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Hain Celestial Group Inc$29.10$.461.61%

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 Hain Celestial Reports Second Quarter Fiscal Year 2018 Financial Results
   Wednesday, February 07, 2018 7:30:00 AM ET

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(TM), today reported financial results for the second quarter ended December 31, 2017.

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"We are pleased with the increase in net sales and profitability across our international business segments for the second quarter along with contributions from various brands in the United States, which reflects our well-diversified geographic portfolio. Our team remains intently focused on generating the growth we believe we are capable of achieving from our brand building efforts," said Irwin D. Simon, Founder, President and Chief Executive Officer of Hain Celestial. "Throughout our organization, we continue to make progress on our long-term strategic priorities and Project Terra cost savings initiatives. As we look to reduce complexities across our business and drive greater efficiencies, our team has already identified specific opportunities to simplify our brand portfolio near-term to enhance stockholder value, positioning Hain Celestial for future growth."

FINANCIAL HIGHLIGHTS1

Second Quarter Results Summary

-- Net sales increased 5% to $775.2 million compared to the prior year period, or 2% on a constant currency basis, primarily reflecting mid-single digit net sales increases from our United Kingdom, Canada and Europe and Hain Pure Protein operating segments, partially offset by a low single digit decrease from the United States segment.

-- Net sales increased 1%, compared to the prior year period, when adjusted for foreign exchange and acquisitions, divestitures, and certain other items2.

-- Gross margin of 18.6%; adjusted gross margin of 20.2%.

-- Operating income of $36.3 million; adjusted operating income of $62.1 million.

-- Net income of $47.1 million, an increase of 73% over the prior year period; adjusted net income of $42.7 million, an increase of 30% over the prior year period.

-- EBITDA increased 2% to $61.0 million compared to $59.6 million in the prior year period; adjusted EBITDA increased 19% to $82.7 million compared to $69.5 million in the prior year period.

-- EPS of $0.45 compared to $0.26 in the prior year period; adjusted EPS of $0.41 compared to $0.32 in the prior year period.

SECOND QUARTER OPERATING SEGMENT HIGHLIGHTS

Hain Celestial United States Net sales for Hain Celestial United States decreased 3% over the prior year period to $270.3 million; net sales adjusted for acquisitions, divestitures and certain other items2 decreased 5%. Growth from the Tea, Pure Personal Care and Better-For-You Baby platforms including Celestial Seasonings?, Terra?, Garden of Eatin?, Alba Botanica?, Avalon Organics?, Live Clean? and Earth’s Best? brands was offset by declines from Sensible Portions?, Spectrum? and The Greek Gods? brands in Better-For-You Snacking, Better-For-You Pantry and Fresh Living platforms, despite growth from MaraNatha? and Arrowhead Mills? brands. In addition, the declines were being driven by the strategic decision to no longer support certain lower margin stock keeping units ("SKUs") in order to reduce complexity and increase gross margins as the Company continues its focus on its top 500 SKUs in the United States. The prior year second quarter results were also negatively impacted by inventory realignment at certain customers. Segment operating income was $21.9 million, a 45% decrease over the prior year period, and adjusted operating income was $31.0 million, a 24% decrease over the prior year period, driven primarily by higher marketing investments, increased freight and commodity costs and unfavorable mix. The financial results for the current period as well as the prior year second quarter results exclude the United Kingdom operations of the Ella’s Kitchen? brand, thereby eliminating net sales of approximately $22.4 million and $19.5 million, respectively, as these net sales are now reported as part of the United Kingdom reportable segment.

Hain Celestial United Kingdom Net sales for Hain Celestial United Kingdom increased 12% to $238.2 million over the prior year period, reflecting 13% growth from Tilda?, 15% growth from Ella’s Kitchen? and 12% growth from Hain Daniels. Hain Daniels net sales, adjusted for both foreign exchange and acquisitions and divestitures2, increased 4% over the prior year period, with strong brand performance from Hartley’s?, Linda McCartney’s? and Cully & Sully? brands. Net sales for Hain Celestial United Kingdom, on a consolidated basis, was up 5% over the prior year period, adjusted for both foreign exchange and acquisitions and divestitures2. Segment operating income of $13.6 million increased 46% over the prior year period, and adjusted operating income of $16.3 million increased 41% over the prior year period driven by strong contribution from the Hain Daniels brands. As discussed above, the financial results for the current period as well as the prior year second quarter results includes the United Kingdom operations of the Ella’s Kitchen? brand, which was previously reported as part of the United States reportable segment.

