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8-K - HAIN CELESTIAL GROUP INC | v209938_8k.htm |
Exhibit
99.1
[THE HAIN
CELESTIAL GROUP, INC. LOGO OMITTED]
Contacts:
Ira
Lamel/Mary Anthes
The Hain
Celestial Group, Inc.
631-730-2200
THE
HAIN CELESTIAL GROUP ANNOUNCES STRONG
SECOND
QUARTER FISCAL YEAR 2011 RESULTS
Sales
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 Expenses
Melville, NY, February 3,
2011—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 million1. 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 quarter1.
“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.”
1 See
Non-GAAP Financial Measures and related Reconciliation of GAAP Results to
Non-GAAP Presentation
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 ago1. 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.
Fiscal
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.
Webcast
Hain
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.
2
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®,
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 Statement
This
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.
3
Non-GAAP
Financial Measures
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.
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.
4
Consolidated
Balance Sheets
(In
thousands)
December 31,
|
June 30,
|
|||||||
2010
|
2010
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 26,308 | $ | 17,266 | ||||
Trade
receivables, net
|
130,558 | 114,215 | ||||||
Inventories
|
169,979 | 157,012 | ||||||
Deferred
income taxes
|
10,927 | 10,738 | ||||||
Other
current assets
|
15,510 | 14,586 | ||||||
Total
current assets
|
353,282 | 313,817 | ||||||
Property,
plant and equipment, net
|
105,253 | 106,985 | ||||||
Goodwill,
trademarks and other intangibles, net
|
759,087 | 714,584 | ||||||
Investments
in and advances to affiliates
|
45,340 | 46,041 | ||||||
Other
assets
|
19,074 | 16,660 | ||||||
Total
assets
|
$ | 1,282,036 | $ | 1,198,087 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable and accrued expenses
|
$ | 172,495 | $ | 129,282 | ||||
Income
taxes payable
|
9,334 | 9,530 | ||||||
Current
portion of long-term debt
|
38 | 38 | ||||||
Total
current liabilities
|
181,867 | 138,850 | ||||||
Deferred
income taxes
|
40,582 | 38,283 | ||||||
Other
noncurrent liabilities
|
12,321 | 30,227 | ||||||
Long-term
debt, less current portion
|
240,087 | 225,004 | ||||||
Total
liabilities
|
474,857 | 432,364 | ||||||
Stockholders'
equity:
|
||||||||
Common
stock
|
441 | 437 | ||||||
Additional
paid-in capital
|
559,996 | 548,782 | ||||||
Retained
earnings
|
266,266 | 240,904 | ||||||
Treasury
stock
|
(17,852 | ) | (17,529 | ) | ||||
Accumulated
other comprehensive income
|
(1,672 | ) | (6,871 | ) | ||||
Total
stockholders' equity
|
807,179 | 765,723 | ||||||
Total
liabilities and stockholders' equity
|
$ | 1,282,036 | $ | 1,198,087 |
5
THE
HAIN CELESTIAL GROUP, INC.
