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, 2009
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
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, 2009, The Hain Celestial Group, Inc. issued a press release
announcing financial results for its second quarter ended December 31,
2008. The press release is attached hereto as Exhibit 99.1 and
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,
2009.
|
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, 2009
|
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
[THE HAIN
CELESTIAL GROUP, INC. LOGO OMITTED]
|
Contacts:
|
|
|
Ira
Lamel/Mary Anthes
|
Jeremy
Fielding/Paige Gruman
|
|
The
Hain Celestial Group, Inc
|
Kekst
and Company
|
|
631-730-2200
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212-521-4800
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THE
HAIN CELESTIAL GROUP ANNOUNCES
SECOND
QUARTER RESULTS
Solid
Sales Growth of 14.2% in Second Quarter
Resets
Full Year Sales and Earnings Guidance to Account
for
Global Economic Conditions
Announces
Licensing Agreement for Green Cleaning Products with
Martha
Stewart Living Omnimedia
Melville, NY, February 4,
2009—The Hain Celestial Group, Inc. (NASDAQ: HAIN), a leading natural and
organic products company, today reported results for the second quarter ended
December 31, 2008. The Company reported solid second quarter net
sales of $315.6 million, a 14.2% increase over the prior year’s second quarter
sales of $276.2 million. Net income in the second quarter was $8.1
million on a GAAP basis and $14.9 million adjusted1. Diluted earnings per share for the second
quarter totaled $0.20 on a GAAP basis and $0.36 adjusted1.
“In these
challenging economic times, we are seeing that consumers are still health
conscious and seeking natural and organic products in a variety of distribution
channels. Despite a strong start in the quarter, sales moderated
toward the end of the quarter with the acceleration of the economic
downturn. Although there is evidence that some customers are reducing
their inventories and some consumers are destocking their pantries, we continue
to see growth in key categories, supported by our innovative new products,” said
Irwin D. Simon, President and Chief Executive Officer. “Inventory
reductions, grain costs at Hain Pure Protein (“HPP”) and the lag in fully
realizing our August price increase impacted our earnings by almost $0.11 per
share this quarter. We continue to evaluate our business while
aggressively managing costs with a sharpened focus on productivity to position
the Company for the difficult worldwide economic macroeconomic
conditions. The work we have done in the past four years in this
regard gives a strong foundation from which to implement these
improvements”
Adjusted
gross margin for the same brands operated by the Company (other than the
Company’s lower margin HPP joint venture) was 28.7% in the second quarter,
versus 30.9% in the prior year quarter. Inflation in input costs
caused a 458 basis point decline in gross margin with productivity improvements
recouping 95 basis points. The August price increase contributed 304
basis points to gross margin. The full benefit of the price increase
is expected to improve the Company’s revenues and margin during the second half
of the year. Increased consumer couponing negatively impacted margin
by 44 basis points, and disappointing margin performance in the United Kingdom
impacted margin by 95 basis points.
Despite
strong holiday sales, HPP faced challenges in the protein category with
increased grain costs year-over-year and the effects of an unfavorable
antibiotic-free to conventional sales mix. As a result, HPP gross
margin declined by 670 basis points versus the prior year
quarter. The Company and HPP should benefit from lower commodity
costs in the second half of the year.
Adjusted
selling, general and administrative expenses declined as a percentage of sales
to 15.4% in this year’s quarter compared to 17.5% in the prior year quarter.
This reduction comes from the Company’s continued successful focus on its cost
structure and from the increased scale of HPP.
Interest
expense, net, was $4.1 million in the second quarter compared to $3.0 million
for the prior year quarter. The Company’s interest cost this year includes the
cost of higher borrowings resulting from acquisitions during the prior fiscal
year. Foreign exchange losses from the rapid strengthening of the U.S. dollar
amounted to $1.4 million during the second quarter this year versus $0.2 million
in the prior year quarter. The Company’s effective tax
rate for the current period increased to 38.5% to bring the full year estimated
rate to 38.25%.
The
Company’s balance sheet remains strong, with $275.5 million in working capital
and a current ratio of 3.0 at December 31, 2008. Debt as a percentage
of equity was 43.9%, with equity at $729.1 million. The Company’s cash
conversion cycle was 80 days compared to 72 days in the prior year. Operating
free cash flow in the second quarter this year was $9.4 million compared to $4.9
million in the prior year quarter. The Company’s cash balance at December 31,
2008 was $50 million.
