Hain Celestial Announces Third Quarter Fiscal Year 2016 Results
Third Quarter Performance Highlights
- Net sales of
$750.0 million , a 13% increase, or 15% on a constant currency basis, over prior year period net sales of$662.7 million . Net sales were impacted by$13.9 million of foreign exchange rate movements versus a year ago. - Hain Celestial US net sales increased by 2.7% on a constant currency basis over the prior year period.
- Earnings per diluted share of
$0.47 , a 47% increase over the prior year period, or on an adjusted basis$0.49 , a 9% increase over the prior year period. Foreign currencies impacted reported results by$0.01 per diluted share. - Operating income of
$69.0 million , or 9.2% of net sales; adjusted operating income of$80.4 million , or 10.7% of net sales. - Strong nine month operating cash flow of
$131 million , an increase of 87% over the prior year period.
"Our net sales reflect the strong performance across our businesses led by Hain Celestial United States, Hain Pure Protein, Hain Celestial United Kingdom and Hain Celestial Europe as well as Hain Celestial Canada," said
Third Quarter 2016
The Company earned net income of
Project Terra
As previously communicated, the Company commenced a strategic review under Project Terra and has identified approximately
The strategic review has also resulted in the Company redefining its core platforms for future growth based upon consumer trends to create and inspire A Healthier Way of Life™. The core platforms are now defined by common consumer need, route-to-market or internal advantage and are aligned with the Company's strategic roadmap to continue its leadership position in the organic and natural, better-for-you industry.
Beginning in fiscal year 2017, the Company plans to establish five strategic platforms within Hain Celestial US with the purpose to drive accelerated net sales and margin growth. The platforms will be:
- Fresh Living—includes poultry, yogurt, plant-based proteins and other refrigerated products;
- Better-for-You Baby—includes infant foods, infant formula, diapers and wipe products that nurture and care for babies and toddlers;
- Better-for-You Snacking—wholesome products for in-between meals;
- Better-for-You Pantry—core consumer staples; and
- Pure Personal Care—personal care products focused on providing consumers with cleaner and gentler ingredients.
In addition, the Company will launch
The Company has also identified certain brands representing approximately
"We are excited about the launch of our new platforms in fiscal year 2017, which are uniquely aligned with consumer eating habits and usage needs," commented
Fiscal Year 2016 Guidance
The Company updated its fiscal year 2016 guidance expectations:
- Total net sales range of
$2.946 billion to $2.966 billion , an increase of approximately 9% to 10% as compared to fiscal year 2015, and - Earnings per diluted share range of
$2.00 to $2.04 , an increase of approximately 6% to 9% as compared to fiscal year 2015.
Guidance is provided on a non-GAAP basis and excludes acquisition-related expenses, integration and restructuring charges, start-up costs, unrealized net foreign currency gains or losses, reserves for litigation matters and other non-recurring items, including any product recalls or market withdrawals, that have been or may be incurred during the Company's fiscal year 2016, 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 managed into the following segments:
The following is a summary of results for the three and nine months ended
(dollars in thousands) |
United States |
United Kingdom |
Hain Pure Protein |
Rest of World |
Corporate/ |
Total |
NET SALES |
||||||
Net sales - Three months ended 03/31/16 |
$ 351,887 |
$ 208,391 |
$ 113,643 |
$ 75,941 |
$ - |
$ 749,862 |
Net sales - Three months ended 03/31/15 |
$ 343,728 |
$ 178,068 |
$ 83,192 |
$ 57,751 |
$ - |
$ 662,739 |
% change - FY'16 net sales vs. FY'15 net sales |
2.4% |
17.0% |
36.6% |
31.5% |
13.1% |
|
OPERATING INCOME |
||||||
Three months ended 03/31/16 |
||||||
Operating income |
$ 54,546 |
$ 16,217 |
$ 4,613 |
$ 6,198 |
$ (12,567) |
$ 69,007 |
Non-GAAP Adjustments (1) |
$ 2,700 |
$ - |
$ 3,054 |
$ - |
$ 5,701 |
$ 11,455 |
Adjusted operating income |
$ 57,246 |
$ 16,217 |
$ 7,667 |
$ 6,198 |
