Fourth Quarter Total Net Sales Increased 1.4%; North America Net Sales Increased 17.2%

Fourth Quarter GAAP EPS of $0.03; Adjusted EPS of $0.08

LAKE SUCCESS, N.Y., Aug. 25, 2022 (GLOBE NEWSWIRE) -- 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, 2022.

Mark L. Schiller, Hain Celestial’s President and Chief Executive Officer, commented, “Fiscal year 2022 and Q4 presented unprecedented volatility and numerous challenges. While our results have been below our expectations and we still face challenges, especially in Europe, we exit the year with strong topline momentum in North America, improving supply chain performance, additional pricing and stabilizing total store revenues in the UK. Looking forward to fiscal year 2023, we remain confident in our strategy and are poised to restore net sales and EBITDA growth as the year progresses.”

FINANCIAL HIGHLIGHTS

Summary of Fourth Quarter Results Compared to the Prior Year Period

• Net sales increased 1.4% to $457.0 million compared to the prior year period.
• When adjusted for foreign exchange, acquisitions, divestitures and discontinued brands, net sales decreased 0.6% compared to the prior year period.
• Gross profit margin of 19.5%, a 550-basis point decrease from the prior year period.
• Adjusted gross profit margin of 19.4%, a 630-basis point decrease from the prior year period.
• Operating income of $11.9 million compared to $41.6 million in the prior year period.
• Adjusted operating income of $19.3 million compared to $53.0 million in the prior year period.
• Net income of $3.0 million compared to $40.5 million in the prior year period.
• Adjusted net income of $7.6 million compared to $39.7 million in prior year period.
• Adjusted EBITDA of $35.4 million compared to $68.1 million in the prior year period.
• Adjusted EBITDA margin of 7.7%, a 740-basis point decrease compared to the prior year period.
• Earnings per diluted share (“EPS”) of $0.03 compared to $0.40 in the prior year period.
• Adjusted EPS of $0.08 compared to $0.39 in the prior year period.
• Repurchased 0.5 million shares, or 0.6% of the outstanding common stock, at an average price of $26.13 per share.
  

Summary of Fiscal Year 2022 Results Compared to the Prior Year

• Net sales decreased 4.0% to $1,891.8 million compared to the prior year.
• When adjusted for foreign exchange, acquisitions, divestitures and discontinued brands, net sales decreased 0.4% compared to the prior year.
• Gross profit margin of 22.6%, a 240-basis point decrease from the prior year.
• Adjusted gross profit margin of 22.9%, a 280-basis point decrease from the prior year.
• Operating income of $104.7 million compared to $107.4 million in the prior year.
• Adjusted operating income of $141.8 million compared to $199.5 million in the prior year.
• Net income of $77.9 million compared to $66.1 million in the prior year.
• Adjusted net income of $95.5 million compared to $146.5 million in the prior year.
• Adjusted EBITDA of $200.6 million compared to $258.9 million in the prior year.
• Adjusted EBITDA margin of 10.6%, a 250-basis point decrease compared to the prior year.
• EPS of $0.83 compared to $0.65 in the prior year.
• Adjusted EPS of $1.02 compared to $1.45 in the prior year.
• Repurchased 10.6 million shares, or 10.7% of the outstanding common stock, at an average price of $38.48 per share.
  

SEGMENT HIGHLIGHTS

The Company operates under two reportable segments: North America and International.

North America
North America net sales in the fourth quarter were $296.9 million, a 17% increase compared to the prior year period. When adjusted for foreign exchange, acquisitions, divestitures and discontinued brands, net sales increased by approximately 6% from the prior year period mainly due to stronger sales in the snacks, baby and personal care categories.

Segment gross profit in the fourth quarter was $59.8 million, flat compared to the prior year period. Adjusted gross profit was $59.5 million, a decrease of 5% from the prior year period. Gross margin was 20.1%, a 340-basis point decrease from the prior year period, and adjusted gross margin was 20.0%, a 460-basis point decrease from the prior year period. The decrease was mainly driven by higher inflation compared to the prior year period.

