Hain Celestial Announces Record Third Quarter Fiscal Year 2014 Results
Performance Highlights
- Adjusted earnings per diluted share from continuing operations of
$0.88 , a 22% increase - Earnings per diluted share from continuing operations of
$0.75 , compared to$0.87 a year ago, which included a$0.28 one-time tax benefit - Record quarterly net sales of
$557.4 million , a 22% increase - Operating income of
$63.6 million , 11.4% of net sales; adjusted operating income of$72.3 million , 13.0% of net sales - Adjusted EBITDA of
$83.3 million , 14.9% of net sales; EBITDA of$76.4 million , 13.7% of net sales - Operating Free Cash Flow of
$91.6 million for the nine months endedMarch 31, 2014
"We are pleased with our record third quarter results, the highest net sales in the Company's history and our 13th consecutive quarter of year-over-year double digit net sales and adjusted earnings growth," said
Third Quarter Fiscal 2014
The Company reported net sales of
For the third quarter, the Company earned adjusted net income from continuing operations of
"The third quarter was a significant quarter for the Company with many accomplishments," added
Acquisitions and Divestitures
"We are excited by the strategic acquisition of
During the third quarter, the Company completed the previously announced divestiture of the Grains Noirs business as well as other discontinued products in
Fiscal Year 2014 Guidance
The Company raised its annual guidance for fiscal year 2014 to reflect the Rudi's acquisition completed in
- Total net sales range of
$2.145 billion to $2.150 billion for fiscal year 2014; an increase of approximately 24% as compared to fiscal year 2013. - Earnings range of
$3.14 to $3.17 per diluted share for fiscal year 2014; an increase of 24% 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, integration and restructuring charges, factory start-up costs, certain litigation expenses, unrealized currency gains and losses and specific losses on equity-method investees 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:
The following is a summary of third quarter and nine month results by reportable segment:
(dollars in thousands) |
United States |
United Kingdom |
Rest of World |
Corporate/ |
Non-GAAP Adjustments (1) |
Adjusted (1) |
||||||
Net sales - Three months ended 3/31/14 |
$ 319,471 |
$ 176,939 |
$ 61,010 |
$ - |
$ - |
$ 557,420 |
||||||
Net sales - Three months ended 3/31/13 |
$ 277,582 |
$ 121,162 |
$ 57,343 |
$ - |
$ - |
$ 456,087 |
||||||
% change |
15.1% |
46.0% |
6.4% |
22.2% |
||||||||
Operating income (loss) - Three months ended 3/31/14 |
$ 56,702 |
$ 18,366 |
$ 5,100 |
$ (16,539) |
$ 8,627 |
$ 72,256 |
||||||
Operating income (loss) - Three months ended 3/31/13 |
$ 51,260 |
$ 8,793 |
$ 5,170 |
$ (14,164) |
$ 6,561 |
$ 57,620 |
||||||
% change |
10.6% |
108.9% |
-1.4% |
25.4% |
||||||||
Operating income margin - Three months ended 3/31/14 |
17.7% |
10.4% |
8.4% |
13.0% |
||||||||
Operating income margin - Three months ended 3/31/13 |
18.5% |
7.3% |
9.0% |
12.6% |
||||||||
(dollars in thousands) |
United States |
United Kingdom |
Rest of World |
Corporate/ |
Non-GAAP Adjustments (1) |
Adjusted (1) |
||||||
Net sales - Nine months ended 3/31/14 |
$ 959,191 |
$ 436,985 |
$ 173,607 |
$ - |
$ - |
