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Hain Celestial Announces Record Results for Second Quarter Fiscal Year 2013 and Raises Earnings Guidance

GAAP Net Income of $31.6 Million; Up 58%

GAAP EPS of $0.68 per Diluted Share from Continuing Operations; Up 48%

Adjusted Net Income of $34.2 Million; Up 40%

Adjusted EPS of $0.72 per Diluted Share; Up 36%

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MELVILLE, N.Y., Feb. 5, 2013 /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 second quarter ended December 31, 2012. 

(Logo: http://photos.prnewswire.com/prnh/20050324/NYTH131 )

Performance Highlights 2QFY13 Compared to 2QFY12

  • Record net sales of $455.3 million, an increase of 24.8%
  • GAAP net income of $31.6 million, an increase of 57.8%
  • GAAP earnings per diluted share from continuing operations of $0.68, an increase of 47.8%
  • Adjusted earnings per diluted share of $0.72, an increase of 35.8%
  • Operating free cash flow of $106.8 million for the trailing 12 months ended December 31, 2012, an increase of 47.6%
  • Adjusted EBITDA of $205.9 million for the trailing 12 months ended December 31, 2012, an increase of 31.8%

"I am extremely pleased with our results as Hain Celestial US delivered 9.4% top-line growth on a comparable basis as well as increased profitability during the second quarter.  In the UK, Hain Daniels, with the addition of the ambient grocery brands for two months of the quarter, focused on higher margin brand growth while evaluating and establishing a program to eliminate certain unprofitable private label sales.  At the same time our businesses in Canada and Europe delivered profitable growth," said Irwin D. Simon, Founder, President and Chief Executive Officer of Hain Celestial.  "As we have previously discussed, a major investment in our Fakenham facility is underway, where we are repositioning our meat-free frozen foods plant to be ready for the commencement of a long-term program with a major retailer later this year.   Brands acquired during the quarter also contributed to our results, including Hartley's® jam and Sun-Pat® peanut butter, each of which are No. 1 in their respective categories in the United Kingdom," concluded Irwin Simon.  

Worldwide net sales for the second quarter of fiscal year 2013 were a record $455.3 million, an increase of 24.8% compared to net sales of $364.8 million in the prior year period. Hain Celestial US reported net sales of $280.4 million.  In the United Kingdom, Hain Daniels' net sales were $120.2 million.  For the Company's Rest of World segment, consisting of the operations of Hain Celestial Canada and Hain Celestial Europe, net sales were $54.7 million.  The Company had strong brand contribution across various sales channels led by Celestial Seasonings®, Earth's Best®, Garden of Eatin®, Imagine®, MaraNatha®, The Greek Gods®, Alba Botanica®, Lima®, Danival® and Linda McCartney®.  Also, the Company has entered the raw juice category with the acquisition of the BluePrint® brand in late December.

The Company earned income from continuing operations of $32.2 million in the second quarter of fiscal year 2013 compared to $21.1 million in the prior year period, a 53.0% increase, and reported earnings per diluted share from continuing operations of $0.68 compared to $0.46 in the prior year second quarter.  Adjusted income from continuing operations was $34.2 million compared to $24.4 million in the prior year, a 40.3% increase, and adjusted earnings per diluted share from continuing operations was $0.72 compared to $0.53 in the prior year second quarter.  Adjusted amounts exclude acquisition-related expenses, integration and restructuring charges as well as an acquisition-related currency gain.  Adjusted EBITDA reached a new high of $205.9 million during the 12-trailing month period ended December 31, 2012.

Fiscal Year 2013 Guidance

The Company updated its annual guidance for fiscal year 2013. 

  • Total net sales range of $1.740 billion to $1.755 billion; an increase of 26% to 27% as compared to fiscal year 2012.
  • Earnings range of $2.40 to $2.47 per diluted share; an increase of 29% to 33% as compared to fiscal year 2012.

