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Form 8-K HAIN CELESTIAL GROUP For: May 04

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May 4, 2016 8:24 AM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
 
————————————

FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): May 4, 2016
————————————
THE HAIN CELESTIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
 
————————————
 
Delaware
0-22818
22-3240619
(State or other jurisdiction
of incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)
 
1111 Marcus Avenue, Lake Success, NY 11042
(Address of principal executive offices)
 
Registrant’s telephone number, including area code: (516) 587-5000
 
————————————
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 






Item 2.02    Results of Operations and Financial Condition

On May 4, 2016, The Hain Celestial Group, Inc. (the “Company”) issued a press release announcing financial results for its third quarter ended March 31, 2016. The press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

The information contained in this Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.



Item 9.01    Financial Statements and Exhibits

(d) Exhibits. The following exhibit is furnished herewith:

Exhibit No.
 
Description
99.1
 
Press Release of The Hain Celestial Group, Inc. dated May 4, 2016







SIGNATURES
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
Date: May 4, 2016
 
THE HAIN CELESTIAL GROUP, INC.
(Registrant)
 
By: 
/s/ Pasquale Conte
Name:
Pasquale Conte
Title:
Executive Vice President and
Chief Financial Officer








EXHIBIT INDEX


Exhibit No.
 
Description
99.1*
  
Press Release of The Hain Celestial Group, Inc. dated May 4, 2016

* Furnished herewith






Exhibit 99.1


Pat Conte/Mary Anthes
The Hain Celestial Group, Inc.
516-587-5000


HAIN CELESTIAL ANNOUNCES THIRD QUARTER
FISCAL YEAR 2016 RESULTS

Net Sales Reach $750 Million, a 13% Increase or
15% on a Constant Currency Basis

Earnings Per Diluted Share $0.47, a 47% Increase
Adjusted Earnings Per Diluted Share $0.49, a 9% Increase


Lake Success, NY, May 4, 2016-The Hain Celestial Group, Inc. (NASDAQ: HAIN), a leading organic and natural products company with operations in North America, Europe and India providing consumers with A Healthier Way of Life™, today reported results for its third quarter ended March 31, 2016.

Third Quarter Performance Highlights
▪
Net sales of $750.0 million, a 13% increase, or 15% on a constant currency basis, over prior year period net sales of $662.7 million. Net sales were impacted by $13.9 million of foreign exchange rate movements versus a year ago.
▪
Hain Celestial US net sales increased by 2.7% on a constant currency basis over the prior year period.
▪
Earnings per diluted share of $0.47, a 47% increase over the prior year period, or on an adjusted basis $0.49, a 9% increase over the prior year period. Foreign currencies impacted reported results by $0.01 per diluted share.
▪
Operating income of $69.0 million, or 9.2% of net sales; adjusted operating income of $80.4 million, or 10.7% of net sales.
▪
Strong nine month operating cash flow of $131 million, an increase of 87% over the prior year period.

“Our net sales reflect the strong performance across our businesses led by Hain Celestial United States, Hain Pure Protein, Hain Celestial United Kingdom and Hain Celestial Europe as well as Hain Celestial Canada,” said Irwin D. Simon, Founder, President and Chief Executive Officer of Hain Celestial. “The diversification of our product portfolio with leading organic, natural and better-for-you brands around the world, combined with our team’s solid execution of our operational initiatives fueled our financial performance. We are extremely pleased with our US results where we returned to growth in the third quarter and expect these trends to continue.”




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


Third Quarter 2016
The United States segment reported third quarter net sales of $351.9 million. In the United Kingdom segment, net sales were $208.4 million. Hain Pure Protein reported net sales of $113.6 million, and the Rest of World segment reported net sales of $75.9 million. The Company had strong branded sales in constant currency led by Imagine®, Plainville Farms®, Terra®, Garden of Eatin’®, Tilda®, Yves®, FreeBird®, The Greek Gods®, Spectrum® and Sensible Portions® brands as well as its personal care brands, Alba Botanica® and Jason®. Net sales of Joya® brand and the Orchard House Foods business, both acquired after the third quarter of fiscal year 2015 also contributed to the net sales growth.

