Document


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): November 8, 2018
————————————
https://cdn.kscope.io/b54ace3f143a9eb39036c37bb811744a-haincelestialnewlogoa01a26.jpg
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.)
 
1111 Marcus Avenue, Lake Success, NY 11042
(Address of principal executive offices, including zip code)
 
Registrant’s telephone number, including area code: (516) 587-5000
Former name or former address, if changed since last report: N/A
 
————————————
 
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))




 





Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
        
Emerging growth company
¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨







Item 1.01    Entry into a Material Definitive Agreement

On November 7, 2018, The Hain Celestial Group, Inc. (the “Company”) entered into the first amendment (the “Amendment”) to the Company’s Third Amended and Restated Credit Agreement, dated as of February 6, 2018 (the “Credit Agreement”).  The Amendment, among other things, modifies the definition of “Consolidated EBITDA” in the Credit Agreement to permit the Company to add back to Consolidated EBITDA (i) up to $37 million of cash charges and cash expenses directly attributable to one-time severance and succession costs and expenses incurred by the Company in connection with the departure of the Company’s former Chief Executive Officer Irwin Simon, and (ii) cash charges and cash expenses directly attributable to the restructurings contemplated by and reasonably detailed in the Company’s “Project Terra” cost savings plan, in an amount not to exceed (x) $38.8 million, for the fiscal year ended June 30, 2018, and (y) $35 million thereafter.

The foregoing description of the Amendment is not complete and is qualified in its entirety by the terms and provisions of the Amendment, a copy of which is filed herewith as Exhibit 10.1 and is incorporated herein by reference.

Item 2.02    Results of Operations and Financial Condition

On November 8, 2018, the Company issued a press release announcing financial results for its first quarter ended September 30, 2018.

The information contained in this Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and 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. The press release is attached hereto as Exhibit 99.1 and is incorporated into this Item 2.02 by reference.




Item 9.01    Financial Statements and Exhibits

(d) Exhibits. The following exhibits are furnished herewith:

Exhibit No.
 
Description
10.1
 
First Amendment to Third Amended and Restated Credit Agreement dated November 7, 2018 by and among The Hain Celestial Group, Inc., Hain Pure Protein Corporation, certain wholly-owned subsidiaries of the Hain Celestial Group, Inc. party thereto from time to time, and Bank of America, N.A., as administrative agent.
99.1
 
Press Release of The Hain Celestial Group, Inc. dated November 8, 2018


EXHIBIT INDEX

Exhibit No.
 
Description
 
  







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: November 8, 2018

THE HAIN CELESTIAL GROUP, INC.
(Registrant)
 
By: 
/s/ James Langrock
Name:
James Langrock
Title:
Executive Vice President and
Chief Financial Officer




Exhibit
Exhibit 10.1

EXECUTION VERSION


FIRST AMENDMENT TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT


This FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT, dated as of November 7, 2018 (this “Amendment”), is by and among THE HAIN CELESTIAL GROUP, INC., a Delaware corporation (the “Company”), HAIN PURE PROTEIN CORPORATION, a Delaware corporation and a wholly-owned Subsidiary of the Company (“HPPC” and, together with the Company, collectively, the “Borrowers”) the Lenders (as defined below) party hereto and BANK OF AMERICA, N.A., as administrative agent (in such capacity, the “Administrative Agent”). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement (as defined below).


W I T N E S S E T H

WHEREAS, the Company, HPPC, certain other wholly-owned Subsidiaries of the Company party thereto from time to time, each lender from time to time party thereto (collectively, the “Lenders” and individually, a “Lender”) and the Administrative Agent are parties to that certain Third Amended and Restated Credit Agreement, dated as of February 6, 2018 (as amended, supplemented, extended, restated or otherwise modified from time to time, the “Credit Agreement”);

WHEREAS, the Company has requested that the Lenders amend certain provisions of the Credit Agreement; and

WHEREAS, the Lenders party hereto are willing to make such amendments to the Credit Agreement, in accordance with and subject to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

Article 1
AMENDMENTS TO CREDIT AGREEMENT

1.1    Amendments to Section 1.01 (“Defined Terms”). The definition of “Consolidated EBITDA” set forth in Section 1.01 of the Credit Agreement is hereby amended by (a) deleting the word “and” appearing immediately prior to the Roman numeral “(xi)” appearing in such definition and inserting a comma (“,”) in its place, and (b) inserting new clauses (a)(xii) and (a)(xiii) of such definition immediately after the reference to “$40,000,000;” appearing therein to read as follows:
(xii) cash charges and cash expenses directly attributable to one-time severance and succession costs and expenses incurred by the Company in connection with the departure of Irwin Simon; provided that the aggregate amount added to Consolidated EBITDA pursuant to this clause (xii) shall not exceed $37,000,000 in the aggregate over the term of this Agreement; and (xiii) cash charges and cash expenses directly attributable to the restructurings contemplated by and reasonably detailed in the Company’s “Project Terra”




cost savings plan; provided that the aggregate amount added to Consolidated EBITDA pursuant to this clause (xiii) shall not exceed (A) for the fiscal year ended June 30, 2018, $38,800,000 and (B) thereafter, $35,000,000 in the aggregate for the remaining term of this Agreement;
1.2    Amendment to Section 7.01 (“Liens”). Clause (n) of Section 7.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: “[Reserved];”.
Article 2

CONDITIONS TO EFFECTIVENESS

2.1    Closing Conditions. This Amendment shall be deemed effective as of September 30, 2018 (the “Amendment Effective Date”) upon satisfaction of the following conditions (in each case, in form and substance reasonably acceptable to the Administrative Agent):

(a)    Executed Amendment. The Administrative Agent shall have received a copy of this Amendment duly executed by each of the Borrowers, the Required Lenders and the Administrative Agent.
(b)    Default. After giving effect to this Amendment, no Default or Event of Default shall exist.
(c)    Fees, Costs and Expenses. The Administrative Agent shall have received from the Company:
(i)    For the account of each Lender that executes and delivers a signature page hereto to the Administrative Agent by 5:00 p.m. Eastern time on or before October 31, 2018 (each such Lender, a “Consenting Lender”, and collectively, the “Consenting Lenders”), an amendment fee in an amount equal to five (5) basis points on (A) the aggregate Revolving Commitments of such Consenting Lender (prior to giving effect to this Amendment) and (B) the outstanding principal amount of the Term Loans held by such Consenting Lender.
(ii)    The Administrative Agent shall have received from the Company such other fees, costs and expenses that are payable in connection with the consummation of the transactions contemplated hereby and Holland & Knight LLP shall have received from the Company payment of all outstanding fees and expenses previously incurred and all fees and expenses incurred in connection with this Amendment.
(d)    Miscellaneous. All other documents and legal matters in connection with the transactions contemplated by this Amendment shall be reasonably satisfactory in form and substance to the Administrative Agent and its counsel.

