Hain Celestial Announces Record Second Quarter Fiscal Year 2014 Results Record Net Sales Reach $535 Million GAAP Earnings Per Diluted Share of $0.84 Adjusted Earnings Per Diluted Share of $0.87 GAAP Operating Margin Reaches 12.0% Adjusted Operating Margin Reaches 12.5% Updates Guidance PR Newswire LAKE SUCCESS, N.Y., Feb. 4, 2014 LAKE SUCCESS, N.Y., Feb. 4, 2014 /PRNewswire/ --The Hain Celestial Group, Inc. (NASDAQ: HAIN), a leading organic and natural products company providing consumers with A Healthier Way of Life™, today reported record results for its second quarter ended December 31, 2013. (Logo: http://photos.prnewswire.com/prnh/20130502/NY06743LOGO ) Performance Highlights oRecord quarterly net sales of $535 million, an 18% increase oRecord second quarter GAAP earnings per diluted share of $0.84, a 25% increase, which includes $0.03 earnings per diluted share from discontinued operations oRecord quarterly adjusted earnings per diluted share of $0.87, an 18% increase oGAAP operating income of $64 million, 12.0% of net sales; adjusted operating income of $67 million, 12.5% of net sales oAdjusted EBITDA of $79 million, 14.9% of net sales "We are pleased with our record second quarter results, the highest in the Company's history and our twelfth consecutive quarter of year-over-year double digit sales and adjusted earnings growth. We delivered strong sales driven by expanded distribution and brand contribution as well as robust operating margin expansion as we leveraged our selling, general and administrative expenses with a higher sales base. Our gross margin was impacted in the quarter by higher commodity costs, product mix and a shift in trade spending to point of sale activities, which are reported against net sales," said Irwin D. Simon, Founder, President and Chief Executive Officer of Hain Celestial. "With a good start to our third quarter, we expect to deliver a strong second half in sales and profitability as consumption trends reflect consumers seeking out our organic and natural products. We will continue to focus on driving profitable sales and sustained earnings growth over the next several years by expanding distribution of our brands, including our newly acquired Tilda® brand, across geographies and sales channels to capitalize on the tremendous white space opportunities in various retail channels." Second Quarter Fiscal 2014 The Company reported record net sales of $535 million in the second quarter, an 18% increase, compared to net sales of $455 million in the second quarter of fiscal year 2013. Hain Celestial US reported record second quarter net sales of $328 million, a 17% increase. In the United Kingdom, Hain Daniels net sales were $146 million, a 22% increase, and the Rest of World segment reported net sales of $61 million, a 12% increase. The Company had strong brand contribution across various sales channels led by double-digit growth of nineteen brands and mid to high single digit growth of five brands, including Spectrum®, MaraNatha®, The Greek Gods®, Garden of Eatin'®, Arrowhead Mills®, Celestial Seasonings®, Jason®, Alba Botanica®, Linda McCartney®, Cully & Sully®, Danival® and Europe's Best®. The growth in net sales also resulted from sales of Hartley's®, Robertson's®, Sun-Pat®, Frank Cooper's®, Gale's® and BluePrint® brands, acquired during the second quarter of fiscal year 2013, and Ella's Kitchen® brand, acquired in the fourth quarter of fiscal year 2013. The Company earned net income of $41 million compared to $32 million in the prior year second quarter, a 30% increase, and reported earnings per diluted share of $0.84, which includes $0.03 earnings per diluted share from discontinued operations, compared to $0.67, a 25% increase compared to last year. Adjusted net income was $43 million compared to $35 million in the prior year second quarter, a 23% increase, and adjusted earnings per diluted share was $0.87 compared to $0.74, an 18% increase compared to last year. Adjusted amounts exclude those items detailed in Fiscal Year 2014 