Hain Celestial Reports Fourth Quarter and Fiscal Year 2018 Financial Results

Hain Celestial Reports Fourth Quarter and Fiscal Year 2018 Financial Results

Provides Fiscal Year 2019 Guidance for Net Sales of $2.500 Billion to $2.560 Billion Adjusted EBITDA of $275 Million to $300 Million

PR Newswire

LAKE SUCCESS, N.Y., Aug. 28, 2018 /PRNewswire/ -- The Hain Celestial Group, Inc. 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 fourth quarter and fiscal year ended June 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, which is expected to be completed during the first half of fiscal year 2019.

The Hain Celestial Group, Inc. (PRNewsfoto/The Hain Celestial Group, Inc.)

"We continued to execute on our global strategic objectives, with marketing investments in our core brands and incremental savings and productivity through Project Terra, although a number of cost and operational headwinds in the United States impacted our consolidated annual results," said Irwin D. Simon, Founder, President and Chief Executive Officer of Hain Celestial. "Our top priorities in fiscal year 2019 are to return our United States business to growth and to generate increased profitability.  We remain optimistic that the aggressive strategic changes and investments in our go-to-market strategy will fuel our future results and value for our stockholders."

FINANCIAL HIGHLIGHTS1

Summary of Fourth Quarter Results from Continuing Operations2

  • Net sales increased 3% to $619.6 million compared to the prior year period, or a 1% decrease on a constant currency basis, primarily reflecting low double digit net sales increases from the United Kingdom and Rest of World reporting segments, which includes the Canada and Europe operating segments, partially offset by a mid-single digit net sales decrease from the United States reporting segment. 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 increased 3% compared to the prior year period.
  • Gross margin of 20.2%, a 370 basis point decrease over the prior year period; adjusted gross margin of 21.1%, a 290 basis point decrease over the prior year period as a result of higher trade and promotional investments in the United States and increased freight and commodity costs.
  • Operating income of $16.6 million, an increase of $9.4 million over the prior year period; adjusted operating income of $44.5 million, a $21.3 million decrease over the prior year period.
  • Net loss of $4.6 million, a $3.1 million increase in net loss over the prior year period; adjusted net income of $27.7 million, a $14.8 million decrease over the prior year period.
  • EBITDA of $45.8 million, a 41% decrease over the prior year period; Adjusted EBITDA of $61.4 million, a 25% decrease over the prior year period.
  • Earnings per diluted share ("EPS") loss of $0.04 compared to an EPS loss of $0.01 in the prior year period; Adjusted EPS of $0.27 compared to $0.41 in the prior year period.

Summary of Fiscal Year 2018 Results from Continuing Operations

  • Net sales increased 5% to $2.458 billion compared to the prior year, or 2% on a constant currency basis, primarily reflecting low to mid double-digit net sales increases from the United Kingdom and Rest of World reporting segments, which includes the Canada and Europe operating segments, partially offset by a low single digit net sales decrease from the United States reporting segment. When adjusted for Foreign Exchange and Acquisitions, Divestitures and certain other items including the 2017 and 2018 Project Terra SKU rationalization3, net sales would have increased 2% compared to the prior year.
  • Gross margin of 21.0%, a 120 basis point decrease over the prior year; adjusted gross margin of 22.1%, a 40 basis point decrease over the prior year as a result of higher trade and promotional investments in Hain Celestial United States, increased freight and commodity costs and unfavorable mix, partially offset by Project Terra cost savings.
  • Operating income of $106.0 million, a $3.4 million decrease over the prior year; adjusted operating income of $186.1 million, a $14.5 million decrease over the prior year.
  • Net income of $82.4 million, a $16.9 million increase over the prior year; adjusted net income of $121.3 million, a $3.8 million decrease over the prior year.
  • EBITDA of $197.2 million, a 14% decrease over the prior year; Adjusted EBITDA of $255.9 million, a 3% decrease over the prior year.
  • EPS of $0.79 compared to $0.63 in the prior year; Adjusted EPS of $1.16 compared to $1.20 in the prior year.
  • Cash flow provided by operating activities from continuing operations of $121.3 million; operating free cash flow of $50.4 million.

