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Hain Celestial: Q4 Results
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MELVILLE, N.Y -- The Hain Celestial Group, Inc. (Nasdaq:HAIN - News), a leading natural and organic products company providing consumers with A Healthy Way of Life™, today reported strong results for the fourth quarter ended June 30, 2010. Led by solid results from its North American and Continental European operations, net sales in the fourth quarter of fiscal year 2010 totaled $222.8 million versus $223.3 million in the prior year period after excluding net sales of $35.5 million by Hain Pure Protein (“HPP)(1). Net sales in this year’s fourth quarter increased by 4.6%(2) when compared to the prior year quarter excluding both HPP sales and certain food-to-go sales in the United Kingdom. Net sales on a GAAP basis in the prior year quarter amounted to $258.8 million including HPP, which was then a consolidated subsidiary. Fluctuations in currency exchange rates had an insignificant impact on sales comparisons during the period.
“During the fourth quarter our sales and consumption momentum continued with solid performance from our United States, Canadian and Continental European operations. In a tough economy, consumers continued to recognize the value of eating healthy and how healthful eating will continue to be a major part of people’s lives, which we believe will allow us to expand our business for the future,” said Irwin D. Simon, President and Chief Executive Officer of Hain Celestial. “We ended fiscal year 2010 with the Sensible Portions® snacks acquisition and began fiscal year 2011 with The Greek Gods® yogurt acquisition—both exciting strategic additions, which should expand our product offerings into growing categories and should provide us with an opportunity to leverage our existing brands with product extensions in these categories.”
Earnings for the fourth quarter were $0.16 per diluted share, increasing from $0.03 per diluted share in the comparable quarter of the prior year. On an adjusted basis, as described below, earnings improved by 24% to $0.26 per diluted share from $0.21 in the fourth quarter of fiscal year 2009(1). Earnings in the fourth quarter of fiscal year 2010 include $0.02 per diluted share benefit from a lower tax rate for the full year as compared to the estimated tax rate used through the first nine months.
The following table reconciles the GAAP to Non-GAAP diluted earnings per share.
Fourth Quarter
2010 2009
Diluted earnings per share as reported - GAAP
2010: $ 0.16
2009: $ 0.03
Acquisition related expenses, restructuring charges and other
2010: 0.09
2009: 0.04
Loss (gain) on translation of intercompany notes
2010: 0.01
2009: (0.01)
Loss attributable to HPP's discontinued operation
2010: 0.01
2009: 0.03
SKU rationalization
0.11
(Benefit)/charge from discrete tax items
2010: (0.01)
2009: 0.01
Adjusted diluted earnings per share - non-GAAP
2010: $ 0.26
2009: $ 0.21
Adjusted diluted earnings per share - non-GAAP for 2009 has been adjusted for the items shown as
well as the deconsolidation of Hain Pure Protein. See additional tables provided with this release.
Gross profit was 26.0% of net sales in the fourth quarter compared to 18.2% in the year ago period. The prior year gross profit was reduced by a Stock Keeping Unit (“SKU”) rationalization and the lower gross profit performance of HPP. On an adjusted basis the Company’s gross profit was 26.2% of net sales in the fourth quarter compared to 26.9% in the year ago period(1). Adjusted gross profit as a percentage of net sales in the fourth quarter of 2010 was bolstered by strong margin performance in the Company’s United States and Canadian units, which had a favorable mix of higher margin products. The gross profit performance in the Company’s European operations was lower year-over-year, with better margin performance from Continental Europe offset by reduced performance in its United Kingdom food-to-go operations.
Selling, general and administrative expenses (“SG&A”) were 18.3% of net sales in the fourth quarter compared to 19.2% in the year ago period. On an adjusted basis, SG&A was 20.1% of net sales in the prior year period(1). The reduction in SG&A as a percentage of net sales was principally the result of lower overall compensation costs, in part from the benefit of headcount reductions across our business.
Income taxes in the fourth quarter of fiscal 2010 were impacted in two ways. Discrete items, which are accounted for as they arise under GAAP and are not included in the estimated effective tax rate for quarterly reporting, impacted the fourth quarter by a benefit of $0.01 per diluted share. This benefit is included in the Company’s Reconciliation of GAAP Results to Non-GAAP Presentation as a reduction of income. In addition, a change in the overall estimated effective tax rate used to provide taxes through the first three quarters of the fiscal year as compared to the actual rate determined at the end of fiscal 2010 benefitted fourth quarter earnings by $0.02 per diluted share and is not included in the reconciliation.