Hain Pure Protein Net sales for Hain Pure Protein increased 4% to $159.0 million over the prior year period, reflecting a 15% increase from Plainville Farms?, 17% from FreeBird? and 7% from Empire? Kosher brands, partially offset by a decrease in private label sales. Segment operating income increased to $5.3 million or 50% from the prior year period of $3.5 million, and adjusted operating income increased 256% to $12.6 million due to improvements in operating expenses across the business.

Rest of World Net sales for Rest of World increased 12% to $107.7 million over the prior year period, or by 6% on a constant currency basis. Net sales for Hain Celestial Canada grew 6%, driven by strong performance from Yves Veggie Cuisine?, Sensible Portions? and Live Clean? brands. Net sales for Hain Celestial Europe grew 5%, driven by the Joya? and Natumi? brands as well as own-label products. Segment operating income increased to $10.5 million, a 41% increase over the prior year period, and adjusted operating income increased 55% to $11.4 million over the prior year period.

Explores Divestiture of Hain Pure Protein The Company announced it is exploring the divestiture of its Hain Pure Protein business. The Company cannot give any assurances that this will result in any specific action or regarding the outcome or timing of any action. The Company does not intend to comment further regarding the potential divestiture at this time.

Fiscal Year 2018 Guidance The Company reiterated its net sales outlook and updated its Adjusted EPS and Adjusted EBITDA guidance for fiscal year 2018 to take into account continued investment in marketing and brand awareness, primarily in the United States, as well as recent freight and certain commodity price headwinds:

-- Net sales of $2.967 billion to $3.036 billion, an increase of approximately 4% to 6% as compared to fiscal year 2017.

-- Adjusted EBITDA of $340 million to $355 million, an increase of approximately 24% to 29% as compared to fiscal year 2017.

-- Adjusted earnings per diluted share of $1.64 to $1.75, which includes an $.08 to $.09 benefit due to tax reform, an increase of approximately 34% to 43% as compared to fiscal year 2017.

Guidance, where adjusted, is provided on a non-GAAP basis, which excludes acquisition-related expenses, integration and restructuring charges, start-up costs, unrealized net foreign currency gains or losses, accounting review and remediation costs and other non-recurring items that have been or may be incurred during the Company’s fiscal year 2018, which the Company will continue to identify as it reports its future financial results. Guidance excludes the impact of any future acquisitions.

The Company has not reconciled its expected adjusted EBITDA to net income or adjusted earnings per diluted share to earnings per share under "Fiscal Year 2018 Guidance" 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.

