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Hain Celestial Reports Fourth Quarter and Fiscal Year 2020 Financial Results
Profitability at the High-End of Company Expectations
 
Strong Margin Improvement Through Continued Execution of Transformational Plan
 
Generated $92.8 Million in Operating Cash Flow During the Quarter

LAKE SUCCESS, N.Y., Aug. 25, 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 fourth quarter and fiscal year ended June 30, 2020. The results contained herein are presented with the Hain Pure Protein and Tilda operating segments being treated as discontinued operations.

Mark L. Schiller, Hain Celestial's President and Chief Executive Officer, commented, "We are pleased to report profitability at the high-end of our expectations for the fiscal year. Our results were strong because of our team's execution of our transformational strategic plan, which resulted in strong margin improvement and operating cash flow generation. In this dynamic operating environment, we believe we will maintain our positive momentum and remain committed to sustainable long-term growth as we deliver on our four key pillars for growth - portfolio simplification, capability building, cost control and sales acceleration."

FINANCIAL HIGHLIGHTS1

Summary of Fourth Quarter Results from Continuing Operations2 

  • Net sales increased 1% to $511.7 million, or 3% on a constant currency basis, compared to the prior year period.
  • When adjusted for Foreign Exchange, Divestitures, discontinued brands and Stock Keeping Unit ("SKU") rationalization3, net sales increased 7% compared to the prior year period.
  • Gross margin of 25.4%, a 658 basis point increase from the prior year period.
  • Adjusted gross margin of 25.3%, a 257 basis point increase from the prior year period.
  • Operating income of $25.3 million compared to an operating loss of $2.6 million in the prior year period.
  • Adjusted operating income of $47.9 million compared to $34.4 million in the prior year period.
  • Net income of $3.7 million compared to a net loss of $7.3 million in the prior year period.
  • Adjusted net income of $32.3 million compared to $19.9 million in prior year period.
  • Adjusted EBITDA of $62.2 million compared to $49.4 million in the prior year period.
  • Adjusted EBITDA margin of 12.1%, a 237 basis point increase compared to the prior year period.
  • Earnings per diluted share ("EPS") of $0.04 compared to a loss of $0.07 in the prior year period.
  • Adjusted EPS of $0.32 compared to $0.19 in the prior year period.
  • Repurchased 0.1 million shares, or 0.1% of the outstanding common stock, at an average price of $24.97 per share.
  • Net cash provided by continuing operations of $92.8 million compared to $21.0 million in prior year period.
  • Operating free cash flow4 from continuing operations of $78.9 million compared to $0.3 million in prior year period.

Summary of Fiscal Year 2020 Results from Continuing Operations2

  • Net sales decreased 2% to $2,053.9 million compared to the prior year.
  • Net sales decreased 1% on a constant currency basis compared to the prior year.
  • When adjusted for Foreign Exchange, Divestitures, discontinued brands and "SKU" rationalization3, net sales increased 3% compared to the prior year.
  • Gross margin of 22.7%, a 374 basis point increase over the prior year.
  • Adjusted gross margin of 23.2%, a 257 basis point increase over the prior year.
  • Operating income of $56.0 million compared to operating loss of $32.5 million in the prior year.
  • Adjusted operating income of $140.0 million compared to $109.9 million in the prior year.
  • Net income of $25.6 million compared to net loss of $53.4 million in the prior year.
  • Adjusted net income of $87.1 million compared to $62.1 million in prior year.
  • Adjusted EBITDA of $200.0 million compared to $165.1 million in the prior year.
  • Adjusted EBITDA margin of 9.7%, a 189 basis point increase compared to the prior year.
  • EPS of $0.25 compared to a loss of $0.51 in the prior year.
  • Adjusted EPS of $0.84 compared to $0.60 in the prior year.
  • Repurchased 2.6 million shares, or 2.4% of the outstanding common stock, at an average price of $23.59 per share.
  • Net cash provided by continuing operations of $156.9 million compared to $39.3 million in prior year.
  • Operating free cash flow4 from continuing operations of $96.0 million compared to negative operating free cash flow of $36.4 million in prior year.

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 fourth quarter were $298.6 million, an increase of 5% compared to the prior year period. When adjusted for Foreign Exchange, Divestitures, discontinued brands and SKU rationalization3, net sales increased 13% from the prior year period.

Segment gross profit in the fourth quarter was $83.6 million, a 65% increase from the prior year period. Adjusted gross profit was $82.9 million, an increase of 20% from the prior year period. Gross margin was 28.0%, a 1,021 basis point increase from the prior year period and adjusted gross margin was 27.7%, a 354 basis point increase from the prior year period.

Segment operating income in the fourth quarter was $31.9 million, compared to a loss of $2.7 million in the prior year period. Adjusted operating income was $38.9 million, a 57% increase from the prior year period.

