Press Release

Hain Celestial Reports Second Quarter Fiscal Year 2018 Financial Results
Net Sales Increased 5% to $775.2 Million, or 2% on a Constant Currency Basis
Gross Margin of 18.6%; Adjusted Gross Margin of 20.2%
Operating Income of $36.3 Million; Adjusted Operating Income of $62.1 Million
Earnings per Diluted Share ("EPS") of $0.45; Adjusted EPS Increased 28% to $0.41
Explores Divestiture of Hain Pure Protein

LAKE SUCCESS, N.Y., Feb. 7, 2018 /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, 2017.

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

"We are pleased with the increase in net sales and profitability across our international business segments for the second quarter along with contributions from various brands in the United States, which reflects our well-diversified geographic portfolio.  Our team remains intently focused on generating the growth we believe we are capable of achieving from our brand building efforts," said Irwin D. Simon, Founder, President and Chief Executive Officer of Hain Celestial.  "Throughout our organization, we continue to make progress on our long-term strategic priorities and Project Terra cost savings initiatives.  As we look to reduce complexities across our business and drive greater efficiencies, our team has already identified specific opportunities to simplify our brand portfolio near-term to enhance stockholder value, positioning Hain Celestial for future growth."

FINANCIAL HIGHLIGHTS1

Second Quarter Results Summary

  • Net sales increased 5% to $775.2 million compared to the prior year period, or 2% on a constant currency basis, primarily reflecting mid-single digit net sales increases from our United Kingdom, Canada and Europe and Hain Pure Protein operating segments, partially offset by a low single digit decrease from the United States segment.
  • Net sales increased 1%, compared to the prior year period, when adjusted for foreign exchange and acquisitions, divestitures, and certain other items2.
  • Gross margin of 18.6%; adjusted gross margin of 20.2%.
  • Operating income of $36.3 million; adjusted operating income of $62.1 million.
  • Net income of $47.1 million, an increase of 73% over the prior year period; adjusted net income of $42.7 million, an increase of 30% over the prior year period.
  • EBITDA increased 2% to $61.0 million compared to $59.6 million in the prior year period; adjusted EBITDA increased 19% to $82.7 million compared to $69.5 million in the prior year period.
  • EPS of $0.45 compared to $0.26 in the prior year period; adjusted EPS of $0.41 compared to $0.32 in the prior year period.

SECOND QUARTER OPERATING SEGMENT HIGHLIGHTS

Hain Celestial United States
Net sales for Hain Celestial United States decreased 3% over the prior year period to $270.3 million; net sales adjusted for acquisitions, divestitures and certain other items2 decreased 5%.  Growth from the Tea, Pure Personal Care and Better-For-You Baby platforms including Celestial Seasonings®, Terra®, Garden of Eatin®, Alba Botanica®, Avalon Organics®, Live Clean® and Earth's Best® brands was offset by declines from Sensible Portions®, Spectrum® and The Greek Gods® brands in Better-For-You Snacking, Better-For-You Pantry and Fresh Living platforms, despite growth from MaraNatha® and Arrowhead Mills® brands.  In addition, the declines were being driven by the strategic decision to no longer support certain lower margin stock keeping units ("SKUs") in order to reduce complexity and increase gross margins as the Company continues its focus on its top 500 SKUs in the United States.  The prior year second quarter results were also negatively impacted by inventory realignment at certain customers.  Segment operating income was $21.9 million, a 45% decrease over the prior year period, and adjusted operating income was $31.0 million, a 24% decrease over the prior year period, driven primarily by higher marketing investments, increased freight and commodity costs and unfavorable mix.  The financial results for the current period as well as the prior year second quarter results exclude the United Kingdom operations of the Ella's Kitchen® brand, thereby eliminating net sales of approximately $22.4 million and $19.5 million, respectively, as these net sales are now reported as part of the United Kingdom reportable segment.

