UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
————————————
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of The Securities Exchange Act of
1934
Date
of Report (Date of earliest event reported): September 5,
2006
————————————
THE
HAIN CELESTIAL GROUP, INC.
(Exact
name of registrant as specified in its charter)
————————————
|
Delaware
|
0-22818
|
22-3240619
|
|
(State
or other jurisdiction
of
incorporation)
|
(Commission
File Number)
|
(I.R.S.
Employer Identification No.)
|
58
South Service Road, Melville, NY 11747
(Address
of principal executive offices)
Registrant’s
telephone number, including area code: (631) 730-2200
Not
Applicable
(Former
name or former address, if changed since last report)
————————————
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[
]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
[
]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Item
2.02.
Results of Operations and Financial Condition.
The
following information is being furnished under Item 2.02, “Results of Operations
and Financial Condition.” This information shall not be deemed “filed” for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), or otherwise subject to the liabilities of that Section, or
incorporated by reference into any filing under the Securities Act of 1933,
as
amended, or the Exchange Act, except as shall be expressly set forth by specific
reference in such a filing.
On
September 5, 2006, The Hain Celestial Group, Inc. issued the press release
attached as Exhibit 99.1 and incorporated by reference herein, announcing
financial results for its fiscal quarter and year ended June 30,
2006.
Item
9.01.
Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are filed herewith:
|
Exhibit
No.
|
Description
|
|
99.1
|
Press
Release dated September 5, 2006.
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: September
5, 2006
|
THE
HAIN CELESTIAL GROUP, INC.
|
|
(Registrant)
|
|
By:
/s/
Ira J. Lamel
|
|
Name: Ira J. Lamel
|
|
Title: Executive Vice President and
|
|
Chief Financial Officer
|
Exhibit
99.1
|
Contact:
|
Ira
Lamel/Mary Anthes
|
Jeremy
Fielding/David Lilly
|
|
The
Hain Celestial Group, Inc.
|
Kekst
and Company
|
|
|
631-730-2200
|
212-521-4800
|
THE
HAIN CELESTIAL GROUP ANNOUNCES RECORD
FOURTH
QUARTER AND FISCAL YEAR 2006 RESULTS
Sales
Grew 29% in Fourth Quarter
And
19% for Full Year
GAAP
Net Income $0.22 in Fourth Quarter
And
$0.95 for Full Year
Adjusted
Net Income $0.24 in Fourth Quarter
And
$1.02 for Full Year
Announces
Sale of Biomarché
Provides
2007 Guidance
Revenue
Growth 19% to 22%
Earnings
Growth 13% to 17%
Melville,
NY, September 5, 2006 —The
Hain
Celestial Group, Inc. (NASDAQ: HAIN), a leading natural and organic food and
personal care products company, today reported record results for the fourth
quarter and fiscal year ended June 30, 2006. The Company reported fourth quarter
net sales of $195 million, a 29% increase compared with $151 million in the
prior year period. GAAP net income for the fourth quarter, including special
charges of $0.02 per share, was $0.22 per share compared to ($0.07) per share
in
the prior year quarter. Adjusted net income in the 2006 quarter was $0.24 per
share versus an adjusted $0.20 per share in the prior year period.
Full
fiscal year net sales reached a record $739 million, a 19% increase over prior
year sales of $620 million. GAAP net income for the year, including special
charges of $0.07 per share, reached $0.95 per share versus the prior fiscal
year
GAAP net income of $0.59 per share. Adjusted net income for fiscal year 2006
was
a record $1.02 per share compared with an adjusted $0.89 per share in the prior
year.
The
Company reported that GAAP earnings in the 2006 periods were reduced by $0.01
in
the fourth quarter and $0.05 for the full year by charges arising from recently
adopted provisions of Statement of Financial Accounting Standards No. 123R,
“Share-Based Payment” and by $0.01 in the quarter and $0.02 for the full year
for the completion of its 2005 stock keeping unit (“SKU”) rationalization
program. Excluding these charges, the Company reported adjusted earnings of
$0.24 per share in the fourth quarter this year as compared to $0.20 in the
prior year period, and $1.02 per share for the full year compared to $0.89
in
the prior year. In the prior year’s quarter and full year, the Company incurred
charges for its 2005 SKU rationalization program and the acceleration of the
vesting of stock options.
