The Hain Celestial Group, Inc. : Hain Celestial Reports Sales and Earnings Records in its Second Quarter Fiscal Year 2012 Results

02/01/2012 | 04:05pm

MELVILLE, N.Y., Feb. 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(TM), today reported record results in the second quarter ended December 31, 2011 as net sales, net income and earnings per diluted share reached the highest levels in the Company's history.

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

Performance Highlights

-- Record net sales, up 32.1% over the comparable period in fiscal year
2011
-- Record GAAP net income, up 23.2%; adjusted net income, up 34.5%
-- GAAP operating income increased 17.6%, adjusted operating income
increased 30.9%
-- Record Diluted GAAP EPS of $0.44; diluted adjusted EPS of $0.52
-- Adjusted EBITDA increased 29.4% to $49.8 million compared to $38.5
million in the prior year second quarter.
-- Operating free cash flow improved by 21.3%, reaching $72.3 million for
the 12 months ended December 31, 2011 compared to $59.6 million in the
12 months ended December 31, 2010.

"At a time when many consumer packaged goods companies are experiencing one to two percent consumption growth in the grocery channel, we are achieving consumption growth at more than three times that rate. In the United States, we continue to drive sales growth in our core distribution channels. We are pleased and delighted to see that consumers continue to be attracted to our more healthful food and personal care products," said Irwin D. Simon, Founder, President and Chief Executive Officer of Hain Celestial. "Based on our experience during the last few months, we are even more excited today about working with the Daniels Group management team, and we can see the high potential they have to contribute to the future overall growth of Hain Celestial."

Net sales in the second quarter of fiscal year 2012 increased 32.1% to a record of $385.6 million as compared to net sales of $291.9 million in the second quarter of fiscal year 2011. The Company's growth was driven by increased consumption in core categories with strong contributions from its Earth's Best®, Celestial Seasonings®, MaraNatha®, Garden of Eatin'®, Sensible Portions®, The Greek Gods®, Imagine®, Linda McCartney® and JASON® brands and expanded distribution principally in the grocery and mass channels. The acquisitions of the Daniels Group and Europe's Best® brand, which were completed in October, also contributed to the Company's growth.

The Company earned a record $20.0 million of net income as compared to $16.3 million in the second quarter of the prior year and reported earnings per diluted share of $0.44 as compared to $0.37 in the second quarter of the prior year. Adjusted earnings per diluted share were $0.52 on adjusted net income of $23.5 million in the fiscal 2012 second quarter as compared to $0.39 per share on adjusted net income of $17.5 million in the prior year second quarter. Adjusted net income and adjusted earnings per diluted share improved 34.5% and 33.3%, respectively, over the prior year second quarter. Adjusted net income and adjusted earnings per diluted share for these periods exclude acquisition-related fees, expenses and integration costs of $5.5 million before taxes, or $0.08 per diluted share.

As expected with the acquisition of the Daniels Group, changes in the Company's gross profit and selling, general and administrative expenses as percentages of net sales resulted in virtually no change to operating margin. Input cost inflation amounted to 6.1% in the second quarter this year measured against the second quarter of the prior year.

Fiscal Year 2012 Company Estimates

The Company reconfirmed its annual guidance for fiscal year 2012:

-- Total net sales of $1.455 billion to $1.480 billion
-- Earnings of $1.63 to $1.73 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.

Webcast

Hain Celestial will host a conference call and webcast at 4:30 PM Eastern Time today to review its second 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 Measures

This press release and the accompanying tables include non-GAAP financial measures, including adjusted net income, 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 six months ended December 31, 2011 and 2010 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-, six- and twelve-month periods ended December 31, 2011 and 2010, EBITDA and adjusted EBITDA were calculated as follows:

Three Three Six Six Twelve Twelve
----- ----- --- --- ------ ------
months months months months months months
------ ------ ------ ------ ------ ------
ended ended ended ended ended ended
----- ----- ----- ----- ----- -----
12/
12/31/11 12/ 31/10 12/31/11 12/31/10 12/31/11 31/10
-------- --------- -------- -------- -------- ------
Net income $20,038 $16,267 $31,728 $25,362 $61,348 $34,709
Income
taxes 11,028 10,361 18,745 17,525 38,528 34,455
Interest
expense,
net 4,019 3,396 6,918 6,797 13,411 11,384
Depreciation
and
amortization 8,278 5,770 14,592 11,713 27,003 12,126
Equity in
earnings
of non-
consolidated
affiliates (751) (443) (819) (616) 1,945 (9)
Stock
based
compensation 1,969 2,161 3,763 3,911 8,883 7,611
----- ----- ----- ----- ----- -----