$ 1,569,783 |
||||||
Net sales - Nine months ended 3/31/13 |
$ 810,644 |
$ 299,277 |
$ 161,292 |
$ - |
$ - |
$ 1,271,213 |
||||||
% change |
18.3% |
46.0% |
7.6% |
23.5% |
||||||||
Operating income (loss) - Nine months ended 3/31/14 |
$ 159,578 |
$ 32,278 |
$ 12,010 |
$ (36,152) |
$ 14,423 |
$ 182,137 |
||||||
Operating income (loss) - Nine months ended 3/31/13 |
$ 135,359 |
$ 19,843 |
$ 13,844 |
$ (34,467) |
$ 10,977 |
$ 145,556 |
||||||
% change |
17.9% |
62.7% |
-13.2% |
25.1% |
||||||||
Operating income margin - Nine months ended 3/31/14 |
16.6% |
7.4% |
6.9% |
11.6% |
||||||||
Operating income margin - Nine months ended 3/31/13 |
16.7% |
6.6% |
8.6% |
11.5% |
||||||||
(1) See accompanying table of "Reconciliation of GAAP Results to Non-GAAP Measures" |
Webcast
The
The
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" 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) opportunities ahead; (ii) productivity savings; (iii) integration opportunities; (iv) the acquisition of Rudi's and the potential for growth therefrom; (v) its core strategy and (vi) the Company's guidance for net sales and earnings per diluted share 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
Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP financial measures, including adjusted net income from continuing operations, 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 nine months ended
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 and nine months ended
3 Months Ended |
9 Months Ended |
||||
(dollars in thousands) |
3/31/2014 |
3/31/2013 |
3/31/2014 |
3/31/2013 |
|
Net Income |
$35,241 |
$40,715 |
$104,127 |
$88,723 |
|
Income taxes |
19,748 |
1,610 |
48,247 |
26,052 |
|
Interest expense, net |
5,699 |
4,777 |
16,193 |
12,891 |
|
Depreciation and amortization |
12,789 |
10,529 |
34,597 |
27,522 |
|
Equity in earnings of affiliates |
(83) |
(293) |
(2,128) |
(151) |
|
Stock based compensation |
3,020 |
3,236 |
9,657 |
9,837 |
|
EBITDA |
76,414 |
60,574 |
210,693 |
164,874 |
|
Acquisition related fees and expenses, |
|||||
6,883 |
3,825 |
9,885 |
8,240 |
||
Adjusted EBITDA |
$83,297 |
$64,399 |
$220,578 |
$173,114 |
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
9 Months
|
9 Months
|
|
3/31/2014 |
3/31/2013 |
|
(dollars in thousands) |
||
Cash flow provided by operating activities |
$122,281 |
$67,864 |
Purchases of property, plant and equipment |
(30,724) |
(49,021) |
Operating free cash flow |
$91,557 |
$18,843 |
Operating free cash flow increased to
THE HAIN CELESTIAL GROUP, INC. |
|||||
Consolidated Balance Sheets |
|||||
(In thousands) |
|||||
March 31, |
June 30, |
||||
2014 |
2013 |
||||
(Unaudited) |
|||||
ASSETS |
|||||
Current assets: |
|||||
Cash and cash equivalents |
$ 101,422 |
$ 41,263 |
|||
Trade receivables, net |
302,078 |
233,641 |
|||
Inventories |
299,464 |
250,175 |
|||
Deferred income taxes |
17,620 |
17,716 |
|||
Other current assets |
44,601 |
32,377 |
|||
Total current assets |
765,185 |
575,172 |
|||
Property, plant and equipment, net |
298,897 |
235,841 |
|||
Goodwill, net |
1,096,525 |
876,106 |
|||
Trademarks and other intangible assets, net |
609,492 |
498,235 |
|||
Investments and joint ventures |
39,367 |
46,799 |
|||
Other assets |
28,586 |
26,341 |
|||
