Hain Celestial Announces Record First Quarter Fiscal Year 2014 Results Net Sales Reach $477.5 Million

GAAP Earnings Per Diluted Share of $0.57

Adjusted Earnings Per Diluted Share of $0.52

Reconfirms Annual Sales and Earnings Guidance

LAKE SUCCESS, N.Y., Nov. 5, 2013 /PRNewswire/ -- The Hain Celestial Group, Inc. (NASDAQ:  HAIN) a leading organic and natural products company providing consumers with A Healthier Way of Life™, today reported record first quarter results for its quarter ended September 30, 2013. 

(Logo:  http://photos.prnewswire.com/prnh/20130502/NY06743LOGO )

Performance Highlights

  • Record first quarter net sales of $477.5 million, a 33% increase
  • Record first quarter GAAP earnings per diluted share from continuing operations of $0.57, a 36% increase
  • Record adjusted earnings per diluted share from continuing operations of $0.52, a 27% increase
  • Adjusted EBITDA of $57.8 million, a 42% increase

"We are pleased with the strong start to our fiscal year with robust growth globally from numerous brands in our portfolio," said Irwin D. Simon, Founder, President and Chief Executive Officer of Hain Celestial.  "We continue to focus on driving sales growth and distribution gains, which, combined with margin enhancement and cost containment, will position us for sustained earnings growth."

First Quarter Fiscal 2014
The Company reported net sales of $477.5 million, a 33% increase, compared to net sales of $359.8 million in the first quarter of fiscal year 2013.  Hain Celestial US reported record first quarter sales of $312.0 million, a 23% increase, including strong sales from Ella's Kitchen® and BluePrint® brands acquired after the first quarter of fiscal year 2013.  In the United Kingdom, Hain Daniels net sales were $114.0 million, and the Rest of World segment reported net sales of $51.5 million.  The Company had strong brand contribution across various sales channels led by double-digit growth from Earth's Best®, Sensible Portions®, Spectrum®, The Greek Gods®, Imagine®, Arrowhead Mills®, Hain Pure Foods®, Bearitos®, Lima®, Danival®, Natumi® and Linda McCartney®.  The growth in net sales also resulted from sales of our Hartley's®, Sun-Pat®, Gale's®, Robertson's® and Frank Cooper's® brands also acquired after the first quarter of fiscal year 2013.

For the first quarter, the Company earned income from continuing operations of $27.7 million compared to $19.8 million in the prior year first quarter, a 40% increase, and reported earnings per diluted share from continuing operations of $0.57 compared to $0.42 in the prior year first quarter.  Adjusted net income was $25.3 million compared to $19.2 million in the prior year first quarter, a 32% increase and adjusted earnings per diluted share was $0.52 compared to $0.41, a 27% increase. Adjusted amounts exclude acquisition-related expenses, integration and restructuring charges, factory start-up costs, unrealized currency gains and losses and a net discrete tax benefit.

Fiscal Year 2014 Guidance
The Company reconfirmed its annual guidance for fiscal year 2014 and updated its first half of fiscal year 2014 earnings guidance: 

  • Total net sales range of $2.025 billion to $2.050 billion for fiscal year 2014; an increase of approximately 17% as compared to fiscal year 2013.
  • Earnings range of $2.95 to $3.05 per diluted share for fiscal year 2014; an increase of 16% to 20% as compared to fiscal year 2013.
  • Earnings range of $1.37 to $1.42 per diluted share for the first half of fiscal year 2014.

Guidance is provided for continuing operations on a non-GAAP basis and excludes acquisition-related expenses, integration and restructuring charges, factory start-up costs, unrealized currency gains or losses, reserves for litigation and non-recurring tax items that have been or may be incurred during the Company's fiscal year 2014, which the Company will continue to identify as it reports its future financial results.  Guidance excludes the impact of any future acquisitions. 

Segment Results
The Company's operations are organized into geographic segments:  United States, United Kingdom and Rest of World (comprised of Canada and Continental Europe). 

The following is a summary of first quarter results by reportable segment:

(dollars in thousands)


United States


United Kingdom


Rest of World


Corporate/Other


Non-GAAP

Adjustments(1)


Adjusted(1)














Net sales - Three months ended 9/30/13


$311,995


$113,995


$51,494


$0




$477,484

Net sales - Three months ended 9/30/12


$252,647


$57,948


$49,212


$0




$359,807

% change


23.5%


96.7%


4.6%






32.70%














Operating income (loss) - Three months ended 9/30/13


$46,366


$1,911


$2,914


($11,419)


$3,245


$43,017

Operating income (loss) - Three months ended 9/30/12


$36,517


($1,026)


$4,406


($7,621)


$641


$32,917

% change


27.0%


286.3%


-33.9%






30.70%














Operating income margin - Three months ended 9/30/13


14.9%


1.7%


5.7%






9.0%

Operating income margin - Three months ended 9/30/12


14.5%


-1.8%


9.0%






9.1%














(1)See accompanying table of "Reconciliation of GAAP Results to Non-GAAP Measures"









Webcast
Hain Celestial will host a conference call and webcast at 4:30 PM Eastern Time today to review its first quarter fiscal year 2014 results.  The conference call will be webcast and available under the Investor Relations section of the Company's website at www.hain.com.