SEGMENT HIGHLIGHTS FROM CONTINUING OPERATIONS

Hain Celestial United States

Hain Celestial United States net sales in the fourth quarter decreased 6% over the prior year period to $269.9 million; when adjusted for Acquisitions, Divestitures and certain other items including the 2017 and 2018 Project Terra SKU rationalization3, net sales would have been generally flat. Net sales growth from the Pure Personal Care platform was offset by declines in other platforms. As previously discussed, the decline in net sales was due in part to the strategic decision to no longer support certain lower margin SKUs in order to reduce complexity and increase gross margin over time, as the United States reporting segment continued its focus on its top 500 SKUs, which disproportionately impacted the other platforms. Segment operating income in the fourth quarter was $18.6 million, a 56% decrease from the prior year period, and adjusted operating income was $23.2 million, a 45% decrease over the prior year period, driven primarily by higher trade and marketing investments to drive future period growth and increased freight and logistics costs. The financial results for the current period as well as the prior year fourth quarter results exclude the United Kingdom operations of the Ella's Kitchen® brand, thereby eliminating net sales of approximately $25.3 million and $23.6 million, respectively, as these net sales are now reported as part of the United Kingdom reportable segment.

Hain Celestial United States net sales in fiscal year 2018 decreased 2% over the prior year to $1.085 billion; when adjusted for Acquisitions, Divestitures and certain other items including the 2017 and 2018 Project Terra SKU rationalization3, net sales would have decreased 1%. The decrease in net sales was driven by declines in the Better-for-You Snacking, Fresh Living and Better-for-You Pantry platforms, partially offset by growth in the Pure Personal Care, Better-for-You Baby and Tea platforms. The decline in net sales was also due to the aforementioned fourth quarter fiscal 2018 items. Segment operating income in fiscal year 2018 was $86.3 million, a 41% decrease from the prior year, and adjusted operating income was $113.2 million, a 25% decrease over the prior year, driven primarily by higher trade and marketing investments to drive future period growth, increased freight and commodity costs and unfavorable mix. The financial results for fiscal years 2018 and 2017 exclude the United Kingdom operations of the Ella's Kitchen® brand, thereby eliminating net sales of approximately $94.9 million and $83.5 million, respectively, as these net sales are now reported as part of the United Kingdom reportable segment.

Hain Celestial United Kingdom

Hain Celestial United Kingdom net sales in the fourth quarter increased 10% to $239.1 million over the prior year period, or 5% after adjusting for Foreign Exchange, Acquisitions and Divestitures and certain other items3. The strong results for the United Kingdom segment were driven by 15% growth from Tilda®, 9% growth from Hain Daniels and 8% growth from Ella's Kitchen®, or 9%, 4% and 1% growth, respectively, after adjusting for Foreign Exchange, Acquisitions and Divestitures and certain other items3. Segment operating income was $19.0 million, a 9% decrease from the prior year period, and adjusted operating income was $20.2 million, a decrease of 7% over the prior year period. The financial results for the current period as well as the prior year fourth quarter results include the United Kingdom operations of the Ella's Kitchen® brand, which was previously reported as part of the United States reportable segment.

Hain Celestial United Kingdom net sales in fiscal year 2018 increased 10% to $938.0 million over the prior year, or 5% after adjusting for Foreign Exchange, Acquisitions and Divestitures and certain other items3. The strong results for the United Kingdom segment were driven by 14% growth from Tilda®, 9% growth from Hain Daniels and 14% growth from Ella's Kitchen®, or 8%, 3% and 7% growth, respectively, after adjusting for Foreign Exchange, Acquisitions and Divestitures and certain other items3. Segment operating income in fiscal year 2018 was $56.0 million, an 8% increase from the prior year, and adjusted operating income was $70.3 million, an increase of 24% over the prior year driven by strong contribution from the Hain Daniels brands. As discussed above, the financial results for fiscal years 2018 and 2017 include the United Kingdom operations of the Ella's Kitchen® brand, which was previously reported as part of the United States reportable segment.

Rest of World

Rest of World net sales in the fourth quarter increased 12% to $110.7 million over the prior year period, or by 6% on a constant currency basis. Net sales for Hain Celestial Europe grew 18%, or 8% on a constant currency basis, driven by strong performance from the Tilda®, Danival® and Joya® brands as well as own-label products. Net sales for Hain Celestial Canada grew 9%, or 5% on a constant currency basis, driven by strong performance from the Yves Veggie Cuisine®, Alba Botanica®, Sensible Portions® and Live Clean® brands. Segment operating income in the fourth quarter was $8.1 million, a $2.0 million decrease from the prior year period. Adjusted operating income was $9.9 million, a 2% decrease over the prior year period.

