Reflecting its focus on increasing distribution of natural foods to consumers in the grocery channel and the expansion of its international presence, The Hain Celestial Group (Nasdaq: HAIN), the leading natural and organic food company, today announced a net sales increase of $12.3 million for the fourth quarter or 14% over the prior year period, totaling net sales of $99.3 million. For the 2001 fiscal year ended June 30, 2001, the Company reported a 6% increase in net sales compared to fiscal 2000 on a comparative basis, totaling $412.9 million. Hain Celestial announced earnings of $23.6 million, or $0.68 per share for fiscal 2001. For the fourth quarter, the Company reported earnings of $2.7 million, or $0.08 per share. As previously announced, higher marketing expenditures for its Westsoy brand and increased production costs for its Terra brand adversely impacted earnings in the fourth quarter, though these steps have positioned the brands for long-term market share growth.
Irwin D. Simon, Chairman, President and Chief Executive Officer, said, “This has been an important year for The Hain Celestial Group, as we focused on increasing natural food distribution in the grocery channel, and expanded our scope to include consumer-oriented marketing in addition to our existing trade-related advertising program. We will continue to integrate the sales and back office operations of Celestial Seasonings into our business, and with our Fruit Chips and Yves Veggie Cuisine acquisitions, we have expanded our operations and distribution capabilities internationally, and established new headquarters in Europe and Canada. We have begun establishing a dedicated sales force to capitalize on opportunities in increasing our reach to convenience stores, food service operations, mass market and club stores. In addition, we have taken significant steps in implementing new systems, which have been successfully integrated on the corporate level and will be on-line across our U.S. operations by the end of the third quarter 2002. All of these steps position us well for the future.
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“In the short-term this year, our transition necessitated measures which impacted our earnings. Additionally, this year we faced the challenges of dealing with the last deloading from Celestial Seasonings, Y2K inventory buildup and the reduction of inventory levels by all major supermarkets. I am proud that in the fourth quarter we continued to grow revenues in spite of these market conditions, reflecting the popularity and performance of our rocket brands, including 38% growth for Terra, 14% for Earth’s Best, 11% for Health Valley and 18% for Celestial Seasonings teas. At the same time, we are continuing to maintain our fundamental financial strength, as evidenced by our robust balance sheet,” said Mr. Simon.
FISCAL 2001 HIGHLIGHTS
During Fiscal 2001, The Hain Celestial Group’s Fruit Chips B.V. and Yves Veggie Cuisine acquisitions have provided a strong basis from which the Company plans to expand its operations internationally. In particular, the Yves brand will position Hain Celestial as a leader in the growing meat analog category as consumers recognize the health benefits of soy as well as the health concerns associated with traditional meat products. During the year, the Company fixed the mix and pricing at retail for Celestial, resulting in the brand’s category growth and providing a strong selling foundation for the upcoming tea season.
Hain Celestial also continued its record of innovative products and marketing, introducing the Earth’s Best Kidz line extension, Westsoy refrigerated soymilk and soy Shakes and Smoothies, four different flavors in a new Terra Frites product, and new Celestial Seasonings herbal and green teas.
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By GlobalDataSTRATEGIC INITIATIVES/MANAGEMENT CHANGES
Mr. Simon commented, “Our priority this coming year is to build revenues and earnings growth for our shareholders. We intend to continue to build our financial strength from the expansion of our Company, and maintaining and augmenting our cost controls. We have targeted $10 million of cost savings including integration efficiencies such as backoffice consolidation, better efficiencies in our Company-run plants as well as staff reductions. These savings will enable us to provide further marketing support for our brands. In addition, we have already begun consolidating our U.S. warehouse distribution network to achieve greater geographical efficiencies. We currently have 22 facilities (down from 29 at the beginning of fiscal 2001), and our goal is to have 5 strategically located warehouses by the end of fiscal 2002.”
“To help us accomplish these goals, we are focused on building the best possible team for executing these operational and financial imperatives. Accordingly, I am pleased to announce today a significant addition to our executive management team. Ira Lamel, a senior partner with Ernst & Young for 28 years, will join us as Executive Vice President and Chief Financial Officer, effective October 1, 2001. Ira is no stranger to The Hain Celestial Group, as he led all of Ernst & Young’s services to Hain Celestial through June 2000. As we welcome Ira to his new position with the Company, we are also delighted that, as Executive Vice President, Gary Jacobs will focus his attention on day-to-day operations and the overall Hain Celestial business. He will bring his expertise and skills to bear on the Operations Group in New York, including purchasing, procurement, customer fulfillment, technical services and forecasting. I know that both Ira and Gary will contribute to a successful 2002 for The Hain Celestial Group.”
FISCAL 2002 OUTLOOK
As previously announced, the Company reiterated that it remains comfortable with consensus earnings estimates for fiscal 2002 of $1.05-$1.15 per share, taking into consideration the anticipated effect of new accounting rules regarding amortization of goodwill and other intangibles, and revenues of $480-$500 million. In addition to the performance of its existing rocket brands and other successful brands through both the mass market and natural channels, the Company also identified factors it expected to contribute to its growth, including: the addition of Yves Veggie Cuisine to the Company’s existing portfolio of rocket brands and growth synergies for Westsoy refrigerated soy products as a result of access to Yves’ refrigerated distribution capabilities; a reorganized sales and marketing organization; and additional growth internationally as the Company builds its presence in Europe and Canada.