Total assets |
$ 2,838,052 |
$ 2,258,494 |
|||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||
Current liabilities: |
|||||
Accounts payable |
$ 217,746 |
$ 184,996 |
|||
Accrued expenses and other current liabilities |
90,223 |
76,657 |
|||
Current portion of long-term debt |
82,395 |
12,477 |
|||
Total current liabilities |
390,364 |
274,130 |
|||
Long-term debt, less current portion |
750,331 |
653,464 |
|||
Deferred income taxes |
134,921 |
114,395 |
|||
Other noncurrent liabilities |
13,014 |
14,950 |
|||
Total liabilities |
1,288,630 |
1,056,939 |
|||
Stockholders' equity: |
|||||
Common stock |
514 |
490 |
|||
Additional paid-in capital |
957,070 |
768,774 |
|||
Retained earnings |
593,894 |
489,767 |
|||
Accumulated other comprehensive income |
38,034 |
(27,251) |
|||
Subtotal |
1,589,512 |
1,231,780 |
|||
Treasury stock |
(40,090) |
(30,225) |
|||
Total stockholders' equity |
1,549,422 |
1,201,555 |
|||
Total liabilities and stockholders' equity |
$ 2,838,052 |
$ 2,258,494 |
THE HAIN CELESTIAL GROUP, INC. |
||||||||
Consolidated Statements of Income |
||||||||
(in thousands, except per share amounts) |
||||||||
Three Months Ended March 31, |
Nine Months Ended March 31, |
|||||||
2014 |
2013 |
2014 |
2013 |
|||||
(Unaudited) |
(Unaudited) |
|||||||
Net sales |
$ 557,420 |
$ 456,087 |
$ 1,569,783 |
$ 1,271,213 |
||||
Cost of sales |
404,627 |
329,924 |
1,154,790 |
919,075 |
||||
Gross profit |
152,793 |
126,163 |
414,993 |
352,138 |
||||
Selling, general and administrative expenses |
78,268 |
70,087 |
227,092 |
202,652 |
||||
Amortization of acquired intangibles |
4,133 |
3,161 |
11,248 |
8,635 |
||||
Acquisition related expenses including integration and restructuring charges, net |
6,763 |
1,856 |
8,939 |
6,272 |
||||
Operating income |
63,629 |
51,059 |
167,714 |
134,579 |
||||
Interest expense and other expenses |
5,946 |
7,913 |
15,839 |
15,100 |
||||
Income before income taxes and equity in earnings of equity- method investees |
57,683 |
43,146 |
151,875 |
119,479 |
||||
Income tax provision |
19,748 |
1,610 |
48,247 |
25,770 |
||||
Income of equity-method investees, net of tax |
(83) |
(293) |
(2,128) |
(151) |
||||
Income from continuing operations |
38,018 |
41,829 |
105,756 |
93,860 |
||||
Loss from discontinued operations, net of tax |
(2,777) |
(1,114) |
(1,629) |
(5,137) |
||||
Net income |
$ 35,241 |
$ 40,715 |
$ 104,127 |
$ 88,723 |
||||
Basic net income per share: |
||||||||
From continuing operations |
$ 0.77 |
$ 0.90 |
$ 2.18 |
$ 2.05 |
||||
From discontinued operations |
(0.06) |
(0.02) |
(0.03) |
(0.11) |
||||
Net income per share - basic |
$ 0.71 |
$ 0.88 |
$ 2.15 |
$ 1.94 |
||||
Diluted net income per share: |
||||||||
From continuing operations |
$ 0.75 |
$ 0.87 |
$ 2.13 |
$ 1.99 |
||||
From discontinued operations |
(0.06) |
(0.02) |
(0.03) |
(0.11) |
||||
Net income per share - diluted |
$ 0.69 |
$ 0.85 |
$ 2.10 |
$ 1.88 |
||||
Weighted average common shares outstanding: |
||||||||
Basic |
49,695 |
46,508 |
48,473 |
45,822 |
||||
Diluted |
50,751 |
47,821 |
49,623 |
47,248 |
THE HAIN CELESTIAL GROUP, INC. |
||||||
Reconciliation of GAAP Results to Non-GAAP Measures |
||||||
(in thousands, except per share amounts) |
||||||
Three Months Ended March 31, |
||||||