Operating free cash flow(1) was a record $28.4 million during the fourth quarter compared to $28.2 million in the prior year period. Operating free cash flow was $59.6 million during the fiscal year ended June 30, 2010 compared to $8.6 million during the prior year. The Company’s balance sheet remained strong during the fourth quarter as the Company reduced borrowings under its credit facility by $33.4 million in the year despite using over $50 million of cash to fund acquisitions at the end of the fourth quarter. Debt as a percentage of equity was 29.4%, with equity at $765.7 million at the end of the fourth quarter.
Recent Acquisitions and Divestitures
On June 15, 2010 the Company completed the acquisition of the assets and business of World Gourmet Marketing, L.L.C., including its Sensible Portions brand of Garden Veggie Straws™, Pita Bites® and other snack products. On July 2, 2010 the Company completed the acquisition of the assets and business of 3 Greek Gods LLC, including The Greek Gods brand of all natural, Greek-style yogurt. On June 15, 2010 the Company also purchased Churchill Food Products Limited, a manufacturer and distributor of food-to-go products in the United Kingdom to complement its existing Daily Bread™ brand. The Company completed this acquisition as part of its previously announced plan to return to profitability in the United Kingdom, although there can be no assurances that the Company’s plan will be successful. Also, on May 14 2010, the Company’s HPP joint venture exchanged its Kosher Valley® brand and certain assets with Empire Kosher Poultry, Inc. for an equity interest in Empire. HPP recognized a net loss from the discontinued Kosher Valley operations of $1.2 million during the quarter ended June 30, 2010, of which $0.6 million represented the Company’s share. These acquisitions, along with the HPP divestiture of Kosher Valley, are expected to be accretive to the Company’s earnings in fiscal year 2011.
Recent Accomplishments
The Company highlighted several of its accomplishments during fiscal year 2010 and the beginning of fiscal year 2011:
* Delivered solid sales, earnings and consumption growth despite a challenging economy, which included inventory reductions at distributors and retailers;
* Expanded the depth of its management team;
* Generated net sales of $18 million from new products at Hain Celestial US;
* Acquired the Sensible Portions and The Greek Gods brands, which bring products in growing categories and the Churchill food-to-go operations; and
* Entered into an expanded unsecured credit facility of $400 million to provide the Company with increased access to capital for its next level of growth.
“A year ago we expected to see a stronger second half in our 2010 fiscal year, and we delivered solid operating performance as momentum continued to build quarter-over- quarter from an established base of business across various channels of distribution. Overall, we are pleased with our results in a challenging economy. We’ve established a solid foundation of core natural and organic brands, which we strengthened with new acquisitions positioning the Company for sustainable growth in fiscal year 2011. We look forward to building on our accomplishments with a talented team in place to increase our sales and earnings, for the benefit of our shareholders, customers, consumers and employees,” concluded Irwin Simon.
Fiscal Year 2011 Guidance
The Company announced its fiscal year 2011 guidance of $1.025 to $1.050 billion in sales and $1.24 to $1.31 earnings per diluted share. The guidance does not reflect acquisition and related integration expenses which will be incurred during the Company’s fiscal year 2011. When the Company reports its financial results each quarter, these items will be identified.
Webcast and Upcoming Events
Hain Celestial will host a conference call and webcast at 4:30 PM Eastern Daylight Time today to review its fourth 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 Company is scheduled to present at the Barclays Capital Back-to-School Consumer Conference on September 8, 2010.