Adjusted EBITDA in the fourth quarter was $43.8 million, a 46% increase from the prior year period. As a percentage of sales on a constant currency basis, North America adjusted EBITDA margin was 14.7%, a 418 basis point increase from the prior year period.

North America net sales in fiscal year 2020 were $1,171 million, a decrease of 2% compared to the prior year. When adjusted for Foreign Exchange, Divestitures, discontinued brands and SKU rationalization3, net sales increased 5% from the prior year.

Segment gross profit in fiscal year 2020 was $293.5 million, a 30% increase from the prior year. Adjusted gross profit was $300.9 million, an increase of 17% from the prior year. Gross margin was 25.1%, a 619 basis point increase from the prior year and adjusted gross margin was 25.7%, a 422 basis point increase from the prior year.

Segment operating income in fiscal year 2020 was $95.9 million, a 194% increase from the prior year. Adjusted operating income was $121.0 million, a 53% increase from the prior year.

Adjusted EBITDA in fiscal year 2020 was $140.9 million, a 43% increase from the prior year. As a percentage of sales on a constant currency basis, North America adjusted EBITDA margin was 12.0%, a 381 basis point increase from the prior year.

International
International net sales in the fourth quarter were $213.1 million, a decrease of 3% compared to the prior year period. When adjusted for Foreign Exchange, Divestitures, discontinued brands and SKU rationalization3, net sales were flat compared to the prior year period.

Segment gross profit in the fourth quarter was $46.3 million, a 5% increase from the prior year period. Adjusted gross profit was $46.4 million, an increase of 2% from the prior year period. Gross margin was 21.7%, a 162 basis point increase from the prior year period and adjusted gross margin was 21.8%, a 104 basis point increase from the prior year period.

Segment operating income in the fourth quarter was $14.7 million, a 19% decrease from the prior year period. Adjusted operating income was $22.7 million, a decrease of 1% from the prior year period.

Adjusted EBITDA in the fourth quarter was $29.9 million, a 3% decrease from the prior year period. As a percentage of sales, International adjusted EBITDA margin was 14.0%, a 9 basis point increase from the prior year period.

International net sales in fiscal year 2020 were $882.4 million, a decrease of 3% when compared to the prior year. When adjusted for Foreign Exchange, Divestitures, discontinued brands and SKU rationalization3, net sales increased 1% compared to the prior year.

Segment gross profit in fiscal year 2020 was $172.2 million, flat when compared to the prior year. Adjusted gross profit was $174.9 million, a decrease of 1% from the prior year. Gross margin was 19.5%, a 50 basis point increase from the prior year and adjusted gross margin was 19.8%, a 37 basis point increase from the prior year.

Segment operating income in fiscal year 2020 was $55.3 million, a 6% decrease from the prior year. Adjusted operating income was $73.9 million, a decrease of 1% from the prior year.

Adjusted EBITDA in fiscal year 2020 was $105.7 million, flat when compared to the prior year. As a percentage of sales on a constant currency basis, International adjusted EBITDA margin was 12.0%, a 32 basis point increase from the prior year.

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, discontinued brands and SKU Rationalization" provided herein.
4 Refer to Non-GAAP Financial Measures below for definition of operating free cash flow from continuing operations.

CAPITAL MANAGEMENT

During fiscal year 2020, the Company repurchased 2.6 million shares, or 2.4% of the outstanding common stock, at an average price of $23.59 per share for a total of $60.2 million, excluding commissions. As of June 30, 2020, the Company had $189.8 million remaining authorization under the share repurchase program.

SALE OF RUDI'S BAKERY

Effective May 1, 2020, the Company completed the divestiture of its Rudi's business, a component of the United States reporting unit to an affiliate of Promise Gluten Free. Details of the transaction were not disclosed.

SALE OF DANIVAL

Effective July 21, 2020, the Company completed the divestiture of Danival® to a subsidiary of Wessanen N.V. Details of the transaction were not disclosed.

FISCAL YEAR 2021 GUIDANCE

Due to the uncertainty around the duration and impact of the COVID-19 pandemic, the Company is not providing specific financial guidance for fiscal 2021. For fiscal 2021, the Company expects continued margin expansion, strong double digit adjusted EBITDA growth and double digit operating free cash flow growth. The Company believes that the first half of fiscal 2021 will yield stronger net sales and adjusted EBITDA growth than the second half of the year due to its strong consumer and customer plans as well as increased at home eating occasions related to COVID-19. For the first quarter, based on actual results to date, the Company expects mid-single digit net sales growth after adjusting for divestitures and discontinued brands, and several hundred basis points of margin improvement and adjusted EBITDA growth.