$ (6,866) |
$ 80,462 |
Adjusted operating income margin |
16.3% |
7.8% |
6.7% |
8.2% |
10.7% |
|
Three months ended 03/31/15 |
||||||
Operating income |
$ 55,851 |
$ 11,760 |
$ 4,970 |
$ 4,412 |
$ (16,799) |
$ 60,194 |
Non-GAAP Adjustments (1) |
$ 3,188 |
$ 3,838 |
$ - |
$ - |
$ 10,326 |
$ 17,352 |
Adjusted operating income |
$ 59,039 |
$ 15,598 |
$ 4,970 |
$ 4,412 |
$ (6,473) |
$ 77,546 |
Adjusted operating income margin |
17.2% |
8.8% |
6.0% |
7.6% |
11.7% |
|
(1) See accompanying table of "Reconciliation of GAAP Results to Non-GAAP Measures" |
||||||
(dollars in thousands) |
United States |
United Kingdom |
Hain Pure Protein |
Rest of World |
Corporate/ |
Total |
NET SALES |
||||||
Net sales - Nine months ended 03/31/16(1) |
$ 1,025,398 |
$ 567,971 |
$ 379,336 |
$ 216,934 |
$ - |
$ 2,189,639 |
Net sales - Nine months ended 03/31/15 |
$ 1,034,612 |
$ 551,144 |
$ 240,078 |
$ 164,545 |
$ - |
$ 1,990,379 |
Non-GAAP Adjustments (2) |
$ 15,773 |
$ - |
$ - |
$ 928 |
$ - |
$ 16,701 |
Adjusted net sales - Nine months ended 03/31/15 |
$ 1,050,385 |
$ 551,144 |
$ 240,078 |
$ 165,473 |
$ - |
$ 2,007,080 |
% change - FY'16 net sales vs. FY'15 adjusted net sales |
-2.4% |
3.1% |
58.0% |
31.1% |
9.1% |
|
OPERATING INCOME |
||||||
Nine months ended 03/31/16 |
||||||
Operating income |
$ 149,233 |
$ 45,189 |
$ 33,009 |
$ 12,981 |
$ (26,216) |
$ 214,196 |
Non-GAAP Adjustments (2) |
$ 6,597 |
$ 1,020 |
$ 3,940 |
$ 515 |
$ 10,293 |
$ 22,365 |
Adjusted operating income |
$ 155,830 |
$ 46,209 |
$ 36,949 |
$ 13,496 |
$ (15,923) |
$ 236,561 |
Adjusted operating income margin |
15.2% |
8.1% |
9.7% |
6.2% |
10.8% |
|
Nine months ended 03/31/15 |
||||||
Operating income |
$ 141,031 |
$ 29,618 |
$ 16,505 |
$ 10,660 |
$ (34,781) |
$ 163,033 |
Non-GAAP Adjustments (2) |
$ 33,546 |
$ 12,002 |
$ 140 |
$ 2,187 |
$ 12,822 |
$ 60,697 |
Adjusted operating income |
$ 174,577 |
$ 41,620 |
$ 16,645 |
$ 12,847 |
$ (21,959) |
$ 223,730 |
Adjusted operating income margin |
16.6% |
7.6% |
6.9% |
7.8% |
11.1% |
|
(1) There were no Non-GAAP adjustments to net sales for the nine months ended 03/31/16 |
||||||
(2) See accompanying table of "Reconciliation of GAAP Results to Non-GAAP Measures" |
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On
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Safe Harbor Statement
Certain statements contained in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are predictions based on expectations and projections about future events, and are not statements of historical fact. You can identify forward-looking statements by the use of forward-looking terminology such as "plan", "continue", "expect", "anticipate", "intend", "predict", "project", "estimate", "likely", "believe", "might", "seek", "may", "remain", "potential", "can", "should", "could", "future" and similar expressions, or the negative of those expressions. These forward-looking statements include the Company's beliefs or expectations relating to (i) the Company's growth trends, initiatives and strategies with respect to Project Terra and its strategic platforms; (ii) the Company's ability to achieve approximately
Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP financial measures, including adjusted operating income, adjusted net income, adjusted earnings per diluted share, adjusted EBITDA (defined below) 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 nine months ended
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 nine months ended
Nine Months Ended |
|||||||
03/31/2016 |
03/31/2015 |
||||||
(dollars in thousands) |
|||||||
Cash flow provided by operating activities |
$ |
131,853 |
$ |
70,169 |
|||
Purchases of property, plant and equipment |
(58,022) |
(36,312) |
|||||
Operating free cash flow |
$ |
73,831 |
$ |
33,857 |
Our operating free cash flow was
The Company defines adjusted 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, stock based compensation, acquisition-related expenses, including integration and restructuring charges, and other non-recurring items. The Company's management believes that this presentation provides 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 this measure for reviewing the financial results of the Company and as a component of performance-based executive compensation.
