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 Announces Record First Quarter Fiscal Year 2013 Results

Thursday, November 01, 2012

Hain Celestial Announces Record First Quarter Fiscal Year 2013 Results16:10 EDT Thursday, November 01, 2012STRONG NET SALES FROM CONTINUING OPERATIONS UP 25.4% GAAP EPS FROM CONTINUING OPERATIONS OF $0.42 PER DILUTED SHARE; ADJUSTED EPS OF $0.40 PER DILUTED SHARE Enters into Letter of Intent to Acquire BluePrint?MELVILLE, N.Y., Nov. 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 its results for the first quarter ended September 30, 2012. Performance HighlightsNet sales from continuing operations up 25.4% over the same period in fiscal year 2012 GAAP net income from continuing operations up 56.6%; adjusted net income up 35.8% GAAP gross profit and adjusted gross profit up 19.3% GAAP diluted EPS from continuing operations of $0.42, up 50.0%; adjusted diluted EPS of $0.40, up 33.3% Operating free cash flow was $102.1 million for the trailing twelve months ended September 30, 2012, increasing 23.8% over the same period in fiscal year 2012The Company reported global net sales of $359.8 million from continuing operations, a 25.4% increase compared to net sales of $286.8 million in the first quarter of fiscal year 2012.  The Company's first quarter net sales do not include $12.2 million of net sales in fiscal year 2013 and $5.5 million in fiscal year 2012 from discontinued operations.  The Company's growth came from continued sales momentum in the natural and organic sector across various classes of trade including natural, grocery, mass-market retailers, club stores and e-tailers along with contributions from strategic acquisitions.  Strong contribution came from our Celestial Seasonings®, Earth's Best®, Sensible Portions®, Spectrum®, MaraNatha®, The Greek Gods®, Terra®, Garden of Eatin'®, Arrowhead Mills®,  Linda McCartney®, Alba Botanica®, Europe's Best®, New Covent Garden Soup Co.®, Johnson's Juice Co.®  and Cully & Sully® brands.  For the first quarter, the Company earned $19.8 million of net income from continuing operations as compared to $12.6 million in the prior year first quarter, a 56.6% increase from the prior year, and reported earnings per diluted share from continuing operations of $0.42 compared to $0.28 in the prior year first quarter.  Adjusted earnings per diluted share was $0.40 on adjusted net income of $18.6 million in the fiscal year 2013 first quarter as compared to $0.30 per diluted share on adjusted net income of $13.7 million over the prior year first quarter. Adjusted net income and adjusted earnings per diluted share improved 35.8% and 33.3%, respectively, over the prior year first quarter.  Adjusted net income excludes acquisition-related items and restructuring charges, discrete tax items and results of discontinued operations.    "We had a strong start to our fiscal year with solid growth of our business led by Hain Celestial United States and with contributions from our expanded international operations during our first quarter.  Our increased scale provided us the leverage for improved operating efficiencies across our global portfolio enabling us to deliver solid results from all of our segments.  At the same time, our cash conversion cycle improved to 66 days compared 83 days during the first quarter last year," said Irwin D. Simon, Founder, President and Chief Executive Officer of Hain Celestial.  Enters into Letter of Intent to Acquire BluePrint? In a separate press release, the Company announced it had entered into a letter of intent to acquire BluePrint?, a recognized leader in juice cleanses and single-serve raw juices based in New York City.  The acquisition, which is expected to close by the end of calendar year 2012, is expected to be accretive to Hain Celestial's earnings in fiscal year 2013.  Details of the transaction were not disclosed.Acquisition of Brands from Premier Foods In an October 29, 2012 press release, the Company also announced it had completed the strategic acquisition of Premier Foods' market-leading grocery brands including Hartley's®, Sun-Pat®, Gale's®, Robertson's® and Frank Cooper's® in the United Kingdom.  The Company estimates that net sales during the eight month period from closing to June 30, 2013 will approximate $180 million with accretion in earnings per diluted share during that period of approximately $0.25 before acquisition related charges.  These estimates are included in the Company's updated guidance below.  The Company also announced that its Daily Bread sandwich business, which had been classified as a discontinued operation effective in the fourth quarter of fiscal year 2012, is expected to close tomorrow on its sale to Adelie Foods Group.  Under the terms of the transaction the Company will acquire the prepared fruit products business of Adelie, which will be housed at Hain Daniels High Care, Fresh Innovation Center, specializing in healthy fruit and vegetable meal solutions.     