Consolidated
Statements of Income
(in
thousands, except per share amounts)
Three Months Ended December
31,
|
Six Months Ended December
31,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||
Net
sales
|
$ | 291,878 | $ | 241,967 | $ | 549,839 | $ | 472,451 | ||||||||
Cost
of sales
|
206,486 | 172,067 | 394,345 | 340,743 | ||||||||||||
Gross
profit
|
85,392 | 69,900 | 155,494 | 131,708 | ||||||||||||
Selling,
general and administrative expenses
|
55,004 | 47,182 | 105,150 | 89,746 | ||||||||||||
Acquisition
related expenses including integration and restructuring
charges
|
676 | 1,157 | 2,089 | 2,936 | ||||||||||||
Operating
income
|
29,712 | 21,561 | 48,255 | 39,026 | ||||||||||||
Interest
expense and other expenses
|
3,527 | 3,515 | 5,984 | 6,557 | ||||||||||||
Income
before income taxes and equity in earnings of equity-method
investees
|
26,185 | 18,046 | 42,271 | 32,469 | ||||||||||||
Income
tax provision
|
10,361 | 6,728 | 17,525 | 12,065 | ||||||||||||
After-tax
income (loss) of equity-method investees
|
(443 | ) | 136 | (616 | ) | 1,132 | ||||||||||
Net
income
|
$ | 16,267 | $ | 11,182 | $ | 25,362 | $ | 19,272 | ||||||||
Basic
net income per share
|
$ | 0.38 | $ | 0.27 | $ | 0.59 | $ | 0.47 | ||||||||
Diluted
net income per share
|
$ | 0.37 | $ | 0.27 | $ | 0.57 | $ | 0.47 | ||||||||
Weighted
average common shares outstanding:
|
||||||||||||||||
Basic
|
42,929 | 40,774 | 42,876 | 40,737 | ||||||||||||
Diluted
|
44,334 | 41,352 | 44,126 | 41,225 |
6
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 December
31,
|
||||||||||||||||
2010 GAAP
|
Adjustments
|
2010 Adjusted
|
2009 Adjusted (Note)
|
|||||||||||||
(Unaudited)
|
||||||||||||||||
Net
sales
|
$ | 291,878 | $ | 291,878 | $ | 241,967 | ||||||||||
Cost
of Sales
|
206,486 | $ | (286 | ) | 206,200 | 172,067 | ||||||||||
Gross
profit
|
85,392 | 286 | 85,678 | 69,900 | ||||||||||||
Selling,
general and administrative expenses
|
55,004 | 55,004 | 47,182 | |||||||||||||
Acquisition
related expenses including integration and restructuring
charges
|
676 | (676 | ) | - | - | |||||||||||
Operating
income
|
29,712 | 962 | 30,674 | 22,718 | ||||||||||||
Interest
and other expenses, net
|
3,527 | (483 | ) | 3,044 | 2,305 | |||||||||||
Income
before income taxes and equity in earnings of equity-method
investees
|
26,185 | 1,445 | 27,630 | 20,413 | ||||||||||||
Income
tax provision
|
10,361 | 459 | 10,820 | 9,050 | ||||||||||||
After-tax
(income) loss of equity-method investees
|
(443 | ) | (252 | ) | (695 | ) | (379 | ) | ||||||||
Net
income
|
$ | 16,267 | $ | 1,238 | $ | 17,505 | $ | 11,742 | ||||||||
Basic
net income per share
|
$ | 0.38 | $ | 0.03 | $ | 0.41 | $ | 0.29 | ||||||||
Diluted
net income per share
|
$ | 0.37 | $ | 0.02 | $ | 0.39 | $ | 0.28 | ||||||||
Weighted
average common shares outstanding:
|
||||||||||||||||
Basic
|
42,929 | 42,929 | 40,774 | |||||||||||||
Diluted
|
44,334 | 44,334 | 41,352 |
FY
2011
|
FY
2010 (Note)
|
|||||||||||||||
Impact
on Income
Before Income Taxes |
Impact
on Income Tax
Provision |
Impact
on Income Before
Income Taxes |
Impact
on Income Tax
Provision |
|||||||||||||
(Unaudited)
|
||||||||||||||||
Acquisition
related integration costs
|
$ | 286 | $ | 69 | ||||||||||||
Cost
of sales
|
286 | 69 | - | - | ||||||||||||
Acquisition
related expenses
|
565 | 209 | ||||||||||||||
Severance
and other reorganization costs
|
111 | 11 | $ | 1,157 | ||||||||||||
Acquisition
related expenses and restructuring charges
|
676 | 220 | 1,157 | - | ||||||||||||
Accretion
on acquisition related contingent consideration
|
483 | 170 | ||||||||||||||
Unrealized
loss on investment
|
1,210 | $ | 450 | |||||||||||||
Interest
and other expenses, net
|
483 | 170 | 1,210 | 450 | ||||||||||||
Net
loss from HPP discontinued operation
|
252 | - | 515 | - | ||||||||||||
Equity
in net (income) loss of HPP
|
252 | - | 515 | - | ||||||||||||
Valuation
allowance recorded on UK deferred tax assets
|
1,872 | |||||||||||||||
Total
adjustments
|
$ | 1,697 | $ | 459 | $ | 2,882 | $ | 2,322 | ||||||||
Note:
|
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.
