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  • The Hain Celestial Group is a leading organic and natural products company with operations in North America, Europe and India. Hain Celestial participates in many natural categories with well-known brands. Our mission is to be the leading marketer, manufacturer and seller of organic and natural, better-for-you products. We are committed to growing sustainably while continuing to implement environmentally sound business practices and manufacturing processes.
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Hain Celestial Reports Second Quarter Fiscal Year 2019 Financial Results
Updates Fiscal Year 2019 Guidance

LAKE SUCCESS, N.Y., Feb. 7, 2019 /PRNewswire/ -- The Hain Celestial Group, Inc. (Nasdaq: HAIN) ("Hain Celestial" or the "Company"), a leading organic and natural products company with operations in North America, Europe, Asia and the Middle East providing consumers with A Healthier Way of Life™, today reported financial results for the second quarter ended December 31, 2018. The results contained herein are presented with the Hain Pure Protein operating segment being treated as a discontinued operation given the Company's previously announced decision to divest the business.

The Hain Celestial Group, Inc. (PRNewsfoto/The Hain Celestial Group, Inc.)

"We are creating a new strategic direction to take Hain Celestial to the next level of performance," commented Mark L. Schiller, Hain Celestial's President and Chief Executive Officer.  "Although we are not satisfied with our near-term performance, we are starting to see sequential improvement in our numbers and are working diligently to restore profitable growth in the United States, while continuing our profit momentum in the United Kingdom and Europe.  My team and I have been in similar situations during our previous roles, which gives us confidence in our abilities to execute Hain Celestial's business transformation. We believe we have a core set of high margin brands, with mainstream potential, competing in fast-growing categories, and we plan to simplify our business in order to focus more resources towards these high potential opportunities to seek to deliver attractive returns to stockholders."

FINANCIAL HIGHLIGHTS1

Summary of Second Quarter Results from Continuing Operations2

  • Net sales decreased 5% to $584.2 million compared to the prior year period, or a 4% decrease on a constant currency basis. When adjusted for Foreign Exchange and Acquisitions, Divestitures and certain other items, including the Project Terra Stock Keeping Unit ("SKU") rationalization3, net sales would have decreased 1% compared to the prior year period.
  • Gross margin of 19.6%, a 210 basis point decrease over the prior year period; adjusted gross margin of 20.3%, a 240 basis point decrease over the prior year period as a result of planned higher trade and promotional investments and increased freight and commodity costs in the United States.
  • Operating loss of $15.4 million compared to operating income of $31.0 million in the prior year period; adjusted operating income of $29.9 million compared to $49.5 million in the prior year period.
  • Net loss of $29.3 million compared to net income of $43.1 million in the prior year period; adjusted net income of $15.0 million compared to $33.6 million in prior year period.
  • EBITDA of $19.2 million compared to $53.3 million in the prior year period; Adjusted EBITDA of $44.9 million compared to $67.7 million in the prior year period.
  • Loss per diluted share of $0.28 compared to earnings per diluted share ("EPS") of $0.41 in the prior year period; adjusted EPS of $0.14 compared to $0.32 in the prior year period.

SEGMENT HIGHLIGHTS FROM CONTINUING OPERATIONS

Hain Celestial United States
Hain Celestial United States net sales in the second quarter decreased 4% over the prior year period to $259.2 million; when adjusted for Acquisitions, Divestitures and certain other items including the Project Terra SKU rationalization3, net sales would have decreased 1%. The decline in the United States segment was primarily driven by declines in the Pantry and Better-For-You Baby platforms, partially offset by an increase in the Better-For-You Snack platform. United States net sales were also impacted by the previously disclosed strategic decision to no longer support certain lower margin SKUs. Segment operating income in the second quarter was $7.2 million, a 67% decrease from the prior year period, and adjusted operating income was $13.4 million, a 57% decrease over the prior year period, driven primarily by higher planned trade investments to drive future period growth and increased freight and commodity costs.

Hain Celestial United Kingdom
Hain Celestial United Kingdom net sales in the second quarter decreased 5% to $225.3 million over the prior year period, or 1% after adjusting for Foreign Exchange, Acquisitions and Divestitures and certain other items3. The results for the United Kingdom segment reflect an 8% decline in Hain Daniels, or a decline of 4% after adjusting for Foreign Exchange, Acquisitions and Divestitures and certain other items3, primarily driven by declines from the New Covent Garden Soup Co.®, Hartley's® and Cully & Sully® brands, offset in part by growth in the Linda McCartney® and Sun-Pat® brands.  The net sales decrease in the United Kingdom segment was partially offset by 2% growth from Tilda® while Ella's Kitchen® was relatively flat, or increased 6% and 3%, respectively, after adjusting for Foreign Exchange, Acquisitions and Divestitures and certain other items3. Segment operating income was $14.7 million, an 8% increase over the prior year period, and adjusted operating income was $18.1 million, an increase of 11% over the prior year period.