The Company earned net income of $49.0 million, a 47% increase, and adjusted net income of $50.6 million, a 9% increase, compared to the prior year period. Earnings per diluted share for the third quarter were $0.47, a 47% increase compared to the prior year period. On an adjusted basis earnings per diluted share for the third quarter were $0.49, a 9% increase compared to the prior year period. Refer to “Non-GAAP Financial Measures” section in this press release for reconciliations.

Project Terra
As previously communicated, the Company commenced a strategic review under Project Terra and has identified approximately $100 million in global cost savings, which it expects to achieve during fiscal years 2017 through 2019.  These initiatives are expected to include optimizing plants, co-packers and procurement and rationalizing the Company’s product portfolio, and reinvesting these incremental savings into the business to further brand building efforts and household penetration.  Effective immediately, James R. Meiers has been appointed to the newly-created position of Chief Operations Officer for Hain Celestial reporting to Irwin Simon, with responsibility for achieving the cost savings across the Company’s worldwide operations.

The strategic review has also resulted in the Company redefining its core platforms for future growth based upon consumer trends to create and inspire A Healthier Way of Life™. The core platforms are now defined by common consumer need, route-to-market or internal advantage and are aligned with the Company’s strategic roadmap to continue its leadership position in the organic and natural, better-for-you industry.   

Beginning in fiscal year 2017, the Company plans to establish five strategic platforms within Hain Celestial US with the purpose to drive accelerated net sales and margin growth. The platforms will be: 

▪
Fresh Living-includes poultry, yogurt, plant-based proteins and other refrigerated products;
▪
Better-for-You Baby-includes infant foods, infant formula, diapers and wipe products that nurture and care for babies and toddlers;
▪
Better-for-You Snacking-wholesome products for in-between meals;
▪
Better-for-You Pantry-core consumer staples; and
▪
Pure Personal Care-personal care products focused on providing consumers with cleaner and gentler ingredients.

In addition, the Company will launch Cultivate Ventures (“Cultivate”), a venture unit whose purpose is threefold:  (i) to strategically invest in the Company’s smaller brands in high potential categories such as SunSpire® chocolates and DeBoles® pasta by giving them a dedicated, creative focus for refresh and relaunch; (ii) to incubate small acquisitions until they reach the scale for the Company’s core platforms; and (iii) to invest in concepts, products and technology, which focus on health and wellness. 


2






The Company has also identified certain brands representing approximately $30 million in sales, which no longer fit into its core strategy for future growth, and it intends to sell these as a group. 

“We are excited about the launch of our new platforms in fiscal year 2017, which are uniquely aligned with consumer eating habits and usage needs,” commented Irwin Simon. “We believe our platforms represent distinct opportunities for incremental growth and margin improvement. We expect this new approach will enable us to define more distinct channel strategies for our branded product offerings, and ensure that we continue to extend our organic and natural industry leadership position.”

Fiscal Year 2016 Guidance
The Company updated its fiscal year 2016 guidance expectations:

•
Total net sales range of $2.946 billion to $2.966 billion, an increase of approximately 9% to 10% as compared to fiscal year 2015, and
•
Earnings per diluted share range of $2.00 to $2.04, an increase of approximately 6% to 9% as compared to fiscal year 2015.

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.














3




Segment Results
The Company’s operations are managed into the following segments: United States, United Kingdom, Hain Pure Protein and Rest of World (comprised of Canada and Continental Europe).

The following is a summary of results for the three and nine months ended March 31, 2016 by reportable segment:
(dollars in thousands)
 
United States
 
United Kingdom
 
Hain Pure Protein
 
Rest of World
 
Corporate / Other
 
Total
NET SALES
 
 
 
 
 
 
 
 
 
 
 
 
Net sales - Three months ended 3/31/16
 
$
351,887

 
$
208,391

 
$
113,643

 
$
75,941

 
$
—

 
$
749,862

 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales - Three months ended 3/31/15
 
$
343,728

 
$
178,068

 
$
83,192

 
$
57,751

 
$
—

 
$
662,739

 
 
 
 
 
 
 
 
 
 
 
 
 
% change - FY'16 net sales vs. FY'15 net sales
 
2.4
%
 
17.0
%
 
36.6
%
 
31.5
%
 
 

13.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
OPERATING INCOME
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended 3/31/16
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
 