Guidance is provided for continuing operations on a non-GAAP basis and excludes acquisition and integration expenses that may be incurred during the Company's fiscal year 2013, which the Company will continue to identify as it reports its future 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.  

Segment Results

The Company's operations are organized into geographic segments:  United States, United Kingdom, Canada and Europe.  

Sales in the United States segment were $280.4 million for the three months ended December 31, 2012, up 9.4% from the prior year period on a comparable basis, after adjusting the reported 8.2% growth for the transfer of sales responsibilities for a particular brand to the Company's Canadian operations in fiscal year 2013, which accounted for $2.8 million included in United States sales in fiscal year 2012.  For the six months ended December 31, 2012, the increase was 9.4% after adjusting for the transfer of $5.7 million of sales in fiscal year 2012.

The following is a summary of second quarter and six month results by reportable segment:

 

The Hain Celestial Group, Inc.

Reportable Segment Results



(dollars in thousands)









United States


United Kingdom


Rest of World


Corporate/Other


Consolidated

Net sales - Three months ended 12/31/12


$      280,415


$           120,167


$        54,737




$      455,319

Net sales - Three months ended 12/31/11


$      259,153


$             56,417


$        49,267




$      364,837

% change


8.20%


113.00%


11.10%




24.80%












Operating income - Three months ended 12/31/12


$         47,582


$             12,076


$          4,268


$           (12,682)


$        51,244

Operating income - Three months ended 12/31/11


$         41,760


$               3,362


$          2,630


$           (11,548)


$        36,204

% change


13.90%


259.20%


62.30%




41.50%












Operating income margin - Three months ended 12/31/12


17.00%


10.00%


7.80%




11.30%

Operating income margin - Three months ended 12/31/11


16.10%


6.00%


5.30%




9.90%














United States


United Kingdom


Rest of World


Corporate/Other


Consolidated

Net sales - six months ended 12/31/12


$      533,062


$           178,115


$      103,949




$      815,126

Net sales - six months ended 12/31/11


$      492,795


$             67,655


$        91,224




$      651,674

% change


8.20%


163.30%


13.90%




25.10%












Operating income - six months ended 12/31/12


$         84,099


$             11,050


$          8,674


$           (20,303)


$        83,520

Operating income - six months ended 12/31/11


$         73,492


$               2,240


$          4,810


$           (20,501)


$        60,041

% change


14.40%


393.30%


80.30%




39.10%












Operating income margin - six months ended 12/31/12


15.80%


6.20%


8.30%




10.20%

Operating income margin - six months ended 12/31/11


14.90%


3.30%


5.30%




9.20%

 

Webcast

Hain Celestial will host a conference call and webcast at 4:30 PM Eastern Time today to review its second quarter fiscal year 2013 results.  The conference call will be webcast and available under the Investor Relations section of the Company's website at www.hain-celestial.com.

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®, BluePrint®, 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 www.hain-celestial.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 2013; and (ii) the Company's investment in its Fakenham facility for the commencement later this year of a program with a major retailer.  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 for 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 "Reconciliation of GAAP Results to Non-GAAP Measures" for the three months and six months ended December 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, 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, six-month and trailing 12-month periods ended December 31, 2012 and 2011, EBITDA and adjusted EBITDA were calculated as follows:

 



3-Months Ended

6-Months Ended

Trailing 12 Months



12/31/12

12/31/11

12/31/12

12/31/11

12/31/12

12/31/11

Net Income

$31,622

$20,038

$48,008

$31,728

$95,505

$61,348

Income taxes

16,106

11,028

24,442

18,745

45,040

38,528

Interest expense, net

4,673

4,019

8,114

6,918

16,271

13,411

Depreciation and amortization

8,984

8,278

16,993

14,592

32,861

27,003

Impairment of long lived assets

-

-

-

-

15,098

-

Equity in earnings of affiliates

(596)

(751)

142

(819)

(179)