Hain Celestial United Kingdom 
Net sales for Hain Celestial United Kingdom increased 12% to $238.2 million over the prior year period, reflecting 13% growth from Tilda®, 15% growth from Ella's Kitchen® and 12% growth from Hain Daniels.  Hain Daniels net sales, adjusted for both foreign exchange and acquisitions and divestitures2, increased 4% over the prior year period, with strong brand performance from Hartley's®, Linda McCartney's® and Cully & Sully® brands.  Net sales for Hain Celestial United Kingdom, on a consolidated basis, was up 5% over the prior year period, adjusted for both foreign exchange and acquisitions and divestitures2.  Segment operating income of $13.6 million increased 46% over the prior year period, and adjusted operating income of $16.3 million increased 41% over the prior year period driven by strong contribution from the Hain Daniels brands.  As discussed above, the financial results for the current period as well as the prior year second quarter results includes the United Kingdom operations of the Ella's Kitchen® brand, which was previously reported as part of the United States reportable segment. 

Hain Pure Protein 
Net sales for Hain Pure Protein increased 4% to $159.0 million over the prior year period, reflecting a 15% increase from Plainville Farms®, 17% from FreeBird® and 7% from Empire® Kosher brands, partially offset by a decrease in private label sales.  Segment operating income increased to $5.3 million or 50% from the prior year period of $3.5 million, and adjusted operating income increased 256% to $12.6 million due to improvements in operating expenses across the business.

Rest of World 
Net sales for Rest of World increased 12% to $107.7 million over the prior year period, or by 6% on a constant currency basis.  Net sales for Hain Celestial Canada grew 6%, driven by strong performance from Yves Veggie Cuisine®, Sensible Portions® and Live Clean® brands.  Net sales for Hain Celestial Europe grew 5%, driven by the Joya® and Natumi® brands as well as own-label products.  Segment operating income increased to $10.5 million, a 41% increase over the prior year period, and adjusted operating income increased 55% to $11.4 million over the prior year period.

Explores Divestiture of Hain Pure Protein
The Company announced it is exploring the divestiture of its Hain Pure Protein business.  The Company cannot give any assurances that this will result in any specific action or regarding the outcome or timing of any action.  The Company does not intend to comment further regarding the potential divestiture at this time.

Fiscal Year 2018 Guidance 
The Company reiterated its net sales outlook and updated its Adjusted EPS and Adjusted EBITDA guidance for fiscal year 2018 to take into account continued investment in marketing and brand awareness, primarily in the United States, as well as recent freight and certain commodity price headwinds:

  • Net sales of $2.967 billion to $3.036 billion, an increase of approximately 4% to 6% as compared to fiscal year 2017.
  • Adjusted EBITDA of $340 million to $355 million, an increase of approximately 24% to 29% as compared to fiscal year 2017.
  • Adjusted earnings per diluted share of $1.64 to $1.75, which includes an $.08 to $.09 benefit due to tax reform, an increase of approximately 34% to 43% as compared to fiscal year 2017.

Guidance, where adjusted, is provided on a non-GAAP basis, which excludes acquisition-related expenses, integration and restructuring charges, start-up costs, unrealized net foreign currency gains or losses, accounting review and remediation costs and other non-recurring items that have been or may be incurred during the Company's fiscal year 2018, which the Company will continue to identify as it reports its future financial results. Guidance excludes the impact of any future acquisitions.

The Company has not reconciled its expected adjusted EBITDA to net income or adjusted earnings per diluted share to earnings per share under "Fiscal Year 2018 Guidance" 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.

Effective July 1, 2017, due to changes to the Company's internal management and reporting structure, the United Kingdom operations of the Ella's Kitchen® brand, which was previously included within the United States reportable segment, is included in the United Kingdom reportable segment.  The prior period segment information contained below has been adjusted to reflect the Company's new operating and reporting structure.

