Hain Celestial Group Inc (HAIN) 2013 Q1 法說會逐字稿

Good afternoon, my name Keena, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Hain Celestial first quarter fiscal year 2013 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions)

Thank you. Mary Anthes, you may begin your conference.

Thank you, Keena. Good afternoon, and thank you for joining us today. Welcome to the review of our first quarter fiscal year 2013 results. We have several members of our management team here today to discuss our results; Irwin Simon, our Founder, President, and Chief Executive Officer; Ira Lamel, Executive Vice President and Chief Financial Officer; John Carroll, Executive Vice President and Chief Executive Officer, Hain Celestial US; and Rob Burnett, Chief Executive Officer, Hain Daniels.

Our discussion today will include forward-looking statements which are current as of today's date. We do not undertake any obligation to update forward-looking statements either a result of new information, future events or otherwise. Our actual results may differ materially from those projected, and some of the factors which but cause results to differ are listed in our publicly filed documents, including our 2012 form 10K filed with the SEC.

This conference call is being webcast and an archive of the webcast will be available on our website at www.hain-celestial.com under investor relations. Our call will be approximately one hour, so please limit yourself to one question with a follow-up question. If time allows, will take additional questions and Management will be available after the call for further discussion. Now let me turn the call over to Irwin Simon. Irwin?

Thank you, Mary, and good afternoon. And first I want to put our well wishes out to all those affected by Hurricane Sandy. It was quite a devastating storm, and from a Hain standpoint, number one, we have five plants that were down Monday and Tuesday, four back up Wednesday. All our distribution centers are out there distributing except one, we have one plant that should be back up running. We have no power in our Long Island corporate offices, but we have moved a lot of the functions out to Boulder. But we are here taking orders and billing and we are absolutely back up to speed. But again, we are here to help out with food and everything else we can to get people back to normal, and our thoughts are with everybody.

With that, now let's look at Q1. And our first quarter of fiscal '13, it seems like we just reported Q4 a few days ago. Very strong quarter, great quarter. Our sales $359.8 million versus $286.6 million, up 25.4%. Not included in those $359.8 million is $12.2 million of discontinued sales. Our gross profit, $95.2 million versus $79.8 million, up over 19%, and our operating income non-GAAP $32.9 million versus $25.3 million, up 30%. EBITDA non-GAAP for the quarter $40.4 million versus $32 million, up 26%. EPS GAAP of $0.42 versus $0.28, up 50%, and EPS non-GAAP $0.40 versus $0.30, up 33.3%. And our free cash, which I think is the most important, what pays the bills is cash, $102.1 million up, from $85.5 million, and Ira will talk more about that later. So, it shows we're generating a lot of cash here.

Let's come back and talk about the quarter. Number one, you heard me talk about strong sales. You heard me talk about our gross margins up 19%. We paid down, over the last 11 months since we did the Daniels acquisition, over $100 million, which allows us to go out there and do other acquisitions or do buybacks or do other things with our capital. We have gained tremendous amount of new distribution, which John will talk about when he speaks, and Rob when he talks some of the new distribution. We sold the ICL business, which was a private-label meals business in August which closed.

We will close on our UK -- we will close on our sandwich business, Food-to-Go, Daily Bread business tomorrow. We have closed on our UK grocery business which was Project Dundee, the Premier Foods brands of Sun-Pat, Hartley's, Gale's and Rose's. We are pretty excited about that. I spent some time over the last couple of weeks with Robin's team, and there is so much we can do. I happened to get a chance to visit a few UK retailers and one UK retailers said, hey, we are behind the health and wellness trend in the US. With Hain depth and breadth of products, can you help us with a lot of the health and wellness products, just even with gluten-free, non-dairy, lower sodium, there's just a few. So, we are absolutely looking to do that and being a bigger player now in the grocery side of the business. That will help us, and Rob will talk about that shortly.

Our Cully & Sully business in sales are strong up in Ireland, and we will look to introduce a lot of our other products into the Irish market. Our US business, on an adjustment, up 10%, that is on shipments, consumption, even higher, which John will talk about. And we had to overcome major cuts on Earth's Best in MaraNantha. Earth's Best due to demand of pouches in some of our other products from a co-packer, and MaraNantha just with the demand of peanut butter and nut butters, because of the Sunland recall. So, great consumption, but we just can't keep up with demand. John and his team's margin up 67 bips with high commodity costs, and taking a price increase that is not effective until October. And just to come back, our tea sales, we are not even into tea season, yet our tea sales are up over 11%.

Our Greek Gods, our yogurt business and a lot of new products coming from yogurt and exciting products, and you're going to see the next evolution of Greek yogurt up 35%. And now with Greek Gods going into Canada in a much bigger way on both coasts, Rob will talk about introducing it into the UK in November. It will continue to become much more of a major brand within Hain.

Gluten-free, and we hear a lot about gluten-free, and there's a lot of talk in size and scale. Arrowhead Mills and DeBoles, which have a lot of gluten-free products, both brands up over 35%. And there is brands that we've created, gluten-free products within the brand and have really gone out and expanded distribution. So, great growth there.

Linda McCartney, the whole -- and our tempeh tofu business, both up double-digits 13% 14% which shows, again, the whole meat free category, and the continuous demand for meat free, and meat-free Monday has really caught on. Our personal care business and our NSF and concern with what you put on your body and personal care products and in regards to baby products, in the ingredients, big growth in that area for us. So, 13 of our brands at least had double-digit growth. 11 had high single, mid- single-digit growth, so we had a lot of good growth in our brands.

As we come back and look at our countries, our Canadian business is up over 15%, our consumption there grew 9% and just MaraNantha, our Greek Gods, our Spectrum business grew there. Our Yves business in Canada was flat, and that is with one customer that had some changes in some buying and that was from in the quarter. But in the first month of October, we've seen a lot of good sales coming to that. A lot of new retailers in Canada, target is in there in December. A lot more new Walmarts opening. Whole Foods is opening more and more stores, so the Canadian market is really getting some good growth and good opportunities for us there.

Europe, we had a good quarter in Europe, Europe up 9.7% on local currency. GG Crackers up 39%, that's because we took it over shipping here in the US. Our Rice Dream, Natumi business up 11%, our Lima business up 6%. So, all this going on in Europe still up close to 10% in local currency, and that's a good turnaround for us in Europe and I really like what I see there. Rob will take you through the rest of the UK business and some of the stuff that we got going on, which is pretty exciting.

We are now into turkey season and our joint venture, which we own 49% of Hain Pure Protein, overall sales up 14%. ABS sales, which are antibiotic free, sales up 82% -- is 82% of sales. Turkey sales up 16%, chicken sales up 7%, and we just don't have enough capacity, and that's -- we just don't have any more capacity. We really have a big Thanksgiving planned, we're basically sold out of turkeys. And the numbers that we have committed to is just astronomical, and what the consumer wants today is an antibiotic free turkey. So, it's great to see.