Rest of World
Rest of World net sales in the second quarter decreased 8% to $99.7 million over the prior year period, or 3% after adjusting for Foreign Exchange, Acquisitions and Divestitures and certain other items3. Net sales for Hain Celestial Canada decreased 12%, or 7% after adjusting for Foreign Exchange, Acquisitions and Divestitures and certain other items3, primarily driven by declines from the Europe's Best® and Dream® brands and private label sales, offset in part by growth from the Yves Veggie Cuisine®, Live Clean® and Tilda® brands. Net sales for Hain Celestial Europe were relatively flat, or increased 3% on a constant currency basis, primarily driven by strong performance from the Joya® brand and private label sales, offset in part by declines from the Danival®, Lima® and Dream® brands. Net sales for Hain Ventures, formerly known as Cultivate Ventures, decreased 17%, or 14% after adjusting for Foreign Exchange, Acquisitions and Divestitures and certain other items3, primarily driven by declines from the Blueprint®, Westsoy®, SunSpire® and DeBoles® brands, offset in part by growth from the Health Valley® and Yves Veggie Cuisine® brands. Segment operating income in the second quarter was $8.4 million, a $2.2 million decrease over the prior year period. Adjusted operating income was $9.3 million, an 18% decrease over the prior year period.

Hain Pure Protein Discontinued Operations
As previously disclosed on May 5, 2018, the results of operations, financial position and cash flows related to the operations of the Hain Pure Protein business segment have been moved to discontinued operations in the current and prior periods. The Company continues to make substantial progress and expect to complete the divestiture of the Hain Pure Protein operating segment in the coming months. Net sales for Hain Pure Protein in the second quarter were $147.2 million, a decrease of 7% compared to the prior year period. Segment operating loss in the second quarter was $59.6 million and included a $54.9 million pre-tax non-cash impairment charge.

Fiscal Year 2019 Guidance
The Company updated its annual guidance for continuing operations for fiscal year 2019:

  • Total net sales of $2.320 billion to $2.350 billion, a decrease of approximately 4% to 6% as compared to fiscal year 2018.
  • Adjusted EBITDA of $185 million to $200 million, a decrease of approximately 22% to 28% as compared to fiscal year 2018.
  • Adjusted EPS of $0.60 to $0.70, a decrease of approximately 40% to 48% as compared to fiscal year 2018.

Guidance, where adjusted, is provided on a non-GAAP basis and excludes acquisition-related expenses; integration charges; restructuring charges, start-up costs, consulting fees and other costs associated with Project Terra; costs associated with the CEO Succession Agreement; unrealized net foreign currency gains or losses, accounting review and remediation costs and other non-recurring items that may be incurred during the Company's fiscal year 2019, which the Company will continue to identify as it reports its future financial results. Guidance also excludes the impact of any future acquisitions and divestitures.

The Company cannot reconcile its expected Adjusted EBITDA to net income or adjusted earnings per diluted share to earnings per diluted share under "Fiscal Year 2019 Guidance" without unreasonable effort because certain items that impact net income and other reconciling metrics are out of the Company's control and/or cannot be reasonably predicted at this time.

1 This press release includes certain non-GAAP financial measures, which are intended to supplement, not substitute for, comparable GAAP financial measures. Reconciliations of non-GAAP financial measures to GAAP financial measures are provided herein in the tables "Reconciliation of GAAP Results to Non-GAAP Measures."
2 Unless otherwise noted all results included in this press release are from continuing operations.
3 Refer to "Net Sales Growth at Constant Currency and Adjusted for Acquisitions, Divestitures and Other" provided herein.

QTD TABLE Q2 FY19



















(unaudited and dollars in thousands)

United States

United Kingdom

Rest of World

Corporate/
Other

Total

NET SALES






Net sales - Three months ended 12/31/18

$     259,155

$     225,338

$       99,663

$                 -

$     584,156

Net sales - Three months ended 12/31/17

$     270,303

$     238,201

$     107,728

$                 -

$     616,232

% change - FY'19 net sales vs. FY'18 net sales

(4.1)%

(5.4)%

(7.5)%


(5.2)%

OPERATING INCOME/(LOSS)






Three months ended 12/31/18






Operating income (loss)

$         7,180

$       14,655

$         8,374

$      (45,596)

$      (15,387)

Non-GAAP adjustments (1)

6,257

3,429

953

34,624

45,263

Adjusted operating income

$       13,437

$       18,084

$         9,327

$      (10,972)

$       29,876

Operating income (loss) margin

2.8%

6.5%

8.4%


(2.6)%

Adjusted operating income margin

5.2%

8.0%

9.4%


5.1%

Three months ended 12/31/17






Operating income

$       21,861

$       13,598

$       10,535

$      (15,029)

$       30,965

Non-GAAP adjustments (1)

9,109

2,740

866

5,791

18,506

Adjusted operating income

$       30,970

$       16,338

$       11,401

$        (9,238)

$       49,471

Operating income margin

8.1%

5.7%

9.8%


5.0%

Adjusted operating income margin

11.5%

6.9%

10.6%


8.0%



















YTD TABLE Q2 FY19



















(unaudited and dollars in thousands)