 















(unaudited and dollars in thousands)

United
States

United
Kingdom

Hain Pure
Protein

Rest of
World

Corporate/
Other

Total

NET SALES







Net sales - Three months ended 12/31/17

$     270,303

$     238,201

$     158,972

$     107,728

$                 -

$     775,204

Net sales - Three months ended 12/31/16

$     278,640

$     212,312

$     152,979

$       96,068

$                 -

$     739,999

% change - FY'18 net sales vs. FY'17 net sales

(3.0)%

12.2%

3.9%

12.1%


4.8%








OPERATING INCOME







Three months ended 12/31/17







Operating income

$       21,861

$       13,598

$         5,328

$       10,535

$      (15,029)

$       36,293

Non-GAAP adjustments (1)

9,109

2,740

7,287

866

5,791

25,793

Adjusted operating income

$       30,970

$       16,338

$       12,615

$       11,401

$        (9,238)

$       62,086

Operating income margin

8.1%

5.7%

3.4%

9.8%


4.7%

Adjusted operating income margin

11.5%

6.9%

7.9%

10.6%


8.0%








Three months ended 12/31/16







Operating income

$       39,928

$         9,321

$         3,541

$         7,477

$      (18,867)

$       41,400

Non-GAAP adjustments (1)

668

2,251

-

(110)

7,113

9,922

Adjusted operating income

$       40,596

$       11,572

$         3,541

$         7,367

$      (11,754)

$       51,322

Operating income margin

14.3%

4.4%

2.3%

7.8%


5.6%

Adjusted operating income margin

14.6%

5.5%

2.3%

7.7%


6.9%





































(unaudited and dollars in thousands)

United
States

United
Kingdom

Hain Pure
Protein

Rest of
World

Corporate/
Other

Total

NET SALES







Net sales - Six months ended 12/31/17 

$     533,962

$     460,646

$     278,029

$     210,843

$                 -

$  1,483,480

Net sales - Six months ended 12/31/16

$     532,872

$     432,463

$     269,648

$     186,480

$                 -

$  1,421,463

% change - FY'18 net sales vs. FY'17 net sales

0.2%

6.5%

3.1%

13.1%


4.4%








OPERATING INCOME







Six months ended 12/31/17







Operating income

$       42,722

$       23,199

$         7,570

$       19,532

$      (25,247)

$       67,776

Non-GAAP adjustments (1)

11,392

6,075

8,629

866

7,047

34,009

Adjusted operating income

$       54,114

$       29,274

$       16,199

$       20,398

$      (18,200)

$     101,785

Operating income margin

8.0%

5.0%

2.7%

9.3%


4.6%

Adjusted operating income margin

10.1%

6.4%

5.8%

9.7%


6.9%








Six months ended 12/31/16







Operating income

$       58,722

$       17,140

$         2,523

$       12,532

$      (35,766)

$       55,151

Non-GAAP adjustments (1)

6,194

3,754

-

(110)

13,534

23,372

Adjusted operating income

$       64,916

$       20,894

$         2,523

$       12,422

$      (22,232)

$       78,523

Operating income margin

11.0%

4.0%

0.9%

6.7%


3.9%

Adjusted operating income margin

12.2%

4.8%

0.9%

6.7%


5.5%








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

 