Segment operating income in the fourth quarter was $21.2 million, an 11% decrease from the prior year period. Adjusted operating income was $22.0 million, a 26% decrease resulting primarily from continued high inflation and supply disruptions, with progress made throughout the quarter to set the Company up for a stronger start to fiscal year 2023. Additionally, operating income for the fourth quarter included charges of approximately $10.0 million to eliminate several unprofitable brands and SKUs and to write off obsolete inventory in Hain’s sanitizer business, as the Company elected to continue to aggressively reshape the portfolio during the quarter.

Adjusted EBITDA in the fourth quarter was $27.5 million, a 21% decrease from the prior year period. As a percentage of net sales, North America adjusted EBITDA margin was 9.3%, a 450-basis point decrease from the prior year period.

North America net sales in fiscal year 2022 were $1,163.1 million, a 5% increase compared to the prior year. When adjusted for foreign exchange, acquisitions, divestitures and discontinued brands, net sales increased by approximately 4% from the prior year mainly due to price increases that occurred in the latter half of the fiscal year as well as stronger sales in snacks, baby, personal care and other product categories.

Segment gross profit in fiscal year 2022 was $259.5 million, an 11% decrease compared to the prior year. Adjusted gross profit was $263.7 million, a decrease of 12% from the prior year. Gross margin was 22.3%, a 410-basis point decrease from the prior year, and adjusted gross margin was 22.7%, a 460-basis point decrease from the prior year. The decrease was mainly driven by inflationary and supply chain challenges, such as continued industry-wide distribution and warehousing cost pressures driven by labor shortages, freight costs and the proactive write-off of unprofitable SKUs.

Segment operating income in fiscal year 2022 was $93.7 million, a 27% decrease from the prior year. Adjusted operating income was $102.9 million, a 28% decrease from the prior year resulting primarily from continued high inflation and supply disruptions, with progress made throughout the quarter to set the Company up for a stronger start to fiscal year 2023. Additionally, operating income included charges of approximately $10.0 million to eliminate several unprofitable brands and SKUs and to write off obsolete inventory on Hain’s sanitizer business, as the Company elected to continue to aggressively reshape the portfolio during the quarter.

Adjusted EBITDA in fiscal year 2022 was $122.2 million, a 25% decrease from the prior year. As a percentage of net sales, North America adjusted EBITDA margin was 10.5%, a 420-basis point decrease from the prior year.

International
International net sales in the fourth quarter were $160.2 million, a 19% decrease compared to the prior year period. Foreign exchange reduced fourth quarter net sales by 930 basis points while divestitures were immaterial to the quarter. When adjusted for foreign exchange and divestitures, net sales decreased 10% compared to the prior year period mainly due to total store sales declines and softness in the plant-based protein and beverage categories.

Segment gross profit in the fourth quarter was $29.3 million, a 45% decrease from the prior year period. Adjusted gross profit was $29.3 million, a decrease of 45% from the prior year period. Gross margin was 18.3%, an 860-basis point decrease from the prior year period, and adjusted gross margin was 18.3%, an 890-basis point decrease from the prior year period. The decrease in gross profit was mainly due to the aforementioned decrease in sales, higher than expected inflation and manufacturing deleverage compared to the prior year period.

Segment operating income in the fourth quarter was $9.3 million, a 69% decrease from the prior year period. Adjusted operating income was $9.9 million, a decrease of 68% from the prior year period. The decrease in operating income was mainly due to lower gross profit resulting from a decline in sales, as well as higher energy and supply chain costs, when compared to the prior year period.

Adjusted EBITDA in the fourth quarter was $16.9 million, a 56% decrease from the prior year period. As a percentage of net sales, International adjusted EBITDA margin was 10.5%, an 890-basis point decrease from the prior year period.

International net sales in fiscal year 2022 were $728.7 million, a 16% decrease compared to the prior year. Foreign exchange and divestitures reduced fiscal year net sales by 200 and 830 basis points, respectively. When adjusted for foreign exchange and divestitures, net sales decreased 6% compared to the prior year mainly due to a decline in sales in the Europe and United Kingdom operating segments. The net sales decrease in the Europe operating segment was primarily due to the loss of a large non-dairy co-manufacturing customer. The net sales decrease in the United Kingdom was due to lower sales volume driven by total sales declines resulting from high inflation and lower consumer confidence in the economy.

