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The Hain Celestial Group, Inc. (NASDAQ:HAIN)

Q4 2008 Earnings Call

August 26, 2008 4:30 pm ET

Executives

Mary Anthes – VP IR

Irwin Simon – President & CEO

Ira Lamel – EVP & CFO

John Carroll – EVP & CEO Hain Celestial US

Analysts

Edward Aaron - RBC Capital Markets

Christine McCracken - Cleveland Research Company

Simeon Gutman – Goldman Sachs

Scott Mushkin – Jeffries & Company

Analyst - Blackrock

Gregory Bandishkanian - Citigroup

Scott Van Winkle - Canaccord Adams

Jacqueline Rider – Lazard Capital Markets

Andrew Wolf - BB&T Capital Markets

Terry Bivens - JP Morgan

Operator

At this time I would like to welcome everyone to the Hain Celestial fourth quarter fiscal 2008 conference call. (Operator Instructions) I will now turn the call over to Mary Anthes, Vice President of Investor Relations.

Mary Anthes

Good afternoon. I’m pleased to be with you today to introduce our fourth quarter and full fiscal year 2008 earnings conference call discussion of our financial results which were issued earlier today. We have several members of our management team here today to discuss our results; Irwin Simon, President and Chief Executive Officer, Ira Lamel, Executive Vice President and Chief Financial Officer and John Carroll, Executive Vice President and Chief Executive Officer of Hain Celestial United States.

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 as a result of new information, future events or otherwise.

Our actual results may differ materially from those projected and some of the factors which may cause results to defer are listed in our publicly filed documents, including our 2007 Form 10-K 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 today will be limited to approximately one hour, so please limit yourself to one question and one follow up question. If time allows, we 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 our President and Chief Executive Officer.

Irwin Simon

Thank you Mary and good afternoon everybody. I hope everybody had an opportunity to look at our fourth quarter for fiscal 2008 and our full year and our guidance for fiscal 2009. Our sales for the fourth quarter $278.3 million versus $223.3 million, up 25.2% and for the full year $1.06 billion versus $900 million and we reached that milestone of $1 billion in sales, up 17.3% and what I must point out, the $278 million has been our biggest quarterly sales ever in the history of the company.

Our gross margin for the quarter 27.9% versus 28.7% and half of that, of the 0.8 bps is coming from input costs and just fuel alone April, May and June was up 22% and we’ll show you later how we absorbed those costs and how our freight rates and fuel was flat to last year.

For the year 28.6% versus 29.1% and up 50 bps and the majority of that is coming from input costs. Our operating income for the quarter $20 million versus $18.5 million, up 8%. For the year $103 million versus $86 million, up 19.7%. Earnings per share for the quarter adjusted $0.34 versus $.025 up 36% and $1.40 versus $1.16, up 21%.

Let me talk about the quarter and let me share some of the great things. What a quarter it’s been and what it’s been and what’s happened with inflation, what’s happened with ingredient costs, what’s happened with fuel costs, what’s happened to the consumer and we’ll talk a lot about that today.

Good top line growth, good bottom line growth in the fourth quarter. We absorbed about $11 million of costs in the quarter and as you can see we were able to offset it with price increasing productivity, increase in sales. Fuel alone as you heard me say up 22%. In the quarter we absorbed the MaraNatha acquisition, we started to integrate it. We were able to cut costs but actually in the first quarter that we owned it, MaraNatha cost us some dollars but we see this as a great acquisition and we see the similar acquisition as Spectrum, Avalon, and Alba.

Pilgrim’s Pride which I’ll spend some time talking about our poultry business, same thing, we see some good things happening here in our chicken turkey business. Our Daily Bread business which will help our UK operations and seeing some good things there. We dealt with distributor inventory reductions as distributors and retailers look to bring down their inventories so in the quarter we have seen that.

We made some management changes in the UK. As you know the UK has not performed for us this year and probably one of our disappointing areas and we made some good management changes. I spent about three weeks over there in the summer and we’re seeing some good things happening.

Our Canadian business is strong, up 7%. Strong growth came in our poultry business. Our Celestial Seasonings business grew 4% in the quarter and we had great double-digit growth from brands like Garden of Eden, Imagine, Arrowhead Mills, Earth's Best, Imagine Soups, Spectrum, Avalon, Alba, DeBoles, so some good double-digit growth coming from all those.

Our European business was up 31%. Our FreeBird business which is our chicken business, up 24% and our Plainville turkey operation which we acquired last August was up 5%. So what did we do to drive out the costs, to drive top line? We’ve improved distribution; we’ve grown a lot more among mass market, supermarkets, food service, and convenience store.

We really went after sales and the consumer is still looking for healthy products and we’ll talk about that in a little while. We drove productivity in the quarter $11 million we absorbed. We really focused on our SG&A and our SG&A in the quarter was down 1.2 bps. So we really focused on costs, and on growth.

So let me talk about the brands, Celestial was up a little over 1% for the year. Up 4% for the quarter. Profits for the year on Celestial were up about 5%, so what has happened? We completed the packaging change for Celestial. There are some things we need to do on the flavor identifier. There are some other things we need to do on vertical versus horizontal.

And our big thing to do on Celestial is improve the distribution, improve shelf, really go after food service, go after some of the, fix our green tea and consolidate some of the back room as you heard me mention before John Carroll has now taken over full responsibility of the Celestial operation so we will consolidate a lot of businesses here from our US side of the business.

Big thing John is looking for next year and he’s going to talk about it, we’re going to look at some of the innovation coming out of the tea and leverage a lot of our impact with our trade versus the consumer and really how do we get the consumer there are a lot of tea choices out there. And last but not least we’re praying for a real cold winter.

In Canada, great year in Canada, top line up 7%, bottom line up double-digits, numerous new products, Celestial in Canada grew 6%. Our Terra business was up 39%, our soup business up 14%, that’s Imagine, Spectrum up 10%. We introduced 37 new products. Here is something is a business today that’s approaching $100 million in size, our Canadian business almost 10% of our business, where the only business we bought in our Canadian operations is Yves.

So here’s a business where we took existing brands and taken off to Canada or taken some of the brands that were in Canada and have grown them and one of the great things I like to announce is we became the sponsor of the Olympics for 2010 in Vancouver and this will be in the Canadian market with Terra chips, Celestial, Yves, some personal care products, soup and MaraNatha which products will be sold during venues and we’ll be able to use the Olympic logo. So with the success of the current Olympics in China and the winter Olympics we’re looking forward to a real good marketing and tie in with the Olympics in Vancouver in 2010.