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 Celestial Seasonings®, Clarks™, Cully & Sully®, Dream®, Earth's Best®, Ella's Kitchen®, Farmhouse Fare™, Frank Cooper's®, GG UniqueFiber®, Gale's®, Garden of Eatin'®, Hain Pure Foods®, Hartley's®, Health Valley®, Imagine®, Joya®, Lima®, Linda McCartney® (under license), MaraNatha®, Natumi®, New Covent Garden Soup Co.®, Orchard House®, Robertson's®, Sensible Portions®, Spectrum®, Sun-Pat®, Sunripe®, Terra®, The Greek Gods®,  William's™, Yorkshire Provender® and Yves Veggie Cuisine®. The Company's personal care products are marketed under the Alba Botanica®, Avalon Organics®, Earth's Best®, JASON®, Live Clean®, One Step® 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 2021 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, general economic and financial market conditions, the United Kingdom's exit from the European Union, consolidation of customers or the loss of a significant customer, reliance on independent distributors, 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 implement cost reduction initiatives, the impact of our debt covenants, the potential discontinuation of LIBOR, 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 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, 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 reflect changes in underlying assumptions or factors or 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, discontinued brands and certain other items, including SKU rationalization, as applicable in each case, adjusted operating income and its related margin, adjusted gross margin, adjusted net income, adjusted earnings per diluted share, Adjusted EBITDA and its related margin 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 twelve months ended June 30, 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 twelve months ended June 30, 2020 and 2019, Operating Free Cash Flow from continuing operations was calculated as follows: 



Three Months Ended June 30,


Twelve Months Ended June 30,



2020


2019


2020


2019



(unaudited and in thousands)











Cash flow provided by operating activities from continuing operations

$              92,822


$              21,001


$            156,914


$              39,333


Purchases of property, plant and equipment

(13,932)


(20,719)


(60,893)


(75,792)


Operating Free Cash Flow from continuing operations

$              78,890


$                   282


$              96,021


$             (36,459)

The Company's Operating Free Cash Flow from continuing operations was $78.9 million for the three months ended June 30, 2020, an increase of $78.6 million from the three months ended June 30, 2019. The Company's Operating Free Cash Flow from continuing operations was $96.0 million for the twelve months ended June 30, 2020, an increase of $132.5 million from the twelve months ended June 30, 2019. The improvement in Operating Free Cash Flow for both periods resulted primarily from an improvement in net income adjusted for non-cash charges in the current year and a decrease in our capital expenditures.

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, discontinued brands, 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 twelve months ended June 30, 2020 and 2019, Adjusted EBITDA from continuing operations was calculated as follows:


Three Months Ended June 30,


Twelve Months Ended June 30,


2020


2019


2020


2019


(unaudited and in thousands)









Net income (loss)

$                3,239


$             (13,551)


$             (80,407)


$           (183,314)

Net loss from discontinued operations

(460)


(6,215)


(106,041)


(129,887)

Net income (loss) from continuing operations

$                3,699


$               (7,336)


$              25,634


$             (53,427)









Provision (benefit) for income taxes

15,958


(1,306)


6,205


(3,232)

Interest expense, net

2,467


5,484


14,351


19,450

Depreciation and amortization

12,019


13,350


52,088


50,898

Equity in net loss of equity-method investees

770


264


1,989


655

Stock-based compensation, net

3,497


3,982


13,078


9,471

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

-


-


-


429

Goodwill impairment

394


-


394


-

Long-lived asset and intangibles impairment

12,079


10,010


27,493


33,719

Unrealized currency losses (gains)

355


(3,401)


543


(850)

Productivity and transformation costs

10,194


10,494


47,596


39,958

Former Chief Executive Officer Succession Plan expense, net

-


-


-


29,727

Proceeds from insurance claim

-


(4,460)


(2,962)


(4,460)

Accounting review and remediation costs, net of insurance proceeds

-


-


-


4,334

Loss (gain) on sale of business

1,448


(534)


3,564


(534)

Warehouse/manufacturing facility start-up costs

385


8,107


3,440


17,636

Plant closure related costs

3


1,232


2,357


4,734

SKU rationalization and inventory write-down

(1,103)


10,346


4,175


12,381

Litigation and related expenses

-


455


48


1,517

Realized currency loss on repayment of international loans

-


2,706


-


2,706

Adjusted EBITDA

$              62,165


$              49,393


$            199,993


$            165,112

 

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 6/30/20

$                298,644

$                213,102

$                          -

$                511,746

Net sales - Three months ended 6/30/19

$                284,893

$                220,412

$                          -

$                505,305

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

4.8%

(3.3)%


1.3%






Gross Profit





Three months ended 6/30/20





Gross profit

$                  83,589

$                  46,348

$                          -

$                129,937

Non-GAAP adjustments (1)

(728)

13

-

(715)