(unaudited and dollars in thousands)           United         United          Hain Pure       Rest of         Corporate/          Total
                                               States         Kingdom         Protein         World           Other
NET SALES
Net sales - Three months ended 12/31/17        $     270,303  $     238,201   $     158,972   $     107,728   $                 - $     775,204
Net sales - Three months ended 12/31/16        $     278,640  $     212,312   $     152,979   $       96,068  $                 - $     739,999
% change - FY’18 net sales vs. FY’17 net sales (3.0)%         12.2%           3.9%            12.1%                               4.8%
OPERATING INCOME
Three months ended 12/31/17
Operating income                               $       21,861 $       13,598  $         5,328 $       10,535  $      (15,029)     $       36,293
Non-GAAP adjustments (1)                       9,109          2,740           7,287           866             5,791               25,793
Adjusted operating income                      $       30,970 $       16,338  $       12,615  $       11,401  $        (9,238)    $       62,086
Operating income margin                        8.1%           5.7%            3.4%            9.8%                                4.7%
Adjusted operating income margin               11.5%          6.9%            7.9%            10.6%                               8.0%
Three months ended 12/31/16
Operating income                               $       39,928 $         9,321 $         3,541 $         7,477 $      (18,867)     $       41,400
Non-GAAP adjustments (1)                       668            2,251           -               (110)           7,113               9,922
Adjusted operating income                      $       40,596 $       11,572  $         3,541 $         7,367 $      (11,754)     $       51,322
Operating income margin                        14.3%          4.4%            2.3%            7.8%                                5.6%
Adjusted operating income margin               14.6%          5.5%            2.3%            7.7%                                6.9%
(unaudited and dollars in thousands)           United         United          Hain Pure       Rest of         Corporate/          Total
                                               States         Kingdom         Protein         World           Other
NET SALES
Net sales - Six months ended 12/31/17          $     533,962  $     460,646   $     278,029   $     210,843   $                 - $  1,483,480
Net sales - Six months ended 12/31/16          $     532,872  $     432,463   $     269,648   $     186,480   $                 - $  1,421,463
% change - FY’18 net sales vs. FY’17 net sales 0.2%           6.5%            3.1%            13.1%                               4.4%
OPERATING INCOME
Six months ended 12/31/17
Operating income                               $       42,722 $       23,199  $         7,570 $       19,532  $      (25,247)     $       67,776
Non-GAAP adjustments (1)                       11,392         6,075           8,629           866             7,047               34,009
Adjusted operating income                      $       54,114 $       29,274  $       16,199  $       20,398  $      (18,200)     $     101,785
Operating income margin                        8.0%           5.0%            2.7%            9.3%                                4.6%
Adjusted operating income margin               10.1%          6.4%            5.8%            9.7%                                6.9%
Six months ended 12/31/16
Operating income                               $       58,722 $       17,140  $         2,523 $       12,532  $      (35,766)     $       55,151
Non-GAAP adjustments (1)                       6,194          3,754           -               (110)           13,534              23,372
Adjusted operating income                      $       64,916 $       20,894  $         2,523 $       12,422  $      (22,232)     $       78,523
Operating income margin                        11.0%          4.0%            0.9%            6.7%                                3.9%
Adjusted operating income margin               12.2%          4.8%            0.9%            6.7%                                5.5%
(1) See accompanying table of "Reconciliation of GAAP Results to Non-GAAP Measures"

Webcasts and Upcoming Presentation Hain Celestial will host a conference call and webcast today at 8:30 AM Eastern Time to discuss its results and business outlook. Additionally, the Company is scheduled to present at the CAGNY 2018 Conference on Tuesday, February 20, 2018 at 5:00 PM Eastern Time. These events will be webcast, and the accompanying presentations 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 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 Caf?(TM), 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?, Better Bean(TM), Europe’s Best?, Cully & Sully?, New Covent Garden Soup Co.?, Yorkshire Provender(TM), Johnson’s Juice Co.?, Farmhouse Fare?, Hartley’s?, Sun-Pat?, Gale’s?, Clarks(TM), Robertson’s?, Frank Cooper’s?, Linda McCartney?, Lima?, Danival?, Happy?, 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(TM) 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 2018; (ii) the Company’s ability to generate growth; (iii) the potential divestiture of the Hain Pure Protein business, and (iv) the Company’s ability to execute Project Terra initiatives for future growth and simplify its brand portfolio to enhance value; 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, 2017, 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, as applicable in each case, adjusted operating income, adjusted gross margin, 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 ended December 31, 2017 and 2016 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 three months and six months ended December 31, 2017 and 2016, operating free cash flow was calculated as follows:

                                            Three Months Ended   Six Months Ended
                                            12/31/17  12/31/16   12/31/17   12/31/16
                                            (unaudited and dollars in thousands)
 Cash flow provided by operating activities $44,864   $103,308   $25,426    $116,127
 Purchases of property, plant and equipment (16,114)  (14,172)   (31,027)   (28,725)
 Operating free cash flow                   $28,750   $  89,136  $ (5,601)  $  87,402