United States

United Kingdom

Rest of World

Corporate/
Other

Total

NET SALES






Net sales - Six months ended 12/31/18

$     503,140

$     443,915

$     197,934

$                 -

$  1,144,989

Net sales - Six months ended 12/31/17

$     533,962

$     460,646

$     210,843

$                 -

$  1,205,451

% change - FY'19 net sales vs. FY'18 net sales

(5.8)%

(3.6)%

(6.1)%


(5.0)%

OPERATING INCOME/(LOSS)






Six months ended 12/31/18






Operating income (loss)

$         9,350

$       18,675

$       16,210

$      (83,726)

$      (39,491)

Non-GAAP adjustments (1)

11,737

10,074

2,299

66,120

90,230

Adjusted operating income

$       21,087

$       28,749

$       18,509

$      (17,606)

$       50,739

Operating income (loss) margin

1.9%

4.2%

8.2%


(3.4)%

Adjusted operating income margin

4.2%

6.5%

9.4%


4.4%

Six months ended 12/31/17






Operating income

$       42,722

$       23,199

$       19,532

$      (25,247)

$       60,206

Non-GAAP adjustments (1)

11,392

6,075

866

7,047

25,380

Adjusted operating income

$       54,114

$       29,274

$       20,398

$      (18,200)

$       85,586

Operating income margin

8.0%

5.0%

9.3%


5.0%

Adjusted operating income margin

10.1%

6.4%

9.7%


7.1%







(1) See accompanying table of "Reconciliation of GAAP Results to Non-GAAP Measures"









Webcast Presentation
Hain Celestial will host a conference call and webcast today at 8:30 AM Eastern Time to discuss its results and business outlook. Additionally, the Company is scheduled to host an Investor Day on Wednesday, February 27, 2019. These events will be webcast, and any accompanying presentation will be available under the Investor Relations section of the Company's website at www.hain.com.

About The Hain Celestial Group, Inc.
The Hain Celestial Group (Nasdaq: HAIN), headquartered in Lake Success, NY, is a leading organic and natural products company with operations in North America, Europe, Asia and the Middle East. Hain Celestial participates in many natural categories with well-known brands that include Almond Dream®, Arrowhead Mills®, Bearitos®, Better Bean®, BluePrint®, Casbah®, Celestial Seasonings®, Clarks™, Coconut Dream®, Cully & Sully®, Danival®, DeBoles®, Earth's Best®, Ella's Kitchen®,  Europe's Best®, Farmhouse Fare™, Frank Cooper's®, Gale's®, Garden of Eatin'®, GG UniqueFiber™, Hain Pure Foods®, Hartley's®, Health Valley®, Imagine™, Johnson's Juice Co.™, Joya®, Lima®, Linda McCartney® (under license), MaraNatha®, Mary Berry (under license), Natumi®, New Covent Garden Soup Co.®, Orchard House®, Rice Dream®, Robertson's®, Rudi's Gluten-Free Bakery™, Rudi's Organic Bakery®, Sensible Portions®, Spectrum® Organics, Soy Dream®, Sun-Pat®, Sunripe®, SunSpire®, Terra®, The Greek Gods®, Tilda®, Walnut Acres®, WestSoy®, Yorkshire Provender®, Yves Veggie Cuisine® and William's™. The Company's personal care products are marketed under the Alba Botanica®, Avalon Organics®, Earth's Best®, JASON®, Live Clean® and Queen Helene® brands.

Safe Harbor Statement
Certain statements contained in this press release constitute "forward-looking statements" within the meaning of federal securities laws, including 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", "will", "remain", "potential", "can", "should", "could", "future" and similar expressions, or the negative of those expressions, or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. You can also identify forward-looking statements by discussions of the Company's strategic initiatives, including Project Terra, the Company's potential divestiture of its Hain Pure Protein business, the Company's Guidance for Fiscal Year 2019 and our future performance and results of operations.

Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, levels of activity, performance or achievements of the Company, or industry results, to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements, and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and may not be able to be realized. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). Such factors, include, among others, the Company's beliefs or expectations relating to the impact of competitive products, changes to the competitive environment, changes to consumer preferences, our ability to manage our supply chain effectively, changes in raw materials, freight, commodity costs and fuel, consolidation of customers, reliance on independent distributors, general economic and financial market conditions, risks associated with our international sales and operations, our ability to execute and realize cost savings initiatives, including, but not limited to, cost reduction initiatives under Project Terra and SKU rationalization plans, our ability to identify and complete acquisitions or divestitures and integrate acquisitions, the availability of organic and natural ingredients, the reputation of our brands and the other risks detailed from time-to-time in the Company's reports filed with the United States Securities and Exchange Commission, including the Annual Report on Form 10-K for the fiscal year ended June 30, 2018, and our quarterly reports. As a result of the foregoing and other factors, the Company cannot provide any assurance regarding future results, levels of activity and achievements of the Company, and neither the Company nor any person assumes responsibility for the accuracy and completeness of these statements. All forward-looking statements contained herein apply as of the date hereof or as of the date they were made and, except as required by applicable law, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflects changes in underlying assumptions or factors of new methods, future events or other changes.

Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP financial measures, including net sales adjusted for the impact of Foreign Exchange, Acquisitions and Divestitures and certain other items, including SKU rationalization, as applicable in each case, adjusted operating income, adjusted gross margin, adjusted net income, adjusted earnings per diluted share, 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 and six months ended December 31, 2018 and 2017 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 Operations presented in accordance with GAAP.

The Company defines Operating Free Cash Flow as cash provided by or used in operating activities from continuing operations (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 three and six months ended December 31, 2018 and 2017, Operating Free Cash Flow from continuing operations was calculated as follows:










Three Months Ended


Six Months Ended


12/31/2018


12/31/2017


12/31/2018


12/31/2017


(unaudited and dollars in thousands)









Cash flow provided by (used in) operating activities - continuing operations

$             17,240


$             29,472


$           (1,013)


$           28,390

Purchases of property, plant and equipment

(18,992)


(13,451)


(41,539)


(24,685)

Operating Free Cash Flow - continuing operations

$             (1,752)


$             16,021


$         (42,552)


$             3,705

The Company's Operating Free Cash Flow from continuing operations was negative $1.8 million for the three months ended December 31, 2018, a decrease of $17.8 million from the three months ended December 31, 2017.  The Company's Operating Free Cash Flow from continuing operations was negative $42.6 million for the six months ended December 31, 2018, a decrease of $46.3 million from the six months ended December 31, 2017. This decrease resulted primarily from a decrease in net loss adjusted for non-cash charges and increased capital expenditures in the current year, offset in part by cash provided by working capital accounts.

The Company believes presenting net sales at constant currency provides useful information to investors because it provides transparency to underlying performance in the Company's consolidated net sales by excluding the effect that foreign currency exchange rate fluctuations have on period-to-period comparability given the volatility in foreign currency exchange markets. To present this information for historical periods, current period net sales for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average monthly exchange rates in effect during the corresponding period of the prior fiscal year, rather than at the actual average monthly exchange rate in effect during the current period of the current fiscal year. As a result, the foreign currency impact is equal to the current year results in local currencies multiplied by the change in average foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year.

The Company provides net sales adjusted for constant currency, acquisitions and divestitures, and certain other items including SKU rationalization, as applicable in each case, to understand the growth rate of net sales excluding the impact of such items. The Company's management believes net sales adjusted for such items is useful to investors because it enables them to better understand the growth of our business from period-to-period.

The Company defines EBITDA as net (loss) income from continuing operations (a GAAP measure) before income taxes, net interest expense, depreciation and amortization, equity in net loss (income) of equity-method investees, stock-based compensation expense in connection with the Succession Plan, long-lived asset and intangible impairments and unrealized currency gains and losses. Adjusted EBITDA is defined as EBITDA before acquisition-related expenses, including integration and restructuring charges, and other non-recurring items. 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 a component of performance-based executive compensation.

For the three and six months ended December 31, 2018 and 2017, EBITDA and Adjusted EBITDA from continuing operations was calculated as follows:



















Three Months Ended 


Six Months Ended 


12/31/2018


12/31/2017


12/31/2018


12/31/2017


(unaudited and dollars in thousands)









Net (loss) income

$           (66,501)


$             47,103


$         (103,926)


$             66,949

Net (loss) income from discontinued operations

(37,223)


3,973


(51,547)


5,206

Net (loss) income from continuing operations

$           (29,278)


$             43,130


$           (52,379)


$             61,743









Provision (benefit) for income taxes

4,690


(17,690)


(4,793)


(10,206)

Interest expense, net

8,247


5,817


15,416


11,426

Depreciation and amortization

13,722


14,919


28,106


30,066

Equity in net loss (income) of equity-method investees

11


(194)


186


(205)

Stock-based compensation expense

1,774


4,158


1,565


7,322

Stock-based compensation expense in connection with
Chief Executive Officer Succession Agreement

117


-


429


-

Long-lived asset and intangibles impairment

19,473


3,449


23,709


3,449

Unrealized currency losses/(gains)

439


(286)


1,029


(3,705)

EBITDA

$             19,195


$             53,303


$             13,268


$             99,890

















Project Terra costs and other

9,872


4,069


20,205


8,919

Chief Executive Officer Succession Plan expense, net

10,031


-


29,272


-

Accounting review and remediation costs, net of insurance proceeds

920


4,451


4,334


3,093

Warehouse/manufacturing facility start-up costs

1,708


418


6,307


1,155

Plant closure related costs

1,490


700


3,319


700

SKU rationalization

1,530


-


1,530


-

Litigation and related expenses

122


-


691


-

Losses on terminated chilled desserts contract

-


2,143


-


3,615

Co-packer disruption

-


1,567


-


2,740

Regulated packaging change

-


1,007


-


1,007

Adjusted EBITDA

$             44,868


$             67,658


$             78,926


$           121,119

 

THE HAIN CELESTIAL GROUP, INC.