Adjusted gross profit

$                  82,861

$                  46,361

$                          -

$                129,222

Gross margin

28.0%

21.7%


25.4%

Adjusted gross margin

27.7%

21.8%


25.3%






Three months ended 6/30/19





Gross profit

$                  50,659

$                  44,371

$                          -

$                  95,030

Non-GAAP adjustments (1)

18,308

1,284

-

19,592

Adjusted gross profit

$                  68,967

$                  45,655

$                          -

$                114,622

Gross margin

17.8%

20.1%


18.8%

Adjusted gross margin

24.2%

20.7%


22.7%






Operating income (loss)





Three months ended 6/30/20





Operating income (loss)

$                  31,867

$                  14,667

$                 (21,273)

$                  25,261

Non-GAAP adjustments (1)

7,020

8,056

7,521

22,597

Adjusted operating income (loss)

$                  38,887

$                  22,723

$                 (13,752)

$                  47,858

Operating income margin

10.7%

6.9%


4.9%

Adjusted operating income margin

13.0%

10.7%


9.4%






Three months ended 6/30/19





Operating (loss) income

$                  (2,745)

$                  18,112

$                 (18,008)

$                  (2,641)

Non-GAAP adjustments (1)

27,500

4,878

4,706

37,084

Adjusted operating income (loss)

$                  24,755

$                  22,990

$                 (13,302)

$                  34,443

Operating (loss) income margin

(1.0)%

8.2%


(0.5)%

Adjusted operating income margin

8.7%

10.4%


6.8%






(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 - Twelve months ended 6/30/20

$             1,171,478

$                882,425

$                          -

$             2,053,903

Net sales - Twelve months ended 6/30/19

$             1,195,979

$                908,627

$                          -

$             2,104,606

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

(2.0)%

(2.9)%


(2.4)%






Gross Profit





Twelve months ended 6/30/20





Gross profit

$                293,545

$                172,225

$                          -

$                465,770

Non-GAAP adjustments (1)

7,309

2,679

-

9,988

Adjusted gross profit

$                300,854

$                174,904

$                          -

$                475,758

Gross margin

25.1%

19.5%


22.7%

Adjusted gross margin

25.7%

19.8%


23.2%






Twelve months ended 6/30/19





Gross profit

$                225,707

$                172,790

$                          -

$                398,497

Non-GAAP adjustments (1)

30,952

3,948

-

34,900

Adjusted gross profit

$                256,659

$                176,738

$                          -

$                433,397

Gross margin

18.9%

19.0%


18.9%

Adjusted gross margin

21.5%

19.5%


20.6%






Operating income (loss)





Twelve months ended 6/30/20





Operating income (loss)

$                  95,934

$                  55,333

$                 (95,225)

$                  56,042

Non-GAAP adjustments (1)

25,083

18,559

40,296

83,938

Adjusted operating income (loss)

$                121,017

$                  73,892

$                 (54,929)

$                139,980

Operating income margin

8.2%

6.3%


2.7%

Adjusted operating income margin

10.3%

8.4%


6.8%






Twelve months ended 6/30/19





Operating income (loss)

$                  32,682

$                  58,808

$               (123,983)

$                 (32,493)

Non-GAAP adjustments (1)

46,430

16,143

79,780

142,353

Adjusted operating income (loss)

$                  79,112

$                  74,951

$                 (44,203)

$                109,860

Operating income (loss) margin

2.7%

6.5%


(1.5)%

Adjusted operating income margin

6.6%

8.2%


5.2%






(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) 










 June 30, 


 June 30, 




2020


2019

ASSETS




Current assets:





Cash and cash equivalents

$              37,771


$              31,017


Accounts receivable, net

170,969


209,990


Inventories

248,170


299,341


Prepaid expenses and other current assets

104,024


51,391


Current assets of discontinued operations

-


110,048


Total current assets

560,934


701,787

Property, plant and equipment, net

289,256


287,845

Goodwill

861,958


875,881

Trademarks and other intangible assets, net

346,462


380,286

Investments and joint ventures

17,439


18,890

Operating lease right-of-use assets

88,165


-

Other assets

24,238


58,764

Noncurrent assets of discontinued operations

-


259,167


Total assets 

$          2,188,452


$          2,582,620

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:





Accounts payable

$            171,009


$            219,957


Accrued expenses and other current liabilities

127,612


114,265


Current portion of long-term debt

1,656


17,232


Current liabilities of discontinued operations

-


31,703


Total current liabilities

300,277


383,157

Long-term debt, less current portion

281,118


613,537

Deferred income taxes 

51,849


34,757

Operating lease liabilities, noncurrent portion

82,962


-

Other noncurrent liabilities

28,692


14,489

Noncurrent liabilities of discontinued operations

-


17,361

Total liabilities

744,898


1,063,301

Stockholders' equity:





Common stock

1,092


1,088


Additional paid-in capital

1,171,875


1,158,257


Retained earnings

614,171


695,017


Accumulated other comprehensive loss

(171,392)


(225,004)




1,615,746


1,629,358


Treasury stock

(172,192)


(110,039)


Total stockholders' equity

1,443,554


1,519,319


Total liabilities and stockholders' equity

$          2,188,452


$          2,582,620

 

THE HAIN CELESTIAL GROUP, INC.