For the three months and nine months ended
3 Months Ended |
9 Months Ended |
||||||
3/31/2016 |
3/31/2015 |
3/31/2016 |
3/31/2015 |
||||
(dollars in thousands) |
|||||||
Net Income |
$ 48,985 |
$ 33,394 |
$ 137,234 |
$ 96,824 |
|||
Income taxes |
21,576 |
18,147 |
57,337 |
45,144 |
|||
Interest expense, net |
6,233 |
5,670 |
17,365 |
17,644 |
|||
Depreciation and amortization |
16,085 |
14,162 |
47,190 |
43,064 |
|||
Equity in earnings of affiliates |
161 |
13 |
108 |
(315) |
|||
Stock based compensation |
2,776 |
2,935 |
10,004 |
8,934 |
|||
Tradename impairment charge |
- |
5,510 |
- |
5,510 |
|||
Acquisition related fees and expenses, |
4,190 |
5,572 |
10,855 |
8,789 |
|||
Contingent consideration expense |
1,511 |
- |
1,511 |
281 |
|||
Nut butter recall |
- |
- |
- |
30,110 |
|||
European non-dairy beverage withdrawal |
- |
- |
- |
2,187 |
|||
HPPC costs related to chiller breakdown and factory start-up costs |
3,054 |
- |
4,111 |
- |
|||
Ashland factory and related expenses |
- |
2,142 |
- |
2,142 |
|||
UK factory start-up costs |
- |
2,512 |
743 |
8,533 |
|||
US warehouse consolidation project |
- |
- |
426 |
- |
|||
Fakenham inventory allowance for fire |
- |
- |
- |
900 |
|||
Litigation expenses |
- |
518 |
- |
891 |
|||
Celestial Seasonings packaging launch support and Keurig transition |
2,700 |
- |
4,704 |
- |
|||
Tilda fire insurance recovery costs and other start-up/ integration costs |
- |
1,098 |
230 |
1,354 |
|||
Gain on Tilda fire |
(9,013) |
- |
(9,013) |
- |
|||
Gain on pre-existing investment in HPPC and Empire Kosher |
- |
(2,922) |
- |
(8,256) |
|||
Adjusted EBITDA |
$ 98,258 |
$ 88,751 |
$ 282,805 |
$ 263,736 |
|||
THE HAIN CELESTIAL GROUP, INC. |
|||||
Consolidated Balance Sheets |
|||||
(In thousands) |
|||||
March 31, |
June 30, |
||||
(Unaudited) |
|||||
ASSETS |
|||||
Current assets: |
|||||
Cash and cash equivalents |
$ 125,390 |
$ 166,922 |
|||
Accounts receivable, net |
360,964 |
320,197 |
|||
Inventories |
394,958 |
382,211 |
|||
Deferred income taxes |
21,421 |
20,758 |
|||
Prepaid expenses and other current assets |
43,469 |
42,931 |
|||
Total current assets |
946,202 |
933,019 |
|||
Property, plant and equipment, net |
392,719 |
344,262 |
|||
Goodwill, net |
1,195,305 |
1,136,079 |
|||
Trademarks and other intangible assets, net |
643,940 |
647,754 |
|||
Investments and joint ventures |
20,034 |
2,305 |
|||
Other assets |
32,966 |
33,851 |
|||
Total assets |
$ 3,231,166 |
$ 3,097,270 |
|||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||
Current liabilities: |
|||||
Accounts payable |
$ 233,642 |
$ 251,999 |
|||
Accrued expenses and other current liabilities |
93,050 |
79,167 |
|||
Current portion of long-term debt |
37,806 |
31,275 |
|||
Total current liabilities |
364,498 |
362,441 |
|||
Long-term debt, less current portion |
879,627 |
812,608 |
|||
Deferred income taxes |
142,188 |
145,297 |