On the other side, let’s look at the UK, not a great year for the UK after last year. We were off about $7.5 million from budget. With that came some changes. Peter McPhillips who joined us with the Daily Bread acquisition and in August who took over as Executive Chairman of Europe Peter brings a lot of years of experience, brings a lot of good trade relationships, both in retail and food service and I had the opportunity to spend about three weeks working with Peter in Europe and the UK and I got to tell you, we have some great opportunities. We’ve got some work to do. I feel the integration of Fakenham which did not go well due to cost pressures, I’m not sure we had the right plan in place. We lost some volume we had some private label volume that was not profitable.

With personnel changes now and a true strategic plan, I feel most of that is behind us and throughout the first quarter it will all be behind us. We have to go after volume on the Linda McCartney brand, on the Ross brand, and we have to go after some private label business and we’ve made business to [Sansbury Tesco] [Auza] everybody over there and we have some good opportunities, a lot of new products in the pipeline so I think we really can turn the UK around because we have the people, we have some good products, we have a good plan and with our relationship I’m sure we can do that.

The acquisition of Daily Bread which gave us a branded fresh business has the opportunity to expand our Luten facility. Daily Bread which is centrally located was maxed out basically on capacity, didn’t have the opportunity expend on a national basis, and we can do a lot more production in Luten on the branded side from Daily Bread and we look forward to that. We also can go into a lot of other fresh meals.

The other big opportunity for us is our branded business, Celestial in the UK now Terra is in the UK and Rice Dream, we look to expand Earth's Best. We also have JASON and Avalon in the UK today. JASON is a good size business for us; Avalon is mostly natural foods, so we really look to focus on our branded business in the UK market.

If you look at Europe our Europe business was up 21%. Lima up 21%, Hain Europe 35%, Natumi up 11%, Celestial up 31% and our Grains Noirs business up 20%. We took pricing; we absorbed over $5 million of costs there so the group was really focused on costs and really took the pricing where we had to. In Europe today we’re in countries Belgium, Netherlands, Luxemburg, France, Germany, Spain and Scandinavia, and we look to expand and we’re looking towards some major things out of Europe this year.

One of the big things Grains Noirs which is up for us we’re really looking for profitability out of that business and out of our fresh business and they’re doing some tie ins and working together with our UK operation and I think we can do that and that’s been a bit of a lagger for us on our European side of the business.

On our protein side of the business, protein excluding New Oxford was about $90 million this year. On an EBIT it was 8% on EBIT and we absorbed over $2 million of grain costs and that came from pricing, productivity and higher sales. Our chicken business, antibiotic free which is probably about 90% of our sales up 24%. Our turkey business which just was the Plainville was up 5%. So with the acquisition of New Oxford in late March, we will now become the largest antibiotic free turkey facility and what we’re seeing is the consumer trading down from red meat to poultry and turkey and we’re seeing good demand. Pricing has gone up substantially.

We are basically covered until the end of December on our grain and 70% of our sales are done between June and the end of December. So with that I think we’ve got a good handle on things and with the availability of antibiotic free turkey now and the Plainville brand, the FreeBird name, we can expand into deli and further other types of products and that’s what we look to do.

One of the big problems before was the availability of products and the availability of turkey products so we definitely do have that and definitely pretty excited. So let’s go back to fiscal 2008 and our accomplishments, sales up over 17%. We took two to three price increases in a lot of our business and most of them while they all stuck and feel good about that.

If you sit back, last year this time and it was a few days later that I was on the call and giving guidance diesel was about $3 a gallon, corn was about $3 a bushel, today we’re sitting with diesel close to $5 a gallon, corn at $6 a bushel, we’re sitting with soy and we absorb these costs and we grew our business. With that I feel good about what our accomplishments and what a difference a year makes and what we had to absorb.

So we absorbed over $33 million of costs as a total company this year and we absorbed it through top line growth, mix, price increases, productivity, and really watching our costs. We completed acquisitions, Plainville in August, Tender Care which is going to be a great business for us in the diaper business, we’ve rolled out Earth's Best Diapers and seeing some good results from that and some great opportunities with diapers and wet wipes.

The MaraNatha business which I’ve got to tell you pretty excited about that. If you go back and look at Spectrum, we acquired Spectrum in 2005 and Spectrum is basically almost doubled for us. And if you go back and look at the EBITDA on that business, it’s tripled or quadrupled on that so great opportunities in MaraNatha and Spectrum.

Daily Bread which is a great branded business will help our Luten facility in the UK and we saw some good things coming from that in our first quarter owning it. In regards to Avalon, Alba we’ve now owned that since January, 2007 and sales in that business have almost doubled and EBITDA has almost doubled so when you do good acquisitions and you may pay a little higher for them you see great results coming from it and good results coming from Avalon and Alba and John will take you through some of the sales numbers and what’s continuing to happen with that.

We now have the SKU rationalization in the third quarter and it was our first SKU rationalization in the personal care side of the business as we put these two businesses together and you heard, our EBITDA is almost doubled in that and that was without SKU rationalization so with SKU rationalization in place we expect to continue more and will improve margins by almost two points into 2009.

We introduced many new products as a company and what I always say innovation is key. When you’re green you’re growing when you’re ripe you rot and with that we’ve introduced as a company almost $30 million of new products and just think about how many acquisitions you’ve got to do at $30 million then. Maureen Putman and the group in Boulder and the chicken group and the group in Europe, with the group what they have done with new products has just been great but just not only new products its innovative products.

We’ve really watched our costs, you heard me say our SG&A being down 1.2 bps. Our earnings per share on an adjusted basis for the year up 21%. A strong balance sheet we did $102 million in acquisitions and our debt to equity ratio is still 42%. So have a lot to do and we can do a lot with our balance sheet, whether its acquisitions, buyback stock or etc. so we’re really out there with a strong balance sheet.

And throughout the year I think what people don’t realize is how difficult and what was going on with product shortages and how difficult it was to get ingredients and how we took positions on inventories to make sure and our service levels ran as a total company in the 98% 99% level which kept our customers happy where I think a lot of people just didn’t take positions and we were able to do that.

So 2008 good accomplishments, disappointments in 2009. The UK was definitely a disappointment and we started off the year and thought considering what happened last year but I think we put a lot of good things in place and we put a lot of good action plans in place and I think we’ve done an acquisition to have the people in place now really to take the UK back to where it should go.

