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 4,
2008
————————————
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:
o
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
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
information contained in this Current Report on Form 8-K, including the exhibit
attached hereto, is being furnished pursuant to Item 2.02, "Results of
Operations and Financial Condition." This information shall not be deemed to
be
"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 filing.
On
February 4, 2008, The Hain Celestial Group, Inc. issued a press release
announcing financial results for its second quarter ended December 31, 2007.
A
copy of the press release is included as Exhibit 99.1 to this Current Report
and
is incorporated herein by reference.
Item
9.01.
Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are filed herewith:
|
Exhibit
No.
|
Description
|
|
99.1
|
Press
Release dated February 4, 2008.
|
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
4, 2008
THE
HAIN
CELESTIAL GROUP, INC.
(Registrant)
By:
/s/ Ira J. Lamel
Name: Ira J. Lamel
Title: Executive Vice President and Chief
Financial Officer
|
Contacts:
|
|
|
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 SECOND QUARTER
Sales
Increased 20% to $276.2 Million
GAAP
Net Income Grew 10% to $15.6 Million
Adjusted
EPS Increased 16%
Melville,
NY, February 4, 2008—The
Hain
Celestial Group, Inc. (NASDAQ: HAIN), a leading natural and organic food
and
personal care products company, today reported results for its second fiscal
quarter ended December 31, 2007. Reflecting strong demand for Hain Celestial’s
portfolio of natural and organic brands, net sales reached $276.2 million,
a 20%
increase compared with $230.2 million in the prior year second quarter. GAAP
net
income for the second quarter was $15.6 million, or $0.37 per diluted share,
a
10% increase over the prior year’s $14.2 million, or $0.34 per diluted share.
Adjusted
earnings per diluted share for the quarter totaled $0.43 on adjusted net
income
of $17.9 million. The reported results include charges of $2.1 million ($1.3
million after tax or $0.03 per diluted share) of previously announced
acquisition-related integration and manufacturing start-up costs at the
Company’s Fakenham facility in the United Kingdom, into which the frozen
meat-free operations of Haldane Foods have been consolidated, and of $1.75
million ($1.1 million after tax or $0.03 per diluted share) for professional
fees associated with the recently completed independent directors’ review of the
Company’s stock options practices. The continuing mark-to-market charge to
reflect the Company’s contractual obligation for ungranted stock options was not
significant in the quarter.
“Our
sustained and profitable growth continues, with strong sales this quarter
from a
range of our brands, including Earth’s Best®, Terra®, Garden of Eatin’®,
DeBoles®, Arrowhead Mills®, Imagine®, Casbah®, Spectrum®, Yves®, FreeBird™,
Ethnic Gourmet®, Lima®, and from the newly acquired Plainville Farms® and our
tofu operations. We also achieved strong sales in Personal Care, with
Jason® and the Avalon® brands. Sales at Celestial Seasonings® have continued to
improve with new packaging reaching near full distribution and being
well-received along with the introduction of Celestial Seasonings coffee
and
Saphara premium tea,” said Irwin D. Simon, President and Chief Executive Officer
of Hain Celestial. “The diversity of our business—in various product categories,
with strong sales from our United States, Canadian and European operations
as
well as in expanded distribution channels—continues to drive the growth of our
sales and earnings.”
The
Hain Celestial Group, Inc. • 58 South Service Road • Melville, NY 11747 •
631-730-2200
www.hain-celestial.com
“With
input costs increasing rapidly, we are very pleased with our gross margin
results this quarter,” said Ira J. Lamel, Executive Vice President and Chief
Financial Officer. “Had we not had the 170 basis point drag on our gross margin
from these increased input costs, our adjusted gross margin would have been
31.0% compared to the prior year’s adjusted gross margin of 30.6%.” The
Company’s adjusted gross margin excludes the cost of the acquisition-related
integration and manufacturing start-up costs. “The impact of acquisitions we
have made since last year’s second quarter, some of which helped our margin
while others reduced our margin, was neutral to our gross margin performance,”
concluded Ira Lamel.
