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The Hain Celestial Group Announces Strong First Quarter Fiscal Year 2011 Results
Net Sales of $258 Million Increased 12%
Operating Free Cash Flow Improved to $55.9 Million for the 12 Months Ended September 30, 2010
GAAP Gross Profit Increased by 36 Basis Points
GAAP Earnings Increased to $0.21 Per Diluted Share
Adjusted Earnings $0.25 Per Diluted Share Before Acquisition Related Charges
Reconfirms Fiscal Year Guidance of $1.24 to $1.31 Earnings Per Diluted Share

MELVILLE, N.Y., Nov. 4, 2010 /PRNewswire via COMTEX/ --

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 results for the first quarter ended September 30, 2010. Net sales for the first quarter totaled $258.0 million versus $230.5 million in the prior year first quarter reflecting strong results from the Company's North American operations. The Company reported GAAP earnings of $0.21 per diluted share on net income of $9.1 million as compared to the prior year first quarter earnings of $0.20 per diluted share on net income of $8.1 million. The earnings improvement came from the strength of profit contributions from the Company's United States, Canadian and Continental European operations.The first quarter results are after the Company absorbed expenses of $2.3 million, or $0.04 per diluted share, for acquisition related expenses. Before these acquisition related charges, adjusted earnings were $0.25 per diluted share on adjusted net income of $10.8 million.(1)

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

(Logo: http://www.newscom.com/cgi-bin/prnh/20050324/NYTH131)

"Building on the improved consumption trends the Company experienced earlier in the calendar year, we started off fiscal year 2011 with strong first quarter sales and earnings. Even with a tough economy, consumers are committed to eating healthy foods and maintaining healthy lifestyles. Our established operations gained momentum across most major categories along with sales from our recent strategic acquisitions, which achieved incremental sales growth over their pre-acquisition results. We're excited that these gains were made across various classes of trade," said Irwin D. Simon, President and Chief Executive Officer.

Gross profit in this year's first quarter improved by 36 basis points to 27.2% of sales compared to 26.8% in the prior year first quarter. On an adjusted basis, gross profit in this year's first quarter was 27.3%, an improvement of 52 basis points over the prior year first quarter gross profit.(1) The improved profit resulted from the mix of product sales, including the sales of higher margin products from recently acquired businesses in the United States, which together with cost savings, more than offset input cost increases.

Selling, general and administrative expenses were 19.4% as a percentage of net sales in this year's first quarter compared to 18.5% in the prior year first quarter. This increase as a percentage of net sales resulted from higher amortization expenses related to recent acquisitions and a higher level of selling expenses employed by the acquired businesses where product demonstrations and store level sampling are integral parts of the consumer experience.

"Our solid foundation of core natural and organic brands, strengthened by the recent acquisitions of The Greek Gods(R), Sensible Portions(R) and Churchill's brands, has brought us new product platforms and channel expansion capabilities. As stated when we reported our fiscal year-end results in August, we expect to see momentum increase resulting in stronger year-over-year results as we move through fiscal year 2011 both from our existing brands and our recent acquisitions," concluded Irwin Simon.

Operating free cash flow for the 12-month period ended September 30, 2010 improved to $55.9 million, an increase of $25.5 million from a year ago. The Company had working capital of $179.9 million at September 30, 2010 with a current ratio of 2.1. Debt was $257.7 million, or 32.8% of equity of $786.4 million at September 30, 2010.

(1) See Non-GAAP Financial Measures and related Reconciliation of GAAP Results to Non-GAAP Presentation.

Fiscal Year 2011 Guidance

The Company reconfirmed its fiscal year 2011 guidance at $1.24 to $1.31 of earnings 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. When the Company reports its financial results each quarter, these items will be identified.

Webcast and Upcoming Events

Hain Celestial will host a conference call and webcast at 8:30 AM Eastern Time today to review its first 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.

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(R), Earth's Best(R), Terra(R), Garden of Eatin'(R), Sensible Portions(R), Health Valley(R), Arrowhead Mills(R), MaraNatha(R), SunSpire(R), DeBoles(R), Gluten Free Café(TM), Hain Pure Foods(R), Hollywood(R), Spectrum Naturals(R), Spectrum Essentials(R), Walnut Acres Organic(R), Imagine(R), Almond Dream(R), Rice Dream(R), Soy Dream(R), WestSoy(R), The Greek Gods(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), Earth's Best TenderCare(R) 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.

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. These forward-looking statements include (i) our statements regarding our guidance for net sales and earnings per diluted share in fiscal year 2011; and (ii) our expectations for our business for the 2011 fiscal year. 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 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 investments in core brands, offering new products and our focus 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; changes 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 SEC, 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.