The Hain Celestial Group, Inc.
The Hain Celestial Group (NASDAQ: HAIN), headquartered in Lake Success, NY, is a leading organic and natural 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®, Ella's Kitchen®, Terra®, Garden of Eatin'®, Sensible Portions®, Health Valley®, Arrowhead Mills®, MaraNatha®, SunSpire®, DeBoles®, Gluten Free Cafe™, Hain Pure Foods®, Spectrum®, Spectrum Essentials®, Walnut Acres Organic®, Imagine®, Almond Dream®, Rice Dream®, Soy Dream®, WestSoy®, The Greek Gods®, BluePrint®, 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®, JASON®, Avalon Organics®, Alba Botanica® and Queen Helene®.  Hain Celestial has been providing A Healthier Way of Life™ since 1993.  For more information, visit www.hain.com.

Safe 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 for fiscal year 2014; and (ii) being positioned for sustained earnings growth.  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 factors 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 2014 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; 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; the ability of the Company's joint venture investments to successfully execute their business plans; the Company's ability to realize sustainable growth generally and from investments 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; the Company's ability to successfully consummate its proposed divestitures; the effects on the Company's results of operations from the impacts of foreign exchange; competition; the success and cost of introducing new products as well as the Company's ability to increase prices on existing products; 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 material and commodity costs; changes in, or the failure to comply with, government regulations; the availability of organic and natural ingredients; the loss of one or more of the Company's manufacturing facilities; the ability to use the Company's trademarks; reputational damage; product liability; seasonality; litigation; the Company's reliance on its information technology systems; and the other risks detailed from time-to-time in the Company's reports filed with the  SEC, including the annual report on Form 10-K for the fiscal year ended June 30, 2013.  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 from continuing operations, adjusted earnings per diluted share, 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 "Reconciliation of GAAP Results to Non-GAAP Measures" for the three months ended September 30, 2013 and 2012 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 one of the criteria for evaluating performance-based executive compensation. 

For the three months and trailing twelve months ended September 30, 2013 and 2012, EBITDA and adjusted EBITDA were calculated as follows:



3 Months Ended

12 Months Ended

(dollars in thousands)

9/30/2013

9/30/2012

9/30/2013

9/30/2012

Net Income

$27,655

$16,386

$125,925

$83,921

Income taxes

8,751

8,336

35,021

39,962

Interest expense, net

5,285

3,749

19,511

15,925

Depreciation and amortization

10,453

8,009

42,537

32,155

Impairment of long lived assets

0

0

0

15,098

Equity in earnings of affiliates

(572)

738

(1,605)

(334)

Stock based compensation

3,237

2,892

13,355

9,389

EBITDA

54,809

40,110

234,744

196,116

Acquisition related fees and

expenses, integration and

restructuring charges





3,021

640

18,135

(8,388)

Adjusted EBITDA

$57,830

$40,750

$252,879

$187,728

The Company defines Operating Free Cash Flow as cash provided from or used in operating activities (a GAAP measure) less capital expenditures.  The Company views 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 three months ended September 30, 2013 and 2012, operating free cash flow was calculated as follows:


3 Months

Ended

9/30/2013

3 Months

Ended

9/30/2012

(dollars in thousands)


Cash flow provided by operating activities

$53,608

$27,155

Purchases of property, plant and equipment

(12,347)

(8,306)

Operating free cash flow

$41,261

$18,849

Operating free cash flow increased to $41.3 million for the three months ended September 30, 2013 from $18.8 million in the year ago quarter as a result of the increase in our net income and improved working capital management.








THE HAIN CELESTIAL GROUP, INC.