2


Article 3
MISCELLANEOUS

3.1    Amended Terms. On and after the Amendment Effective Date, all references to the Credit Agreement in each of the Loan Documents shall hereafter mean the Credit Agreement as amended by this Amendment. Except as specifically amended hereby or otherwise agreed, the Credit Agreement is hereby ratified and confirmed and shall remain in full force and effect according to its terms.
3.2    FATCA. For purposes of determining withholding Taxes imposed under the Foreign Account Tax Compliance Act (FATCA), from and after the Amendment Effective Date, the Borrower and the Administrative Agent shall treat (and the Lenders hereby authorize the Administrative Agent to treat) the Credit Agreement as not qualifying as a “grandfathered obligation” within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i).
3.3    Representations and Warranties of Loan Parties. Each of the Borrowers represents and warrants as follows:
(a)    It has taken all necessary action to authorize the execution, delivery and performance of this Amendment.
(b)    This Amendment has been duly executed and delivered by such Borrower and constitutes such Borrower’s legal, valid and binding obligation, enforceable in accordance with its terms, except as such enforceability may be subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).
(c)    No consent, approval, authorization or order of, or filing, registration or qualification with, any court or governmental authority or third party is required in connection with the execution, delivery or performance by such Person of this Amendment.
(d)    The representations and warranties of the Company and each other Loan Party contained in Article V of the Credit Agreement or any other Loan Document, or which are contained in any document furnished at any time under or in connection therewith, are true and correct in all material respects on and as of the Amendment Effective Date, except that (i) such representations and warranties that specifically refer to an earlier date shall be true and correct in all material respects as of such earlier date, (ii) such representations and warranties shall be true and correct in all respects to the extent they are qualified by a materiality standard and (iii) the representations and warranties contained in clauses (a) and (c) of Section 5.03 of the Credit Agreement shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (c), respectively, of Section 6.01 of the Credit Agreement.
(e)    As of the Amendment Effective Date, no event has occurred and is continuing which constitutes a Default or an Event of Default.
(f)    The Obligations are not reduced or modified by this Amendment and are not subject to any offsets, defenses or counterclaims.

3


3.4    Reaffirmation of Obligations. Each Borrower hereby ratifies the Credit Agreement and each other Loan Document to which it is a party, and acknowledges and reaffirms (a) that it is bound by all terms of the Credit Agreement and each such Loan Document applicable to it and (b) that it is responsible for the observance and full performance of its respective Obligations.
3.5    Loan Document. This Amendment shall constitute a Loan Document under the terms of the Credit Agreement.
3.6    Expenses. The Borrower agrees to pay all reasonable costs and expenses of the Administrative Agent in connection with the preparation, execution and delivery of this Amendment, including without limitation the reasonable fees and expenses of the Administrative Agent’s legal counsel.
3.7    Further Assurances. The Loan Parties agree to promptly take such action, upon the request of the Administrative Agent, as is necessary to carry out the intent of this Amendment.
3.8    Entirety. This Amendment and the other Loan Documents embody the entire agreement among the parties hereto and supersede all prior agreements and understandings, oral or written, if any, relating to the subject matter hereof.
3.9    Counterparts; Telecopy. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Amendment or any other document required to be delivered hereunder, by fax transmission or e-mail transmission (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Agreement. Without limiting the foregoing, upon the request of any party, such fax transmission or e-mail transmission shall be promptly followed by such manually executed counterpart.
3.10    No Actions, Claims, Etc. As of the date hereof, each of the Loan Parties hereby acknowledges and confirms that it has no knowledge of any actions, causes of action, claims, demands, damages and liabilities of whatever kind or nature, in law or in equity, against the Administrative Agent, the Lenders, or the Administrative Agent’s or the Lenders’ respective officers, employees, representatives, agents, counsel or directors arising from any action by such Persons, or failure of such Persons to act under the Credit Agreement on or prior to the date hereof.
3.11    GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING FOR SUCH PURPOSES SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK.
3.12    Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
3.13    Consent to Jurisdiction; Service of Process; Waiver of Jury Trial. The jurisdiction, service of process and waiver of jury trial provisions set forth in Sections 10.14 and 10.15 of the Credit Agreement are hereby incorporated by reference, mutatis mutandis.

4


IN WITNESS WHEREOF the parties hereto have caused this Amendment to be duly executed on the date first above written.

BORROWERS:

THE HAIN CELESTIAL GROUP, INC.

By: /s/ James Langrock            
Name: James Langrock
Title: Executive Vice President and
Chief Financial Officer

HAIN PURE PROTEIN CORPORATION

By: /s/ James Langrock            
Name: James Langrock
Title: Executive Vice President and
Chief Financial Officer

    

The Hain Celestial Group, Inc.
First Amendment to Credit Agreement


ADMINISTRATIVE AGENT:

BANK OF AMERICA, N.A.,
as Administrative Agent


By: /s/ Ronaldo Naval            
Name: Ronaldo Naval
Title: Vice President

The Hain Celestial Group, Inc.
First Amendment to Credit Agreement


LENDERS:    

BANK OF AMERICA, N.A.,
as a Lender


By: /s/ Jana L. Baker            
Name: Jana L. Baker
Title: Senior Vice President

The Hain Celestial Group, Inc.
First Amendment to Credit Agreement


WELLS FARGO BANK, N.A,,
as a Lender


By: /s/ Stephanie Allegra            
Name: Stephanie Allegra
Title: Senior Vice President

The Hain Celestial Group, Inc.
First Amendment to Credit Agreement


JPMORGAN CHASE BANK, N.A,
as a Lender


By: /s/ Anthony Galea            
Name: Anthony Galea
Title: Executive Director

The Hain Celestial Group, Inc.
First Amendment to Credit Agreement


CITIZENS BANK, N.A,
as a Lender


By: /s/ Barrett D Bencivenga            
Name: Barrett D Bencivenga
Title: Managing Director

The Hain Celestial Group, Inc.
First Amendment to Credit Agreement


FARM CREDIT EAST, ACA,
as a Lender


By: /s/ Justin A. Brown            
Name: Justin A. Brown
Title: Vice President

The Hain Celestial Group, Inc.
First Amendment to Credit Agreement


HSBC Bank USA, N.A.,
as a Lender


By: /s/ Emily E. Barker #22403            
Name: Emily E. Barker #22403
Title: Senior Credit Manager

The Hain Celestial Group, Inc.
First Amendment to Credit Agreement


COBANK, ACB
as a Lender

By: /s/ Robert Pickett            
Name: Robert Pickett
Title: Vice President

The Hain Celestial Group, Inc.
First Amendment to Credit Agreement


Capital One, National Association
 
By: /s/ Kevin Brown            
Name: Kevin Brown
Title: Senior Vice President

The Hain Celestial Group, Inc.
First Amendment to Credit Agreement


KeyBank National Association,
as a Lender


By: /s/ Matthew J. Bradley            
Name: Matthew J. Bradley
Title: Vice President

