Sales Grew 22% in First Quarter Fiscal Year 2009
Reconfirms Full Year Sales and Earnings Guidance
MELVILLE, N.Y., Nov. 3 /PRNewswire-FirstCall/ -- The Hain Celestial Group,
Inc. (Nasdaq: HAIN), a leading natural and organic food and personal care
products company, today reported results for the first quarter ended September
30, 2008. Reflecting continued strong consumer demand for its brands and
products, the Company reported record first quarter net sales of $289.3
million, a 22% increase over the prior year's first quarter sales of $237.2
million. Net income in the first quarter was $7.0 million on a GAAP basis and
$11.4 million after reflecting previously announced adjustments resulting from
continuing personnel and facility costs related to the execution of the Stock
Keeping Unit ("SKU") Rationalization Program; acquisition-related integration
and start-up costs in the United Kingdom, reflecting initiatives which were
completed in this year's first quarter; the costs of the now completed, below
market contract at Hain Pure Protein's New Oxford facility; stock compensation
related expense; and continued additional professional fees. Diluted earnings
per share for the first quarter totaled $0.17 on a GAAP basis and $0.28 after
these adjustments. Net income and earnings per share were affected by the
highest commodity and input costs in the Company's history, with such costs
estimated to be $10 million higher than last year. The Company's results do
not reflect the benefit of its August price increases, which are expected to
improve the Company's sales and margins in the second half of the year. The
Company realized approximately $1 million from these increases in its first
quarter.
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"We are pleased that, even with the economic difficulties experienced in
many markets, consumers increased their demand for our natural and organic
food and personal care products. We are also pleased to see that the sales
momentum experienced in the first quarter continued through the month of
October. With our grocery, snacks, and tea products selling at an average
price of $3.99, our brands meet our consumers' needs in this economy.
Additionally, we believe our portfolio approach-in products, distribution
channels and geographic markets-benefited our performance this quarter. Our
new fiscal year began with continued strong sales in all our geographic
markets-the United States, Canada, and Europe-across various distribution
channels. In North America, our focus on new product innovation and increased
sales and distribution of our core items resulted in strong contributions from
Rice Dream(R), WestSoy(R), Earth's Best(R), MaraNatha(R), Imagine(R),
Spectrum(R), Garden of Eatin'(R), Rosetto(R), Yves(R), Jason(R), Avalon(R) and
the Hain Pure Protein brands. In Europe, our approach led to similar sales
trends from the Lima(R), Natumi(R), Rice Dream, Grains Noirs(R) and Daily
Bread(TM) brands," said Irwin D. Simon, President and Chief Executive Officer.
The Company continues to see strong sales despite the slowdown in the
economy. Hain Celestial has experienced growth in the natural sector with
independent natural stores and supermarkets, mass market retailers, chain drug
stores and other retail outlets. The Company believes it is attracting new
consumers who are not dining out but are looking for healthful dining
experiences at home, and consumers are finding our products at more retail
outlets, such as supermarkets, club stores and mass merchants. The Company
has also seen an increase in poultry sales, where consumers are trading down
from other proteins to chicken and turkey; consumers are also eating more
seitan, tofu and tempeh rather than red meat. The at-home dining trend is
more prevalent for breakfast and dinner, where the Company's product
categories can provide healthy, reasonably priced meals and snacks. The
Company continues to see substantial growth in its Earth's Best brands with
parents concerned about healthy eating for their infants, toddlers and kids,
and believes that consumers staying at home are drinking more tea and trading
down from more expensive beverage offerings.
Reflecting the previously stated adjustments, gross margin for the same
brands operated by the Company (other than the Company's lower margin Hain
Pure Protein joint venture) was 28.6% in the first quarter, versus 30.8% in
the prior year quarter. Inflation in input costs, including higher commodity
and fuel costs, amounted to over 7% in the quarter when measured against the
prior year comparable quarter. While this inflation was partially offset by
productivity improvements and price increases, the full impact of the price
increase announced in July is expected to benefit the Company over the
remaining quarters in its fiscal year. The Company expects that the benefits
from this price increase will improve margins during the second half of the
fiscal year by 200 to 300 basis points. In Personal Care, where the SKU
Rationalization eliminated costs, the brands continued to experience good
sales growth, and benefited from a margin improvement of approximately 200
basis points in the first quarter.
Adjusted selling, general and administrative expenses declined as a
percentage of sales to 18.2% compared to 20.2%, with the Company's continued
focus on cost savings and achieving the benefit of synergies from
acquisitions.
