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, 2010
————————————
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, 2010, The Hain Celestial Group, Inc. issued a press release
announcing financial results for its second quarter ended December 31,
2009. 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, 2010.
|
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,
2010
|
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 LOGO OMITTED]
Contacts:
|
Ira
Lamel/Mary Anthes
|
David
Lilly/Paige Gruman
|
|
The
Hain Celestial Group, Inc.
|
Kekst
and Company
|
|
631-730-2200
|
212-521-4800
|
THE
HAIN CELESTIAL GROUP ANNOUNCES
SECOND
QUARTER FISCAL YEAR 2010 RESULTS
Earnings
Per Share Grows 35%
Solid
Performance from North American and
Continental
European Operations
Consumption
Trends Improve
Operating
Free Cash Flow Improves
by
$59.2 Million in the 12 Months Ended December 31, 20091
Melville, NY, February 4,
2010—The Hain Celestial Group, Inc. (NASDAQ: HAIN), a leading natural and
organic products company providing consumers with A Healthy Way of Life™, today
reported results for the second quarter ended December 31, 2009. The
Company reported that earnings per share grew 35% to $0.27 per share on net
income of $11.2 million as compared to the prior year quarter earnings of $0.20
per share on net income of $8.1 million, on the strength of profit contributions
from the Company’s North American and Continental European operations. The
Company’s earnings of $0.27 per share in the second quarter ended December 31,
2009 is after absorbing a total of $0.04 of charges consisting of $1.2 million,
or $0.02 per share, for the planned and previously disclosed consolidation of
its two United Kingdom-based fresh food-to-go production facilities, and a $1.2
million, or $0.02 per share, non-cash write-down of the Company’s equity
investment in Yeo Hiap Seng Limited, a Singapore-based natural food and beverage
company listed on the Singapore Stock Exchange.
Sales in
the second quarter totaled $242.0 million versus $250.8 million in the prior
year period after deducting sales of $61.4 million by Hain Pure Protein
(“HPP”)2. Total sales on a GAAP basis in the
prior year quarter amounted to $312.2 million including HPP, which was then a
consolidated subsidiary. Sales in the current year second quarter
were affected by a total of approximately $25 million consisting of inventory
reductions at two major distributors and the phasing out of the supply of fresh
sandwiches to Marks and Spencer in the United Kingdom, offset by $4.8
million of favorable changes in exchange rates for foreign
currencies.
_________________________
1 See
Non-GAAP Financial Measures
2 See
Reconciliation of GAAP Results to Non-GAAP Presentation
“Our
results reflect solid performance from Hain Celestial US, with increased
distribution from improving consumption trends and from increasing margins,
along with contributions from our Continental European and Canadian operations
where we remain focused on selling our global brands. Overall, we
were pleased with our operational performance in the quarter after considering
the distributor inventory destocking, events in the UK and currency
factors,” said Irwin D. Simon, President and Chief Executive Officer. “Consumers
continue to seek more healthful products in various classes of trade, while
eating more meals at home, which has contributed to the solid performance in
core categories across our portfolio.”
“Consumption
is improving across the Hain Celestial US portfolio as we move
beyond 2009’s difficult comparisons,” commented John Carroll, Chief
Executive Officer, Hain Celestial US. “Our last four weeks
consumption was up versus a year ago, led by a 8% increase at Celestial
Seasonings®. Additionally, we saw mid- to high-single digit
increases from Terra Chips®, Imagine® soup, Earth’s Best Organic® baby food,
Rosetto® and DeBoles® pastas and Avalon® and Alba® personal care
products.”
Gross
profit increased 270 basis points to 28.9% in the second quarter, up from 26.2%
in the year ago period after adjusting the prior year quarter for the gross
profit of HPP2. The
prior year gross profit as reported under GAAP amounted to 22.5%. The
gross profit improvement was primarily driven by a less volatile and more
normalized cost environment when compared to the high input cost inflation
impacting the Company during the same period of the prior year along with the
results of its productivity initiatives.
Selling,
general and administrative expenses (“SG&A”) were 19.5% as a percentage of
sales in this year’s second quarter compared to 19.1% after adjusting the prior
year quarter for the deconsolidation of HPP2. The
prior year SG&A as reported under GAAP was 16.0%. The increase in
SG&A as a percentage of sales is the result of the lower sales in the
current quarter. While SG&A, excluding HPP, was lower by
approximately $0.6 million in this year’s quarter, the SG&A of the Company’s
foreign units was unfavorably impacted by approximately $1.0 million due to
currency fluctuations.
Operating
free cash flow was $37.7 million over the most recent 12-month period ended
December 31, 2009, improving by $59.2 million from the comparable period one
year ago1. The
Company’s balance sheet remains strong as the Company reduced borrowings by $7.0
million in the quarter bringing the total debt reduction to $82.0 million over
the 12 months ended December 31, 2009. Debt as a percentage of equity
was 32.1%, with equity at $732.2 million at the end of the second quarter this
year.