Looking forward into fiscal 2009, sales have been strong for July and August. I keep hearing about the consumer trading down. I keep seeing reports, keep talking to consumers where consumers are concerned about health and you’ve got to remember one thing within the Hain, basically and take away from our turkey business, but over 85% of our products are under $5. And if you see where the trade down is coming to and private label, its more in produce, its more in red meat and that is not products we are in.

Where you see the consumer pulling back today its more on fresh products as prices have gone up tremendously and consumers are concerned that they’re going to spoil and one thing just to point out, our rice milk business has grown in double-digit numbers as I see consumers buying more and more rice milk instead of buying fresh milk today so we’re really seeing good growth and what we’re seeing is the consumer staying home and cooking from scratch instead of buying prepared foods.

Our DeBoles business up tremendously, one because its gluten free but two because of good pasta, whole wheat, whole grains, etc. Our Arrowhead Mills business is the exact same. We have pricing in place today as we say we have two to three price increases that we’ve taken throughout the year so we’re much farther ahead then we are then last year. We have strong brands, a strong organization, so what do we have to do?

We have to grow our sales and growing sales comes from demand and distribution and the group is focused on that and I have to tell you sales, sales, sales and its tremendous how many places you walk in today and see some of the Hain products. Productivity is something that’s a word around here that we pledge every morning. It’s how we take costs out of this business and productivity is something that we show in 2008, something that we’ll continuously show in 2009.

Cost control is something else. Innovation, Hain just can’t be another me-too company, every company today wants to get into health and wellness and everybody is talking about it. We wake up every morning and natural and [organty] is our life so we’ll continue to do that. Smart people in tough times like this, you need to have smart people and we’ll continue to do that.

In regards to commodities we’re hedged on about 67% of our commodities on our grocery, frozen and snack business and with that that’s other ones we just didn’t want to hedge on and John will talk about that in a little while. As you heard in regards to our protein business we’re hedged out until the end of December and that’s where 705 of our sales are done.

So with that we’re in good categories. We absorbed fuel costs in the fourth quarter, flat even though fuel costs were up 22% and we showed you what our group can do so pretty excited going into fiscal 2009 and pretty exciting some of the opportunities out there and I have to tell you I’m happy where we are this year at this time rather then where we were last year at this time.

I’ll turn it over to John and he’ll take you through grocery, frozen, snacks and person care.

John Carroll

Thanks Irwin, good afternoon. Today I’ll give you an overview of our Q4 and full year results for Hain grocery and snacks, Hain personal care and further outline our plans for Celestial Seasonings.

Starting with Hain grocery and snacks, Q4 was a very strong quarter with top growth up 85 which reflects organic year on year growth as the acquired brands MaraNatha, SunSpire and Tender Care were not included in this calculation. Q4 top line growth including the acquired brands was 18%.

As Irwin talked about we saw growth across our brand portfolio and our growth was driven by a combination of velocity increases, alternate channel gains, and new product sales. Moving to the middle of the grocery and snacks P&L, pressure for commodity costs and fuel related expenses reached its highest point in Q4. We saw year on year increases on almost all commodities including organic corn, soy beans, wheat, canola oil, fruit and dairy as well as packaging and diesel fuel.

In fact our Q4 ingredient inflation is $10 million versus year ago which was double the rate we experienced in Q3. Despite these challenges our Q4 organic gross margin was actually flat versus year ago as pricing taken in Q2 and Q3 and continued productivity savings offset rising commodity and fuel costs.

Moving on down the P&L our Q4 SG&A expenses as a percent of sales were flat versus a year ago. We continue to exercise strong discipline on our operating costs which is essential in this inflationary environment. Our Q4 inventories were higher then a year ago primarily due to an additional $6.5 million in Earth's Best inventory. This is consistent with what we discussed in previous calls where we said we would maximize our fresh pack production in September through December to ensure supply for our fastest growing brand.

We will again look to increase our fresh pack production in FY09 to ensure supply as we expect the brand to continue to growth very quickly. Finally we completed the integration of the MaraNatha and SunSpire acquisition in fourth quarter on time and on budget and are already realizing synergy benefits.

So to conclude Q4 brought a close to a very strong year for Hain grocery and snacks. FY09 top line growth prior to acquisitions was 8%, our top 10 brands are showing double-digit consumption growth and we achieved record new product sales. Our full year organic gross margin was flat versus year ago despite absorbing $25 million in ingredient inflation and our SG&A was down almost 50 bps versus year ago.

Our FY09 HG&S outlook is for continued profitable growth. We have consumption momentum on all our core brand, our new product queue is full and there are still new distribution expansion opportunities available. We have fully integrated our MaraNatha and SunSpire acquisition and are positioned for growth on these brands.

Now while year on year pressure on input costs and fuel related expenses is still challenging we expect to offset them with more productivity, a price increase that was announced in July and continued tight SG&A control. We have also taken positions on approximately two-thirds of our FY09 commodity needs, to ensure supply and cost certainty. We’re going to continue to monitor our commodity and fuel costs quarterly and we’re prepared to [inaudible] more pricing if required to ensure margin maintenance.

So now moving to personal care, our Q4 top line was up 11% ex our SKU rationalization and was driven by our three top brands; JASON, Alba and Avalon. Alba led the way with year on year growth of over 20%. The growth on our top three brands reflected gains across all three channels; natural, grocery, drug, mass and club. We also saw growth on our high end mixed brand Zia for the first time in two years.

Moving to the middle of the P&L gross margin expanded over 100 basis points driven by improved mix, conversion savings and to a lesser extent pricing. Our gross margin improvement was in part an immediate reflection of our SKU rationalization as we have begun to eliminate and we did this in the fourth quarter, the lower margin slower moving SKUs from the Hain personal care portfolio.

While personal care was also being pressured with cost inflation in Q4 it was not with the same severity that we experienced on grocery and snacks. We have however begun to experience increased pressure in FY09 particularly on packaging and co-packer conversion costs. Our personal care SG&A was down 100 basis points for the quarter as we continue to realize the benefit of the JASON and Avalon acquisitions and consolidation.

We will lap these benefits in first half 2009. As I mentioned the personal care SKU rationalization is underway. We will eliminate 30% to 40% of our SKUs. We expect the decrease in the sales volume from the discontinued SKUs will ultimately be offset by an acceleration of sales of continuing SKUs with higher margins along with sales of new products.

