39$          1.26$       0.98Diluted net income per share:     From continuing operations$       0.52$       0.38$          1.22$       0.95     From discontinued operations----Net income per share - diluted$       0.52$       0.38$          1.22$       0.95Weighted average common shares outstanding:Basic44,50643,20244,19842,985Diluted45,98944,71145,66644,321   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) Three Months Ended March 31,2012 GAAPAdjustments2012 Adjusted2011 Adjusted(Unaudited)Net sales$            379,357-$                 379,357$                    288,386Cost of Sales275,028-275,028205,739Gross profit104,329-104,32982,647Selling, general and administrative expenses63,183-63,18353,664Acquisition related expenses including integration andrestructuring charges549(549)--Operating income40,59754941,14628,983Interest and other expenses, net4,172(212)3,9602,382Income before income taxes and equity in earnings of equity-method investees36,42576137,18626,601Income tax provision12,384(112)12,27210,307After-tax (income) loss of equity-method investees(28)-(28)51Income from continuing operations24,06987324,94216,243Income from discontinued operations, net of tax38(38)--Net income$              24,107$                   835$                   24,942$                      16,243Basic net income per share$                  0.54$                  0.02$                       0.56$                          0.38Diluted net income per share$                  0.52$                  0.02$                       0.54$                          0.36Weighted average common shares outstanding:Basic44,50644,50643,202Diluted45,98945,98944,711FY 2012FY 2011Impact on IncomeBefore Income TaxesImpact on Income TaxProvisionImpact on Income BeforeIncome TaxesImpact on Income TaxProvision(Unaudited)  Acquisition related integration costs--$                          83-Cost of sales--83-  Acquisition related fees and expenses and restructuring charges$                   524$                   1831,690$                           586  Contingent consideration (income)--(4,130)(1,531)  Severance and other reorganization costs25752010Acquisition related expenses and restructuring charges549190(1,920)(935)  Accretion on acquisition related contingent consideration21256469166Interest and other expenses, net21256469166  Net (income) loss from HPP discontinued operation--70-After-tax (income) loss of equity-method investees--70-  Decrease in unrecognized tax benefits-820--  Nondeductible acquisition related transaction expenses(1,178)Income tax provision-(358)--  Income from discontinued operations(38)---Total adjustments$                   723$                  (112)$                   (1,298)$                         (769)   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) Nine Months Ended March 31,2012 GAAPAdjustments2012 Adjusted2011 Adjusted(Unaudited)Net sales$         1,041,022-$              1,041,022$                    838,225Cost of Sales752,640-752,640599,373Gross profit288,382-288,382238,852Selling, general and administrative expenses182,765-182,765158,814Acquisition related expenses including integration andrestructuring charges7,501(7,501)--Operating income98,1167,501105,61780,038Interest and other expenses, net12,273(672)11,6017,461Income before income taxes and equity in earnings of equity-method investees85,8438,17394,01672,577Income tax provision31,0632,45633,51928,851After-tax (income) loss of equity-method investees(847)77(770)(817)Income from continuing operations55,6275,64061,26744,543Income from discontinued operations, net of tax208(208)--Net income$              55,835$                5,432$                   61,267$                      44,543Basic net income per share$                  1.26$                  0.12$                       1.39$                          1.04Diluted net income per share$                  1.22$                  0.12$                       1.34$                          1.01Weighted average common shares outstanding:Basic44,19844,19842,985Diluted45,66645,66644,321FY 2012FY 2011Impact on IncomeBefore Income TaxesImpact on Income TaxProvisionImpact on Income BeforeIncome TaxesImpact on Income TaxProvision(Unaudited)  Acquisition related integration costs--$                        794$                             69Cost of sales--79469  Acquisition related fees and expenses and restructuring charges$                5,995$                2,2023,0241,039  Contingent consideration (income)900338(3,687)(1,364)  Severance and other reorganization costs60610383221Acquisition related expenses and restructuring charges7,5012,643169(304)  Accretion on acquisition related contingent consideration6721711,374485Interest and other expenses, net6721711,374485  Net (income) loss from HPP discontinued operation(77)-322-After-tax (income) loss of equity-method investees(77)-322-  Decrease in unrecognized tax benefits-820--  Nondeductible acquisition related transaction expenses-(1,178)--Income tax provision-(358)--  Income from discontinued operations(208)---Total adjustments$                7,888$                2,456$                     2,659$                           250 SOURCE The Hain Celestial Group, Inc.For further information: Ira Lamel or Mary Anthes, The Hain Celestial Group, Inc., +1-631-730-2200