Webcasts and Upcoming 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 present at the CAGNY 2018 Conference on Tuesday, February 20, 2018 at 5:00 PM Eastern Time. These events will be webcast, and the accompanying presentations 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 Celestial Seasonings®, Earth's Best®, Ella's Kitchen®, Terra®, Garden of Eatin'®, Sensible Portions®, Health Valley®, Arrowhead Mills®, MaraNatha®, SunSpire®, DeBoles®, Casbah®, Rudi's Organic Bakery®, Gluten Free Café™, Hain Pure Foods®, Spectrum®, Spectrum Essentials®, Walnut Acres Organic®, Imagine®, Almond Dream®, Rice Dream®, Soy Dream®, WestSoy®, The Greek Gods®, BluePrint®, FreeBird®, Plainville Farms®, Empire®, Kosher Valley®, Yves Veggie Cuisine®, Better Bean™, Europe's Best®, Cully & Sully®, New Covent Garden Soup Co.®, Yorkshire Provender™, Johnson's Juice Co.®, Farmhouse Fare®, Hartley's®, Sun-Pat®, Gale's®, Clarks™, Robertson's®, Frank Cooper's®, Linda McCartney®, Lima®, Danival®, Happy®, Joya® Natumi®, GG UniqueFiber®, Tilda®, JASON®, Avalon Organics®, Alba Botanica®, Live Clean® 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  
Certain statements contained in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are predictions based on expectations and projections about future events and are not statements of historical fact.  You can identify forward-looking statements by the use of forward-looking terminology such as "plan", "continue", "expect", "anticipate", "intend", "predict", "project", "estimate", "likely", "believe", "might", "seek", "may", "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 facts.  You can also identify forward-looking statements by discussions of the Project Terra strategic initiatives, the Company's potential divestiture of its Hain Pure Protein business, and our future performance and results of operations. Such 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 (i) the Company's guidance for Fiscal Year 2018; (ii) the Company's ability to generate growth; (iii) the potential divestiture of the Hain Pure Protein business, and (iv) the Company's ability to execute Project Terra initiatives for future growth and simplify its brand portfolio to enhance value; 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, 2017, 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 currency, acquisitions and divestitures and certain other items, as applicable in each case, adjusted operating income, adjusted gross margin, 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 months ended December 31, 2017 and 2016 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 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 three months and six months ended December 31, 2017 and 2016, operating free cash flow was calculated as follows:

 












Three Months Ended


Six Months Ended



12/31/17


12/31/16


12/31/17


12/31/16



(unaudited and dollars in thousands)











Cash flow provided by operating activities

$44,864


$103,308


$25,426


$116,127


Purchases of property, plant and equipment

(16,114)


(14,172)


(31,027)


(28,725)


Operating free cash flow

$28,750


$  89,136


$ (5,601)


$  87,402

 

The Company's operating free cash flow was $28.8 million for the three months ended December 31, 2017, a decrease of $60.4 million from the three months ended December 31, 2016.  The Company's operating free cash flow was negative $5.6 million for the six months ended December 31, 2017, a decrease of $93.0 million from the six months ended December 31, 2016.  The decrease in operating free cash flow was primarily attributable to an increase in inventories and accounts receivable.

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, 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 income (a GAAP measure) before income taxes, net interest expense, depreciation and amortization, equity in earnings of equity method investees, stock based compensation expense and unrealized currency gains.  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 months and six months ended December 31, 2017 and 2016, EBITDA and Adjusted EBITDA was calculated as follows:  

 


Three Months Ended 


Six Months Ended


12/31/2017


12/31/2016


12/31/2017


12/31/2016


(unaudited and dollars in thousands)

Net Income

$         47,103


$   27,185


$         66,949


$   35,789

(Benefit)/provision for income taxes

(16,369)


10,509


(7,899)


11,271

Interest expense, net

5,827


4,426


11,447


8,780

Depreciation and amortization

17,346


16,948


34,972


34,168

Equity in net income of equity method investees

(194)


(38)


(205)


(222)

Stock based compensation expense

4,158


2,531


7,322


5,235

Long-lived asset impairment

3,449


-


3,449


-

Unrealized currency gains and losses

(287)


(1,984)


(3,706)


(3,277)

EBITDA

61,033


59,577


112,329


91,744

















Acquisition related expenses, restructuring, and integration charges, and other

4,797


108


10,643


1,516

Accounting review and remediation costs, net of insurance proceeds

4,451


7,005


3,093


12,966

Losses on terminated chilled desserts contract

2,142


-


3,614


-

U.K. and HPP start-up costs

2,381


-


3,464


-

Discontinuation of Round Hill Brand

2,177


-


2,177


-

HPP Network Distribution Redesign 

1,952


-


1,952


-

Co-packer disruption

1,567


-


2,740


-

Regulated packaging change

1,007


-


1,007


-

Plant closure related costs

700


1,804


700


1,804

HPP Feed Formulation Test

471


-


471


-

Recall and other related costs

-


397


-


809

SKU rationalization

-


160


-


5,359

U.K. deferred synergies due to CMA Board decision

-


447


-


918

Adjusted EBITDA

$         82,678


$   69,498


$       142,190


$ 115,116

 

THE HAIN CELESTIAL GROUP, INC.