Our Asia business with our partnership with Hutchison Whampoa, like-for-like Hong Kong sales up 35%, and consumers are loyal to our brands. Hong Kong is a smaller market with 8 million people, but they are getting used to our brands, know our brands and continue to show great growth. We have a lot of brands that are in the UK today -- or in Hong Kong today up 15%. In China and the balance of Asia distribution, we are gradually building and of our overall sales to Asia today is 30% of sales. In China today, we are in over 200 stores, Philippines we're in over 70, South Korean we're in over 95. And right now, we have a team that is looking at doing local production of our snack business in Asia and we hope to get that going very shortly.

We've heard a lot about Prop 37 and the thing is, will it win or not, what important is California is the first state to really measure and legislate the requirements for labeling, and we've always supported labeling. It is very important for us. It is important to identify where there is GMOs or not -- or GMO-free, and we do that on our products. 98% of Hain products are GMO-free. So, it's going to be interesting to see what happens November 4, but whatever happens, there's a lot of attention brought to it and a lot of notice and I think you're going to see a lot more states follow on here and maybe different language within the bill. But today, I sit here and say, we come out a winner no matter what, because 98% of our products are -- the date is November 6, not November 4, when the vote will be.

You saw today that we announced a great acquisition. It's something I've done many times, a product called BluePrint, and I look at BluePrint as a juice, as a cleanse, as a meal. It was launched in 2007 by Zoe Sakoutis and Erika Huss, Zoe, I'll get your name right, and I think they really got it right. If you come back and look at the juice, the ingredients are all organic, I've been through their facility in Long Island City. It is not pasteurized, so you're getting all the nutrients. Having one of their juices for lunch is like eating a salad and really, I come back and look at pasteurized juice today, and it's almost like cans of soup in where that's going. And we just think there's a lot more opportunities with that product, not only with juice and meal replacement, but going into bars and a lot of other products.

We feel like that from a lifestyle brand and what else we can do with that and where spinning has caught on today, and look what is happening with Lululemon from exercising and where that brand has gone, and there is a tremendous correlation here. So, we are pretty excited and we are pretty excited that Zoe and Erika and the team will be joining Hain and will really help us from a lifestyle and looking to take that on a global basis, whether it's UK and Canada, and that should close sometime in December.

Just that nobody is confused and Ira will talk about confirming guidance, we're now into our second quarter which does include two months of our UK acquisition. One month of discontinued operations of Food-to-Go, and does not include anything of ICL, which was sold in August. We are comfortable with first call EPS and sales expectations that are out there. So, great quarter, and I really feel good about what we're doing, we are eating healthy, it's becoming a bigger part of our lives. What I've seen, as you saw, anybody went near any supermarkets on Friday, Saturday, Sunday, shelves were bare, and we are out there right now trying to replenish a lot of stores and get products back out there. We feel just individuals staying at home, family staying at home eating and replenishing, that is something we'll do over the next few weeks. So, we feel good about business. What I'll do is turn it over to John and he'll take you through some of the exciting things that he has going on in the US. John?

Thanks, Irwin. Good afternoon, Q1 was again a very strong quarter for Hain Celestial US and it provided a great start to FY '13.

We have many highlights in the quarter, and I want to start first with our Q1 Nielsen All Outlets Combined, or AOC consumption growth, which was 11%, which reflects consumption momentum in all measured channels. Our 11% AOC growth was driven by gains across the portfolio, including -- we had 16 brands in terms of double or high single digit consumption increase in the AOC world. Our total consumption growth was 9%, reflecting the strong AOC results as well as our high single-digit growth in the natural channel. Our Q1 sales were $252.6 million, which were up 8.1% versus a year ago. The difference between our 9% total consumption growth and our 8.1% sales growth reflects lapping year-ago sales from discontinued low-margin club private label and Martha Stewart SKUs.

Our Q1 US sales growth ex these discontinuations was actually higher than our 9% total consumption growth. Reflecting stronger growth, even in the retailers that are not measured by AOC or spend. Also in Q1, our gross profit margin was up 67 bips, as Irwin said, as we were able to offset inflation with productivity savings and dairy cost favorability. Additionally, our Q1 SG&A as a percent of sales was down 20 bips, reflecting the sales increase and continued tight control of expenses. All this led to Q1 US operating income of $36.5 million, or 14.5% of sales, which was up 15% and 87 bips, respectively versus year ago. We leveraged strong consumption in top line growth with our gross profit improvement and our increased SG&A efficiency to drive a double-digit operating income gain. Finally, in Q1, our US inventories were down $5 million versus year ago, while supporting our sales growth. This inventory leverage, coupled with our accounts receivable and accounts payable improvement, was the major driver in the Company's improved cash conversion and operating free cash flow.

As you've heard me say before, we continue to be very bullish about our US business. We see strong momentum across the business, and like I've said before, it is sustainable, and I'm going to talk to you about four key factors. The first factor is one you've heard me talk about before, and that is the continued US consumption gains. Q1 was our eleventh consecutive quarter of consumption growth. Importantly, our two-year stacked AOC consumption growth is over 20%.

The second factor is our continued progress in filling in what we call our distribution whitespace with our reorganized sales group. Q1 saw our AOC distribution improve by 400 basis points versus the previous quarter. Highlighted by significant distribution wins at key accounts like Kroger, Publix, Wakefern, Wegman, Walmart, and Target. Additionally, we saw key distribution wins at [national] accounts, such as Whole Foods, Earth Fair, and Sprouts, that aren't included in that AOC measure. We also have several distribution wins that will be on shelf in Q2 and Q3 that I'm really excited to talk to you about in future calls.

Third reason we feel bullish is our successful Q1 initiatives to increase production capacity on our fast-growing MaraNantha and Earth's Best pouch line. As Irwin said, we had pretty significant cuts on those two lines because demand outstripped our capacity. In this quarter we successfully increased capacity on these key lines by first turning our MaraNantha plant in Ashland, Oregon to a continuous 24/7 operation, and second, installing Earth's Best pouch processing and filling capability into our Westchester facility. These two initiatives were executed on time and on budget. As you know, I have spoken to you in the past about the pouch installation, and we will increase our MaraNantha and Earth's Best pouch capacity by 20% and 50%, respectively. I want to point out one thing. At a time when most manufacturers struggle just to bring up a single CapEx initiative, the fact that we were able to execute two in the space of one quarter is remarkable and a real complement to Jim Myers and his operations team.