The Hain Celestial Group, Inc.
First Amendment to Credit Agreement


Coöperatieve Rabobank U.A., New York Branch,
as a Lender


By: /s/ Chris Grimes            
Name: Chris Grimes
Title: Executive Director

By: /s/ David Vernon            
Name: David Vernon
Title: Vice President

The Hain Celestial Group, Inc.
First Amendment to Credit Agreement


SunTrust Bank,
as a Lender


By: /s/ Tesha Winslow            
Name: Tesha Winslow
Title: Director

The Hain Celestial Group, Inc.
First Amendment to Credit Agreement


TD Bank, N.A.,
as a Lender


By: /s/ John Topolovec            
Name: John Topolovec
Title: Vice President


The Hain Celestial Group, Inc.
First Amendment to Credit Agreement


AGFIRST FARM CREDIT BANK,
as a Lender


By: /s/ Matthew Jeffords            
Name: Matthew Jeffords
Title: Vice President

The Hain Celestial Group, Inc.
First Amendment to Credit Agreement


KBC BANK N.V., NEW YORK BRANCH
as a Lender


By: /s/ Susan M. Silver            
Name: Susan M. Silver
Title: Managing Director

By: /s/ Deborah Carlson            
Name: Deborah Carlson
Title: Director


The Hain Celestial Group, Inc.
First Amendment to Credit Agreement
Exhibit

Exhibit 99.1

https://cdn.kscope.io/b54ace3f143a9eb39036c37bb811744a-haincelestialnewlogoa01a26.jpg

Hain Celestial Reports First Quarter Fiscal Year 2019 Financial Results
Reiterates Fiscal 2019 Guidance

Lake Success, NY, November 8, 2018 - The Hain Celestial Group, Inc. (Nasdaq: HAIN) (“Hain Celestial” or the “Company”), a leading organic and natural products company with operations in North America, Europe, Asia and the Middle East providing consumers with A Healthier Way of Life™, today reported financial results for the first quarter ended September 30, 2018. The results contained herein are presented with the Hain Pure Protein operating segment being treated as a discontinued operation given the Company’s previously announced decision to divest the business.
“We have an incredible opportunity at Hain Celestial to accelerate the mission and purpose envisioned 25 years ago, as we further build consumer awareness and access to our organic, natural and better-for-you brands,” said Mark L. Schiller, President and Chief Executive Officer of Hain Celestial. “Initially, I will be focused on, the improvement of our operational and financial results, particularly in the United States. Looking ahead, I am eager to work with our entire team to further integrate our global operations to achieve sustainable sales growth and cost-savings synergies and deliver long-term value for our stockholders.”

FINANCIAL HIGHLIGHTS1 
 
Summary of First Quarter Results from Continuing Operations2 

Net sales decreased 5% to $560.8 million compared to the prior year period, or a 4% decrease on a constant currency basis. When adjusted for Foreign Exchange and Acquisitions, Divestitures and certain other items, including the 2017 and 2018 Project Terra Stock Keeping Unit (“SKU”) rationalization3, net sales would have decreased 2% compared to the prior year period.
Gross margin of 17.8%, a 320 basis point decrease over the prior year period; adjusted gross margin of 19.0%, a 250 basis point decrease over the prior year period as a result of planned higher trade and promotional investments in the United States and increased freight and commodity costs.
Operating loss of $24.1 million compared to operating income of $29.2 million in the prior year period; adjusted operating income of $20.9 million compared to $36.1 million in the prior year period.
Net loss of $23.1 million compared to net income of $18.6 million in the prior year period; adjusted net income of $9.7 million compared to $21.4 million in prior year period.
EBITDA loss of $5.9 million compared to EBITDA of $46.6 million in the prior year period; Adjusted EBITDA of $34.1 million compared to $53.5 million in the prior year period.
Earnings per diluted share (“EPS”) loss of $0.22 compared to EPS of $0.18 in the prior year period; Adjusted EPS of $0.09 compared to $0.20 in the prior year period.

1 This press release includes certain non-GAAP financial measures, which are intended to supplement, not substitute for, comparable GAAP financial measures. Reconciliations of non-GAAP financial measures to GAAP financial measures are provided herein in the tables “Reconciliation of GAAP Results to Non-GAAP Measures".
2 Unless otherwise noted all results included in this press release are from continuing operations.
3 Refer to “Net Sales Growth at Constant Currency and Adjusted for Acquisitions, Divestitures and Other” provided herein.







The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com



SEGMENT HIGHLIGHTS FROM CONTINUING OPERATIONS

Hain Celestial United States
Hain Celestial United States net sales in the first quarter decreased 8% over the prior year period to $244.0 million; when adjusted for Acquisitions, Divestitures and certain other items including the 2017 and 2018 Project Terra SKU rationalization3, net sales would have decreased 4%. The decline in the United States segment was primarily driven by declines in the Pantry and Better-For-You Snacks platforms, partially offset by an increase in the Pure Personal Care platform. The Pure Personal Care Platform’s strong growth for the first quarter was offset, in part, by production challenges within the quarter. United States net sales also were impacted by the previously disclosed strategic decision to no longer support certain lower margin SKUs and focus on the Top 500 SKUs in order to reduce complexity and increase gross margin over time. Segment operating income in the first quarter was $2.2 million, a 90% decrease from the prior year period, and adjusted operating income was $7.7 million, a 67% decrease over the prior year period, driven primarily by higher planned trade investments to drive future period growth and increased freight and logistics costs.
Hain Celestial United Kingdom
Hain Celestial United Kingdom net sales in the first quarter decreased 2% to $218.6 million over the prior year period, or relatively flat after adjusting for Foreign Exchange, Acquisitions and Divestitures and certain other items3. The results for the United Kingdom segment reflect a 4% decline in Hain Daniels, or a decline of 2% after adjusting for Foreign Exchange, Acquisitions and Divestitures and certain other items3, primarily driven by declines from New Covenant Garden Soup Co.®, Johnson’s Juice Co.®, and Yorkshire Provender® brands, offset in part by growth in the Linda McCartney’s® and Hartley’s® brands. The net sales decrease in the United Kingdom segment was partially offset by 4% growth from Tilda® and 8% growth from Ella’s Kitchen®, or 5% and 9% growth, respectively, after adjusting for Foreign Exchange, Acquisitions and Divestitures and certain other items3. Segment operating income was $4.0 million, a 58% decrease from the prior year period, and adjusted operating income was $10.7 million, a decrease of 18% over the prior year period.
Rest of World
Rest of World net sales in the first quarter decreased 5% to $98.3 million over the prior year period, or 2% after adjusting for Foreign Exchange, Acquisitions and Divestitures and certain other items3. Net sales for Hain Celestial Canada decreased 5%, or relatively flat after adjusting for Foreign Exchange, Acquisitions and Divestitures and certain other items3 , primarily driven by declines from the Europe’s Best® brand, Tilda® brand and private label sales offset in part by growth from the Yves Veggie Cuisine® and Live Clean® brands. Net sales for Hain Celestial Europe were flat, or increased 1% on a constant currency basis, primarily driven by strong performance from the Joya® and Natumi® brands offset in part by declines from the Lima® and Danival® brands. Net sales for Hain Ventures, formerly known as Cultivate Ventures, decreased 18%, or 14% after adjusting for Foreign Exchange, Acquisitions and Divestitures and certain other items3, primarily driven by declines from the Blueprint®, Westsoy® and SunSpire® brands, offset in part by growth from the Yves Veggie Cuisine® and GG UniqueFiber™ brands. Segment operating income in the first quarter was $7.8 million, a $1.2 million decrease from the prior year period. Adjusted operating income was $9.2 million, an increase of 2% over the prior year period.

