Hain Celestial Announces Record Second Quarter Fiscal Year 2016 Results
Second Quarter Performance Highlights
- Record net sales of
$752.6 million , an 8% increase, or 11% on a constant currency basis, over prior year net sales of$696.4 million . Net sales were impacted by$18.3 million as a result of foreign exchange rate movements versus a year ago. - Earnings per diluted share of
$0.55 , a 28% increase; adjusted earnings per diluted share of$0.57 , a 6% increase. Foreign currencies impacted reported results by$0.01 per diluted share. - Record operating income of
$87.7 million , 11.7% of net sales; adjusted operating income of$92.9 million , 12.3% of net sales. - Strong operating cash flow of
$93.9 million , an increase of 82% over the prior year quarter.
"Our record net sales reflect the continuing strong performance from the
Second Quarter 2016
The Company earned net income of
"
Fiscal Year 2016 Guidance
The Company reiterated its fiscal year 2016 guidance expectations of:
- Total net sales range of
$2.90 billion to $3.04 billion , an increase of approximately 7% to 12% as compared to fiscal year 2015, and - Earnings per diluted share range of
$1.95 to $2.10 , an increase of approximately 4% to 12% as compared to fiscal year 2015.
With respect to the cadence of the second half of the Company's fiscal year financial results, the Company expects net sales to be slightly lower in the third quarter as compared to the fourth quarter, while 42% to 46% of the Company's second half earnings will be in the third quarter and the balance in the fourth quarter.
Guidance is provided on a non-GAAP basis and excludes acquisition-related expenses, integration and restructuring charges, start-up costs, unrealized net foreign currency gains or losses, reserves for litigation matters and other non-recurring items, including any product recalls or market withdrawals, that have been or may be incurred during the Company's fiscal year 2016, which the Company will continue to identify as it reports its future financial results. Guidance excludes the impact of any future acquisitions.
Segment Results
The Company's operations are managed into the following segments:
The following is a summary of results for the three and six months ended
(dollars in thousands) |
United States |
United Kingdom |
Hain Pure Protein |
Rest of World |
Corporate/ |
Total |
NET SALES |
||||||
Net sales - Three months ended 12/31/15 (1) |
$ 342,298 |
$ 194,226 |
$ 141,706 |
$ 74,359 |
$ - |
$ 752,589 |
Net sales - Three months ended 12/31/14 |
$ 353,969 |
$ 200,797 |
$ 86,216 |
$ 55,401 |
$ - |
$ 696,383 |
Non-GAAP Adjustments (2) |
$ 5,331 |
$ - |
$ - |
$ - |
$ - |
$ 5,331 |
Adjusted net sales - Three months ended 12/31/14 |
$ 359,300 |
$ 200,797 |
$ 86,216 |
$ 55,401 |
$ - |
$ 701,714 |
% change - FY'16 net sales vs. FY'15 adjusted net sales |
-4.7% |
-3.3% |
64.4% |
34.2% |
7.3% |
|
OPERATING INCOME |
||||||
Three months ended 12/31/15 |
||||||
Operating income |
$ 50,221 |
$ 18,768 |
$ 18,125 |
$ 4,689 |
$ (4,081) |
$ 87,722 |
Non-GAAP Adjustments (2) |
$ 1,800 |
$ - |
$ 841 |
$ - |
$ 2,498 |
$ 5,139 |
Adjusted operating income |
$ 52,021 |
$ 18,768 |
$ 18,966 |
$ 4,689 |
$ (1,583) |
$ 92,861 |
Adjusted operating income margin |
15.2% |
9.7% |
13.4% |
6.3% |
12.3% |
|
Three months ended 12/31/14 |
||||||
Operating income |
$ 55,591 |
