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Hain Celestial Reports Third Quarter Fiscal Year 2020 Financial Results
Third Quarter 2020 Results Exceed Expectations and 2020 Fiscal Year Guidance Raised
Company Returns to Top Line Growth
Bought Back 2.3% of Shares Outstanding During the Third Quarter

LAKE SUCCESS, N.Y., May 7, 2020 /PRNewswire/ -- The Hain Celestial Group, Inc. (Nasdaq: HAIN) ("Hain Celestial", "Hain" or the "Company"), a leading organic and natural products company with operations in North America, Europe, Asia and the Middle East providing consumers with A Healthier Way of Life™, today reported financial results for the third quarter ended March 31, 2020. The results contained herein are presented with the Hain Pure Protein and Tilda operating segments being treated as discontinued operations.

The Hain Celestial Group, Inc. (PRNewsfoto/The Hain Celestial Group, Inc.)

Mark L. Schiller, Hain Celestial's President and Chief Executive Officer, commented, "I am pleased to be raising our full year guidance for 2020 as third quarter financial performance exceeded our previous guidance and is expected to show continuing strength in the current quarter. With our transformation plan taking hold and food-at-home consumption accelerating, Hain Celestial's natural and organic product offerings resonated with consumers, resulting in year-over-year growth in third quarter net sales, the first such increase since fiscal 2018."

Schiller continued, "Across our organization, we are taking necessary safety measures to best manage our business in the current operating environment as we continue to deliver against our transformational strategic plan. I am proud of how Hain associates across the globe rose to the occasion to partner with our valued customers and suppliers to deliver for our consumers and local communities in the face of unprecedented global challenges. As a result of the actions we have taken, we are well positioned to manage through this unprecedented crisis and emerge an even stronger company."

FINANCIAL HIGHLIGHTS1

Summary of Third Quarter Results from Continuing Operations2

  • Net sales increased 1% to $553.3 million or 2% on a constant currency basis compared to the prior year period.
  • When adjusted for Foreign Exchange, Divestitures and Stock Keeping Unit ("SKU") rationalization3, net sales increased 6% compared to the prior year period.
  • Gross margin of 23.9%, a 324 basis point increase from the prior year period.
  • Adjusted gross margin of 24.3%, a 282 basis point increase from the prior year period.
  • Operating income of $19.1 million compared to $19.0 million in the prior year period.
  • Adjusted operating income of $45.7 million compared to $34.0 million in the prior year period.
  • Net income of $25.0 million compared to $8.8 million in the prior year period.
  • Adjusted net income of $28.8 million compared to $20.2 million in prior year period.
  • Adjusted EBITDA of $60.7 million compared to $49.1 million in the prior year period.
  • Adjusted EBITDA margin of 11.0%, a 199 basis point increase compared to the prior year period.
  • Earnings per diluted share ("EPS") of $0.24 compared to $0.08 in the prior year period.
  • Adjusted EPS of $0.28 compared to $0.19 in the prior year period.
  • Repurchased 2.4 million shares, or 2.3% of the outstanding common stock, at an average price of $23.52 per share.

1 This press release includes certain non-GAAP financial measures, which are intended to supplement, not substitute for, comparable GAAP financial measures. Reconciliations of non-GAAP financial measures to GAAP financial measures are provided herein in the tables "Reconciliation of GAAP Results to Non-GAAP Measures."
2 Unless otherwise noted all results included in this press release are from continuing operations.
3 Refer to "Net Sales Growth at Constant Currency" and "Adjusted for Divestitures and SKU Rationalization" provided herein.

SEGMENT HIGHLIGHTS FROM CONTINUING OPERATIONS

Historically, the Company had three reportable segments: United States, United Kingdom and Rest of World. Effective July 1, 2019, the Company reassessed its segment reporting structure, pursuant to which the Company's Canada and Hain Ventures operating segments, which were included within the Rest of World reportable segment, were moved to the United States reportable segment and renamed the North America segment. Additionally, the Europe operating segment, which was included in the Rest of World reportable segment, was combined with the United Kingdom reportable segment and renamed the International reportable segment. Accordingly, the Company now operates under two reportable segments: North America and International. Prior period segment information included herein has been adjusted to reflect the Company's new reporting structure.

North America
North America net sales in the third quarter were $320.4 million, an increase of 2% compared to the prior year period. When adjusted for Divestitures and SKU rationalization3, net sales increased 9% from the prior year period.

Segment gross profit in the third quarter was $82.6 million, a 21% increase from the prior year period. Adjusted gross profit was $84.5 million, an increase of 18% from the prior year period. Gross margin was 25.8%, a 415 basis point increase from the prior year period and adjusted gross margin was 26.4%, a 351 basis point increase from the prior year.

Segment operating income in the third quarter was $28.9 million, a 35% increase from the prior year period. Adjusted operating income was $38.1 million, a 44% increase from the prior year period.

Adjusted EBITDA was $42.9 million, a 36% increase from the prior year period. As a percentage of sales on a constant currency basis, North America adjusted EBITDA margin was 13.4%, a 338 basis point increase from the prior year period.

International
International net sales in the third quarter were $232.9 million, flat when compared to the prior year period. When adjusted for Foreign Exchange, Divestitures and SKU rationalization3, net sales increased 2% compared to the prior year period.

Segment gross profit in the third quarter was $49.8 million, a 10% increase from the prior year period. Adjusted gross profit was $49.8 million, an increase of 9% from the prior year period. Gross margin was 21.4%, a 197 basis point increase from the prior year period and adjusted gross margin was 21.4%, a 184 basis point increase from the prior year period.

Segment operating income in the third quarter was $18.7 million, a 6% decrease from the prior year period. Adjusted operating income was $23.2 million, an increase of 11% from the prior year period.

Adjusted EBITDA was $30.9 million, a 7% increase from the prior year period. As a percentage of sales on a constant currency basis, International adjusted EBITDA margin was 13.3%, an 89 basis point increase from the prior year period.