Consolidated Balance Sheets

 (in thousands) 










December 31, 2017


June 30, 2017




 (unaudited) 









ASSETS





Current assets:





Cash and cash equivalents

$                139,216


$                146,992


Accounts receivable, net

274,728


248,436


Inventories

502,372


427,308


Prepaid expenses and other current assets

62,994


52,045



Total current assets

979,310


874,781







Property, plant and equipment, net

386,077


370,511

Goodwill


1,083,696


1,059,981

Trademarks and other intangible assets, net

583,911


573,268

Investments and joint ventures

19,301


18,998

Other assets

35,042


33,565



Total assets 

$             3,087,337


$             2,931,104







LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:





Accounts payable

$                263,395


$                222,136


Accrued expenses and other current liabilities

112,677


108,514


Current portion of long-term debt

25,021


9,844



Total current liabilities

401,093


340,494







Long-term debt, less current portion

742,125


740,304

Deferred income taxes 

98,127


121,475

Other noncurrent liabilities

23,446


15,999



Total liabilities

1,264,791


1,218,272







Stockholders' equity:





Common stock

1,084


1,080


Additional paid-in capital

1,145,042


1,137,724


Retained earnings

935,771


868,822


Accumulated other comprehensive loss

(153,351)


(195,479)


  Subtotal

1,928,546


1,812,147


Treasury stock

(106,000)


(99,315)



Total stockholders' equity

1,822,546


1,712,832



Total liabilities and stockholders' equity

$             3,087,337


$             2,931,104

 

THE HAIN CELESTIAL GROUP, INC.

 Consolidated Statements of Income 

 (unaudited and in thousands, except per share amounts) 













Three Months Ended December 31,


Six Months Ended December 31,



2017


2016


2017


2016



















Net sales


$            775,204


$            739,999


$         1,483,480


$         1,421,463

Cost of sales


630,933


601,606


1,207,606


1,173,203

Gross profit


144,271


138,393


275,874


248,260










Selling, general and administrative expenses


90,372


85,187


181,093


170,154

Amortization of acquired intangibles


4,909


4,693


9,820


9,421

Acquisition related expenses, restructuring and integration charges


4,797


108


10,643


568

Accounting review and remediation costs, net of insurance proceeds


4,451


7,005


3,093


12,966

Long-lived asset impairment


3,449


-


3,449


-

Operating income


36,293


41,400


67,776


55,151










Interest and other financing expenses, net


6,513


5,097


12,828


10,178

Other (income)/expense, net


(760)


(1,353)


(3,897)


(1,865)

Income before income taxes and equity-method investees


30,540


37,656


58,845


46,838










(Benefit)/provision for income taxes


(16,369)


10,509


(7,899)


11,271

Equity in net income of equity-method investees


(194)


(38)


(205)


(222)

Net income


$              47,103


$              27,185


$              66,949


$              35,789










Net income per common share:









Basic


$                  0.45


$                  0.26


$                  0.65


$                  0.35

Diluted


$                  0.45


$                  0.26


$                  0.64


$                  0.34










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









Basic


103,837


103,597


103,773


103,532

Diluted


104,440


104,204


104,379


104,225

 

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,



2017 GAAP

Adjustments

2017 Adjusted


2016 GAAP

Adjustments

2016 Adjusted



















Net sales


$            775,204

$                       -

$            775,204


$            739,999

$                       -

$            739,999

Cost of sales


630,933

(12,396)

618,537


601,606

(693)