Selling,
general and administrative expenses were 18.1% of sales, or 17.5% adjusted,
in
the current year second quarter compared to 19.2% (adjusted) in the prior
year.
The reduction in selling, general and administrative expenses resulted from
our
ability to integrate back office functions of acquired businesses and focus
on
cost savings. The acquisition of Plainville Farms, with its lower than average
administrative expense structure, benefitted our consolidated selling, general
and administrative rate by 70 basis points.
“Through
our major cost savings initiative, we continue to seek productivity
opportunities, particularly in these inflationary times. Price increases
implemented across multiple categories earlier in our fiscal year lessened,
but
certainly did not eliminate, the impact of cost pressures on our business,”
remarked Irwin Simon. “Our price increases were widely accepted across our
customer base due in large part to effective trade and promotional spending,
ensuring consumers received the benefit of these programs. We are encouraged
that as natural and organic products become even more mainstream, we see
consumers maintaining their commitment to better-for-you eating and healthy
living,” continued Irwin Simon.
Interest
expense in the second quarter was $3.4 million versus $2.3 million in the
prior
year quarter and interest income was $0.4 million this year versus $0.9 million
last year. The higher interest expense and lower interest income was
attributable to increased borrowings and use of invested cash for acquisitions.
The
Hain Celestial Group, Inc. • 58 South Service Road • Melville, NY 11747 •
631-730-2200
www.hain-celestial.com
The
Company’s tax rate was 37.5% for the second quarter versus 38.7% in the prior
year. Our tax rate this quarter and as expected for the full year is lower
than
last year, as our income around the world is earned in more favorable tax
rate
jurisdictions.
Average
diluted shares outstanding for the quarter were 42.1 million for the quarter,
an
increase of 2.2% over the prior year quarter’s 41.2 million average diluted
shares.
The
Company’s balance sheet remains strong with working capital of $291.4 million
and a current ratio of 2.5 at December 31, 2007. Debt as a percentage of
equity
was 29.4% with equity at $732 million. The number of days in the Company’s cash
conversion cycle was 72 days compared to 68 days in the prior year, principally
due to the higher levels of inventory in the Company’s personal care unit with
the acquisition of Avalon and an intentional increase in Earth’s Best ingredient
inventory to protect the continuing growth of that brand. In the trailing
twelve months, the Company generated $33.4 million of operating free cash
flow.
Fiscal
Year 2008 Guidance
The
Company reconfirmed its fiscal year 2008 guidance for sales of $1.025 to
$1.050
billion and earnings per share of $1.38 to $1.42.
“We
remain focused on our business strategy as the leading natural and organic
food
and personal care products company. We continue to invest in our business
by
consolidating our operations in the United Kingdom and in Personal Care,
positioning the Company for additional expansion, and remaining focused on
improving efficiencies throughout our business,” concluded Irwin Simon.
Review
of Stock Options, NASDAQ Listing and Annual Meeting
On
January 31, 2008 the Company reported that a group of independent directors
(the
“Independent Directors”) established to review the Company’s past stock option
practices had reported its findings to the Board of Directors. The Company
also
announced that the Board of Directors had adopted each of the recommendations
of
the Independent Directors. In connection with the completion of the review,
the
Company restated its previously issued financial statements to correct errors
related to accounting for stock-based compensation expense.
The
Company filed its annual report on Form 10-K for the year ended June 30,
2007,
and its quarterly report on Form 10-Q for the quarter ended September 30,
2007
on January 31, 2008. With these filings the Company believes that it has
remedied its non-compliance with the listing standards of The NASDAQ Stock
Market, Inc. and that it will no longer be subject to delisting. The Company
plans to hold its 2007 Annual Meeting of Shareholders on April 1, 2008.