Rest of World net sales in fiscal year 2018 increased 13% to $434.9 million over the prior year, or by 7% on a constant currency basis. Net sales for Hain Celestial Europe grew 19%, or 8% on a constant currency basis, driven by strong performance from the Tilda®, Danival®, Joya®, as well as own label products. Net sales for Hain Celestial Canada grew 13%, or 8% on a constant currency basis, driven by strong performance from Yves Veggie Cuisine®, Tilda®, Live Clean® and Sensible Portions® brands. Segment operating income in fiscal year 2018 was $38.7 million, a 21% increase from the prior year, and adjusted operating income was $42.6 million, a 34% increase over the prior year.

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. Net sales for Hain Pure Protein in the fourth quarter were $113.2 million, a decrease of 7% compared to the prior year period, primarily due to the shift in timing of the Passover holiday. Segment operating loss in the fourth quarter was $83.8 million and included a $78.5 million pre-tax non-cash impairment charge.

For fiscal year 2018, net sales for Hain Pure Protein were $509.5 million, relatively flat compared to the prior year. Segment operating loss for fiscal year 2018 was $78.3 million and includes a $78.5 million pre-tax non-cash impairment charge.

Fiscal Year 2019 Guidance

The Company provided 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.
  • 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 benefits from the planned Hain Celestial United States strategic brand investments, distribution gains and price optimization efforts. As a result of the continued strategic brand investments and expected near-term cost headwinds, the Company expects first quarter of fiscal 2019 net sales to be flat to slightly down, adjusted EBITDA and adjusted EPS to be down year-over-year on a percentage basis similar to the fourth quarter of fiscal 2018. In addition, the timing of the annual global Project Terra cost savings and productivity benefits that are already in process is 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 Fourth Quarter Fiscal Year 2018 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 and restructuring charges, start-up costs, 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.

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.

Effective July 1, 2017, due to changes to the Company's internal management and reporting structure, the United Kingdom operations of the Ella's Kitchen® brand, which was previously included within the United States reportable segment, is included in the United Kingdom reportable segment. The prior period segment information contained below has been adjusted to reflect the Company's new operating and reporting structure.

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.

 





































(unaudited and dollars in thousands)

United States

United

Kingdom

Rest of World

Corporate/

Other

Total

NET SALES











Net sales - Three months ended 6/30/18

$     269,857

$     239,061

$     110,680

$                 -

$     619,598

Net sales - Three months ended 6/30/17

$     285,432

$     218,315

$       99,144

$                 -

$     602,891

% change - FY'18 net sales vs. FY'17 net sales

(5.5)%

9.5%

11.6%



2.8%













OPERATING INCOME











Three months ended 6/30/18











Operating income

$       18,623

$       18,984

$         8,069

$      (29,096)

$       16,580

Non-GAAP adjustments (1)

4,571

1,257

1,862

20,211

27,901

Adjusted operating income

$       23,194

$       20,241

$         9,931

$        (8,885)

$       44,481

Operating income margin

6.9%

7.9%

7.3%



2.7%

Adjusted operating income margin

8.6%

8.5%

9.0%



7.2%













Three months ended 6/30/17











Operating income

$       42,262

$       20,748

$       10,117

$      (65,953)

$         7,174

Non-GAAP adjustments (1)

-

942

-

57,661

58,603

Adjusted operating income

$       42,262

$       21,690

$       10,117

$        (8,292)

$       65,777

Operating income margin

14.8%

9.5%

10.2%



1.2%

Adjusted operating income margin

14.8%

9.9%

10.2%



10.9%













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





















































United States

United

Kingdom

Rest of World

Corporate/

Other

Total

NET SALES











Net sales - Twelve months ended 6/30/18

$  1,084,871

$     938,029

$     434,869

$                 -

$  2,457,769

Net sales - Twelve months ended 6/30/17

$  1,107,806

$     851,757

$     383,942

$                 -

$  2,343,505

% change - FY'18 net sales vs. FY'17 net sales

(2.1)%

10.1%

13.3%



4.9%













OPERATING INCOME











Twelve months ended 6/30/18











Operating income

$       86,319

$       56,046

$       38,660

$      (74,985)

$     106,040

Non-GAAP adjustments (1)

26,841

14,227

3,985

34,980

80,033

Adjusted operating income

$     113,160

$       70,273

$       42,645

$      (40,005)

