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): February 1,
2007
————————————
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
February 1, 2007, 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 ended December 31, 2006.
Item
9.01.
Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are filed herewith:
|
Exhibit
No.
|
Description
|
|
99.1
|
Press
Release dated February 1, 2007.
|
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: February
1, 2007
|
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
|
|
|
631-730-2220
|
212-521-4800
|
THE
HAIN CELESTIAL GROUP ANNOUNCES RECORD SECOND QUARTER
SALES
AND EARNINGS HIGHEST IN COMPANY HISTORY
COMPANY
RAISES EARNINGS GUIDANCE TO $1.16-$1.21
Sales
Increased 24% to $230.9 Million
GAAP
Net Income Grew 20% to $14.8 Million
Adjusted
EPS Increased 15% to $0.38
Melville,
NY, February 1, 2007 —The
Hain
Celestial Group, Inc. (NASDAQ: HAIN), a leading natural and organic food and
personal care products company, today reported results for the second quarter
ended December 31, 2006. The Company reported net sales of $230.9 million,
a 24%
increase compared with $186.2 million in the prior year second quarter. GAAP
net
income for the second quarter was $14.8 million, or $0.36 per diluted share,
a
20% increase over the prior year’s $12.3 million, or $0.32 per diluted share.
Adjusted earnings for the quarter totaled $0.38 per share on adjusted net income
of $15.6 million.
The
Company successfully completed the previously announced start-up phase of the
new production lines at its West Chester Frozen Foods Facility, and incurred
the
final start-up costs, consistent with its previous estimate of $0.6 million
pre-tax, or $0.01 per share. The Company also incurred a non-cash mark-to-market
charge of $0.7 million pre-tax, or $0.01 per share, to reflect its contractual
obligation for ungranted stock options at fair value in accordance with SFAS
No.
123R. These options remain ungranted and therefore remain subject to
mark-to-market adjustments as was first reported by the Company with its fiscal
year 2006 results.
“I
am
pleased with our performance this quarter. We continue to see robust sales
and
strong consumption from our Garden of Eatin’®, Earth’s Best®, Arrowhead Mills®,
Rice Dream®, Imagine® and Health Valley® soups, Ethnic Gourmet™, Westbrae®, Yves
Veggie Cuisine® and Spectrum® brands as well as significant contributions from
our personal care brands, Hain Celestial Canada and Hain Celestial Europe,
including Hain Celestial United Kingdom,” said Irwin D. Simon, President and
Chief Executive Officer of Hain Celestial. “The increasing scale and diversity
of our business continues to provide the Company with a balanced portfolio
of
markets and categories that result in a stable base of
sales
and
earnings that reflect the growth of the natural and organic category. At the
same time, we are maintaining our focus on continually improving efficiencies.”
The
Company reported gross margin of 30.6% in the second quarter, compared to 31.2%
in the prior year’s second quarter. In order to compare gross margin performance
against the prior year’s comparable quarter, the Company reported that adjusted
gross margin for the current quarter was 31.9% when excluding the final start-up
costs at its West Chester Frozen Foods Facility and the Company’s lower margin
business in the UK. The 70 basis points margin improvement was achieved despite
increasing input costs and the challenging selling conditions of the unusually
warm weather throughout the quarter impacting the Company’s Celestial Seasonings
tea brand.
Selling,
general and administrative expense for the second quarter was 19.4% of sales
in
the current year quarter compared to 19.9% in the prior year. Adjusted for
the
SFAS No. 123R charges for ungranted stock options, selling, general and
administrative expense was 19.1% in the current year versus 19.6% in the prior
year quarter. The Company continues to benefit from its increased scale and
disciplined strategy for building effective marketing programs.
Interest
expense in the second quarter was $2.3 million versus $1.3 million in the prior
year quarter and interest income was $0.9 million this year versus $0.2 million
last year. The higher level of interest expense was attributable to the $150
million of 10-year 5.98% Senior Notes issued in May 2006, which was in part
offset by interest earned on excess cash balances.
