Hain Celestial Announces Record First Quarter Fiscal Year 2016 Results
First Quarter Performance Highlights
- Record first quarter net sales of
$687.2 million , a 9% increase over the prior year period or, on a constant currency basis, an 11% increase over prior year adjusted net sales of$642.6 million . Net sales were negatively impacted by$24 million as a result of foreign exchange rate movements versus a year ago. - Record first quarter earnings per diluted share of
$0.30 , a 67% increase; adjusted earnings per diluted share of$0.37 , a 9% increase. Foreign currencies negatively impacted reported results by$0.01 per diluted share. - Operating income of
$57.5 million , 8.4% of net sales; adjusted operating income of$63.2 million , 9.2% of net sales.
"We began fiscal year 2016 with record first quarter net sales and earnings growth. Our diversified portfolio delivered strong growth with contribution from our
First Quarter 2016
The Company earned net income of
"We remain optimistic about our growth opportunities in fiscal 2016 and beyond. We expect to build momentum throughout the year across our global footprint through the strength of our diversified product portfolio and customer base while investing in our brands and gaining distribution in the important health and wellness category," concluded
Fiscal Year 2016 Guidance
The Company reiterated its annual guidance for fiscal year 2016:
- Total net sales range of
$2.97 billion to $3.11 billion , an increase of approximately 10% to 15% as compared to fiscal year 2015; - Earnings range of
$2.11 to $2.26 per diluted share, an increase of 12% to 20% as compared to fiscal year 2015.
Guidance is provided on a non-GAAP basis and excludes acquisition-related expenses, integration and restructuring charges, start-up costs, unrealized net foreign currency gains or losses, reserves for litigation matters and other non-recurring items, including any product recalls or market withdrawals, that have been or may be incurred during the Company's fiscal year 2016, which the Company will continue to identify as it reports its future financial results. Guidance excludes the impact of any future acquisitions.
Segment Results
The Company's operations are managed into the following segments:
The following is a summary of results for the three months ended
(dollars in thousands) |
United States |
United Kingdom |
Hain Pure Protein |
Rest of World |
Corporate/ |
Total |
|
NET SALES |
|||||||
Net sales - Three months ended 9/30/15 (1) |
$ 331,213 |
$ 165,354 |
$ 123,988 |
$ 66,633 |
$ - |
$ 687,188 |
|
Net sales - Three months ended 9/30/14 |
$ 336,915 |
$ 172,279 |
$ 70,670 |
$ 51,393 |
$ - |
$ 631,257 |
|
Non-GAAP Adjustments (2) |
$ 10,442 |
$ - |
$ - |
$ 928 |
$ - |
$ 11,370 |
|
Adjusted net sales - Three months ended 9/30/14 |
$ 347,357 |
$ 172,279 |
$ 70,670 |
$ 52,321 |
$ - |
$ 642,627 |
|
% change - FY'16 net sales vs. FY'15 adjusted net sales |
-4.6% |
-4.0% |
75.4% |
27.4% |
6.9% |
||
OPERATING INCOME |
|||||||
Three months ended 9/30/15 |
|||||||
Operating income |
$ 44,466 |
$ 10,204 |
$ 10,271 |
$ 2,095 |
$ (9,568) |
$ 57,468 |
|
Non-GAAP Adjustments (2) |
$ 2,097 |
$ 1,021 |
$ 45 |
$ 514 |
$ 2,093 |
$ 5,770 |
|
Adjusted operating income |
$ 46,563 |
$ 11,225 |
$ 10,316 |
$ 2,609 |
$ (7,475) |
$ 63,238 |
|
Adjusted operating income margin |
14.1% |
6.8% |
8.3% |
3.9% |
9.2% |
||
Three months ended 9/30/14 |
|||||||
Operating income |
$ 29,589 |
$ 5,595 |
$ 3,820 |
$ 635 |
$ (10,812) |
$ 28,827 |
|
Non-GAAP Adjustments (2) |
$ 22,803 |
$ 2,975 |
$ 140 |
$ 2,187 |
$ 1,870 |
$ 29,975 |
|
Adjusted operating income |
$ 52,392 |
$ 8,570 |
$ 3,960 |
$ 2,822 |
$ (8,942) |
$ 58,802 |
|
Adjusted operating income margin |
15.1% |
5.0% |
5.6% |
5.4% |
9.2% |
||
(1) There were no Non-GAAP adjustments to net sales for the three months ended 9/30/15 |
|||||||
(2) See accompanying table of "Reconciliation of GAAP Results to Non-GAAP Measures" |
Webcast
The
The
Safe Harbor Statement