“The
Company remains well-positioned for the difficult worldwide economic
slowdown. As we benefit from stabilizing input costs and from pricing
in the second half of the year, we’ll provide market support where necessary to
provide consumers with healthy, innovative products,” concluded Irwin
Simon.
In
a separate press release issued today, the Company announced a license agreement
with Martha Stewart Living Omnimedia, Inc. to produce natural home cleaning
solutions, which the Company expects to introduce in the Fall of
2009.
Fiscal
Year 2009 Guidance
The
Company updated its fiscal year 2009 guidance to account for the rapid
deceleration in global economic conditions, and now expects $1.175 to $1.20
billion in sales and $1.38 to $1.42 earnings per share. Guidance has
been reset to reflect current economic conditions and may change based on future
events. This earnings guidance is before deducting $0.08 per share in
stock compensation expense to amortize the previous year’s equity
grants.
Webcast
Hain
Celestial will host a conference call and webcast at 4:30 PM Eastern Standard
Time today to review its second quarter fiscal year 2009 results. The
event 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®, MaraNatha®,
SunSpire®, 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®, Daily Bread™, 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; escalating fuel and commodity costs; the
resolution of the SEC inquiry and litigation regarding our stock option
practices; 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, 2008. 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.
Non-GAAP
Financial Measures
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 only be
read in connection with the Company’s condensed consolidated statements of
earnings presented in accordance with GAAP.
THE
HAIN CELESTIAL GROUP, INC.
Consolidated
Balance Sheets
(In
thousands)
|
December 31,
|
June 30,
|
|||||||
|
2008
|
2008
|
|||||||
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(Unaudited)
|
||||||||
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ASSETS
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||||||||
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Current
assets:
|
||||||||
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Cash
and cash equivalents
|
$ | 49,912 | $ | 58,513 | ||||
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Trade
receivables, net
|
113,586 | 118,867 | ||||||
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Inventories
|
212,763 | 175,667 | ||||||
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Deferred
income taxes
|
12,456 | 12,512 | ||||||
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Other
current assets
|
21,964 | 27,482 | ||||||
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Total
current assets
|
410,681 | 393,041 | ||||||
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Property,
plant and equipment, net
|
143,448 | 159,089 | ||||||
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Goodwill,
net
|
529,154 | 550,238 | ||||||
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Trademarks
and other intangible assets, net
|
142,072 | 136,861 | ||||||
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Other
assets
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19,946 | 20,155 | ||||||
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Total
assets
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$ | 1,245,301 | $ | 1,259,384 | ||||
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LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
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Current
liabilities:
|
||||||||
|
Accounts
payable and accrued expenses
|
$ | 133,953 | $ | 145,186 | ||||
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Income
taxes payable
|
917 | 907 | ||||||
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Current
portion of long-term debt