CAPITAL MANAGEMENT

During the month of March, the Company repurchased 2.4 million shares, or 2.3% of the outstanding common stock, at an average price of $23.52 per share for a total of $57.4 million, excluding commissions. As of March 31, 2020, the Company had $192.6 million remaining authorization under the share repurchase program.

SALE OF RUDI'S BAKERY

Effective May 1, 2020, the Company has completed the divestiture of the Rudi's Gluten Free BakeryTM and Rudi's Organic Bakery® brands to an affiliate of Promise Gluten Free. Details of the transaction were not disclosed.

FISCAL YEAR 2020 GUIDANCE

The Company now expects all profit metrics for the full year ending June 30, 2020 to be higher than their previously provided ranges as a result of the ongoing execution of our transformation plan and higher food-at-home consumption related to the COVID-19 pandemic. The Company acknowledges that the magnitude and duration of increased demand remains uncertain and a challenge it faces as a result of the pandemic is its ability to maintain the level of supply needed to keep up with the increased demand. Hain Celestial's outlook assumes its supply chain continues to operate with minimal disruption for the remainder of fiscal 2020. The Company is raising its annual guidance for continuing operations for fiscal year 2020 as follows:

 

Fiscal Year 2020

 

Reported

Constant Currency

Adjusted EBITDA

$190 Million to $200 Million

$195 Million to $205 Million

% Growth

+15% to +21%

+18% to +24%

Adjusted EPS

$0.75 to $0.82

$0.78 to $0.85

% Growth

+25% to +37%

+30% to +42%

 

Guidance, where adjusted, is provided on a non-GAAP basis and excludes: acquisition and divestiture related expenses; integration charges; restructuring charges, start-up costs, consulting fees and other costs associated with the Company's productivity and transformation initiatives; unrealized net foreign currency gains or losses; and other non-recurring items that may be incurred during the Company's fiscal year 2020, which the Company will continue to identify as it reports its future financial results. Guidance also excludes the impact of any future acquisitions, divestitures, or share repurchases.

The Company cannot reconcile its expected Adjusted EBITDA to net income or adjusted earnings per diluted share to earnings per diluted share under "Fiscal Year 2020 Guidance" without unreasonable effort because certain items that impact net income and other reconciling metrics are out of the Company's control and/or cannot be reasonably predicted at this time.

Webcast Presentation
Hain Celestial will host a conference call and webcast today at 8:30 AM Eastern Time to discuss its results and business outlook. The call will be webcast and the accompanying presentation will be available under the Investor Relations section of the Company's website at www.hain.com.

About The Hain Celestial Group, Inc.
The Hain Celestial Group (Nasdaq: HAIN), headquartered in Lake Success, NY, is a leading organic and natural products company with operations in North America, Europe, Asia and the Middle East. Hain Celestial participates in many natural categories with well-known brands that include Almond Dream®, Bearitos®, Better Bean®, BluePrint®, Celestial Seasonings®, Clarks™, Coconut Dream®, Cully & Sully®, Danival®, DeBoles®, Earth's Best®, Ella's Kitchen®, Farmhouse Fare™, Frank Cooper's®, Gale's®, Garden of Eatin'®, GG UniqueFiber™, Hain Pure Foods®, Hartley's®, Health Valley®, Imagine™, Johnson's Juice Co.™, Joya®, Lima®, Linda McCartney® (under license), MaraNatha®, Mary Berry (under license), Natumi®, New Covent Garden Soup Co.®, Orchard House®, Rice Dream®, Robertson's®, Sensible Portions®, Spectrum® Organics, Soy Dream®, Sun-Pat®, Sunripe®, Terra®, The Greek Gods®, Walnut Acres®, Yorkshire Provender®, Yves Veggie Cuisine® and William's™. The Company's personal care products are marketed under the Alba Botanica®, Avalon Organics®, Earth's Best®, JASON®, Live Clean® and Queen Helene® brands.

Safe Harbor Statement
Certain statements contained in this press release constitute "forward-looking statements" within the meaning of federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements are predictions based on expectations and projections about future events and are not statements of historical fact. You can identify forward-looking statements by the use of forward-looking terminology such as "plan", "continue", "expect", "anticipate", "intend", "predict", "project", "estimate", "likely", "believe", "might", "seek", "may", "will", "remain", "potential", "can", "should", "could", "future" and similar expressions, or the negative of those expressions, or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. You can also identify forward-looking statements by discussions of the Company's strategic initiatives, including productivity and transformation, the Company's Guidance for Fiscal Year 2020 and our future performance and results of operations.

Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, levels of activity, performance or achievements of the Company, or industry results, to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements, and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and may not be able to be realized. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). Such factors include, among others, challenges and uncertainty resulting from the COVID-19 pandemic, the impact of competitive products and changes to the competitive environment, changes to consumer preferences, the United Kingdom's exit from the European Union, consolidation of customers or the loss of a significant customer, reliance on independent distributors, general economic and financial market conditions, risks associated with our international sales and operations, our ability to manage our supply chain effectively, volatility in the cost of commodities, ingredients, freight and fuel, our ability to execute and realize cost savings initiatives, including SKU rationalization plans, the impact of our debt and our credit agreements on our financial condition and our business, our ability to manage our financial reporting and internal control system processes, potential liabilities due to legal claims, government investigations and other regulatory enforcement actions, costs incurred due to pending and future litigation, potential liability, including in connection with indemnification obligations to our current and former officers and members of our Board of Directors that may not be covered by insurance, potential liability if our products cause illness or physical harm, impairments in the carrying value of goodwill or other intangible assets, our ability to consummate divestitures, our ability to integrate past acquisitions, the availability of organic ingredients, disruption of operations at our manufacturing facilities, loss of one or more independent co-packers, disruption of our transportation systems, risks relating to the protection of intellectual property, the risk of liabilities and claims with respect to environmental matters, the reputation of our brands, our reliance on independent certification for a number of our products, and other risks detailed from time-to-time in the Company's reports filed with the United States Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and our subsequent reports on Forms 10-Q and 8-K. As a result of the foregoing and other factors, the Company cannot provide any assurance regarding future results, levels of activity and achievements of the Company, and neither the Company nor any person assumes responsibility for the accuracy and completeness of these statements. All forward-looking statements contained herein apply as of the date hereof or as of the date they were made and, except as required by applicable law, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflects changes in underlying assumptions or factors of new methods, future events or other changes.

Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP financial measures, including net sales adjusted for the impact of Foreign Exchange, Divestitures and certain other items, including SKU rationalization, as applicable in each case, adjusted operating income, adjusted gross margin, adjusted net income, adjusted earnings per diluted share, Adjusted EBITDA and operating free cash flow. The reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are presented in the tables "Reconciliation of GAAP Results to Non-GAAP Measures" for the three and nine months ended March 31, 2020 and 2019 in the paragraphs below. Management believes that the non-GAAP financial measures presented provide useful additional information to investors about current trends in the Company's operations and are useful for period-over-period comparisons of operations. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures. In addition, these non-GAAP measures may not be the same as similar measures provided by other companies due to potential differences in methods of calculation and items being excluded. They should be read only in connection with the Company's Consolidated Statements of Operations presented in accordance with GAAP.

The Company defines Operating Free Cash Flow as cash provided by or used in operating activities from continuing operations (a GAAP measure) less capital expenditures. The Company views Operating Free Cash Flow as an important measure because it is one factor in evaluating the amount of cash available for discretionary investments.

For the three and nine months ended March 31, 2020 and 2019, Operating Free Cash Flow from continuing operations was calculated as follows:

 

Three Months Ended March 31,

 

Nine Months Ended March 31,

 

2020

 

2019

 

2020

 

2019

 

(unaudited and in thousands)

               

 

Cash flow provided by operating activities - continuing operations

$              46,944

 

$              18,335

 

$              64,092

 

$              18,331

 

Purchases of property, plant and equipment

(17,624)

 

(14,075)

 

(46,961)

 

(55,073)

 

Operating Free Cash Flow - continuing operations

$              29,320

 

$                4,260

 

$              17,131

 

$             (36,742)

 

The Company's Operating Free Cash Flow from continuing operations was $29.3 million for the three months ended March 31, 2020, an increase of $25.1 million from the three months ended March 31, 2019. The Company's Operating Free Cash Flow from continuing operations was $17.1 million for the nine months ended March 31, 2020, an increase of $53.9 million from the nine months ended March 31, 2019. The improvement in Operating Free Cash Flow resulted primarily from an improvement in net income adjusted for non-cash charges in the current year and a decrease in cash used in working capital accounts.

The Company believes presenting net sales at constant currency provides useful information to investors because it provides transparency to underlying performance in the Company's consolidated net sales by excluding the effect that foreign currency exchange rate fluctuations have on period-to-period comparability given the volatility in foreign currency exchange markets. To present this information for historical periods, current period net sales for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average monthly exchange rates in effect during the corresponding period of the prior fiscal year, rather than at the actual average monthly exchange rate in effect during the current period of the current fiscal year. As a result, the foreign currency impact is equal to the current year results in local currencies multiplied by the change in average foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year.

The Company provides net sales adjusted for constant currency, divestitures, and certain other items including SKU rationalization, as applicable in each case, to understand the growth rate of net sales excluding the impact of such items. The Company's management believes net sales adjusted for such items is useful to investors because it enables them to better understand the growth of our business from period-to-period.

The Company defines Adjusted EBITDA as net income (loss) before income taxes, net interest expense, depreciation and amortization, impairment of long-lived and intangible assets, equity in net loss of equity-method investees, stock-based compensation, net, stock-based compensation expense in connection with the Company's former CEO Succession Plan, Productivity and transformation costs, SKU rationalization and certain inventory write-downs, unrealized currency gains and losses and other adjustments.  The Company's management believes that these presentations provide useful information to management, analysts and investors regarding certain additional financial and business trends relating to its results of operations and financial condition. In addition, management uses these measures for reviewing the financial results of the Company as well as a component of performance-based executive compensation.

For the three and nine months ended March 31, 2020 and 2019, Adjusted EBITDA from continuing operations was calculated as follows:

 

Three Months Ended March 31,

 

Nine Months Ended March 31,

 

2020

 

2019

 

2020

 

2019

 

(unaudited and in thousands)

               

Net income (loss)

$              24,339

 

$             (65,837)

 

$             (83,646)

 

$           (169,763)

Net loss from discontinued operations

(697)

 

(74,620)

 

(105,581)

 

(123,672)

Net income (loss) from continuing operations

$              25,036

 

$                8,783

 

$              21,935

 

$             (46,091)

               

(Benefit) provision for income taxes

(10,242)

 

2,943

 

(9,753)

 

(1,926)

Interest expense, net

3,332

 

5,278

 

11,884

 

13,966

Depreciation and amortization

12,927

 

12,483

 

40,069

 

37,548

Equity in net loss of equity-method investees

564

 

205

 

1,219

 

391

Stock-based compensation, net

3,761

 

3,927

 

9,581

 

5,489

Stock-based compensation expense in connection with Chief Executive Officer Succession Agreement

-

 

-

 

-

 

429

Long-lived asset and intangibles impairment

13,525

 

-

 

15,414

 

23,709

Unrealized currency (gains) losses

(1,011)

 

1,522

 

188

 

2,551

Productivity and transformation costs

10,967

 

9,259

 

37,402

 

29,464

Chief Executive Officer Succession Plan expense, net

-

 

455

 

-

 

29,727

Proceeds from insurance claim

(400)

 

-

 

(2,962)

 

-

Accounting review and remediation costs, net of insurance proceeds

-

 

-

 

-

 

4,334

Warehouse/manufacturing facility start-up costs

537

 

3,222

 

3,055

 

9,529

Loss on sale of business

332

 

-

 

2,115

 

-

SKU rationalization and inventory write-down

1,362

 

505

 

5,278

 

2,035

Plant closure related costs

-

 

184

 

2,354

 

3,502

Litigation and related expenses

-

 

371

 

48

 

1,062

Adjusted EBITDA

$              60,690

 

$              49,137

 

$            137,827

 

$            115,719

 

 

 

THE HAIN CELESTIAL GROUP, INC.