More importantly this initiative will position Hain personal care to leverage its Culver City manufacturing facility as competitive advantage and to integrate volume currently produced by co-packers when the co-packer contracts expire.

To conclude Q4 brought to close another strong year on Hain personal care. We continue to see strong top line growth on our key brands and there are significant distribution expansion opportunities in front of us. The consolidation of JASON and Avalon into Hain personal care is behind us and we have realized the SG&A synergies that we targeted. Our SKU rationalization program is underway and already producing margin expansion and we are positioned to integrate currently co-pack volume into our Culver City plant to further strengthen our margin.

Now on personal care we expect cost pressures will escalate in FY09 and we’re already seeing that and we will implement a 4% to 6% price increase in September to offset them. Additionally just as with grocery and snacks, we’re implementing a make productivity a priority program in personal care to drive savings.

Overall we believe we’re well positioned at Hain personal care to take advantage of the growth of natural personal care in all channels and to drive profitable growth in FY09.

Finally moving to Celestial Seasonings, Irwin has already talked about the achievements on the business is FY08. My focus is on 2009 and specifically it’s on restarting profitable consumption growth on our base Celestial Tea business. In the last two months we’ve done an extensive analysis of the base tea business and will implement the following initiatives to make this happen.

First we’re going to fix our Celestial Tea presence on shelf. Our customers’ biggest complaint is they can’t find their favorite tea flavor or segment. We’re going to fix this by doing the following things. First we’re going to fix our mix on shelf, 20 SKUs account for 75% of the volume on Celestial so we’ve got to make sure we’ve got the right 20 on shelf every time. Secondly we’re going to strengthen our flavor communication on the new package with revised graphics. The package itself and the whole new graphic is great, the problem is we’re not screaming out our flavors strongly enough and so you’ll see you won’t miss it as we go forward and we put in some new communication elements to make that happen.

The third thing is we’re going to reemphasize the sale of prepack displays and we’re looking to reach record level of this in store. This is something that we have not been as strong on in previous years and it’s a key to driving Celestial sales particularly during tea season. We’re also going to put into place a high impact consumer and trade tea season promotion program to help consumption and share losses, improving our green tea product line with a better taste profile, higher antioxidant content and stronger flavor and segment communication. We’re going to be reducing our distributor buyout just as we did on grocery and personal care to reallocate over time our support against consumption driving programs. We’re going to be implementing a make productivity a priority program across the tea supply chain and SG&A to ensure we’re driving savings across all levels.

We’ll be strengthening our marketing and sales on the brand by recruiting in new talent to head those functions and finally we’re going to restart the innovation pipeline on base Celestial tea. We’ve had great success with the innovation engine on grocery and snacks and we seek to duplicate that same success on Celestial.

Let me just conclude, Celestial is a great business within the Hain portfolio and again our objective is simply to restart profitable consumption growth. I look forward to updating all of you further on these initiatives as they get underway.

Now I’ll turn it over to Ira Lamel.

Ira Lamel

Thanks John, good afternoon everyone. I’m going to review for you the details of our adjustments to earnings as well as the 2009 guidance. Our earnings on a GAAP basis was $0.16 per share in the quarter and $0.99 per share for the full year. On an adjusted basis earnings were $0.34 for the quarter and $1.40 for the year.

The adjustments we’ve made are those we identified for you in our third quarter call. In the fourth quarter we’ve added back $2.3 million pre-tax which is $1.6 million after-tax, or $0.04 a share for the personal care SKU rationalization, severance and other reorganization costs.

Of this amount $900,000 went to cost of goods and $1.4 million to SG&A. For the full year we added back $10.8 million pre-tax which is $7.9 million after-tax or $0.16 per share for this program. The charges included inventory we will not go forward with, the write-off of certain assets related to the inventory, such as packaging design costs and the costs related to the reduction in force. We continue to believe as we said when we announced this in our third quarter release that this program is going to benefit gross margins in the future, probably a bit more then 200 basis points in the personal care unit and approximately 100 basis points in the consolidated margin line.

We also anticipate that we will get additional benefit to the operating income line from the personnel reduction which should save approximately $2 million annually. This of course, is absent any other cost pressures that we may encounter in the inflationary environment in personal care. As we’ve discussed in recent quarters we continue to incur integration and start-up costs through the fourth quarter in connection with consolidating our manufacturing facilities and processes into one facility in the UK in Fakenham.

These arose in connection with our acquisition of the [Haldain’s] Foods brands in the UK after which we determined to eliminate two facilities of [Haldain] one of which we sold. Our progress in this project has taken longer then we anticipated and costs have been higher then expected. In the fourth quarter we incurred $2.5 million pre-tax or $2 million after-tax of start-up costs which pressured earnings by $0.06. For the full year we added back $7.5 million which is $5.5 million after-tax or $0.13 per share.

These costs that have been added back are separate from the other items that Irwin discussed earlier in the call such as the need to increase volumes on existing products. The project in Fakenham is now largely completed but there will be some continuing costs in the first quarter. In addition, with the expiration of the co-pack agreement with the former owner of the Fakenham facility, we will need to add volume to cover unabsorbed overhead that we may incur in fiscal 2009 approximating $1 million to $1.2 million.

As previously disclosed during the fourth quarter in April, our Board of Directors approved new equity grants for the first time in over three years. At the same time the Board and the CEO agreed to satisfy what had been ungranted options over that three year period which the company was obligated to grant under an employment agreement.

During our third quarter earnings call we estimated that approximately $4 million of expense would be charged to the fourth quarter. After a more careful and detailed review as well as consultations, on the appropriate method of charging expense in the quarter and to amortizing expense going forward, it was determined that such expense should be $2.3 million in a quarter.

Since there are components of this pre-tax charge that are non-deductible, the after-tax charge is larger then the pre-tax charge. Therefore the impact on earnings was $2.9 million after-tax or $0.07 in the fourth quarter. The impact for the full year was the same.

We have also added back professional fees we have incurred during the inquiry into our past options practices. In the fourth quarter we incurred $1.1 million of such fees which is $600,000 after tax or $0.02 per share. For the full we incurred $5.8 million in fees which is $3.5 million after-tax or $0.09 per share. The inquiry remains ongoing.

We have given you guidance for the full year of fiscal 2009. We expect our sales to come in between the range of $1.2 billion to $1.3 billion and we anticipate earnings per share will come in at $1.54 to $1.61. As was the case in fiscal 2008 where we saw a $0.07 charge for stock compensation, we expect that fiscal 2009 will bear an $0.08 per share charge subject to adjustments for our forfeiture experience and any additional grants which may be made.