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267 | 222 | ||||||
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Total
current liabilities
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135,137 | 146,315 | ||||||
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Deferred
income taxes
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25,023 | 26,524 | ||||||
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Other
noncurrent liabilities
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2,127 | 5,012 | ||||||
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Long-term
debt, less current portion
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319,608 | 308,220 | ||||||
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Total
liabilities
|
481,895 | 486,071 | ||||||
|
Minority
Interest
|
34,316 | 30,502 | ||||||
|
Stockholders'
equity:
|
||||||||
|
Common
stock
|
414 | 411 | ||||||
|
Additional
paid-in capital
|
497,114 | 488,650 | ||||||
|
Retained
earnings
|
252,170 | 237,008 | ||||||
|
Treasury
stock
|
(15,517 | ) | (15,473 | ) | ||||
|
Accumulated
other comprehensive income (loss)
|
(5,091 | ) | 32,215 | |||||
|
Total
stockholders' equity
|
729,090 | 742,811 | ||||||
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Total
liabilities and stockholders' equity
|
$ | 1,245,301 | $ | 1,259,384 | ||||
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,
|
|||||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
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(Unaudited)
|
||||||||||||||||
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Net
sales
|
$ | 315,561 | $ | 276,233 | $ | 604,878 | $ | 513,478 | ||||||||
|
Cost
of sales
|
241,838 | 197,089 | 459,789 | 365,483 | ||||||||||||
|
Gross
profit
|
73,723 | 79,144 | 145,089 | 147,995 | ||||||||||||
|
SG&A
expenses
|
54,212 | 49,882 | 110,682 | 100,428 | ||||||||||||
|
Operating
income
|
19,511 | 29,262 | 34,407 | 47,567 | ||||||||||||
|
Interest
and other expenses, net
|
6,284 | 4,312 | 9,853 | 5,271 | ||||||||||||
|
Income
before income taxes
|
13,227 | 24,950 | 24,554 | 42,296 | ||||||||||||
|
Income
tax provision
|
5,087 | 9,368 | 9,392 | 15,894 | ||||||||||||
|
Net
income
|
$ | 8,140 | $ | 15,582 | $ | 15,162 | $ | 26,402 | ||||||||
|
Basic
net income per share
|
$ | 0.20 | $ | 0.39 | $ | 0.38 | $ | 0.66 | ||||||||
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Diluted
net income per share
|
$ | 0.20 | $ | 0.37 | $ | 0.37 | $ | 0.63 | ||||||||
|
Weighted
average common shares outstanding:
|
||||||||||||||||
|
Basic
|
40,464 | 40,048 | 40,344 | 40,037 | ||||||||||||
|
Diluted
|
41,025 | 42,096 | 41,262 | 41,961 | ||||||||||||
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,
|
||||||||||||||||
|
2008 GAAP
|
Adjustments
|
2008 Adjusted
|
2007 Adjusted
|
|||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
Net
sales
|
$ | 315,561 | $ | 315,561 | $ | 276,233 | ||||||||||
|
Cost
of Sales
|
241,838 | $ | (2,984 | ) | 238,854 | 195,005 | ||||||||||
|
Gross
profit
|
73,723 | 2,984 | 76,707 | 81,228 | ||||||||||||
|
SG&A
expenses
|
54,212 | (5,690 | ) | 48,522 | 48,240 | |||||||||||
|
Operating
income
|
19,511 | 8,674 | 28,185 | 32,988 | ||||||||||||
|
Interest
and other expenses, net
|
6,284 | (1,385 | ) | 4,899 | 4,312 | |||||||||||
|
Income
before income taxes
|
13,227 | 10,059 | 23,286 | 28,676 | ||||||||||||
|
Income
tax provision
|
5,087 | 3,305 | 8,392 | 10,753 | ||||||||||||
|
Net
income
|
$ | 8,140 | $ | 6,754 | $ | 14,894 | $ | 17,923 | ||||||||
|
Basic
net income per share
|
$ | 0.20 | $ | 0.17 | $ | 0.37 | $ | 0.45 | ||||||||
|
Diluted
net income per share
|
$ | 0.20 | $ | 0.16 | $ | 0.36 | $ | 0.43 | ||||||||
|
Weighted
average common shares outstanding:
|
||||||||||||||||
|
Basic
|
40,464 | 40,464 | 40,048 | |||||||||||||
|
Diluted
|
41,025 | 41,025 | 42,096 | |||||||||||||
|
FY 2009
|
FY 2008
|
|||||||||||||||
|
Impact on Income
before income taxes
|