EBITDA 44,581 37,512 74,927 64,692 151,118 109,276

Acquisition
related
fees and
expenses 5,206 962 6,952 2,800 5,149 7,724

Adjusted
EBITDA $49,787 $38,474 $81,879 $67,492 $156,267 $117,000
------- ------- ------- ------- -------- --------

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 12-month periods ended December 31, 2011 and 2010, operating free cash flow was calculated as follows:

Twelve Twelve
------ ------
Months Months
------ ------
ended ended
----- -----
12/31/2011 12/31/2010
---------- ----------
Cash flow provided by operating activities $85,921 $70,866
Purchases of property, plant and equipment (13,578) (11,295)
------- -------
Operating free cash flow $72,343 $59,571
======= =======

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 "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 ability to continue to achieve consumption growth in the grocery channel and sales growth in its core distribution channels and (iv) the contribution of the Daniels Group management team to the future overall growth of the Company. 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 Cafe(TM), 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®, New Covent Garden Soup Co.®, Johnson's Juice Co.®, Farmhouse Fare®, Linda McCartney®, Daily Bread(TM), 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(TM). Hain Celestial has been providing "A Healthy Way of Life(TM)" since 1993. For more information, visit www.hain-celestial.com.

THE HAIN CELESTIAL GROUP, INC.
Consolidated Balance Sheets
(In thousands)

December 31, June 30,
------------ --------
2011 2011
---- ----
(Unaudited)

ASSETS
Current assets:
Cash and cash equivalents $23,928 $27,517
Trade receivables, net 200,973 143,348
Inventories 189,514 171,098
Deferred income taxes 13,952 13,993
Other current assets 20,168 15,110
------ ------
Total current assets 448,535 371,066

Property, plant and equipment, net 171,944 110,423
Goodwill, net 683,447 568,374
Trademarks and other intangible
assets, net 288,013 220,429
Investments and joint ventures 42,426 50,557
Other assets 14,070 12,655
------ ------
Total assets $1,648,435 $1,333,504
========== ==========

LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable and accrued
expenses $210,254 $167,078
Income taxes payable 1,980 2,974
Current portion of long-term debt 424 633
--- ---
Total current liabilities 212,658 170,685

Deferred income taxes 73,654 52,915
Other noncurrent liabilities 16,066 13,661
Long-term debt, less current
portion 450,409 229,540
------- -------
Total liabilities 752,787 466,801

Stockholders' equity:
Common stock 455 451
Additional paid-in capital 596,687 582,972
Retained earnings 327,614 295,886
Treasury stock (21,123) (19,750)
Accumulated other comprehensive
income (7,985) 7,144
------ -----
Total stockholders' equity 895,648 866,703
------- -------

Total liabilities and stockholders'
equity $1,648,435 $1,333,504
========== ==========

THE HAIN CELESTIAL GROUP, INC.
Consolidated Statements of Income
(in thousands, except per share
amounts)


Six Months Ended December
Three Months Ended December 31, 31,
------------------------------- --------------------------
2011 2010 2011 2010
---- ---- ---- ----
(Unaudited) (Unaudited)

Net
sales $385,552 $291,878 $677,911 $549,839
Cost
of
sales 280,024 206,486 492,546 394,345
------- ------- ------- -------
Gross
profit 105,528 85,392 185,365 155,494

Selling,
general
and
administrative
expenses 65,384 55,004 120,615 105,150
Acquisition
related
expenses
including
integration
and
restructuring
charges 5,206 676 6,952 2,089
----- --- ----- -----

Operating
income 34,938 29,712 57,798 48,255


Interest
expense
and
other
expenses 4,623 3,527 8,144 5,984
----- ----- ----- -----
Income
before
income
taxes
and
equity
in
earnings
of
equity-
method
investees 30,315 26,185 49,654 42,271
Income
tax
provision 11,028 10,361 18,745 17,525
After-
tax
(income)
loss
of
equity-
method
investees (751) (443) (819) (616)
---- ---- ---- ----

Net
income $20,038 $16,267 $31,728 $25,362
======= ======= ======= =======

Basic
net
income
per
share $0.45 $0.38 $0.72 $0.59
===== ===== ===== =====

Diluted
net
income
per
share $0.44 $0.37 $0.70 $0.57
===== ===== ===== =====

Weighted
average
common
shares
outstanding:
Basic 44,158 42,929 44,044 42,876
====== ====== ====== ======
Diluted 45,652 44,334 45,504 44,126
====== ====== ====== ======

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,
-------------------------------
2011 GAAP Adjustments 2011 Adjusted 2010 Adjusted
--------- ----------- ------------- -------------
(Unaudited)
Net
sales $385,552 - $385,552 $291,878
Cost
of
Sales 280,024 - 280,024 206,200
------- --- ------- -------
Gross
profit 105,528 - 105,528 85,678