The 2009 guidance we look at depreciation and amortization to be around $20 million with an equal amount of $20 million for CapEx. There are a couple of other things I’d like to discuss, during the fourth quarter we experienced continuing and accelerating inflationary pressures on our input costs. The rise in diesel was almost 20% in the quarter when compared to the March 31 cost of diesel. These increases have accelerated in their effect on our costs and during the fourth quarter we saw 388 basis points of pressure on our gross margin from input costs.

For the full year the pressure was 310 basis points on gross margin. These pressures have been offset in large measure by productivity improvements of 132 basis points in the quarter and 157 basis points in the year as well as with price increases we have been successful in implementing.

Celestial Seasonings continues to become a smaller percentage of our total sales and is now 8.8% of consolidated sales for the year this year as compared to 10.2% last year. Our gross profit percentage was impacted by approximately 60 basis points by the dilutive effect of increased revenues in our Hain pure protein division which operates at lower gross margins. The Hain pure protein unit temporarily sells certain of its products at below market rates under a contractual obligation for a specified period and therefore is currently unable to sell these products at market prices.

Had we processed and sold the same products into the market at market prices, which we expect to do in the future, we believe that pre-tax income would have been approximately $1.6 million higher in the quarter. Our ability to sell at market begins on October 1st. Despite increased costs both operating and pre-tax income as adjusted were up 10 basis points for the full year. EBITDA as adjusted came in at $125 million this year versus $103 million adjusted last year.

Our operating free cash flow was reduced this year on a GAAP basis to $5 million however we think it should be viewed after adding back the non-recurring items that we’ve faced during the year. These non-recurring items total $42 million. The adjustments I discussed earlier had a significant impact on cash flow. First the non-recurring items: $7.5 million of start-up costs, $3.8 million in the cash portion of the personal care reorganization, the $4 million cash component of our ungranted stock option obligations and the $5.8 million we incurred in professional fees in the inquiry.

And in addition to the adjustments we made significant investments in our inventory, we added $11 million to support the longer grow out season for turkey products at New Oxford. We made an investment of $6.5 million in our Earth's Best inventories, and there was an overall $7 million increase in inventories due to the inflationary pressures in buying ingredients and other items that go into inventory.

With that we’ll open up the call for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Edward Aaron - RBC Capital Markets

Edward Aaron - RBC Capital Markets

On the tax rate, it looks like it accounted for about $0.08 relative to where you expected the tax rate to be, is that accurate and if so is the variance between that and what you reported on an adjusted basis, would that entirely be the impact of unexpected additional increase in costs in the quarter?

Ira Lamel

No I think $0.08 is not quite the right conclusion. If you were to take out all of the adjustment items because of the varying tax rates of those items, there’s a component of the stock compensation that’s non deductible, there are different rates for the start-up costs because its in the UK and if you just normalized what the rate would have been for the full year there was a $0.02 impact on earnings for the quarter on both a GAAP and adjusted basis. So it’s not $0.08 its $0.02.

Edward Aaron - RBC Capital Markets

The difference between the reported adjusted gross margin and the number that you used in the same brand calculation, when you talked about the 28.6 number in the press release, there’s about a 300 basis points difference there. Is that entirely the impact of Hain pure protein? Because it doesn’t seem like that could account for that much.

Ira Lamel

The reason I labeled it as same brands computation is we look at the brands we operated last year and the brands we operated this year so it takes out both Hain pure protein because of its lower margin results and it takes out the businesses that did not operate on the Hain Celestial group for the full year this year and the full year last year. So what it shows is what we’ve been able to do on a continuum with the brands that we’ve operated in the full fiscal years.

Irwin Simon

It’s an apples to apples basis. So the brands this year that we own versus the brands last year in comparing the margin last year if we owned those same brands what they were for the full year.

Operator

Your next question comes from the line of Christine McCracken - Cleveland Research Company

Christine McCracken - Cleveland Research Company

Regarding your comment that you’ve hedged it sounds like about two-thirds of your hedgable commodities, it’s just that portion of your exposure that you’re able to hedge is that accurate?

Ira Lamel

When we use the word hedge we’re not really hedging in the traditional sense of buying against each other with forwards and so on. What we’re able to do is actually buy the commitments from the producers of the ingredients that we utilize so it’s not a pure hedging play. It’s locking in our price for a period of time and locking in the source of supply for that same period of time. We actually execute contracts with farmers and other types of suppliers at fixed prices. So when we say hedge we really mean we’ve locked it in as opposed to the pure play on these derivative contracts in the hedging world.

Christine McCracken - Cleveland Research Company

That’s not including diesel or oil based packaging, that kind of thing? Is that included?

Ira Lamel

No we’re not really buying diesel ourselves. We look at diesel and fuel inflation as it comes to us from the, let’s call it the trucking industry. We know what the cost of diesel is by tracking it on the market number one and number two by tracking it in the delivery bills that we get from those third party truckers who deliver products for us. We also see the same inputs on the freight bills on our inputs as well where ingredients are being delivered to us or products that are co-packed are being delivered to us.

When you look at packaging we’re not measuring with specificity the packaging component that includes petroleum.

Christine McCracken - Cleveland Research Company

I think you talked about if you saw increased commodity pressure into next year you’re more then willing to take another round of price increases and you’ve done a great job with that, at what do you think you’re not close to where you’ll see that demand destruction as prices hit a level, or maybe just comment on how you measure that and how that goes into your pricing equation?

John Carroll

First I believe the percentage is 85% of our products are sold at $3.99 or less so that’s first thing. We don’t think that we’re really breaking any real price barriers yet. Secondly we look and we compare ourselves to two things, we compare ourselves to our competition in the natural organic space as well as our conventional counterparts and we manage deltas against each of them and as long as we don’t push a delta above where we’ve been successful in the past we’re comfortable pushing through the pricing.

The third thing is most of our competitors have the same commodity pressures that we do and they’re not in a better position then we are so we’re pretty comfortable that if we take and lead pricing in natural organic they’ll follow. We’ve seen that as the experience in the past.

Operator

Your next question comes from the line of Simeon Gutman – Goldman Sachs

Simeon Gutman – Goldman Sachs

On the guidance the mid point for the top line guidance is 18%, the mid point on the earnings guidance is more low teens, what does that reflect? Is it more of the ingredient inflation that just won’t be fully priced through?

