(Source: PRNewswire-FirstCall)
MELVILLE, N.Y., May 4 /PRNewswire-FirstCall/ -- The Hain Celestial Group, Inc. , a leading natural and organic products company, today reported results for the third quarter ended March 31, 2009. The Company reported third quarter net sales of $267.7 million versus the prior year's third quarter sales of $264.6 million. Sales in the quarter would have been $12.7 million higher without the effects of foreign exchange rate changes between the periods, or 6% higher on a year-over-year basis. Net loss in the third quarter was $41.2 million, or $1.01 per share, on a GAAP basis, driven by the Company taking an estimated after-tax non-cash impairment charge of $48.4 million against goodwill and intangible assets related to the Company's European and Hain Pure Protein's (HPP) reporting units. On a non-GAAP basis(1), adjusted net income was $12.5 million, or $0.31 per share, in the third quarter this year.
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"Hain Celestial's U.S. business delivered a solid quarter as health conscious consumers remain committed to natural and organic products even in tough economic times. The macroeconomic conditions in this past quarter -- and particularly at the beginning of the calendar year -- led to sales being challenged by reduced inventories and by consumers using their pantry goods. However, we believe that, as the quarter progressed, our strong brand portfolio and innovative range of healthy products offered through various distribution channels at reasonable prices provided consumers with the core goods they need for a healthy lifestyle. Their response was encouraging. Our results also reflect the sharp emphasis we continue to place on cost containment and productivity initiatives," said Irwin D. Simon, President and Chief Executive Officer of Hain Celestial.
"At the same time, we continue to improve our business, and focus on the challenges in our European and protein operations. In Europe, we are encouraged by recent business wins at our Fakenham facility in the United Kingdom in light of the challenges we have faced, including the under-utilization of the plant. New volume will be coming into the plant starting very soon as we produce new frozen meat-free and dessert products. In late April, HPP's Kosher Valley(TM) brand commenced production of natural, antibiotic-free, vegetarian-fed kosher poultry products at the Plainville facility," commented Irwin Simon.
On a GAAP basis gross margin was 23.5% in the third quarter versus 26.0% in the prior year quarter. If not for the Company's lower margin HPP joint venture with its current mix of commodity versus antibiotic-free mix, gross margin would have been 485 basis points higher this year at 28.3%, versus 126 basis points higher last year at 27.2%. The Company is in the process of de-emphasizing sales of conventional turkey and chicken products while it focuses on antibiotic-free products to improve its mix of sales for future periods.
Adjusted selling, general and administrative expenses declined as a percentage of sales to 17.8% in this year's quarter, compared to 18.4% in the prior year quarter. This reduction comes from the Company's continued successful focus on its cost structure and from productivity initiatives. On a GAAP basis the selling, general and administrative expenses as a percentage of sales was 18.7% in this year's quarter compared to 19.4% in the prior year quarter.
Interest and other expense, net includes interest expense of $3.4 million in the third quarter this year compared to $3.2 million for the prior year quarter. Also included is the minority interest share of the results of our protein operations, amounting to $(3.4) million in this year's quarter compared to $0.3 million in the prior year quarter. The remaining items of other expense in the current year quarter include foreign exchange and the settlement of a pre-acquisition contingency which could not be estimated or accrued at the time of the acquisition in 2003.
The Company recorded an estimated non-cash impairment charge aggregating $52.6 million ($48.4 million after-tax, or $1.19 per share) from the write-down of goodwill and other intangibles in its European and its Hain Pure Protein operations. This non-cash charge had no impact on the Company's compliance with financial covenants under its debt obligations.
The Company's balance sheet remains strong, with $255.6 million in working capital and a current ratio of 2.8 at March 31, 2009. Debt as a percentage of equity was 42.5%, with equity at $685.7 million. Operating free cash flow in the third quarter this year was $3.7 million compared to $6.8 million in the prior year quarter. The Company's cash balance at March 31, 2009 was $27.8 million after reducing outstanding debt by $28.5 million in the quarter.
"In an exceptionally tough operating environment, the Company drove growth in the natural, mass market and specialty channels, while we delivered on productivity and efficiencies. These initiatives, which, coupled with strategic pricing actions, position the Company for future growth," concluded Irwin Simon.
Fiscal Year 2009 Guidance
The Company updated its fiscal year 2009 guidance and narrowed the range to $1.162 to $1.170 billion in sales and $1.25 to $1.30 earnings per share excluding the impairment and other adjustments. The earnings guidance is before deducting $0.10 per share in stock compensation expense to amortize equity grants.
Webcast
Hain Celestial will host a conference call and webcast at 4:30 PM Eastern Daylight Time today to review its third quarter fiscal year 2009 results. The event will be webcast and available under the Investor Relations section of the Company's website at http://www.hain-celestial.com/.
The Hain Celestial Group
The Hain Celestial Group , headquartered in Melville, NY, is a leading natural and organic company in North America and Europe. Hain Celestial participates in almost all natural food categories with well-known brands that include Celestial Seasonings(R), Terra(R), Garden of Eatin'(R), Health Valley(R), WestSoy(R), Earth's Best(R), Arrowhead Mills(R), MaraNatha(R), SunSpire(R), DeBoles(R), Hain Pure Foods(R), FreeBird(TM), Plainville Farms(R), Kosher Valley(TM), Hollywood(R), Spectrum Naturals(R), Spectrum Essentials(R), Walnut Acres Organic(R), Imagine(R), Rice Dream(R), Soy Dream(R), Rosetto(R), Ethnic Gourmet(R), Yves Veggie Cuisine(R), Granose(R), Realeat(R), Linda McCartney(R), Daily Bread(TM), Lima(R), Grains Noirs(R), Natumi(R), JASON(R), Zia(R) Natural Skincare, Avalon Organics(R), Alba Botanica(R), Queen Helene(R), Tushies(R) and TenderCare(R). Hain Celestial has been providing "A Healthy Way of Life(TM)" since 1993. For more information, visit http://www.hain-celestial.com/.
Safe Harbor Statement
This press release contains forward-looking statements within and constitutes a "Safe Harbor" statement under the Private Securities Litigation Act of 1995.