$
54,546

 
$
16,217

 
$
4,613

 
$
6,198

 
$
(12,567
)
 
$
69,007

Non-GAAP Adjustments [1]
 
$
2,700

 
$
—

 
$
3,054

 
$
—

 
$
5,701

 
$
11,455

Adjusted operating income
 
$
57,246

 
$
16,217

 
$
7,667

 
$
6,198

 
$
(6,866
)
 
$
80,462

Adjusted operating income margin
 
16.3
%
 
7.8
%
 
6.7
%
 
8.2
%
 
 
 
10.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended 3/31/15
 


 


 


 


 


 


Operating income
 
$
55,851

 
$
11,760

 
$
4,970

 
$
4,412

 
$
(16,799
)
 
$
60,194

Non-GAAP Adjustments [1]
 
$
3,188

 
$
3,838

 
$
—

 
$
—

 
$
10,326

 
$
17,352

Adjusted operating income
 
$
59,039

 
$
15,598

 
$
4,970

 
$
4,412

 
$
(6,473
)
 
$
77,546

Adjusted operating income margin
 
17.2
%
 
8.8
%
 
6.0
%
 
7.6
%
 


 
11.7
%

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



4




(dollars in thousands)
 
United States
 
United Kingdom
 
Hain Pure Protein
 
Rest of World
 
Corporate / Other
 
Total
NET SALES
 
 
 
 
 
 
 
 
 
 
 
 
Net sales - Nine months ended 3/31/16 [1]
 
$
1,025,398

 
$
567,971

 
$
379,336

 
$
216,934

 
$
—

 
$
2,189,639

 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales - Nine months ended 3/31/15
 
$
1,034,612

 
$
551,144

 
$
240,078

 
$
164,545

 
$
—

 
$
1,990,379

Non-GAAP Adjustments [2]
 
$
15,773

 
$
—

 
$
—

 
$
928

 
$
—

 
$
16,701

Adjusted net sales - Nine months ended 3/31/15
 
$
1,050,385

 
$
551,144

 
$
240,078

 
$
165,473

 
$
—

 
$
2,007,080

 
 
 
 
 
 
 
 
 
 
 
 
 
% change - FY'16 net sales vs. FY'15 adjusted net sales
 
(2.4
)%
 
3.1
%
 
58.0
%
 
31.1
%
 
 
 
9.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
OPERATING INCOME
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended 3/31/16
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
 
$
149,233

 
$
45,189

 
$
33,009

 
$
12,981

 
$
(26,216
)
 
$
214,196

Non-GAAP Adjustments [2]
 
$
6,597

 
$
1,020

 
$
3,940

 
$
515

 
$
10,293

 
$
22,365

Adjusted operating income
 
$
155,830

 
$
46,209

 
$
36,949

 
$
13,496

 
$
(15,923
)
 
$
236,561

Adjusted operating income margin
 
15.2
 %
 
8.1
%
 
9.7
%
 
6.2
%
 
 
 
10.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended 3/31/15
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
 
$
141,031

 
$
29,618

 
$
16,505

 
$
10,660

 
$
(34,781
)
 
$
163,033

Non-GAAP Adjustments [2]
 
$
33,546

 
$
12,002

 
$
140

 
$
2,187

 
$
12,822

 
$
60,697

Adjusted operating income
 
$
174,577

 
$
41,620

 
$
16,645

 
$
12,847

 
$
(21,959
)
 
$
223,730

Adjusted operating income margin
 
16.6
 %
 
7.6
%
 
6.9
%
 
7.8
%
 
 
 
11.1
%

(1) There were no Non-GAAP adjustments to net sales for the nine months ended 03/31/16
(2) See accompanying table of "Reconciliation of GAAP Results to Non-GAAP Measures"

Webcasts
Hain Celestial will host a conference call and webcast at 8:30 AM Eastern Time today to review its third quarter fiscal year 2016 results. The conference call will be webcast and available under the Investor Relations section of the Company’s website at www.hain.com.

On Thursday, May 19, 2016 at 8:50 AM Eastern Time the Company is scheduled to present at BMO Capital Markets 2016 Farm to Market Conference. The presentation will be webcast and available under the Investor Relations section of the Company’s website at www.hain.com.