The
Company’s effective tax rate for the quarter was 38.6% versus 37.9% in the prior
year quarter.
Average
diluted shares outstanding in the quarter were 41.2 million, an increase of
2.8
million shares, or 7%, over the second quarter of the prior year, and 1.2
million shares, or 3%, higher than in the immediately preceding first quarter
of
fiscal 2007. The increase resulted from additional shares issued for the
exercise of employee stock options and higher equivalent shares included in
the
earnings per diluted share calculation resulting from the Company’s higher share
price. In announcing full year guidance in September 2006, the Company had
anticipated an average diluted share count of 40.5 million for the full fiscal
2007 year.
The
Company’s balance sheet remains strong with $214.5 million in working capital
and a current ratio of 2.9 at December 31, 2006. Debt as a percentage of equity
was 23.3% with equity at $651.9 million. The number of days in the
Company’s
cash conversion cycle was 67 compared to 71 days in the prior year period.
Operating free cash flow was $61.0 million for the trailing twelve months ended
December 31, 2006 versus $23.5 million in the comparable period of the prior
year.
“The
broad
distribution of our natural and organic food and personal care products into
varied channels in North America, Europe and the United Kingdom, alongside
our
effectiveness in executing our grocery and international businesses, allows
us
to continue to expand our growth in sales and earnings. These results were
achieved despite unusually warm weather in the United States, which challenged
our Celestial Seasonings® tea brand this past quarter,” added Irwin Simon.
“I
am
particularly excited about the strategic opportunities from our most recent
acquisitions of Avalon Natural Products and certain assets of Haldane Foods.
These latest additions to our growing portfolio, with the synergistic
opportunities they bring, will aid in our continued drive to achieve further
margin efficiencies, general and administrative cost savings and to improve
our
return on equity. Avalon Organics® and Alba Botanica® are premier brands that
complement our natural and organic personal care products. This acquisition
demonstrates our commitment to and solidifies our position in the fast-growing
personal care category. Haldane Foods provides us with critical mass in the
meat-free category, building upon our Linda McCartney® brand. This acquisition
establishes a manufacturing base for our non-dairy brands along with Haldane’s
soy-based products in the United Kingdom. These acquisitions strengthen our
portfolio of brands to meet the increasing consumer needs for natural and
organic products across multiple categories,” concluded Irwin Simon.
Fiscal
Year 2007 Outlook
The
Company raised its annual guidance for fiscal year 2007 to reflect the recently
completed acquisitions of Haldane Foods Limited and Avalon Natural Products.
The
Company expects full year fiscal 2007 sales of $900 million to $920 million
and
earnings per share of $1.16 to $1.21 based on 41.0 million shares outstanding.
Webcast
and Upcoming Events
Hain
Celestial will host a conference call and webcast at 4:30 PM Eastern Standard
Time today to review its second quarter fiscal year 2007 results. On March