“Our
operations in the United Kingdom remain challenged, but we continue to take
steps to improve our future performance, including completing the consolidation
of our food-to-go production facilities. Our frozen meat-free
offerings, desserts and non-dairy beverage products in the UK continue to make
progress. Also, we believe that our HPP investment will continue to
take steps toward profitability having sold the last of its commodity
turkeys. HPP now produces only antibiotic-free product,” stated Irwin
Simon.
“As we
enter the second half of our fiscal year 2010, our product portfolio has
expanded its reach. We began shipping 10 Martha Stewart Clean™
products in the United States, and we will introduce Martha Stewart Clean™ in
Canada shortly. We have introduced several of our selected global
brands, including Earth’s Best Organic baby food and Imagine soup, into China
through our Hutchison Hain Organic Holdings Limited joint venture with Hutchison
China MediTech Limited. We look forward to showcasing our products
throughout the upcoming Winter Olympics in Vancouver, where Hain Celestial
Canada is the Official Supplier of natural and organic packaged grocery products
for the 2010 Games, and at Natural Products Expo West in March, and concluding
fiscal year 2010 with a stronger second half,” concluded Irwin
Simon.
As part
of Hain Celestial’s commitment to corporate and social responsibility, the
Company channeled its resources in Canada and the United States to provide over
75 tons of food and personal care products to the Haitian relief efforts in late
January and early February. Additionally, the Company has partnered
with Madison Square Garden to sponsor a Haiti Food Drive for donations of
non-perishable canned food items at a New York Rangers game on February 6,
2010. The food collected will be packaged and sent to Haiti by the
Company.
Fiscal
Year 2010 Guidance
The
Company updated its full fiscal year 2010 guidance with expected earnings per
share of $1.05 to $1.10 with expected net sales of $920 million to $940
million. The Company’s full fiscal year 2009 sales base has been
adjusted to exclude HPP sales, items discontinued in the SKU rationalization and
the reclassification of promotional expenses.
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 2010 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 products company in North America and Europe. Hain Celestial
participates in many natural categories with well-known brands that include
Celestial Seasonings®, Terra®, Garden of Eatin’®, Health Valley®, WestSoy®,
Earth’s Best®, Arrowhead Mills®, MaraNatha®, SunSpire®, DeBoles®, Gluten Free
Café™, Hain Pure Foods®, 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®, TenderCare® and Martha
Stewart Clean™. 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 under Rule 3b-6 of the
Securities Exchange Act of 1934, as amended. Words such as “expect,”
“expected”, “anticipate,” “estimate,” “believe,” “may,” “potential,” “can,”
“position”, “positioned,” “should,” “plan,” “continue”, “future”, “look forward”
and similar expressions, or the negative of those expressions, may identify
forward-looking statements. 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 our
ability to achieve our guidance for sales and earnings per share in fiscal year
2010 given the recessionary environment in the U.S. and other markets that we
sell products as well as economic and business conditions generally and their
effect on our customers and consumers’ product preferences, and our business,
financial condition and results of operations; changes in estimates or judgments
related to our impairment analysis of goodwill and other intangible assets; our
ability to implement our business and acquisition strategy, including our
strategy for improving results in Europe; HPP’s ability to implement its
business strategy; our ability to realize sustainable growth generally and from
investments in core brands, offering new products and our focus on cost
containment, productivity, cash flow and margin enhancement in particular; our
ability to effectively integrate our acquisitions; our ability to successfully
execute our joint ventures; competition; the success and cost of introducing new
products as well as our ability to increase prices on existing products; the
availability and retention of key personnel; our reliance on third party
distributors, manufacturers and suppliers; our ability to maintain existing
contracts and secure and integrate new customers; our ability to respond to
changes and trends in customer and consumer demand, preferences and
consumption; international sales and operations; changes in fuel and
commodity costs; the continuing adverse effects on our results of operations
from the impacts of foreign exchange; the resolution of the civil 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, 2009 and the quarterly report on Form 10-Q
for the quarter ended September 30, 2009. 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.
Operating
Free Cash Flow is a non-GAAP Financial Measure. The
Company defines Operating Free Cash Flow as cash provided from operating
activities less capital expenditures. For the 12-month period ended
December 31, 2009, cash provided from operating activities was $49.4 million and
capital expenditures were $11.7 million for a total of $37.7
million. The operating free cash flow of $37.7 million represents a
$59.2 million improvement over the 12-month period ended December 31,
2008.