|||
Other noncurrent liabilities |
5,986 |
5,237 |
|||
Total liabilities |
1,392,299 |
1,325,583 |
|||
Stockholders' equity: |
|||||
Common stock |
1,075 |
1,058 |
|||
Additional paid-in capital |
1,120,777 |
1,073,671 |
|||
Retained earnings |
934,748 |
797,514 |
|||
Accumulated other comprehensive loss |
(129,062) |
(42,406) |
|||
Subtotal |
1,927,538 |
1,829,837 |
|||
Treasury stock |
(88,671) |
(58,150) |
|||
Total stockholders' equity |
1,838,867 |
1,771,687 |
|||
Total liabilities and stockholders' equity |
$ 3,231,166 |
$ 3,097,270 |
|||
THE HAIN CELESTIAL GROUP, INC. |
||||||||
Consolidated Statements of Income |
||||||||
(unaudited and in thousands, except per share amounts) |
||||||||
Three Months Ended March 31, |
Nine Months Ended March 31, |
|||||||
2016 |
2015 |
2016 |
2015 |
|||||
Net sales |
$ 749,862 |
$ 662,739 |
$ 2,189,639 |
$ 1,990,379 |
||||
Cost of sales |
576,653 |
504,990 |
1,686,820 |
1,539,459 |
||||
Gross profit |
173,209 |
157,749 |
502,819 |
450,920 |
||||
Selling, general and administrative expenses |
93,915 |
83,068 |
262,776 |
262,613 |
||||
Amortization/impairment of acquired intangibles |
4,586 |
10,189 |
13,994 |
19,001 |
||||
Acquisition related expenses, restructuring and |
5,701 |
4,298 |
11,852 |
6,273 |
||||
Operating income |
69,007 |
60,194 |
214,197 |
163,033 |
||||
Interest and other expenses, net |
(1,715) |
8,640 |
19,518 |
21,380 |
||||
Income before income taxes and equity in earnings of |
70,722 |
51,554 |
194,679 |
141,653 |
||||
Provision for income taxes |
21,576 |
18,147 |
57,337 |
45,144 |
||||
Equity in net loss (income) of equity-method investees |
161 |
13 |
108 |
(315) |
||||
Net income |
$ 48,985 |
$ 33,394 |
$ 137,234 |
$ 96,824 |
||||
Net income per common share: |
||||||||
Basic |
$ 0.47 |
$ 0.33 |
$ 1.33 |
$ 0.95 |
||||
Diluted |
$ 0.47 |
$ 0.32 |
$ 1.32 |
$ 0.94 |
||||
Weighted average common shares outstanding: |
||||||||
Basic |
103,265 |
102,252 |
103,030 |
101,401 |
||||
Diluted |
104,087 |
103,796 |
104,168 |
103,226 |
||||
THE HAIN CELESTIAL GROUP, INC. |
||||||||
Reconciliation of GAAP Results to Non-GAAP Measures |
||||||||
(unaudited and in thousands, except per share amounts) |
||||||||
Three Months Ended March 31, |
||||||||
2016 GAAP |
Adjustments |
2016 Adjusted |
2015 GAAP |
Adjustments |
2015 Adjusted |
|||
Net sales |
$ 749,862 |
$ - |
$ 749,862 |
$ 662,739 |
$ - |
$ 662,739 |
||
Cost of sales |
576,653 |
(3,054) |
573,599 |
504,990 |
(5,928) |
499,062 |
||
Operating expenses (a) |
98,501 |
(2,700) |
95,801 |
93,257 |
(7,126) |
86,131 |
||
Acquisition related expenses, restructuring and |
5,701 |
(5,701) |
- |
4,298 |
(4,298) |
- |
||
Operating Income |
69,007 |
11,455 |
80,462 |
60,194 |
17,352 |
77,546 |
||
Interest and other expenses, net |
(1,715) |
9,149 |
7,434 |
8,640 |
(2,216) |
6,424 |
||
Provision for income taxes |
21,576 |
712 |
22,288 |