“During
fiscal year 2006 we capitalized on growth opportunities with our superior
brands, effective marketing and sales programs, greater distribution and
operating efficiencies, while meeting the increased demand for natural and
organic products throughout our operations in the United States, Canada,
continental Europe and, as of May, the United Kingdom,” said Irwin D. Simon,
President and Chief Executive Officer of Hain Celestial. “We started the year
with an adjusted sales base of $590 million due to our divestitures, SKU
rationalization program and other initiatives implemented to streamline our
business. In spite of a difficult economy with rising input costs, our approach
is working and it has allowed us to accelerate our growth, increase our margins
and introduce new, innovative products while raising our service levels to
achieve some of the highest sales in the history of the Company.”
The
Company reported adjusted gross margin of 28.4% in the fourth quarter versus
adjusted gross margin of 27.2% in the prior year quarter. Hain Pure Protein,
the
Company’s antibiotic-free chicken joint venture, continued to reduce
consolidated margins by 0.8% in the quarter. Also in the fourth quarter, gross
margin was reduced by another 0.6% from the lower yield in the Company’s
recently acquired lower margin fresh prepared foods operations in the United
Kingdom. These units are expected to continue to reduce gross margins by similar
amounts in the future. For the full year after adjusting for Hain Pure Protein
and the United Kingdom operation, adjusted gross margin was 30.2% versus 29%
for
the prior year. Gross margin improvements came from the successful SKU
rationalization program with its cost savings and acceleration of sales of
better performing SKUs, operating efficiencies, and from the Company’s
successful implementation of price increases when necessary. These improvements
were made despite the increasing costs for ingredients, petroleum, and health
care.
“As
we
continue to be a leading innovator in the natural and organic market, we have
entered into strategic alliances that we call incubator opportunities, where
we
can participate in a growing segment without too much investment. This strategy
allows us to determine if the category and the expansion opportunity deserve
more investment where we can work synergistically with our existing operations
to enhance our overall business. During fiscal year 2006 we entered into several
such alliances including Hain Pure Protein, Yeo Hiap Sing and now Paws for
a
Cause, LLC, an organic pet food products company," said Irwin
Simon.
Selling,
general and administrative expense for the fourth quarter was 17.8% versus
an
adjusted 18.9% in the prior year quarter. For the full year selling, general
and
administrative expense was 19.6% versus an adjusted 20.2% in the prior
year.
Interest
and other expense in the quarter totaled $2.2 million versus $1.3 million in
the
prior year due to increased market rates and higher borrowings for acquisitions.
In May 2006, the Company completed the private placement of $150 million 10-year
fixed rate senior notes at 5.98%.
Average
diluted shares outstanding increased by 2.9 million shares for the fourth
quarter over the prior year quarter, an increase of 7.7% over the prior year.
The increase in shares was caused by the issuance of shares in acquisitions
completed during fiscal year 2006 and incremental shares included in the
computation due to the higher market price of the Company’s stock. The higher
share count reduced earnings per share in the current year quarter by $0.02
when
compared to the prior year quarter.
The
Company’s balance sheet remains strong with $174 million in working capital and
a current ratio of 3:1 at June 30, 2006. Debt as a percentage of equity was
24.7% with total equity at $616 million. The number of days in the Company’s
cash conversion cycle was 71. Operating
free cash flow for the year increased $10 million to $38
million.
Fiscal
Year 2006 Accomplishments
The
Company cited several accomplishments during fiscal year 2006:
| · |
Solid
sales and earnings growth with increased consumption driven by margin
enhancement and continued focus on cash conversion cycle and other
financial metrics
|
| · |
Benefited
from SKU rationalization program with multiple new products and expanded
distribution
|
| · |
Implemented
price increase effective October
2005
|
| · |
Secured
new, enhanced credit facility and long-term, fixed rate private note
financing
|
| · |
New
Alliances included Hain Pure Protein featuring FreeBird™ antibiotic-free
and organic chicken; Yeo Hiap Seng for sourcing and product development
in
Asia and the United States; Heritage Foods license agreement on
refrigerated non-dairy beverages and Paws for a Cause organic pet
food
products
|
| · |
Acquired
Spectrum Organic Products and Para Labs
|
| · |
Established
Hain Holdings UK Ltd. for the acquisition of a fresh prepared foods
business and the Linda McCartney® brand (under
license)
|
| · |
New
sponsorships included Earth’s Best® with PBS Kids and Sesame Street, Terra
Chips® as The Official Chip of Madison Square Garden, Jason Natural
Products® Pink Hope Lip Temptations in support of the Susan G. Komen
Breast Cancer Foundation and Celestial Seasonings® continued partnership
with The
Heart Truth
and
WomenHeart to raise awareness of heart disease with The Red Dress
campaign
|
Sale
of Biomarché
The
Company also announced the sale of Biomarché, its Belgian-based provider of
fresh organic fruits and vegetables, to Pro Natura, a French company
specializing in the distribution of organic produce. Terms of the transaction
were not disclosed.