Consolidated Balance Sheets

(In thousands)












September 30,


June 30,





2013


2013





(Unaudited)










ASSETS





Current assets:






Cash and cash equivalents


$ 65,069


$ 41,263


Trade receivables, net


233,759


233,641


Inventories


267,075


250,175


Deferred income taxes


17,665


17,716


Other current assets


38,639


32,377



Total current assets


622,207


575,172








Property, plant and equipment, net


251,363


235,841

Goodwill, net


916,590


876,106

Trademarks and other intangible assets, net


487,532


498,235

Investments and joint ventures


41,099


46,799

Other assets


26,030


26,341



Total assets


$ 2,344,821


$ 2,258,494








LIABILITIES AND STOCKHOLDERS' EQUITY





Current liabilities:






Accounts payable and accrued expenses


$ 275,451


$ 256,946


Income taxes payable


8,154


4,707


Current portion of long-term debt


11,287


12,477



Total current liabilities


294,892


274,130








Deferred income taxes


113,120


114,395

Other noncurrent liabilities


15,293


14,950

Long-term debt, less current portion


641,241


653,464



Total liabilities


1,064,546


1,056,939








Stockholders' equity:






Common stock


492


490


Additional paid-in capital


780,872


768,774


Retained earnings


517,422


489,767


Treasury stock


(34,174)


(30,225)


Accumulated other comprehensive income


15,663


(27,251)



Total stockholders' equity


1,280,275


1,201,555










Total liabilities and stockholders' equity


$ 2,344,821


$ 2,258,494




















THE HAIN CELESTIAL GROUP, INC.

Consolidated Statements of Income

(in thousands, except per share amounts)








Three Months Ended September 30,



2013


2012



(Unaudited)






Net sales


$ 477,484


$ 359,807

Cost of sales


358,361


264,595

Gross profit


119,123


95,212






Selling, general and administrative expenses


73,587


59,662

Amortization of acquired intangibles


3,468


2,633

Acquisition related expenses including integration and

restructuring charges


2,296


641






Operating income


39,772


32,276






Interest expense and other expenses


3,938


3,892

Income before income taxes and equity in earnings of equity-

method investees


35,834


28,384

Income tax provision


8,751


7,858

(Income) loss of equity-method investees, net of tax


(572)


738






Income from continuing operations


27,655


19,788

Loss from discontinued operations, net of tax


-


(3,402)






Net income


$ 27,655


$ 16,386






Basic net income per share:





From continuing operations


$ 0.58


$ 0.44

From discontinued operations


-


(0.08)

Net income per share - basic


$ 0.58


$ 0.36






Diluted net income per share:





From continuing operations


$ 0.57


$ 0.42

From discontinued operations


-


(0.07)

Net income per share - diluted


$ 0.57


$ 0.35











Weighted average common shares outstanding:





Basic


47,706


45,017

Diluted


48,934


46,569






















THE HAIN CELESTIAL GROUP, INC.

Reconciliation of GAAP Results to Non-GAAP Measures

(in thousands, except per share amounts)

 










Three Months Ended September 30,



2013 GAAP

Adjustments


2013 Adjusted

2012 Adjusted



(Unaudited)








Gross profit


$ 119,123

725


$ 119,848

$ 95,212








Selling, general and administrative expenses


73,587

(224)


73,363

59,662

Amortization of acquired intangibles


3,468

-


3,468

2,633

Acquisition related (income) expenses including integration and

restructuring charges


2,296

(2,296)


-

-








Operating income


39,772

3,245


43,017

32,917








Interest and other expenses, net


3,938

2,081


6,019

3,822

Income before income taxes and equity in earnings of equity-

method investees


35,834

1,164


36,998

29,095

Income tax provision


8,751

3,493


12,244

9,777

(Income) of equity-method investees, net of tax


(572)

-


(572)

81

Income from continuing operations


$ 27,655

$ (2,329)


$ 25,326

$ 19,237















Income per share from continuing operations - basic


$ 0.58

$ (0.05)


$ 0.53

$ 0.43








Income per share from continuing operations - diluted


$ 0.57

$ (0.05)


$ 0.52

$ 0.41








Weighted average common shares outstanding:







Basic


47,706



47,706

45,017

Diluted


48,934



48,934

46,569
























FY 2014


FY 2013



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


$ 259

$ 59


-

-








Factory start-up costs


466

158


-

-








Cost of sales


725

217


-

-








Expenses related to third party sale of common stock


224

85


-

-








Selling, general and administrative expenses


224

85


-

-








Acquisition related fees and expenses, integration and restructuring

charges


2,296

780


$ 641

$ 109








Acquisition related (income) expenses including integration and

restructuring charges


2,296

780


641

109








Unrealized currency impacts


(2,319)

(898)


-

-








Accretion of contingent consideration


238

82


70

17








Interest and other expenses, net


(2,081)

(816)


70

17








Net (income) loss from HHO discontinued operation



-


657

-








After-tax (income) loss of equity-method investees


-

-


657

-








Discrete tax benefit resulting from enacted tax rate change


-

3,777


-

1,793








Increase in unrecognized tax benefits


-

(550)


-

-








Income tax provision


-

3,227


-

1,793















Total adjustments


$ 1,164

$ 3,493


$ 1,368

$ 1,919








 

 

SOURCE The Hain Celestial Group, Inc.



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