Ira Lamel

Yes, there’s certainly going to be a carryover of the ingredient inflation certainly in the first half of the year before some of our pricing increases take hold, and then we still will have a period of time where the acquisitions that we made essentially in Q4 will not be accretive to earnings in the front half of the year.

Simeon Gutman – Goldman Sachs

The Fakenham start-up costs, is that going to continue to dwindle as the quarters progress here?

Ira Lamel

Well we think its going to be largely completed in the first quarter and that we won’t have any of these start-up costs from the second quarter on.

Simeon Gutman – Goldman Sachs

As far as the velocity versus channel gains, can you comment on that a little further and what are you seeing with respect to channels, are you consumer shopping patterns move out of one channel into others?

John Carroll

We’re seeing a pretty good split between the two in terms of driving our growth. Only on a handful of brands are we starting to see volume move away from certain channels. Other then that we’re just seeing new consumers coming into the natural organic area.

Simeon Gutman – Goldman Sachs

How well are you positioned to where that volume is moving towards?

John Carroll

I would argue that we’re probably as well positioned as anybody in the natural organic area because in some places, many channels, we’re the first natural organic item they put in particularly in the area of baby food.

Irwin Simon

I think what’s happening is all retailers they are looking for additional business and looking for different unique brands so with that where our brands were not before, they’re looking to bring our brands into their stores.

Operator

Your next question comes from the line of Scott Mushkin – Jeffries & Company

Scott Mushkin – Jeffries & Company

I’m still a little unclear on this stock compensation the $0.08, is that included in the guidance or is that excluded?

Ira Lamel

The guidance of $1.54 to $1.61 is before you deduct stock compensation.

Scott Mushkin – Jeffries & Company

I understand that you’re not seeing demand falling off and you’re doing a good job of staying in front of the trends, but what kind of things do you think about in 2009 that either (a) could happen or (b) and what would you do in the event that you just started to see demand fade away as we have seen with some of these other [inaudible] products, not natural organic but referring to restaurants and these kind of things because it seems like the consumer is taking a step back. It is possible that it could visit natural organic.

Irwin Simon

Demand falling off is something that always could happen out there. But I think as we step back today we’re not thinking about how demand falls off, we’re thinking about how to grow our demand and you can see by our guidance and our organic growth and our guidance for next year. Our plan for next year is strong growth, innovation, new products, and if you go back and look we’re a diversified group of products, diversified group of brands and if you look at Hain, our business today a little more then half of our business today only goes through mass market and supermarkets so we think we have tremendous distribution gains of opportunities out there. And at the other end we think there are tremendous opportunities in Canada and Europe.

I keep hearing about sales falling off, again you heard John say it, over 85% of our products are less then $5. If you come back and really think about it, if our baby food is $0.10 more and the average mother buys four to six jars of baby food, $0.60 a week, $4.20. So yes we watch it and yes we’re watching the consumer out there but I think our focus continues on how we grow our distribution, how we expand our brands.

Operator

Your next question comes from the line of Analyst – Blackrock

Analyst – Blackrock

On the $33 million you identified as absorbed costs in FY08, the $11 million in FQ4, how much were you able to recover given the four to five variables mentioned, top line growth, mix, price increases, etc?

Irwin Simon

In that $33 million probably $12 million to $15 million came from pricing and the remaining came from productivity and mix and top line growth.

Analyst – Blackrock

That was for the year? And how about in Q4, a similar kind of breakdown?

Irwin Simon

In Q4 probably a little more because we’re able to start to catch up on pricing. There’s a lag time, unfortunately we get the price increases right away. We don’t get to pass then on right away so there was some catching up in Q4 and Q4 probably at the $11 million, $7 million to $8 million probably came from pricing and probably $4 million came from productivity. But I think the important thing is it shows that we’re able to get pricing through pricing sticks, its showing that with our pricing we’re still getting good top line sales and which I’m really proud of the group here is the productivity that we’ve been able to do and I think one thing is important to point out, we just didn’t start looking for this productivity on July 1, 2007, this is something that’s been in place a long time. We’re looking for a lot of productivity again this year and we’re also looking for pricing and our hope is commodities come down.

Operator

Your next question comes from the line of Gregory Bandishkanian - Citigroup

Gregory Bandishkanian - Citigroup

In acquisition sales, I’m calculating about $23 million, am I missing anything?

Irwin Simon

That’s real close.

Gregory Bandishkanian - Citigroup

So that gets me to about a mid teen organic sales? Am I in the ballpark or am I pretty far off?

Irwin Simon

You’re a little high but again you know I don’t want to comment on organic growth but I guess you can come back and see we had a good top line quarter for the quarter so I think you can pretty well figure it out with the $20 million, I think you’ve got to put some pricing in there. And I think that will get you to, and again also in the quarter there are some SKU rat adjustments and on the positive side of the quarter you’ve seen it where one of our biggest customers took down their inventories and reduction in inventory so from a growth standpoint it was a good quarter on growth.

Gregory Bandishkanian - Citigroup

July and August were strong, any color on channels or products that in particular were doing a little better and then even if its not mid teens it was still very strong, the Whole Foods actually saw deteriorating trends in the second calendar quarter in July, I’m showing accelerating trends for you, any thoughts on why this might be the case?

Irwin Simon

I think we’re continuously seeing strong sales in July and August again back to similar brands, rice milk, Earth's Best, Spectrum, Garden of Eden, Arrowhead Mills, I have my group here, DeBoles, were definitely seeing that. We’re seeing some good strong growth continuously on Avalon and Alba, JASON on adjusted after SKU rats seeing mid single-digit growth, seeing some good growth on our chicken business, so all around I think what I continuously say, people are staying home and cooking.

In regards to the natural channel, we’re seeing some good growth on our products and actually interesting what we think is people are buying groceries and cooking instead of buying prepared foods and fresh foods and produce and that’s what we’re seeing. So in the natural channel in regards to independents and the banners of Whole Foods etc. we’re seeing some good growth coming from that also.

Gregory Bandishkanian - Citigroup

I know not the easiest question to answer about one of your biggest customers but any reason for their disconnect why you’re seeing very nice accelerating sales growth, they’ve been seeing deteriorating growth?

Irwin Simon

I don’t think I’m going to answer that question.

Operator

Your next question comes from the line of Scott Van Winkle - Canaccord Adams

Scott Van Winkle - Canaccord Adams

You mentioned that the plans to improve profitable consumption in the base Celestial business, what is included in that base Celestial business and what percentage of the sets you currently have do you have your top 20 selling SKUs?