The Hain Celestial Group, Inc.
The Hain Celestial Group (NASDAQ: HAIN), headquartered in Lake Success, NY, is a leading organic and natural products company with operations in North America, Europe and India. Hain Celestial participates in many natural categories with well-known brands that include Celestial Seasonings®, Earth’s Best®, Ella’s Kitchen®, Terra®, Garden of Eatin’®, Sensible Portions®, Health Valley®, Arrowhead Mills®, MaraNatha®, SunSpire®, DeBoles®, Casbah®, Rudi’s Organic Bakery®, Gluten Free Café™, Hain Pure Foods®, Spectrum®, Spectrum Essentials®, Walnut Acres Organic®, Imagine®, Almond Dream®, Rice Dream®, Soy Dream®, WestSoy®, The Greek Gods®, BluePrint®, FreeBird®, Plainville Farms®, Empire®, Kosher Valley®, Yves Veggie Cuisine®, Europe’s Best®, Cully & Sully®, New Covent Garden Soup Co.®, Johnson’s Juice Co.®, Farmhouse Fare®, Hartley’s®, Sun-Pat®, Gale’s®, Robertson’s®, Frank Cooper’s®, Linda McCartney®, Lima®, Danival®, Joya®, Natumi®, GG UniqueFiber®, Tilda®, JASON®, Avalon Organics®, Alba Botanica®, Live Clean® and Queen Helene®. Hain Celestial has been providing A Healthier Way of Life™ since 1993. For more information, visit www.hain.com.



5




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 (i) the Company’s growth trends, initiatives and strategies with respect to Project Terra and its strategic platforms; (ii) the Company’s ability to achieve approximately $100 million in global cost savings; and (iii) 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 Securities and Exchange Commission, including the annual report on Form 10-K for the fiscal year ended June 30, 2015. As a result of the foregoing and other factors, no assurance can be given as to the 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.

Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP financial measures, including adjusted operating income, adjusted net income, adjusted earnings 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 nine months ended March 31, 2016 and 2015 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 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 nine months ended March 31, 2016 and 2015, operating free cash flow was calculated as follows:


6




 
Nine Months Ended
 
3/31/2016
 
3/31/2015
 
(dollars in thousands)
Cash flow provided by operating activities
$
131,853

 
$
70,169

Purchases of property, plant and equipment
(58,022
)
 
(36,312
)
Operating free cash flow
$
73,831

 
$
33,857


Our operating free cash flow was $73.8 million for the nine months ended March 31, 2016, an increase of $40.0 million from the nine months ended March 31, 2015. The increase in operating free cash flow primarily resulted from an increase in net income. This was offset partially by an increase in our capital expenditures principally related to the purchase of a new factory location and production equipment in the Hain Pure Protein segment to accommodate current demand, as well as the expansion of production lines at both our ready-to-heat rice facility in the United Kingdom and our plant-based beverage facilities in Europe to accommodate new products and increased volume.

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.



7




For the three and nine months ended March 31, 2016 and 2015, adjusted EBITDA was calculated as follows:
 
 
3 Months Ended
 
9 Months Ended
 
3/31/2016
 
3/31/2015
 
3/31/2016
 
3/31/2015
 
(dollars in thousands)
Net Income
$
48,985

 
$
33,394

 
$
137,234

 
$
96,824

Income taxes
21,576

 
18,147

 
57,337

 
45,144

Interest expense, net
6,233

 
5,670

 
17,365

 
17,644

Depreciation and amortization
16,085

 
14,162

 
47,190

 
43,064

Equity in earnings of affiliates
161

 
13

 
108

 
(315
)
Stock based compensation
2,776

 
2,935

 
10,004

 
8,934

Tradename impairment charge
—

 
5,510

 
—

 
5,510

Acquisition related fees and expenses,
  integration and restructuring charges,
  including severance, and other
4,190