$ 12,263 |
$ 7,715 |
$ 5,613 |
$ (7,170) |
$ 74,012 |
Non-GAAP Adjustments (2) |
$ 7,555 |
$ 5,189 |
$ - |
$ - |
$ 627 |
$ 13,371 |
Adjusted operating income |
$ 63,146 |
$ 17,452 |
$ 7,715 |
$ 5,613 |
$ (6,543) |
$ 87,383 |
Adjusted operating income margin |
17.6% |
8.7% |
8.9% |
10.1% |
12.5% |
|
(1) There were no Non-GAAP adjustments to net sales for the three months ended 12/31/15 |
||||||
(2) See accompanying table of "Reconciliation of GAAP Results to Non-GAAP Measures" |
(dollars in thousands) |
United States |
United Kingdom |
Hain Pure Protein |
Rest of World |
Corporate/ |
Total |
NET SALES |
||||||
Net sales - Six months ended 12/31/15 (1) |
$ 673,511 |
$ 359,580 |
$ 265,694 |
$ 140,992 |
$ - |
$ 1,439,777 |
Net sales - Six months ended 12/31/14 |
$ 690,884 |
$ 373,076 |
$ 156,886 |
$ 106,794 |
$ - |
$ 1,327,640 |
Non-GAAP Adjustments (2) |
$ 15,773 |
$ - |
$ - |
$ 928 |
$ - |
$ 16,701 |
Adjusted net sales - Six months ended 12/31/14 |
$ 706,657 |
$ 373,076 |
$ 156,886 |
$ 107,722 |
$ - |
$ 1,344,341 |
% change - FY'16 net sales vs. FY'15 adjusted net sales |
-4.7% |
-3.6% |
69.4% |
30.9% |
7.1% |
|
OPERATING INCOME |
||||||
Six months ended 12/31/15 |
||||||
Operating income |
$ 94,687 |
$ 28,972 |
$ 28,396 |
$ 6,784 |
$ (13,649) |
$ 145,190 |
Non-GAAP Adjustments (2) |
$ 3,897 |
$ 1,020 |
$ 886 |
$ 514 |
$ 4,592 |
$ 10,909 |
Adjusted operating income |
$ 98,584 |
$ 29,992 |
$ 29,282 |
$ 7,298 |
$ (9,057) |
$ 156,099 |
Adjusted operating income margin |
14.6% |
8.3% |
11.0% |
5.2% |
10.8% |
|
Six months ended 12/31/14 |
||||||
Operating income |
$ 85,181 |
$ 17,858 |
$ 11,534 |
$ 6,248 |
$ (17,982) |
$ 102,839 |
Non-GAAP Adjustments (2) |
$ 30,358 |
$ 8,164 |
$ 140 |
$ 2,187 |
$ 2,496 |
$ 43,345 |
Adjusted operating income |
$ 115,539 |
$ 26,022 |
$ 11,674 |
$ 8,435 |
$ (15,486) |
$ 146,184 |
Adjusted operating income margin |
16.4% |
7.0% |
7.4% |
7.8% |
10.9% |
|
(1) There were no Non-GAAP adjustments to net sales for the six months ended 12/31/15 |
||||||
(2) See accompanying table of "Reconciliation of GAAP Results to Non-GAAP Measures" |
Webcast
The
The
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", "remain", "potential", "can", "should", "could", "future" and similar expressions, or the negative of those expressions. These forward-looking statements include the Company's beliefs or expectations relating to the Company's guidance for net sales and earnings per diluted share for fiscal year 2016. 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. Such factors include, among others, general economic and financial market conditions; competition; our ability to respond to changes and trends in customer and consumer demand, preferences and consumption; our reliance on third party distributors, manufacturers and suppliers; the consolidation or loss of a significant customer; our ability to introduce new products and improve existing products; availability and retention of key personnel; our ability to effectively integrate our acquisitions; our ability to successfully consummate any proposed divestitures; liabilities arising from potential product recalls, market withdrawals or product liability claims; outbreaks of diseases or food-borne illnesses; potential litigation; the availability of organic and natural ingredients; our ability to manage our supply chain