Consolidated Balance Sheets

 (in thousands) 










 December 31, 


 June 30, 




2018


2018

ASSETS

 (unaudited) 



Current assets:





Cash and cash equivalents

$               38,158


$              106,557


Restricted cash

34,304


-


Accounts receivable, net

240,520


252,708


Inventories

402,724


391,525


Prepaid expenses and other current assets

56,393


59,946


Current assets of discontinued operations

179,327


240,851


Total current assets

951,426


1,051,587

Property, plant and equipment, net

320,036


310,172

Goodwill

1,008,787


1,024,136

Trademarks and other intangible assets, net

473,534


510,387

Investments and joint ventures

19,318


20,725

Other assets

30,390


29,667


Total assets 

$          2,803,491


$           2,946,674

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:





Accounts payable

$             209,869


$              229,993


Accrued expenses and other current liabilities

159,588


116,001


Current portion of long-term debt

35,566


26,605


Current liabilities of discontinued operations

34,306


49,846


Total current liabilities

439,329


422,445

Long-term debt, less current portion

692,128


687,501

Deferred income taxes 

65,245


86,909

Other noncurrent liabilities

15,846


12,770

Total liabilities

1,212,548


1,209,625

Stockholders' equity:





Common stock

1,087


1,084


Additional paid-in capital

1,150,239


1,148,196


Retained earnings

774,405


878,516


Accumulated other comprehensive loss

(225,359)


(184,240)




1,700,372


1,843,556


Treasury stock

(109,429)


(106,507)


Total stockholders' equity

1,590,943


1,737,049


Total liabilities and stockholders' equity

$          2,803,491


$           2,946,674

 

THE HAIN CELESTIAL GROUP, INC.

 Consolidated Statements of Operations 

 (unaudited and in thousands, except per share amounts) 













Three Months Ended December 31,


Six Months Ended December 31,



2018


2017


2018


2017










Net sales


$              584,156


$              616,232


$         1,144,989


$         1,205,451

Cost of sales


469,883


482,282


931,122


948,113

Gross profit


114,273


133,950


213,867


257,338

Selling, general and administrative expenses


85,387


86,444


167,644


172,525

Amortization of acquired intangibles


3,860


4,572


7,765


9,146

Project Terra costs and other


9,872


4,069


20,205


8,919

Chief Executive Officer Succession Plan expense, net


10,148


-


29,701


-

Accounting review and remediation costs, net of insurance
proceeds


920


4,451


4,334


3,093

Long-lived asset and intangibles impairment


19,473


3,449


23,709


3,449

Operating (loss) income


(15,387)


30,965


(39,491)


60,206

Interest and other financing expense, net


8,817


6,479


16,522


12,761

Other expense/(income), net


373


(760)


973


(3,887)

(Loss) income from continuing operations before income taxes and equity in net loss (income) of equity-method investees


(24,577)


25,246


(56,986)


51,332

Provision (benefit) for income taxes


4,690


(17,690)


(4,793)


(10,206)

Equity in net loss (income) of equity-method investees


11


(194)


186


(205)

  Net (loss) income from continuing operations


$               (29,278)


$                43,130


$             (52,379)


$              61,743

  Net (loss) income from discontinued operations, net of tax


(37,223)


3,973


(51,547)


5,206

Net (loss) income


$               (66,501)


$                47,103


$           (103,926)


$              66,949










Net (loss) income per common share:









Basic net (loss) income per common share from continuing operations


$                   (0.28)


$                    0.42


$                 (0.50)


$                  0.59

Basic net (loss) income per common share from discontinued operations


(0.36)


0.04


(0.50)


0.05

  Basic net (loss) income per common share


$                   (0.64)


$                    0.45


$                 (1.00)


$                  0.65










Diluted net (loss) income per common share from continuing operations


$                   (0.28)


$                    0.41


$                 (0.50)


$                  0.59

Diluted net (loss) income per common share from discontinued operations


(0.36)


0.04


(0.50)


0.05

  Diluted net (loss) income per common share


$                   (0.64)


$                    0.45


$                 (1.00)


$                  0.64










Shares used in the calculation of net (loss) income per common share:







Basic


104,056


103,837


104,009


103,773

Diluted


104,056


104,440


104,009


104,379

 

THE HAIN CELESTIAL GROUP, INC.

 Consolidated Statements of Cash Flows  

 (unaudited and in thousands) 










Three Months Ended December 31,


Six Months Ended December 31,


2018


2017


2018


2017

CASH FLOWS FROM OPERATING ACTIVITIES








Net (loss) income

$           (66,501)


$            47,103


$         (103,926)


$            66,949

Net (loss) income from discontinued operations

(37,223)


3,973


(51,547)


5,206

Net (loss) income from continuing operations

(29,278)


43,130


(52,379)


61,743

Adjustments to reconcile net (loss) income from continuing operations to net cash provided by (used in) operating activities from continuing operations:








Depreciation and amortization

13,722


14,919


28,106


30,065

Deferred income taxes

(9,514)


(28,171)


(22,790)


(28,808)

Equity in net loss (income) of equity-method investees

11


(194)