The final reason we are bullish about our FY '13 prospects is the continued strong response to our FY '13 innovation. We are on schedule to introduce over 100 new products leveraging the hottest emerging trends across our key product categories. So far, the products that have gotten the strongest response, I'm going to take you through four quick ones here. The first one is new Celestial Seasonings Sleepytime Snooze Natural Sleep Shot, okay? This is a great new launch that Walmart took across the chain immediately. As a matter of fact, you can go into the Walmarts across the country and you can see it right now. And this further extends our Sleepytime franchise which, by the way, even prior to this, Sleepytime had a 20% AOC consumption increase for the quarter. Second one I wanted talk to you about is new Greek Gods low fat Kafir, which is a probiotic smoothie with 12 grams of protein which extends our fast-growing Greek Gods franchise into another refrigerated segment.

Third one is new gluten-free cafe bake mixes, hot cereals and pancake and waffle mixes, which are targeted directly at the fast-growing gluten free segment that Irwin talked about and will be introduced with over 10,000 points of distribution at Walmart. And finally, we are going to be introducing the new Covent Garden refrigerated soups which, as you know, are Daniels and the UK's leading brand of chilled soups, and we will be introducing them into a limited test market in the New York City -- New York area as a prelude to a wider expansion in fall 2013. These new products and many others will continue to drive distribution and consumption growth for Hain Celestial US

So to close, Q1 was a very strong start for Hain Celestial US, highlighted by top line growth, 11% AOC consumption growth, margin expansion of 67 bips, 15% operating income growth and increased operating free cash flow. And look, we are very bullish about our FY '13 prospects given the consumption trends that are continuing, our growing distribution base, our increased capacity on fast-growing MaraNantha and Earth's Best pouch lines, our strong innovation, the momentum on all of our businesses. And this is before we even complete the acquisition of BluePrint, which is going to bring a great line of products and a great team to the Hain Celestial US Group. So, we continue to be very bullish on the US prospects for an FY '13. So with that, I will turn over the conversation -- I will throw it over to Rob. Rob?

Thanks, John, good afternoon, everyone. The first quarter is the lowest level of activity for us here in the UK, both in terms of sales and profits. We have a very heavy weighting towards autumn and winter, therefore, Q2 and Q3. However, having said that, we had a solid first quarter with annualized like-for-like sales up over 7%. And the branded highlights in that figure was new Covent Garden soup up 12%, Linda McCartney frozen meat-free up 14%, Cully & Sully fresh soup from Ireland up 6%, and LoveTub premium desserts up 66%. We launched over 80 new products in the first quarter, with two-thirds of them hitting in the back end of September, so we haven't really seen the benefit from those yet in the first quarter. Notable new launches though, were Linda McCartney's chilled meat-free, our first venture for the Linda McCartney brand into chilled, bringing it into a whole new category in the UK. And we commenced production of Cully & Sully fresh soups in the UK, having transferred them from their previous [co-packer] in Ireland.

Now, a little bit more detail on the category in brand performances. Our total soup sales were up 16% in quarter one, led by NCG up over 12%. As I've mentioned, Cully & Sully up over 6%, and our private label sales were also boosted by growth in the food service channel which is a relatively new channel for us in the group. Our frozen meat-free business overall had a very strong quarter of 17% led by the Linda McCartney frozen category, which grew by 14%. Our fresh prepared fruit business grew by 16% in the quarter, well ahead of the category growth, and the acquisition of a new customer for this business, Morrisons, is driving a lot of this growth, as well is a strong performance in the coffee shop sector.

Our fresh juice had a small decline in the quarter, our premium freshly squeezed orange juice business suffered a bit due to very strong activity from PepsiCo and Coca-Cola who are bottling out in the UK a little bit with their Tropicana and Innocent brands. We are very excited about the forthcoming acquisition of BluePrint. It is a great opportunity for us in the UK to enter a new channel and use our experience and expertise as the UK's largest freshly squeezed juice manufacturer to bring this fast-growing concept in the UK. So, we are really looking forward to meeting the team and see what we can do.

Chilled desserts again had a very strong quarter, it grew by 18%, and as I mentioned earlier, that was led by the LoveTub brand, 66% from strong new distribution gains. We also had 9% growth in our ingredients business, which is a small B2B business but nevertheless, quite profitable. And I mentioned last quarter some revenue synergies from the Daniels acquisition last year, and just to update you on those, as I mentioned, we launched a completely new range of chilled Linda McCartney meat-free products in the quarter. But in this quarter, it was only into the Walmart. We followed that up with launches into Waitrose in late October, which has just started. And the range will then extend into Tesco and Sainsbury's, Sainsbury's in November and we're anticipating Tesco in early January. So, that means the new Linda McCartney chilled meat-free range will have very strong distribution in time for the January peak period, and we are really excited about the prospects.

The frozen range brand is outperforming the meat-free category, and we're looking for very similar results in the chilled category. I'm delighted to say that the launch of the new range will be supported by a new TV campaign retelling the story of Linda McCartney to a younger audience and featuring original new music from Paul. So, we think that's really going to have help the business fly.

We mentioned that we're just about to launch Greek Gods SKUs in the UK, we're really excited about this. We're launching Sainsbury's in over 300 stores in November. This launch will be supported with extensive in-store tastings and POS, and that will be an exclusive launch Sainsbury's for several months before we roll out nationally in the spring. We've commenced work now on the building of our Fakenham site for our new business that will launch there in May 2013. And the expected sale tomorrow of Daily Bread business in exchange for the prepared fruit business of Superior Foods will further strengthen our position in this fast-growing category. The new fruit business will be produced at our fresh innovations center in Luton, and we will allow us to broaden our scope of operation further into this food service sector, and possibly even further afield into Europe as our existing factory for prepared fruit is in the north of England and this new business will go into the south of England.

During the quarter, we -- to coincide with the completion of our GBP200 million acquisition of the Premier Foods brands, we have finalized a business-wide reorganization putting the UK and Ireland business into four operating units led by the new Premier business which will form in Daniels grocery. We've also developed a UK soup and meals division, and a UK Food-to-Go and desserts division, and fourthly, of course, we have the Irish operation. The four operating units will be supported by group functions, consisting of finance, IT, procurement, innovation, technical, and HR. The restructure has been spear headed by the appointment of three new managing directors to lead the respective UK operating units. And of course, with the addition of the new grocery unit, the UK group has a sales profile over $550 million. And this new structure will give greater focus and accountability to respective categories as we develop our leading healthy portfolio of branded fruit, veggie and meat-free solutions.

Now, the Premier business unit, we are in the first weeks trading with our newly acquired grocery business based in Histon at Cambridge. The transition so far has gone very smoothly, and the acquisition has been very welcomed by the staff. Customer response has been very positive as we have outlined our vision for the business and category over the last four weeks. Customers are very keen to see us reinvigorate these categories with our new ways of working extensive product innovation and investment we will bring to this portfolio of leading brands. The acquired business had a strong quarter one with average branded growth in volume terms above 7%. The [Hartways] German dessert brand and the Sun-Pat Peanut Butter brands spearheaded this growth in quarter one and consolidated their market-leading positions in their respective categories. As highlighted in our earnings release, we expect the business to be immediately accretive.