2014 GAAP |
Adjustments |
2014 Adjusted |
2013 Adjusted |
|||
(Unaudited) |
||||||
Gross profit |
$ 152,793 |
$ 1,096 |
$ 153,889 |
$ 128,309 |
||
Selling, general and administrative expenses |
78,268 |
(768) |
77,500 |
67,528 |
||
Amortization of acquired intangibles |
4,133 |
- |
4,133 |
3,161 |
||
Acquisition related expenses including integration and restructuring charges, net |
6,763 |
(6,763) |
- |
- |
||
Operating income |
63,629 |
8,627 |
72,256 |
57,620 |
||
Interest and other expenses, net |
5,946 |
913 |
6,859 |
5,775 |
||
Income before income taxes and equity in earnings of equity- method investees |
57,683 |
7,714 |
65,397 |
51,845 |
||
Income tax provision |
19,748 |
1,368 |
21,116 |
17,790 |
||
(Income) of equity-method investees, net of tax |
(83) |
(158) |
(241) |
(362) |
||
Income from continuing operations |
$ 38,018 |
$ 6,504 |
$ 44,522 |
$ 34,417 |
||
Income per share from continuing operations - basic |
$ 0.77 |
$ 0.13 |
$ 0.90 |
$ 0.74 |
||
Income per share from continuing operations - diluted |
$ 0.75 |
$ 0.13 |
$ 0.88 |
$ 0.72 |
||
Weighted average common shares outstanding: |
||||||
Basic |
49,695 |
49,695 |
46,508 |
|||
Diluted |
50,751 |
50,751 |
47,821 |
|||
FY 2014 |
FY 2013 |
|||||
Impact on Income Before Income Taxes |
Impact on Income Tax Provision |
Impact on Income Before Income Taxes |
Impact on Income Tax Provision |
|||
(Unaudited) |
||||||
Factory start-up costs |
$ 977 |
$ 230 |
$ 559 |
$ 190 |
||
Acquisition related integration costs |
119 |
27 |
1,587 |
413 |
||
Cost of sales |
1,096 |
257 |
2,146 |
603 |
||
Acquisition related integration costs |
- |
- |
584 |
155 |
||
Litigation expenses |
768 |
292 |
1,975 |
751 |
||
Selling, general and administrative expenses |
768 |
292 |
2,559 |
906 |
||
Acquisition related fees and expenses, integration and restructuring charges |
6,918 |
2,481 |
1,856 |
432 |
||
Contingent consideration (income) expense, net |
(155) |
- |
- |
- |
||
Acquisition related (income) expenses including integration and restructuring charges |
6,763 |
2,481 |
1,856 |
432 |
||
Unrealized currency impacts |
(524) |
(213) |
1,882 |
713 |
||
Gain on disposal of investment held for sale |
(467) |
(177) |
- |
- |
||
Interest accretion and other items, net |
78 |
20 |
256 |
79 |
||
Interest and other expenses, net |
(913) |
(370) |
2,138 |
792 |
||
Net (income) loss from Hutchison Hain Organic Holdings Limited discontinued operation |
- |
- |
69 |
- |
||
Hain Pure Protein Corporation mortality losses |
158 |
- |
- |
- |
||
After-tax (income) loss of equity-method investees |
158 |
- |
69 |
- |
||
Worthless stock tax deduction |
- |
- |
- |
13,186 |
||
Decrease in unrecognized tax benefits |
- |
- |
- |
261 |
||
Nondeductible acquisition related transaction expenses |
- |
(1,292) |
- |
- |
||
Income tax provision |
- |
(1,292) |
- |
13,447 |
||
Total adjustments |
$ 7,872 |
$ 1,368 |
$ 8,768 |
$ 16,180 |
THE HAIN CELESTIAL GROUP, INC. |
||||||
Reconciliation of GAAP Results to Non-GAAP Measures |
||||||
(in thousands, except per share amounts) |
||||||
Nine Months Ended March 31, |
||||||
2014 GAAP |
Adjustments |
2014 Adjusted |
2013 Adjusted |
|||
(Unaudited) |
||||||
Gross profit |
$ 414,993 |
$ 4,037 |
$ 419,030 |
$ 354,284 |
||