13,
2007, the Company is scheduled to present at the Banc of America Securities
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®, Realeat®,
Lima®, Grains Noirs®, Natumi®, JASON®, Zia® Natural Skincare, Avalon Organics®,
Alba Botanica® 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, 2006. 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)
|
|||||||
|
December
31,
|
June
30,
|
||||||
|
2006
|
2006
|
||||||
|
(Unaudited)
|
|||||||
|
ASSETS
|
|||||||
|
Current
assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
83,079
|
$
|
48,875
|
|||
|
Trade
receivables, net
|
104,106
|
80,764
|
|||||
|
Inventories
|
115,665
|
105,883
|
|||||
|
Deferred
income taxes
|
3,872
|
2,986
|
|||||
|
Other
current assets
|
17,860
|
21,968
|
|||||
|
Total
current assets
|
324,582
|
260,476
|
|||||
|
Property,
plant and equipment, net
|
117,704
|
119,830
|
|||||
|
Goodwill,
net
|
399,666
|
421,002
|
|||||
|
Trademarks
and other intangible assets, net
|
79,939
|
61,626
|
|||||
|
Other
assets
|
16,043
|
14,750
|
|||||
|
Total
assets
|
$
|
937,934
|
$
|
877,684
|
|||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
|
Current
liabilities:
|
|||||||
|
Accounts
payable and accrued expenses
|
$
|
98,775
|
$
|
81,894
|
|||
|
Income
taxes payable
|
10,940
|
3,083
|
|||||
|
Current
portion of long-term debt
|
400
|
1,065
|
|||||
|
Total
current liabilities
|
110,115
|
86,042
|
|||||
|
Deferred
income taxes
|
19,086
|
19,086
|
|||||
|
Long-term
debt, less current portion
|
151,409
|
151,229
|
|||||
|
Minority
interest
|
5,378
|
4,926
|
|||||
|
Total
liabilities
|
285,988
|
261,283
|
|||||
|
Stockholders'
equity:
|
|||||||
|
Common
stock
|
403
|
396
|
|||||
|
Additional
paid-in capital
|
459,098
|
446,319
|
|||||
|
Retained
earnings
|
188,836
|
165,034
|
|||||
|
Treasury
stock
|
(12,745
|
)
|
(12,745
|
)
|
|||
|
Foreign
currency translation adjustment
|
16,354
|
17,397
|
|||||
|
Total
stockholders' equity
|
651,946
|
616,401
|
|||||
|
Total
liabilities and stockholders' equity
|
$
|
937,934
|
$
|
877,684
|
|||
|
THE
HAIN CELESTIAL GROUP, INC.
|
|||||||||||||
|
Consolidated
Statements of Operations
|
|||||||||||||
|
(in
thousands, except per share amounts)
|
|||||||||||||
|
(Unaudited)
|
|||||||||||||
|
Three
Months Ended December 31,
|
Six
Months Ended December 31,
|
||||||||||||
|
2006
|
2005
|
2006
|
2005
|
||||||||||
|
Net
sales
|
$
|
230,909
|
$
|
186,227
|
$
|
441,116
|
$
|
347,324
|
|||||
|
Cost
of Sales
|
160,319
|
128,061
|
311,384
|
243,309
|
|||||||||
|
Gross
profit
|
70,590
|
58,166
|
129,732
|
104,015
|
|||||||||
|
SG&A
expenses
|
44,799
|
36,988
|
86,645
|
70,857
|
|||||||||
|
Operating
income
|
25,791
|
21,178
|
43,087
|
33,158
|
|||||||||
|
Interest
expense and other expenses
|
1,754
|
1,309
|
3,574
|
2,177
|
|||||||||
|
Income
before income taxes
|
24,037
|
19,869
|
39,513
|
30,981
|
|||||||||
|
Income
tax provision
|
9,269
|
7,531
|
15,711
|
11,752
|
|||||||||
|
Net
income
|
$
|
14,768
|
$
|
12,338
|
$
|
23,802
|
$
|
19,229
|
|||||
|
Basic
per share amounts
|
$
|
0.38
|
$
|
0.33
|
$
|
0.61
|
$
|
0.52
|
|||||
|
Diluted
per share amounts
|
$
|
0.36
|
$
|
0.32
|
$
|
0.59
|
$
|
0.51
|
|||||
|
Weighted
average common shares outstanding:
|
|||||||||||||
|
Basic
|
39,173
|
37,165
|
38,960
