5.2.2007: Meldung: Hain Celestial Group Announces Record Q2

The Hain Celestial Group, Inc., a leading natural and organic food and personal care products company, reported results for the second quarter ended December 31, 2006. The Company reported net sales of $230.9 million, a 24% increase compared with $186.2 million in the prior year second quarter. GAAP net income for the second quarter was $14.8 million, or $0.36 per diluted share, a 20% increase over the prior year"s $12.3 million, or $0.32 per diluted share. Adjusted earnings for the quarter totaled $0.38 per share on adjusted net income of $15.6 million.

The Company successfully completed the previously announced start-up phase of the new production lines at its West Chester Frozen Foods Facility, and incurred the final start-up costs, consistent with its previous estimate of $0.6 million pre-tax, or $0.01 per share. The Company also incurred a non-cash mark-to-market charge of $0.7 million pre-tax, or $0.01 per share, to reflect its contractual obligation for ungranted stock options at fair value in accordance with SFAS No. 123R. These options remain ungranted and therefore remain subject to mark-to-market adjustments as was first reported by the Company with its fiscal year 2006 results.

"I am pleased with our performance this quarter. We continue to see robust sales and strong consumption from our Garden of Eatin"(R), Earth"s Best(R), Arrowhead Mills(R), Rice Dream(R), Imagine(R) and Health Valley(R) soups, Ethnic Gourmet(TM), Westbrae(R), Yves Veggie Cuisine(R) and Spectrum(R) brands as well as significant contributions from our personal care brands, Hain Celestial Canada and Hain Celestial Europe, including Hain Celestial United Kingdom," said Irwin D. Simon, President and Chief Executive Officer of Hain Celestial. "The increasing scale and diversity of our business continues to provide the Company with a balanced portfolio of markets and categories that result in a stable base of sales and earnings that reflect the growth of the natural and organic category. At the same time, we are maintaining our focus on continually improving efficiencies."

The Company reported gross margin of 30.6% in the second quarter, compared to 31.2% in the prior year"s second quarter. In order to compare gross margin performance against the prior year"s comparable quarter, the Company reported that adjusted gross margin for the current quarter was 31.9% when excluding the final start-up costs at its West Chester Frozen Foods Facility and the Company"s lower margin business in the UK. The 70 basis points margin improvement was achieved despite increasing input costs and the challenging selling conditions of the unusually warm weather throughout the quarter impacting the Company"s Celestial Seasonings tea brand.

Selling, general and administrative expense for the second quarter was 19.4% of sales in the current year quarter compared to 19.9% in the prior year. Adjusted for the SFAS No. 123R charges for ungranted stock options, selling, general and administrative expense was 19.1% in the current year versus 19.6% in the prior year quarter. The Company continues to benefit from its increased scale and disciplined strategy for building effective marketing programs.

Interest expense in the second quarter was $2.3 million versus $1.3 million in the prior year quarter and interest income was $0.9 million this year versus $0.2 million last year. The higher level of interest expense was attributable to the $150 million of 10-year 5.98% Senior Notes issued in May 2006, which was in part offset by interest earned on excess cash balances.

The Company"s effective tax rate for the quarter was 38.6% versus 37.9% in the prior year quarter.

Average diluted shares outstanding in the quarter were 41.2 million, an increase of 2.8 million shares, or 7%, over the second quarter of the prior year, and 1.2 million shares, or 3%, higher than in the immediately preceding first quarter of fiscal 2007. The increase resulted from additional shares issued for the exercise of employee stock options and higher equivalent shares included in the earnings per diluted share calculation resulting from the Company"s higher share price. In announcing full year guidance in September 2006, the Company had anticipated an average diluted share count of 40.5 million for the full fiscal 2007 year.

The Company"s balance sheet remains strong with $214.5 million in working capital and a current ratio of 2.9 at December 31, 2006. Debt as a percentage of equity was 23.3% with equity at $651.9 million. The number of days in the Company"s cash conversion cycle was 67 compared to 71 days in the prior year period. Operating free cash flow was $61.0 million for the trailing twelve months ended December 31, 2006 versus $23.5 million in the comparable period of the prior year.

"The broad distribution of our natural and organic food and personal care products into varied channels in North America, Europe and the United Kingdom, alongside our effectiveness in executing our grocery and international businesses, allows us to continue to expand our growth in sales and earnings. These results were achieved despite unusually warm weather in the United States, which challenged our Celestial Seasonings(R) tea brand this past quarter," added Irwin Simon.