effectively; changes in fuel, raw material and commodity costs; effects of climate change on our business and operations; our ability to offset input cost increases; the interruption, disruption or loss of operations at one or more of our manufacturing facilities; the loss of one or more of our independent co-packers; the disruption of our transportation systems; risks associated with expansion into countries in which we have no prior operating experience; risks associated with our international sales and operations, including foreign currency risks; impairment in the carrying value of our goodwill or other intangible assets; our ability to use our trademarks; reputational damage; changes in, or the failure to comply with, government laws and regulations; liabilities or claims with respect to environmental matters; our reliance on independent certification for our products; a breach of security measures; our reliance on our information technology systems; effects of general global capital and credit market issues on our liquidity and cost of borrowing; potential liabilities not covered by insurance; the ability of joint venture investments to successfully execute business plans; dilution in the value of our common shares; and the other risks detailed from time-to-time in the Company's reports filed with the
Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP financial measures, including adjusted operating income, adjusted income, adjusted income per diluted share, adjusted EBITDA (defined below) 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 six months ended
The Company defines adjusted EBITDA as net income (a GAAP measure) before income taxes, net interest expense, depreciation and amortization, impairment of long lived assets, equity in the earnings of non-consolidated affiliates, stock based compensation, acquisition-related expenses, including integration and restructuring charges, and other non-recurring items. The Company's management believes that this presentation provides 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 this measure for reviewing the financial results of the Company and as a component of performance-based executive compensation.
For the three months and six months ended
3 Months Ended |
6 Months Ended |
||||
12/31/2015 |
12/31/2014 |
12/31/2015 |
12/31/2014 |
||
(dollars in thousands) |
|||||
Net Income |
$ 56,947 |
$ 44,575 |
$ 88,249 |
$ 63,430 |
|
Income taxes |
21,379 |
20,931 |
35,761 |
26,997 |
|
Interest expense, net |
5,416 |
5,882 |
11,132 |
11,974 |
|
Depreciation and amortization |
15,843 |
14,322 |
31,409 |
28,902 |
|
Equity in earnings of affiliates |
31 |
(308) |
(53) |
(328) |
|
Stock based compensation |
4,010 |
3,060 |
7,279 |
5,999 |
|
Subtotal |
103,626 |
88,462 |
173,777 |
136,974 |
|
Adjustments (a) |
5,255 |
13,371 |
10,821 |
38,012 |
|
Adjusted EBITDA |
$ 108,881 |
$ 101,833 |
$ 184,598 |
$ 174,986 |
|
(a) The adjustments include all adjustments in the table "Reconciliation of GAAP Results to Non-GAAP Measures" except for unrealized currency impacts, gain on disposal of investment held for sale, interest accretion and other items, net and taxes. |
The Company defines Operating Free Cash Flow as cash provided from or used in operating activities (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 six months ended
Six Months Ended |