John Carroll

The base it’s the core tea business so it does not include [Safara] it does not include coffee, its bag tea.

Irwin Simon

And one of the things we see on that what’s happened is [Safara] and some of these things we look for innovation on some of those things and if we just stuck to tea and the money we spent on some of those innovations our profits would be up even more. So I think if we sold more green tea, sold more herb tea and focus on that, that’s where we’re going to see a lot of profitability and a lot of growth come from.

John Carroll

In terms of what percentage of sale sets have the core 20, it’s a very low number and its like any other item, we just need to have some real discipline about these are the 20 items we have to have in no matter what.

Scott Van Winkle - Canaccord Adams

Is it because your average set is less then 20 or is it because the retailers just ask for what they ask for?

John Carroll

Actually our average set is more then 20, it just comes down to not great category management in some instances where they don’t know what the best sellers are in a category.

Scott Van Winkle - Canaccord Adams

What’s the timing on the personal care co-pack contracts ending this year?

John Carroll

They stagger throughout the year so we’ll be seeing them; most of them start to come up in the second half.

Operator

Your next question comes from the line of Jacqueline Rider – Lazard Capital Markets

Jacqueline Rider – Lazard Capital Markets

On your guidance for 2009 on the sales side, you’re looking at about 14.3% sales growth and there are obviously a bunch of items such as acquisitions and SKU rat in there, I’m looking at about $40 million in SKU rationalization, $100 million maybe a little more in acquisitions, if that’s in the ballpark you’re looking at about 7% to 17% organic growth next year. How do you get from one end of that to the other? Is the 7.5% kind of just price increases and then you get up to 17% and that’s strong volumes and price increases? If you could break that down a little more.

Irwin Simon

I think you’re a little high on the top end. I think you’re right on on the bottom from 7%. I think we’ve said 7% to 10% organic growth and--

Jacqueline Rider – Lazard Capital Markets

Just if you take the acquisition revenue out and you take the SKU rat out of the high end of your guidance, just whatever is left I kind of look at organic growth and is the $40 million in SKU rat and $100 million in acquisitions in the ballpark?

Irwin Simon

Right, you’re high on that and I think getting to that of how we get to the organic growth and I think we’ve seen it this year in regards to organic growth and we think with our new products, with product growth in the acquisition MaraNatha, 70% of MaraNatha today is only natural food stores, we also a big thing is our business, our volume was down substantially in the UK, we’re looking to recover some of that. We’re looking to recover some of the JASON business. We were off in our fourth quarter on [tariff] shifts in some of the promotions in club stores versus a year ago to pick up some of that.

There are some one-offs that we had that we didn’t have this year that we’re looking to pick up this year and we see tremendous opportunities. Also we’re looking for some good growth on our baby formula; we’re also looking for some real good growth on our diapers. That really is from an Earth's Best standpoint really some substantial stuff there. We’ve introduced a whole line of gluten free products on frozen which we’re looking for some good things. We continuously see where Spectrum is, so I feel good going into the year with some of the things that we have. We’re a little late in getting some of the new Health Valley products out, where our sales lagged last year. So we’re looking for some major execution from a sales side and from a product side on Health Valley. So we’re feeling good on the growth for next year.

Jacqueline Rider – Lazard Capital Markets

On your EBIT margins for 2009 we’re looking for some contraction maybe in the 100 basis points overall range and it really should be, we should see leverage on SG&A but we are going to have a pretty tough time on the gross margin line going into 2009?

Ira Lamel

We think the gross margin as we said are going to continue to be pressured in the first half of the year as we lap if you will the very heavy inflationary effects we saw in the back half of the 2008 fiscal year. So we’re being cautious on that.

Irwin Simon

I don’t think what you’re seeing, you’ve got to look on an apples to apples basis, and then whereas poultry brought down the overall margins but on the other hand whereas poultry offset some of the SG&A margin I think that’s what you’ve got to look at is the overall EBITDA or overall EBIT margins from a standpoint.

Jacqueline Rider – Lazard Capital Markets

So by the fourth quarter of next year we should start to see as we’ve lapped all of these items in New Oxford acquisition we should really start to see at least a stabilization or even an improvement especially with the SKU rat going on in the personal products business.

Irwin Simon

You should see that beginning in the January quarter where basically you’ve got SKU rat and then you see price increase and that, starting to take affect after that.

Operator

Your next question comes from the line of Andrew Wolf - BB&T Capital Markets

Andrew Wolf - BB&T Capital Markets

On the Celestial business, getting it going next year, to my hearing it sounds like at least strategically or hypothetically not too hard a fix if it’s all about going into the retailers, buyers and showing them how they can move more product through better category management. Has this kind of a fix if you will to getting some of the other brands to be a lot more profitable and have better velocities and productivity, how analogous is that to some of the other brands? You have other brands that you can point to and say yes this is pretty much we had to do here and it worked. And secondly is tea different because it’s much more competitive then some of these other, and if that’s the case and it’s just a category management fix and its worked before what is the competitiveness of the category mean for that?

John Carroll

First this a really, really profitable business even today it is a very profitable business for Hain so it is an opportunity for us to really start driving some consumption growth and in terms of what’s analogous to, its analogous to some of the categories that we ran into in grocery and snacks, it analogous to some of the issues we worked our way through on JASON. It’s just a matter of refocusing our efforts on the consumer in a really meaningful way. I think there’s been a lot of great progress on the Celestial business, the question is are we getting the most out of our marketing and sales investment to drive consumption? Or are we spending in too many areas or are we spending it in distributors as opposed to retailers, there’s the issues that we tackled on both grocery and snacks and personal care and I think the same issues and the same opportunities and same leverage point exist on tea.

Irwin Simon

If we were here talking about tea today alone as a public company I think we’d be talking about some good numbers. It’s a tougher category and when you’re number one or number two, its what do you do and I think [inaudible] what Celestial tried to do was go into categories and had to innovate how to innovate and at the end of the day we kept innovating and we didn’t make any money on these. And we make a lot of money on selling green tea, herbal tea, and black tea but how do we make more money going into other areas and as we focused on zingers to go, or maybe [Safara] and places like that did we take our eye off green tea, herbal tea and was it worth it and I think that’s what John is saying and that’s kind of what the blueprint that John was able to do on personal care with JASON SKU rat and get the line skinnied down and improve margins and take it to a whole other level and I think he’s got the playbook for that and he’s done it within a lot of brands within Hain.