Hain Pure Protein Discontinued Operations
As previously disclosed on May 5, 2018, the results of operations, financial position and cash flows related to the operations of the Hain Pure Protein business segment have been moved to discontinued operations in the current and prior periods. The Company continues to make substantial progress to complete the divestiture of the Hain Pure Protein operating segment by the third quarter of fiscal 2019. Net sales for Hain Pure Protein in the first quarter were $113.5 million, a decrease of 5% compared to the prior year period. Segment operating loss in the first quarter was $19.5 million, primarily resulting from the continued pricing pressure resulting from excess turkey inventory for the Plainville Farms business.


Fiscal Year 2019 Guidance
The Company reiterated its annual guidance for continuing operations for fiscal year 2019:
Total net sales of $2.500 billion to $2.560 billion, an increase of approximately 2% to 4% as compared to fiscal year 2018.


The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com



Adjusted EBITDA of $275 million to $300 million, an increase of approximately 7% to 17% as compared to fiscal year 2018.
Adjusted EPS of $1.21 to $1.38, an increase of approximately 4% to 19% as compared to fiscal year 2018.

The Company expects growth in net sales, adjusted EBITDA and adjusted EPS to be weighted towards the second half of fiscal 2019 as it recovers from the production disruptions, primarily in its personal care business, experienced during the first quarter of fiscal 2019, which impacted net sales and profitability, and as it benefits from the planned Hain Celestial United States strategic brand investments, distribution gains and price optimization efforts. In addition, the timing of the annual global Project Terra cost savings and productivity benefits that are already in process are expected to accelerate as the fiscal year progresses. Details of the Project Terra cost savings and productivity with expected timing are contained in the presentation for the First Quarter Fiscal Year 2019 earnings call available under the Investor Relations section of the Company’s website at www.hain.com.
Guidance, where adjusted, is provided on a non-GAAP basis and excludes acquisition-related expenses; integration charges; restructuring charges, start-up costs, consulting fees and other costs associated with Project Terra; costs associated with the CEO Succession Agreement; unrealized net foreign currency gains or losses, accounting review and remediation costs and other non-recurring items that may be incurred during the Company’s fiscal year 2019, which the Company will continue to identify as it reports its future financial results. Guidance also excludes the impact of any future acquisitions and divestitures.
The Company cannot reconcile its expected Adjusted EBITDA to net income or adjusted earnings per diluted share to earnings per share under “Fiscal Year 2019 Guidance” without unreasonable effort because certain items that impact net income and other reconciling metrics are out of the Company’s control and/or cannot be reasonably predicted at this time.

Contact:
James Langrock / Katie Turner
The Hain Celestial Group, Inc.
516-587-5000















The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com



(unaudited and dollars in thousands)
United States
 
United Kingdom
 
Rest of World
 
Corporate / Other
 
Total
NET SALES
 
 
 
 
 
 
 
 
 
Net sales - Three months ended 9/30/18
$
243,985

 
$
218,577

 
$
98,271

 
$

 
$
560,833

Net sales - Three months ended 9/30/17
$
263,659

 
$
222,445

 
$
103,115

 
$

 
$
589,219

% change - FY'19 net sales vs. FY'18 net sales
(7.5
)%
 
(1.7
)%
 
(4.7
)%
 
 
 
(4.8
)%
 
 
 
 
 
 
 
 
 
 
OPERATING INCOME/(LOSS)


 


 


 
 



Three months ended 9/30/18
 
 
 
 
 
 
 
 
 
Operating income (loss)
$
2,170

 
$
4,020

 
$
7,836

 
$
(38,130
)
 
$
(24,104
)
Non-GAAP adjustments (1)
5,480

 
6,646

 
1,346

 
31,495

 
44,967

Adjusted operating income
$
7,650

 
$
10,666

 
$
9,182

 
$
(6,635
)
 
$
20,863

Operating income margin
0.9
 %
 
1.8
 %
 
8.0
 %
 
 
 
(4.3
)%
Adjusted operating income margin
3.1
 %
 
4.9
 %
 
9.3
 %
 
 
 
3.7
 %
 
 
 
 
 
 
 
 
 
 
Three months ended 9/30/17


 


 


 


 


Operating income
$
20,861

 
$
9,601

 
$
8,997

 
$
(10,218
)
 
$
29,241

Non-GAAP adjustments (1)
2,283

 
3,335

 

 
1,256

 
6,874

Adjusted operating income
$
23,144

 
$
12,936

 
$
8,997

 
$
(8,962
)
 
$
36,115

Operating income margin
7.9
 %
 
4.3
 %
 
8.7
 %
 
 
 
5.0
 %
Adjusted operating income margin
8.8
 %
 
5.8
 %
 
8.7
 %
 



6.1
 %
(1) See accompanying table of "Reconciliation of GAAP Results to Non-GAAP Measures"

Webcast Presentation
Hain Celestial will host a conference call and webcast today at 8:30 AM Eastern Time to discuss its results and business outlook. The webcast and any accompanying presentation will be available under the Investor Relations section of the Company’s website at www.hain.com.

About The Hain Celestial Group, Inc.
The Hain Celestial Group (Nasdaq: HAIN), headquartered in Lake Success, NY, is a leading organic and natural products company with operations in North America, Europe, Asia and the Middle East. Hain Celestial participates in many natural categories with well-known brands that include Almond Dream®, Arrowhead Mills®, Bearitos®, Better Bean®, BluePrint®, Casbah®, Celestial Seasonings®, Clarks™, Coconut Dream®, Cully & Sully®, Danival®, DeBoles®, Earth’s Best®, Ella’s Kitchen®, Empire®, Europe’s Best®, Farmhouse Fare™, Frank Cooper’s®, FreeBird®, Gale’s®, Garden of Eatin’®, GG UniqueFiber™, Hain Pure Foods®, Hartley’s®, Health Valley®, Imagine™, Johnson’s Juice Co.™, Joya®, Kosher Valley®, Lima®, Linda McCartney® (under license), MaraNatha®, Mary Berry (under license), Natumi®, New Covent Garden Soup Co.®, Orchard House®, Plainville Farms®, Rice Dream®, Robertson’s®, Rudi’s Gluten-Free Bakery™, Rudi’s Organic Bakery®, Sensible Portions®, Spectrum® Organics, Soy Dream®, Sun-Pat®, Sunripe®, SunSpire®, Terra®, The Greek Gods®, Tilda®, Walnut Acres®, WestSoy®, Yorkshire Provender®, Yves Veggie Cuisine® and William’s™. The Company’s personal care products are marketed under the Alba Botanica®, Avalon Organics®, Earth’s Best®, JASON®, Live Clean® and Queen Helene® brands.