The
Hain Celestial Group, Inc. • 58 South Service Road • Melville, NY 11747 •
631-730-2200
www.hain-celestial.com
Webcast
and Upcoming Events
Hain
Celestial will host a conference call and webcast at 4:15 PM Eastern Standard
Time today to review its second quarter fiscal year 2008 results. On March
12,
2008 the Company is scheduled to present at Bank of America 2008 Consumer
Conference and on March 19, 2008 the Company is scheduled to present at the
Citi
Investment Research Small & Mid-Cap Conference. These events will be webcast
and 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®, Garden of Eatin’®,
Health Valley®, WestSoy®, Earth’s Best®, Arrowhead Mills®, DeBoles®, Hain Pure
Foods®, FreeBird™, Plainville Farms®, Hollywood®, Spectrum Naturals®, Spectrum
Essentials®, Walnut Acres Organic®, Imagine®, Rice Dream®, Soy Dream®, Rosetto®,
Ethnic Gourmet®, Yves Veggie Cuisine®, Granose®, Realeat®, Linda McCartney®,
Lima®, Grains Noirs®, Natumi®, JASON®, Zia® Natural Skincare, Avalon Organics®,
Alba Botanica®, Queen Helene®, Tushies® and TenderCare®. Hain Celestial
has been providing “A Healthy Way of Life” since 1993. 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;
our
ability to implement our business and acquisition strategy; our ability to
effectively integrate our acquisitions; competition; availability and retention
of key personnel; our reliance on third party distributors, manufacturers
and
suppliers; changes in customer preferences; international sales and operations;
the results of our stock option investigation and the SEC’s inquiry; changes in,
or the failure to comply with, government regulations; and other risks detailed
from time-to-time in the Company’s reports filed with the SEC, including the
annual report on Form 10-K, for the fiscal year ended June 30, 2007. As a
result
of the foregoing and other factors, no assurance can be given as to future
results, levels of activity and achievements and neither the Company nor
any
person assumes responsibility for the accuracy and completeness of these
statements.
The
Hain Celestial Group, Inc. • 58 South Service Road • Melville, NY 11747 •
631-730-2200
www.hain-celestial.com
|
THE
HAIN CELESTIAL GROUP, INC.
|
|||||||
|
Consolidated
Balance Sheets
|
|||||||
|
(In
thousands)
|
|||||||
|
December
31,
|
June
30,
|
||||||
|
2007
|
2007
|
||||||
|
(Unaudited)
|
|||||||
|
ASSETS
|
|||||||
|
Current
assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
44,718
|
$
|
60,518
|
|||
|
Trade
receivables, net
|
126,547
|
95,405
|
|||||
|
Inventories
|
150,376
|
129,062
|
|||||
|
Deferred
income taxes
|
8,094
|
8,069
|
|||||
|
Other
current assets
|
20,771
|
22,950
|
|||||
|
Total
current assets
|
350,506
|
316,004
|
|||||
|
Property,
plant and equipment, net
|
130,444
|
114,901
|
|||||
|
Goodwill,
net
|
529,088
|
509,336
|
|||||
|
Trademarks
and other intangible assets, net
|
100,300
|
96,342
|
|||||
|
Other
assets
|
19,708
|
21,873
|
|||||
|
Total
assets
|
$
|
1,130,046
|
$
|
1,058,456
|
|||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
|
Current
liabilities:
|
|||||||
|
Accounts
payable and accrued expenses
|
$
|
129,809
|
$
|
112,458
|
|||
|
Income
taxes payable
|
8,861
|
4,456
|
|||||
|
Current
portion of long-term debt
|
468
|
566
|
|||||
|
Total
current liabilities
|
139,138
|
117,480
|
|||||
|
Deferred
income taxes and other liabilities
|
25,080
|
22,896
|
|||||
|
Long-term
debt, less current portion
|
214,436
|
215,446
|
|||||
|
Total
liabilities
|
378,654
|
355,822
|
|||||
|
Minority
Interest
|
19,442
|
5,678
|
|||||
|
Stockholders'
equity:
|
|||||||
|
Common
stock
|
410
|
409
|
|||||
|
Additional
paid-in capital
|
489,041
|
487,750
|
|||||
|
Retained
earnings
|
222,189
|
195,658
|
|||||
|
Treasury
stock
|
(15,473
|
)
|
(12,745
|
)
|
|||
|
Foreign
currency translation adjustment
|
35,783
|
25,884
|
|||||
|
Total
stockholders' equity
|
731,950
|
696,956
|
|||||
|
Total
liabilities and stockholders' equity
|
$
|
1,130,046
|
$
|
1,058,456
|
|||
|
THE
HAIN CELESTIAL GROUP, INC.