 
5,572

 
10,855

 
8,789

Contingent consideration expense
1,511

 
—

 
1,511

 
281

Nut butter recall
—

 
—

 
—

 
30,110

European non-dairy beverage withdrawal
—

 
—

 
—

 
2,187

HPPC costs related to chiller breakdown and
  factory start-up costs
3,054

 
—

 
4,111

 
—

Ashland factory and related expenses
—

 
2,142

 
—

 
2,142

UK factory start-up costs
—

 
2,512

 
743

 
8,533

US warehouse consolidation project
—

 
—

 
426

 
—

Fakenham inventory allowance for fire
—

 
—

 
—

 
900

Litigation expenses
—

 
518

 
—

 
891

Celestial Seasonings packaging launch support
  and Keurig transition
2,700

 
—

 
4,704

 
—

Tilda fire insurance recovery costs and other
  start-up/integration costs
—

 
1,098

 
230

 
1,354

Gain on Tilda fire
(9,013
)
 
—

 
(9,013
)
 
—

Gain on pre-existing ownership interest in HPPC
  and Empire Kosher
—

 
(2,922
)
 
—

 
(8,256
)
Adjusted EBITDA
$
98,258

 
$
88,751

 
$
282,805

 
$
263,736






8




THE HAIN CELESTIAL GROUP, INC.
Consolidated Balance Sheets
(In thousands)
 
 
 
 
 
March 31,
 
June 30,
 
2016
 
2015
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
125,390

 
$
166,922

Accounts receivable, net
360,964

 
320,197

Inventories
394,958

 
382,211

Deferred income taxes
21,421

 
20,758

Prepaid expenses and other current assets
43,469

 
42,931

Total current assets
946,202

 
933,019

 
 
 
 
Property, plant and equipment, net
392,719

 
344,262

Goodwill, net
1,195,305

 
1,136,079

Trademarks and other intangible assets, net
643,940

 
647,754

Investments and joint ventures
20,034

 
2,305

Other assets
32,966

 
33,851

Total assets
$
3,231,166

 
$
3,097,270

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
233,642

 
$
251,999

Accrued expenses and other current liabilities
93,050

 
79,167

Current portion of long-term debt
37,806

 
31,275

Total current liabilities
364,498

 
362,441

 
 
 
 
Long-term debt, less current portion
879,627

 
812,608

Deferred income taxes
142,188

 
145,297

Other noncurrent liabilities
5,986

 
5,237

Total liabilities
1,392,299

 
1,325,583

 
 
 
 
Stockholders' equity:
 
 
 
Common stock
1,075

 
1,058

Additional paid-in capital
1,120,777

 
1,073,671

Retained earnings
934,748

 
797,514

Accumulated other comprehensive loss
(129,062
)
 
(42,406
)
Subtotal
1,927,538

 
1,829,837

Treasury stock
(88,671
)
 
(58,150
)
Total stockholders' equity
1,838,867

 
1,771,687

 
 
 
 
Total liabilities and stockholders' equity
$
3,231,166

 
$
3,097,270

   


9




THE HAIN CELESTIAL GROUP, INC.
 Consolidated Statements of Income
 (unaudited and in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
Nine Months Ended
March 31,
 
 
2016
 
2015
 
2016
 
2015
 
 
 
 
 
 
 
 
 
Net sales
 
$
749,862

 
$
662,739

 
$
2,189,639

 
$
1,990,379

Cost of sales
 
576,653

 
504,990

 
1,686,820

 
1,539,459

Gross profit
 
173,209

 
157,749

 
502,819

 
450,920

 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
93,915

 
83,068

 
262,776

 
262,613

Amortization/impairment of acquired intangibles
 
4,586

 
10,189

 
13,994

 
19,001

Acquisition related expenses, restructuring and
  integration charges, and other
 
5,701

 
4,298

 
11,852

 
6,273

 
 
 
 
 
 
 
 
 
Operating income
 
69,007

 
60,194

 
214,197

 
163,033

 
 
 
 
 
 
 
 
 
Interest expense and other expenses, net
 
(1,715
)
 
8,640

 
19,518

 
21,380

Income before income taxes and equity in earnings of
   equity-method investees
 
70,722

 
51,554

 
194,679

 
141,653

Provision for income taxes
 
21,576

 
18,147

 
57,337

 
45,144

Equity in net loss (income) of equity-method investees
 
161

 
13

 
108

 
(315
)
 
 
 
 
 
 
 
 
 
Net income
 
$
48,985

 
$
33,394

 
$
137,234

 
$
96,824

 
 