Safe Harbor Statement
Certain statements contained in this press release constitute “forward-looking statements” within the meaning of federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements are predictions based on expectations and projections about future events and are not statements of historical fact. You can identify forward-looking statements by the use of forward-looking terminology such as “plan”, “continue”, “expect”, “anticipate”, “intend”, “predict”, “project”, “estimate”, “likely”, “believe”, “might”, “seek”, “may”, “will”, “remain”, “potential”, “can”, “should”, “could”, “future” and similar expressions, or the negative of those expressions, or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical


The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com



matters. You can also identify forward-looking statements by discussions of the Company’s Project Terra strategic initiatives, the Company’s potential divestiture of its Hain Pure Protein business, the Company’s Guidance for Fiscal Year 2019 and our future performance and results of operations.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, levels of activity, performance or achievements of the Company, or industry results, to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements, and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and may not be able to be realized. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). Such factors, include, among others, the Company’s beliefs or expectations relating to the impact of competitive products, changes to the competitive environment, changes to consumer preferences, our ability to manage our supply chain effectively, changes in raw materials, freight, commodity costs and fuel, consolidation of customers, reliance on independent distributors, general economic and financial market conditions, risks associated with our international sales and operations, our ability to execute and realize cost savings initiatives, including, but not limited to, cost reduction initiatives under Project Terra and SKU rationalization plans, our ability to identify and complete acquisitions or divestitures and integrate acquisitions, the availability of organic and natural ingredients, the reputation of our brands and the other risks detailed from time-to-time in the Company’s reports filed with the United States Securities and Exchange Commission, including the Annual Report on Form 10-K for the fiscal year ended June 30, 2018, and our quarterly reports. As a result of the foregoing and other factors, the Company cannot provide any assurance regarding future results, levels of activity and achievements of the Company, and neither the Company nor any person assumes responsibility for the accuracy and completeness of these statements. All forward-looking statements contained herein apply as of the date hereof or as of the date they were made and, except as required by applicable law, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflects changes in underlying assumptions or factors of new methods, future events or other changes.

Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP financial measures, including net sales adjusted for the impact of Foreign currency, Acquisitions and Divestitures and certain other items, including SKU rationalization, as applicable in each case, adjusted operating income, adjusted gross margin, adjusted net income, adjusted earnings per diluted share, EBITDA, Adjusted EBITDA and operating free cash flow. The reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are presented in the tables “Reconciliation of GAAP Results to Non-GAAP Measures” for the three months ended September 30, 2018 and 2017 and in the paragraphs below. 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 be read only in connection with the Company’s Consolidated Statements of Operations presented in accordance with GAAP.
The Company defines Operating Free Cash Flow as cash provided by or used in operating activities from continuing operations (a GAAP measure) less capital expenditures. The Company views Operating Free Cash Flow as an important measure because it is one factor in evaluating the amount of cash available for discretionary investments.
 
For the three months ended September 30, 2018 and 2017, Operating Free Cash Flow from continuing operations was calculated as follows:
 
Three Months Ended
 
9/30/2018
 
9/30/2017
 
(unaudited and dollars in thousands)
Cash flow provided by operating activities - continuing operations
$
(18,252
)
 
$
(1,080
)
Purchases of property, plant and equipment
(22,547
)
 
(11,233
)
Operating Free Cash Flow - continuing operations
$
(40,799
)
 
$
(12,313
)



The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com



The Company's Operating Free Cash Flow from continuing operations was negative $40.8 million for the three months ended September 30, 2018, a decrease of $28.5 million from the three months ended September 30, 2017. This decrease resulted primarily from a decrease of $30.6 million in net income adjusted for non-cash charges, an increase of $11.3 million in capital expenditures offset in part by $13.4 million of cash provided by working capital accounts.
The Company believes presenting net sales at constant currency provides useful information to investors because it provides transparency to underlying performance in the Company’s consolidated net sales by excluding the effect that foreign currency exchange rate fluctuations have on period-to-period comparability given the volatility in foreign currency exchange markets. To present this information for historical periods, current period net sales for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average monthly exchange rates in effect during the corresponding period of the prior fiscal year, rather than at the actual average monthly exchange rate in effect during the current period of the current fiscal year. As a result, the foreign currency impact is equal to the current year results in local currencies multiplied by the change in average foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year.
The Company provides net sales adjusted for constant currency, acquisitions and divestitures, and certain other items including SKU rationalization, as applicable in each case, to understand the growth rate of net sales excluding the impact of such items. The Company’s management believes net sales adjusted for such items is useful to investors because it enables them to better understand the growth of our business from period-to-period.
The Company defines EBITDA as net income from continuing operations (a GAAP measure) before income taxes, net interest expense, depreciation and amortization, equity in net income of equity method investees, stock based compensation expense and unrealized currency gains. Adjusted EBITDA is defined as EBITDA before acquisition-related expenses, including integration and restructuring charges, and other non-recurring items. The Company’s management believes that these presentations provide useful information to management, analysts and investors regarding certain additional financial and business trends relating to its results of operations and financial condition. In addition, management uses these measures for reviewing the financial results of the Company as well as a component of performance-based executive compensation.






























The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com




For the three months ended September 30, 2018 and 2017, EBITDA and Adjusted EBITDA from continuing operations was calculated as follows:
 
Three Months Ended
 
9/30/2018
 
9/30/2017
 
(unaudited and dollars in thousands)
Net (loss) income
$
(37,425
)
 
$
19,846

Net (loss) income from discontinued operations
(14,324
)
 
1,233

Net (loss) income from continuing operations
(23,101
)
 
18,613

 
 
 
 
(Benefit) provision for income taxes
(9,483
)
 
7,484

Interest expense, net
7,169

 
5,609

Depreciation and amortization
14,384

 
15,147

Equity in net loss (income) of equity-method investees
175

 
(11
)
Stock-based compensation (benefit) expense
(209
)
 
3,164

Stock-based compensation expense in connection with Chief Executive Officer Succession Agreement
312

 

Long-lived asset impairment
4,236

 

Unrealized currency losses/(gains)
590

 
(3,419
)
EBITDA
(5,927
)
 
46,587

 
 
 
 
Project Terra costs and other
10,333

 
4,850

Chief Executive Officer Succession Plan expense, net
19,241

 

Accounting review and remediation costs, net of insurance proceeds
3,414

 
(1,358
)
Losses on terminated chilled desserts contract

 
1,472

Warehouse/manufacturing facility start-up costs
4,599

 
737

Co-packer disruption

 
1,173

Plant closure related costs
1,828

 

