The Hain Celestial Group Reports Fiscal First Quarter Results

MELVILLE, N.Y., Nov 3, 2004 /PRNewswire-FirstCall via COMTEX/ -- The Hain Celestial Group (HAIN), a leading natural and organic food company, today announced results for the Fiscal 2005 first quarter. Hain Celestial reported net income of $0.17 per share, after deducting $0.01 per share for certain previously announced compensation charges, compared with net income of $0.19 per share in the prior year's comparable quarter. Before deducting the compensation charges, adjusted (non-GAAP) earnings were $0.18 per share. First quarter sales grew 8.3% to $137.6 million, compared with net sales of $127.1 million in the prior year period.

During the Fiscal 2005 first quarter, the Company incurred compensation charges for terminated personnel and non-cash compensation which aggregated approximately $0.6 million. As previously disclosed, these charges are expected to aggregate approximately $0.75 million in the second quarter of Fiscal 2005, after which time the compensation charges for terminated employees will be concluded. In the Fiscal 2005 first quarter, the Company's estimated effective annual tax rate increased as expected to 39% from 38% in the prior year's quarter. Also impacting earnings by $0.01 per share in the Fiscal 2005 first quarter was an increase in the average diluted shares outstanding by 1.5 million shares.

Operating income in the quarter was $ 10.8 million as compared to $11.3 million in the prior year's quarter. The Company reported gross margins at 28.3% of sales as compared with 29.2% in the prior year's quarter, the reduction coming principally from the higher costs of ingredients and freight of approximately $2.5 million not yet offset by the price increase implemented during the quarter which contributed approximately $1 million. Selling, general and administrative expenses were 20.5% of sales this year versus 20.3% last year.

Irwin Simon, President and Chief Executive Officer, said, "We are pleased with the good growth in many of our key brands this quarter. There has been continued broad acceptance of our previously announced price increase. Our tea and snacks brands showed very good growth and our international businesses also performed well. We achieved this performance in our business even with a reduction in inventories at two major distributors and increased commodity and freight costs during the quarter. All of our U.S.-based businesses were impacted by the inventory reductions, with sales of our grocery brands most affected. Despite the challenges of the quarter, we refused to make short-term decisions at the end of the quarter that would have otherwise impacted our strategy for the year.

"As we move forward, we will continue to grow intelligently and pursue opportunities for more savings and margin enhancement across our brands. I am particularly encouraged by our sales activity in October, where we have seen strong increases over the prior year. This reflects our belief that inventory reductions at distributors help increase inventory turns and the frequency of reorders, and that our strategic decisions will bring us better results over the long term. We have also made significant progress integrating our recently acquired Ethnic Gourmet and Rosetto frozen foods businesses, and we are expanding the distribution of the JASON personal care products to channels where those products have not previously been carried."

Mr. Simon continued, "We are also excited at the opportunity for additional savings in a new collaborative initiative with the H. J. Heinz Company to assist us with our cost savings programs over the next twelve months. Heinz has appointed Dave Gaertner, Vice President - Business Development, to coordinate this initiative from our headquarters in Melville. Working with Heinz executives, we have begun to identify specific opportunities for savings in the cost of market research and in freight/ transportation and co-packing. We have also introduced the Heinz Operating Free Cash Flow and Cash Conversion Cycle model for measuring performance metrics in our business. In future periods we will report our progress in this initiative."

"We made progress on all of our strategic priorities for the year -- including improvements in our processes and our core growth brands, and greater efficiencies. We met our internal objectives for the quarter, and we reaffirm our previously announced full year earnings guidance of $0.92 to $1.01 per share on revenues of $650 - $670 million," Mr. Simon concluded.

About The Hain Celestial Group

The Hain Celestial Group, headquartered in Melville, NY, is a leading natural and organic beverage, snack, specialty food and personal care products company in North America and Europe. Hain Celestial is a leader in almost all natural food categories- Beverages, Specialty Tea, Snacks, Grocery, Frozen Foods-and the natural Personal Care category 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), Hain Pure Foods(R), Breadshop's(R), Casbah(R), Carb Fit(TM), DeBoles(R), Nile Spice(R), Westbrae Natural(R), Rice Dream(R), Soy Dream(R), Imagine(R), Walnut Acres Certified Organic(R), Rosetto(R), Ethnic Gourmet(R), Yves Veggie Cuisine(R), The Good Dog(R), and in Europe, Lima(R), Biomarche(R), Grains Noirs(R), Natumi(R) and Milkfree(R). The Company's principal specialty product lines include Hollywood(R) cooking oils, Estee(R) sugar-free products, Kineret(R) kosher foods, Boston Better Snacks(TM), and Alba Foods(R). The Company's personal care product lines consist primarily of JASON(R) pure, natural and organic products. Hain Celestial's corporate website is . The Hain Celestial Group, Inc. common stock trades on the NASDAQ(R) National Market under the symbol HAIN.

Safe Harbor Statement

The following 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, integrate acquisitions, and obtain financing for general corporate purposes; competition, retention of key personnel and 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, 2004. The Company does not undertake any obligation to update forward-looking statements.

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