The Company's balance sheet remains strong, with $272.2 million in working
capital and a current ratio of 2.8 at September 30, 2008. Debt as a
percentage of equity was 43.1%, with equity at $745.2 million. The Company's
cash conversion cycle was 79 days, compared to 75 days in the prior year
period, with the increase coming principally in the Company's inventory of
turkey in preparation for the holiday season demands in that category and
increased ingredients for Grocery and Snacks. The Company's receivables days
have declined, and payables days remain consistent with past periods.
Interest expense, net, was $3.6 million in the first quarter compared to
$2.7 million for the prior year quarter. The Company's interest cost this
year includes the cost of higher borrowings resulting from acquisitions during
the prior fiscal year. "Other expenses, net" in the prior year included a
$2.0 million gain on the sale of an investment in a joint venture in Europe.
The Company's effective tax rate for the current period was 38%.
"Having good brands in good categories will continue to drive sales. At
the same time, the Company will continue to build on the successful
productivity initiatives commenced in prior years to control its expenses,
reducing overhead and capital expenditures and other costs. Our Company is
well-positioned with a proven management team to enable Hain Celestial to deal
with this tough economic environment. We continue to experience solid growth
and steady performance and expect our strategic pricing actions and
productivity initiatives to deliver on our objectives for the year and our
long-term goals to enhance shareholder value," concluded Irwin Simon.
Fiscal Year 2009 Guidance
The Company reconfirmed its fiscal year 2009 guidance of $1.2 to $1.3
billion in sales and $1.54 to $1.61 earnings per share. This earnings
guidance is before deducting $0.08 per share in stock compensation expense to
amortize the previous year's equity grants.
Webcast
Hain Celestial will host a conference call and webcast at 4:30 PM Eastern
Standard Time today to review its first quarter fiscal year 2009 results. The
event will be webcast and available under the Investor Relations section of
the Company's website at www.hain-celestial.com.
The Hain Celestial Group
The Hain Celestial Group (Nasdaq: HAIN), headquartered in Melville, NY, is
a leading natural and organic food and personal care products company in North
America and Europe. Hain Celestial participates in almost all natural food
categories with well-known brands that include Celestial Seasonings(R),
Terra(R), Garden of Eatin'(R), Health Valley(R), WestSoy(R), Earth's Best(R),
Arrowhead Mills(R), MaraNatha(R), SunSpire(R), DeBoles(R), Hain Pure Foods(R),
FreeBird(TM), Plainville Farms(R), Hollywood(R), Spectrum Naturals(R),
Spectrum Essentials(R), Walnut Acres Organic(R), Imagine(R), Rice Dream(R),
Soy Dream(R), Rosetto(R), Ethnic Gourmet(R), Yves Veggie Cuisine(R),
Granose(R), Realeat(R), Linda McCartney(R), Daily Bread(TM), Lima(R), Grains
Noirs(R), Natumi(R), JASON(R), Zia(R) Natural Skincare, Avalon Organics(R),
Alba Botanica(R), Queen Helene(R), Tushies(R) and TenderCare(R). Hain
Celestial has been providing "A Healthy Way of Life(TM)" since 1993. For more
information, visit www.hain-celestial.com.
Safe Harbor Statement
This press release contains forward-looking statements within and
constitutes a "Safe Harbor" statement under the Private Securities Litigation
Act of 1995. Except for the historical information contained herein, the
matters discussed in this press release are forward-looking statements that
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 risks include but are not limited to general
economic and business conditions; our ability to implement our business and
acquisition strategy; our ability to effectively integrate our acquisitions;
competition; availability and retention of key personnel; our reliance on
third party distributors, manufacturers and suppliers; changes in customer
preferences; international sales and operations; escalating fuel and commodity
costs; the resolution of the SEC inquiry and litigation regarding our stock
option practices; 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 SEC, including the annual report on Form 10-K, for the
fiscal year ended June 30, 2008. 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
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 only be read in connection with the
Company's condensed consolidated statements of earnings presented in
accordance with GAAP.
THE HAIN CELESTIAL GROUP, INC.