Looking forward, we expect to complement the acquired business, the Hain Daniels grocery unit, by building up the portfolio of US Hain brand in UK grocery, which will be managed by this new operating unit. The UK demand for healthier food and drink alternatives is bordering pace, and we are well-positioned to capitalize on Hain US and Canada experience to lead the way in the UK. So in summary, we have exited Q1, which is a very low quarter for us, in good position. We enter our peak trading periods now with good organic growth momentum of plus 7% which will now be augmented by the exciting additions of Hain Daniels' grocery unit and the new fruit business acquired in the Daily Bread sale. Thank you.

Thanks, Rob. Good afternoon, everyone. As we said in our press release, the incoming EPS numbers from continuing operations are the highest in the Company's history of a first quarter.

Income from continuing operations in the first quarter this year was up 56.6% to record first-quarter income of $19.8 million, compared to $12.6 million in last year's quarter. We earned a first-quarter record of $0.42 per diluted share from continuing operations on a GAAP basis this year, an increase of 50% compared to $0.28 per diluted share last year's quarter. Adjusted income from continuing operations was $18.6 million this year, compared to $13.7 million last year, improving by 35.8%. Adjusted earnings from continuing operations were $0.40 per diluted share compared to $0.30, improving by 33.3%. Our adjustments to net earnings are from acquisition-related expenses, including integration and restructuring charges of $600,000 and a discrete tax benefit of $1.8 million, which I'll discuss a bit later in our -- in my effective tax rate discussion.

Net sales from continuing operations in the first quarter were $359.8 million, an increase of 25.4% compared to $286.8 million last year. Net sales from discontinued operations in this quarter was $12.2 million, compared to $5.5 million last year. Therefore, total non-GAAP sales in the quarter were $372 million, compared to $292.3 million last year, up 27.3%. Sales in the quarter were equal to 22.5% of our annual guidance this year before the Premier Brands acquisition versus only 20.8% last year, showing strong growth in the quarter. Foreign currencies negatively impact sales growth by $3.5 million in this year's quarter, principally coming from the decline in the euro. We saw strong increases in sales across all of our segments, coupled with sales contributed by our acquisitions. Sales from continuing operations of course include the recent acquisitions of Daniels, Europe's Best, and Cully & Sully, for the full quarter this year.

Gross profit in the first quarter was 26.5% of net sales. Input cost inflation amounted to 1.1% in the first quarter this year, measured against the first quarter last year. This 1.1% was tempered by the drop in milk prices, the exclusion of which raises the inflation rate for all other ingredients to 1.4%.

Inflation was offset by a better mix of sales on our preacquisition units and productivity improvements. Pricing has lapped from last year and therefore, had virtually no impact in this year's quarter. We have announced a new price increase in the US, which went into effect after the quarter ended on October 1. Our SG&A for the quarter, excluding acquisition related expenses and integration costs, was 17.3% compared to 19% in last year's first quarter. The 166 basis point improvement comes from a combination of the lower SG&A rates at our Hain Daniels Group in the UK, and Europe's Best in Canada. We continue to see benefits from the integration of certain functions in the UK into the Daniels operation, and continue to focus leveraging on our existing GA&A base across all of our segments.

Operating income for the quarter from continuing operations was $32.3 million, or 9% of net sales, compared to $23.8 million last year, or 8.3% of net sales, both on a GAAP basis. On an adjusted basis, operating income was $32.9 million this year, increasing 29.8% from last year's $25.4 million. Our effective income tax rate from continuing operations was 27.7% of pretax income for the first quarter this year compared to 38% last year. This rate was adjusted to become 33.6% this year.

The GAAP rate was artificially low as the result of the tax benefit from the impact of a tax rate reduction in the United Kingdom on previously recorded net deferred tax liabilities as well is a change in mix in our worldwide income. Principally, the result of the Daniels acquisition with lower corporate tax rates in the UK. Depreciation and amortization in this year's quarter was $8 million as compared to $6.3 million in the prior year, the increase coming principally from acquisitions. Stock compensation was $2.9 million compared to $1.8 million last year.

Our balance sheet continues to be strong. Our working capital was $245.2 million with a current ratio of 2.2 to 1. Our stockholders equity was $1 billion for the first time. Our debt as a percentage of equity is 35.7% and debt to total capitalization is now a very low 26.3%. At the time of our acquisition of Daniels, we drew down $235 million of floating-rate debt under our credit facility, that was in October, 2011. Through September 30, 2012, we had repaid $100 million of that debt from our operating cash flows. In connection with the acquisition of the brands from Premier foods this week, we did draw down $272 million in order to fund the cash portion of the purchase price.

We continue to focus our attention on improving working capital and generating improved cash flows. For the trailing 12 months through September 30, 2012, operating free cash flow was up 23.8% to $102.1 million this year versus $82.5 million for the prior year's 12-month period. This strong increase in operating free cash flow came even with our increased capital expenditures, which amounted to $8.3 million this quarter. These capital expenditures were, as expected, with the projects we have undertaken and discussed in the past. Days sales outstanding was at 44, inventory days at 67, and our payables of 45 days. As a result, our cash conversion cycle is now at 66 days, a 17 day decrease as compared to September 30 a year ago. Much of this decrease comes from the Daniels acquisition, and the fresh nature of its product base, but significantly, cash conversion year-over-year in the United States is down 10 days.

We are confirming our previously released guidance as updated to include our now completed acquisition of the packaged grocery business from Premier Foods in the UK. Accordingly, our net sales guidance for the full fiscal year 2013 is expected to be in a range of $1.78 billion to $1.795 billion. We anticipate earnings per diluted share will come in at $2.35 to $2.45. With the acquisition of the package grocery business in the UK, we see no change to our operating margin as changes in gross profit margin and SG&A rates will offset. Our updated estimates now show consolidated gross profit for the year expected to be in the 27.25% to 27.75% range. Our SG&A rate as a percentage of sales is estimated to land at between 16.75% to 17%. We are not adjusting our estimated annual tax rate at this time, thus leaving it at 34%, while we await the determination of certain tax strategies related to our recent acquisitions, principally in the UK.