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 condensed consolidated statements of earnings 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 September 30, 2010, cash provided by operating activities was $67.1 million and capital expenditures were $11.2 million for a net total of $55.9 million. For the 12-month period ended September 30, 2009, cash provided by operating activities was $42.7 million and capital expenditures were $12.3 million for a net total of $30.4 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 Operations with Adjustments for the three months ended September 30, 2010 and 2009. These non-GAAP financial measures exclude the items listed at the bottom of the tables.

THE HAIN CELESTIAL GROUP, INC.

Consolidated Balance Sheets

(In thousands)


September 30,


June 30,




2010


2010




(Unaudited)



ASSETS





Current assets:





Cash and cash equivalents

$ 20,948


$ 17,266


Trade receivables, net

131,489


114,215


Inventories

169,817


157,012


Deferred income taxes

10,749


10,738


Other current assets

16,927


14,586



Total current assets

349,930


313,817







Property, plant and equipment, net

106,709


106,985

Goodwill, net

551,326


516,455

Trademarks and other intangible assets, net

207,833


198,129

Investments in and advances to affiliates

45,891


46,041

Other assets

19,195


16,660



Total assets

$ 1,280,884


$ 1,198,087







LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:





Accounts payable and accrued expenses

$ 161,818


$ 129,282


Income taxes payable

8,202


9,530


Current portion of long-term debt

37


38



Total current liabilities

170,057


138,850







Deferred income taxes

39,812


38,283

Other noncurrent liabilities

26,879


30,227

Long-term debt, less current portion

257,694


225,004



Total liabilities

494,442


432,364







Stockholders' equity:





Common stock

439


437


Additional paid-in capital

555,657


548,782


Retained earnings

249,999


240,904


Treasury stock

(17,566)


(17,529)


Accumulated other comprehensive income

(2,087)


(6,871)



Total stockholders' equity

786,442


765,723









Total liabilities and stockholders' equity

$ 1,280,884


$ 1,198,087

THE HAIN CELESTIAL GROUP, INC.

Consolidated Statements of Operations

(in thousands, except per share amounts)






Three Months Ended
September 30,


2010


2009


(Unaudited)





Net sales

$ 257,961


$ 230,484

Cost of sales

187,859


168,676

Gross profit

70,102


61,808





Selling, general and administrative expenses

50,146


42,564

Acquisition related expenses including integration and restructuring charges

1,413


1,779





Operating income

18,543


17,465





Interest expense and other expenses

2,457


3,042

Income before income taxes and equity in earnings of equity-method investees

16,086


14,423

Income tax provision

7,164


5,337

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

(173)


996





Net income

$ 9,095


$ 8,090





Basic net income per share

$ 0.21


$ 0.20





Diluted net income per share

$ 0.21


$ 0.20





Weighted average common shares outstanding:




Basic

42,823


40,701

Diluted

43,918


41,159

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,



2010 GAAP

Adjustments


2010 Adjusted

2009 Adjusted (Note)



(Unaudited)

Net sales


$ 257,961



$ 257,961

$ 230,484

Cost of Sales


187,859

$ (425)


187,434

168,676

Gross profit


70,102

425


70,527

61,808








Selling, general and administrative expenses


50,146



50,146

42,564

Acquisition related expenses including integration and restructuring charges


1,413

(1,413)


-

-








Operating income


18,543

1,838


20,381

19,244








Interest and other expenses, net


2,457

(424)


2,033

3,042

Income before income taxes and equity in earnings of equity-method investees


16,086

2,262


18,348

16,202

Income tax provision


7,164

560


7,724

6,617

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


(173)



(173)

574

Net income


$ 9,095

$ 1,702


$ 10,797

$ 9,011








Basic net income per share


$ 0.21

$ 0.04


$ 0.25

$ 0.22








Diluted net income per share


$ 0.21

$ 0.04


$ 0.25

$ 0.22








Weighted average common shares outstanding:







Basic


42,823



42,823

40,701

Diluted


43,918



43,918

41,159










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


$ 425

-











Cost of sales


425

-


-

-








Acquisition related expenses


1,212

$ 411











Severance and other reorganization costs


201

-


$ 1,779









Acquisition related expenses and restructuring charges


1,413

411


1,779

-








Accretion on acquisition related contingent consideration


424

149











Interest and other expenses, net


424

149


-

-








Net loss from HPP discontinued operation


-

-


422

-








Equity in net (income) loss of HPP


-

-


422

-








Valuation allowance recorded on UK deferred tax assets






$ 1,280















Total adjustments


$ 2,262

$ 560


$ 2,201

$ 1,280















Note:


The fiscal year 2010 non-GAAP presentation reflects (i) the cessation in the third quarter of recording tax benefits for the United Kingdom losses as applied to the prior two quarters and (ii) the treatment by HPP of Kosher Valley as a discontinued operation beginning in the fourth quarter as applied to the first three quarters.

SOURCE The Hain Celestial Group, Inc.