The Hain Celestial Group
The Hain Celestial Group (NASDAQ:HAIN - News), 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®, Earth’s Best®, Terra®, Garden of Eatin’®, Sensible Portions®, Health Valley®, WestSoy®, Arrowhead Mills®, MaraNatha®, SunSpire®, DeBoles®, Gluten Free Café™, Hain Pure Foods®, Hollywood®, Spectrum Naturals®, Spectrum Essentials®, Walnut Acres Organic®, Imagine®, Almond Dream®, Rice Dream®, Soy Dream®, Rosetto®, Ethnic Gourmet®, The Greek Gods®, 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. These forward-looking statements include (i) our statements regarding our guidance for net sales and earnings per share in fiscal year 2011; (ii) our statements regarding the impact of the acquisition of the Sensible Portions and The Greek Gods businesses on our product offerings; (iii) our beliefs regarding the potential improvements to the Company’s earnings resulting from our recent acquisitions of the Sensible Portions and The Greek Gods businesses and Churchill Food Products Limited, and HPP’s divestiture of the Kosher Valley operations to Empire Kosher Poultry, Inc.; (iv) our statements regarding our plan to return our United Kingdom operations to profitability; and (v) our expectations for all our business for the 2011 fiscal year and its positioning for the future. Forward-looking statements 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 net sales and earnings per share in fiscal year 2011 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 as well as with respect to our valuation allowances of our deferred tax 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 effects on our results of operations from adverse impacts of foreign exchange; 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 be read only 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. We view operating free cash flow as an important measure because it is one factor in evaluating the amount of cash available for discretionary investment. For the fiscal year ended June 30, 2010, cash provided from operating activities was $71.0 million and capital expenditures were $11.4 million for a total of $59.6 million. The operating free cash flow of $59.6 million represents a $51 million improvement over the fiscal year ended June 30, 2009. For the quarter ended June 30, 2010, cash provided from operating activities was $32.4 million and capital expenditures were $4.0 million for a total of $28.4 million.
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). We have presented the prior year’s results on a pro forma basis as if HPP had been deconsolidated for those periods and accounted for as if on the equity method. Management believes that it is useful to investors to present this information because as of June 30, 2009, HPP is no longer consolidated in the Company’s consolidated financial statements, which affects the comparability of the Company’s results for periods after June 30, 2009 to prior periods. The reconciliation of this non-GAAP presentation to the prior year’s results reported in accordance with GAAP appears in the table Reconciliation of GAAP Results to Non-GAAP Presentation of Pro Forma Deconsolidation of HPP.
This press release and the accompanying tables also include non-GAAP financial measures which are referred to as “adjusted”. The reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are presented in the tables Consolidated Statements of Operations with Adjustments for the three months and the year ended June 30, 2010 and 2009. These non-GAAP financial measures exclude the items listed at the bottom of the tables and, for the periods ended June 30, 2009, the pro forma HPP adjustment described above.
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.
MELVILLE, N.Y -- The Hain Celestial Group, Inc. (Nasdaq:HAIN - News), a leading natural and organic products company providing consumers with A Healthy Way of Life™, today reported strong results for the fourth quarter ended June 30, 2010. Led by solid results from its North American and Continental European operations, net sales in the fourth quarter of fiscal year 2010 totaled $222.8 million versus $223.3 million in the prior year period after excluding net sales of $35.5 million by Hain Pure Protein (“HPP)(1). Net sales in this year’s fourth quarter increased by 4.6%(2) when compared to the prior year quarter excluding both HPP sales and certain food-to-go sales in the United Kingdom. Net sales on a GAAP basis in the prior year quarter amounted to $258.8 million including HPP, which was then a consolidated subsidiary. Fluctuations in currency exchange rates had an insignificant impact on sales comparisons during the period.
“During the fourth quarter our sales and consumption momentum continued with solid performance from our United States, Canadian and Continental European operations. In a tough economy, consumers continued to recognize the value of eating healthy and how healthful eating will continue to be a major part of people’s lives, which we believe will allow us to expand our business for the future,” said Irwin D. Simon, President and Chief Executive Officer of Hain Celestial. “We ended fiscal year 2010 with the Sensible Portions® snacks acquisition and began fiscal year 2011 with The Greek Gods® yogurt acquisition—both exciting strategic additions, which should expand our product offerings into growing categories and should provide us with an opportunity to leverage our existing brands with product extensions in these categories.”
Earnings for the fourth quarter were $0.16 per diluted share, increasing from $0.03 per diluted share in the comparable quarter of the prior year. On an adjusted basis, as described below, earnings improved by 24% to $0.26 per diluted share from $0.21 in the fourth quarter of fiscal year 2009(1). Earnings in the fourth quarter of fiscal year 2010 include $0.02 per diluted share benefit from a lower tax rate for the full year as compared to the estimated tax rate used through the first nine months.
The following table reconciles the GAAP to Non-GAAP diluted earnings per share.