Consolidated Balance Sheets
(In thousands)
September 30, June 30,
2008 2008
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $43,506 $58,513
Trade receivables, net 127,378 118,867
Inventories 215,590 175,667
Deferred income taxes 12,482 12,512
Other current assets 23,614 27,482
Total current assets 422,570 393,041
Property, plant and equipment, net 155,823 159,089
Goodwill, net 539,183 550,238
Trademarks and other intangible assets, net 140,950 136,861
Other assets 19,252 20,155
Total assets $1,277,778 $1,259,384
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $148,261 $145,186
Income taxes payable 1,868 907
Current portion of long-term debt 246 222
Total current liabilities 150,375 146,315
Deferred income taxes 25,590 26,524
Other noncurrent liabilities 2,163 5,012
Long-term debt, less current portion 321,177 308,220
Total liabilities 499,305 486,071
Minority Interest 33,256 30,502
Stockholders' equity:
Common stock 414 411
Additional paid-in capital 495,639 488,650
Retained earnings 244,030 237,008
Treasury stock (15,486) (15,473)
Foreign currency translation adjustment 20,620 32,215
Total stockholders' equity 745,217 742,811
Total liabilities and
stockholders' equity $1,277,778 $1,259,384
THE HAIN CELESTIAL GROUP, INC.
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended September 30,
2008 2007
(Unaudited)
Net sales $289,317 $237,245
Cost of sales 217,951 168,394
Gross profit 71,366 68,851
SG&A expenses 56,470 50,546
Operating income 14,896 18,305
Interest and other expenses, net 3,569 959
Income before income taxes 11,327 17,346
Income tax provision 4,305 6,526
Net income $7,022 $10,820
Basic net income per share $0.17 $0.27
Diluted net income per share $0.17 $0.26
Weighted average common shares outstanding:
Basic 40,225 40,026
Diluted 41,499 41,825
THE HAIN CELESTIAL GROUP, INC.
Consolidated Statements of Operations With Adjustments
Reconciliation of GAAP Results to Non-GAAP Presentation
(in thousands, except per share amounts)
Three Months Ended September 30,
2008 2007
2008 GAAP Adjustments Adjusted Adjusted
(Unaudited)
Net sales $289,317 $289,317 $237,245
Cost of Sales 217,951 $(3,540) 214,411 167,321
Gross profit 71,366 3,540 74,906 69,924
SG&A expenses 56,470 (3,768) 52,702 47,860
Operating income 14,896 7,308 22,204 22,064
Interest and other expenses, net 3,569 360 3,929 2,961
Income before income taxes 11,327 6,948 18,275 19,103
Income tax provision 4,305 2,539 6,844 7,164
Net income $7,022 $4,409 $11,431 $11,939
Basic net income per share $0.17 $0.11 $0.28 $0.30
Diluted net income per share $0.17 $0.11 $0.28 $0.29
Weighted average common
shares outstanding:
Basic 40,225 40,225 40,026
Diluted 41,499 41,499 41,825
FY 2009 FY 2008
Impact on Impact on
Income Impact on Income Impact on
before Income before Income
income tax income tax
taxes provision taxes provision
(Unaudited)
Start-up costs at the Fakenham
manufacturing facility
related to the integration
of the Haldane Foods frozen
meat-free operations and,
in 2009, also includes
unabsorbed overhead resulting
from expiration of a co-pack
agreement with prior owner $2,519 $799 $1,073 $406
Severance and other
reorganization costs 300 118
Impact of co-pack pricing
agreement related to
acquisition of turkey
processing facility 721 277
Cost of sales 3,540 1,194 1,073 406
Professional fees and other
expenses incurred in
connection with the review
of the Company's stock
option practices 1,753 896 2,266 857
Stock compensation expense 1,417 356 420 159
Severance and other
reorganization costs 598 231
SG&A expenses 3,768 1,483 2,686 1,016
Other (income) expenses, net (360) (138) (2,002) (784)
Interest and other
expenses, net (360) (138) (2,002) (784)
Total adjustments $6,948 $2,539 $1,757 $638
SOURCE The Hain Celestial Group, Inc.
-0- 11/03/2008
/CONTACT: Ira Lamel or Mary Anthes, both of The Hain Celestial Group,
Inc., +1-631-730-2200; or Jeremy Fielding or David Lilly, both of Kekst and
Company, +1-212-521-4800/
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/Web site: http://www.hain-celestial.com/
(HAIN)
CO: The Hain Celestial Group, Inc.
ST: New York
IN: FOD HOU REA SUP
SU: ERN CCA ERP
WR-AA
-- NYM150 --
5599 11/03/2008 16:00 EST http://www.prnewswire.com