|||||||
12/31/2015 |
12/31/2014 |
||||||
(dollars in thousands) |
|||||||
Cash flow provided by operating activities |
$ |
99,644 |
$ |
54,251 |
|||
Purchases of property, plant and equipment |
(41,177) |
(25,766) |
|||||
Operating free cash flow |
$ |
58,467 |
$ |
28,485 |
Our operating free cash flow was
THE HAIN CELESTIAL GROUP, INC. |
|||||
Consolidated Balance Sheets |
|||||
(In thousands) |
|||||
December 31, |
June 30, |
||||
(Unaudited) |
|||||
ASSETS |
|||||
Current assets: |
|||||
Cash and cash equivalents |
$ 177,100 |
$ 166,922 |
|||
Accounts receivable, net |
350,408 |
320,197 |
|||
Inventories |
403,318 |
382,211 |
|||
Deferred income taxes |
21,027 |
20,758 |
|||
Prepaid expenses and other current assets |
49,513 |
42,931 |
|||
Total current assets |
1,001,366 |
933,019 |
|||
Property, plant and equipment, net |
382,830 |
344,262 |
|||
Goodwill, net |
1,219,725 |
1,136,079 |
|||
Trademarks and other intangible assets, net |
659,267 |
647,754 |
|||
Investments and joint ventures |
20,214 |
2,305 |
|||
Other assets |
33,458 |
33,851 |
|||
Total assets |
$ 3,316,860 |
$ 3,097,270 |
|||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||
Current liabilities: |
|||||
Accounts payable |
$ 280,042 |
$ 251,999 |
|||
Accrued expenses and other current liabilities |
89,965 |
79,167 |
|||
Current portion of long-term debt |
41,552 |
31,275 |
|||
Total current liabilities |
411,559 |
362,441 |
|||
Long-term debt, less current portion |
940,462 |
812,608 |
|||
Deferred income taxes |
145,984 |
145,297 |
|||
Other noncurrent liabilities |
4,830 |
5,237 |
|||
Total liabilities |
1,502,835 |
1,325,583 |
|||
Stockholders' equity: |
|||||
Common stock |
1,066 |
1,058 |
|||
Additional paid-in capital |
1,103,357 |
1,073,671 |
|||
Retained earnings |
885,763 |
797,514 |
|||
Accumulated other comprehensive loss |
(107,577) |
(42,406) |
|||
Subtotal |
1,882,609 |
1,829,837 |
|||
Treasury stock |
(68,584) |
(58,150) |
|||
Total stockholders' equity |
1,814,025 |
1,771,687 |
|||
Total liabilities and stockholders' equity |
$ 3,316,860 |
$ 3,097,270 |
|||
THE HAIN CELESTIAL GROUP, INC. |
||||||||
Consolidated Statements of Income |
||||||||
(unaudited and in thousands, except per share amounts) |
||||||||
Three Months Ended December 31, |
Six Months Ended December 31, |
|||||||
2015 |
2014 |
2015 |
2014 |
|||||
Net sales |
$ 752,589 |
$ 696,383 |
$ 1,439,777 |
$ 1,327,640 |
||||
Cost of sales |
575,026 |
529,056 |
1,110,167 |
1,034,469 |
||||
Gross profit |
177,563 |
167,327 |
329,610 |
293,171 |
||||
Selling, general and administrative expenses |
82,607 |
88,621 |
168,861 |
179,544 |
||||
Amortization/impairment of acquired intangibles |
4,736 |
4,303 |
9,408 |
8,813 |
||||
Acquisition related expenses, restructuring and |
2,498 |
391 |
6,151 |
1,975 |
||||
Operating income |
87,722 |
74,012 |
145,190 |
102,839 |
||||
Interest and other expenses, net |
9,365 |
8,814 |
21,233 |
12,740 |
||||
Income before income taxes and equity in earnings of |
78,357 |
65,198 |
123,957 |
90,099 |
||||
Provision for income taxes |
21,379 |
20,931 |
35,761 |
26,997 |
||||
Equity in net loss (income) of equity-method investees |
31 |
(308) |
(53) |
(328) |
||||
Net income |
$ 56,947 |
$ 44,575 |
$ 88,249 |
$ 63,430 |
||||
Net income per common share: |
||||||||
Basic |
$ 0.55 |
$ 0.44 |
$ 0.86 |
$ 0.63 |