Andrew Wolf - BB&T Capital Markets

What I wanted to get to beyond that was some of your competitors are so big they can buy some shelf space and can they kind of knock that back just through size or have they been doing that? Or do you think if you could persuade the retailers to getting velocity up on these high margin items if it’s better to go with the velocity?

Irwin Simon

We hope the brand means something. At the end of the day we hope Celestial part of Hain that we have relationships out there with Kroger and our other retailers that help the brand grow and I think what’s important today again, half of our volume of Celestial goes through other markets whether its mass market, other retail channels so its just not supermarkets.

Andrew Wolf - BB&T Capital Markets

On the guidance you mentioned the stock comp is out the options are excluded, can you give any sense of what the range on the expectation from Fakenham in Q1 is, start-up costs there?

Irwin Simon

Hopefully it’s minimal and that is behind us and as Ira said within the first quarter, $0.50 million to $1 million that’s a lot but that needs to be behind us and as a company it needs to be behind us and I think we’ve got the people in place to really get that behind us. We know what we need to do in regards to volume and new products and that in there. So that’s basically behind us.

Andrew Wolf - BB&T Capital Markets

And then $1 million to $2 million of unabsorbed overhead? Is that something we also will also be excluded from the adjusted number?

Ira Lamel

No, we [absorb] that out because the co-pack agreement is expired, we have been pointing out that co-pack agreement in the past and we just know that we need to replace the volume as we go forward.

Irwin Simon

I think it’s important to say, in regards to this year one-time items and its important going into next year other then some of the legal costs with regards to the inquiry and one or two months into the first quarter in regards to Fakenham, our one-timers hopefully are all behind us.

Operator

Your next question comes from the line of Terry Bivens – JP Morgan

Terry Bivens - JP Morgan

I don’t know if you comment at all, Campbell has Wolfgang Puck now, I understand there may be some capacity issues there, do you see anything in their acquisition that you’re going to have to do anything strategically with Health Valley on?

Irwin Simon

I think what it shows and we’ve seen Wolfgang Puck organic where they made the present and I think I’d be more concerned with Campbell’s organic then Wolfgang Puck organic. And we’re seeing good soup numbers which is interesting during the summer where people are staying at home and ultimately are cooking with soup and some of our research shows that Chef’s branded products are perceived as unhealthy so that’s one of the things that we see out there when we do some of our testing.

Terry Bivens - JP Morgan

So you haven’t really had to do anything significantly different as a result of that, it sounds like you’re not planning to for this fall?

Irwin Simon

No and I think from a capacity standpoint its something we’re going to continuously do because our [inaudible] soup business is something that continues to grow for us and we’re going to look for more capacity. The other thing that we’re doing this year and we’ve announced it and its out there, we’ve introduced a whole line of Imagine soups for the first time in cans which are all organic because of the strength and the [inaudible] line so with that we’ve now come out with Imagine and we have Health Valley, we have Walnut Acres which will basically be SKUed to natural food stores but we have basically a very strong brand in Imagine canned soup.

Terry Bivens - JP Morgan

Did you give a number on personal product sales, how that top line did?

John Carroll

Yes we said it was up 11% ex SKU rat.

Terry Bivens - JP Morgan

What’s the ACV on that now?

John Carroll

It’s still below 40% in grocery.

Irwin Simon

And what we did say since we acquired Avalon and Alba, our sales have somewhat almost doubled on that business. Our profitability has doubled on that business. And that’s since owning it since January 2007.

Operators

Your final question is a follow-up from the line of Edward Aaron - RBC Capital Markets

Edward Aaron - RBC Capital Markets

You mentioned I think that the price increases from July are not expected to help until the second quarter, why would that be if we are, July was obviously the first month of the quarter so why not see any impact this quarter and then on the commodity environment in general, there has been a pull back over the last month or so in some of the key commodities, I didn’t really hear a sense from you that you really feel like your cost picture has loosened up at all, can you provide a little clarity on that?

John Carroll

The reason why we won’t realize anything in Q2 is that for the most part, most of the, we announced it in July, it takes affect the end of July early August and the net of it is most of the promotions we can’t touch at all. So at this point we’re going to realize very little benefit in Q1. Secondly in regard to commodity prices softening, that’s on conventional commodities. Organic commodities are under really, really high demand right now so we’re not seeing any softening on organic commodity prices at all.

Irwin Simon

Thank you everybody for listening to our call today for our year end fiscal 2008 and our Q4 and like I said at the beginning what a year it has been and there’s numerous times I sat there and said going into our planning and our planning starts back in December and planning of fuel and planning of commodities prices and healthcare costs etc. and where we’ve been able to come out at, I think this group has done a fabulous job. It shows the power of our brands, the strategy we have in place, and yes, the UK operation did not deliver and we are not happy about that but we’ve taken a lot of steps.

We’ve made people changes and where we need to make personnel changes we’re not afraid to do that. I think going into 2008 the question asked about organic growth I feel good about the growth. I feel good about the opportunity of expansion to many classes of trade and many channels, whether Canada, the US, Europe, Asia which we didn’t really talk about. We’re being cautious here and we should be because we’ve seen corn go from $8.50 down to $5 and we see it back over $6 today.

We’ve seen crude oil come down from $1.50 to $1.50 but we still see, $115 and we still see fuel at the pumps $4.09 so not knowing where anything is going we’re somewhat being cautious and optimistic out there. On the other hand, we feel the consumer is staying at home eating healthy. The consumer, personal care products continuously buying personal care products because they’re educated and aware of the ingredients and we feel the consumer is trading down from red meat or reducing their red meat intake and eating chicken and turkey so we’re really in good places.

And we also feel the retailer is looking for additional brands and looking to bring in a good line of natural organic products so going into 2009 we’re focused on growing top line sales, we’re really focused on cost containment, on productivity, we showed everybody what we could do on productivity in 2008 and we’re looking to repeat that and then some in 2009. We’re continuously looking at innovation, as I said, as a company we introduced over $30 million of new products and looking to duplicate that. And last but not least we appreciate our shareholders and those that follow us for your support through 2008 and look forward to delivering in 2009.

Enjoy the rest of the summer and look forward to speaking to each of your soon. Thank you very much.

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Source: The Hain Celestial Group, Inc. F4Q08 (Qtr End 06/30/08) Earnings Call Transcript

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