About The Hain Celestial Group
The Hain Celestial Group, headquartered in Uniondale, NY, is a natural, specialty and snack food company. The Company is a leader in 13 of the top 15 natural food categories, with such well-known natural food brands as Celestial Seasonings® teas, Hain Pure Foods®, Westbrae®, Westsoy®, Arrowhead Mills®, Health Valley®, Breadshop’s®, Casbah®, Garden of Eatin®, Terra Chips®, Yves Veggie Cuisine®, The Good Dog®, The Good Slice®, DeBoles®, Earth’s Best®, and Nile Spice. The Company’s principal specialty product lines include Hollywood® cooking oils, Estee® sugar-free products, Weight Watchers® dry and refrigerated products, Kineret® kosher foods, Boston Better Snacks®, and Alba Foods®. The Hain Celestial Group’s website can be found at http://www.hain-celestial.com.
Statements made in this Press Release that are estimates of past or future performance are based on a number of factors, some of which are outside of the Company’s control. Statements made in this Press Release that state the intentions, beliefs, expectations or predictions of The Hain Celestial Group and its management for the future are forward-looking statements. It is important to note that actual results could differ materially from those projected in such forward-looking statements. Information concerning factors that could cause actual results to differ materially from those in forward-looking statements is contained from time to time in filings of The Hain Celestial Group with the U.S. Securities and Exchange Commission. Copies of these filings may be obtained by contacting The Hain Celestial Group or the SEC.
THE HAIN CELESTIAL GROUP, INC.
Consolidated Balance Sheets
(In thousands)
June 30,
2001 2000
ASSETS
Current assets:
Cash and cash equivalents $26,643 $38,308
Trade receivables, net 46,404 36,120
Inventories 49,593 48,139
Recoverable income taxes 8,232 7,982
Deferred income taxes 3,740 8,724
Other current assets 4,168 3,611
Total current assets 138,780 142,884
Property, plant and equipment, net 55,780 39,340
Goodwill and other intangible assets, net 258,056 228,477
Other assets 9,077 5,316
Total assets $461,693 $416,017
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses $42,456 $43,039
Accrued merger related charges 1,131 9,414
Current portion of long-term debt 2,459 681
Total current liabilities 46,046 53,134
Deferred income taxes 7,854 5,537
Long-term debt, less current portion 11,140 5,622
Total liabilities 65,040 64,293
Stockholders’ equity:
Common stock 338 321
Additional paid-in capital 348,942 326,641
Retained earnings 48,626 25,037
Treasury stock (275) (275)
Foreign currency translation adjustment (978) —
Total stockholders’ equity 396,653 351,724
Total liabilities and
stockholders’ equity $461,693 $416,017
THE HAIN CELESTIAL GROUP, INC.
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended Fiscal Year Ended
June 30, June 30,
2001 2000 2001 2000
(Unaudited)
Net sales $99,293 $87,012 $412,880 $403,543
Cost of Sales 57,972 55,034 234,643 227,417
Gross profit 41,321 31,978 178,237 176,126
SG&A expenses 35,377 41,378 132,385 148,133
Merger costs — 15,633 1,032 15,633
Restructuring and other
non-recurring charges — 3,733 — 4,933
Impairment of long-lived assets — 3,468 — 3,468
Amortization of goodwill and
other intangible assets 1,671 1,345 6,441 6,346
Operating income (loss) 4,273 (33,579) 38,379 (2,387)
Interest and other income 484 213 2,808 1,585
Interest and financing costs (141) (1,017) (516) (6,701)
Income (loss) before income taxes,
extraordinary item and cumulative
change in accounting principle 4,616 (34,383) 40,671 (7,503)
Income tax provision (benefit) 1,939 (7,054) 17,082 3,900
Income (loss) before
extraordinary item and cumulative
change in accounting principle 2,677 (27,329) 23,589 (11,403)
Extraordinary item – loss from
early extinguishment of debt,
net of income tax benefit of $1,182 — (1,940) — (1,940)
Cumulative change in accounting
principle, net of income
tax benefit of $2,547 — — — (3,754)
Net income (loss) $2,677 $(29,269) $23,589 $(17,097)
Basic per share amounts:
Income (loss) before extraordinary
item and cumulative change
in accounting principle $0.08 $(0.93) $0.71 $(0.41)
Extraordinary item — (0.06) — (0.07)
Cumulative change in
accounting principle — — — (0.13)
Net income (loss) $0.08 $(0.99) $0.71 $(0.61)
Diluted per share amounts:
Income (loss) before extraordinary
item and cumulative change
in accounting principle $0.08 $(0.93) $0.68 $(0.41)
Extraordinary item — (0.06) — (0.07)
Cumulative change in
accounting principle — — — (0.13)
Net income (loss) $0.08 $(0.99) $0.68 $(0.61)
Common equivalent shares:
Basic 33,553 29,484 33,014 27,952
Diluted 34,650 29,484 34,544 27,952
Supplementary Information:
EBITDA (Earnings before
interest, taxes,
depreciation and amortization) $7,586 $(31,238) $51,107 $8,652