 Consolidated Statements of Operations 

 (unaudited and in thousands, except per share amounts) 










Three Months Ended June 30,


Twelve Months Ended June 30,


2020


2019


2020


2019









Net sales

$            511,746


$            505,305


$          2,053,903


$          2,104,606

Cost of sales

381,809


410,275


1,588,133


1,706,109

Gross profit

129,937


95,030


465,770


398,497

Selling, general and administrative expenses

79,171


78,439


324,376


314,000

Amortization of acquired intangibles

2,192


3,188


11,638


13,134

Productivity and transformation costs

10,840


10,494


48,789


40,107

Former Chief Executive Officer Succession Plan expense, net

-


-


-


30,156

Proceeds from insurance claim

-


(4,460)


(2,962)


(4,460)

Accounting review and remediation costs, net of insurance proceeds

-


-


-


4,334

Goodwill impairment

394


-


394


-

Long-lived asset and intangibles impairment

12,079


10,010


27,493


33,719

Operating income (loss)

25,261


(2,641)


56,042


(32,493)

Interest and other financing expense, net

3,190


6,781


18,258


22,517

Other expense (income), net

1,644


(1,044)


3,956


994

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

20,427


(8,378)


33,828


(56,004)

Provision (benefit) for income taxes

15,958


(1,306)


6,205


(3,232)

Equity in net loss of equity-method investees

770


264


1,989


655

   Net income (loss) from continuing operations

$                3,699


$               (7,336)


$              25,634


$             (53,427)

   Net loss from discontinued operations, net of tax

(460)


(6,215)


(106,041)


(129,887)

Net income (loss)

$                3,239


$             (13,551)


$             (80,407)


$           (183,314)









Net income (loss) per common share: 








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

$                  0.04


$                 (0.07)


$                  0.25


$                 (0.51)

Basic net loss per common share from discontinued operations

(0.00)


(0.06)


(1.02)


(1.25)

   Basic net income (loss) per common share

$                  0.04


$                 (0.13)


$                 (0.77)


$                 (1.76)









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

$                  0.04


$                 (0.07)


$                  0.25


$                 (0.51)

Diluted net loss per common share from discontinued operations

(0.00)


(0.06)


(1.02)


(1.25)

   Diluted net income (loss) per common share

$                  0.04


$                 (0.13)


$                 (0.77)


$                 (1.76)









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





Basic

101,895


104,167


103,618


104,076

Diluted

102,280


104,167


103,937


104,076

 

THE HAIN CELESTIAL GROUP, INC.

 Consolidated Statements of Cash Flows  

(unaudited and in thousands)










Three Months Ended June 30,


Twelve Months Ended June 30,


2020


2019


2020


2019

CASH FLOWS FROM OPERATING ACTIVITIES







Net income (loss)

$                3,239


$             (13,551)


$             (80,407)


$           (183,314)

   Net loss from discontinued operations

(460)


(6,215)


(106,041)


(129,887)

   Net income (loss) from continuing operations

3,699


(7,336)


25,634


(53,427)

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








Depreciation and amortization

12,019


13,350


52,088


50,898

Deferred income taxes

45,195


818


36,160


(23,706)

Former Chief Executive Officer Succession Plan expense, net

-


(29,727)


-


-

Equity in net loss of equity-method investees

770


264


1,989


655

Stock-based compensation, net

3,497


3,982


13,078


9,900

Goodwill impairment

394


-


394


-

Long-lived asset and intangibles impairment

12,079


10,010


27,493


33,719

Other non-cash items, net

1,571


(2,504)


3,906


1,193

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








Accounts receivable

64,726


31,124


33,856


26,658

Inventories

(14,044)


18,920


33,236


30,550

Other current assets

(55,639)


(6,992)


(45,337)


(7,215)

Other assets and liabilities

7,152


(1,571)


5,986


3,635

Accounts payable and accrued expenses

11,403


(9,337)


(31,569)


(33,527)

Net cash provided by operating activities from continuing operations

92,822


21,001


156,914


39,333

CASH FLOWS FROM INVESTING ACTIVITIES








Purchases of property and equipment

(13,932)


(20,719)


(60,893)


(75,792)

Proceeds from sale of businesses and other

1,337


3,282


15,765


7,145

Net cash used in investing activities from continuing operations

(12,595)