18,147 |
6,427 |
24,574 |
||
Net income |
48,985 |
1,594 |
50,579 |
33,394 |
13,141 |
46,535 |
||
Earnings per share - diluted |
0.47 |
0.02 |
0.49 |
0.32 |
0.13 |
0.45 |
||
(a)Operating expenses include amortization/impairment of acquired intangibles and selling, general, and administrative expenses. |
||||||||
Three Months Ended March 31, |
||||||||
FY 2016 |
FY 2015 |
|||||||
Impact on Income Before Income Taxes |
Impact on Income Tax Provision |
Impact on Income Before Income Taxes |
Impact on Income Tax Provision |
|||||
HPPC costs related to chiller breakdown and |
3,054 |
943 |
- |
- |
||||
Ashland factory and related expenses |
- |
- |
2,142 |
814 |
||||
UK factory start-up costs |
- |
- |
2,512 |
521 |
||||
Acquisition and other integration costs |
- |
- |
1,274 |
427 |
||||
Cost of sales |
3,054 |
943 |
5,928 |
1,762 |
||||
Celestial Seasonings packaging launch support |
2,700 |
833 |
- |
- |
||||
Tilda fire insurance recovery costs and other start-up/ |
- |
- |
1,098 |
275 |
||||
Litigation expenses |
- |
- |
518 |
197 |
||||
Selling, general and administrative expenses |
2,700 |
833 |
1,616 |
472 |
||||
Tradename impairment charge |
- |
- |
5,510 |
1,102 |
||||
Amortization/impairment of acquired intangibles |
- |
- |
5,510 |
1,102 |
||||
Acquisition related fees and expenses, integration and |
4,190 |
1,294 |
4,298 |
1,463 |
||||
Contingent consideration expense |
1,511 |
466 |
- |
- |
||||
Acquisition related expenses, restructuring and |
5,701 |
1,760 |
4,298 |
1,463 |
||||
Unrealized currency impacts |
(136) |
(42) |
5,138 |
1,628 |
||||
Gain on Tilda fire |
(9,013) |
(2,782) |
- |
- |
||||
Gain on pre-existing investment in HPPC and Empire Kosher |
- |
- |
(2,922) |
- |
||||
Interest and other expenses, net |
(9,149) |
(2,824) |
2,216 |
1,628 |
||||
Total adjustments |
$ 2,306 |
$ 712 |
$ 19,568 |
$ 6,427 |
||||
THE HAIN CELESTIAL GROUP, INC. |
||||||||
Reconciliation of GAAP Results to Non-GAAP Measures |
||||||||
(unaudited and in thousands, except per share amounts) |
||||||||
Nine Months Ended March 31, |
||||||||
2016 GAAP |
Adjustments |
2016 Adjusted |
2015 GAAP |
Adjustments |
2015 Adjusted |
|||
Net sales |
$ 2,189,639 |
$ - |
$ 2,189,639 |
$ 1,990,379 |
$ 16,701 |
$ 2,007,080 |
||
Cost of sales |
1,686,820 |
(5,578) |
1,681,242 |
1,539,459 |
(25,059) |
1,514,400 |
||
Operating expenses (a) |
276,770 |
(4,934) |
271,836 |
281,614 |
(12,664) |
268,950 |
||
Acquisition related expenses, restructuring and |
11,852 |
(11,852) |
- |
6,273 |
(6,273) |
- |
||
Operating Income |
214,197 |
22,364 |
236,561 |
163,033 |
60,697 |
223,730 |
||
Interest and other expenses, net |
19,518 |
1,706 |
21,224 |
21,380 |
(2,466) |
18,914 |
||
Provision for income taxes |
57,337 |
9,988 |
67,325 |
45,144 |
23,257 |
68,401 |
||
Net income |
137,234 |
10,670 |
147,904 |
96,824 |
39,906 |
136,730 |
||
Earnings per share - diluted |