Fourth Quarter
2010 2009
Diluted earnings per share as reported - GAAP
2010: $ 0.16
2009: $ 0.03
Acquisition related expenses, restructuring charges and other
2010: 0.09
2009: 0.04
Loss (gain) on translation of intercompany notes
2010: 0.01
2009: (0.01)
Loss attributable to HPP's discontinued operation
2010: 0.01
2009: 0.03
SKU rationalization
0.11
(Benefit)/charge from discrete tax items
2010: (0.01)
2009: 0.01
Adjusted diluted earnings per share - non-GAAP
2010: $ 0.26
2009: $ 0.21
Adjusted diluted earnings per share - non-GAAP for 2009 has been adjusted for the items shown as
well as the deconsolidation of Hain Pure Protein. See additional tables provided with this release.
Gross profit was 26.0% of net sales in the fourth quarter compared to 18.2% in the year ago period. The prior year gross profit was reduced by a Stock Keeping Unit (“SKU”) rationalization and the lower gross profit performance of HPP. On an adjusted basis the Company’s gross profit was 26.2% of net sales in the fourth quarter compared to 26.9% in the year ago period(1). Adjusted gross profit as a percentage of net sales in the fourth quarter of 2010 was bolstered by strong margin performance in the Company’s United States and Canadian units, which had a favorable mix of higher margin products. The gross profit performance in the Company’s European operations was lower year-over-year, with better margin performance from Continental Europe offset by reduced performance in its United Kingdom food-to-go operations.
Selling, general and administrative expenses (“SG&A”) were 18.3% of net sales in the fourth quarter compared to 19.2% in the year ago period. On an adjusted basis, SG&A was 20.1% of net sales in the prior year period(1). The reduction in SG&A as a percentage of net sales was principally the result of lower overall compensation costs, in part from the benefit of headcount reductions across our business.
Income taxes in the fourth quarter of fiscal 2010 were impacted in two ways. Discrete items, which are accounted for as they arise under GAAP and are not included in the estimated effective tax rate for quarterly reporting, impacted the fourth quarter by a benefit of $0.01 per diluted share. This benefit is included in the Company’s Reconciliation of GAAP Results to Non-GAAP Presentation as a reduction of income. In addition, a change in the overall estimated effective tax rate used to provide taxes through the first three quarters of the fiscal year as compared to the actual rate determined at the end of fiscal 2010 benefitted fourth quarter earnings by $0.02 per diluted share and is not included in the reconciliation.
Operating free cash flow(1) was a record $28.4 million during the fourth quarter compared to $28.2 million in the prior year period. Operating free cash flow was $59.6 million during the fiscal year ended June 30, 2010 compared to $8.6 million during the prior year. The Company’s balance sheet remained strong during the fourth quarter as the Company reduced borrowings under its credit facility by $33.4 million in the year despite using over $50 million of cash to fund acquisitions at the end of the fourth quarter. Debt as a percentage of equity was 29.4%, with equity at $765.7 million at the end of the fourth quarter.
Recent Acquisitions and Divestitures
On June 15, 2010 the Company completed the acquisition of the assets and business of World Gourmet Marketing, L.L.C., including its Sensible Portions brand of Garden Veggie Straws™, Pita Bites® and other snack products. On July 2, 2010 the Company completed the acquisition of the assets and business of 3 Greek Gods LLC, including The Greek Gods brand of all natural, Greek-style yogurt. On June 15, 2010 the Company also purchased Churchill Food Products Limited, a manufacturer and distributor of food-to-go products in the United Kingdom to complement its existing Daily Bread™ brand. The Company completed this acquisition as part of its previously announced plan to return to profitability in the United Kingdom, although there can be no assurances that the Company’s plan will be successful. Also, on May 14 2010, the Company’s HPP joint venture exchanged its Kosher Valley® brand and certain assets with Empire Kosher Poultry, Inc. for an equity interest in Empire. HPP recognized a net loss from the discontinued Kosher Valley operations of $1.2 million during the quarter ended June 30, 2010, of which $0.6 million represented the Company’s share. These acquisitions, along with the HPP divestiture of Kosher Valley, are expected to be accretive to the Company’s earnings in fiscal year 2011.