The last major assumptions in our guidance are that our share count will approximate 48 million shares for the full fiscal year. Our estimates do not include any of our discontinued operations, restructurings, or additional acquisition activity including fees and expenses or potential additional acquisitions such as BluePrint. Finally, we estimate that our earnings will continue to be somewhat seasonal, with the second and third quarters being strongest of our quarters. We refer you to review our form 10K to obtain information about our quarterly sales and earnings trends. The quarterly data in the form 10K was recast to exclude the discontinued operations for each of the quarters in the two years that were presented in that 10K. And as Irwin stated earlier, we are comfortable with first call estimates of our sales and earnings for the second quarter. I think Irwin said full year or didn't refer specifically -- you said first quarter, sorry. What we're saying is we are comfortable with the first-quarter estimates of sales and earnings for our second quarter this year. At this point, we will open it up for questions.

(Operator Instructions)

Scott Van Winkle, Canaccord Genuity.

Hi, great, thanks, congratulations, guys. I'll save it for a follow-up -- the real question I want to talk about is the US market. John, you had very good consumption growth without much price, assuming there was some mix in there that was favorable. What do you think is going to happen? Does that momentum on volume flow through to another round of price increases starting in October?

Look, I think the pricing will definitely show up in October, but I think the underlying things that are driving this are distribution gains and actually movement -- turned in gains. You are going to add price to that, I think price will be not huge with the exception of nut butters, but the key is just keep driving distribution and driving movement by going deep with our best SKUs.

When you -- you mentioned the disparity between 11% growth in the mass channels -- the more mass channels, and high single-digit in the natural channel. Is that difference there, is that the distribution gains you're seeing in the supermarket channel?

Yes.

And also, Scott, just more stores out there that are selling our products, that is what it is also.

Smaller base.

And then, can you give us an idea of how big BluePrint is? And is this a product that is easy to take national, given it's a raw food product?

Well, number one, it is over $20 million in sales since 2007. 80% of the sales, Scott, are sold to home. Right now, it's in Whole Foods basically in the northeast. We feel we can get the shelf life up to 25 days, and we ship a lot of products today with 25 days on it. There is a plant on the west coast; there is a plant on the east coast. And there is a lot of new technology coming out today that Rob and his team have been working on in the UK that even can take the shelf life longer. And we've just done that -- with soup we're at 25 days where we can extend the shelf life and not lose the freshness and the nutrients.

And the big opportunity, from a cleanse standpoint, I think it is great, but from a fresh juice here that has the nutrients, and one of the juices contains six pounds of organic vegetables -- that is like a meal. So, we think we really can extend it on a national basis. We think we can expand it into other products. We think if we get 9 million moms a month that hit our Earth's Best website and the tie in with that with them, that after they have their new baby, so we just think there's a lot of opportunities. And from the standpoint of lifestyle within Hain, it really will fit a lifestyle brand and a younger generation within Hain.

Thank you much.

Greg Badishkanian, Citigroup.

With respect to -- yes, good. The sales were pretty strong this quarter. Consumption was really good. Was there any -- did you notice any deviation, September or October? Or was it pretty consistent, that strong trend that you saw from earlier in your September quarter?

Well, first of all, this is until the end of September. October is in our next quarter, and as John talked about, consumption numbers throughout our business remained strong in October.

Yes.

One of the things we experienced, which I talked about, we're out of stocks on two brands and keeping up with demand there. And some of that had to do with packaging, some of that just had to do with demand. But again, the first of November, and I think what we've seen just happen at over 60 million homes and demand, we'll see good consumption grow. If any indication is orders placed for Thanksgiving for turkeys for antibiotic free, it would still show the demand out there.

And I think, Greg, the big thing is demand is one thing, but we are not sitting there just waiting for the consumer to come to the shelf. It is how are we creating new distribution, what are we doing with new products and packaging? What we have done with Greek Gods and Sensible Portions, new Covent Garden soups bringing them here, what we will do with BluePrint along with the founders and how we will take that on a national basis. So, again, it is just not waiting for the consumer to convert to natural organic, it's what are we innovating, how are gaining distribution, what are the new products, how are we doing things on a global basis? And I think that's what the team is just doing a great job in.

Yes, good. And then, with respect to thinking about margins, commodity costs going up. I think they're going up January-ish when contracts come off, but you're getting pricing in October. How should we think about margin benefit from the pricing versus commodities over the next few quarters?

I think principally they are going to offset, Greg. We guided to the margin that we believe we are going to have on a consolidated basis with the acquisition of the Premier brands to 27.25% to 27.75%. Obviously when we look out at inflation, and our pricing and our productivity initiatives, those are all included in that guidance. I think also you referred to commodities or inputs for January. John, I think, can speak to when it is that those changes hit us.

Greg, a lot of our commodities, organic commodities is in March, April, May, is when a lot of them come out. So, I think we are okay. Listen, we've seen corn come down from over $9 a bushel, we've seen soybeans, we've seen [fuel], we've seen almonds from last year. So, with that, we've seen them increase, we've seen them level off, and on the other hand, when demand goes up, so do commodity prices.

Yes, yes. Great, thanks. Good quarter. Appreciate it.

Ken Goldman, JPMorgan.

Irwin, just to confirm, because it got a bit tricky there, you were saying you're comfortable right now with the street estimates for sales and EPS for the current December quarter, correct?

Right.

Okay. Couple of other questions. Andes said earlier this week they've never seen better US demand for natural and organic foods than right now. Is that something you can say as well? I'm just curious if there is really a strong read through for the entire category from their results, from your results? Is it better than ever, or are things just still great and not necessarily accelerating, from your perspective?

Well, I come back and look at our consumption, and you'd heard what John took you through our consumption in our shipments in the US. You heard me take you through our Canadian business, our Europe business, and Rob took you through some of our UK business. Sales are good and, again, I think difference is here we are talking about numerous products, numerous categories. On a global basis, we are expanding into mass-market grocery super naturals, Whole Foods' consumption numbers are up nicely. So, yes, Ken, sales are strong out there. On the other hand, we are manufacturing our products, controlling our destiny, and have the availability to go out there and keep up with demand, invest in capital and CapEx to keep up with demand, which we are doing on Earth's Best and which we are doing on MaraNatha, which we will be doing on soups, which we will be doing on BluePrint, which we're doing on Terra Chips.

So, listen, consumption is not -- overall food consumption is not growing, but I guarantee you this here. The consumer that's at home in the northeast since the weekend, either what they consumed in food, what had to be thrown out and what will be consumed again, I hate what happened out there, but it will be -- it is good for business. And eating healthy will continue to be more and more. Listen, the whole thing with Prop 37 is a west coast referendum that is being voted upon, but there is a lot of news on a US basis on Prop 37 and GMO-free foods. So, I think, yes, demand is strong out there overall in the category.

Thanks very much.

Ed Aaron, RBC Capital Markets.

Ed, are you there?

I am here, can you hear me?

Yes, we can hear you.

Great, just wanted to follow up on Ken's question about your comfort with Q2 estimates. I'm a little confused because I think the numbers that are out there reflect a combination of analysts that have adjusted for the Premier deal and analysts that have not. Are you referring to just the analysts that have adjusted for Premier, or are you just looking at the total consensus number that is out there for the December quarter?