$     186,073

Operating income margin

8.0%

6.0%

8.9%



4.3%

Adjusted operating income margin

10.4%

7.5%

9.8%



7.6%













Twelve months ended 6/30/17











Operating income

$     145,307

$       51,948

$       32,010

$    (119,842)

$     109,423

Non-GAAP adjustments (1)

6,193

4,696

(110)

80,402

91,181

Adjusted operating income

$     151,500

$       56,644

$       31,900

$      (39,440)

$     200,604

Operating income margin

13.1%

6.1%

8.3%



4.7%

Adjusted operating income margin

13.7%

6.7%

8.3%



8.6%













(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 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 Alba Botanica®, Almond Dream®, Arrowhead Mills®, Avalon Organics®, 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®, JĀSÖN®, Johnson's Juice Co.®, Joya®, Kosher Valley®, Lima®, Linda McCartney's® (under license), Live Clean®, MaraNatha®, Mary Berry (under license), Natumi®, New Covent Garden Soup Co.®, Orchard House®, Plainville Farms®, Queen Helene®, 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™. Hain Celestial has been providing A Healthier Way of LifeTM since 1993. For more information, visit www.hain.com.

Safe Harbor Statement

Certain statements contained in this press release constitute "forward-looking statements" within the meaning of 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 facts. You can also identify forward-looking statements by discussions of the Project Terra strategic initiatives, the Company's potential divestiture of its Hain Pure Protein business, and our future performance and results of operations. Such 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 (i) the Company's guidance for Fiscal Year 2019; (ii) the potential divestiture of the Hain Pure Protein business during the first half of fiscal year 2019; (iii) the Company's ability to return our United States business to growth and generate increased profitability; and (iv) the Company's ability to fuel future results and value for stockholders; 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 and twelve months ended June 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 Income 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 12 months ended June 30, 2018 and 2017, Operating Free Cash Flow from continuing operations was calculated as follows:  



















































Twelve Months Ended









6/30/18



6/30/17









(unaudited and dollars in thousands)





















Cash flow provided by operating activities - continuing operations

$           121,308



$           232,695







Purchases of property, plant and equipment

(70,891)



(47,307)







Operating Free Cash Flow - continuing operations

$            50,417



$           185,388















The Company's Operating Free Cash Flow from continuing operations was $50.4 million for the 12 months ended June 30, 2018, a decrease of $135.0 million from the twelve months ended June 30, 2017.  The decrease in Operating Free Cash Flow was primarily attributable to increased capital expenditures in the current year and an increase in inventories and accounts receivable.

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.

For the three months and twelve months ended June 30, 2018 and 2017, EBITDA and Adjusted EBITDA from continuing operations was calculated as follows:  

 



Three Months Ended 



Twelve Months Ended



6/30/18



6/30/17



6/30/18



6/30/17



(unaudited and dollars in thousands)

Net (loss) income

$         (69,941)



$                313



$             9,694



$           67,430

Net (loss) income from discontinued operations

(65,385)



1,817



(72,734)



1,889

Net (loss) income from continuing operations

$           (4,556)



$           (1,504)



$           82,428



$           65,541

















Provision (benefit) for income taxes

10,629



2,954



(887)



22,466

Interest expense, net

6,804



4,914



24,339



18,391

Depreciation and amortization

15,670



14,832



60,809



59,567

Equity in net income of equity-method

investees

(235)



(84)



(339)



(129)

Stock-based compensation expense

3,122



2,139



13,380



9,658

Stock-based compensation expense in

connection with CEO succession agreement

(2,203)



-



(2,203)



-

Goodwill impairment

7,700



-



7,700



-

Long-lived asset and intangibles impairment

5,743



40,452



14,033



40,452

Unrealized currency losses/(gains)

3,143



14,056



(2,027)



12,570

EBITDA

$           45,817



$           77,759



$         197,233



$         228,516

































Acquisition related expenses, restructuring, integration and

other charges

6,999



6,095



20,749



9,694

Accounting review and remediation costs, net of insurance

proceeds

2,887



9,473



9,293



29,562

Warehouse/Manufacturing Facility start-up costs

3,024



-



4,179



-

Plant closure related costs

1,567



-



5,513



1,804

Recall and other related costs

307



-



580



809

Litigation expense

780



-



1,015



-

Machine break-down costs

-



-



317



-

Co-packer disruption

-



-



3,692



-

Losses on terminated chilled desserts contract

-



2,583



6,553



2,583

Regulated packaging change

-



-



1,007



-

2018 Project Terra SKU rationalization

-



-



4,913



-

Toys "R" Us bad debt

-



-



897



-

2017 Project Terra SKU rationalization

-



-



-



5,360

U.K. deferred synergies due to CMA Board decision

-



-



-



918

Realized currency gain on repayment of GBP denominated

debt

-



(14,290)



-



(14,290)

Adjusted EBITDA

$           61,381



$           81,620



$         255,941



$         264,956













 

 

THE HAIN CELESTIAL GROUP, INC.