Certain statements contained in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are predictions based on expectations and projections about future events, and are not statements of historical fact. You can identify forward-looking statements by the use of forward-looking terminology such as "plan", "continue", "expect", "anticipate", "intend", "predict", "project", "estimate", "likely", "believe", "might", "seek", "may", "remain", "potential", "can", "should", "could", "future" and similar expressions, or the negative of those expressions. These forward-looking statements include the Company's beliefs or expectations relating to (i) the Company's guidance for net sales and earnings per diluted share for fiscal year 2016; and (ii) the Company's opportunities and growth strategy and (iii) distribution opportunities. 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. Such factors include, among others, general economic and financial market conditions; competition; our ability to respond to changes and trends in customer and consumer demand, preferences and consumption; our reliance on third party distributors, manufacturers and suppliers; the consolidation or loss of a significant customer; our ability to introduce new products and improve existing products; availability and retention of key personnel; our ability to effectively integrate our acquisitions; our ability to successfully consummate any proposed divestitures; liabilities arising from potential product recalls, market withdrawals or product liability claims; outbreaks of diseases or food-borne illnesses; potential litigation; the availability of organic and natural ingredients; our ability to manage our supply chain effectively; changes in fuel, raw material and commodity costs; effects of climate change on our business and operations; our ability to offset input cost increases; the interruption, disruption or loss of operations at one or more of our manufacturing facilities; the loss of one or more of our independent co-packers; the disruption of our transportation systems; risks associated with expansion into countries in which we have no prior operating experience; risks associated with our international sales and operations, including foreign currency risks; impairment in the carrying value of our goodwill or other intangible assets; our ability to use our trademarks; reputational damage; changes in, or the failure to comply with, government laws and regulations; liabilities or claims with respect to environmental matters; our reliance on independent certification for our products; a breach of security measures; our reliance on our information technology systems; effects of general global capital and credit market issues on our liquidity and cost of borrowing; potential liabilities not covered by insurance; the ability of joint venture investments to successfully execute business plans; dilution in the value of our common shares; 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 operating income, adjusted income, adjusted income per diluted share, adjusted EBITDA (defined below) and operating free cash flow. The reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are presented in the tables "Reconciliation of GAAP Results to Non-GAAP Measures" for the three months ended
The Company defines adjusted EBITDA as net income (a GAAP measure) before income taxes, net interest expense, depreciation and amortization, impairment of long lived assets, equity in the earnings of non-consolidated affiliates, stock based compensation, acquisition-related expenses, including integration and restructuring charges, and other non-recurring items. The Company's management believes that this presentation provides useful information to management, analysts and investors regarding certain additional financial and business trends relating to its results of operations and financial condition. In addition, management uses this measure for reviewing the financial results of the Company and as a component of performance-based executive compensation.