186


(205)

Chief Executive Officer Succession Plan expense, net

10,031


-


29,272


-

Stock-based compensation, net

1,891


4,158


1,994


7,322

Long-lived asset and intangibles impairment

19,473


3,449


23,709


3,449

Other non-cash items, net

444


1,299


1,285


(1,760)

Increase (decrease) in cash attributable to changes in operating assets and liabilities:








Accounts receivable

2,226


2,023


6,583


(16,077)

Inventories

6,675


(34,945)


(17,472)


(63,131)

Other current assets

(3,123)


5,133


(1,765)


(3,889)

Other assets and liabilities

4,635


5,312


4,616


5,259

Accounts payable and accrued expenses

47


13,359


(2,358)


34,422

Net cash provided by (used in) operating activities - continuing operations

17,240


29,472


(1,013)


28,390

CASH FLOWS FROM INVESTING ACTIVITIES








Purchases of property and equipment

(18,992)


(13,451)


(41,539)


(24,685)

Acquisitions of businesses, net

-


(13,064)


-


(13,064)

Other

4,515


-


3,863


-

Net cash used in investing activities - continuing operations

(14,477)


(26,515)


(37,676)


(37,749)

CASH FLOWS FROM FINANCING ACTIVITIES








Borrowings under bank revolving credit facility

80,000


15,000


150,000


35,000

Repayments under bank revolving credit facility

(77,647)


(20,000)


(137,646)


(35,000)

Repayments under term loan

(3,750)


-


(7,500)


-

Funding of discontinued operations entities

11,159


7,511


(3,996)


(12,758)

Borrowings of other debt, net

6,918


5,675


8,627


13,912

Shares withheld for payment of employee payroll taxes

(1,943)


(4,588)


(2,922)


(6,685)

Net cash provided by (used in) financing activities - continuing operations

14,737


3,598


6,563


(5,531)

Effect of exchange rate changes on cash

(909)


706


(1,969)


3,765

CASH FLOWS FROM DISCONTINUED OPERATIONS








Cash provided by (used in) operating activities

14,055


15,392


(1,850)


(2,964)

Cash used in investing activities

(1,296)


(2,662)


(2,931)


(6,342)

Cash (used in) provided by financing activities

(11,206)


(7,562)


3,901


12,655

Net cash flows provided by (used in) discontinued operations

1,553


5,168


(880)


3,349

Net increase (decrease) in cash and cash equivalents and restricted cash

18,144


12,429


(34,975)


(7,776)

Cash and cash equivalents at beginning of period

59,899


126,787


113,018


146,992

Cash and cash equivalents and restricted cash at end of period

$            78,043


$          139,216


$            78,043


$          139,216

Less: cash and cash equivalents of discontinued operations

(5,581)


(13,285)


(5,581)


(13,285)

Cash and cash equivalents and restricted cash of continuing operations at end of period

$            72,462


$          125,931


$            72,462


$          125,931

 

THE HAIN CELESTIAL GROUP, INC.

 Reconciliation of GAAP Results to Non-GAAP Measures 

 (unaudited and in thousands, except per share amounts) 












Three Months Ended December 31,



2018 GAAP

Adjustments

2018 Adjusted


2017 GAAP

Adjustments

2017 Adjusted










Net sales


$           584,156

-

$           584,156


$           616,232

-

$           616,232

Cost of sales


469,883

(4,294)

465,589


482,282

(5,835)

476,447

Gross profit


114,273

4,294

118,567


133,950

5,835

139,785

Operating expenses (a) 


108,720

(20,029)

88,691


94,465

(4,151)

90,314

Project Terra costs and other


9,872

(9,872)

-


4,069

(4,069)

-

Chief Executive Officer Succession Plan expense, net


10,148

(10,148)

-


-

-

-

Accounting review and remediation costs, net of insurance proceeds


920

(920)

-


4,451

(4,451)

-

Operating (loss) income


(15,387)

45,263

29,876


30,965

18,506

49,471

Interest and other expense (income), net (b) 


9,190

(439)

8,751


5,719

286

6,005

Provision (benefit) for income taxes


4,690

1,462

6,152


(17,690)

27,751

10,061

  Net (loss) income from continuing operations


(29,278)

44,240

14,962


43,130

(9,531)

33,599

  Net (loss) income from discontinued operations, net of tax


(37,223)

37,223

-


3,973

(3,973)

-

Net (loss) income


(66,501)

81,463

14,962


47,103

(13,504)

33,599










Diluted net (loss) income per common share from continuing operations


(0.28)

0.43

0.14


0.41

(0.09)

0.32

Diluted net (loss) income per common share from discontinued operations


(0.36)

0.36

-


0.04

(0.04)

-

Diluted net (loss) income per common share


(0.64)

0.78

0.14


0.45

(0.13)

0.32










Detail of Adjustments:












Three Months Ended
December 31, 2018




Three Months Ended
December 31, 2017


Warehouse/manufacturing facility start-up costs



$                      1,708




$                         418


Plant closure related costs



1,056




700


SKU rationalization



1,530




-


Losses on terminated chilled desserts contract



-




2,143


Co-packer disruption



-




1,567


Regulated packaging change



-




1,007


Cost of sales



4,294




5,835











Gross profit



4,294




5,835











Intangibles impairment



17,900




-


Long-lived asset impairment charge associated with plant closure 



1,573




3,449


Litigation and related expenses



122




-


Plant closure related costs



434




-


Stock-based compensation acceleration associated with Board of Directors 



-




702


Operating expenses (a)



20,029




4,151











Project Terra costs and other



9,872




4,069


Project Terra costs and other



9,872




4,069











Chief Executive Officer Succession Plan expense, net



10,148




-


Chief Executive Officer Succession Plan expense, net



10,148




-











Accounting review and remediation costs, net of insurance proceeds



920




4,451


Accounting review and remediation costs, net of insurance proceeds



920




4,451











Operating income



45,263




18,506











Unrealized currency losses/(gains)



439




(286)


Interest and other expense (income), net (b) 



439




(286)











Income tax related adjustments



(1,462)




(27,751)


Benefit for income taxes



(1,462)




(27,751)











  Net income (loss) from continuing operations



$                    44,240




$                    (9,531)











(a)Operating expenses include amortization of acquired intangibles, selling, general, and administrative expenses and long-lived asset and intangibles impairment.

(b)Interest and other expenses (income), net include interest and other financing expenses, net and other (income)/expense, net.




 

THE HAIN CELESTIAL GROUP, INC.

 Reconciliation of GAAP Results to Non-GAAP Measures 

 (unaudited and in thousands, except per share amounts) 












Six Months Ended December 31,



2018 GAAP

Adjustments

2018 Adjusted


2017 GAAP

Adjustments

2017 Adjusted










Net sales


$        1,144,989

-

$        1,144,989


$        1,205,451

-

$        1,205,451

Cost of sales


931,122

(11,156)

919,966


948,113

(9,217)

938,896

Gross profit


213,867

11,156

225,023


257,338

9,217

266,555

Operating expenses (a) 


199,118

(24,834)

174,284


185,120

(4,151)

180,969

Project Terra costs and other


20,205

(20,205)

-


8,919

(8,919)

-

Chief Executive Officer Succession Plan expense, net


29,701

(29,701)

-


-


-

Accounting review and remediation costs, net of insurance proceeds


4,334

(4,334)

-


3,093

(3,093)

-

Operating (loss) income


(39,491)

90,230

50,739


60,206

25,380

85,586

Interest and other expense (income), net (b) 


17,495

(1,029)

16,466


8,874

3,705

12,579

(Benefit) provision for income taxes


(4,793)

14,241

9,448


(10,206)

28,442

18,236

  Net (loss) income from continuing operations


(52,379)

77,018

24,639


61,743

(6,767)

54,976

  Net (loss) income from discontinued operations, net of tax


(51,547)

51,547

-


5,206

(5,206)

-

Net (loss) income


(103,926)

128,565

24,639


66,949

(11,973)

54,976










Diluted net (loss) income per common share from continuing operations


(0.50)

0.74

0.24


0.59

(0.06)

0.53

Diluted net (loss) income per common share from discontinued operations

(0.50)

0.50

-


0.05

(0.05)

-

Diluted net (loss) income per common share


(1.00)

1.24

0.24


0.64

(0.11)

0.53










Detail of Adjustments:





















Six Months Ended
December 31, 2018




Six Months Ended
December 31, 2017


Warehouse/manufacturing facility start-up costs



$                      6,307




$                      1,155


Plant closure related costs



3,319




700


SKU rationalization



1,530




-


Losses on terminated chilled desserts contract



-




3,615


Co-packer disruption



-




2,740


Regulated packaging change



-




1,007


Cost of sales



11,156




9,217











Gross profit



11,156




9,217











Intangibles impairment



17,900




-


Long-lived asset impairment charge associated with plant closure 



5,809




3,449


Litigation and related expenses



691




-


Plant closure related costs



434




-


Stock-based compensation acceleration associated with Board of Directors 



-




702


Operating expenses (a)



24,834




4,151











Project Terra costs and other



20,205




8,919


Project Terra costs and other



20,205




8,919











Chief Executive Officer Succession Plan expense, net



29,701




-


Chief Executive Officer Succession Plan expense, net



29,701




-











Accounting review and remediation costs, net of insurance proceeds



4,334




3,093


Accounting review and remediation costs, net of insurance proceeds



4,334




3,093











Operating income



90,230




25,380











Unrealized currency losses/(gains)



1,029




(3,705)


Interest and other expense (income), net (b) 



1,029




(3,705)











Income tax related adjustments



(14,241)




(28,442)


Benefit for income taxes



(14,241)




(28,442)











  Net income (loss) from continuing operations



$                    77,018




$                    (6,767)











(a)Operating expenses include amortization of acquired intangibles, selling, general, and administrative expenses and long-lived asset and intangibles impairment.

(b)Interest and other expenses (income), net include interest and other financing expenses, net and other (income)/expense, net.