The Company’s operating free cash flow was $28.8 million for the three months ended December 31, 2017, a decrease of $60.4 million from the three months ended December 31, 2016. The Company’s operating free cash flow was negative $5.6 million for the six months ended December 31, 2017, a decrease of $93.0 million from the six months ended December 31, 2016. The decrease in operating free cash flow was primarily attributable to 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, 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 (a GAAP measure) before income taxes, net interest expense, depreciation and amortization, equity in earnings 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 six months ended December 31, 2017 and 2016, EBITDA and Adjusted EBITDA was calculated as follows:

                                                                                Three Months Ended            Six Months Ended
                                                                                12/31/2017        12/31/2016  12/31/2017        12/31/2016
                                                                                (unaudited and dollars in thousands)
Net Income                                                                      $         47,103  $   27,185  $         66,949  $   35,789
(Benefit)/provision for income taxes                                            (16,369)          10,509      (7,899)           11,271
Interest expense, net                                                           5,827             4,426       11,447            8,780
Depreciation and amortization                                                   17,346            16,948      34,972            34,168
Equity in net income of equity method investees                                 (194)             (38)        (205)             (222)
Stock based compensation expense                                                4,158             2,531       7,322             5,235
Long-lived asset impairment                                                     3,449             -           3,449             -
Unrealized currency gains and losses                                            (287)             (1,984)     (3,706)           (3,277)
EBITDA                                                                          61,033            59,577      112,329           91,744
Acquisition related expenses, restructuring, and integration charges, and other 4,797             108         10,643            1,516
Accounting review and remediation costs, net of insurance proceeds              4,451             7,005       3,093             12,966
Losses on terminated chilled desserts contract                                  2,142             -           3,614             -
U.K. and HPP start-up costs                                                     2,381             -           3,464             -
Discontinuation of Round Hill Brand                                             2,177             -           2,177             -
HPP Network Distribution Redesign                                               1,952             -           1,952             -
Co-packer disruption                                                            1,567             -           2,740             -
Regulated packaging change                                                      1,007             -           1,007             -
Plant closure related costs                                                     700               1,804       700               1,804
HPP Feed Formulation Test                                                       471               -           471               -
Recall and other related costs                                                  -                 397         -                 809
SKU rationalization                                                             -                 160         -                 5,359
U.K. deferred synergies due to CMA Board decision                               -                 447         -                 918
Adjusted EBITDA                                                                 $         82,678  $   69,498  $       142,190   $ 115,116
THE HAIN CELESTIAL GROUP, INC.
Consolidated Balance Sheets
(in thousands)
                                                                                  December 31, 2017         June 30, 2017
                                                                                  (unaudited)
ASSETS
Current assets:
               Cash and cash equivalents                                          $                139,216  $                146,992
               Accounts receivable, net                                           274,728                   248,436
               Inventories                                                        502,372                   427,308
               Prepaid expenses and other current assets                          62,994                    52,045
                                       Total current assets                       979,310                   874,781
Property, plant and equipment, net                                                386,077                   370,511
Goodwill                                                                          1,083,696                 1,059,981
Trademarks and other intangible assets, net                                       583,911                   573,268
Investments and joint ventures                                                    19,301                    18,998
Other assets                                                                      35,042                    33,565
                                       Total assets                               $             3,087,337   $             2,931,104
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
               Accounts payable                                                   $                263,395  $                222,136
               Accrued expenses and other current liabilities                     112,677                   108,514
               Current portion of long-term debt                                  25,021                    9,844
                                       Total current liabilities                  401,093                   340,494
Long-term debt, less current portion                                              742,125                   740,304
Deferred income taxes                                                             98,127                    121,475
Other noncurrent liabilities                                                      23,446                    15,999
                                       Total liabilities                          1,264,791                 1,218,272
Stockholders’ equity:
               Common stock                                                       1,084                     1,080
               Additional paid-in capital                                         1,145,042                 1,137,724
               Retained earnings                                                  935,771                   868,822
               Accumulated other comprehensive loss                               (153,351)                 (195,479)
               Subtotal                                                           1,928,546                 1,812,147
               Treasury stock                                                     (106,000)                 (99,315)
                                       Total stockholders’ equity                 1,822,546                 1,712,832
                                       Total liabilities and stockholders’ equity $             3,087,337   $             2,931,104
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,