Litigation and related expenses
569

 

Adjusted EBITDA
$
34,057

 
$
53,461





The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com



THE HAIN CELESTIAL GROUP, INC.
Consolidated Balance Sheets
(in thousands)
 
 
 
 
 
September 30,
 
June 30,
 
2018
 
2017
 
(unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
55,871

 
$
106,557

Accounts receivable, net
246,519

 
252,708

Inventories
414,479

 
391,525

Prepaid expenses and other current assets
58,183

 
59,946

Current assets of discontinued operations
239,809

 
240,851

    Total current assets
1,014,861

 
1,051,587

 
 
 
 
Property, plant and equipment, net
315,926

 
310,172

Goodwill
1,019,693

 
1,024,136

Trademarks and other intangible assets, net
502,356

 
510,387

Investments and joint ventures
21,153

 
20,725

Other assets
29,041

 
29,667

Total assets
$
2,903,030

 
$
2,946,674

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
226,418

 
$
229,993

Accrued expenses and other current liabilities
136,890

 
116,001

Current portion of long-term debt
28,498

 
26,605

Current liabilities of discontinued operations
46,407

 
49,846

    Total current liabilities
438,213

 
422,445

 
 
 
 
Long-term debt, less current portion
693,429

 
687,501

Deferred income taxes
73,223

 
86,909

Other noncurrent liabilities
12,741

 
12,770

Total liabilities
1,217,606

 
1,209,625

 
 
 
 
Stockholders' equity:
 
 
 
Common stock
1,085

 
1,084

Additional paid-in capital
1,148,330

 
1,148,196

Retained earnings
840,906

 
878,516

Accumulated other comprehensive loss
(197,411
)
 
(184,240
)
 
1,792,910

 
1,843,556

Treasury stock
(107,486
)
 
(106,507
)
    Total stockholders' equity
1,685,424

 
1,737,049

    Total liabilities and stockholders' equity
$
2,903,030

 
$
2,946,674

   

8





THE HAIN CELESTIAL GROUP, INC.
 Consolidated Statements of Operations
 (unaudited and in thousands, except per share amounts)
 
 
 
 
 
Three Months Ended September 30,
 
2018

2017
Net sales
$
560,833

 
$
589,219

Cost of sales
461,239

 
465,831

  Gross profit
99,594

 
123,388

Selling, general and administrative expenses
82,257

 
86,081

Amortization of acquired intangibles
3,905

 
4,574

Project Terra costs and other
10,333

 
4,850

Chief Executive Officer Succession Plan expense, net
19,553

 

Accounting review and remediation costs, net of insurance proceeds
3,414

 
(1,358
)
Long-lived asset impairment
4,236

 

  Operating (loss) income
(24,104
)
 
29,241

Interest expense and other financing expense, net
7,705

 
6,282

Other expense/(income), net
600

 
(3,127
)
(Loss) income from continuing operations before income taxes and equity in net income of equity-method investees
(32,409
)
 
26,086

(Benefit) provision for income taxes
(9,483
)
 
7,484

Equity in net loss (income) of equity-method investees
175

 
(11
)
Net (loss) income from continuing operations
$
(23,101
)
 
$
18,613

Net (loss) income from discontinued operations, net of tax
(14,324
)
 
1,233

Net (loss) income
$
(37,425
)
 
$
19,846

 
 
 
 
Net (loss) income per common share:
 
 
 
Basic net (loss) income per common share from continuing operations
$
(0.22
)
 
$
0.18

Basic net (loss) income per common share from discontinued operations
(0.14
)
 
0.01

Basic net (loss) income per common share
$
(0.36
)
 
$
0.19

 
 
 
 
Diluted net (loss) income per common share from continuing operations
$
(0.22
)
 
$
0.18

Diluted net (loss) income per common share from discontinued operations
(0.14
)
 
0.01

Diluted net (loss) income per common share
$
(0.36
)
 
$
0.19

 
 
 
 
Shares used in the calculation of net (loss) income per common share:
 
 
 
Basic
103,962

 
103,709

Diluted
103,962

 
104,476


9





THE HAIN CELESTIAL GROUP, INC.
 Consolidated Statements of Cash Flows
 (unaudited and in thousands)
 
 
 
 
 
Three Months Ended September 30,
 
2018
 
2017
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net (loss) income
$
(37,425
)
 
$
19,846

Net (loss) income from discontinued operations
(14,324
)
 
1,233

Net (loss) income from continuing operations
$
(23,101
)
 
$
18,613

 
 
 
 
Adjustments to reconcile net (loss) income from continuing operations to net cash used in operating activities from continuing operations:
 
 
 
Depreciation and amortization
14,384

 
15,147

Deferred income taxes
(13,276
)
 
(637
)
Equity in net loss (income) of equity-method investees
175

 
(11
)
Chief Executive Officer Succession Plan expense, net
19,241

 

Stock-based compensation, net
103

 
3,164

Impairment of long-lived assets
4,236

 

Other non-cash items, net
841

 
(3,059
)
Increase (decrease) in cash attributable to changes in operating assets and liabilities:
 
 
 
Accounts receivable
4,357

 
(18,100
)
Inventories
(24,147
)
 
(28,186
)
Other current assets
1,358

 
(9,021
)
Other assets and liabilities
(19
)
 
(53
)
Accounts payable and accrued expenses
(2,404
)
 
21,063

Net cash used in operating activities - continuing operations
(18,252
)
 
(1,080
)
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Purchases of property and equipment
(22,547
)
 
(11,233
)
Other
(652
)
 

Net cash used in investing activities - continuing operations
(23,199
)
 
(11,233
)
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Borrowings under bank revolving credit facility
70,000

 
20,000

Repayments under bank revolving credit facility
(60,000
)
 
(15,000
)
Repayments under term loan
(3,750
)
 

Funding of discontinued operations entities
(15,155
)
 
(20,269
)
(Repayments) borrowings of other debt, net
1,709

 
8,237

Shares withheld for payment of employee payroll taxes
(979
)
 
(2,098
)
Net cash used in financing activities - continuing operations
(8,175
)
 
(9,130
)
 
 
 
 
Effect of exchange rate changes on cash
(1,060
)
 
3,059

 
 
 
 
CASH FLOWS FROM DISCONTINUED OPERATIONS
 
 
 
Cash used in operating activities
(15,905
)
 
(18,358
)
Cash used in investing activities
(1,635
)
 
(3,680
)
Cash provided by financing activities
15,107

 
20,217

Net cash flows used in discontinued operations
(2,433
)
 
(1,821
)
 
 
 
 
Net decrease in cash and cash equivalents
(53,119
)
 
(20,205
)
Cash and cash equivalents at beginning of period
113,018

 
146,992

Cash and cash equivalents at end of period
$
59,899

 
$
126,787

Less: cash and cash equivalents of discontinued operations
(4,028
)
 