Guidance. Recent Tilda Acquisition "We are excited to expand our worldwide better-for-you product portfolio into premium Basmati rice and specialty rice products with the strategic acquisition of Tilda Limited ("Tilda"), which we completed in mid-January. After working with the Tilda team for just a few weeks, we look forward to their future contributions and are pleased with the performance of the Tilda brand," commented Irwin Simon. "We plan to expand the growth of the Tilda® brand by increasing sales of its Basmati and ready-to-heat rice product offerings through our existing extensive distribution platform in the United States, Canada and Europe. In addition, we will look to expand the distribution of our global brands including Earth's Best®, Ella's Kitchen®, Celestial Seasonings®, Terra®, Rice Dream® and Almond Dream®, into Tilda's existing, fast-growing markets in the Middle East, North Africa and India." Fiscal Year 2014 Guidance The Company updated its annual net sales and earnings guidance for fiscal year 2014 for the Tilda acquisition completed on January 13, 2014: oTotal net sales range of $2.115 billion to $2.145 billion for fiscal year 2014; an increase of approximately 22% to 24% as compared to fiscal year 2013. oEarnings range of $3.07 to $3.15 per diluted share for fiscal year 2014; an increase of 21% to 25% as compared to fiscal year 2013. Guidance is provided for continuing operations on a non-GAAP basis and excludes acquisition-related fees and expenses and contingent consideration, integration and restructuring charges, factory start-up and co-pack contract termination costs, certain litigation expenses, unrealized currency gains and losses and disposal of an investment held for sale that have been or may be incurred during the Company's fiscal year 2014, 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 organized into geographic segments: United States, United Kingdom and Rest of World (comprised of Canada and Continental Europe). The following is a summary of second quarter and six month results by reportable segment: United Non-GAAP (dollars in United Rest of Corporate/ Adjusted thousands) States Kingdom World Other Adjustments ^(1) ^(1) Net sales - Three $ $ $ $ $ $ months 534,879 ended 327,725 146,051 61,103 - - 12/31/13 Net sales - Three $ $ $ $ $ $ months 455,319 ended 280,415 120,167 54,737 - - 12/31/12 % change 16.9% 21.5% 11.6% 17.5% Operating income (loss) - $ $ $ $ $ $ Three 2,551 months 56,510 12,001 3,996 (8,194) 66,864 ended 12/31/13 Operating income (loss) - $ $ $ $ $ $ Three (12,682) 3,775 months 47,582 12,076 4,268 55,019 ended 12/31/12 % change 18.8% -0.6% -6.4% 21.5% Operating income margin - Three 17.2% 8.2% 6.5% 12.5% months ended 12/31/13 Operating income margin - Three 17.0% 10.0% 7.8% 12.1% months ended 12/31/12 United Non-GAAP (dollars in United Rest of Corporate/ Adjusted thousands) States Kingdom World Other Adjustments ^(1) ^(1) Net sales - $ $ $ $ $ Six months $ ended 639,720 260,046 112,597 - - 1,012,363 12/31/13 Net sales - $ $ $ $ $ Six months $ ended 533,062 178,115 103,949 - - 815,126 12/31/12 % change 20.0% 46.0% 8.3% 24.2% Operating income $ $ $ (loss) - $ $ $ Six months 102,876 13,912 6,910 (19,613) 5,796 109,881 ended 12/31/13 Operating income $ $ $ $ (loss) - $ $ Six months 84,099 11,050 8,674 (20,303) 4,416 87,936 ended 12/31/12 % change 22.3% 25.9% -20.3% 25.0% Operating income margin - 16.1% 5.3% 6.1% 10.9% Six months ended 12/31/13 Operating income margin - 15.8% 6.2% 8.3% 10.8% Six months ended 12/31/12 (1) See accompanying table of "Reconciliation of GAAP Results to Non-GAAP Measures" Webcast Hain Celestial will host a conference call and webcast at 4:30 PM Eastern Time today to review its second quarter fiscal year 2014 results. The conference call will be webcast and available under the Investor Relations section of the Company's website at www.hain.com. The Hain Celestial Group, Inc. The Hain Celestial Group (NASDAQ: HAIN), headquartered in Lake Success, NY, is a leading organic and natural 