We are referring specifically to first-call consensus. We are not making a commentary on any one group -- any one analyst or group of analysts. The first-call consensus gives us comfort.

Okay, thanks for the clarity on that. And then I also wanted to make sure that I understand the Daniels seasonality properly. I think you spoke to a 7% like-for-like number in the UK. How is Daniels treated in that number?

Well, it is blended in. When you say, how was it treated in that number in the UK? Daniels is the lion's share of the UK business right now. We have already disposed -- or I should say classified as discontinued, a piece of the Daniels business that was acquired, which was the ready meals business. So, it is not included in sales on a GAAP basis, and we discontinued the sandwich business at Daily Bread, which is being sold this week. So, that is also not included in the numbers that Rob was quoting, or in our guidance going forward. I think that is what you were referring to.

Yes, I just wanted to make sure that you were treating that number as if you owned Daniels in both periods, and it sounds like you were. And then one more quick one, if I could, I think you --

Yes, Rob was giving comparative number to what the business was --

Year-over-year.

-- before we owned it and during our ownership.

Okay. And then just one more quick one, if I could. I think you mentioned that pricing had basically no impact on the quarter because you have lapped the price increases that you took I think in June or July of 2011. But I didn't think that those price increases went all the way through until like the Spring, so it is not clear to me why you would not have had any pricing benefit in the quarter? Thanks.

Well, we only got, based upon what our calculations show, about 30 basis points worth of pricing, which we didn't feel was worth pointing out on our prepared remarks this quarter as compared to last year's quarter. One of the things you have to remember is last year we did not have Daniels, where a much bigger base of the impact of pricing that may have been put through in the US is not as high as it was before we had our large international expansion.

And Ed, by the way, currency in the quarter affected us by about $3.5, million, $4 million.

$3.5 million.

$3.5 million.

Thank you.

Scott Mushkin, Jefferies & Company.

So, just wanted to delve into a little bit of the categories in the US. We've heard from a number of people that, and we see ourselves, that the yogurt category is kind of getting messy. A lot of price activity going on there. Greek Gods seems to be doing pretty well still, or very well with the Nielsen data, but wanted to hear what maybe John's plans are besides the new introductions to combat what is going on in the yogurt category.

The second question I had was on baby food, and it looks like from some of the Nielsen data that baby food is slowing a little bit, and with maybe Plum and Ella's getting more play. Wondering how you guys are adjusting to those competitive dynamics. And then a third for John is snacks. Snacks seem to be taking off, and I'm wondering what is going on there?

Okay, let's start with Greek Gods. The key -- and you're right, the category is getting more competitive, there's a lot of price dealing. The key point is -- the price dealing is happening on low-fat Greek yogurts in 6-ounce cups. The key point about Greek Gods is, Greek Gods is a higher fat, indulgent product sold in 24-ounce cups, and also used as an ingredient in Mediterranean diets. This has always been a key differentiating point for this brand, and that is why, look, you put four or five SKUs of Greek Gods on the shelf, you've got enough to grow the business significantly. So, we feel pretty comfortable with our positioning. We don't see anybody coming out directly at us. They are all just fighting in the 6-ounce place, and moving price points on 6-ounce way down. That is why we feel good about that.

On Earth's Best, look, our biggest view on Earth's Best this quarter was simply cuts because we could not get enough pouch material to make all the pouches we needed to make. We had a very significant distribution increase in Q1 on Earth's Best. We now feel -- we feel very comfortable with that as of this month with our new pouch installation that we will have the capacity we need to supply the demand on the product.

And on snacks, Scott, listen, our Terra Chip business was up over 20%, and our Garden of Eatin' business we're up over 40%, Sensible Portions were up high single-digits. Again, it's just part of the distribution, the innovation that the guys have done out there. And a perfect example is on Garden of Eatin', we've now started to label the bag GMO-free. And I think that is a big thing, the product is exceptional, some of the sprouted blues that we've come out with, some of the sweet potato products, the red-hot blues, some of the sesame products, and stay tuned.

And then Terra Chips, which is basically not potato, basically a vegetable snack, a vegetable chip, and it continues to show some of the new unique things that we come out with, with sweets and beets, and some of the other new products that we've come out with. Barbecued sweets, that's what the consumer wants more from an adult snack instead of eating a bag of Lays or tired of a baked pita chip.

I think the other thing just on Earth's Best, which is near and dear to my heart, and one of them -- you love all your kids equal, but I think just what the team has done in expanding into meals, expanding into personal care, expanding into wipes, sensitive formula for baby sensitive stomach. And I think, again, what is happening is, yes, you are seeing a major transition, and what you're not seeing with Plum and Ella's -- they've never been in jars. We are seeing a big transition from jars into pouches. And by the way, we now produce a majority of our own pouches, and will continue to do that, and will continue to invest in capital for pouches. So, that is something that we will continue to do and expand that.

So, I had two quick follow-ups. I think you guys have the exclusive into Safeway with pouches. When does that start, and is it going to move the needle? The second thing is, I know on the last conference call you guys talked about increasing the spend behind some of the -- the marketing spend behind some of the US brands. Those snack numbers are just phenomenal, is that partly because of the spend, or has that not really happened yet?

Look, the snack -- look, we invested in the product, we invested in the packaging, and we're driving distribution on it. In regard to Safeway, look, I don't know if it's exclusive, but I know that the Safeway pouches show up this month.

Okay, I have -- (multiple speakers)

I think we're the only organic patch going in the baby food section. I don't think we have an exclusive, but I think we're the only baby food patch going in there.

Okay, I'll take the rest off-line. I have a bunch more, but thank you for taking my questions.

Thank you, Scott.

Bill Chappell, SunTrust.

Just a little more color on Premier Foods, and just trying to understand the near-term trends and comparing that to the -- I think there was a comment of high single-digit growth for the category in the UK right now, and how long it will take to maybe get up to that level with Premier, and what you're doing to close the gap?

Well, right now, the brand's -- and again, over 60% is the branded, 40% is private-label. And that is where, as Rob said, 7% of the growth is coming from the branded side of the business, Bill. And we think there is -- over the next year, we can get that to double-digit and then some. Our thing is to deemphasize -- private-label is good to have because you are partnered with a lot of the retailers, and Premiere did lose some private-label business, and actually we are in the midst of getting some of it back where some of it went to Poland and some went to some other competitors. But number one is, I feel we can get this to a high single-digit growth business. I also think with our gluten-free, with our snacks, with Celestial Seasonings, with our non-dairy business, I think there is some great growth to come from that alongside with that.

But we've worked on a lot of new product development, a lot more healthier, replacing sugar with honey, doing stuff with some hot categories here, and chia seed pouches over there with Hartley's for kids and snacks for kids. So, that's what's going to drive a lot of the growth, but I've got to tell you, growing at 7% today and no money spent behind that, I think that's pretty good.