600,913

Gross profit


144,271

12,396

156,667


138,393

693

139,086

Operating expenses (a) 


98,730

(4,148)

94,582


89,880

(2,115)

87,765

Acquisition related expenses, restructuring and
  integration charges


4,797

(4,797)

-


108

(108)

-

Accounting review and remediation costs, net of
  insurance proceeds


4,451

(4,451)

-


7,005

(7,005)

-

Operating Income


36,293

25,793

62,086


41,400

9,921

51,321

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


5,753

286

6,039


3,744

1,984

5,728

(Benefit)/provision for income taxes


(16,369)

29,931

13,562


10,509

2,215

12,724

Net income


47,103

(4,424)

42,679


27,185

5,722

32,907

Earnings per share - diluted


0.45

(0.04)

0.41


0.26

0.05

0.32



















Detail of Adjustments:

















Three Months Ended
December 31, 2017




Three Months Ended
December 31, 2016











Losses on terminated chilled desserts contract



$                  2,142




$                         -


U.K. and HPP Start-up costs



2,381




-


Inventory costs for products discontinued or having
  redesigned packaging



1,007




160


Discontinuation of Round Hill Brand



2,177




-


Recall and other related costs



-




(110)


U.K. deferred synergies due to CMA Board decision



-




179


Plant closure related costs



700




464


Co-packer disruption



1,567




-


HPP feed formulation test



471




-


HPP network distribution redesign 



1,952




-


Cost of sales



12,396




693











Gross profit



12,396




693











Plant closure related costs



-




1,340


U.K. deferred synergies due to CMA Board decision



-




268


Recall and other related costs



-




507


Stock Compensation Acceleration



699




-


Long-lived asset impairment charge associated with
  plant closure



3,449




-


Operating expenses (a)



4,148




2,115











Acquisition related fees and expenses, integration and restructuring charges, including severance



4,797




108


Acquisition related expenses, restructuring and
integration charges



4,797




108




















Accounting review and remediation costs



4,451




7,005


Accounting review and remediation costs, net of
insurance proceeds



4,451




7,005











Operating income



25,793




9,921











Unrealized currency (gains) and losses



(286)




(1,984)


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



(286)




(1,984)











Income tax related adjustments (c)



(29,931)




(2,215)


(Benefit)/provision for income taxes



(29,931)




(2,215)











Net income



$                 (4,424)




$                  5,722











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

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

(c) Included within the income tax related adjustments is the impact of the U.S. tax legislation enacted in December 2017.  These tax law changes resulted in a net income tax benefit of $24.1
     million, consisting of a $29.3 million reduction in the Company's net deferred tax liabilities as a result of the lowering of the U.S. corporate income tax rate, partially offset by an estimated
     $5.2 million transition tax imposed on the deemed repatriation of deferred foreign income.

 

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,



2017 GAAP

Adjustments

2017 Adjusted


2016 GAAP

Adjustments

2016 Adjusted



















Net sales


$          1,483,480

$                      -

$          1,483,480


$          1,421,463

$                      -

$          1,421,463

Cost of sales


1,207,606

(16,124)

1,191,482


1,173,203

(6,263)

1,166,940

Gross profit


275,874

16,124

291,998


248,260

6,263

254,523

Operating expenses (a) 


194,362

(4,148)

190,214


179,575

(3,574)

176,001

Acquisition related expenses, restructuring and
  integration charges


10,643

(10,643)

-


568

(568)

-

Accounting review and remediation costs, net of
  insurance proceeds


3,093

(3,093)

-


12,966

(12,966)

-

Operating Income


67,776

34,009

101,785


55,151

23,371

78,522

Interest and other expenses, net (b) 


8,931

3,705

12,636


8,313

3,277

11,590

(Benefit)/provision for income taxes


(7,899)

30,903

23,004


11,271

8,071

19,342

Net income


66,949

(600)

66,349


35,789

12,023

47,812

Earnings per share - diluted


0.64

(0.01)