(17,437)


(45,128)


(68,647)

CASH FLOWS FROM FINANCING ACTIVITIES








Borrowings under bank revolving credit facility

65,000


45,000


262,000


285,000

Repayments under bank revolving credit facility

(147,169)


(82,000)


(401,669)


(268,791)

Repayments under term loan

-


(78,750)


(206,250)


(90,000)

Proceeds from discontinued operations entities

398


90,458


305,645


56,643

Repayments of other debt, net

(538)


(477)


(2,040)


(2,166)

Share repurchases

(2,815)


-


(60,221)


-

Shares withheld for payment of employee payroll taxes

(425)


(461)


(1,931)


(3,532)

Net cash used in financing activities from continuing operations

(85,549)


(26,230)


(104,466)


(22,846)

Effect of exchange rate changes on cash from continuing operations

1,544


(748)


(566)


(1,522)

CASH FLOWS FROM DISCONTINUED OPERATIONS








Cash provided by (used in) operating activities

398


15,563


(5,748)


1,936

Cash provided by investing activities

-


70,166


297,592


36,605

Cash used in financing activities

(398)


(88,352)


(299,816)


(57,770)

Effect of exchange rate changes on cash from discontinued operations

-


(129)


(537)


(580)

Net cash flows used in discontinued operations

-


(2,752)


(8,509)


(19,809)

Net decrease in cash and cash equivalents

(3,778)


(26,166)


(1,755)


(73,491)

Cash and cash equivalents at beginning of period

41,549


65,692


39,526


113,017

Cash and cash equivalents at end of period

$              37,771


$              39,526


$              37,771


$              39,526

Less: cash and cash equivalents of discontinued operations

-


(8,509)


-


(8,509)

Cash and cash equivalents of continuing operations at end of period

$              37,771


$              31,017


$              37,771


$              31,017

 

THE HAIN CELESTIAL GROUP, INC.

 Reconciliation of GAAP Results to Non-GAAP Measures 

 (unaudited and in thousands, except per share amounts) 










Three Months Ended June 30,


2020 GAAP

Adjustments

2020 Adjusted


2019 GAAP

Adjustments

2019 Adjusted









Net sales

$                511,746

-

511,746


$                505,305

-

$                505,305

Cost of sales

381,809

715

382,524


410,275

(19,591)

390,684

Gross profit

129,937

(715)

129,222


95,030

19,591

114,622

Operating expenses (a) 

93,442

(12,079)

81,363


91,637

(11,459)

80,179

Productivity and transformation costs

10,840

(10,840)

-


10,494

(10,494)

-

Proceeds from insurance claims

-

-

-


(4,460)

4,460

-

Goodwill impairment

394

(394)

-


-

-

-

Operating income (loss)

25,261

22,597

47,858


(2,641)

37,084

34,443

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

4,834

(1,803)

3,031


5,737

882

6,619

Provision (benefit) provision for income taxes

15,958

(4,243)

11,715


(1,306)

8,962

7,656

   Net income (loss) from continuing operations

3,699

28,644

32,343


(7,336)

27,240

19,904

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

(460)

460

-


(6,215)

6,215

-

Net income (loss)

3,239

29,104

32,343


(13,551)

33,455

19,904









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

0.04

0.28

0.32


(0.07)

0.26

0.19

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

(0.00)

0.00

-


(0.06)

0.06

-

   Diluted net income (loss) per common share

0.04

0.28

0.32


(0.13)

0.32

0.19









Detail of Adjustments:










Three Months Ended
June 30, 2020




Three Months Ended
June 30, 2019


Warehouse/manufacturing facility start-up costs


$                         385




$                      8,107


Plant closure related costs


3




1,138


SKU rationalization and inventory write-down


(1,103)




10,346


Cost of sales


(715)




19,591










Gross profit


(715)




19,591










Long-lived asset impairment 


12,079




10,010


Stock-based compensation acceleration


-




875


Litigation and related expenses


-




455


Plant closure related costs


-




119


Operating expenses (a) 


12,079




11,459










Productivity and transformation costs


10,840




10,494


Productivity and transformation costs


10,840




10,494










Proceeds from insurance claims


-




(4,460)


Proceeds from insurance claims


-




(4,460)










Goodwill impairment


394




-


Goodwill impairment


394




-










Operating income (loss)


22,597




37,084










Loss (gain) on sale of business


1,448




(534)


Unrealized currency losses (gains)


355




(3,401)


Realized currency loss on repayment of international loans

-




2,706


Deferred financing cost write-off


-




347


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


1,803




(882)










Income tax related adjustments


4,243




(8,962)


Provision (benefit) provision for income taxes


4,243




(8,962)