|
|||||||||||||
|
Consolidated
Statements of Operations
|
|||||||||||||
|
(in
thousands, except per share amounts)
|
|||||||||||||
|
Three
Months Ended December 31,
|
Six
Months Ended December 31,
|
||||||||||||
|
2007
|
2006
|
2007
|
2006
|
||||||||||
|
(Unaudited)
|
|||||||||||||
|
Net
sales
|
$
|
276,233
|
$
|
230,190
|
$
|
513,478
|
$
|
440,085
|
|||||
|
Cost
of sales
|
197,089
|
160,319
|
365,483
|
311,384
|
|||||||||
|
Gross
profit
|
79,144
|
69,871
|
147,995
|
128,701
|
|||||||||
|
SG&A
expenses
|
49,882
|
44,946
|
100,428
|
86,896
|
|||||||||
|
Operating
income
|
29,262
|
24,925
|
47,567
|
41,805
|
|||||||||
|
Interest
expense and other expenses
|
4,312
|
1,754
|
5,271
|
3,574
|
|||||||||
|
Income
before income taxes
|
24,950
|
23,171
|
42,296
|
38,231
|
|||||||||
|
Income
tax provision
|
9,368
|
8,958
|
15,894
|
15,279
|
|||||||||
|
Net
income
|
$
|
15,582
|
$
|
14,213
|
$
|
26,402
|
$
|
22,952
|
|||||
|
Basic
per share amounts
|
$
|
0.39
|
$
|
0.36
|
$
|
0.66
|
$
|
0.59
|
|||||
|
Diluted
per share amounts
|
$
|
0.37
|
$
|
0.34
|
$
|
0.63
|
$
|
0.57
|
|||||
|
Weighted
average common shares outstanding:
|
|||||||||||||
|
Basic
|
40,048
|
39,173
|
40,037
|
38,960
|
|||||||||
|
Diluted
|
42,096
|
41,202
|
41,961
|
40,613
|
|||||||||
|
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,
|
||||||||||||||||
|
2007
GAAP
|
Adjustments
|
|
2007
Adjusted
|
2006
Adjusted (5)
|
||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
Net
sales
|
$
|
276,233
|
$
|
276,233
|
$
|
230,190
|
||||||||||
|
Cost
of Sales
|
197,089
|
$
|
(2,084
|
)
|
(1
|
)
|
195,005
|
159,678
|
||||||||
|
Gross
profit
|
79,144
|
2,084
|
81,228
|
70,512
|
||||||||||||
|
SG&A
expenses
|
49,882
|
$
|
(1,642
|
)
|
(2
|
)
|
48,240
|
44,223
|
||||||||
|
|
|
|
|
|
||||||||||||
|
Operating
income
|
29,262
|
3,726
|
32,988
|
26,289
|
||||||||||||
|
Interest
and other expenses, net
|
4,312
|
|
|
4,312
|
1,754
|
|||||||||||
|
Income
before income taxes
|
24,950
|
3,726
|
28,676
|
24,535
|
||||||||||||
|
Income
tax provision
|
9,368
|
1,385
|
(4
|
)
|
10,753
|
9,487
|
||||||||||
|
Net
income
|
$
|
15,582
|
$
|
2,341
|
|
$
|
17,923
|
$
|
15,048
|
|||||||
|
Basic
per share amounts
|
$
|
0.39
|
$
|
0.06
|
|
$
|
0.45
|
$
|
0.38
|
|||||||
|
Diluted
per share amounts
|
$
|
0.37
|
$
|
0.06
|
|
$
|
0.43
|
$
|
0.37
|
|||||||
|
Weighted
average common shares outstanding:
|
||||||||||||||||
|
Basic
|
40,048
|
|
|
40,048
|
39,173
|
|||||||||||
|
Diluted
|
42,096
|
|
|
42,096
|
41,202
|
|||||||||||
|
Six
Months Ended December 31,
|
||||||||||||||||