                                                                     2017                     2016                     2017                     2016
Net sales                                                            $            775,204     $            739,999     $         1,483,480      $         1,421,463
Cost of sales                                                        630,933                  601,606                  1,207,606                1,173,203
Gross profit                                                         144,271                  138,393                  275,874                  248,260
Selling, general and administrative expenses                         90,372                   85,187                   181,093                  170,154
Amortization of acquired intangibles                                 4,909                    4,693                    9,820                    9,421
Acquisition related expenses, restructuring and integration charges  4,797                    108                      10,643                   568
Accounting review and remediation costs, net of insurance proceeds   4,451                    7,005                    3,093                    12,966
Long-lived asset impairment                                          3,449                    -                        3,449                    -
Operating income                                                     36,293                   41,400                   67,776                   55,151
Interest and other financing expenses, net                           6,513                    5,097                    12,828                   10,178
Other (income)/expense, net                                          (760)                    (1,353)                  (3,897)                  (1,865)
Income before income taxes and equity-method investees               30,540                   37,656                   58,845                   46,838
(Benefit)/provision for income taxes                                 (16,369)                 10,509                   (7,899)                  11,271
Equity in net income of equity-method investees                      (194)                    (38)                     (205)                    (222)
Net income                                                           $              47,103    $              27,185    $              66,949    $              35,789
Net income per common share:
Basic                                                                $                  0.45  $                  0.26  $                  0.65  $                  0.35
Diluted                                                              $                  0.45  $                  0.26  $                  0.64  $                  0.34
Shares used in the calculation of net income per common share:
Basic                                                                103,837                  103,597                  103,773                  103,532
Diluted                                                              104,440                  104,204                  104,379                  104,225
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,
                                                                                                   2017 GAAP             Adjustments               2017 Adjusted          2016 GAAP             Adjustments                 2016 Adjusted
Net sales                                                                                          $            775,204  $                       - $            775,204   $            739,999  $                       -   $            739,999
Cost of sales                                                                                      630,933               (12,396)                  618,537                601,606               (693)                       600,913
Gross profit                                                                                       144,271               12,396                    156,667                138,393               693                         139,086
Operating expenses (a)                                                                             98,730                (4,148)                   94,582                 89,880                (2,115)                     87,765
Acquisition related expenses, restructuring and                                                    4,797                 (4,797)                   -                      108                   (108)                       -
integration charges
Accounting review and remediation costs, net of                                                    4,451                 (4,451)                   -                      7,005                 (7,005)                     -
insurance proceeds
Operating Income                                                                                   36,293                25,793                    62,086                 41,400                9,921                       51,321
Interest and other expenses (income), net (b)                                                      5,753                 286                       6,039                  3,744                 1,984                       5,728
(Benefit)/provision for income taxes                                                               (16,369)              29,931                    13,562                 10,509                2,215                       12,724
Net income                                                                                         47,103                (4,424)                   42,679                 27,185                5,722                       32,907
Earnings per share - diluted                                                                       0.45                  (0.04)                    0.41                   0.26                  0.05                        0.32
Detail of Adjustments:
                                                                                                                         Three Months Ended                                                     Three Months Ended
                                                                                                                         December 31, 2017                                                      December 31, 2016
Losses on terminated chilled desserts contract                                                                           $                  2,142                                               $                         -
U.K. and HPP Start-up costs                                                                                              2,381                                                                  -
Inventory costs for products discontinued or having                                                                      1,007                                                                  160
redesigned packaging
Discontinuation of Round Hill Brand                                                                                      2,177                                                                  -
Recall and other related costs                                                                                           -                                                                      (110)
U.K. deferred synergies due to CMA Board decision                                                                        -                                                                      179
Plant closure related costs                                                                                              700                                                                    464