Net Sales, Gross Profit and Operating Income (Loss) by Segment

 (unaudited and in thousands) 

         
 

North America

International

Corporate/Other

Total

Net Sales

       

Net sales - Three months ended 3/31/20

$                320,440

$                232,857

$                          -

$                553,297

Net sales - Three months ended 3/31/19

$                314,321

$                232,936

$                          -

$                547,257

% change - FY'20 net sales vs. FY'19 net sales

1.9%

(0.0)%

 

1.1%

         

Gross Profit

       

Three months ended 3/31/20

       

Gross profit

$                  82,626

$                  49,769

$                          -

$                132,395

Non-GAAP adjustments (1)

1,873

-

-

1,873

Adjusted gross profit

$                  84,499

$                  49,769

$                          -

$                134,268

Gross margin

25.8%

21.4%

 

23.9%

Adjusted gross margin

26.4%

21.4%

 

24.3%

         

Three months ended 3/31/19

       

Gross profit

$                  68,014

$                  45,194

$                          -

$                113,208

Non-GAAP adjustments (1)

3,845

308

-

4,153

Adjusted gross profit

$                  71,859

$                  45,502

$                          -

$                117,361

Gross margin

21.6%

19.4%

 

20.7%

Adjusted gross margin

22.9%

19.5%

 

21.4%

         

Operating income (loss)

       

Three months ended 3/31/20

       

Operating income (loss)

$                  28,873

$                  18,660

$                 (28,398)

$                  19,135

Non-GAAP adjustments (1)

9,202

4,512

12,824

26,538

Adjusted operating income (loss)

$                  38,075

$                  23,172

$                 (15,574)

$                  45,673

Operating income margin

9.0%

8.0%

 

3.5%

Adjusted operating income margin

11.9%

10.0%

 

8.3%

         

Three months ended 3/31/19

       

Operating income (loss)

$                  21,358

$                  19,883

$                 (22,249)

$                  18,992

Non-GAAP adjustments (1)

5,109

975

8,955

15,039

Adjusted operating income (loss)

$                  26,467

$                  20,858

$                 (13,294)

$                  34,031

Operating income margin

6.8%

8.5%

 

3.5%

Adjusted operating income margin

8.4%

9.0%

 

6.2%

         

(1) See accompanying table of "Reconciliation of GAAP Results to Non-GAAP Measures"

   

 

 

 

THE HAIN CELESTIAL GROUP, INC.

Net Sales, Gross Profit and Operating Income (Loss) by Segment

 (unaudited and in thousands) 

         
 

North America

International

Corporate/Other

Total

Net Sales

       

Net sales - Nine months ended 3/31/20

$                872,834

$                669,323

$                          -

$             1,542,157

Net sales - Nine months ended 3/31/19

$                911,086

$                688,215

$                          -

$             1,599,301

% change - FY'20 net sales vs. FY'19 net sales

(4.2)%

(2.7)%

 

(3.6)%

         

Gross Profit

       

Nine months ended 3/31/20

       

Gross profit

$                209,956

$                125,877

$                          -

$                335,833

Non-GAAP adjustments (1)

8,037

2,666

-

10,703

Adjusted gross profit

$                217,993

$                128,543

$                          -

$                346,536

Gross margin

24.1%

18.8%

 

21.8%

Adjusted gross margin

25.0%

19.2%

 

22.5%

         

Nine months ended 3/31/19

       

Gross profit

$                175,048

$                128,419

$                          -

$                303,467

Non-GAAP adjustments (1)

12,644

2,665

-

15,309

Adjusted gross profit

$                187,692

$                131,084

$                          -

$                318,776

Gross margin

19.2%

18.7%

 

19.0%

Adjusted gross margin

20.6%

19.0%

 

19.9%

         

Operating income (loss)

       

Nine months ended 3/31/20

       

Operating income (loss)

$                  64,067

$                  40,666

$                 (73,952)

$                  30,781

Non-GAAP adjustments (1)

18,063

10,503

32,775

61,341

Adjusted operating income (loss)

$                  82,130

$                  51,169

$                 (41,177)

$                  92,122

Operating income margin

7.3%

6.1%

 

2.0%

Adjusted operating income margin

9.4%

7.6%

 

6.0%

         

Nine months ended 3/31/19

       

Operating income (loss)

$                  35,427

$                  40,696

$               (105,975)

$                 (29,852)

Non-GAAP adjustments (1)

18,930

11,264

75,074

105,268

Adjusted operating income (loss)

$                  54,357

$                  51,960

$                 (30,901)

$                  75,416

Operating income (loss) margin

3.9%

5.9%

 

(1.9)%

Adjusted operating income margin

6.0%

7.5%

 

4.7%

         

(1) See accompanying table of "Reconciliation of GAAP Results to Non-GAAP Measures"

   

 

 

 

THE HAIN CELESTIAL GROUP, INC.

