The Hain Celestial Group, Inc. HAIN +0.70% , a leading natural and organic products company providing consumers with A Healthy Way of Life(TM), reported results for the third quarter ended March 31, 2011. Reflecting record sales for the third quarter, net sales increased 29.8% to $288.4 million from net sales of $222.1 million in the prior year third quarter. The Company continued its growth momentum with gains across the Hain Celestial worldwide portfolio.
In the third quarter, the Company earned $16.8 million in net income as compared to $2.7 million in the prior year third quarter, and reported earnings of $0.38 per diluted share as compared to $0.06 per diluted share in the prior year third quarter. Earnings per diluted share were $0.36 on adjusted net income of $16.2 million in this year's third quarter as compared to $0.26 per share on adjusted net income of $10.6 million in the prior year third quarter(1). On an adjusted basis, net income and diluted earnings improved 53% and 38% respectively, over the prior year third quarter(1). Operating margin was 10.7% on a GAAP basis in this year's third quarter, a 198 basis point improvement from 8.7% in the prior year third quarter. On an adjusted basis, operating margin was 10.1% in this year's third quarter, improving 66 basis points from 9.4% in the prior year third quarter (1)
"Our third quarter results reflect the strength of our brands and our solid execution across various classes of trade in the growing natural and organic industry," said Irwin D. Simon, President and Chief Executive Officer of Hain Celestial. "All of our reporting units grew, both in the United States and abroad. Strong top line performance came from our Grocery and Snacks, Celestial Seasonings and Personal Care units with solid contributions from our Canadian and European units. Key brands that experienced double-digit sales growth were Earth's Best® infant and toddler products, MaraNatha® nut butters, Spectrum® oils, Dream(TM) non-dairy frozen desserts, Terra® chips, Lima® organic foods and Avalon® and Alba® personal care brands as well as our recently acquired brands, Sensible Portions® snacks and The Greek Gods® yogurt.
Gross profit in this year's third quarter improved 90 basis points to 28.6% of net sales compared to 27.7% of net sales in the prior year third quarter. The higher gross profit performance resulted from the favorable mix of product sales worldwide, which together with productivity savings offset increased input costs.
Selling, general and administrative expenses were 18.6% of net sales in this year's third quarter compared to 19.0% in the prior year third quarter. The Company has continued to benefit from leveraging its existing infrastructure across its expanded portfolio of brands, including acquisitions. Compared to the prior year third quarter, these expenses increased due to the higher amortization related to recent acquisitions and a higher level of product demonstrations and store level sampling.
Operating free cash flow for the 12-month period, ended March 31, 2011 was $61.0 million (1). The Company had working capital of $170.7 million at March 31, 2011. Debt was $237.3 million or 28.3% of equity of $839.2 million at March 31, 2011.
"As the natural and organic industry continues to experience accelerating growth trends, Hain Celestial's portfolio of brands is well-positioned to meet consumer demands. We recently introduced over 50 new and improved products to strengthen our leadership position and support these trends," commented Irwin Simon. "The foundation we established to position the Company for sustainable long-term growth has enabled us to experience resurgence in our sales, earnings and margins. As we move toward the end of our fiscal year, we expect to continue to build our brands and drive profitable growth with product innovation and productivity initiatives, despite the challenges of increasing input costs."
Fiscal Year 2011 Outlook
The Company updated its fiscal year 2011 sales guidance to $1.095 to $1.115 billion and its earnings guidance to $1.30 to $1.34 per diluted share adjusted. The guidance excludes acquisition and integration expenses that may be incurred during the Company's fiscal year 2011, which the Company will continue to identify when it reports its financial results.
The webcast will be available under the Investor Relations section of the Company's website at www.hain-celestial.com.
The Hain Celestial Group, Inc.
The Hain Celestial Group HAIN +0.70% , headquartered in Melville, NY, is a leading natural and organic products company in North America and Europe. Hain Celestial participates in many natural categories with well-known brands that include Celestial Seasonings®, Earth's Best®, Terra®, Garden of Eatin'®, Sensible Portions®, Health Valley®, Arrowhead Mills®, MaraNatha®, SunSpire®, DeBoles®, Gluten Free Cafe(TM), Hain Pure Foods®, Hollywood®, Spectrum Naturals®, Spectrum Essentials®, Walnut Acres Organic®, Imagine®, Almond Dream®, Rice Dream®, Soy Dream®, WestSoy®, The Greek Gods®, Ethnic Gourmet®, Yves Veggie Cuisine®, Granose®, Realeat®, Linda McCartney®, Daily Bread(TM), Lima®, Danival®, GG UniqueFiber(TM), Grains Noirs®, Natumi®, JASON®, Zia® Natural Skincare, Avalon Organics®, Alba Botanica®, Queen Helene®, Tushies®, Earth's Best TenderCare® and Martha Stewart Clean(TM). Hain Celestial has been providing "A Healthy Way of Life(TM)" since 1993. For more information, visit www.hain-celestial.com.