Consolidated Balance Sheets

 (unaudited and in thousands) 



















June 30,







2018



2017

ASSETS







Current assets:









Cash and cash equivalents

$               106,557



$                137,055



Accounts receivable, net

252,708



225,765



Inventories

391,525



341,995



Prepaid expenses and other current assets

59,946



46,179



Current assets of discontinued operations

240,851



123,787



Total current assets

1,051,587



874,781













Property, plant and equipment, net

310,172



291,866

Goodwill



1,024,136



1,018,892

Trademarks and other intangible assets, net

510,387



521,228

Investments and joint ventures

20,725



18,998

Other assets

29,667



30,235

Noncurrent assets of discontinued operations

-



175,104



Total assets 

$            2,946,674



$             2,931,104













LIABILITIES AND STOCKHOLDERS' EQUITY







Current liabilities:









Accounts payable

$               229,993



$                186,193



Accrued expenses and other current liabilities

116,001



106,727



Current portion of long-term debt

26,605



9,626



Current liabilities of discontinued operations

49,846



37,948



Total current liabilities

422,445



340,494













Long-term debt, less current portion

687,501



740,135

Deferred income taxes 

86,909



98,346

Other noncurrent liabilities

12,770



15,975

Noncurrent liabilities of discontinued operations

-



23,322

Total liabilities

1,209,625



1,218,272













Stockholders' equity:









Common stock

1,084



1,080



Additional paid-in capital

1,148,196



1,137,724



Retained earnings

878,516



868,822



Accumulated other comprehensive loss

(184,240)



(195,479)







1,843,556



1,812,147



Treasury stock

(106,507)



(99,315)



Total stockholders' equity

1,737,049



1,712,832



Total liabilities and stockholders' equity

$            2,946,674



$             2,931,104













 

 

THE HAIN CELESTIAL GROUP, INC.

 Consolidated Statements of Income 

 (unaudited and in thousands, except per share amounts) 

























Three Months Ended June 30,



Twelve Months Ended June 30,





2018



2017



2018



2017





































Net sales



$          619,598



$          602,891



$       2,457,769



$       2,343,505

Cost of sales



494,501



459,029



1,942,321



1,824,109

Gross profit



125,097



143,862



515,448



519,396



















Selling, general and administrative expenses



80,845



74,926



339,431



312,583

Amortization of acquired intangibles



4,343



4,101



18,202



16,988

Acquisition related expenses, restructuring,

integration and other charges



6,999



7,736



20,749



10,388

Accounting review and remediation costs, net of

insurance proceeds



2,887



9,473



9,293



29,562

Goodwill impairment



7,700



-



7,700



-

Long-lived asset and intangibles impairment



5,743



40,452



14,033



40,452

Operating income



16,580



7,174



106,040



109,423



















Interest and other financing expense, net



7,382



5,624



26,925



21,115

Other expense/(income), net



3,360



184



(2,087)



430

Income from continuing operations before income

taxes and equity in net income of equity-method

investees



5,838



1,366



81,202



87,878

Provision (benefit) for income taxes



10,629



2,954



(887)



22,466

Equity in net income of equity-method investees



(235)



(84)



(339)



(129)

  Net (loss) income from continuing operations



$             (4,556)



$             (1,504)



$            82,428



$            65,541

  Net (loss) income from discontinued

    operations, net of tax



(65,385)



1,817



(72,734)



1,889

Net (loss) income



$           (69,941)



$                  313



$              9,694



$            67,430



















Net (loss) income per common share:

















Basic net (loss) income per common share

from continuing operations



$               (0.04)



$               (0.01)



$                 0.79



$                 0.63

Basic net (loss) income per common share

from discontinued operations



(0.63)



0.02



(0.70)



0.02

  Basic net (loss) income per common share



$               (0.67)



$                     -



$                 0.09



$                 0.65



















Diluted net (loss) income per common share

from continuing operations



$               (0.04)



$               (0.01)



$                 0.79



$                 0.63

Diluted net (loss) income per common share

from discontinued operations



(0.63)



0.02



(0.70)



0.02

  Diluted net (loss) income per common share



$               (0.67)



$                     -



$                 0.09



$                 0.65



















Shares used in the calculation of net (loss) income per common share:









Basic



103,927



103,693



103,848



103,611

Diluted



103,927



103,693



104,477



104,248



















 

 

THE HAIN CELESTIAL GROUP, INC.