Sure, and just -- is this something -- now that this just closed a week ago, is this something we can see this quarter, or is it probably more two quarters out before we really see what you've done to it?

I think it's a couple quarters out because we can't affect the promotions and the distribution out there, it's all set. But I'll tell you what, keeping it in that 7%, getting it to 9% or 10% would be a great accomplishment. And I think this was really a neglected business within Premier Foods, and still growing at 7% shows the potential.

Okay, and then just one follow-up on pricing. So, is it like last year where this will layer in through quarters, or will we see the full benefit of pricing this quarter?

It layers in. It will take the full year, the rest of this year to get the full benefit of it, and it will layer in. It is effective October 1, and it will layer out throughout the rest of the year.

Yes, it will probably layer in through the fourth quarter, much like this year's first quarter didn't have much impact over last year. I expect it will take 2.5 to 3 quarters to layer in fully.

Perfect, thanks for the color.

Sean Naughton, Piper Jaffray.

This is actually Jared Madlin on for Sean, how are you guys doing?

Good.

Good. I had a quick question into the independent channel, which is something that's a little bit tougher for us to get a read on. I believe last quarter you'd commented it was slightly outperforming the natural channel as a whole. Has that momentum continued this quarter, or are any differences you are seeing in terms of the independent channel?

Natural independents are performing at about high single-digit growth for us at this point.

Okay, great.

That's what we said last, and it continues at that. It's not declining nor -- and I think with a lot more Whole Foods opening up, fresh markets and other natural foods super natural retailers and natural independents that at one time were flat, I think it's great that it's growing high single digits.

Okay, and could you maybe talk a bit about the distribution expansion into e-tailers, and how you think about that longer term, and maybe the potential cannibalization at retail? Or what do you think about that?

No, actually, here, we -- think about this. The big play for us is to get to more doors. And when you think about it, we are open to, whether it's a bricks-and-mortar retailer or an e-tailer. And the thing of it is, as some folks have said, basically you are shipping cases when you are in e-tail. That can really move the business forward. So, we are very open to that. And we've talked -- Amazon is a top-10 customer for us, we've said that in the past. And we work hard -- we see a lot of growth in e-tailers in personal care as well. It is a huge opportunity for us, but it is all about filling in that distribution whitespace.

And our consumer, who is an educated, younger consumer, who is working moms and dads ordering online, we are following our consumers, and that's what's important to us. And we're seeing more and more demand for product.

It is an entry point for new consumers to the category.

And it is interesting, because you don't see that on our consumption data. But our e-com today, they're -- one of the -- second-biggest customer are one of our major customers out there for Earth's Best. So, you continue to see more and more baby products, as John said, more and more personal products, and there you are buying cases, so your sale number is a lot higher.

Got you. One last quick one here and I'll yield. Any margin disparities there in terms of retail versus e-commerce?

I'm sorry, we couldn't hear that? Disparity. No.

Any -- okay, great. Thank you.

Amit Sharma, BMO Capital.

A quick one or two, what you said earlier about high single-digit growth in Premier. You were talking about branded, right, not the whole --?

I'm talking about branded. Because, Amit, when I think the circular came out, there was confusion in that. There was some private-label business that was lost from Tesco and some Morrison's business that was down year over year. And also, you are coming into your highest season for that business. So, that is what I'm talking about, is branded.

Got it, and then going back to BluePrint, could you give us what has been the growth trajectory for that business? I'm trying to see if this business can become one of the Greek Gods for you.

We think it can become one of the Greek Godesses, but listen, since 2007 they've grown at over $20 million-plus, and that is direct to home, 80% of that. And today at retail you'll find it in New York City Whole Foods and Dean & DeLuca and some other retailers, and Fresh Direct. It is in some retailers on the west coast. So, if you come back and use our infrastructure like we did with Greek Gods, and let the Greek Gods operators run it, there is a lot --

The BluePrint people.

Right, let the BluePrint people run it similar to the Greek Gods people, gentlemen that ran it, we think the upside is tremendous. But again, more important is this here. The reason Greek Gods did so well, it was a great product -- right packaging, right product, right ingredients, right nutrition. I come back here -- BluePrint product is a phenomenal product, and I think -- as I said, I can't emphasize enough, a lifestyle. If you want to do a cleanse, which is very healthy, higher nutrients in the product.

If you come back and look at the Odwalla juices or Naked juices that go through a pasteurization, or Tropicana juices, again, it's not dissimilar to what canned soup is. And I think the consumer today, and the younger consumer -- and one of the things that we have seen, and we've looked at it, Celestial Seasonings does great in tea. If we were to take Celestial Seasonings and put it on a drink like this here, it's not the right brand for it. We really think the BluePrint brand going after the younger consumer as a lifestyle is a great brand for us to win to multiple categories in, the whole raw category is a raw yogurt, is there bars, is there snack, is there kale snacks out there, et cetera? So, we really feel there's multiple opportunities for us to take it into a lot of other categories.

And Irwin, thanks for that. You also said gluten-free sales were up 35%. Could you give us a size of the portfolio that you have in gluten-free? What is the base for that growth?

Well, if you take our gluten-free and Arrowhead Mills today, and our gluten-free at DeBoles, our Gluten Free Cafe, and then we have a lot of other products, whether it's our rice milk, some of our snacks, that we have over 400 products today that are gluten-free that we will label gluten-free, but not market under a gluten-free brand. Which, again, we've gone out and created this from scratch within our brands. Didn't go out there and acquire a gluten-free company or anything like that.

And again, we will take that gluten-free model in the US, and where gluten-free now is just catching on in the UK, and the same with Canada. And we think from a size today, as a $75 million to $100 million, if you include all gluten-free products at least, so we think there's big upside in that category and that businesses for us.

That's great. If I may ask one more for John? John, 9% total consumption growth across all channels -- when we think about it, how much of that is turns versus distribution, if you're able to give us a little bit of color on that?

Think about it in the all -- the AOC consumption. Basically, we saw 400 basis points of growth in distribution quarter to quarter. Basically, I would argue to you that you're seeing about 50% of it in distribution and 50% of it in turn.

Thank you very much.

Thank you.

(Operator Instructions)

Andrew Wolf, BB&T Capital Markets.

Good afternoon, can you hear me on this line?

We can hear you.

Okay, great. John, I think, is the 400 basis point distribution gain, is that an acceleration, or is that about in-line? I think you've been saying it's been about 50/50, the consumption numbers. But I'm just trying to get a sense of it because I think last quarter you said the 12-week was 150 BPS better than the 52-week. But I'm just trying to figure out -- is distribution still accelerating?