“As
the
Company continues to expand in Europe, we plan to focus on fresh prepared foods
and higher margin branded products. The sale of Biomarché organic products
representing $18 million in sales that were non-branded and lower margin should
increase our overall margins in Europe. This divestiture enables us to
streamline our business and focus on our core strategy of natural and organic
brands and products that complement our growth plan in Europe,” said Irwin
Simon.
Fiscal
Year 2007 Guidance
The
Company announced fiscal year 2007 sales guidance of $880 million to $900
million, an increase of 19% to 22% over 2006 sales and earnings per share of
$1.15 to $1.19 increasing 13% to 17% on existing business.
“As
we
look to 2007, we implemented a price increase with our new fiscal year and
are
already seeing a continuation of the positive trends that drove our success
this
past year - including strong general consumer and customer interest in natural
and organic products; more and more demand for Hain Celestial’s brands; and a
full program of exciting new products which we believe will further build our
business in the year to come,” concluded Irwin Simon.
Impact
of Financial Accounting Standards Board Statement No. 123R
Statement
of Financial Accounting Standards No. 123R (“Statement 123R”) requires that
contractual commitments to issue stock options be recorded as an expense whether
or not the options have been granted. The Company’s employment agreement with
its Chief Executive Officer contains such a commitment; however the options
which were to be awarded in July 2005 and July 2006 have not been granted,
principally due to an insufficient number of shares available under the
Company’s Long Term Incentive and Stock Award Plans. Under Statement 123R,
regardless of whether the options are ever granted, either currently or in
the
future, a non-cash accounting expense is required to be recorded during the
year
leading up to the anticipated grant date under the contract. This period is
defined in Statement 123R as the “requisite service period.” As the requisite
service period related to the July 2005 un-granted options was completed on
June
30, 2005, prior to the required implementation of Statement 123R, no expense
has
been recorded for the July 2005 un-granted options. The requisite service period
related to the July 2006 un-granted options was completed during the fiscal
year
ended June 30, 2006, and as a result, $3.2 million of compensation expense
was
earned during the fiscal year with $0.8 million, or $0.01 per share, earned
in
the fourth quarter. Earlier quarters of the year have been adjusted to reflect
charges during the requisite service period of $0.8 million in the first
quarter, $0.5 million in the second quarter, and $1.1 million in the third
quarter. Each of these adjustments has been determined using the Black-Scholes
model to value the un-granted options measured at the end of each quarter.
The
Company did not grant any stock options or restricted stock during fiscal year
2006.
Webcast
and Upcoming Events
Hain
Celestial will host a conference call and live webcast at 4:30 PM Eastern
Daylight Time to review its fourth quarter and fiscal year 2006 results. On
September 7, 2006 the Company is scheduled to present at the Prudential Equity
Group, LLC Back to School Consumer Conference. These events will be available
under the Investor Relations section of the Company’s website at
www.hain-celestial.com.
The
Hain Celestial Group
The
Hain
Celestial Group (NASDAQ: HAIN), headquartered in Melville, NY, is a leading
natural and organic food and personal care products company in North America
and
Europe. Hain Celestial participates in almost all natural food categories with
well-known brands that include Celestial Seasonings®, Terra Chips®, Garden of
Eatin’®, Health Valley®, WestSoy®, Earth’s Best®, Arrowhead Mills®, DeBoles®,
Hain Pure Foods®, FreeBird™, Hollywood®, Spectrum Naturals®, Spectrum
Essentials®, Walnut Acres Organic™, Imagine Foods®, Rice Dream®, Soy Dream®,
Rosetto®, Ethnic Gourmet®, Yves Veggie
Cuisine®,
Linda McCartney®, Lima®, Grains Noirs®, Natumi®, JASON®, Zia® Natural Skincare
and Queen Helene®. For more information, visit www.hain-celestial.com.