Fiscal Year 2013 Guidance The Company updated its annual guidance for fiscal year 2013 in connection with its recent acquisition of certain of the Premier Foods brands.  Total net sales range of $1.780 billion to $1.795 billion. Earnings of $2.35 to $2.45 per diluted share.Guidance is provided for continuing operations on a non-GAAP basis and therefore excludes results of discontinued operations and acquisition and integration expenses that may be incurred during the Company's fiscal year 2013, which the Company will continue to identify when it reports its financial results.  Guidance excludes the impact of any future acquisitions. Historically, the Company's sales and earnings are strongest in its second and third quarters, which is expected to continue with the acquisition of the brands from Premier Foods.   Segment Results The Company's operations are organized into geographic segments:  United States, United Kingdom and Rest of World.  The following is a summary of first-quarter results by reportable segment. United StatesUnited KingdomRest of WorldCorporate/ OtherConsolidatedQ1 FY 2013 Net sales$  252,647$      57,948$  49,212$    359,807Q1 FY 2012 Net sales$  233,642$      11,238$  41,957$    286,837% change - 2013 vs. 20128.1%415.6%17.3%25.4%Q1 FY 2013 Operating profit (loss)$   36,517$     (1,026)$    4,406$  (7,621)$      32,276Q1 FY 2012 Operating profit (loss)$   31,732$     (1,122)$    2,180$   (8,953)$      23,837% change - 2013 vs. 201215.1%8.6%102.1%35.4%Q1 FY 2013 Operating profit (loss) margin14.5%-1.8%9.0%9.0%Q1 FY 2012 Operating profit (loss) margin13.6%-10.0%5.2%8.3%Webcast Hain Celestial will host a conference call and webcast at 4:30 PM Eastern Time today to review its first quarter fiscal year 2013 results.  The conference call will be webcast and available under the Investor Relations section of the Company's website at 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®, Hartley's®, Sun-Pat®, Gale's®, Robertson's®, Frank Cooper's®, Linda McCartney®, Lima®, Danival®, GG UniqueFiber®, Natumi®, JASON®, Zia® Natural Skincare, Avalon Organics®, Alba Botanica®, Queen Helene® and Earth's Best TenderCare®.  Hain Celestial has been providing "A Healthy Way of Life?" since 1993.  For more information, visit Harbor Statement This press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995.  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.  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 2013; (ii) the acquisition of certain brands from Premier Foods and the potential improvements to the Company's earnings resulting therefrom; and (iii) the potential acquisition of BluePrint.  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 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 2013 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 ability to implement its business and acquisition strategy; the Company's ability to realize sustainable growth, execute productivity initiatives and manage its supply chain; 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 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; 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; and those 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, 2012.  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 Measures This press release and the accompanying tables include non-GAAP financial measures, including adjusted net income, adjusted gross profit, 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 ended September 30, 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, impairment of long lived assets, 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, impairment of long lived assets, equity in the earnings of non-consolidated affiliates, stock based compensation and acquisition-related expenses, including integration, and restructuring charges.   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-month period ended September 30, 2012 and 2011, EBITDA and adjusted EBITDA were calculated as follows: Three MonthsTrailing 12 MonthsSep-12Sep-11Sep-12Sep-11Net Income16,38611,69083,92157,577Income taxes8,3367,71739,96237,861Interest expense, net3,4412,89915,61712,787Depreciation and amortization8,0096,31432,15524,495Impairment of long lived assets0015,0980Equity in earnings of non-consolidated affiliates738(68)(334)2,253Stock based compensation2,8921,7949,3899,075EBITDA39,80230,346195,808144,048Acquisition related expensesand restructuring charges6401,747(8,388)905Adjusted EBITDA40,44232,093187,420144,953 The 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 trailing twelve-month periods ended September 30, 2012 and 2011, operating free cash flow was calculated as follows: Twelve months  9/30/2012Twelve months 9/30/2011Cash flow provided by operating activities$128,293$93,957Purchases of property, plant and