 Reconciliation of GAAP Results to Non-GAAP Measures 

 (unaudited and in thousands, except per share amounts) 









































Three Months Ended June 30,





2018 GAAP

Adjustments

2018 Adjusted



2017 GAAP

Adjustments

2017 Adjusted





































Net sales



$  619,598

-

$      619,598



$  602,891

$                       -

$      602,891

Cost of sales



494,501

(5,346)

489,155



459,029

(942)

458,087

Gross profit



125,097

5,346

130,443



143,862

942

144,804

Operating expenses (a) 



90,931

(4,969)

85,962



119,479

(40,452)

79,027

Acquisition related expenses, restructuring,

  integration and other charges



6,999

(6,999)

-



7,736

(7,736)

-

Accounting review and remediation costs, net of

  insurance proceeds



2,887

(2,887)

-



9,473

(9,473)

-

Goodwill impairment



7,700

(7,700)

-



-

-

-

Operating income



16,580

27,901

44,481



7,174

58,603

65,777

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



10,742

(3,143)

7,599



5,808

234

6,042

Provision (benefit) for income taxes



10,629

(1,255)

9,374



2,954

14,332

17,286

  Net (loss) income from continuing operations



(4,556)

32,299

27,743



(1,504)

44,037

42,533

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



(65,385)

65,385

-



1,817

(1,817)

-

Net (loss) income



(69,941)

97,684

27,743



313

42,220

42,533



















Diluted net (loss) income per common share from continuing

  operations



(0.04)

0.31

0.27



(0.01)

0.42

0.41

Diluted net (loss) income per common share from

  discontinued operations



(0.63)

0.63

-



0.02

(0.02)

-

Diluted net (loss) income per common share



(0.67)

0.94

0.27



-

0.40

0.41



















Detail of Adjustments:

































Three Months Ended

June 30, 2018







Three Months Ended

June 30, 2017





















Warehouse/Manufacturing Facility start-up costs





$                  3,024







$                         -



Plant closure related costs





2,015







-



Recall and other related costs





307







-



Losses on terminated chilled desserts contract





-







942





















Cost of sales





5,346







942





















Gross profit





5,346







942





















Intangibles impairment





5,632







14,079



Long-lived asset impairment charge associated with

  plant closure 





111







26,373



Accelerated Depreciation on software disposal





461







-



Litigation expense





780







-



Warehouse/Manufacturing Facility start-up costs





188







-



Stock-based compensation expense in connection

  with CEO succession agreement





(2,203)







-



Operating expenses (a)





4,969







40,452





















Acquisition related expenses, restructuring,

  integration and other charges





6,999







7,736



Acquisition related expenses, restructuring,

  integration and other charges





6,999







7,736







































Accounting review and remediation costs, net of insurance proceeds 





2,887







9,473



Accounting review and remediation costs, net of insurance

proceeds





2,887







9,473





















Goodwill impairment





7,700







-



Goodwill impairment





7,700







-







































Operating income





27,901







58,603





















Unrealized currency losses





3,143







14,056



Realized currency gain on repayment of GBP

  denominated debt





-







(14,290)



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





3,143







(234)





















Income tax related adjustments





1,255







(14,332)



Provision (benefit) for income taxes





1,255







(14,332)





















  Net income from continuing operations





$                 32,299







$                 44,037





















(a)Operating expenses include amortization of acquired intangibles, selling, general, and administrative expenses and long-lived asset and intangibles impairment.

(b)Interest and other expense (income), net include interest and other financing expense, net and other (income)/expense, net.



















 

 

THE HAIN CELESTIAL GROUP, INC.