For the three months ended
Three Months Ended |
||||
9/30/2015 |
9/30/2014 |
|||
(dollars in thousands) |
||||
Net Income |
$ 31,302 |
$ 18,855 |
||
Income taxes |
14,382 |
6,066 |
||
Interest expense, net |
5,716 |
6,092 |
||
Depreciation and amortization |
15,566 |
14,580 |
||
Equity in earnings of affiliates |
(84) |
(20) |
||
Stock based compensation |
3,269 |
2,939 |
||
Subtotal |
70,151 |
48,512 |
||
Adjustments (a) |
5,566 |
24,641 |
||
Adjusted EBITDA |
$ 75,717 |
$ 73,153 |
||
(a) The adjustments include all adjustments in the table "Reconciliation of |
||||
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 ended
Three Months Ended |
|||||||
9/30/2015 |
9/30/2014 |
||||||
(dollars in thousands) |
|||||||
Cash flow provided by operating activities |
$ |
5,785 |
$ |
2,614 |
|||
Purchases of property, plant and equipment |
(19,513) |
(13,260) |
|||||
Operating free cash flow |
$ |
(13,728) |
$ |
(10,646) |
Our operating free cash flow was negative
THE HAIN CELESTIAL GROUP, INC. |
|||||
Consolidated Balance Sheets |
|||||
(In thousands) |
|||||
September 30, |
June 30, |
||||
(Unaudited) |
|||||
ASSETS |
|||||
Current assets: |
|||||
Cash and cash equivalents |
$ 147,699 |
$ 166,922 |
|||
Accounts receivable, net |
330,221 |
320,197 |
|||
Inventories |
427,152 |
382,211 |
|||
Deferred income taxes |
20,978 |
20,758 |
|||
Prepaid expenses and other current assets |
38,914 |
42,931 |
|||
Total current assets |
964,964 |
933,019 |
|||
Property, plant and equipment, net |
361,797 |
344,262 |
|||
Goodwill, net |
1,142,257 |
1,136,079 |
|||
Trademarks and other intangible assets, net |
647,339 |
647,754 |
|||
Investments and joint ventures |
2,140 |
2,305 |
|||
Other assets |
33,679 |
33,851 |
|||
Total assets |
$ 3,152,176 |
$ 3,097,270 |
|||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||
Current liabilities: |
|||||
Accounts payable |
$ 236,434 |
$ 251,999 |
|||
Accrued expenses and other current liabilities |
94,671 |
79,167 |
|||
Current portion of long-term debt |
45,232 |
31,275 |
|||
Total current liabilities |
376,337 |
362,441 |
|||
Long-term debt, less current portion |
843,290 |
812,608 |
|||
Deferred income taxes |
146,135 |
145,297 |
|||
Other noncurrent liabilities |
4,789 |
5,237 |
|||
Total liabilities |
1,370,551 |
1,325,583 |
|||
Stockholders' equity: |
|||||
Common stock |
1,062 |
1,058 |
|||
Additional paid-in capital |
1,094,217 |
1,073,671 |
|||
Retained earnings |
828,816 |
797,514 |
|||
Accumulated other comprehensive loss |
(81,514) |
(42,406) |
|||
Subtotal |
1,842,581 |
1,829,837 |
|||
Treasury stock |
(60,956) |
(58,150) |
|||
Total stockholders' equity |
1,781,625 |
1,771,687 |
|||
Total liabilities and stockholders' equity |
$ 3,152,176 |
$ 3,097,270 |
THE HAIN CELESTIAL GROUP, INC. |
|||||
Consolidated Statements of Income |
|||||
(in thousands, except per share amounts) |
|||||
Three Months Ended |
|||||
2015 |
2014 |
||||
(Unaudited) |
(Unaudited) |
||||
Net sales |
$ 687,188 |
$ 631,257 |
|||
Cost of sales |
535,141 |
505,413 |
|||
Gross profit |
152,047 |
125,844 |
|||
Selling, general and administrative expenses |
86,254 |
90,924 |
|||
Amortization/impairment of acquired intangibles |
4,672 |
4,509 |
|||
Acquisition related expenses, restructuring and |
3,653 |
1,584 |
|||
Operating income |
57,468 |
28,827 |
|||
Interest and other expenses, net |
11,868 |
3,926 |
|||
Income before income taxes and equity in earnings of |
45,600 |
24,901 |
|||
Provision for income taxes |
14,382 |
6,066 |
|||
Equity in net (income) of equity-method investees |
(84) |
(20) |
|||
Net income |
$ 31,302 |
$ 18,855 |
|||
Net income per common share: * |
|||||
Basic |
$ 0.30 |
$ 0.19 |
|||
Diluted |
$ 0.30 |
$ 0.18 |
|||
Weighted average common shares outstanding: * |