"I am particularly excited about the strategic opportunities from our most recent acquisitions of Avalon Natural Products and certain assets of Haldane Foods. These latest additions to our growing portfolio, with the synergistic opportunities they bring, will aid in our continued drive to achieve further margin efficiencies, general and administrative cost savings and to improve our return on equity. Avalon Organics(R) and Alba Botanica(R) are premier brands that complement our natural and organic personal care products. This acquisition demonstrates our commitment to and solidifies our position in the fast-growing personal care category. Haldane Foods provides us with critical mass in the meat-free category, building upon our Linda McCartney(R) brand. This acquisition establishes a manufacturing base for our non-dairy brands along with Haldane"s soy-based products in the United Kingdom. These acquisitions strengthen our portfolio of brands to meet the increasing consumer needs for natural and organic products across multiple categories," concluded Irwin Simon.

Fiscal Year 2007 Outlook

The Company raised its annual guidance for fiscal year 2007 to reflect the recently completed acquisitions of Haldane Foods Limited and Avalon Natural Products. The Company expects full year fiscal 2007 sales of $900 million to $920 million and earnings per share of $1.16 to $1.21 based on 41.0 million shares outstanding.

Webcast and Upcoming Events

Hain Celestial will host a conference call and webcast at 4:30 PM Eastern Standard Time today to review its second quarter fiscal year 2007 results. On March 13, 2007, the Company is scheduled to present at the Banc of America Securities Consumer Conference. These events will be available under the Investor Relations section of the Company"s website at www.hain-celestial.com.

The Hain Celestial Group

The Hain Celestial Group (Nasdaq: HAIN), headquartered in Melville, NY, is a leading natural and organic food and personal care products company in North America and Europe. Hain Celestial participates in almost all natural food categories with well-known brands that include Celestial Seasonings(R), Terra Chips(R), Garden of Eatin"(R), Health Valley(R), WestSoy(R), Earth"s Best(R), Arrowhead Mills(R), DeBoles(R), Hain Pure Foods(R), FreeBird(TM), Hollywood(R), Spectrum Naturals(R), Spectrum Essentials(R), Walnut Acres Organic(TM), Imagine Foods(TM), Rice Dream(R), Soy Dream(R), Rosetto(R), Ethnic Gourmet(TM), Yves Veggie Cuisine(R), Linda McCartney(R), Realeat(R), Lima(R), Grains Noirs(R), Natumi(R), JASON(R), Zia(R) Natural Skincare, Avalon Organics(R), Alba Botanica(R) and Queen Helene(R). For more information, visit www.hain-celestial.com .

Safe Harbor Statement

This press release contains forward-looking statements within and constitutes a "Safe Harbor" statement under the Private Securities Litigation Act of 1995. Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements that involve known and unknown risks and uncertainties, which could cause our actual results to differ materially from those described in the forward- looking statements. These risks include but are not limited to general economic and business conditions; the ability to implement business and acquisition strategies and integrate acquisitions; competition; retention of key personnel; compliance with government regulations and other risks detailed from time-to-time in the Company"s reports filed with the Securities and Exchange Commission, including the report on Form 10-K for the fiscal year ended June 30, 2006. The forward-looking statements made in this press release are current as of the date of this press release, and the Company does not undertake any obligation to update forward-looking statements.

Consolidated Balance Sheets
(In thousands)

December 31, June 30,
2006 2006

Current assets:
Cash and cash equivalents $83,079 $48,875
Trade receivables, net 104,106 80,764
Inventories 115,665 105,883
Deferred income taxes 3,872 2,986
Other current assets 17,860 21,968
Total current assets 324,582 260,476

Property, plant and equipment, net 117,704 119,830
Goodwill, net 399,666 421,002
Trademarks and other intangible
assets, net 79,939 61,626
Other assets 16,043 14,750
Total assets $937,934 $877,684

Current liabilities:
Accounts payable and accrued
expenses $98,775 $81,894
Income taxes payable 10,940 3,083
Current portion of long-term debt 400 1,065
Total current liabilities 110,115 86,042

Deferred income taxes 19,086 19,086
Long-term debt, less current portion 151,409 151,229
Minority interest 5,378 4,926
Total liabilities 285,988 261,283