|
7
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 GAAP
|
Adjustments
|
2010 Adjusted
|
2009 Adjusted (Note)
|
|||||||||||||
(Unaudited)
|
||||||||||||||||
Net
sales
|
$ | 549,839 | $ | 549,839 | $ | 472,451 | ||||||||||
Cost
of Sales
|
394,345 | $ | (711 | ) | 393,634 | 340,743 | ||||||||||
Gross
profit
|
155,494 | 711 | 156,205 | 131,708 | ||||||||||||
Selling,
general and administrative expenses
|
105,150 | 105,150 | 89,746 | |||||||||||||
Acquisition
related expenses including integration and restructuring
charges
|
2,089 | (2,089 | ) | - | - | |||||||||||
Operating
income
|
48,255 | 2,800 | 51,055 | 41,962 | ||||||||||||
Interest
and other expenses, net
|
5,984 | (905 | ) | 5,079 | 5,347 | |||||||||||
Income
before income taxes and equity in earnings of equity-method
investees
|
42,271 | 3,705 | 45,976 | 36,615 | ||||||||||||
Income
tax provision
|
17,525 | 1,019 | 18,544 | 15,667 | ||||||||||||
After-tax
(income) loss of equity-method investees
|
(616 | ) | (252 | ) | (868 | ) | 195 | |||||||||
Net
income
|
$ | 25,362 | $ | 2,938 | $ | 28,300 | $ | 20,753 | ||||||||
Basic
net income per share
|
$ | 0.59 | $ | 0.07 | $ | 0.66 | $ | 0.51 | ||||||||
Diluted
net income per share
|
$ | 0.57 | $ | 0.07 | $ | 0.64 | $ | 0.50 | ||||||||
Weighted
average common shares outstanding:
|
||||||||||||||||
Basic
|
42,876 | 42,876 | 40,737 | |||||||||||||
Diluted
|
44,126 | 44,126 | 41,225 |
FY
2011
|
FY
2010
(Note)
|
|||||||||||||||
Impact
on Income
Before Income Taxes |
Impact
on Income
Tax
Provision |
Impact
on Income Before
Income Taxes |
Impact
on Income
Tax
Provision |
|||||||||||||
(Unaudited)
|
||||||||||||||||
Acquisition
related integration costs
|
$ | 711 | $ | 69 | ||||||||||||
Cost
of sales
|
711 | 69 | - | - | ||||||||||||
Acquisition
related expenses
|
1,777 | 620 | ||||||||||||||
Severance
and other reorganization costs
|
312 | 11 | $ | 2,936 | ||||||||||||
Acquisition
related expenses and restructuring charges
|
2,089 | 631 | 2,936 | - | ||||||||||||
Accretion
on acquisition related contingent consideration
|
905 | 319 | ||||||||||||||
Unrealized
loss on investment
|
1,210 | $ | 450 | |||||||||||||
Interest
and other expenses, net
|
905 | 319 | 1,210 | 450 | ||||||||||||
Net
loss from HPP discontinued operation
|
252 | - | 937 | - | ||||||||||||
Equity
in net (income) loss of HPP
|
252 | - | 937 | - | ||||||||||||
Valuation
allowance recorded on UK deferred tax assets
|
3,152 | |||||||||||||||
Total
adjustments
|
$ | 3,957 | $ | 1,019 | $ | 5,083 | $ | 3,602 | ||||||||
Note:
|
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. |
8