 
 
 
 
 
 
 
Net income per common share:
 
 
 
 
 
 
 
 
     Basic
 
$
0.47

 
$
0.33

 
$
1.33

 
$
0.95

     Diluted
 
$
0.47

 
$
0.32

 
$
1.32

 
$
0.94

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
103,265

 
102,252

 
103,030

 
101,401

Diluted
 
104,087

 
103,796

 
104,168

 
103,226




10





THE HAIN CELESTIAL GROUP, INC.
 Reconciliation of GAAP Results to Non-GAAP Measures
 (unaudited and in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
 
2016 GAAP
 
Adjustments
 
2016 Adjusted
 
2015 GAAP
 
Adjustments
 
2016 Adjusted
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
749,862

 
$
—

 
$
749,862

 
$
662,739

 
$
—

 
$
662,739

Cost of sales
 
576,653

 
(3,054
)
 
573,599

 
504,990

 
(5,928
)
 
499,062

Operating expenses (a)
 
98,501

 
(2,700
)
 
95,801

 
93,257

 
(7,126
)
 
86,131

Acquisition related expenses, restructuring
  and integration charges, and other
 
5,701

 
(5,701
)
 
—

 
4,298

 
(4,298
)
 
—

Operating Income
 
69,007

 
11,455

 
80,462

 
60,194

 
17,352

 
77,546

Interest and other expenses, net
 
(1,715
)
 
9,149

 
7,434

 
8,640

 
(2,216
)
 
6,424

Provision for income taxes
 
21,576

 
712

 
22,288

 
18,147

 
6,427

 
24,574

Net income
 
48,985

 
1,594

 
50,579

 
33,394

 
13,141

 
46,535

Earnings per share - diluted
 
0.47

 
0.02

 
0.49

 
0.32

 
0.13

 
0.45


(a) Operating expenses include amortization/impairment of acquired intangibles and selling, general, and administrative expenses.



11




 
 
Three Months Ended March 31,
 
 
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
 
 
 
HPPC costs related to chiller breakdown and factory
  start-up costs
 
$
3,054

 
$
943

 
$
—

 
$
—

Ashland factory and related expenses
 
—

 
—

 
2,142

 
814

UK factory start-up costs
 
—

 
—

 
2,512

 
521

Acquisition and other integration costs
 
—

 
—

 
1,274

 
427

Cost of sales
 
3,054

 
943

 
5,928

 
1,762

 
 
 
 
 
 
 
 
 
Celestial Seasonings packaging launch support
 
2,700

 
833

 
—

 
—

Tilda fire insurance recovery costs and other start-up/
  integration costs
 
—

 
—

 
1,098

 
275

Litigation expenses
 
—

 
—

 
518

 
197

Selling, general and administrative expenses
 
2,700

 
833

 
1,616

 
472

 
 
 
 
 
 
 
 
 
Tradename impairment charge
 
—

 
—

 
5,510

 
1,102

Amortization/impairment of acquired intangibles
 
—

 
—

 
5,510

 
1,102

 
 
 
 
 
 
 
 
 
Acquisition related fees and expenses, integration and
  restructuring charges, including severance, and other
 
4,190

 
1,294

 
4,298

 
1,463

Contingent consideration expense
 
1,511

 
466

 
—

 
—

Acquisition related expenses, restructuring and integration charges, and other
 
5,701

 
1,760

 
4,298

 
1,463

 
 
 
 
 
 
 
 
 
Unrealized currency impacts
 
(136
)
 
(42
)
 
5,138

 
1,628

Gain on Tilda fire
 
(9,013
)
 
(2,782
)
 
—

 
—

Gain on pre-existing investment in HPPC and
  Empire Kosher
 
—

 
—

 
(2,922
)
 
—

Interest and other expenses, net
 
(9,149
)
 
(2,824
)
 
2,216

 
1,628

 
 
 
 
 
 
 
 
 
Total adjustments
 
$
2,306

 
$
712

 
$
19,568

 
$
6,427



12





THE HAIN CELESTIAL GROUP, INC.
 Reconciliation of GAAP Results to Non-GAAP Measures
 (unaudited and in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended March 31,
 