Stockholders" equity:
Common stock 403 396
Additional paid-in capital 459,098 446,319
Retained earnings 188,836 165,034
Treasury stock (12,745) (12,745)
Foreign currency translation
adjustment 16,354 17,397
Total stockholders" equity 651,946 616,401

Total liabilities and
stockholders" equity $937,934 $877,684

Consolidated Statements of Operations
(in thousands, except per share amounts)

Three Months Ended Six Months Ended
December 31, December 31,
2006 2005 2006 2005

Net sales $230,909 $186,227 $441,116 $347,324
Cost of Sales 160,319 128,061 311,384 243,309
Gross profit 70,590 58,166 129,732 104,015

SG&A expenses 44,799 36,988 86,645 70,857

Operating income 25,791 21,178 43,087 33,158

Interest expense and other
expenses 1,754 1,309 3,574 2,177
Income before income taxes 24,037 19,869 39,513 30,981
Income tax provision 9,269 7,531 15,711 11,752
Net income $14,768 $12,338 $23,802 $19,229

Basic per share amounts $0.38 $0.33 $0.61 $0.52

Diluted per share amounts $0.36 $0.32 $0.59 $0.51

Weighted average common shares
Basic 39,173 37,165 38,960 36,900
Diluted 41,202 38,434 40,613 37,997

Consolidated Statements of Operations With Adjustments
Reconciliation of GAAP Results to Non-GAAP Presentation
(in thousands, except per share amounts)

Three Months Ended December 31,
2006 2005
2006 GAAP Adjustments Adjusted Adjusted (2)

Net sales $230,909 $230,909 $186,227
Cost of Sales 160,319 $(641)(1) 159,678 128,061
Gross profit 70,590 641 71,231 58,166

SG&A expenses 44,799 (723)(2) 44,076 36,445

Operating income 25,791 1,364 27,155 21,721

Interest expense and other
expenses 1,754 1,754 1,309
Income before income taxes 24,037 1,364 25,401 20,412
Income tax provision 9,269 529 (4) 9,798 7,743
Net income $14,768 $835 $15,603 $12,669

Basic per share amounts $0.38 $0.02 $0.40 $0.34

Diluted per share amounts $0.36 $0.02 $0.38 $0.33

Weighted average common
shares outstanding:
Basic 39,173 39,173 37,165
Diluted 41,202 41,202 38,434

Six Months Ended December 31,
2006 2005
2006 GAAP Adjustments Adjusted Adjusted (2)

Net sales $441,116 $441,116 $347,324
Cost of Sales 311,384 $(1,749)(1 ) 309,635 243,309
Gross profit 129,732 1,749 131,481 104,015

SG&A expenses 86,645 (723)(2) 85,922 69,540

Operating income 43,087 2,472 45,559 34,475

Interest expense and other
expenses 3,574 264 (3) 3,838 2,177
Income before income taxes 39,513 2,208 41,721 32,298
Income tax provision 15,711 383 (4) 16,094 12,266
Net income $23,802 $1,825 $25,627 $20,032

Basic per share amounts $0.61 $0.05 $0.66 $0.54

Diluted per share amounts $0.59 $0.04 $0.63 $0.53

Weighted average common
shares outstanding:
Basic 38,960 38,960 36,900
Diluted 40,613 40,613 37,997

(1) Start-up costs at the Company"s West Chester Frozen Foods Facility.

(2) Adjustment in connection with the requirements of SFAS No. 123R to
record compensation when there is a contractual requirement to grant
stock options, whether or not such options have been granted. Each
quarter the Company marks to market the Black Scholes value of the
ungranted stock options. For the three and six month periods ended
December 31, 2005, the SFAS No. 123R adjustment was $543 and $1,317,

(3) The adjustment of $264 includes $2,510 pre-tax gain on the sale of
Biomarche, and $2,246 pre-tax charge for the unfavorable decision by
the German government regarding the application of VAT on non-dairy

(4) Tax effects of the adjustments described above.

Ira Lamel or Mary Anthes, both of The Hain Celestial Group, Inc., +1-631-730-2200; or
Jeremy Fielding or David Lilly, both of Kekst and Company for The Hain Celestial
Group, Inc., +1-212-521-4800

SOURCE:The Hain Celestial Group, Inc.
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