 Reconciliation of GAAP Results to Non-GAAP Measures 

 (unaudited and in thousands, except per share amounts) 









































Twelve Months Ended June 30,





2018 GAAP

Adjustments

2018 Adjusted



2017 GAAP

Adjustments

2017 Adjusted





































Net sales



$ 2,457,769

$                          -

$   2,457,769



$ 2,343,505

$                          -

$   2,343,505

Cost of sales



1,942,321

(27,200)

1,915,121



1,824,109

(7,205)

1,816,904

Gross profit



515,448

27,200

542,648



519,396

7,205

526,601

Operating expenses (a) 



371,666

(15,091)

356,575



370,023

(44,026)

325,997

Acquisition related expenses, restructuring,

  integration and other charges



20,749

(20,749)

-



10,388

(10,388)

-

Accounting review and remediation costs, net of

  insurance proceeds



9,293

(9,293)

-



29,562

(29,562)

-

Goodwill impairment



7,700

(7,700)

-



-

-

-

Operating income



106,040

80,033

186,073



109,423

91,181

200,604

Interest and other expense, net (b) 



24,838

2,027

26,865



21,545

1,720

23,265

Provision (benefit) for income taxes



(887)

39,133

38,246



22,466

29,883

52,349

  Net income from continuing operations



82,428

38,873

121,301



65,541

59,578

125,119

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



(72,734)

72,734

-



1,889

(1,889)

-

Net income



9,694

111,607

121,301



67,430

57,689

125,119



















Diluted net income per common share from continuing

  operations



0.79

0.37

1.16



0.63

0.57

1.20

Diluted net (loss) income per common share from

  discontinued operations



(0.70)

0.70

-



0.02

(0.02)

-

Diluted net income per common share



0.09

1.07

1.16



0.65

0.55

1.20



















Detail of Adjustments:























Twelve Months Ended

June 30, 2018







Twelve Months Ended

June 30, 2017





















Losses on terminated chilled desserts contract





$                     6,553







$                       942



2018 Project Terra SKU rationalization





4,913







-



Plant closure related costs





5,958







464



Co-packer disruption





3,692







-



Warehouse/Manufacturing Facility start-up costs





4,179







-



Regulated packaging change





1,007







-



Machine break-down costs





317







-



Recall and other related costs





580







73



2017 Project Terra SKU rationalization





-







5,360



U.K. deferred synergies due to CMA Board decision





-







366



Cost of sales





27,200







7,205





















Gross profit





27,200







7,205







































Long-lived asset impairment charge associated with

  plant closure





8,401







26,373



Intangibles impairment





5,632







14,079



Toys "R" Us bad debt





897







-



Stock-based compensation acceleration associated

  with Board of Directors





700







-



Litigation expense





1,015







-



Accelerated Depreciation on software disposal





461







-



Warehouse/Manufacturing Facility start-up costs





188







-



Stock-based compensation expense in connection

  with CEO succession agreement





(2,203)







-



Plant closure related costs





-







1,340



U.K. deferred synergies due to CMA Board decision





-







551



Recall and other related costs





-







736



Tilda fire insurance recovery costs and other

start-up/integration Costs





-







947



Operating expenses (a)





15,091







44,026





















Acquisition related expenses, restructuring,

  integration and other charges





20,749







10,388



Acquisition related expenses, restructuring,

  integration and other charges





20,749







10,388







































Accounting review and remediation costs, net of

  insurance proceeds





9,293







29,562



Accounting review and remediation costs, net of insurance

proceeds





9,293







29,562





















Goodwill impairment





7,700







-



Goodwill impairment





7,700







-





















Operating income





80,033







91,181





















Unrealized currency (gains)/losses





(2,027)







12,570



Realized currency gain on repayment of GBP

  denominated debt





-







(14,290)



Interest and other expense, net (b) 





(2,027)







(1,720)





















Income tax related adjustments





(39,133)







(29,883)



Provision (benefit) for income taxes





(39,133)







(29,883)





















  Net income from continuing operations





$                   38,873







$                   59,578





















(a)Operating expenses include amortization of acquired intangibles, selling, general, and administrative expenses and long-lived asset and intangibles impairment.

(b)Interest and other expense, net include interest and other financing expense, net and other (income)/expense, net.



