Consolidated Balance Sheets

 (unaudited and in thousands) 

           
     

 March 31, 

 

 June 30, 

     

2020

 

2019

ASSETS

     

Current assets:

     
 

Cash and cash equivalents

$              41,549

 

$              31,017

 

Accounts receivable, net

237,719

 

209,990

 

Inventories

238,133

 

299,341

 

Prepaid expenses and other current assets

86,653

 

51,391

 

Current assets of discontinued operations

-

 

110,048

 

Total current assets

604,054

 

701,787

Property, plant and equipment, net

287,629

 

287,845

Goodwill

 

861,067

 

875,881

Trademarks and other intangible assets, net

355,714

 

380,286

Investments and joint ventures

18,103

 

18,890

Operating lease right-of-use assets

81,959

 

-

Other assets

27,611

 

58,764

Noncurrent assets of discontinued operations

-

 

259,167

 

Total assets 

$          2,236,137

 

$          2,582,620

LIABILITIES AND STOCKHOLDERS' EQUITY

     

Current liabilities:

     
 

Accounts payable

$            181,783

 

$            219,957

 

Accrued expenses and other current liabilities

118,405

 

114,265

 

Current portion of long-term debt

2,041

 

17,232

 

Current liabilities of discontinued operations

-

 

31,703

 

Total current liabilities

302,229

 

383,157

Long-term debt, less current portion

363,526

 

613,537

Deferred income taxes 

40,136

 

34,757

Operating lease liabilities, noncurrent portion

74,937

 

-

Other noncurrent liabilities

16,261

 

14,489

Noncurrent liabilities of discontinued operations

-

 

17,361

Total liabilities

797,089

 

1,063,301

Stockholders' equity:

     
 

Common stock

1,092

 

1,088

 

Additional paid-in capital

1,168,378

 

1,158,257

 

Retained earnings

610,932

 

695,017

 

Accumulated other comprehensive loss

(172,403)

 

(225,004)

     

1,607,999

 

1,629,358

 

Treasury stock

(168,951)

 

(110,039)

 

Total stockholders' equity

1,439,048

 

1,519,319

 

Total liabilities and stockholders' equity

$          2,236,137

 

$          2,582,620

 

 

 

 

THE HAIN CELESTIAL GROUP, INC.

 Consolidated Statements of Operations 

 (unaudited and in thousands, except per share amounts) 

               
 

Three Months Ended March 31,

 

Nine Months Ended March 31,

 

2020

 

2019

 

2020

 

2019

               

Net sales

$            553,297

 

$            547,257

 

$          1,542,157

 

$          1,599,301

Cost of sales

420,902

 

434,049

 

1,206,324

 

1,295,834

Gross profit

132,395

 

113,208

 

335,833

 

303,467

Selling, general and administrative expenses

85,447

 

81,088

 

245,205

 

235,561

Amortization of acquired intangibles

3,174

 

3,265

 

9,446

 

9,946

Productivity and transformation costs

11,514

 

9,408

 

37,949

 

29,613

Chief Executive Officer Succession Plan expense, net

-

 

455

 

-

 

30,156

Proceeds from insurance claim

(400)

 

-

 

(2,962)

 

-

Accounting review and remediation costs, net of insurance proceeds

-

 

-

 

-

 

4,334

Long-lived asset and intangibles impairment

13,525

 

-

 

15,414

 

23,709

Operating income (loss)

19,135

 

18,992

 

30,781

 

(29,852)

Interest and other financing expense, net

4,037

 

5,994

 

15,068

 

15,736

Other (income) expense, net

(260)

 

1,067

 

2,312

 

2,038

Income (loss) from continuing operations before income taxes and equity in net loss of equity-method investees

15,358

 

11,931

 

13,401

 

(47,626)

(Benefit) provision for income taxes

(10,242)

 

2,943

 

(9,753)

 

(1,926)

Equity in net loss of equity-method investees

564

 

205

 

1,219

 

391

   Net income (loss) from continuing operations

$              25,036

 

$                8,783

 

$              21,935

 

$             (46,091)

   Net loss from discontinued operations, net of tax

(697)

 

(74,620)

 

(105,581)

 

(123,672)

Net income (loss)

$              24,339

 

$             (65,837)

 

$             (83,646)

 

$           (169,763)

               

Net income (loss) per common share(1)

             

Basic net income (loss) per common share from continuing operations

$                  0.24

 

$                  0.08

 

$                  0.21

 

$                 (0.44)

Basic net loss per common share from discontinued operations

(0.01)

 

(0.72)

 

(1.01)

 

(1.19)

   Basic net income (loss) per common share

$                  0.23

 

$                 (0.63)

 

$                 (0.80)

 

$                 (1.63)

               

Diluted net income (loss) per common share from continuing operations

$                  0.24

 

$                  0.08

 

$                  0.21

 

$                 (0.44)

Diluted net loss per common share from discontinued operations

(0.01)

 

(0.72)

 

(1.01)

 

(1.19)

   Diluted net income (loss) per common share

$                  0.23

 

$                 (0.63)

 

$                 (0.80)

 

$                 (1.63)

               

Shares used in the calculation of net income (loss) per common share:

             

Basic

104,032

 

104,117

 

104,192

 

104,045

Diluted

104,337

 

104,334

 

104,489

 

104,045

               

(1)Net income (loss) per common share may not add in certain periods due to rounding.

           

 

 

 

THE HAIN CELESTIAL GROUP, INC.

 Consolidated Statements of Cash Flows  

(unaudited and in thousands)

               
 

Three Months Ended March 31,

 

Nine Months Ended March 31,

 

2020

 

2019

 

2020

 

2019

CASH FLOWS FROM OPERATING ACTIVITIES

             

Net income (loss)

$              24,339

 

$             (65,837)

 

$             (83,646)

 

$           (169,763)

   Net loss from discontinued operations

(697)

 

(74,620)

 

(105,581)

 

(123,672)

   Net income (loss) from continuing operations

25,036

 

8,783

 

21,935

 

(46,091)

Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities from continuing operations:

             

Depreciation and amortization

12,927

 

12,483

 

40,069

 

37,548

Deferred income taxes

(3,880)

 

(1,858)

 

(9,035)

 

(24,524)

Chief Executive Officer Succession Plan expense, net

-

 

455

 

-

 

29,727

Equity in net loss of equity-method investees

564

 

205

 

1,219

 

391

Stock-based compensation, net

3,761

 

3,927

 

9,581

 

5,918

Long-lived asset and intangibles impairment

13,525

 

-

 

15,414

 

23,709

Other non-cash items, net

(326)

 

2,412

 

2,335

 

3,697

Increase (decrease) in cash attributable to changes in operating assets and liabilities:

             

Accounts receivable

(38,410)

 

(14,006)

 

(30,870)

 