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®, Ella's Kitchen®, Terra®, Garden of Eatin'®, Sensible Portions®, Health Valley®, Arrowhead Mills®, MaraNatha®, SunSpire®, DeBoles®, Gluten Free Café™, Hain Pure Foods®, Spectrum®, Spectrum Essentials®, Walnut Acres Organic®, Imagine®, Almond Dream®, Rice Dream®, Soy Dream®, WestSoy®, The Greek Gods®, BluePrint®, 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®, Tilda®, Akash Basmati®, Abu Shmagh®, JASON®, Avalon Organics®, Alba Botanica® and Queen Helene®. Hain Celestial has been providing A Healthier Way of Life™ since 1993. For more information, visit www.hain.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," "seek" 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 second half of the Company's fiscal year; (ii) the Company's growth strategy; (iii) the acquisition of Tilda and the potential for growth therefrom; and (iv) the Company's guidance for fiscal year 2014. 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 factors 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 2014 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; 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; the ability of the Company's joint venture investments to successfully execute their business plans; the Company's ability to realize sustainable growth generally and from investments 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; the Company's ability to successfully consummate its proposed divestitures; the effects on the Company's results of operations from the impacts of foreign exchange; competition; the success and cost of introducing new products as well as the Company's ability to increase prices on existing products; 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 material and commodity costs; changes in, or the failure to comply with, government regulations; the availability of organic and natural ingredients; the loss of one or more of the Company's manufacturing facilities; the ability to use the Company's trademarks; reputational damage; product liability; seasonality; litigation; the Company's reliance on its information technology systems; and the 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, 2013. 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 operating margin, adjusted operating income, adjusted earnings per diluted share, 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, 2013 and 2012 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 one of the criteria for evaluating performance-based executive compensation. For the three months and six months ended December 31, 2013 and 2012, EBITDA and adjusted EBITDA were calculated as follows: 3 Months Ended 6 Months Ended (dollars in thousands) 12/31/2013 12/31/2012 12/31/2013 12/31/2012 Net Income $41,231 $31,622 $68,886 $48,008 Income taxes 19,748 16,106 28,499 24,442 Interest expense, net 5,209 4,365 10,494 8,114 Depreciation and amortization 11,355 8,984 21,808 16,993 Equity in earnings of affiliates (1,473) (596) (2,045) 142 Stock based compensation 3,400 3,709 6,637 6,601 EBITDA 79,470 64,190 134,279 104,300 Acquisition related fees and expenses, integration and (19) 3,775 3,002 4,415 restructuring charges Adjusted EBITDA $79,451 $67,965 $137,281 $108,715 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 six months ended December 31, 2013 and 2012, operating free cash flow was calculated as follows: 6 Months 6 Months Ended Ended 12/31/2013 12/31/2012 (dollars in thousands) Cash flow provided by operating activities $73,488 $61,182 Purchases of property, plant and equipment (20,822) (24,931) Operating free cash flow $52,666 $36,251 Operating free cash flow increased to $53 million for the six months ended December 31, 2013 from $36 million in the year ago six month period as a result of the increase in our net income and lower capital expenditures. THE HAIN CELESTIAL GROUP, INC. Consolidated Balance Sheets (In thousands) December 31, June 30, 2013 2013 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 67,533 $ 41,263 