Segment gross profit in fiscal year 2022 was $167.9 million, a 16% decrease from the prior year. Adjusted gross profit was $168.8 million, a decrease of 18% from the prior year. Gross margin was 23.0%, relatively flat compared to the prior year, and adjusted gross margin was 23.2%, a 50-basis point decrease from the prior year. The decrease in gross profit was mainly due to the aforementioned decrease in sales and higher energy and supply chain costs compared to the prior year, partially offset by an improvement in gross margin driven by the divestiture of the fruit business in fiscal year 2021 and the implementation of productivity initiatives.

Segment operating income in fiscal year 2022 was $79.1 million, a 108% increase from the prior year. Adjusted operating income was $81.7 million, a decrease of 21% from the prior year. The decrease in adjusted operating income was mainly due to lower gross profit resulting from a decline in sales, as well as higher energy and supply chain costs, when compared to the prior year.

Adjusted EBITDA in fiscal year 2022 was $110.1 million, an 18% decrease from the prior year. As a percentage of net sales, International adjusted EBITDA margin was 15.1%, a 35-basis point decrease from the prior year.

CAPITAL MANAGEMENT

During the fourth quarter of fiscal year 2022, the Company repurchased 0.5 million shares, or 0.6% of the outstanding common stock, at an average price of $26.13 per share for a total of $13.1 million, excluding commissions.

During fiscal year 2022, the Company repurchased 10.6 million shares, or 10.7% of the outstanding common stock, at an average price of $38.48 per share for a total of $408.9 million, excluding commissions. As of June 30, 2022, the Company had $173.5 million remaining under its existing share repurchase authorization.

FULL YEAR FISCAL 2023 GUIDANCE

The Company expects adjusted net sales and adjusted EBITDA on a constant currency basis of -1% to +4% compared to the prior year driven by:

• Ongoing momentum in North America
• 2023 price increases, most of which are already accepted by retail partners, to offset expected mid-teens year-over-year inflation
• A robust productivity pipeline and
• An uncertain, but improving, retail environment in the United Kingdom, with continued challenges in Europe

Contacts:
Investor Relations:
Chris Mandeville and Anna Kate Heller
ICR
hain@icrinc.com

Media:
Robin Shallow
robin@robincomm.com

Conference Call and Webcast Information 
Hain Celestial will host a conference call and webcast today at 8:30 AM Eastern Time to discuss its results and business outlook. Investors interested in participating in the live call can dial 877-407-9716 from the U.S. and 201-493-6779 internationally. 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, Inc. (Nasdaq: HAIN) is a leading organic and natural products company that has been committed to creating A Healthier Way of Life^® since 1993. Headquartered in Lake Success, NY with operations in North America, Europe, Asia and the Middle East, Hain Celestial’s food and beverage brands include Celestial Seasonings^®, Clarks™, Cully & Sully^®, Earth’s Best^®, Ella’s Kitchen^®, Frank Cooper’s^®, Garden of Eatin’^®, Hain Pure Foods^®, Hartley’s^®, Health Valley^®, Imagine^®, Joya^®, Lima^®, Linda McCartney’s^® (under license), MaraNatha^®, Natumi^®, New Covent Garden Soup Co.^®, ParmCrisps^®, Robertson’s^®, Rose’s^® (under license), Sensible Portions^®, Spectrum^®, Sun-Pat^®, Terra^®, The Greek Gods^®, Thinsters^®, Yorkshire Provender^® and Yves Veggie Cuisine^®. Hain Celestial’s personal care brands include Alba Botanica^®, Avalon Organics^®, JASON^®, Live Clean^® and Queen Helene^® brands. For more information, visit hain.com.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looking statements. The words “believe,” “expect,” “anticipate,” “may,” “should,” “plan,” “intend,” “potential,” “will” and similar expressions are intended to identify such forward-looking statements. Forward-looking statements include, among other things, our beliefs or expectations relating to our future performance, results of operations and financial condition; foreign exchange rates; our strategic initiatives, business strategy, supply chain, brand portfolio, pricing actions and product performance; current or future macroeconomic trends; and future corporate acquisitions or dispositions.