This
press release contains certain financial measures related to the deconsolidation
of HPP that are not calculated in accordance with generally accepted accounting
principles in the United States (GAAP), including the exclusion of HPP from net
sales, gross margin and SG&A. A reconciliation of these non-GAAP
financial measures to their respective comparable GAAP financial measures
appears in the table “Reconciliation of GAAP Results to Non-GAAP Presentation”
accompanying this press release. Management believes that it is useful to
investors to present such measures because as of June 30, 2009 HPP is no longer
consolidated in the Company’s condensed consolidated financial statements, which
affects the comparability of the Company’s results for periods after June 30,
2009 to prior periods.
Under the
Investor Relations section of the Company’s website at www.hain-celestial.com,
the Company has posted a schedule detailing the reclassification of promotional
expenses for each annual and quarterly period in fiscal years 2009 and 2008 to
allow comparison to reported amounts.
|
THE
HAIN CELESTIAL GROUP, INC.
|
||||||||
|
Consolidated
Balance Sheets
|
||||||||
|
(In
thousands)
|
||||||||
|
December
31,
|
June
30,
|
|||||||
|
2009
|
2009
|
|||||||
|
(Unaudited)
|
(Audited)
|
|||||||
|
ASSETS
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 26,813 | $ | 41,408 | ||||
|
Trade
receivables, net
|
124,929 | 114,506 | ||||||
|
Inventories
|
165,332 | 158,590 | ||||||
|
Deferred
income taxes
|
13,053 | 13,028 | ||||||
|
Other
current assets
|
17,275 | 21,599 | ||||||
|
Total
current assets
|
347,402 | 349,131 | ||||||
|
Property,
plant and equipment, net
|
101,819 | 102,135 | ||||||
|
Goodwill,
net
|
461,346 | 456,459 | ||||||
|
Trademarks
and other intangible assets, net
|
148,000 | 149,196 | ||||||
|
Investments
in and advances to affiliates
|
46,253 | 49,061 | ||||||
|
Other
assets
|
16,498 | 17,514 | ||||||
|
Total
assets
|
$ | 1,121,318 | $ | 1,123,496 | ||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable and accrued expenses
|
$ | 118,871 | $ | 134,618 | ||||
|
Income
taxes payable
|
8,555 | 1,877 | ||||||
|
Current
portion of long-term debt
|
33 | 44 | ||||||
|
Total
current liabilities
|
127,459 | 136,539 | ||||||
|
Deferred
income taxes
|
24,124 | 24,615 | ||||||
|
Other
noncurrent liabilities
|
2,423 | 2,647 | ||||||
|
Long-term
debt, less current portion
|
235,072 | 258,372 | ||||||
|
Total
liabilities
|
389,078 | 422,173 | ||||||
|
Stockholders'
equity:
|
||||||||
|
Common
stock
|
418 | 417 | ||||||
|
Additional
paid-in capital
|
507,967 | 503,161 | ||||||
|
Retained
earnings
|
231,557 | 212,285 | ||||||
|
Treasury
stock
|
(16,328 | ) | (16,309 | ) | ||||
|
Accumulated
other comprehensive income
|
8,626 | 1,769 | ||||||
|
Total
stockholders' equity
|
732,240 | 701,323 | ||||||
|
Total
liabilities and stockholders' equity
|
$ | 1,121,318 | $ | 1,123,496 | ||||
|
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,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
Note
A
|
Note
A
|
|||||||||||||||
|
Net
sales
|
$ | 241,967 | $ | 312,220 | $ | 472,451 | $ | 599,004 | ||||||||
|
Cost
of sales
|
172,067 | 241,838 | 340,743 | 459,789 | ||||||||||||
|
Gross
profit
|
69,900 | 70,382 | 131,708 | 139,215 | ||||||||||||
|
SG&A
expenses
|
47,182 | 49,977 | 89,746 | 103,316 | ||||||||||||
|
Restructuring
expenses
|
1,157 | 894 | 2,936 | 1,492 | ||||||||||||
|
Operating
income
|
21,561 | 19,511 | 39,026 | 34,407 | ||||||||||||
|
Interest
expense and other expenses
|
3,515 | 5,224 | 6,557 | 9,208 | ||||||||||||
|
Equity
in net loss of unconsolidated affiliate, net
|
136 | - | 1,132 | - | ||||||||||||
|
Income
before income taxes
|
17,910 | 14,287 | 31,337 | 25,199 | ||||||||||||
|
Income
tax provision
|
6,728 | 5,498 | 12,065 | 9,644 | ||||||||||||
|
Net
income
|
11,182 | 8,789 | 19,272 | 15,555 | ||||||||||||
|
Income
attributable to noncontrolling interest
|
- | (649 | ) | - | (393 | ) | ||||||||||
|
Net
income attributable to The Hain Celestial Group, Inc.