(8,117
)
Cash and cash equivalents of continuing operations at end of period
$
55,871

 
$
118,670



10






THE HAIN CELESTIAL GROUP, INC.
 Reconciliation of GAAP Results to Non-GAAP Measures
 (unaudited and in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
2018 GAAP
Adjustments
2018 Adjusted
 
2017 GAAP
 Adjustments
2017 Adjusted
Net sales
$
560,833

$

$
560,833

 
$
589,219

$

$
589,219

Cost of sales
461,239

(6,862
)
454,377

 
465,831

(3,382
)
462,449

Gross profit
99,594

6,862

106,456

 
123,388

3,382

126,770

Operating expenses (a)
90,398

(4,805
)
85,593

 
90,655


90,655

Project Terra costs and other
10,333

(10,333
)

 
4,850

(4,850
)

Accounting review and remediation costs, net of insurance proceeds
3,414

(3,414
)

 
(1,358
)
1,358


Chief Executive Officer Succession Plan expense, net
19,553

(19,553
)

 



Operating (loss) income
(24,104
)
44,967

20,863

 
29,241

6,874

36,115

Interest and other expense (income), net (b)
8,305

(590
)
7,715

 
3,155

3,419

6,574

(Benefit) provision for income taxes
(9,483
)
12,779

3,296

 
7,484

691

8,175

Net (loss) income from continuing operations
(23,101
)
32,778

9,677

 
18,613

2,764

21,377

Net (loss) income from discontinued operations, net of tax
(14,324
)
14,324


 
1,233

(1,233
)

Net (loss) income
(37,425
)
47,102

9,677

 
19,846

1,531

21,377

 
 
 
 
 
 
 
 
Diluted net (loss) income per common share from continuing operations
(0.22
)
0.32

0.09

 
0.18

0.03

0.20

Diluted net (loss) income per common share from discontinued operations
(0.14
)
0.14


 
0.01

(0.01
)

Diluted net (loss) income per common share
(0.36
)
0.45

0.09

 
0.19

0.01

0.20


(a) Operating expenses include amortization of acquired intangibles, selling, general, and administrative expenses and long-lived asset impairment.
(b) Interest and other expense (income), net include interest and other financing expense, net and other (income)/expense, net.





11





THE HAIN CELESTIAL GROUP, INC.
 Reconciliation of GAAP Results to Non-GAAP Measures
 (unaudited and in thousands)
 
 
 
 
Detail of Adjustments:
 
 
 
 
Three Months Ended September 30,
 
2018
 
2017
Warehouse/manufacturing facility start-up costs
$
4,599

 
$
737

Plant closure related costs
2,263

 

Losses on terminated chilled desserts contract

 
1,472

Co-packer disruption

 
1,173

Cost of sales
6,862

 
3,382

 
 
 
 
Gross profit
6,862

 
3,382

 
 
 
 
Long-lived asset impairment charge associated with plant
4,236

 

Litigation and related expenses
569

 

Operating expenses (a)
4,805

 

 
 
 
 
Project Terra costs and other
10,333

 
4,850

Project Terra costs and other
10,333

 
4,850

 
 
 
 
Accounting review and remediation costs, net of insurance proceeds
3,414

 
(1,358
)
Accounting review and remediation costs, net of insurance proceeds
3,414

 
(1,358
)
 
 
 
 
Chief Executive Officer Succession Plan expense, net
19,553

 

Chief Executive Officer Succession Plan expense, net
19,553

 

 
 
 
 
Operating income
44,967

 
6,874

 
 
 
 
Unrealized currency losses (gains)
590

 
(3,419
)
Interest and other expenses (income), net (b)
590

 
(3,419
)
 
 
 
 
Income tax related adjustments
(12,779
)
 
(691
)
Benefit for income taxes
(12,779
)
 
(691
)
 
 
 
 
Net income from continuing operations
$
32,778

 
$
2,764


(a) Operating expenses include amortization of acquired intangibles, selling, general, and administrative expenses and long-lived asset impairment.
(b) Interest and other expense (income), net includes interest and other financing expense, net and other (income)/expense, net.


12





THE HAIN CELESTIAL GROUP, INC.
 Reconciliation of GAAP Results to Non-GAAP Measures
 (unaudited and in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
September 30, 2017
 
December 31, 2017
 
March 31, 2018
 
June 30, 2018
 
GAAP
Adjustments
Adjusted
 
GAAP
Adjustments
Adjusted
 
GAAP
Adjustments
Adjusted
 
GAAP
Adjustments
Adjusted
Net sales
$
589,219

$

$
589,219

 
$
616,232

$

$
616,232

 
$
632,720

$

$
632,720

 
$
619,598

$

$
619,598

Cost of sales
465,831

(3,382
)
462,449

 
482,282

(5,832
)
476,450

 
499,707

(12,640
)
487,067

 
494,501

(5,346
)
489,155

Gross profit
123,388

3,382

126,770

 
133,950

5,832

139,782

 
133,013

12,640

145,653

 
125,097

5,346

130,443

Operating expenses (a)
90,655


90,655

 
94,465

(4,151
)
90,314

 
95,615

(5,971
)
89,644

 
90,931

(4,969
)
85,962

Project Terra costs and other
4,850

(4,850
)

 
4,069

(4,069
)

 
4,831

(4,831
)

 
6,999

(6,999
)

Accounting review and remediation costs, net of insurance proceeds
(1,358
)
1,358


 
4,451

(4,451
)

 
3,313

(3,313
)

 
2,887

(2,887
)

Goodwill impairment



 



 



 
7,700

(7,700
)

Operating income
29,241

6,874

36,115

 
30,965

18,503

49,468

 
29,254

26,755

56,009

 
16,580

27,901

44,481

Interest and other expense (income), net (b)
3,155

3,419

6,574

 
5,719

286

6,005

 
5,222

1,465

6,687

 
10,742

(3,143
)
7,599

Provision (benefit) for income taxes
7,484

691

8,175

 
(17,690
)
27,751

10,061

 
(1,310
)
11,946

10,636

 
10,629

(1,255
)
9,374

  Net income (loss) from continuing operations
18,613

2,764

21,377

 
43,130

(9,534
)
33,596

 
25,241

13,344

38,585

 
(4,556
)
32,299

27,743

  Net income (loss) from discontinued operations, net of tax
1,233

(1,233
)

 
3,973

(3,973
)

 
(12,555
)
12,555


 
(65,385
)
65,385


Net income (loss)
19,846

1,531

21,377

 
47,103

(13,507
)
33,596

 
12,686

25,899

38,585

 
(69,941
)
97,684

27,743

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted net income (loss) per common share from continuing operations
0.18

0.03

0.20

 
0.41

(0.09
)
0.32

 
0.24

0.13

0.37

 
(0.04
)
0.31

0.27

Diluted net income (loss) per common share from
discontinued operations
0.01

(0.01
)

 
0.04

(0.04
)

 
(0.12
)
0.12


 
(0.63
)
0.63


Diluted net income (loss) per common share
0.19

0.01

0.20

 
0.45

(0.13
)
0.32

 
0.12

0.25

0.37

 
(0.67
)
0.94

0.27


(a) Operating expenses include amortization of acquired intangibles, selling, general, and administrative expenses, long-lived asset and intangible impairment.
(b) Interest and other expense (income), net include interest and other financing expense, net and other (income)/expense, net.

