||||
Diluted |
$ 0.55 |
$ 0.43 |
$ 0.85 |
$ 0.62 |
||||
Weighted average common shares outstanding: |
||||||||
Basic |
103,017 |
101,267 |
102,912 |
100,975 |
||||
Diluted |
104,161 |
103,226 |
104,209 |
102,941 |
||||
THE HAIN CELESTIAL GROUP, INC. |
||||||
Reconciliation of GAAP Results to Non-GAAP Measures |
||||||
(unaudited and in thousands, except per share amounts) |
||||||
Three Months Ended December 31, |
||||||
2015 GAAP |
Adjustments |
2015 Adjusted |
2014 Adjusted |
|||
Net sales |
$ 752,589 |
$ - |
$ 752,589 |
$ 701,714 |
||
Cost of sales |
575,026 |
(841) |
574,185 |
523,967 |
||
Gross profit |
177,563 |
841 |
178,404 |
177,747 |
||
Selling, general and administrative expenses |
82,607 |
(1,800) |
80,807 |
86,061 |
||
Amortization/impairment of acquired intangibles |
4,736 |
- |
4,736 |
4,303 |
||
Acquisition related expenses, restructuring and |
2,498 |
(2,498) |
- |
- |
||
Operating income |
87,722 |
5,139 |
92,861 |
87,383 |
||
Interest and other expenses, net |
9,365 |
(2,980) |
6,385 |
6,188 |
||
Income before income taxes and equity in earnings of |
78,357 |
8,119 |
86,476 |
81,195 |
||
Provision for income taxes |
21,379 |
5,900 |
27,279 |
25,985 |
||
Equity in net loss (income) of equity-method investees |
31 |
- |
31 |
(308) |
||
Net income |
$ 56,947 |
$ 2,219 |
$ 59,166 |
$ 55,518 |
||
Net income per common share: |
$ 0.55 |
$ 0.02 |
$ 0.57 |
$ 0.55 |
||
Basic |
$ 0.55 |
$ 0.02 |
$ 0.57 |
$ 0.54 |
||
Diluted |
||||||
Weighted average common shares outstanding: |
||||||
Basic |
103,017 |
103,017 |
101,267 |
|||
Diluted |
104,161 |
104,161 |
103,226 |
|||
FY 2016 |
FY 2015 |
|||||
Impact on Income Before Income Taxes |
Impact on Income Tax Provision |
Impact on Income Before Income Taxes |
Impact on Income Tax Provision |
|||
Nut butter recall |
$ - |
$ - |
$ 5,331 |
$ 2,026 |
||
Net sales |
- |
- |
5,331 |
2,026 |
||
HPPC production interruption related to chiller breakdown |
841 |
320 |
- |
- |
||
Nut butter recall |
- |
- |
(496) |
(188) |
||
Fakenham inventory allowance for fire |
- |
- |
900 |
187 |
||
UK factory start-up costs |
- |
- |
3,289 |
682 |
||
Acquisition related integration costs |
- |
- |
1,396 |
364 |
||
Cost of sales |
841 |
320 |
5,089 |
1,045 |
||
Celestial Seasonings marketing support related to new |
1,800 |
684 |
- |
- |
||
Nut butter recall |
- |
- |
2,432 |
924 |
||
Litigation expenses |
- |
- |
128 |
49 |
||
Selling, general and administrative expenses |
1,800 |
684 |
2,560 |
973 |
||
Acquisition related fees and expenses, integration and |
2,498 |
549 |
391 |
142 |
||
Acquisition related expenses, restructuring and |
2,498 |
549 |
391 |
142 |
||
Unrealized currency impacts |
2,764 |
980 |
2,626 |
868 |
||
HPPC chiller disposal |
216 |
82 |
- |
- |
||
Interest and other expenses, net |
2,980 |
1,062 |
2,626 |
868 |
||
UK tax rate change impact on deferred taxes and |
- |
3,285 |
- |
- |
||
Provision for income taxes |
- |
3,285 |
- |
- |
||
Total adjustments |
$ 8,119 |
$ 5,900 |
$ 15,997 |
$ 5,054 |
||
THE HAIN CELESTIAL GROUP, INC. |
||||||
Reconciliation of GAAP Results to Non-GAAP Measures |
||||||
(unaudited and in thousands, except per share amounts) |
||||||
Six Months Ended December 31, |
||||||
2015 GAAP |
Adjustments |
2015 Adjusted |
2014 Adjusted |
|||
Net sales |
$ 1,439,777 |
$ - |
$ 1,439,777 |
$ 1,344,341 |
||
Cost of sales |