Safe
Harbor Statement
This
press
release contains forward-looking statements within and constitutes a "Safe
Harbor" statement under the Private Securities Litigation Act of 1995. Except
for the historical information contained herein, the matters discussed in this
press release are forward-looking statements that involve known and unknown
risks and uncertainties, which could cause our actual results to differ
materially from those described in the forward-looking statements. These risks
include but are not limited to general economic and business conditions; the
ability to implement business and acquisition strategies and integrate
acquisitions; competition; retention of key personnel; compliance with
government regulations and other risks detailed from time-to-time in the
Company's reports filed with the Securities and Exchange Commission, including
the report on Form 10-K for the fiscal year ended June 30, 2005. The
forward-looking statements made in this press release are current as of the
date
of this press release, and the Company does not undertake any obligation to
update forward-looking statements.
|
THE
HAIN CELESTIAL GROUP, INC.
|
|||||
|
Consolidated
Balance Sheets
|
|||||
|
(In
thousands)
|
|||||
|
June
30,
|
June
30,
|
||||
|
2006
|
2005
|
||||
|
ASSETS
|
|||||
|
Current
assets:
|
|||||
|
Cash
and cash equivalents
|
$
|
48,875
|
|
$
24,139
|
|
|
Trade
receivables, net
|
80,764
|
67,148
|
|||
|
Inventories
|
105,883
|
76,497
|
|||
|
Recoverable
income taxes
|
-
|
2,575
|
|||
|
Deferred
income taxes
|
2,986
|
5,671
|
|||
|
Other
current assets
|
21,968
|
18,164
|
|||
|
Total
current assets
|
260,476
|
194,194
|
|||
|
Property,
plant and equipment, net
|
119,830
|
88,204
|
|||
|
Goodwill,
net
|
421,002
|
350,833
|
|||
|
Trademarks
and other intangible assets, net
|
61,626
|
61,010
|
|||
|
Other
assets
|
14,750
|
12,895
|
|||
|
Total
assets
|
$
|
877,684
|
|
$
707,136
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||
|
Current
liabilities:
|
|||||
|
Accounts
payable and accrued expenses
|
$
|
81,894
|
|
$
65,922
|
|
|
Income
taxes payable
|
3,083
|
1,139
|
|||
|
Current
portion of long-term debt
|
1,065
|
2,791
|
|||
|
Total
current liabilities
|
86,042
|
69,852
|
|||
|
Deferred
income taxes
|
19,086
|
16,723
|
|||
|
Long-term
debt, less current portion
|
151,229
|
92,271
|
|||
|
Minority
interest
|
4,926
|
-
|
|||
|
Total
liabilities
|
261,283
|
178,846
|
|||
|
Stockholders'
equity:
|
|||||
|
Common
stock
|
396
|
375
|
|||
|
Additional
paid-in capital
|
446,319
|
402,645
|
|||
|
Retained
earnings
|
165,034
|
127,967
|
|||
|
Treasury
stock
|
(12,745
|
(12,745
|
)
|
||
|
Foreign
currency translation adjustment
|
17,397
|
10,048
|
|||
|
Total
stockholders' equity
|
616,401
|
528,290
|
|||
|
Total
liabilities and stockholders' equity
|
$
|
877,684
|
|
$
707,136
|
|
|
THE
HAIN CELESTIAL GROUP, INC.
|
|
Consolidated
Statements of Operations
|
|
(in
thousands, except per share amounts)
|
|
Three
Months Ended June 30,
|
Twelve
Months Ended June 30,
|
|||||||||||
|
2006
|
2005
|
2006
|
2005
|
|||||||||
|
Net
sales
|
$
|
194,790
|
$
|
151,349
|
$
|
738,557
|
$
|
619,967
|
||||
|
Cost
of Sales
|
143,136
|
118,066
|
525,205
|
449,010
|
||||||||
|
Gross
profit
|
51,654
|
33,283
|
213,352
|
170,957
|
||||||||
|
SG&A
expenses
|
35,455
|
35,671
|
147,878
|
132,769
|
||||||||
|
Operating
income
|
16,199
|
(2,388
|
)
|
65,474
|
38,188
|
|||||||
|
Interest
expense and other expenses
|
2,152
|
1,287
|
5,911
|
3,677
|
||||||||
|
Income
before income taxes
|
14,047
|
(3,675
|
)
|
59,563
|
34,511
|
|||||||
|
Income
tax provision
|
5,272
|
(987
|
)
|
22,496
|
12,641
|
|||||||
|
Net
income
|
$
|
8,775
|
$
|
(2,688
|
)
|
$
|
37,067
|
$
|
21,870
|
|||
|
Basic
per share amounts
|
$
|
0.23
|
$
|
(0.07
|
)
|
$
|
0.98
|
$
|
0.60
|
|||
|
Diluted
per share amounts
|
$
|
0.22
|
$
|
(0.07
|
)
|
$
|
0.95
|
$
|
0.59
|
|||
|
Weighted
average common shares outstanding:
|
||||||||||||
|
Basic
|
38,561
|
36,524
|
37,643
|
36,407
|
||||||||
|
Diluted
|
40,107
|
37,240
|
38,912
|
37,153
|
||||||||
|
THE
HAIN CELESTIAL GROUP, INC.