13





THE HAIN CELESTIAL GROUP, INC.
 Reconciliation of GAAP Results to Non-GAAP Measures
 (unaudited and in thousands)
 
 
 
 
 
 
 
 
Detail of Adjustments:
 
 
 
 
 
 
 
 
Three Months Ended
 
September 30, 2017
 
December 31, 2017
 
March 31, 2018
 
June 30, 2018
Warehouse/manufacturing facility start-up costs
$
737

 
$
418

 
$

 
$
3,024

2018 Project Terra SKU rationalization

 

 
4,913

 

Plant closure related costs

 
697

 
3,246

 
2,015

Recall and other related costs

 

 
273

 
307

Machine break-down costs

 

 
317

 

Losses on terminated chilled desserts contract
1,472

 
2,143

 
2,939

 

Co-packer disruption
1,173

 
1,567

 
952

 

Regulated packaging change

 
1,007

 

 

Cost of sales
3,382

 
5,832

 
12,640

 
5,346

 
 
 
 
 
 
 
 
Gross profit
3,382

 
5,832

 
12,640

 
5,346

 
 
 
 
 
 
 
 
Long-lived asset impairment charge associated with plant closure

 
3,451

 
4,839

 
111

Intangibles impairment

 

 

 
5,632

Accelerated depreciation on software disposal

 

 

 
461

Litigation and related expenses

 

 
235

 
780

Warehouse/manufacturing facility start-up costs

 

 

 
188

Stock-based compensation expense in connection with Chief Executive Officer Succession Agreement

 

 

 
(2,203
)
Toys "R" Us bad debt

 

 
897

 

Stock-based compensation acceleration associated with Board of Directors

 
700

 

 

Operating expenses (a)

 
4,151

 
5,971

 
4,969

 
 
 
 
 
 
 
 
Project Terra costs and other
4,850

 
4,069

 
4,831

 
6,999

Project Terra costs and other
4,850

 
4,069

 
4,831

 
6,999

 
 
 
 
 
 
 
 
Accounting review and remediation costs, net of insurance proceeds
(1,358
)
 
4,451

 
3,313

 
2,887

Accounting review and remediation costs, net of insurance proceeds
(1,358
)
 
4,451

 
3,313

 
2,887

 
 
 
 
 
 
 
 
Goodwill Impairment

 

 

 
7,700

Goodwill impairment

 

 

 
7,700

 
 
 
 
 
 
 
 
Operating income
6,874

 
18,503

 
26,755

 
27,901

 
 
 
 
 
 
 
 
Unrealized currency (gains) losses
(3,419
)
 
(286
)
 
(1,465
)
 
3,143

Interest and other expenses (income), net (b)
(3,419
)
 
(286
)
 
(1,465
)
 
3,143

 
 
 
 
 
 
 
 
Income tax related adjustments
(691
)
 
(27,751
)
 
(11,946
)
 
1,255

(Benefit) provision for income taxes
(691
)
 
(27,751
)
 
(11,946
)
 
1,255

 
 
 
 
 
 
 
 
Net income (loss) from continuing operations
$
2,764

 
$
(9,534
)
 
$
13,344

 
$
32,299


(a) Operating expenses include amortization of acquired intangibles, selling, general, and administrative expenses, long-lived asset and intangible impairment.
(b) Interest and other expense (income), net includes interest and other financing expense, net and other (income)/expense, net.

14





THE HAIN CELESTIAL GROUP, INC.
 
 
Net Sales Growth at Constant Currency
 
 
(unaudited and in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hain Consolidated
 
United Kingdom
 
Rest of World
 
 
 
 
 
 
 Net sales - Three months ended 9/30/18
$
560,833

 
$
218,577

 
$
98,271

 
 
 
 
 
 
 Impact of foreign currency exchange
3,600

 
1,377

 
2,223

 
 
 
 
 
 
 Net sales on a constant currency basis - Three months ended 9/30/18
$
564,433

 
$
219,954

 
$
100,494

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales - Three months ended 9/30/17
$
589,219

 
$
222,445

 
$
103,115

 
 
 
 
 
 
Net sales growth on a constant currency basis
(4.2
)%
 
(1.1
)%
 
(2.5
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Sales Growth at Constant Currency and Adjusted for Acquisitions, Divestitures and Other
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hain Consolidated
 
United States
 
United Kingdom
 
Rest of World
 
 
 
 
Net sales on a constant currency basis - Three months ended 9/30/18
$
564,433

 
$
243,985

 
$
219,954

 
$
100,494

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales - Three months ended 9/30/17
$
589,219

 
$
263,659

 
$
222,445

 
$
103,115

 
 
 
 
  Acquisitions
2,561

 

 
2,561

 

 
 
 
 
  Castle contract termination
(5,942
)
 

 
(5,942
)
 

 
 
 
 
  2017 Project Terra SKU rationalization
(2,223
)
 
(2,223
)
 

 

 
 
 
 
  2018 Project Terra SKU rationalization
(8,615
)
 
(7,483
)
 

 
(1,132
)
 
 
 
 
Net sales on a constant currency basis adjusted for acquisitions, divestitures and other - Three months ended 9/30/17
$
575,000

 
$
253,953

 
$
219,064

 
$
101,983

 
 
 
 
Net sales growth on a constant currency basis adjusted for acquisitions, divestitures and other
(1.8
)%
 
(3.9
)%
 
0.4
 %
 
(1.5
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tilda
 
Hain Daniels
 
Ella's Kitchen
 
Hain Celestial Europe
 
Hain Celestial Canada
 
Hain Growth Ventures
Net sales growth - Three months ended 9/30/18
3.7
 %
 
(4.4
)%
 
8.0
 %
 
 %
 
(5.4
)%
 
(17.7
)%
   Impact of foreign currency exchange
1.2
 %
 
0.5
 %
 
0.5
 %
 
1.1
 %
 
4.0
 %
 
 %
   Impact of acquisitions
 %
 
(1.5
)%
 
 %
 
 %
 
 %
 
 %
   Impact of castle contract termination
 %
 
3.6
 %
 
 %
 
 %
 
 %
 
 %
   Impact of 2018 Project Terra SKU rationalization
 %
 
 %
 
 %
 
 %
 
1.2
 %
 
3.8
 %
Net sales growth on a constant currency basis adjusted for acquisitions, divestitures and other - Three months ended 9/30/18
4.9
 %
 
(1.9
)%
 
8.6
 %
 
1.1
 %
 
(0.2
)%
 
(13.9
)%

15