(4,466)

Inventories

37,891

 

17,378

 

47,280

 

11,630

Other current assets

8,407

 

1,305

 

10,302

 

(223)

Other assets and liabilities

76

 

612

 

(1,166)

 

5,206

Accounts payable and accrued expenses

(12,627)

 

(13,361)

 

(42,972)

 

(24,191)

Net cash provided by operating activities - continuing operations

46,944

 

18,335

 

64,092

 

18,331

CASH FLOWS FROM INVESTING ACTIVITIES

             

Purchases of property and equipment

(17,624)

 

(14,075)

 

(46,961)

 

(55,073)

Proceeds from sale of businesses and other

1,308

 

-

 

14,428

 

3,863

Net cash used in investing activities - continuing operations

(16,316)

 

(14,075)

 

(32,533)

 

(51,210)

CASH FLOWS FROM FINANCING ACTIVITIES

             

Borrowings under bank revolving credit facility

50,000

 

90,000

 

197,000

 

240,000

Repayments under bank revolving credit facility

(9,000)

 

(49,145)

 

(254,500)

 

(186,791)

Repayments under term loan

-

 

(3,750)

 

(206,250)

 

(11,250)

(Funding of) proceeds from discontinued operations entities

(4,682)

 

(47,365)

 

305,247

 

(33,815)

Repayments of other debt, net

(1,001)

 

(1,088)

 

(1,502)

 

(1,689)

Share repurchases

(57,406)

 

-

 

(57,406)

 

-

Shares withheld for payment of employee payroll taxes

(522)

 

(149)

 

(1,506)

 

(3,071)

Net cash (used in) provided by financing activities - continuing operations

(22,611)

 

(11,497)

 

(18,917)

 

3,384

Effect of exchange rate changes on cash - continuing operations

(3,492)

 

718

 

(2,110)

 

(774)

CASH FLOWS FROM DISCONTINUED OPERATIONS

             

Cash (used in) provided by operating activities

(459)

 

(10,768)

 

(6,146)

 

(13,627)

Cash (used in) provided by investing activities

(4,223)

 

(30,089)

 

297,592

 

(33,561)

Cash provided by (used in) financing activities

4,682

 

34,999

 

(299,418)

 

30,582

Effect of exchange rate changes on cash - discontinued operations

-

 

26

 

(537)

 

(451)

Net cash flows used in discontinued operations

-

 

(5,832)

 

(8,509)

 

(17,057)

Net increase (decrease) in cash and cash equivalents

4,525

 

(12,351)

 

2,023

 

(47,326)

Cash and cash equivalents at beginning of period

37,024

 

78,043

 

39,526

 

113,018

Cash and cash equivalents and restricted cash at end of period

$              41,549

 

$              65,692

 

$              41,549

 

$              65,692

Less: cash and cash equivalents of discontinued operations

-

 

(11,263)

 

-

 

(11,263)

Cash and cash equivalents and restricted cash of continuing operations at end of period

$              41,549

 

$              54,429

 

$              41,549

 

$              54,429

 

 

 

THE HAIN CELESTIAL GROUP, INC.

 Reconciliation of GAAP Results to Non-GAAP Measures 

 (unaudited and in thousands, except per share amounts) 

               
 

Three Months Ended March 31,

 

2020 GAAP

Adjustments

2020 Adjusted

 

2019 GAAP

Adjustments

2019 Adjusted

               

Net sales

$                553,297

-

553,297

 

$                547,257

-

$                547,257

Cost of sales

420,902

(1,873)

419,029

 

434,049

(4,153)

429,896

Gross profit

132,395

1,873

134,268

 

113,208

4,153

117,361

Operating expenses (a) 

102,146

(13,551)

88,595

 

84,353

(1,023)

83,330

Productivity and transformation costs

11,514

(11,514)

-

 

9,408

(9,408)

-

Chief Executive Officer Succession Plan expense, net

-

-

-

 

455

(455)

-

Proceeds from insurance claims

(400)

400

-

 

-

-

-

Operating income

19,135

26,538

45,673

 

18,992

15,039

34,031

Interest and other expense (income), net (b) 

3,777

679

4,456

 

7,061

(1,522)

5,539

(Benefit) provision for income taxes

(10,242)

22,129

11,887

 

2,943

5,136

8,079

   Net income from continuing operations

25,036

3,730

28,766

 

8,783

11,425

20,208

   Net (loss) income from discontinued operations, net of tax

(697)

697

-

 

(74,620)

74,620

-

Net income (loss) 

24,339

4,427

28,766

 

(65,837)

86,045

20,208

               

Diluted net income per common share from continuing operations

0.24

0.04

0.28

 

0.08

0.11

0.19

Diluted net (loss) income per common share from discontinued operations

(0.01)

0.01

-

 

(0.72)

0.72

-

   Diluted net income (loss) per common share

0.23

0.04

0.28

 

(0.63)

0.82

0.19

               

Detail of Adjustments:

             
   

Three Months Ended
March 31, 2020

     

Three Months Ended
March 31, 2019

 

SKU rationalization and inventory write-down

 

$                      1,362

     

$                         505

 

Warehouse/manufacturing facility start-up costs

 

511

     

3,222

 

Plant closure related costs

 

-

     

426

 

Cost of sales

 

1,873

     

4,153

 
               

Gross profit

 

1,873

     

4,153

 
               

Intangibles impairment

 

7,650

     

-

 

Long-lived asset impairment 

 

5,875

     

-

 

Warehouse/manufacturing facility start-up costs

 

26

     

-

 

Stock-based compensation acceleration

 

-

     

583

 

Litigation and related expenses

 

-

     

371

 

Plant closure related costs

 

-

     

69

 

Operating expenses (a) 

 

13,551

     

1,023

 
               

Productivity and transformation costs

 

11,514

     

9,408

 

Productivity and transformation costs

 

11,514

     

9,408

 
               

Chief Executive Officer Succession Plan expense, net

 

-

     

455

 

Chief Executive Officer Succession Plan expense, net

 

-

     

455

 
               

Proceeds from insurance claims

 

(400)

     

-

 

Proceeds from insurance claims

 

(400)

     

-

 
               

Operating income

 

26,538

     

15,039

 
               

Unrealized currency (gains) losses

 

(1,011)

     

1,522

 

Loss on sale of business

 

332

     

-

 

Interest and other expense (income), net (b) 

 

(679)

     

1,522

 
               

Income tax related adjustments

 

(22,129)

     

(5,136)

 

(Benefit) provision for income taxes

 

(22,129)

     

(5,136)

 
               

   Net income from continuing operations

 

$                      3,730

     

$                    11,425

 
               

(a)Operating expenses include amortization of acquired intangibles, selling, general, and administrative expenses and long-lived asset and intangibles impairment.