|
|
Consolidated
Statements of Operations With Adjustments
|
|
Reconciliation
of GAAP Results to Non-GAAP Presentation
|
|
(in
thousands, except per share amounts)
|
|
Three
Months Ended June 30,
|
||||||||||||||||
|
2006
GAAP
|
Adjustments
|
2006
Adjusted
|
2005
Adjusted (3)
|
|||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
Net
sales
|
$
|
194,790
|
$
|
194,790
|
$
|
151,349
|
||||||||||
|
Cost
of Sales
|
143,136
|
$
|
(907
|
)
|
(1)
|
|
142,229
|
110,240
|
||||||||
|
Gross
profit
|
51,654
|
907
|
52,561
|
41,109
|
||||||||||||
|
SG&A
expenses
|
35,455
|
(794
|
)
|
(2)
|
|
34,661
|
28,642
|
|||||||||
|
Operating
income
|
16,199
|
1,701
|
17,900
|
12,467
|
||||||||||||
|
Interest
expense and other expenses
|
2,152
|
2,152
|
1,287
|
|||||||||||||
|
Income
before income taxes
|
14,047
|
1,701
|
15,748
|
11,180
|
||||||||||||
|
Income
tax provision
|
5,272
|
663
|
5,935
|
3,813
|
||||||||||||
|
Net
income
|
$
|
8,775
|
$
|
1,038
|
$
|
9,813
|
$
|
7,367
|
||||||||
|
Basic
per share amounts
|
$
|
0.23
|
$
|
0.02
|
$
|
0.25
|
$
|
0.20
|
||||||||
|
Diluted
per share amounts
|
$
|
0.22
|
$
|
0.02
|
$
|
0.24
|
$
|
0.20
|
||||||||
|
Weighted
average common shares outstanding:
|
||||||||||||||||
|
Basic
|
38,561
|
38,561
|
36,524
|
|||||||||||||
|
Diluted
|
40,107
|
40,107
|
37,240
|
|||||||||||||
|
Fiscal
Year Ended June 30,
|
||||||||||||||||
|
2006
GAAP
|
Adjustments
|
2006
Adjusted
|
2005
Adjusted (3)
|
|||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
Net
sales
|
$
|
738,557
|
$
|
738,557
|
$
|
619,967
|
||||||||||
|
Cost
of Sales
|
525,205
|
$
|
(907
|
)
|
(1)
|
|
524,298
|
439,984
|
||||||||
|
Gross
profit
|
213,352
|
907
|
214,259
|
179,983
|
||||||||||||
|
SG&A
expenses
|
147,878
|
(3,231
|
)
|
(2)
|
|
144,647
|
125,002
|
|||||||||
|
Operating
income
|
65,474
|
4,138
|
69,612
|
54,981
|
||||||||||||
|
Interest
expense and other expenses
|
5,911
|
5,911
|
3,677
|
|||||||||||||
|
Income
before income taxes
|
59,563
|
4,138
|
63,701
|
51,304
|
||||||||||||
|
Income
tax provision
|
22,496
|
1,614
|
24,110
|
18,188
|
||||||||||||
|
Net
income
|
$
|
37,067
|
$
|
2,524
|
$
|
39,591
|
$
|
33,116
|
||||||||
|
Basic
per share amounts
|
$
|
0.98
|
$
|
0.07
|
$
|
1.05
|
$
|
0.91
|
||||||||
|
Diluted
per share amounts
|
$
|
0.95
|
$
|
0.07
|
$
|
1.02
|
$
|
0.89
|
||||||||
|
Weighted
average common shares outstanding:
|
||||||||||||||||
|
Basic
|
37,643
|
37,643
|
36,407
|
|||||||||||||
|
Diluted
|
38,912
|
38,912
|
37,153
|
|||||||||||||
|
(1)
The adjustments of $907 (fourth quarter and full year) represent
additional charges at completion of the
|
|
2005
SKU Rationalization Program.
|
|
(2)
The adjustments of $794 (fourth quarter) and $3,231 (full year)
represent
charges in connection with the requirements
|
|
under
SFAS No. 123R to record compensation when there is a contractual
requirement to grant stock options, whether
|
|
or
not such options have been granted. No options have been granted
since
2004 under the contractual requirement.
|
|
(3)
Adjustments in 2005 consisted of $10,943 (fourth quarter) and
$12,143
(full year) for SKU rationalization charges
|
|
and
$3,912 (fourth quarter) and $4,650 (full year)for non-cash compensation,
principally all of which resulted from
|
|
the
acceleration of the vesting of stock
options.
|