More than a year after the Hain Celestial Group went “dark” and management began investigating accounting irregularities associated with certain revenues, the company released its fiscal 2016 results and its fiscal 2017 third quarter results on June 22. Regarding the revenue investigation, the company said its internal review showed no material changes to Hain’s previously reported financials was necessary and there was no impact on cash flow or balances.

“We corrected certain promotion expenses that should have been classified as a reduction of revenue but were recorded primarily as SG&A expenses,” said James M. Langrock, the company senior vice-president of finance and treasurer, during a June 22 conference call with securities analysts.

Due to the correction, Hain Celestial’s net sales changed by 3% or less in fiscal 2014, fiscal 2015 and for the nine months ended March 31, 2016. Non-GAAP earnings per share changed 5% or less in fiscal 2014, fiscal 2015 and for the nine months ended March 31, 2016.

“These corrections are reclassifications on the income statement and do not impact net income,” Mr. Langrock said.

During the conference call it became clear that during the internal investigation and Hain Celestial’s quiet period, management was making changes to the business. In addition to eliminating some stock-keeping units (s.k.u.s), the company said it conducted a review of the business and expanded its Project Terra program, which is aimed at improving efficiencies and eliminating costs.

Irwin Simon, chairman, president and c.e.o. of Hain Celestial

“The savings realized from Project Terra will enable us to invest at least $40 million to $50 million annually in incremental marketing dollars to support our top brands,” said Irwin D. Simon, chairman, president and chief executive officer.

Net income for the third quarter of fiscal 2017 totaled $31,328,000, equal to 30c per share on the common stock, and a decline when compared against the same period of the previous year when the company earned $48,788,000, or 47c per share.

Sales for the quarter slipped to $706,563,000 in 2017, which compared with $736,663,000 the year before.

Hain intends to increase support for MaraNatha and Spectrum Brands with new innovation.

For the first nine months of fiscal 2017, Hain’s net income fell dramatically to $67,117,000, equal to 65c per share, compared with earnings of $136,026,000, or $1.32 per share, during the same period of the previous year.

Sales for the period held stable, falling slightly to $2,128,026,000 from $2,147,827,000.

Sales for Hain Celestial’s U.S. business fell $60 million during the first nine months to $882 million when compared to the previous year. Outside of the U.S. every business segment grew on a constant currency basis, according to Mr. Langrock.

Hain said it will drive new innovation in the yogurt category with the Greek Gods brand.

“We made significant progress on our strategic initiatives in 2017,” he said. “We are confident that we have reached an inflection point, and that the company is well positioned for long-term growth and profitability. We are experiencing solid momentum in the fourth quarter, and we expect net sales to be in the range of $715 million to $735 million.”

During the conference call, Gary W. Tickle, c.e.o. of Hain Celestial North America, outlined steps the company is taking to improve performance during the fourth quarter and fiscal 2018.

Gary Tickle, c.e.o. of Hain Celestial North America

“Firstly, Better-for-You snacking, we plan to drive growth through distribution, innovation and strategic brand investment as we solidify our top 10 snack position at Terra Chips, Garden of Eatin and Sensible Portions,” he said. “For Fresh Living, we will drive new innovation in the yogurt category with the Greek Gods brand. As we stabilize our plant-based business, we are looking to grow by harnessing our European knowledge and expertise for future innovation in this category.

“In Better-for-You Baby, we are focused on expanding Ellas Kitchen in the natural channel and continuing to support the Earths Best brand and its strong growth. These initiatives include further improving profitability. In Better-for-You Pantry, we’ll increase support for MaraNatha and Spectrum Brands with new innovation, while strengthening Imagines leadership on the back of a very strong 2017 performance. In tea, our objective is to reinforce our No. 1 herbal tea brand position with new marketing and branding initiatives on the back of improved performance in the fiscal 2017 tea season for Celestial Seasonings.”

Hain plans to implement new marketing and branding initiatives for its Celestial Seasonings tea.

He said Hain’s U.S. business will drive low- to mid-single-digit net sales growth by increasing market share and household penetration of the company top 500 products. The business unit’s reinvestment plans are expected to grow operating income faster than the top line in percentage terms.

“We are continuing our efforts to rationalize approximately 600 s.k.u.s that represent over 20% of our total s.k.u.s in MULO+C,” Mr. Tickle said. “As part of this rationalization in the U.S., we reduced our top line for the first nine months of fiscal 2017 by approximately $19 million. We expect this to be concluded in fiscal 2018.”

Reflecting on the financial irregularities and the subsequent investigation, Mr. Simon said it happened on his watch and is his responsibility.

Hain is focused on expanding its Ellas Kitchen brand in the natural channel.

“On 2017, it’s been a tough year,” he said. “It’s been a distraction of resources. But what I can come back and say is, this year, we are a company of good brands, good strategy, great people. And one of the things that happened in 2017, we enhanced our organization. We’ve made lots of changes.

“… With all that was going on, we still threw off $148 million of cash. We’ll pay back almost $220 million of debt. We’ve invested over $50-plus million in CapEx. We grew our top line 4%. And with that, we went through one of the most extensive looks at our numbers over a 3-year period and come out with some pretty good results. So, yes, it was not a stellar year from our performance. But what we’re seeing is a great turnaround in Q4 and some good forecasts going into 2018.”