 

 

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 6/30/18 

$                619,598



$           239,061



$           110,680









 Impact of foreign currency exchange 

(19,934)



(13,949)



(5,985)









 Net sales on a constant currency basis -

   Three months ended 6/30/18 

$                599,664



$           225,112



$           104,695





























Net sales - Three months ended 6/30/17

$                602,891



$           218,315



$            99,144









Net sales growth on a constant currency basis 

   

(0.5)%



3.1%



5.6%































Hain Consolidated



United Kingdom



Rest of World









 Net sales - Twelve months ended 6/30/18 

$             2,457,769



$           938,029



$           434,869









 Impact of foreign currency exchange 

(79,959)



(54,419)



(25,540)









 Net sales on a constant currency basis -

   Twelve months ended 6/30/18 

$             2,377,810



$           883,610



$           409,329





























Net sales - Twelve months ended 6/30/17

$             2,343,505



$           851,757



$           383,942









Net sales growth on a constant currency basis

   

1.5%



3.7%



6.6%











































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 6/30/18 

$                599,664



$           269,857



$           225,112



$           104,695

























Net sales - Three months ended 6/30/17

$                602,891



$           285,432



$           218,315



$            99,144





  Acquisitions

3,538



-



3,165



373





  Divestitures

(1,632)



(1,632)



-



-





  Castle contract termination

(6,773)



-



(6,773)



-





  2017 Project Terra SKU rationalization

(3,185)



(3,185)



-



-





  2018 Project Terra SKU rationalization

(12,093)



(11,165)



-



(928)





  Inventory realignment

-



-



-



-





 Net sales on a constant currency basis adjusted for

   acquisitions, divestitures and other - Three months

   ended 6/30/17 

$                582,746



$           269,450



$           214,707



$            98,589





 Net sales growth on a constant currency

   basis adjusted for acquisitions, divestitures

   and other 

2.9%



0.2%



4.8%



6.2%



























Tilda



Hain Daniels



Ella's Kitchen



Hain Celestial

Europe



Hain Celestial

Canada

Net sales growth - Three months ended 6/30/18

14.5%



8.5%



7.5%



17.7%



9.3%

   Impact of foreign currency exchange 

(5.6)%



(6.6)%



(6.5)%



(9.4)%



(4.4)%

    Impact of acquisitions

0.0%



(2.0)%



0.0%



0.0%



0.0%

    Impact of castle contract termination

0.0%



4.5%



0.0%



0.0%



0.0%

 Net sales on a constant currency basis adjusted for

   acquisitions, divestitures and other - Three months

   ended 6/30/18 

9.0%



4.3%



1.0%



8.3%



4.9%



















































































Hain Consolidated



United States



United Kingdom



Rest of World





 Net sales on a constant currency basis -

   Twelve months ended 6/30/18 

$             2,377,810



$        1,084,871



$           883,610



$           409,329

























Net sales - Twelve months ended 6/30/17

$             2,343,505



$        1,107,806



$           851,757



$           383,942





  Acquisitions

16,000



-



14,796



1,204





  Divestitures

(14,967)



(7,999)



(6,968)



-





  Castle contract termination

(14,401)



-



(14,401)



-





  2017 Project Terra SKU rationalization

(14,359)



(14,359)



-



-





  2018 Project Terra SKU rationalization

(25,357)



(23,154)



-



(2,203)





  Inventory realignment

33,999



33,999



-



-





 Net sales on a constant currency basis adjusted for

   acquisitions, divestitures and other - Twelve months

   ended 6/30/17 

$             2,324,420



$        1,096,293



$           845,184



$           382,943





 Net sales growth on a constant currency

   basis adjusted for acquisitions, divestitures

   and other 

2.3%



(1.0)%



4.5%



6.9%



























Tilda



Hain Daniels



Ella's Kitchen



Hain Celestial

Europe



Hain Celestial

Canada

Net sales growth - Twelve months ended 6/30/18

14.0%



8.7%



13.7%



18.5%



12.5%

   Impact of foreign currency exchange 

(5.8)%



(6.5)%



(6.6)%



(10.5)%



(4.9)%

    Impact of acquisitions

0.0%



(2.4)%



0.0%



0.0%



0.0%

    Impact of castle contract termination

0.0%



2.5%



0.0%



0.0%



0.0%

    Impact of divestures

0.0%



1.1%



0.0%



0.0%



0.0%

 Net sales on a constant currency basis adjusted for

   acquisitions, divestitures and other - Twelve months

   ended 6/30/18 

8.2%



3.3%



7.0%



8.0%



7.6%









































 

 

 

Cision View original content with multimedia:http://www.prnewswire.com/news-releases/hain-celestial-reports-fourth-quarter-and-fiscal-year-2018-financial-results-300702972.html

SOURCE The Hain Celestial Group, Inc.

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