MELVILLE, N.Y., May 3, 2007 /PRNewswire-FirstCall via COMTEX/ -- The Hain Celestial Group, Inc. (HAIN) , a leading natural and organic food and personal care products company, today reported record results for the third quarter ended March 31, 2007. The Company reported net sales of $237.9 million, a 21% increase, compared with $196.4 million in the prior year third quarter. Net income reached $12.4 million, an increase of 37% over the prior year third quarter of $9.1 million. Diluted earnings per share for the quarter totaled $0.30 per share compared to $0.23 per share in the prior year third quarter, a 30% increase.
"The successful execution of our strategy continues to accelerate our sales, margin and earnings growth from our broad portfolio of natural and organic brands in North America and Europe, including the United Kingdom," said Irwin D. Simon, President and Chief Executive Officer of Hain Celestial. "In particular, we delivered strong performance this quarter in our Earth's Best(R), Terra(R), Garden of Eatin'(R), Rice Dream(R), Spectrum(R), Ethnic Gourmet(R), Westbrae(R), and FreeBird(TM) brands. Additionally, our personal care brands, including our recently acquired Avalon Organics(R) and Alba Botanica(R) brands, made significant contributions to both top- and bottom- line growth. Internationally, we are encouraged with the progress we are making in Hain Celestial Europe, and especially the United Kingdom, as we implement our strategy there and adjust our offerings to the specific overseas markets. In Europe, we saw strong sales performance from our Lima(R), Natumi(R), Terra and Rice Dream brands. In Asia, we are making significant progress with our plans for expansion with Singapore-based food and beverage company Yeo Hiap Seng Limited. We are also pleased that the operating efficiencies we have realized in the face of higher input costs contributed to our strong results."
"After warm weather in our second quarter continued into the early weeks of our third quarter, Celestial Seasonings(R) faced challenges in an overall challenged category. We will soon introduce restaged packaging at Celestial Seasonings, incorporating the brand's strong history and tradition into an exciting new look. We will also be launching Saphara(TM), our new pyramid bag, premium organic tea to provide our consumers with "A Journey for the Senses." Despite the work ahead, these are exciting times for Celestial Seasonings as it responds to recent dynamics in the specialty tea market," Mr. Simon commented.
The Company reported gross margin of 29.7% in the third quarter, compared to 29.4% in the prior year third quarter. The 30 basis points margin improvement was achieved with productivity gains in the United States and Europe despite increasing input costs and the challenging selling conditions of the unusually warm weather impacting the Company's Celestial Seasonings tea brand.
Selling, general and administrative expense for the third quarter was 19.8% of sales compared to 21.2% in the prior year, as the Company benefited from the integration of several of its recent acquisitions and disciplined trade spending.
Interest expense, net, in the third quarter was $2.8 million versus $1.6 million in the prior year quarter. The higher interest cost this year was the result of higher borrowings for the recent acquisition of Avalon Natural Products as well as from the Company's $150 million 10-year 5.98% Senior Notes issued in May 2006.
The Company's effective tax rate for the quarter was 38.7% versus 37.7% in the prior year quarter.
Average diluted shares outstanding for the quarter were 41.5 million, an increase of 2.0 million shares, or 5%, over the third quarter of the prior year. The increase resulted from additional shares issued for the exercise of employee stock options and higher equivalent shares included in the earnings per diluted share calculation as a result of the Company's higher share price.
The Company's balance sheet remains strong with $191.4 million in working capital and a current ratio of 2.5 at March 31, 2007. Debt as a percentage of equity was 33% with equity at $674.4 million. The number of days in the Company's cash conversion cycle was 72 compared to 70 days in the prior year period. Operating free cash flow was $67.0 million for the trailing twelve months versus $20.7 million in the comparable period of the prior year, an increase of 224%.
"As we move forward to the end of our fiscal year and into fiscal 2008, we are focused on continuing to implement our long-term strategy to build brands in the natural and organic sector, create sustainable sales, margin and earnings growth, and leverage the platform we have built to expand our reach to consumers through varied channels in North America, Europe, the United Kingdom and Asia," concluded Irwin Simon.
Fiscal Year 2007 Outlook
The Company anticipates revenues of $223 to $227 million and earnings of $0.26 to $0.29 per share in the fourth quarter to conclude its fiscal year ending June 30, 2007.
Webcast and Upcoming Events
Hain Celestial will host a conference call and webcast at 4:15 PM Eastern Daylight Time today to review its third quarter fiscal year 2007 results. On May 8, 2007, the Company is scheduled to present at the Goldman Sachs Consumer Products Symposium in New York. On May 16, 2007, the Company is scheduled to present at the Bank of America 2007 SMid Cap Conference in Boston, where Irwin Simon will be the featured keynote speaker. These events will be 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 (HAIN) , headquartered in Melville, NY, is a leading natural and organic food and personal care products 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 Chips(R), Garden of Eatin'(R), Health Valley(R), WestSoy(R), Earth's Best(R), Arrowhead Mills(R), DeBoles(R), Hain Pure Foods(R), FreeBird(TM), Hollywood(R), Spectrum Naturals(R), Spectrum Essentials(R), Walnut Acres Organic(TM), Imagine Foods(TM), Rice Dream(R), Soy Dream(R), Rosetto(R), Ethnic Gourmet(R), Yves Veggie Cuisine(R), Linda McCartney(R), Realeat(R), Lima(R), Grains Noirs(R), Natumi(R), JASON(R), Zia(R) Natural Skincare, Avalon Organics(R), Alba Botanica(R) and Queen Helene(R). 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. Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements that involve known and unknown risks and uncertainties, which could cause our actual results to differ materially from those described in the forward- looking statements. These risks include but are not limited to general economic and business conditions; the ability to implement business and acquisition strategies and integrate acquisitions; competition; retention of key personnel; compliance with government regulations and other risks detailed from time-to-time in the Company's reports filed with the Securities and Exchange Commission, including the report on Form 10-K for the fiscal year ended June 30, 2006. The forward-looking statements made in this press release are current as of the date of this press release, and the Company does not undertake any obligation to update forward-looking statements.