 
2016 GAAP
 
Adjustments
 
2016 Adjusted
 
2015 GAAP
 
Adjustments
 
2016 Adjusted
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
2,189,639

 
$
—

 
$
2,189,639

 
$
1,990,379

 
$
16,701

 
$
2,007,080

Cost of sales
 
1,686,820

 
(5,578
)
 
1,681,242

 
1,539,459

 
(25,059
)
 
1,514,400

Operating expenses (a)
 
276,770

 
(4,934
)
 
271,836

 
281,614

 
(12,664
)
 
268,950

Acquisition related expenses, restructuring
  and integration charges, and other
 
11,852

 
(11,852
)
 
—

 
6,273

 
(6,273
)
 
—

Operating Income
 
214,197

 
22,364

 
236,561

 
163,033

 
60,697

 
223,730

Interest and other expenses, net
 
19,518

 
1,706

 
21,224

 
21,380

 
(2,466
)
 
18,914

Provision for income taxes
 
57,337

 
9,988

 
67,325

 
45,144

 
23,257

 
68,401

Net income
 
137,234

 
10,670

 
147,904

 
96,824

 
39,906

 
136,730

Earnings per share - diluted
 
1.32

 
0.10

 
1.42

 
0.94

 
0.38

 
1.32


(a) Operating expenses include amortization/impairment of acquired intangibles and selling, general, and administrative expenses.




















13




 
 
Nine Months Ended March 31,
 
 
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 costs related to chiller breakdown and
  factory start-up costs
 
3,895

 
1,263

 
—

 
—

US warehouse consolidation project
 
426

 
162

 
—

 
—

UK factory start-up costs
 
743

 
149

 
8,533

 
1,770

Acquisition and other integration costs
 
514

 
155

 
2,797

 
817

Ashland factory and related expenses
 
—

 
—

 
2,142

 
814

Nut butter recall
 
—

 
—

 
9,428

 
3,583

European non-dairy beverage withdrawal
 
—

 
—

 
1,259

 
428

Fakenham inventory allowance for fire
 
—

 
—

 
900

 
187

Cost of sales
 
5,578

 
1,729

 
25,059

 
7,599

 
 
 
 
 
 
 
 
 
Celestial Seasonings packaging launch support
  and Keurig transition
 
4,704

 
1,595

 
—

 
—

Tilda fire insurance recovery costs and other start-up/
  integration costs
 
230

 
46

 
1,354

 
352

Nut butter recall
 
—

 
—

 
4,909

 
1,864

Litigation expenses
 
—

 
—

 
891

 
339

Selling, general and administrative expenses
 
4,934

 
1,641

 
7,154

 
2,555

 
 
 
 
 
 
 
 
 
Tradename impairment charge
 
—

 
—

 
5,510

 
1,102

Amortization/impairment of acquired intangibles
 
—

 
—

 
5,510

 
1,102

 
 
 
 
 
 
 
 
 
Acquisition related fees and expenses, integration and
  restructuring charges, including severance, and other
 
10,341

 
3,223

 
5,992

 
2,100

Contingent consideration expense
 
1,511

 
466

 
281

 
—

Acquisition related expenses, restructuring and
integration charges, and other
 
11,852

 
3,689

 
6,273

 
2,100

 
 
 
 
 
 
 
 
 
Unrealized currency impacts
 
7,091

 
2,344

 
10,957

 
3,561

Gain on Tilda fire
 
(9,013
)
 
(2,782
)
 
—

 
—

Gain on disposal of investment held for sale
 
—

 
—

 
(314
)
 
—

Gain on pre-existing investment in HPPC and Empire Kosher
 
—

 
—

 
(8,256
)
 
—

Interest accretion and other items, net
 
—

 
—

 
79

 
30

HPPC chiller disposal
 
216

 
82

 
—

 
—

Interest and other expenses, net
 
(1,706
)
 
(356
)
 
2,466

 
3,591

 
 
 
 
 
 
 
 
 
UK tax rate change impact on deferred taxes and uncertain tax
  position reserve
 
—

 
3,285

 
—

 
—

Provision for income taxes
 
—

 
3,285

 
—

 
—

 
 
 
 
 
 
 
 
 
Total adjustments
 
$
20,658

 
$
9,988

 
$
63,163

 
$
23,257


14




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