Risks and uncertainties that may cause actual results to differ materially from forward-looking statements include: challenges and uncertainty resulting from the impact of competition; our ability to manage our supply chain effectively; input cost inflation; supply chain disruptions, cybersecurity risks and other risks arising from the Russia-Ukraine war; disruption of operations at our manufacturing facilities; reliance on independent contract manufacturers; challenges and uncertainty resulting from the COVID-19 pandemic; changes to consumer preferences; customer concentration; reliance on independent distributors; the availability of natural and organic ingredients; risks associated with our international sales and operations; risks associated with outsourcing arrangements; our ability to execute our cost reduction initiatives and related strategic initiatives; our ability to identify and complete acquisitions or divestitures and our level of success in integrating acquisitions; our reliance on independent certification for a number of our products; the reputation of our Company and our brands; our ability to use and protect trademarks; general economic conditions; foreign currency exchange risk; the United Kingdom’s exit from the European Union; cybersecurity incidents; disruptions to information technology systems; the impact of climate change; liabilities, claims or regulatory change with respect to environmental matters; potential liability if our products cause illness or physical harm; the highly regulated environment in which we operate; pending and future litigation; compliance with data privacy laws; compliance with our credit agreement; the discontinuation of LIBOR; our ability to issue preferred stock; the adequacy of our insurance coverage; impairments in the carrying value of goodwill or other intangible assets; and other risks and matters described in our most recent Annual Report on Form 10-K and our other filings from time to time with the U.S. Securities and Exchange Commission.

We undertake no obligation to update forward-looking statements to reflect actual results or changes in assumptions or circumstances, except as required by applicable law.

Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP financial measures, including, among others, adjusted operating income and its related margin, adjusted gross profit and its related margin, adjusted net income, adjusted earnings per diluted share, net sales adjusted for the impact of foreign exchange, acquisitions, divestitures and discontinued brands, adjusted EBITDA and its related margin, adjusted EBITDA on a constant currency basis and operating free cash flow. The reconciliations of historic non-GAAP financial measures to the comparable GAAP financial measures are provided in the tables 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 and Cash Flows presented in accordance with GAAP.

Certain forward-looking non-GAAP financial measures included in this press release are not reconciled to the comparable forward-looking GAAP financial measures. The Company is not able to reconcile these forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures without unreasonable efforts because the Company is unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures but would not impact the non-GAAP measures. Such items may include litigation and related expenses, transaction costs associated with acquisitions and divestitures, productivity and transformation costs, impairments, gains or losses on sales of assets and businesses, foreign exchange movements and other items. The unavailable information could have a significant impact on the Company’s GAAP financial results.

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 monthly 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 the impact of foreign currency, acquisitions, divestitures and discontinued brands 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 before net interest expense, income taxes, depreciation and amortization, equity in net loss of equity-method investees, stock-based compensation, net, unrealized currency gains and losses, litigation and related costs, plant closure related costs, net, productivity and transformation costs, warehouse and manufacturing consolidation and other costs, costs associated with acquisitions, divestitures and other transactions, gains or losses on sales of assets and businesses, inventory write-downs, impairment of long-lived assets and intangibles and other adjustments. Adjusted EBITDA on a constant currency basis reflects adjusted EBITDA, as defined above, excluding the impact of foreign currency changes. 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. The Company believes presenting adjusted EBITDA on a constant currency basis commencing in fiscal year 2023 will provide useful information to investors because it provides transparency to underlying performance in the Company’s adjusted EBITDA 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, current period adjusted EBITDA 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 monthly foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year.

The Company defines operating free cash flow as cash provided by or used in operating activities (a GAAP measure) less purchases of property, plant and equipment. 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.

__________________________

* Notes:

• The results contained in this press release are presented with the Tilda operating segment being treated as discontinued operations. Unless otherwise noted, all results included in this press release are from continuing operations.
• 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 and other non-GAAP financial calculations are provided in the tables included in this press release.

Source: The Hain Celestial Group, Inc.