Selling, general and administrative expenses |
227,092 |
(1,447) |
225,645 |
200,093 |
||
Amortization of acquired intangibles |
11,248 |
- |
11,248 |
8,635 |
||
Acquisition related expenses including integration and restructuring charges, net |
8,939 |
(8,939) |
- |
- |
||
Operating income |
167,714 |
14,423 |
182,137 |
145,556 |
||
Interest and other expenses, net |
15,839 |
3,085 |
18,924 |
14,216 |
||
Income before income taxes and equity in earnings of equity- method investees |
151,875 |
11,338 |
163,213 |
131,340 |
||
Income tax provision |
48,247 |
4,717 |
52,964 |
44,355 |
||
(Income) of equity-method investees, net of tax |
(2,128) |
(158) |
(2,286) |
(1,498) |
||
Income from continuing operations |
$ 105,756 |
$ 6,779 |
$ 112,535 |
$ 88,483 |
||
Income per share from continuing operations - basic |
$ 2.18 |
$ 0.14 |
$ 2.32 |
$ 1.93 |
||
Income per share from continuing operations - diluted |
$ 2.13 |
$ 0.14 |
$ 2.27 |
$ 1.87 |
||
Weighted average common shares outstanding: |
||||||
Basic |
48,473 |
48,473 |
45,822 |
|||
Diluted |
49,623 |
49,623 |
47,248 |
|||
FY 2014 |
FY 2013 |
|||||
Impact on Income Before Income Taxes |
Impact on Income Tax Provision |
Impact on Income Before Income Taxes |
Impact on Income Tax Provision |
|||
(Unaudited) |
||||||
Factory start-up costs |
$ 3,120 |
$ 814 |
$ 559 |
$ 190 |
||
Acquisition related integration costs |
480 |
109 |
1,587 |
413 |
||
Co-pack contract termination costs |
437 |
166 |
- |
- |
||
Cost of sales |
4,037 |
1,089 |
2,146 |
603 |
||
Acquisition related integration costs |
- |
- |
584 |
155 |
||
Litigation expenses |
1,223 |
465 |
1,975 |
751 |
||
Expenses related to third party sale of common stock |
224 |
85 |
- |
- |
||
Selling, general and administrative expenses |
1,447 |
550 |
2,559 |
906 |
||
Acquisition related fees and expenses, integration and restructuring charges |
10,875 |
3,795 |
6,272 |
1,558 |
||
Contingent consideration (income) expense, net |
(1,936) |
(1,117) |
- |
- |
||
Acquisition related (income) expenses including integration and restructuring charges |
8,939 |
2,678 |
6,272 |
1,558 |
||
Unrealized currency impacts |
(2,941) |
(1,260) |
1,882 |
713 |
||
Gain on disposal of investment held for sale |
(701) |
(266) |
- |
- |
||
Currency gain on acquisition payment |
- |
- |
(1,396) |
(548) |
||
Interest accretion and other items, net |
557 |
184 |
398 |
113 |
||
Interest and other expenses, net |
(3,085) |
(1,342) |
884 |
278 |
||
Net (income) loss from Hutchison Hain Organic Holdings Limited discontinued operation |
- |
- |
1,347 |
- |
||
Hain Pure Protein Corporation mortality losses |
158 |
- |
- |
- |
||
After-tax (income) loss of equity-method investees |
158 |
- |
1,347 |
- |
||
Worthless stock tax deduction |
- |
- |
- |
13,186 |
||
Discrete tax benefit resulting from enacted tax rate change |
- |
3,777 |
- |
- |
||
Decrease (increase) in unrecognized tax benefits |
- |
(550) |
- |
2,054 |
||
Nondeductible acquisition related transaction expenses |
- |
(1,485) |
- |
- |
||
Income tax provision |
- |
1,742 |
- |
15,240 |
||
Total adjustments |
$ 11,496 |
$ 4,717 |
$ 13,208 |
$ 18,585 |
Logo - http://photos.prnewswire.com/prnh/20130502/NY06743LOGO
SOURCE The
Stephen Smith/Mary Anthes, The Hain Celestial Group, Inc., 516-587-5000