Impact on Income
tax provision
|
Impact on Income
before income taxes
|
Impact on Income tax
provision
|
|||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
Start-up
costs at the Fakenham manufacturing facility related to the integration of
the Haldane Foods frozen meat-free operations and, in 2009, also includes
unabsorbed overhead resulting from expiration of a co-pack agreement with
prior owner
|
$ | 2,596 | $ | 634 | $ | 2,084 | $ | 774 | ||||||||
|
Severence
and other reorganization costs
|
388 | 106 | ||||||||||||||
|
Cost
of sales
|
2,984 | 740 | 2,084 | 774 | ||||||||||||
|
|
||||||||||||||||
|
Professional
fees and other expenses incurred in connection with the review of
the Company's stock option practices
|
1,966 | 699 | 1,747 | 650 | ||||||||||||
|
Stock
compensation expense
|
1,480 | 523 | (105 | ) | (39 | ) | ||||||||||
|
Legal
settlement
|
1,350 | 505 | ||||||||||||||
|
Severence
and other reorganization costs
|
894 | 309 | ||||||||||||||
|
SG&A
expenses
|
5,690 | 2,036 | 1,642 | 611 | ||||||||||||
|
Other
(income) expenses, net
|
1,385 | 529 | ||||||||||||||
|
Interest
and other expenses, net
|
1,385 | 529 | - | - | ||||||||||||
|
Total
adjustments
|
$ | 10,059 | $ | 3,305 | $ | 3,726 | $ | 1,385 | ||||||||
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)
|
Six Months Ended December 31,
|
||||||||||||||||
|
2008 GAAP
|
Adjustments
|
2008 Adjusted
|
2007 Adjusted
|
|||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
Net
sales
|
$ | 604,878 | $ | 604,878 | $ | 513,478 | ||||||||||
|
Cost
of Sales
|
459,789 | $ | (6,524 | ) | 453,265 | 362,326 | ||||||||||
|
Gross
profit
|
145,089 | 6,524 | 151,613 | 151,152 | ||||||||||||
|
SG&A
expenses
|
110,682 | (9,458 | ) | 101,224 | 96,100 | |||||||||||
|
Operating
income
|
34,407 | 15,982 | 50,389 | 55,052 | ||||||||||||
|
Interest
and other expenses, net
|
9,853 | (1,025 | ) | 8,828 | 7,273 | |||||||||||
|
Income
before income taxes
|
24,554 | 17,007 | 41,561 | 47,779 | ||||||||||||
|
Income
tax provision
|
9,392 | 5,844 | 15,236 | 17,917 | ||||||||||||
|
Net
income
|
$ | 15,162 | $ | 11,163 | $ | 26,325 | $ | 29,862 | ||||||||
|
Basic
net income per share
|
$ | 0.38 | $ | 0.28 | $ | 0.65 | $ | 0.75 | ||||||||
|
Diluted
net income per share
|
$ | 0.37 | $ | 0.27 | $ | 0.64 | $ | 0.71 | ||||||||
|
Weighted
average common shares outstanding:
|
||||||||||||||||
|
Basic
|
40,344 | 40,344 | 40,037 | |||||||||||||
|
Diluted
|
41,262 | 41,262 | 41,961 | |||||||||||||
|
FY 2009
|
FY 2008
|
|||||||||||||||
|
Impact on Income
before income taxes
|
Impact on Income
tax provision
|
Impact on Income
before income taxes
|
Impact on Income tax
provision
|
|||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
Start-up
costs at the Fakenham manufacturing facility related to the integration of
the Haldane Foods frozen meat-free operations and, in 2009, also includes
unabsorbed overhead resulting from expiration of a co-pack agreement with
prior owner
|
$ | 5,115 | $ | 1,433 | $ | 3,157 | $ | 1,184 | ||||||||
|
Severence
and other reorganization costs
|
688 | 224 | ||||||||||||||
|
Impact
of co-pack pricing agreement related to acquisition of turkey processing
facility
|
721 | 277 | ||||||||||||||
|
Cost
of sales
|
6,524 | 1,934 | 3,157 | 1,184 | ||||||||||||
|
Professional
fees and other expenses incurred in connection with the review of the
Company's stock option practices
|
3,719 | 1,391 | 4,013 | 1,505 | ||||||||||||
|
Stock
compensation expense
|
2,897 | 1,083 | 315 | 118 | ||||||||||||
|
Legal
settlement
|
1,350 | 505 | ||||||||||||||
|
Severence
and other reorganization costs
|
1,492 | 540 | ||||||||||||||
|
SG&A
expenses
|
9,458 | 3,519 | 4,328 | 1,623 | ||||||||||||
|
Other
(income) expenses, net
|
1,025 | 391 | (2,002 | ) | (784 | ) | ||||||||||
|
Interest
and other expenses, net
|
1,025 | 391 | (2,002 | ) | (784 | ) | ||||||||||
|
Total
adjustments
|
$ | 17,007 | $ | 5,844 | $ | 5,483 | $ | 2,023 | ||||||||