equipment(26,193)(11,497)Operating free cash flow$102,100$82,478 THE HAIN CELESTIAL GROUP, INC.Consolidated Balance Sheets(In thousands) September 30,  June 30, 20122012 (Unaudited) ASSETSCurrent assets:Cash and cash equivalents$            36,154$            29,895Trade receivables, net181,575166,677Inventories199,916186,440Deferred income taxes17,25915,834Other current assets17,95419,864Assets of business held for sale2,87930,098Total current assets455,737448,808Property, plant and equipment,  net154,111148,475Goodwill, net708,849702,556Trademarks and other intangible assets, net311,835310,378Investments and joint ventures46,29345,100Other assets22,58618,276Total assets $       1,699,411$       1,673,593LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable and accrued expenses$          205,192$          184,103Income taxes payable5,0925,074Current portion of long-term debt252296Liabilities of business held for sale-13,336Total current liabilities210,536202,809Deferred income taxes 111,123107,633Other noncurrent liabilities8,5718,261Long-term debt, less current portion360,246390,288Total liabilities690,476708,991Stockholders' equity:Common stock465462Additional paid-in capital634,343616,197Retained earnings391,497375,111Treasury stock(24,862)(21,785)Accumulated other comprehensive income7,492(5,383)Total stockholders' equity1,008,935964,602Total liabilities and stockholders' equity$       1,699,411$       1,673,593THE HAIN CELESTIAL GROUP, INC. Consolidated Statements of Income  (in thousands, except per share amounts) Three Months Ended September 30,20122011(Unaudited)Net sales$             359,807$             286,837Cost of sales264,595207,033Gross profit95,21279,804Selling, general and administrative expenses62,29554,437Acquisition related expenses including integration andrestructuring charges6411,531Operating income32,27623,836Interest expense  and other expenses3,8923,548Income before income taxes and equity in earnings ofequity-method investees28,38420,288Income tax provision7,8587,717After-tax (income) loss of equity-method investees738(68)Income from continuing operations19,78812,639Loss from discontinued operations, net of tax(3,402)(949)Net income$               16,386$               11,690Basic net income per share:     From continuing operations$                   0.44$                   0.29     From discontinued operations(0.08)(0.02)Net income per share - basic$                   0.36$                   0.27Diluted net income per share:     From continuing operations$                   0.42$                   0.28     From discontinued operations(0.07)(0.02)Net income per share - diluted$                   0.35$                   0.26Weighted average common shares outstanding:Basic45,01743,930Diluted46,56945,356THE 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 September 30,2012 GAAPAdjustments2012 Adjusted2011 Adjusted(Unaudited)Net sales$          359,807-$          359,807$          286,837Cost of Sales264,595-264,595207,033Gross profit95,212-95,21279,804Selling, general and administrative expenses62,295-62,29554,437Acquisition related expenses including integrationand restructuring charges641(641)--Operating income32,27664132,91725,367Interest and other expenses, net3,892(70)3,8223,419Income before income taxes and equity in earnings of equity-method investees28,38471129,09521,948Income tax provision7,8581,9199,7778,332After-tax (income) loss of equity-method investees738-738(68)Income from continuing operations19,788(1,208)18,58013,684Loss from discontinued operations, net of tax(3,402)3,402--Net income$            16,386$                   2,194$            18,580$            13,684Basic net income per share$                0.36$                     0.05$                0.41$                0.31Diluted net income per share$                0.35$                     0.05$                0.40$                0.30Weighted average common shares outstanding:Basic45,01745,01743,930Diluted46,56946,56945,356FY 2013FY 2012Impact on Income Before Income TaxesImpact on Income Tax ProvisionImpact on IncomeBefore Income TaxesImpact on Income Tax Provision(Unaudited)  Acquisition related fees and expenses and restructuring charges$                 641$                      109$                 631$                 236  Contingent consideration expense--900338Acquisition related expenses and restructuring charges6411091,531574  Accretion on acquisition related contingent consideration701712941Interest and other expenses, net701712941  Discrete tax benefit resulting from enacted tax rate change-1,793--Income tax provision-1,793--  Loss from discontinued operations3,402-949-Total adjustments$            4,113$                   1,919$              2,609$                615SOURCE The Hain Celestial Group, Inc.For further information: Ira Lamel or Mary Anthes, The Hain Celestial Group, Inc., +1-631-730-2200