1.32 |
0.10 |
1.42 |
0.94 |
0.38 |
1.32 |
||
(a)Operating expenses include amortization/impairment of acquired intangibles and selling, general, and administrative expenses. |
||||||||
Nine Months Ended March 31, |
||||||||
FY 2016 |
FY 2015 |
|||||||
Impact on Income Before Income Taxes |
Impact on Income Tax Provision |
Impact on Income Before Income Taxes |
Impact on Income Tax Provision |
|||||
Nut butter recall |
$ - |
$ - |
$ 15,773 |
$ 5,994 |
||||
European non-dairy beverage withdrawal |
- |
- |
928 |
316 |
||||
Net sales |
- |
- |
16,701 |
6,310 |
||||
HPPC costs related to chiller breakdown and |
3,895 |
1,263 |
- |
- |
||||
US warehouse consolidation project |
426 |
162 |
- |
- |
||||
UK factory start-up costs |
743 |
149 |
8,533 |
1,770 |
||||
Acquisition and other integration costs |
514 |
155 |
2,797 |
817 |
||||
Ashland factory and related expenses |
- |
- |
2,142 |
814 |
||||
Nut butter recall |
- |
- |
9,428 |
3,583 |
||||
European non-dairy beverage withdrawal |
- |
- |
1,259 |
428 |
||||
Fakenham inventory allowance for fire |
- |
- |
900 |
187 |
||||
Cost of sales |
5,578 |
1,729 |
25,059 |
7,599 |
||||
Celestial Seasonings packaging launch support |
4,704 |
1,595 |
- |
- |
||||
Tilda fire insurance recovery costs and other start-up/ |
230 |
46 |
1,354 |
352 |
||||
Nut butter recall |
- |
- |
4,909 |
1,864 |
||||
Litigation expenses |
- |
- |
891 |
339 |
||||
Selling, general and administrative expenses |
4,934 |
1,641 |
7,154 |
2,555 |
||||
Tradename impairment charge |
- |
- |
5,510 |
1,102 |
||||
Amortization/impairment of acquired intangibles |
- |
- |
5,510 |
1,102 |
||||
Acquisition related fees and expenses, integration and restructuring |
10,341 |
3,223 |
5,992 |
2,100 |
||||
Contingent consideration expense |
1,511 |
466 |
281 |
- |
||||
Acquisition related expenses, restructuring and |
11,852 |
3,689 |
6,273 |
2,100 |
||||
Unrealized currency impacts |
7,091 |
2,344 |
10,957 |
3,561 |
||||
Gain on Tilda fire |
(9,013) |
(2,782) |
- |
- |
||||
Gain on disposal of investment held for sale |
- |
- |
(314) |
- |
||||
Gain on pre-existing investment in HPPC and Empire Kosher |
- |
- |
(8,256) |
- |
||||
Interest accretion and other items, net |
- |
- |
79 |
30 |
||||
HPPC chiller disposal |
216 |
82 |
- |
- |
||||
Interest and other expenses, net |
(1,706) |
(356) |
2,466 |
3,591 |
||||
UK tax rate change impact on deferred taxes and |
- |
3,285 |
- |
- |
||||
Provision for income taxes |
- |
3,285 |
- |
- |
||||
Total adjustments |
$ 20,658 |
$ 9,988 |
$ 63,163 |
$ 23,257 |
||||
Photo - http://photos.prnewswire.com/prnh/20160503/363415
Logo - http://photos.prnewswire.com/prn/20130502/NY06743LOGO
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/hain-celestial-announces-third-quarter-fiscal-year-2016-results-300262511.html
SOURCE The
Pat Conte/Mary Anthes, The Hain Celestial Group, Inc., 516-587-5000