Trade receivables, net 252,386 233,641 Inventories 262,949 250,175 Deferred income taxes 17,521 17,716 Other current assets 36,527 32,377 Total current assets 636,916 575,172 Property, plant and equipment, net 255,257 235,841 Goodwill, net 920,369 876,106 Trademarks and other intangible 489,918 498,235 assets, net Investments and joint ventures 41,329 46,799 Other assets 28,529 26,341 Total assets $ 2,372,318 $ 2,258,494 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 197,716 $ 184,996 Accrued expenses and other current 66,656 76,657 liabilities Current portion of long-term debt 181 12,477 Total current liabilities 264,553 274,130 Long-term debt, less current portion 627,521 653,464 Deferred income taxes 115,797 114,395 Other noncurrent liabilities 13,327 14,950 Total liabilities 1,021,198 1,056,939 Stockholders' equity: Common stock 497 490 Additional paid-in capital 801,091 768,774 Retained earnings 558,653 489,767 Accumulated other comprehensive 30,957 (27,251) income Subtotal 1,391,198 1,231,780 Treasury stock (40,078) (30,225) Total stockholders' equity 1,351,120 1,201,555 Total liabilities and $ 2,372,318 $ 2,258,494 stockholders' equity THE HAIN CELESTIAL GROUP, INC. Consolidated Statements of Income (in thousands, except per share amounts) Three Months Ended Six Months Ended December December 31, 31, 2013 2012 2013 2012 (Unaudited) (Unaudited) Net sales $ $ $ $ 534,879 455,319 1,012,363 815,126 Cost of sales 391,802 324,556 750,163 589,151 Gross profit 143,077 130,763 262,200 225,975 Selling, general and 75,237 72,903 148,824 132,565 administrative expenses Amortization of acquired 3,647 2,841 7,115 5,474 intangibles Acquisition related expenses including (120) 3,775 2,176 4,416 integration and restructuring charges Operating income 64,313 51,244 104,085 83,520 Interest expense and 5,955 3,295 9,893 7,187 other expenses Income before income taxes and equity in earnings of 58,358 47,949 94,192 76,333 equity-method investees Income tax provision 19,748 16,302 28,499 24,160 (Income) loss of equity-method investees, (1,473) (596) (2,045) 142 net of tax Income from continuing 40,083 32,243 67,738 52,031 operations Income (loss) from discontinued operations, 1,148 (621) 1,148 (4,023) net of tax Net income $ $ $ $ 41,231 31,622 68,886 48,008 Basic net income per share: From continuing $ $ $ $ operations 0.83 0.70 1.42 1.14 From discontinued 0.03 (0.01) 0.02 (0.08) operations Net income per share - $ $ $ $ basic 0.86 0.69 1.44 1.06 Diluted net income per share: From continuing $ $ $ $ operations 0.81 0.68 1.38 1.11 From discontinued 0.03 (0.01) 0.02 (0.09) operations Net income per share - $ $ $ $ diluted 0.84 0.67 1.40 1.02 Weighted average common shares outstanding: Basic 48,019 45,942 47,863 45,480 Diluted 49,185 47,355 49,060 46,962 THE HAIN CELESTIAL GROUP, INC. Reconciliation of GAAP Results to Non-GAAP Measures (in thousands, except per share amounts) Three Months Ended December 31, 2013 GAAP Adjustments 2013 2012 Adjusted Adjusted (Unaudited) $ $ $ $ Gross profit 143,077 2,216 145,293 130,763 Selling, general and 75,237 (455) 74,782 72,903 administrative expenses Amortization of acquired 3,647 - 3,647 2,841 intangibles Acquisition related (income) expenses (120) 120 - - including integration and restructuring charges Operating income 64,313 2,551 66,864 55,019 Interest and other 5,955 91 6,046 4,619 expenses, net Income before income taxes and equity in earnings of 58,358 2,460 60,818 50,400 equity-method investees Income tax provision 19,748 (144) 19,604 16,788 (Income) of equity-method (1,473) - (1,473) (1,217) investees, net of tax Income from continuing $ $ $ $ operations 40,083 2,604 42,687 34,829 Income per share from $ $ $ $ continuing operations - 0.06 basic 0.83 0.89 0.76 Income per share from $ $ $ $ continuing operations - 0.06 diluted 0.81 0.87 0.74 Weighted average common shares outstanding: Basic 48,019 48,019 45,942 Diluted 49,185 49,185 47,355 FY 2014 FY 2013 Impact on Impact on Income Impact on Income Impact on Before Income Tax Before Income