|||||
Basic |
102,807 |
100,682 |
|||
Diluted |
104,258 |
102,656 |
|||
* Share and per share amounts for the three months ended September 30, 2014 have been retroactively |
|||||
adjusted to reflect a two-for-one stock split of our common stock in the form of a 100% stock dividend. |
THE HAIN CELESTIAL GROUP, INC. |
||||||
Reconciliation of GAAP Results to Non-GAAP Measures |
||||||
(in thousands, except per share amounts) |
||||||
Three Months Ended September 30, |
||||||
2015 GAAP |
Adjustments |
2015 Adjusted |
2014 Adjusted |
|||
(Unaudited) |
||||||
Net sales |
$ 687,188 |
$ - |
$ 687,188 |
$ 642,627 |
||
Cost of sales |
535,141 |
(1,683) |
533,458 |
491,370 |
||
Gross profit |
152,047 |
1,683 |
153,730 |
151,257 |
||
Selling, general and administrative expenses |
86,254 |
(434) |
85,820 |
87,946 |
||
Amortization/impairment of acquired intangibles |
4,672 |
- |
4,672 |
4,509 |
||
Acquisition related expenses, restructuring and |
3,653 |
(3,653) |
- |
- |
||
Operating income |
57,468 |
5,770 |
63,238 |
58,802 |
||
Interest and other expenses, net |
11,868 |
(4,463) |
7,405 |
6,302 |
||
Income before income taxes and equity in earnings of equity-method investees |
45,600 |
10,233 |
55,833 |
52,500 |
||
Provision for income taxes |
14,382 |
3,376 |
17,758 |
17,843 |
||
Equity in net (income) of equity-method investees |
(84) |
- |
(84) |
(20) |
||
Net income |
$ 31,302 |
$ 6,857 |
$ 38,159 |
$ 34,677 |
||
Net income per common share: * |
$ 0.30 |
$ 0.07 |
$ 0.37 |
$ 0.34 |
||
Basic |
$ 0.30 |
$ 0.07 |
$ 0.37 |
$ 0.34 |
||
Diluted |
||||||
Weighted average common shares outstanding: * |
||||||
Basic |
102,807 |
102,807 |
100,682 |
|||
Diluted |
104,258 |
104,258 |
102,656 |
|||
* Share and per share amounts for the three months ended September 30, 2014 have been retroactively adjusted to reflect a two-for-one stock split of our common stock in the form of a 100% stock dividend |
||||||
FY 2016 |
FY 2015 |
|||||
Impact on Income |
Impact on Income Tax Provision |
Impact on Income |
Impact on Income Tax Provision |
|||
(Unaudited) |
||||||
Nut butter recall |
$ - |
$ - |
$ 10,442 |
$ 3,968 |
||
European non-dairy beverage withdrawal |
- |
- |
928 |
316 |
||
Net sales |
- |
- |
11,370 |
4,284 |
||
UK factory start-up costs |
743 |
149 |
2,732 |
567 |
||
US warehouse consolidation |
426 |
162 |
- |
- |
||
Acquisition related integration costs |
514 |
155 |
127 |
26 |
||
Nut butter recall |
- |
- |
9,925 |
3,772 |
||
European non-dairy beverage withdrawal |
- |
- |
1,259 |
428 |
||
Cost of sales |
1,683 |
466 |
14,043 |
4,793 |
||
Tilda fire insurance recovery costs |
230 |
46 |
- |
- |
||
Celestial Seasonings packaging design costs |
204 |
78 |
- |
- |
||
Recall expenses |
- |
- |
2,477 |
940 |
||
Litigation expenses |
- |
- |
245 |
93 |
||
Acquisition related integration costs |
- |
- |
256 |
77 |
||
Selling, general and administrative expenses |
434 |
124 |
2,978 |
1,110 |
||
Acquisition related fees and expenses, integration and restructuring charges, including severance |
3,653 |
1,380 |
1,303 |
495 |
||
Contingent consideration expense |
- |
- |
281 |
- |
||
Acquisition related expenses, restructuring and |
3,653 |
1,380 |
1,584 |
495 |
||
Unrealized currency impacts |
4,463 |
1,406 |
3,190 |
1,065 |
||
Gain on disposal of investment held for sale |
- |
- |
(311) |
- |
||
Gain on pre-existing investment in HPPC |
- |
- |
(5,334) |
- |
||
Interest accretion and other items, net |
- |
- |
79 |
30 |
||
Interest and other expenses, net |
4,463 |
1,406 |
(2,376) |
1,095 |
||
Total adjustments |
$ 10,233 |
$ 3,376 |
$ 27,599 |
$ 11,777 |
||
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SOURCE The
Pat Conte/Mary Anthes, The Hain Celestial Group, Inc., 516-587-5000