1,110,167 |
(2,524) |
1,107,643 |
1,015,338 |
||
Gross profit |
329,610 |
2,524 |
332,134 |
329,003 |
||
Selling, general and administrative expenses |
168,861 |
(2,234) |
166,627 |
174,007 |
||
Amortization/impairment of acquired intangibles |
9,408 |
- |
9,408 |
8,812 |
||
Acquisition related expenses, restructuring and |
6,151 |
(6,151) |
- |
- |
||
Operating income |
145,190 |
10,909 |
156,099 |
146,184 |
||
Interest and other expenses, net |
21,233 |
(7,443) |
13,790 |
12,490 |
||
Income before income taxes and equity in earnings of |
123,957 |
18,352 |
142,309 |
133,694 |
||
Provision for income taxes |
35,761 |
9,276 |
45,037 |
43,827 |
||
Equity in net loss (income) of equity-method investees |
(53) |
- |
(53) |
(328) |
||
Net income |
$ 88,249 |
$ 9,076 |
$ 97,325 |
$ 90,195 |
||
Net income per common share: |
$ 0.86 |
$ 0.09 |
$ 0.95 |
$ 0.89 |
||
Basic |
$ 0.85 |
$ 0.08 |
$ 0.93 |
$ 0.88 |
||
Diluted |
||||||
Weighted average common shares outstanding: |
||||||
Basic |
102,912 |
102,912 |
100,975 |
|||
Diluted |
104,209 |
104,209 |
102,941 |
|||
FY 2016 |
FY 2015 |
|||||
Impact on Income Before Income Taxes |
Impact on Income Tax Provision |
Impact on Income Before Income Taxes |
Impact on Income Tax Provision |
|||
Nut butter recall |
$ - |
$ - |
$ 15,773 |
$ 5,994 |
||
European non-dairy beverage withdrawal |
- |
- |
928 |
316 |
||
Net sales |
- |
- |
16,701 |
6,310 |
||
HPPC production interruption related to chiller breakdown |
841 |
320 |
- |
- |
||
US warehouse consolidation project |
426 |
162 |
- |
- |
||
Nut butter recall |
- |
- |
9,428 |
3,583 |
||
European non-dairy beverage withdrawal |
- |
- |
1,259 |
428 |
||
Fakenham inventory allowance for fire |
- |
- |
900 |
187 |
||
UK factory start-up costs |
743 |
149 |
6,021 |
1,249 |
||
Acquisition related integration costs |
514 |
155 |
1,523 |
390 |
||
Cost of sales |
2,524 |
786 |
19,131 |
5,837 |
||
Celestial Seasonings marketing support related to new |
2,004 |
762 |
- |
- |
||
Tilda fire insurance recovery costs |
230 |
46 |
- |
- |
||
Nut butter recall |
- |
- |
4,909 |
1,864 |
||
Litigation expenses |
- |
- |
373 |
142 |
||
Acquisition related integration costs |
- |
- |
256 |
77 |
||
Selling, general and administrative expenses |
2,234 |
808 |
5,538 |
2,083 |
||
Acquisition related fees and expenses, integration and |
6,151 |
1,929 |
1,694 |
637 |
||
Contingent consideration expense |
- |
- |
281 |
- |
||
Acquisition related expenses, restructuring and |
6,151 |
1,929 |
1,975 |
637 |
||
Unrealized currency impacts |
7,227 |
2,386 |
5,816 |
1,933 |
||
Gain on disposal of investment held for sale |
- |
- |
(311) |
- |
||
Gain on pre-existing investment in HPPC |
- |
- |
(5,334) |
- |
||
Interest accretion and other items, net |
- |
- |
79 |
30 |
||
HPPC chiller disposal |
216 |
82 |
- |
- |
||
Interest and other expenses, net |
7,443 |
2,468 |
250 |
1,963 |
||
UK tax rate change impact on deferred taxes and |
- |
3,285 |
- |
- |
||
Provision for income taxes |
- |
3,285 |
- |
- |
||
Total adjustments |
$ 18,352 |
$ 9,276 |
$ 43,595 |
$ 16,830 |
||
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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/hain-celestial-announces-record-second-quarter-fiscal-year-2016-results-300213061.html
SOURCE The
Pat Conte/Mary Anthes, The Hain Celestial Group, Inc., 516-587-5000