1,945

Stock based compensation

3,709

1,969

6,601

3,763

11,129

8,883

EBITDA

64,498

44,581

104,300

74,927

215,725

151,118

Acquisition related expenses








and restructuring charges

3,775

5,205

4,416

6,952

(9,817)

5,149

Adjusted EBITDA

$68,273

$49,786

$108,716

$81,879

$205,908

$156,267

 

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 trailing 12-month periods ended December 31, 2012 and 2011, operating free cash flow was calculated as follows:


12-Months

Ended

 12/31/2012


12-Months

Ended

12/31/2011

Cash flow provided by operating activities

$145,229


$85,921

Purchases of property, plant and equipment

(38,479)


(13,578)

Operating free cash flow

$106,750


$72,343

 

THE HAIN CELESTIAL GROUP, INC.

Consolidated Balance Sheets

(In thousands)










 December 31, 


 June 30, 




2012


2012




 (Unaudited) 









ASSETS




Current assets:





Cash and cash equivalents

$            42,571


$            29,895


Trade receivables, net

217,429


166,677


Inventories

234,278


186,440


Deferred income taxes

17,180


15,834


Other current assets

26,411


19,864


Assets of business held for sale

-


30,098



Total current assets

537,869


448,808







Property, plant and equipment,  net

218,170


148,475

Goodwill, net

893,921


702,556

Trademarks and other intangible assets, net

424,356


310,378

Investments and joint ventures

49,595


45,100

Other assets

25,357


18,276



Total assets 

$       2,149,268


$       1,673,593







LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:





Accounts payable and accrued expenses

$          243,020


$          184,103


Income taxes payable

10,047


5,074


Current portion of long-term debt

5,393


296


Liabilities of business held for sale

-


13,336



Total current liabilities

258,460


202,809







Deferred income taxes 

135,395


107,633

Other noncurrent liabilities

14,838


8,261

Long-term debt, less current portion

635,110


390,288



Total liabilities

1,043,803


708,991







Stockholders' equity:





Common stock

478


462


Additional paid-in capital

699,804


616,197


Retained earnings

423,119


375,111


Treasury stock

(30,194)


(21,785)


Accumulated other comprehensive income

12,258


(5,383)



Total stockholders' equity

1,105,465


964,602









Total liabilities and stockholders' equity

$       2,149,268


$       1,673,593

 

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,



2012


2011


2012


2011



(Unaudited)


(Unaudited)










Net sales


$             455,319


$             364,837


$             815,126


$             651,674

Cost of sales


324,556


260,252


589,151


467,285

Gross profit


130,763


104,585


225,975


184,389










Selling, general and administrative expenses


75,744


63,460


138,039


117,896

Acquisition related expenses including integration and

restructuring charges


3,775


4,921


4,416


6,452










Operating income


51,244


36,204


83,520


60,041










Interest expense  and other expenses


3,295


4,607


7,187


8,156

Income before income taxes and equity in earnings of equity-

method investees


47,949


31,597


76,333


51,885

Income tax provision


16,302


11,267


24,160


18,984

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


(596)


(751)


142


(819)










Income from continuing operations


32,243


21,081


52,031


33,720

Loss from discontinued operations, net of tax


(621)


(1,043)


(4,023)


(1,992)










Net income


$               31,622


$               20,038


$               48,008


$               31,728










Basic net income per share:









     From continuing operations


$                   0.70


$                   0.48


$                   1.14


$                   0.77

     From discontinued operations


(0.01)


(0.03)


(0.08)


(0.05)

Net income per share - basic


$                   0.69


$                   0.45


$                   1.06


$                   0.72










Diluted net income per share:









     From continuing operations


$                   0.68


$                   0.46


$                   1.11


$                   0.74

     From discontinued operations


(0.01)


(0.02)


(0.09)


(0.04)

Net income per share - diluted


$                   0.67


$                   0.44


$                   1.02


$                   0.70



















Weighted average common shares outstanding:









Basic


45,942


44,158


45,480


44,044

Diluted


47,355


45,652


46,962


45,504

 

THE HAIN CELESTIAL GROUP, INC.