(b)Interest and other expense (income), net includes interest and other financing expenses, net and other expense, net.

 

 

 

 

THE HAIN CELESTIAL GROUP, INC.

 Reconciliation of GAAP Results to Non-GAAP Measures 

 (unaudited and in thousands, except per share amounts) 

               
 

Nine Months Ended March 31,

 

2020 GAAP

Adjustments

2020 Adjusted

 

2019 GAAP

Adjustments

2019 Adjusted

               

Net sales

$             1,542,157

-

$             1,542,157

 

$             1,599,301

-

$             1,599,301

Cost of sales

1,206,324

(10,703)

1,195,621

 

1,295,834

(15,309)

1,280,525

Gross profit

335,833

10,703

346,536

 

303,467

15,309

318,776

Operating expenses (a) 

270,065

(15,651)

254,414

 

269,216

(25,857)

243,359

Productivity and transformation costs

37,949

(37,949)

-

 

29,613

(29,613)

-

Chief Executive Officer Succession Plan expense, net

-

-

-

 

30,156

(30,156)

-

Proceeds from insurance claim

(2,962)

2,962

-

 

-

-

-

Accounting review and remediation costs, net of insurance proceeds

-

-

-

 

4,334

(4,334)

-

Operating income (loss)

30,781

61,341

92,122

 

(29,852)

105,269

75,416

Interest and other expense (income), net (b) 

17,380

(3,278)

14,102

 

17,774

(2,551)

15,223

(Benefit) provision for income taxes

(9,753)

31,818

22,065

 

(1,926)

19,537

17,611

   Net income (loss) from continuing operations

21,935

32,801

54,736

 

(46,091)

88,283

42,192

   Net (loss) income from discontinued operations, net of tax

(105,581)

105,581

-

 

(123,672)

123,672

-

Net (loss) income

(83,646)

138,382

54,736

 

(169,763)

211,955

42,192

               

Diluted net income (loss) per common share from continuing operations

0.21

0.31

0.52

 

(0.44)

0.85

0.41

Diluted net (loss) income per common share from discontinued operations

(1.01)

1.01

-

 

(1.19)

1.19

-

   Diluted net (loss) income per common share

(0.80)

1.32

0.52

 

(1.63)

2.04

0.41

               

Detail of Adjustments:

             
   

Nine Months Ended
March 31, 2020

     

Nine Months Ended
March 31, 2019

 

SKU rationalization and inventory write-down

 

$                      5,278

     

$                      2,035

 

Warehouse/manufacturing facility start-up costs

 

2,866

     

9,529

 

Plant closure related costs

 

2,559

     

3,745

 

Cost of sales

 

10,703

     

15,309

 
               

Gross profit

 

10,703

     

15,309

 
               

Intangibles impairment

 

9,539

     

17,900

 

Long-lived asset impairment

 

5,875

     

5,809

 

Warehouse/manufacturing facility start-up costs

 

189

     

-

 

Litigation and related expenses

 

48

     

1,062

 

Plant closure related costs

 

-

     

503

 

Stock-based compensation acceleration

 

-

     

583

 

Operating expenses (a) 

 

15,651

     

25,857

 
               

Productivity and transformation costs

 

37,949

     

29,613

 

Productivity and transformation costs

 

37,949

     

29,613

 
               

Chief Executive Officer Succession Plan expense, net

 

-

     

30,156

 

Chief Executive Officer Succession Plan expense, net

 

-

     

30,156

 
               

Proceeds from insurance claim

 

(2,962)

     

-

 

Proceeds from insurance claim

 

(2,962)

     

-

 
               

Accounting review and remediation costs, net of insurance proceeds

 

-

     

4,334

 

Accounting review and remediation costs, net of insurance proceeds

 

-

     

4,334

 
               

Operating income (loss)

 

61,341

     

105,269

 
               

Gain on sale of business

 

2,115

     

-

 

Unrealized currency losses

 

188

     

2,551

 

Deferred financing cost write-off

 

975

     

-

 

Interest and other expense (income), net (b) 

 

3,278

     

2,551

 
               

Income tax related adjustments

 

(31,818)

     

(19,537)

 

(Benefit) provision for income taxes

 

(31,818)

     

(19,537)

 
               

   Net income (loss) from continuing operations

 

$                    32,801

     

$                    88,283

 
               

(a)Operating expenses include amortization of acquired intangibles, selling, general, and administrative expenses and long-lived asset and intangibles impairment.

   

(b)Interest and other expense (income), net includes interest and other financing expenses, net and other expense, net.

       

 

 

 

THE HAIN CELESTIAL GROUP, INC.