Recent Accomplishments
The Company highlighted several of its accomplishments during fiscal year 2010 and the beginning of fiscal year 2011:
* Delivered solid sales, earnings and consumption growth despite a challenging economy, which included inventory reductions at distributors and retailers;
* Expanded the depth of its management team;
* Generated net sales of $18 million from new products at Hain Celestial US;
* Acquired the Sensible Portions and The Greek Gods brands, which bring products in growing categories and the Churchill food-to-go operations; and
* Entered into an expanded unsecured credit facility of $400 million to provide the Company with increased access to capital for its next level of growth.
“A year ago we expected to see a stronger second half in our 2010 fiscal year, and we delivered solid operating performance as momentum continued to build quarter-over- quarter from an established base of business across various channels of distribution. Overall, we are pleased with our results in a challenging economy. We’ve established a solid foundation of core natural and organic brands, which we strengthened with new acquisitions positioning the Company for sustainable growth in fiscal year 2011. We look forward to building on our accomplishments with a talented team in place to increase our sales and earnings, for the benefit of our shareholders, customers, consumers and employees,” concluded Irwin Simon.
Fiscal Year 2011 Guidance
The Company announced its fiscal year 2011 guidance of $1.025 to $1.050 billion in sales and $1.24 to $1.31 earnings per diluted share. The guidance does not reflect acquisition and related integration expenses which will be incurred during the Company’s fiscal year 2011. When the Company reports its financial results each quarter, these items will be identified.
Webcast and Upcoming Events
Hain Celestial will host a conference call and webcast at 4:30 PM Eastern Daylight Time today to review its fourth 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 Company is scheduled to present at the Barclays Capital Back-to-School Consumer Conference on September 8, 2010.
The Hain Celestial Group
The Hain Celestial Group (NASDAQ:HAIN - News), 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®, Earth’s Best®, Terra®, Garden of Eatin’®, Sensible Portions®, Health Valley®, WestSoy®, Arrowhead Mills®, MaraNatha®, SunSpire®, DeBoles®, Gluten Free Café™, Hain Pure Foods®, Hollywood®, Spectrum Naturals®, Spectrum Essentials®, Walnut Acres Organic®, Imagine®, Almond Dream®, Rice Dream®, Soy Dream®, Rosetto®, Ethnic Gourmet®, The Greek Gods®, 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. These forward-looking statements include (i) our statements regarding our guidance for net sales and earnings per share in fiscal year 2011; (ii) our statements regarding the impact of the acquisition of the Sensible Portions and The Greek Gods businesses on our product offerings; (iii) our beliefs regarding the potential improvements to the Company’s earnings resulting from our recent acquisitions of the Sensible Portions and The Greek Gods businesses and Churchill Food Products Limited, and HPP’s divestiture of the Kosher Valley operations to Empire Kosher Poultry, Inc.; (iv) our statements regarding our plan to return our United Kingdom operations to profitability; and (v) our expectations for all our business for the 2011 fiscal year and its positioning for the future. Forward-looking statements 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 net sales and earnings per share in fiscal year 2011 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 as well as with respect to our valuation allowances of our deferred tax 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 effects on our results of operations from adverse impacts of foreign exchange; 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 be read only 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. We view operating free cash flow as an important measure because it is one factor in evaluating the amount of cash available for discretionary investment. For the fiscal year ended June 30, 2010, cash provided from operating activities was $71.0 million and capital expenditures were $11.4 million for a total of $59.6 million. The operating free cash flow of $59.6 million represents a $51 million improvement over the fiscal year ended June 30, 2009. For the quarter ended June 30, 2010, cash provided from operating activities was $32.4 million and capital expenditures were $4.0 million for a total of $28.4 million.
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). We have presented the prior year’s results on a pro forma basis as if HPP had been deconsolidated for those periods and accounted for as if on the equity method. Management believes that it is useful to investors to present this information because as of June 30, 2009, HPP is no longer consolidated in the Company’s consolidated financial statements, which affects the comparability of the Company’s results for periods after June 30, 2009 to prior periods. The reconciliation of this non-GAAP presentation to the prior year’s results reported in accordance with GAAP appears in the table Reconciliation of GAAP Results to Non-GAAP Presentation of Pro Forma Deconsolidation of HPP.
This press release and the accompanying tables also include non-GAAP financial measures which are referred to as “adjusted”. The reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are presented in the tables Consolidated Statements of Operations with Adjustments for the three months and the year ended June 30, 2010 and 2009. These non-GAAP financial measures exclude the items listed at the bottom of the tables and, for the periods ended June 30, 2009, the pro forma HPP adjustment described above.
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.