Selling,
general
and
administrative
expenses 65,384 - 65,384 55,004
Acquisition
related
expenses
including
integration
and
restructuring
charges 5,206 (5,206) - -
----- ------ --- ---

Operating
income 34,938 5,206 40,144 30,674

Interest
and
other
expenses,
net 4,623 (331) 4,292 3,044
----- ---- ----- -----
Income
before
income
taxes
and
equity
in
earnings
of
equity-
method
investees 30,315 5,537 35,852 27,630
Income
tax
provision 11,028 1,952 12,980 10,820
After-
tax
(income)
loss
of
equity-
method
investees (751) 77 (674) (695)
---- --- ---- ----
Net
income $20,038 $3,508 $23,546 $17,505
======= ====== ======= =======

Basic
net
income
per
share $0.45 $0.08 $0.53 $0.41
===== ===== ===== =====

Diluted
net
income
per
share $0.44 $0.08 $0.52 $0.39
===== ===== ===== =====

Weighted
average
common
shares
outstanding:
Basic 44,158 44,158 42,929
====== ====== ======
Diluted 45,652 45,652 44,334
====== ====== ======



FY 2012 FY 2011
------- -------
Impact on
Income
Before Impact on Impact on Impact on
Income Income Tax Income Before Income Tax
Taxes Provision Income Taxes Provision
---------- ---------- -------------- ----------
(Unaudited)

Acquisition
related
integration
costs - - $286 $69

Cost
of
sales - - 286 69
--- --- --- ---

Acquisition
related
fees
and
expenses
and
restructuring
charges $5,206 $1,878 676 220


Acquisition
related
expenses
and
restructuring
charges 5,206 1,878 676 220
----- ----- --- ---

Accretion
on
acquisition
related
contingent
consideration 331 74 483 170

Interest
and
other
expenses,
net 331 74 483 170
--- --- --- ---

Net
(income)
loss
from
HPP
discontinued
operation (77) - 252 -

After-
tax
(income)
loss
of
equity-
method
investees (77) - 252 -
--- --- --- ---


Total
adjustments $5,460 $1,952 $1,697 $459
====== ====== ====== ====

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,
-----------------------------
2011 GAAP Adjustments 2011 Adjusted 2010 Adjusted
--------- ----------- ------------- -------------
(Unaudited)
Net sales $677,911 - $677,911 $549,839
Cost of Sales 492,546 - 492,546 393,634
------- --- ------- -------
Gross profit 185,365 - 185,365 156,205

Selling,
general and
administrative
expenses 120,615 - 120,615 105,150
Acquisition
related
expenses
including
integration
and
restructuring
charges 6,952 (6,952) - -
----- ------ --- ---

Operating
income 57,798 6,952 64,750 51,055

Interest and
other
expenses,
net 8,144 (460) 7,684 5,079
----- ---- ----- -----
Income before
income taxes
and equity
in earnings
of equity-
method
investees 49,654 7,412 57,066 45,976
Income tax
provision 18,745 2,567 21,312 18,544
After-tax
(income)
loss of
equity-
method
investees (819) 77 (742) (868)
---- --- ---- ----
Net income $31,728 $4,768 $36,496 $28,300
======= ====== ======= =======

Basic net
income per
share $0.72 $0.11 $0.83 $0.66
===== ===== ===== =====

Diluted net
income per
share $0.70 $0.10 $0.80 $0.64
===== ===== ===== =====

Weighted
average
common
shares
outstanding:
Basic 44,044 44,044 42,876
====== ====== ======
Diluted 45,504 45,504 44,126
====== ====== ======



FY 2012 FY 2011
------- -------
Impact on
Income
Before Impact on Impact on Impact on
Income Income Tax Income Before Income Tax
Taxes Provision Income Taxes Provision
---------- ---------- -------------- ----------
(Unaudited)

Acquisition
related
integration
costs - - $711 $69

Cost of sales - - 711 69
--- --- --- ---

Acquisition
related fees
and expenses
and
restructuring
charges $6,052 $2,114 2,089 631

Contingent
consideration
expense 900 338 - -

Acquisition
related
expenses and
restructuring
charges 6,952 2,452 2,089 631
----- ----- ----- ---

Accretion on
acquisition
related
contingent
consideration 460 115 905 319

Interest and
other
expenses,
net 460 115 905 319
--- --- --- ---

Net (income)
loss from
HPP
discontinued
operation (77) - 252 -

After-tax
(income)
loss of
equity-
method
investees (77) - 252 -
--- --- --- ---


Total
adjustments $7,335 $2,567 $3,957 $1,019
====== ====== ====== ======

SOURCE The Hain Celestial Group, Inc.