|
$ | 11,182 | $ | 8,140 | $ | 19,272 | $ | 15,162 | ||||||||
|
Basic
net income per share
|
$ | 0.27 | $ | 0.20 | $ | 0.47 | $ | 0.38 | ||||||||
|
Diluted
net income per share
|
$ | 0.27 | $ | 0.20 | $ | 0.47 | $ | 0.37 | ||||||||
|
Weighted
average common shares outstanding:
|
||||||||||||||||
|
Basic
|
40,774 | 40,464 | 40,737 | 40,344 | ||||||||||||
|
Diluted
|
41,352 | 41,025 | 41,255 | 41,262 | ||||||||||||
|
Note
A - The three months and six months ended December 31, 2008 include
adjustments of $3,341 and $5,874, respectively,
|
||||||||
|
to
reclassify certain promotional expenses, which have the effect of reducing
selling, general and administrative
|
||||||||
|
expenses
and reducing net sales. The reclassifications did not affect reported net
income.
|
||||||||
|
THE
HAIN CELESTIAL GROUP, INC.
|
||||||||||||
|
Pro
Forma Consolidated Statements of Operations
|
||||||||||||
|
Reconciliation
of GAAP Results to Non-GAAP Presentation of Pro Forma Deconsolidation of
HPP
|
||||||||||||
|
(in
thousands, except per share amounts)
|
||||||||||||
|
(Unaudited)
|
||||||||||||
|
Three
Months Ended December 31, 2008
|
||||||||||||
|
As
Reported
|
Deconsolidate
HPP
|
Pro
Forma Basis, Excluding HPP
|
||||||||||
|
Net
sales
|
$ | 312,220 | $ | (61,458 | ) | $ | 250,762 | |||||
|
Cost
of sales
|
241,838 | (56,796 | ) | 185,042 | ||||||||
|
Gross
profit
|
70,382 | (4,662 | ) | 65,720 | ||||||||
|
SG&A
expenses
|
49,977 | (2,148 | ) | 47,829 | ||||||||
|
Restructuring
expenses
|
894 | 894 | ||||||||||
|
Operating
income
|
19,511 | (2,514 | ) | 16,997 | ||||||||
|
Interest
and other expenses, net
|
5,224 | (1,462 | ) | 3,762 | ||||||||
|
Income
before income taxes
|
14,287 | (1,052 | ) | 13,235 | ||||||||
|
Income
tax provision
|
5,498 | (400 | ) | 5,098 | ||||||||
|
Net
income
|
8,789 | (652 | ) | 8,137 | ||||||||
|
Income
attributable to noncontrolling interest
|
649 | 649 | ||||||||||
|
Net
income attributable to The Hain Celestial Group, Inc.
|
$ | 8,140 | $ | (652 | ) | $ | 7,488 | |||||
|
Basic
per share amounts
|
$ | 0.20 | $ | (0.02 | ) | $ | 0.19 | |||||
|
Diluted
per share amounts
|
$ | 0.20 | $ | (0.02 | ) | $ | 0.18 | |||||
|
Weighted
average common shares outstanding:
|
||||||||||||
|
Basic
|
40,464 | 40,464 | 40,464 | |||||||||
|
Diluted
|
41,025 | 41,025 | 41,025 | |||||||||
|
Six
Months Ended December 31, 2008
|
||||||||||||
|
As
Reported
|
Deconsolidate
HPP
|
Pro
Forma Basis, Excluding HPP
|
||||||||||
|
Net
sales
|
$ | 599,004 | $ | (99,848 | ) | $ | 499,156 | |||||
|
Cost
of sales
|
459,789 | (93,246 | ) | 366,543 | ||||||||
|
Gross
profit
|
139,215 | (6,602 | ) | 132,613 | ||||||||
|
SG&A
expenses
|
103,316 | (4,733 | ) | 98,583 | ||||||||
| 1,492 | 1,492 | |||||||||||
|
Operating
income
|
34,407 | (1,869 | ) | 32,538 | ||||||||
|
Interest
and other expenses, net
|
9,208 | (1,233 | ) | 7,975 | ||||||||
|
Income
before income taxes
|
25,199 | (636 | ) | 24,563 | ||||||||
|
Income
tax provision
|
9,644 | (240 | ) | 9,404 | ||||||||
|
Net
income
|
15,555 | (396 | ) | 15,159 | ||||||||
|
Income
attributable to noncontrolling interest
|
393 | 393 | ||||||||||
|
Net
income attributable to The Hain Celestial Group, Inc.
|
$ | 15,162 | $ | (396 | ) | $ | 14,766 | |||||
|
Basic
per share amounts
|
$ | 0.38 | $ | (0.01 | ) | $ | 0.37 | |||||
|
Diluted
per share amounts
|
$ | 0.37 | $ | (0.01 | ) | $ | 0.36 | |||||
|
Weighted
average common shares outstanding:
|
||||||||||||
|
Basic
|
40,344 | 40,344 | 40,344 | |||||||||
|
Diluted
|
41,262 | 41,262 | 41,262 | |||||||||