 

THE HAIN CELESTIAL GROUP, INC.





Net Sales Growth at Constant Currency





(unaudited and in thousands)


















Hain Consolidated


United Kingdom


Rest of World







 Net sales - Three months ended 12/31/18 

$              584,156


$         225,338


$           99,663







 Impact of foreign currency exchange 

10,193


7,141


3,052







 Net sales on a constant currency basis -
   Three months ended 12/31/18 

$              594,349


$         232,479


$         102,715



















Net sales - Three months ended 12/31/17

$              616,232


$         238,201


$         107,728







Net sales growth on a constant currency basis

(3.6)%


(2.4)%


(4.7)%




















Hain Consolidated


United Kingdom


Rest of World







 Net sales - Six months ended 12/31/18 

$           1,144,989


$         443,915


$         197,934







 Impact of foreign currency exchange 

13,793


8,519


5,275







 Net sales on a constant currency basis -
   Six months ended 12/31/18 

$           1,158,782


$         452,434


$         203,209



















Net sales - Six months ended 12/31/17

$           1,205,451


$         460,646


$         210,843







Net sales growth on a constant currency basis

(3.9)%


(1.8)%


(3.6)%



















Net Sales Growth at Constant Currency and Adjusted for Acquisitions, Divestitures and Other



















Hain Consolidated


United States


United Kingdom


Rest of World





 Net sales on a constant currency basis -
   Three months ended 12/31/18 

$              594,349


$         259,155


$         232,479


$         102,715

















Net sales - Three months ended 12/31/17

$              616,232


$         270,303


$         238,201


$         107,728





Acquisitions

1,774


-


1,774


-





Castle contract termination

(4,381)


-


(4,381)


-





Project Terra SKU rationalization

(11,051)


(9,708)


-


(1,343)





 Net sales on a constant currency basis adjusted for
   acquisitions, divestitures and other - Three months
   ended 12/31/17 

$              602,574


$         260,595


$         235,594


$         106,385





 Net sales growth on a constant currency
   basis adjusted for acquisitions, divestitures and other 

(1.4)%


(0.6)%


(1.3)%


(3.4)%


















Tilda


Hain Daniels


Ella's Kitchen


Hain Celestial
Europe


Hain Celestial
Canada


Hain Ventures

Net sales growth - Three months ended 12/31/18

2.1%


(8.1)%


(0.2)%


(0.4)%


(12.3)%


(16.8)%

    Impact of foreign currency exchange 

3.6%


2.8%


3.1%


3.2%


3.5%


0.0%

 Impact of acquisitions

0.0%


(1.0)%


0.0%


0.0%


0.0%


0.0%

 Impact of castle contract termination

0.0%


2.5%


0.0%


0.0%


0.0%


0.0%

 Impact of Project Terra SKU rationalization

0.0%


0.0%


0.0%


0.0%


1.8%


2.8%

 Net sales on a constant currency basis adjusted for
   acquisitions, divestitures and other - Three months
   ended 12/31/18 

5.7%


(3.8)%


2.9%


2.8%


(7.0)%


(14.0)%


























Hain Consolidated


United States


United Kingdom


Rest of World





 Net sales on a constant currency basis -
   Six months ended 12/31/18 

$           1,158,782


$         503,140


$         452,434


$         203,209

















Net sales - Six months ended 12/31/17

$           1,205,451


$         533,962


$         460,646


$         210,843





Acquisitions

4,335


-


4,335


-





Castle contract termination

(10,323)


-


(10,323)


-





Project Terra SKU rationalization

(21,889)


(19,414)


-


(2,475)





Net sales on a constant currency basis adjusted for
   acquisitions, divestitures and other - Six months
   ended 12/31/17

$           1,177,574


$         514,548


$         454,658


$         208,368





 Net sales growth on a constant currency
   basis adjusted for acquisitions, divestitures and other 

(1.6)%


(2.2)%


(0.5)%


(2.5)%


















Tilda


Hain Daniels


Ella's Kitchen


Hain Celestial Europe


Hain Celestial Canada


Hain Ventures

Net sales growth - Six months ended 12/31/18

2.8%


(6.3)%


4.0%


(0.2)%


(8.9)%


(17.2)%

    Impact of foreign currency exchange 

2.5%


1.7%


1.8%


2.2%


3.8%


0.0%

 Impact of acquisitions

0.0%


(1.2)%


0.0%


0.0%


0.0%


0.0%

 Impact of castle contract termination

0.0%


3.1%


0.0%


0.0%


0.0%


0.0%

 Impact of Project Terra SKU rationalization

0.0%


0.0%


0.0%


0.0%


1.5%


2.9%

 Net sales on a constant currency basis adjusted for
   acquisitions, divestitures and other - Six months
   ended 12/31/18 

5.3%


(2.7)%


5.8%


2.0%


(3.6)%


(14.3)%

 

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SOURCE The Hain Celestial Group, Inc.

James Langrock / Katie Turner, The Hain Celestial Group, Inc., 516-587-5000

 
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