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Hain Celestial’s long-delayed report shows steep drop in income

Hain Celestial's headquarters in Lake Success, Sept. 24,

Hain Celestial's headquarters in Lake Success, Sept. 24, 2015.  Credit: Barry Sloan

Hain Celestial Group Inc. Thursday released several quarters of long-delayed financial reports, showing a dramatic drop in its net income for the 21-month period it reported.

The Lake Success-based organic and natural products maker’s net income for fiscal 2016 fell more than 70 percent from the prior year, and net income for the first nine months of fiscal 2017 fell more than 50 percent.

Hain Celestial released its financial results for fiscal 2016, ended June 30, 2016, as well as the financial reports for the quarters that ended Sept. 30, 2016, Dec. 31, 2016, and March 31, 2017.

“It has been a tough year,” Hain Celestial founder and CEO Irwin Simon said during a conference call Thursday morning with industry analysts. “I am happy with the news that came out today.”

The company had been unable to file its earnings for the past year amid a review of its accounting, after it disclosed in August it was evaluating its internal control over financial reporting. The accounting review cost more than $20 million, a charge that reduced net income in the first 9 months of 2017, Hain said.

The company said it was determining if revenue from certain U.S. distributors was recorded in the correct period. The company had been recognizing revenue when products were shipped to certain distributors, rather than when the products were sold through its distributors to customers.

On Thursday, the company also announced it made “immaterial” revisions to its previously issued results.

“We have also implemented greater and more effective internal controls and enhanced oversight for our financial reporting and business units,” Simon said in a statement.

Net sales for the first nine months of fiscal 2017, ended March 31, were $2.13 billion, down less than 1 percent from the prior fiscal year. Net income for the nine months was $67.12 million, compared to $136 million in the prior year.

Net sales for fiscal year 2016 ended June 30, 2016 were $2.89 billion, an increase of 11 percent. Net income for the year fell to $47.43 million from $164.96 million, affected by charges of $84.5 million for “goodwill impairment,” and $39.7 million for “tradename impairment.”

Tammy Straus, quality control partner for accounting firm Grassi & Co. in Jericho, said factors that would have affected the company’s net income include one-time costs related to acquisitions, as well as price adjustments.

“I would like to give them a couple of more quarters when they are operating within normalcy to see how their business performs,” Straus said.

Hain Celestial’s board authorized the repurchase of up to $250 million of the company’s stock.

The company appointed James Langrock executive vice president and chief financial officer, effective Friday. Langrock joined Hain in November 2015.

The board recently appointed Andrew R. Heyer as the lead independent director. Heyer has been a director since 2012 and chairperson of the audit committee.

Hain Celestial shares fell 1.5 percent to close at $32.66. The shares are down 35 percent in the past year.

Hain Celestial’s brands include Celestial Seasonings tea, Earth’s Best baby food, Terra chips and Spectrum oils. Distributor United Natural Foods Inc. and Walmart Stores Inc. each account for more than 10 percent of sales, according to the company’s most recent annual filing. Hain Celestial has more than 7,800 employees.

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