Co-packer disruption                                                                                                     1,567                                                                  -
HPP feed formulation test                                                                                                471                                                                    -
HPP network distribution redesign                                                                                        1,952                                                                  -
Cost of sales                                                                                                            12,396                                                                 693
Gross profit                                                                                                             12,396                                                                 693
Plant closure related costs                                                                                              -                                                                      1,340
U.K. deferred synergies due to CMA Board decision                                                                        -                                                                      268
Recall and other related costs                                                                                           -                                                                      507
Stock Compensation Acceleration                                                                                          699                                                                    -
Long-lived asset impairment charge associated with                                                                       3,449                                                                  -
plant closure
Operating expenses (a)                                                                                                   4,148                                                                  2,115
Acquisition related fees and expenses, integration and restructuring charges, including severance                        4,797                                                                  108
Acquisition related expenses, restructuring and                                                                          4,797                                                                  108
integration charges
Accounting review and remediation costs                                                                                  4,451                                                                  7,005
Accounting review and remediation costs, net of                                                                          4,451                                                                  7,005
insurance proceeds
Operating income                                                                                                         25,793                                                                 9,921
Unrealized currency (gains) and losses                                                                                   (286)                                                                  (1,984)
Interest and other expenses (income), net (b)                                                                            (286)                                                                  (1,984)
Income tax related adjustments (c)                                                                                       (29,931)                                                               (2,215)
(Benefit)/provision for income taxes                                                                                     (29,931)                                                               (2,215)
Net income                                                                                                               $                 (4,424)                                              $                  5,722
(a) Operating expenses include amortization of acquired intangibles, selling, general, and administrative expenses and long-lived asset impairment.
(b) Interest and other expenses, net include interest and other financing expenses, net and other (income)/expense, net.
(c) Included within the income tax related adjustments is the impact of the U.S. tax legislation enacted in December 2017.  These tax law changes resulted in a net income tax benefit of $24.1
million, consisting of a $29.3 million reduction in the Company’s net deferred tax liabilities as a result of the lowering of the U.S. corporate income tax rate, partially offset by an estimated
$5.2 million transition tax imposed on the deemed repatriation of deferred foreign income.
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,
                                                                    2017 GAAP             Adjustments              2017 Adjusted          2016 GAAP             Adjustments              2016 Adjusted
Net sales                                                           $          1,483,480  $                      - $          1,483,480   $          1,421,463  $                      - $          1,421,463
Cost of sales                                                       1,207,606             (16,124)                 1,191,482              1,173,203             (6,263)                  1,166,940
Gross profit                                                        275,874               16,124                   291,998                248,260               6,263                    254,523
Operating expenses (a)                                              194,362               (4,148)                  190,214                179,575               (3,574)                  176,001
Acquisition related expenses, restructuring and                     10,643                (10,643)                 -                      568                   (568)                    -
integration charges
Accounting review and remediation costs, net of                     3,093                 (3,093)                  -                      12,966                (12,966)                 -
insurance proceeds
Operating Income                                                    67,776                34,009                   101,785                55,151                23,371                   78,522
Interest and other expenses, net (b)                                8,931                 3,705                    12,636                 8,313                 3,277                    11,590
(Benefit)/provision for income taxes                                (7,899)               30,903                   23,004                 11,271                8,071                    19,342
Net income                                                          66,949                (600)                    66,349                 35,789                12,023                   47,812
Earnings per share - diluted                                        0.64                  (0.01)                   0.64                   0.34                  0.12                     0.46
                                                                                          Six Months Ended                                                      Six Months Ended
                                                                                          December 31, 2017                                                     December 31, 2016
Losses on terminated chilled desserts contract                                            $                 3,614                                               $                      -