Andy, you're exactly right, this is definitely an acceleration from what we saw in the previous couple of quarters. And it is driven by -- when you see the AOC consumption, there is a couple of big retailers that can move the needle, and that is exactly what happened. We broke through on some of the key retailers in AOC in getting distribution gains on Earth's Best, Greek Gods, and gluten-free.

Okay, and I think you've referenced, is that more the strategy of getting the best-selling SKUs and just letting the category managers know? Helping them with their mindset on just selling the top SKUs, or is that broad-based including new products and so forth?

Well, it is first -- as we drive new distribution into the AOC channel, it is about taking our best SKUs and going deep with them for distribution. But look, some of the innovation we have, even though it hasn't proven itself in natural, these AOC retailers want it. They're going to want Greek Gods Kefir. I talked to you about Walmart taking the Sleepytime Snooze Shot. So, it's primarily our best proven products, but we're also seeing a good amount of new distribution on new products.

Okay, and where are you at -- well, two things on the cuts and the pouches, Earth Best and the peanut -- and the butters, nut butters. Is that something you could put a dollar amount on that you weren't able to ship? And also, can you say if you've caught -- I heard you say you built some capacity, but have you -- are you caught up? Are you getting people in stock?

Well, here, we think it was worth at least 2 points of growth in the quarter in terms of cuts.

Okay.

In terms of being caught up, look, right now nut butters is very hard to catch up on.

I'm sorry, is that 2 points to the 8%, 8.1%, or to the -- just to those categories?

No, 2 points to the total business.

Thank you.

Total US business.

Got it, the 8.1% factory shipments, right?

Yes.

Okay, I hear you.

And then -- in regard to catching up, we feel very comfortable that we are catching up to our demand on pouches. The challenge is nut butters right now because, quite frankly, with the Sunland issues, which we are not part of -- remember, we produce our own product, there is a ton of demand for -- really accelerating demand for nut butters. So, we are scrambling to get as much as we can. As a matter of fact, we pulled promotions on both nut butters and pouch, Earth's Best pouch, to realign our supply and our demand. We expect that on nut butters, it will probably take until the third quarter to get back.

And Andy, when you lose sales like this, yes, they are going to reorder. But if it's not at shelf and it's not at retail, you lose the customer. They will come back, but it is just unfortunately keeping up with demand. But we will overcome it, and we are not dependant on another packer to do it, it is ourself, and we will be able to do it.

Just wanted to get a sense of what -- it sounds like the growth would have been closer to the -- okay. And I want to switch to the UK. And very high-level question, at least from the way I'm looking at it. When I look at the numbers that Premier put out on the business you bought, I would say they were running it for cash. From '09 to '11, the margin went up 200 basis points -- the operating margin. And so my question for you is, can you maintain the profitability in the near term?

I'm sure you want to grow it over time, but in the near term can you maintain that, or do you have to invest in the brand? Whether with more advertising and promotion or other things in brand equity, maybe just in value or better ingredients or -- sometimes from adding, just putting new products in the channel, retailers want support. I'm just asking, if they were running this thing for cash, and got near 20% margins, is that something strategically you guys can maintain, or you think there's an opportunity to invest some of that against the brand to help kick start it?

Andy, we're hiring a new brand manager over there, sounds like you know all the things we're going to do. No, seriously, number one is we're going to build these brands that are brands that are over 100 years old. We are going to take them into different categories. And we also feel there's a lot more efficiency that we could get out of the plant that has not been taken. The old Premier management team never even visited the facilities. And we think buying within our Hain Daniels Group now, we think in regards to production, they have an international business which no one ever focused on, and we think there is an opportunity there both in Europe and the US. And with that, we think there's a lot of dollars that from productivity, that we can invest back into the marketing of these brands.

And these are well-known brands. After we announced this, anybody that's lived in the UK, spent time in the UK, and you mention Hartleys, Gales Honey, Sun-Pat peanut butter, and we are already looking at how to take Sun-Pat into almond butters, cashew butters, and nut butters, and nobody's doing that. We're looking at -- we don't have a honey here in the US. So, we are looking at opportunities how to bring it in here.

Do you think if you're going to invest against the brand, is there enough -- I know it's early yet, but do you sense that there is enough inefficiencies and productivity gains within the fixed plant and the production plants and distribution to fund that?

Andy, we feel with productivity, top line growth and running this business, and part of growth in this business when we put our model together was reinvest back in it, not run it for cash. So, that is our plan.

Okay, good luck. It looks like there's a lot of margin to work with, it is a pretty profitable business.

Exactly.

Take care, thank you.

Thank you, Andy. With that being our last question, I want to thank everybody again for being on this call. I know it is, like I said, a very somber day. And I wish good luck to all of those that have been affected and -- by the hurricane. On the other hand, we do got to run our business, and I think we're doing a -- I know we are doing a great job out there in doing it.

I want to thank -- again, with these tough times, all the staff that really, from a Hain standpoint, got together, pulled together to get this call off today, get our earnings together. It's amazing what we've been able to do. On Monday, we closed the Premier deal, which was one of the worst days of the year, and we were able to get basically a signed agreement just because we are on different times in divesting the food-to-go business in the UK. We've been able to get the BluePrint deal done, been able to get four plants back open, been able to get earnings done. And in the meantime, been able to do a lot of billing and a lot of shipping over the last couple of days. So, it's really great to see, and again, what we've been able to do on growth distribution is great.

And I'm excited about the addition of BluePrint becoming part of Hain, and what we can do there. And the same with the UK -- congratulations to what they have done in the UK. Rob and his team have been part of Hain for now just about a year, and great growth there. Our Canadian business, great growth there. We're just going to overlap Europe's Best. And last but not least, Europe, the team in Europe growing over 9%, close to 10% with a tough economy over there.

So, we are really kicking on all cylinders. Yes, do we have some challenges out there in some brands and some categories? Absolutely. But the big difference is here -- we control our destiny, there is no one customer that is more than 19% of our sales. There is no one brand that is more than 19% of our sales. Well over 50% of our products, they are manufactured by ourselves. Those that are not, we are out there purchasing the agreement -- ingredients, and we control the formulas.

And we have dedicated sales organizations today that are calling on major supermarkets, major mass-markets, major club retailers, natural food stores, Whole Foods, we have over 50 retail team that is just going into stores which will help get BluePrint out there. So, we've built a tremendous infrastructure to really take Hain to the next level. And over the last couple of days, you are seeing the benefit of that, it is great to see.

So, I want to wish everybody a very healthy, happy, happy and safe Thanksgiving. My advice is buy an antibiotic-free Turkey, a Plainville one at best, and be safe out there. And we are going to continuously see lots of storms, it is not the -- the world has changed in weather. And thank you very much for your time this afternoon. Bye-bye.

This concludes today's conference call; you may now disconnect.