 Reconciliation of GAAP Results to Non-GAAP Measures 

 (in thousands, except per share amounts) 










Three Months Ended December 31,



2012 GAAP

Adjustments


2012 Adjusted

2011 Adjusted



(Unaudited)








Gross profit


$               130,763

-


$                  130,763

$                    104,585








Selling, general and administrative expenses


75,744

-


75,744

63,460

Acquisition related (income) expenses including integration

and restructuring charges


3,775

(3,775)


-

-








Operating income


51,244

3,775


55,019

41,125








Interest and other expenses, net


3,295

1,324


4,619

4,276

Income before income taxes and equity in earnings of equity-

method investees


47,949

2,451


50,400

36,849

Income tax provision


16,302

486


16,788

13,146

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


(596)

-


(596)

(674)

Income from continuing operations


$                 32,243

$                   1,965


$                    34,208

$                      24,377















Income per share from continuing operations - basic


$                     0.70

$                     0.04


$                        0.74

$                          0.55








Income per share from continuing operations - diluted


$                     0.68

$                     0.04


$                        0.72

$                          0.53








Weighted average common shares outstanding:







Basic


45,942



45,942

44,158

Diluted


47,355



47,355

45,652
























FY 2013


FY 2012



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 fees and expenses, integration and restructuring

charges


$                   3,775

$                   1,017


4,921

$                        1,805








Acquisition related (income) expenses including integration and restructuring charges


3,775

1,017


4,921

1,805








  Currency gain on acquisition payment


(1,324)

(531)


331

74








Interest and other expenses, net


(1,324)

(531)


331

74








  Net (income) loss from HPP discontinued operation


-

-


(77)

-








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


-

-


(77)

-








Total adjustments


$                   2,451

$                      486


$                      5,175

$                        1,879

 

THE HAIN CELESTIAL GROUP, INC.

 Reconciliation of GAAP Results to Non-GAAP Measures 

 (in thousands, except per share amounts) 










Six Months Ended December 31,



2012 GAAP

Adjustments


2012 Adjusted

2011 Adjusted



(Unaudited)








Gross profit


$               225,975

-


$                  225,975

184,389








Selling, general and administrative expenses


138,039

-


138,039

117,896

Acquisition related (income) expenses including integration

and restructuring charges


4,416

(4,416)


-

-








Operating income


83,520

4,416


87,936

66,493








Interest and other expenses, net


7,187

1,254


8,441

7,696

Income before income taxes and equity in earnings of equity-

method investees


76,333

3,162


79,495

58,797

Income tax provision


24,160

2,405


26,565

21,478

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


142

-


142

(742)

Income from continuing operations


$                 52,031

$                      757


$                    52,788

$                      38,061















Income per share from continuing operations - basic


$                     1.14

$                     0.02


$                        1.16

$                          0.86








Income per share from continuing operations - diluted


$                     1.11

$                     0.02


$                        1.12

$                          0.84








Weighted average common shares outstanding:







Basic


45,480



45,480

44,044

Diluted


46,962



46,962

45,504
























FY 2013


FY 2012



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 fees and expenses, integration and restructuring

charges


$                   4,416

$                   1,126


$                      6,452

$                        2,379








Acquisition related (income) expenses including integration and restructuring charges


4,416

1,126


6,452

2,379








  Currency gain on acquisition payment


(1,254)

(514)


460

115








Interest and other expenses, net


(1,254)

(514)


460

115








  Net (income) loss from HPP discontinued operation


-

-


(77)

-








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


-

-


(77)

-








  Decrease in unrecognized tax benefits


-

1,793




Income tax provision


-

1,793


-

-















Total adjustments


$                   3,162

$                   2,405


$                      6,835

$                        2,494

 

SOURCE The Hain Celestial Group, Inc.



RELATED LINKS
http://www.hain-celestial.com

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