0.64


0.34

0.12

0.46








































Six Months Ended
December 31, 2017




Six Months Ended
December 31, 2016











Losses on terminated chilled desserts contract



$                 3,614




$                      -


U.K. and HPP Start-up costs



3,464




-


Inventory costs for products discontinued or having
  redesigned packaging



1,007




5,359


Discontinuation of Round Hill Brand



2,177




-


Recall and other related costs



-




73


U.K. deferred synergies due to CMA Board decision



-




367


Plant closure related costs



700




464


Co-packer disruption



2,740




-


HPP feed formulation test



471




-


HPP network distribution redesign 



1,952




-


Cost of sales



16,124




6,263











Gross profit



16,124




6,263











Plant closure related costs



-




1,340


U.K. deferred synergies due to CMA Board decision



-




551


Recall and other related costs



-




736


Tilda Fire Insurance Recovery Costs and other
  Setup/Integration Costs



-




947


Stock compensation acceleration



699




-


Long-lived asset impairment charge associated with
  plant closure



3,449




-


Operating expenses (a)



4,148




3,574











Acquisition related fees and expenses, integration and
   restructuring charges, including severance



10,643




568


Acquisition related expenses, restructuring and
  integration charges



10,643




568




















Accounting review and remediation costs, net of
  insurance proceeds



3,093




12,966


Accounting review and remediation costs, net of insurance proceeds



3,093




12,966











Operating income



34,009




23,371











Unrealized currency (gains) and losses



(3,705)




(3,277)


Interest and other expenses, net (b) 



(3,705)




(3,277)











Income tax related adjustments (c)



(30,903)




(8,071)


(Benefit)/provision for income taxes



(30,903)




(8,071)











Net income



$                  (600)




$               12,023











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

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

(c) Included within the income tax related adjustments is the impact of the U.S. tax legislation enacted in December 2017.  These tax law changes resulted in a net income tax benefit of $24.1
     million, consisting of a $29.3 million reduction in the Company's net deferred tax liabilities as a result of the lowering of the U.S. corporate income tax rate, partially offset by an estimated
     $5.2 million transition tax imposed on the deemed repatriation of deferred foreign income.

 

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 12/31/17 

$           775,204


$           238,201


$           107,728



 Impact of foreign currency exchange 

(21,148)


(14,987)


(6,161)



 Net sales on a constant currency basis -
   Three months ended 12/31/17 

$           754,056


$           223,214


$           101,567











Net sales - Three months ended 12/31/16

$           739,999


$           212,312


$             96,068



Net sales growth on a constant currency basis
   

1.9%


5.1%


5.7%
























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 12/31/17

$           754,056


$           270,303


$           223,214


$           101,567









Net sales - Three months ended 12/31/16

$           739,999


$           278,640


$           212,312


$            96,068

Acquisitions

4,102


-


3,899


203

Divestitures

(5,279)


(1,986)


(3,293)


-

SKU Rationalization

(4,362)


(4,362)


-


-

Inventory Realignment

13,514


13,514


-


-

 Net sales on a constant currency basis adjusted
  for acquisitions, divestitures and other - Three
  months ended 12/31/16                   

$           747,974


$           285,806


$           212,918


$            96,271

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

0.8%


(5.4)%


4.8%


5.5%










Hain Daniels


Hain Celestial
Canada


Hain Celestial
Europe



Net sales growth - Three months ended 12/31/17

11.6%


11.2%


14.9%



   Impact of foreign currency exchange 

(7.2)%


(5.4)%


(9.5)%



  Impact of acquisitions

(2.6)%


0.0%


0.0%



  Impact of divestitures

2.2%


0.0%


0.0%



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

4.0%


5.8%


5.3%



 

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.

­­2 Refer to "Net Sales Growth at Constant Currency and Adjusted for Acquisitions, Divestitures and Other" provided herein.

 

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SOURCE The Hain Celestial Group, Inc.

James Langrock/Mary Anthes, The Hain Celestial Group, Inc. 516-587-5000