   Net income (loss) from continuing operations


$                    28,644




$                    27,240










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










Twelve Months Ended June 30,


2020 GAAP

Adjustments

2020 Adjusted


2019 GAAP

Adjustments

2019 Adjusted









Net sales

$             2,053,903

-

$             2,053,903


$             2,104,606

-

$             2,104,606

Cost of sales

1,588,133

(9,988)

1,578,145


1,706,109

(34,900)

1,671,209

Gross profit

465,770

9,988

475,758


398,497

34,900

433,397

Operating expenses (a) 

363,507

(27,730)

335,777


360,853

(37,316)

323,537

Productivity and transformation costs

48,789

(48,789)

-


40,107

(40,107)

-

Former Chief Executive Officer Succession Plan expense, net

-

-

-


30,156

(30,156)

-

Proceeds from insurance claim

(2,962)

2,962

-


(4,460)

4,460

-

Accounting review and remediation costs, net of insurance proceeds

-

-

-


4,334

(4,334)

-

Goodwill impairment

394

(394)

-


-

-

-

Operating income (loss)

56,042

83,938

139,980


(32,493)

142,353

109,860

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

22,214

(5,082)

17,132


23,511

(1,669)

21,842

Provision (benefit) for income taxes

6,205

27,575

33,780


(3,232)

28,499

25,267

   Net income (loss) from continuing operations

25,634

61,445

87,079


(53,427)

115,521

62,094

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

(106,041)

106,041

-


(129,887)

129,887

-

Net (loss) income

(80,407)

167,486

87,079


(183,314)

245,408

62,094









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

0.25

0.59

0.84


(0.51)

1.11

0.60

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

(1.02)

1.02

-


(1.25)

1.25

-

   Diluted net (loss) income per common share

(0.77)

1.61

0.84


(1.76)

2.36

0.60









Detail of Adjustments:










Twelve Months Ended
June 30, 2020




Twelve Months Ended
June 30, 2019


SKU rationalization and inventory write-down


$                      4,175




$                    12,381


Warehouse/manufacturing facility start-up costs


3,251




17,636


Plant closure related costs


2,562




4,883


Cost of sales


9,988




34,900










Gross profit


9,988




34,900










Long-lived asset impairment


17,954




15,819


Intangibles impairment


9,539




17,900


Warehouse/manufacturing facility start-up costs


189




-


Litigation and related expenses


48




1,517


Plant closure related costs


-




622


Stock-based compensation acceleration


-




1,458


Operating expenses (a) 


27,730




37,316










Productivity and transformation costs


48,789




40,107


Productivity and transformation costs


48,789




40,107










Former Chief Executive Officer Succession Plan expense, net

-




30,156


Former Chief Executive Officer Succession Plan expense, net


-




30,156










Proceeds from insurance claim


(2,962)




(4,460)


Proceeds from insurance claim


(2,962)




(4,460)










Accounting review and remediation costs, net of insurance proceeds

-




4,334


Accounting review and remediation costs, net of insurance proceeds


-




4,334










Goodwill impairment


394




-


Goodwill impairment


394




-










Operating income (loss)


83,938




142,353










Loss (gain) on sale of business


3,564




(534)


Unrealized currency losses (gains)


543




(850)


Deferred financing cost write-off


975




347


Realized currency loss on repayment of international loans

-




2,706


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


5,082




1,669










Income tax related adjustments


(27,575)




(28,499)


Provision (benefit) for income taxes


(27,575)




(28,499)










   Net income (loss) from continuing operations


$                    61,445




$                   115,523










(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 6/30/20 

$         511,746


$         298,644


$         213,102

 Impact of foreign currency exchange 

8,192


1,463


6,729

 Net sales on a constant currency basis -
   Three months ended 6/30/20 

$         519,938


$         300,107


$         219,831







Net sales - Three months ended 6/30/19

$         505,305


$         284,893


$         220,412

Net sales growth (decline) on a constant currency basis

2.9%


5.3%


(0.3)%








Hain
Consolidated


North America


International

 Net sales - Twelve months ended 6/30/20 

$      2,053,903


$      1,171,478


$         882,425

 Impact of foreign currency exchange 

27,471


2,227


25,244

 Net sales on a constant currency basis -
   Twelve months ended 6/30/20 

$      2,081,374


$      1,173,705


$         907,669







Net sales - Twelve months ended 6/30/19

$      2,104,606


$      1,195,979


$         908,627

Net sales decline on a constant currency basis 

(1.1)%


(1.9)%


(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 6/30/20 

$         519,938


$         300,107


$         219,831







Net sales - Three months ended 6/30/19

$         505,305


$         284,893


$         220,412

Divestitures and discontinued brands

(13,667)


(13,667)


-

SKU rationalization

(6,835)


(6,335)


(500)