|
2007
GAAP
|
Adjustments
|
|
2007
Adjusted
|
2006
Adjusted (5)
|
||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
Net
sales
|
$
|
513,478
|
$
|
513,478
|
$
|
440,085
|
||||||||||
|
Cost
of Sales
|
365,483
|
$
|
(3,157
|
)
|
(1
|
)
|
362,326
|
309,635
|
||||||||
|
Gross
profit
|
147,995
|
3,157
|
151,152
|
130,450
|
||||||||||||
|
SG&A
expenses
|
100,428
|
$
|
(4,328
|
)
|
(2
|
)
|
96,100
|
86,173
|
||||||||
|
|
|
|
|
|
||||||||||||
|
Operating
income
|
47,567
|
7,485
|
55,052
|
44,277
|
||||||||||||
|
Interest
and other expenses, net
|
5,271
|
2,002
|
(3
|
)
|
7,273
|
3,838
|
||||||||||
|
Income
before income taxes
|
42,296
|
5,483
|
47,779
|
40,439
|
||||||||||||
|
Income
tax provision
|
15,894
|
2,023
|
(4
|
)
|
17,917
|
15,662
|
||||||||||
|
Net
income
|
$
|
26,402
|
$
|
3,460
|
|
$
|
29,862
|
$
|
24,777
|
|||||||
|
Basic
per share amounts
|
$
|
0.66
|
$
|
0.09
|
|
$
|
0.75
|
$
|
0.64
|
|||||||
|
Diluted
per share amounts
|
$
|
0.63
|
$
|
0.08
|
|
$
|
0.71
|
$
|
0.61
|
|||||||
|
Weighted
average common shares outstanding:
|
||||||||||||||||
|
Basic
|
40,037
|
|
|
40,037
|
38,960
|
|||||||||||
|
Diluted
|
41,961
|
|
|
41,961
|
40,613
|
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|
(1)
|
Start-up
costs at the Company's Fakenham facility related to the integration
of the
Haldane Foods frozen meat-free
operations.
|
|
(2)
|
Adjustment
to record stock compensation expense of $(105) for the three months
and
$315 for the six months ended December 31, 2007 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. Also, selling,
general
and administrative expense was adjusted for the three and six months
ended
December 31, 2007 for $1,747 and $4,013 of professional fees incurred
in
connection with the review of the Company’s stock option
practices.
|
|
(3)
|
The
adjustment of $2,002 represents the pre-tax gain on the sale of the
Company's investment in a rice cake manufacturing joint venture in
Belgium
recorded in the first quarter of fiscal
2008.
|
|
(4)
|
Tax
effects of the adjustments described
above.
|
|
(5)
|
Includes
adjustments of $641 for the three months and $1,749 for the six months
ended December 31, 2006 for start-up costs at the Company's West
Chester
frozen foods facility, $2,510 for a pre-tax gain recognized in the
first
quarter of fiscal 2007 in connection with the sale of Biomarché and $2,246
of charges also taken in the first quarter of fiscal 2007 in connection
with the decision by the German government regarding the application
of
VAT on non-dairy beverages.
|