Tax Income Provision Income Provision Taxes Taxes (Unaudited) $ $ Factory start-up costs 426 - - 1,677 Acquisition related integration and 102 23 - - restructuring charges Co-pack contract 437 166 - - termination costs Cost of sales 2,216 615 - - Litigation expenses 455 173 - - Selling, general and 455 173 - - administrative expenses Acquisition related fees $ $ and expenses, integration 1,661 534 and 3,775 1,017 restructuring charges Contingent consideration (income) (1,781) (1,117) - - expense, net Acquisition related (income) expenses including (120) (583) 3,775 1,017 integration and restructuring charges Gain on disposal of (234) (89) - - investment held for sale Unrealized currency (98) (149) - - impacts Currency gain on (1,324) (531) acquisition payment Accretion of 241 82 - - contingent consideration Interest and other (91) (156) (1,324) (531) expenses, net Net (income) loss from - 621 - HHO discontinued operation After-tax (income) loss of - - 621 - equity-method investees Nondeductible acquisition related - (193) - - transaction expenses Income tax provision - (193) - - $ $ $ $ Total adjustments (144) 2,460 3,072 486 THE HAIN CELESTIAL GROUP, INC. Reconciliation of GAAP Results to Non-GAAP Measures (in thousands, except per share amounts) Six Months Ended December 31, 2013 GAAP Adjustments 2013 2012 Adjusted Adjusted (Unaudited) $ $ $ $ Gross profit 262,200 2,941 265,141 225,975 Selling, general and 148,824 (679) 148,145 132,565 administrative expenses Amortization of acquired 7,115 - 7,115 5,474 intangibles Acquisition related (income) expenses including 2,176 (2,176) - - integration and restructuring charges Operating income 104,085 5,796 109,881 87,936 Interest and other 9,893 2,172 12,065 8,441 expenses, net Income before income taxes and equity in earnings of 94,192 3,624 97,816 79,495 equity-method investees Income tax provision 28,499 3,349 31,848 26,565 (Income) of equity-method (2,045) - (2,045) (1,136) investees, net of tax Income from continuing $ $ $ $ operations 275 67,738 68,013 54,066 Income per share from $ $ $ $ continuing operations - 0.01 basic 1.42 1.42 1.19 Income per share from $ $ $ $ continuing operations - 0.01 diluted 1.38 1.39 1.15 Weighted average common shares outstanding: Basic 47,863 47,863 45,480 Diluted 49,060 49,060 46,962 FY 2014 FY 2013 Impact on Impact on Income Impact on Income Impact on Before Income Tax Before Income Tax Income Provision Income Provision Taxes Taxes (Unaudited) $ $ Factory start-up costs 584 - - 2,143 Acquisition related integration and 361 82 - - restructuring charges Co-pack contract 437 166 - - termination costs Cost of sales 2,941 832 - - Litigation expenses 455 173 Expenses related to third party sale of 224 85 - - common stock Selling, general and 679 258 - - administrative expenses Acquisition related fees $ $ and expenses, integration 3,957 1,314 and restructuring charges 4,416 1,126 Contingent consideration (income) (1,781) (1,117) - - expense, net Acquisition related (income) expenses including 2,176 197 4,416 1,126 integration and restructuring charges Unrealized currency (2,417) (1,047) - - impacts Gain on disposal of (234) (89) - - investment held for sale Currency gain on (1,254) (514) acquisition payment Accretion of contingent 479 164 - - consideration Interest and other (2,172) (972) (1,254) (514) expenses, net Net (income) loss from HHO discontinued - - 1,278 - operation After-tax (income) loss of - - 1,278 - equity-method investees Discrete tax benefit resulting from enacted tax - 3,777 - 1,793 rate change Increase in - (550) - - unrecognized tax benefits Nondeductible acquisition related transaction - (193) - - expenses Income tax provision - 3,034 - 1,793 $ $ $ $ Total adjustments 3,349 3,624 4,440 2,405 SOURCE The Hain Celestial Group, Inc. Website: http://www.hain-celestial.com Contact: Stephen Smith/Mary Anthes, The Hain Celestial Group, Inc., 516-587-5000
Hain Celestial Announces Record Second Quarter Fiscal Year 2014 Results
Press spacebar to pause and continue. Press esc to stop.