Net Sales Growth at Constant Currency

(unaudited and in thousands)

           
 

Hain Consolidated

 

North America

 

International

 Net sales - Three months ended 3/31/20 

$         553,297

 

$         320,440

 

$         232,857

 Impact of foreign currency exchange 

5,572

 

477

 

5,095

 Net sales on a constant currency basis -
   Three months ended 3/31/20 

$         558,869

 

$         320,917

 

$         237,952

           

Net sales - Three months ended 3/31/19

$         547,257

 

$         314,321

 

$         232,936

Net sales growth on a constant currency basis

2.1%

 

2.1%

 

2.2%

           
 

Hain Consolidated

 

North America

 

International

 Net sales - Nine months ended 3/31/20 

$      1,542,157

 

$         872,834

 

$         669,323

 Impact of foreign currency exchange 

19,279

 

764

 

18,515

 Net sales on a constant currency basis -
   Nine months ended 3/31/20 

$      1,561,436

 

$         873,598

 

$         687,838

           

Net sales - Nine months ended 3/31/19

$      1,599,301

 

$         911,086

 

$         688,215

Net sales decline on a constant currency basis 

(2.4)%

 

(4.1)%

 

(0.1)%

           

Net Sales Growth at Constant Currency and Adjusted for Divestitures and SKU Rationalization

           
 

Hain Consolidated

 

North America

 

International

 Net sales on a constant currency basis -
   Three months ended 3/31/20 

$         558,869

 

$         320,917

 

$         237,952

           

Net sales - Three months ended 3/31/19

$         547,257

 

$         314,321

 

$         232,936

Divestitures

(10,273)

 

(10,273)

 

-

SKU rationalization

(10,141)

 

(9,522)

 

(619)

 Net sales on a constant currency basis adjusted for
   divestitures and SKU rationalization - Three months ended 3/31/20 

$         526,843

 

$         294,526

 

$         232,317

 Net sales growth on a constant currency basis adjusted for
   divestitures and SKU rationalization 

6.1%

 

9.0%

 

2.4%

           
 

Hain Consolidated

 

North America

 

International

 Net sales on a constant currency basis -
   Nine months ended 3/31/20 

$      1,561,436

 

$         873,598

 

$         687,838

           

Net sales - Nine months ended 3/31/19

$      1,599,301

 

$         911,086

 

$         688,215

Divestitures

(19,228)

 

(19,228)

 

-

SKU rationalization

(43,422)

 

(35,550)

 

(7,872)

 Net sales on a constant currency basis adjusted for
   divestitures and SKU rationalization - Nine months ended 3/31/20 

$      1,536,651

 

$         856,308

 

$         680,343

 Net sales growth on a constant currency basis adjusted for
   divestitures and SKU rationalization 

1.6%

 

2.0%

 

1.1%

           

Adjusted EBITDA Growth at Constant Currency

           
 

Hain Consolidated

 

North America

 

International

 Adjusted EBITDA - Three months ended 3/31/20 

$           60,690

 

$           42,920

 

$           30,927

 Impact of foreign currency exchange 

880

 

63

 

818

 Adjusted EBITDA on a constant currency basis -
   Three months ended 3/31/20 

$           61,570

 

$           42,983

 

$           31,745

           

Net sales on a constant currency basis -
   Three months ended 3/31/20

$         558,869

 

$         320,917

 

$         237,952

Adjusted EBITDA growth on a constant currency basis

11.0%

 

13.4%

 

13.3%

           
 

Hain Consolidated

 

North America

 

International

 Adjusted EBITDA - Nine months ended 3/31/20 

$         137,828

 

$           97,101

 

$           75,787

 Impact of foreign currency exchange 

2,215

 

86

 

2,129

 Adjusted EBITDA on a constant currency basis -
   Nine months ended 3/31/20 

$         140,043

 

$           97,187

 

$           77,916

           

Net sales on a constant currency basis -
   Nine months ended 3/31/20

$      1,561,436

 

$         873,598

 

$         687,838

Adjusted EBITDA growth on a constant currency basis

9.0%

 

11.1%

 

11.3%

 

 

 

THE HAIN CELESTIAL GROUP, INC.

Segment EBITDA and Adjusted EBITDA

Three Months Ended

(unaudited and in thousands)

       

North America

       
 

March 31, 2020

 

March 31, 2019

       

Operating income

$                    28,873

 

$                    21,358

Depreciation and amortization

4,240

 

4,246

Long-lived asset impairment

2,303

 

-

Other

352

 

765

Productivity and transformation costs

5,000

 

1,263

SKU rationalization and inventory write-down

1,362

 

506

Warehouse/manufacturing facility start-up costs

537

 

3,221

Loss on sale of business

253

 

-

Plant closure related costs

-

 

119

Adjusted EBITDA

$                    42,920

 

$                    31,478

       
       

International

       
 

March 31, 2020

 

March 31, 2019

       

Operating income

$                    18,660

 

$                    19,883

Depreciation and amortization

7,993

 

7,699

Long-lived asset impairment

3,571

 

-

Other

(238)

 

315

Productivity and transformation costs

941

 

897

Plant closure related costs

-

 

78

Adjusted EBITDA

$                    30,927

 

$                    28,872

 

 

 

THE HAIN CELESTIAL GROUP, INC.

Segment EBITDA and Adjusted EBITDA

Nine Months Ended

(unaudited and in thousands)

       

North America

       
 

March 31, 2020

 

March 31, 2019

       

Operating income

$                    64,067

 

$                    35,427

Depreciation and amortization

12,789

 

12,790

Long-lived asset impairment

2,303

 

1,503

Other

180

 

1,330

Productivity and transformation costs

7,500

 

4,784

SKU rationalization and inventory write-down

5,099

 

2,036

Warehouse/manufacturing facility start-up costs

3,055

 

9,528

Loss on sale of business

2,036

 

-

Plant closure related costs

72

 

1,079

Adjusted EBITDA

$                    97,101

 

$                    68,477

       
       

International

       
 

March 31, 2020

 

March 31, 2019

       

Operating Income

$                    40,666

 

$                    40,696

Depreciation and amortization

24,258

 

23,373

Long-lived asset impairment

3,571

 

4,305

Other

562

 

343

Productivity and transformation costs

4,269

 

4,099

Plant closure related costs

2,282

 

2,409

SKU rationalization and inventory write-down

179

 

-

Litigation and related expenses

-

 

19

Adjusted EBITDA

$                    75,787

 

$                    75,244

 

 

 

 

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SOURCE The Hain Celestial Group, Inc.

Katie Turner, ICR, 646-277-1228