 Net sales on a constant currency basis adjusted for
   divestitures, discontinued brands and SKU rationalization -
   Three months ended 6/30/20 

$         484,803


$         264,891


$         219,912

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

7.2%


13.3%


(0.0)%








Hain
Consolidated


North America


International

 Net sales on a constant currency basis -
   Twelve months ended 6/30/20 

$      2,081,374


$      1,173,705


$         907,669







Net sales - Twelve months ended 6/30/19

$      2,104,606


$      1,195,979


$         908,627

Divestitures and discontinued brands

(32,895)


(32,895)


-

SKU rationalization

(50,257)


(41,885)


(8,372)

 Net sales on a constant currency basis adjusted for
   divestitures, discontinued brands and SKU rationalization -
   Twelve months ended 6/30/20 

$      2,021,454


$      1,121,199


$         900,255

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

3.0%


4.7%


0.8%







Adjusted EBITDA Growth at Constant Currency








Hain
Consolidated


North America


International

 Adjusted EBITDA - Three months ended 6/30/20 

$           62,165


$           43,786


$           29,909

 Impact of foreign currency exchange 

1,214


275


938

 Adjusted EBITDA on a constant currency basis -
   Three months ended 6/30/20 

$           63,379


$           44,061


$           30,847







Net sales on a constant currency basis -
   Three months ended 6/30/20

$         519,938


$         300,107


$         219,831

Adjusted EBITDA growth on a constant currency basis

12.2%


14.7%


14.0%








Hain
Consolidated


North America


International

 Adjusted EBITDA - Twelve months ended 6/30/20 

$         199,993


$         140,886


$         105,696

 Impact of foreign currency exchange 

3,430


363


3,067

 Adjusted EBITDA on a constant currency basis -
   Twelve months ended 6/30/20 

$         203,423


$         141,249


$         108,763







Net sales on a constant currency basis -
   Twelve months ended 6/30/20

$      2,081,374


$      1,173,705


$         907,669

Adjusted EBITDA growth on a constant currency basis

9.8%


12.0%


12.0%

 

THE HAIN CELESTIAL GROUP, INC.

Operating Income (Loss) and Adjusted EBITDA

Three Months Ended

(unaudited and in thousands)





North America






June 30, 2020


June 30, 2019





Operating income (loss)

$                    31,867


$                     (2,745)

Depreciation and amortization

4,101


4,203

Long-lived asset impairment

6,196


5,617

Other

(664)


(1,062)

Productivity and transformation costs

1,553


3,549

Loss (gain) on sale of business

1,448


(534)

Warehouse/manufacturing facility start-up costs

385


8,133

Plant closure related costs

3


126

SKU rationalization and inventory write-down

(1,103)


10,075

Realized currency loss on repayment of international loans

-


2,563

Adjusted EBITDA

$                    43,786


$                    29,925





International






June 30, 2020


June 30, 2019





Operating income

$                    14,667


$                    18,112

Depreciation and amortization

7,179


8,142

Goodwill impairment

394


-

Long-lived asset impairment

4,883


4,393

Other

21


(515)

Productivity and transformation costs

2,765


(913)

Plant closure related costs

-


1,058

SKU rationalization and inventory write-down

-


271

Realized currency loss on repayment of international loans

-


105

Litigation and related expenses

-


68

Adjusted EBITDA

$                    29,909


$                    30,721

 

THE HAIN CELESTIAL GROUP, INC.

Operating Income (Loss) and Adjusted EBITDA

Twelve Months Ended

(unaudited and in thousands)





North America






June 30, 2020


June 30, 2019





Operating income

$                    95,934


$                    32,682

Depreciation and amortization

16,890


16,993

Long-lived asset impairment

8,499


7,120

Other

(486)


268

Productivity and transformation costs

9,053


8,333

SKU rationalization and inventory write-down

3,996


12,111

Warehouse/manufacturing facility start-up costs

3,440


17,661

Loss (gain) on sale of business

3,485


(534)

Plant closure related costs

75


1,205

Realized currency loss on repayment of international loans

-


2,563

Adjusted EBITDA

$                   140,886


$                    98,402









International






June 30, 2020


June 30, 2019





Operating Income

$                    55,333


$                    58,808

Depreciation and amortization

31,437


31,515

Goodwill impairment

394


-

Long-lived asset impairment

8,454


8,698

Other

583


(174)

Productivity and transformation costs

7,034


3,186

Plant closure related costs

2,282


3,467

SKU rationalization and inventory write-down

179


271

Realized currency loss on repayment of international loans

-


105

Litigation and related expenses

-


87

Adjusted EBITDA

$                   105,696


$                   105,963

 

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SOURCE The Hain Celestial Group, Inc.

Katie Turner and Ashley DeSimone, ICR, 646-277-1228