|
36,900
|
|||||||||
|
Diluted
|
41,202
|
38,434
|
40,613
|
37,997
|
|||||||||
|
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 December 31,
|
||||||||||||||||
|
2006
GAAP
|
Adjustments
|
2006
Adjusted
|
2005
Adjusted (2)
|
|||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
Net
sales
|
$
|
230,909
|
$
|
230,909
|
$
|
186,227
|
||||||||||
|
Cost
of Sales
|
160,319
|
$
|
(641
|
)
|
(1)
|
|
159,678
|
128,061
|
||||||||
|
Gross
profit
|
70,590
|
641
|
71,231
|
58,166
|
||||||||||||
|
SG&A
expenses
|
44,799
|
(723
|
)
|
(2)
|
|
44,076
|
36,445
|
|||||||||
|
Operating
income
|
25,791
|
1,364
|
27,155
|
21,721
|
||||||||||||
|
Interest
expense and other expenses
|
1,754
|
1,754
|
1,309
|
|||||||||||||
|
Income
before income taxes
|
24,037
|
1,364
|
25,401
|
20,412
|
||||||||||||
|
Income
tax provision
|
9,269
|
529
|
(4)
|
|
9,798
|
7,743
|
||||||||||
|
Net
income
|
$
|
14,768
|
$
|
835
|
$
|
15,603
|
$
|
12,669
|
||||||||
|
Basic
per share amounts
|
$
|
0.38
|
$
|
0.02
|
$
|
0.40
|
$
|
0.34
|
||||||||
|
Diluted
per share amounts
|
$
|
0.36
|
$
|
0.02
|
$
|
0.38
|
$
|
0.33
|
||||||||
|
Weighted
average common shares outstanding:
|
||||||||||||||||
|
Basic
|
39,173
|
39,173
|
37,165
|
|||||||||||||
|
Diluted
|
41,202
|
41,202
|
38,434
|
|||||||||||||
|
Six
Months Ended December 31,
|
||||||||||||||||
|
2006
GAAP
|
Adjustments
|
2006
Adjusted
|
2005
Adjusted (2)
|
|||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
Net
sales
|
$
|
441,116
|
$
|
441,116
|
$
|
347,324
|
||||||||||
|
Cost
of Sales
|
311,384
|
$
|
(1,749
|
)
|
(1)
|
|
309,635
|
243,309
|
||||||||
|
Gross
profit
|
129,732
|
1,749
|
131,481
|
104,015
|
||||||||||||
|
SG&A
expenses
|
86,645
|
(723
|
)
|
(2)
|
|
85,922
|
69,540
|
|||||||||
|
Operating
income
|
43,087
|
2,472
|
45,559
|
34,475
|
||||||||||||
|
Interest
expense and other expenses
|
3,574
|
264
|
(3)
|
|
3,838
|
2,177
|
||||||||||
|
Income
before income taxes
|
39,513
|
2,208
|
41,721
|
32,298
|
||||||||||||
|
Income
tax provision
|
15,711
|
383
|
(4)
|
|
16,094
|
12,266
|
||||||||||
|
Net
income
|
$
|
23,802
|
$
|
1,825
|
$
|
25,627
|
$
|
20,032
|
||||||||
|
Basic
per share amounts
|
$
|
0.61
|
$
|
0.05
|
$
|
0.66
|
$
|
0.54
|
||||||||
|
Diluted
per share amounts
|
$
|
0.59
|
$
|
0.04
|
$
|
0.63
|
$
|
0.53
|
||||||||
|
Weighted
average common shares outstanding:
|
||||||||||||||||
|
Basic
|
38,960
|
38,960
|
36,900
|
|||||||||||||
|
Diluted
|
40,613
|
40,613
|
37,997
|
|||||||||||||
|
(1)
Start-up costs at the Company's West Chester Frozen Foods
Facility.
|
|
|
(2)
Adjustment in connection with the requirements of SFAS No. 123R
to record
compensation when there is a contractual
|
|
|
requirement
to grant stock options, whether or not such options have been granted.
Each quarter the Company marks to market
|
|
|
the
Black Scholes value of the ungranted stock options. For the three
and six
month periods ended December 31, 2005,
|
|
|
the
SFAS No. 123R adjustment was $543 and $1,317,
respectively.
|
|
|
(3)
The adjustment of $264 includes $2,510 pre-tax gain on the sale
of
Biomarche, and $2,246 pre-tax charge for the unfavorable
|
|
|
decision
by the German government regarding the application of VAT on non-dairy
beverages.
|
|
|
(4)
Tax effects of the adjustments described above.
|
|