U.K. and HPP Start-up costs                                                               3,464                                                                 -
Inventory costs for products discontinued or having                                       1,007                                                                 5,359
redesigned packaging
Discontinuation of Round Hill Brand                                                       2,177                                                                 -
Recall and other related costs                                                            -                                                                     73
U.K. deferred synergies due to CMA Board decision                                         -                                                                     367
Plant closure related costs                                                               700                                                                   464
Co-packer disruption                                                                      2,740                                                                 -
HPP feed formulation test                                                                 471                                                                   -
HPP network distribution redesign                                                         1,952                                                                 -
Cost of sales                                                                             16,124                                                                6,263
Gross profit                                                                              16,124                                                                6,263
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                                             -                                                                     947
Setup/Integration Costs
Stock compensation acceleration                                                           699                                                                   -
Long-lived asset impairment charge associated with                                        3,449                                                                 -
plant closure
Operating expenses (a)                                                                    4,148                                                                 3,574
Acquisition related fees and expenses, integration and                                    10,643                                                                568
restructuring charges, including severance
Acquisition related expenses, restructuring and                                           10,643                                                                568
integration charges
Accounting review and remediation costs, net of                                           3,093                                                                 12,966
insurance proceeds
Accounting review and remediation costs, net of insurance proceeds                        3,093                                                                 12,966
Operating income                                                                          34,009                                                                23,371
Unrealized currency (gains) and losses                                                    (3,705)                                                               (3,277)
Interest and other expenses, net (b)                                                      (3,705)                                                               (3,277)
Income tax related adjustments (c)                                                        (30,903)                                                              (8,071)
(Benefit)/provision for income taxes                                                      (30,903)                                                              (8,071)
Net income                                                                                $                  (600)                                              $               12,023
(a) Operating expenses include amortization of acquired intangibles, selling, general, and administrative expenses and long-lived asset impairment.
(b) Interest and other expenses, net include interest and other financing expenses, net and other (income)/expense, net.
(c) Included within the income tax related adjustments is the impact of the U.S. tax legislation enacted in December 2017.  These tax law changes resulted in a net income tax benefit of $24.1
million, consisting of a $29.3 million reduction in the Company’s net deferred tax liabilities as a result of the lowering of the U.S. corporate income tax rate, partially offset by an estimated
$5.2 million transition tax imposed on the deemed repatriation of deferred foreign income.
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 12/31/17          $           775,204  $           238,201  $           107,728
Impact of foreign currency exchange              (21,148)             (14,987)             (6,161)
Net sales on a constant currency basis -         $           754,056  $           223,214  $           101,567
Three months ended 12/31/17
Net sales - Three months ended 12/31/16          $           739,999  $           212,312  $             96,068
Net sales growth on a constant currency basis    1.9%                 5.1%                 5.7%
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 -         $           754,056  $           270,303  $           223,214   $           101,567
Three months ended 12/31/17
Net sales - Three months ended 12/31/16          $           739,999  $           278,640  $           212,312   $            96,068
Acquisitions                                     4,102                -                    3,899                 203
Divestitures                                     (5,279)              (1,986)              (3,293)               -
SKU Rationalization                              (4,362)              (4,362)              -                     -
Inventory Realignment                            13,514               13,514               -                     -
Net sales on a constant currency basis adjusted  $           747,974  $           285,806  $           212,918   $            96,271
for acquisitions, divestitures and other - Three
months ended 12/31/16
Net sales growth on a constant currency          0.8%                 (5.4)%               4.8%                  5.5%
basis adjusted for acquisitions, divestitures
and other
                                                 Hain Daniels         Hain Celestial       Hain Celestial
                                                                      Canada               Europe
Net sales growth - Three months ended 12/31/17   11.6%                11.2%                14.9%
Impact of foreign currency exchange              (7.2)%               (5.4)%               (9.5)%
Impact of acquisitions                           (2.6)%               0.0%                 0.0%
Impact of divestitures                           2.2%                 0.0%                 0.0%
Net sales on a constant currency basis adjusted  4.0%                 5.8%                 5.3%
for acquisitions, divestitures and other - Three
months ended 12/31/17

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.

2 Refer to "Net Sales Growth at Constant Currency and Adjusted for Acquisitions, Divestitures and Other" provided herein.

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SOURCE The Hain Celestial Group, Inc.

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