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Hain Celestial Reports Second Quarter Fiscal Year 2021 Financial Results
Fourth Consecutive Quarter of Net Sales Growth
376 Basis Point Expansion of Gross Margin
$43.1 Million Improvement in Operating Cash Flow
Gross Margin Improvement and Adjusted EBITDA Growth Expected to Continue

LAKE SUCCESS, N.Y., Feb. 9, 2021 /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 second quarter ended December 31, 2020. The results contained herein are presented with the Hain Pure Protein and Tilda operating segments being treated as discontinued operations. All growth comparisons are against the corresponding prior year period unless otherwise noted.

Mark L. Schiller, Hain Celestial's President and Chief Executive Officer, commented, "We are very pleased with our second quarter results, delivering mid-single digit topline growth, several hundred basis points of gross margin improvement and strong adjusted EBITDA growth. Although the macro operating environment remains challenging, our team continues to execute well against our transformational agenda. As a result, I am confident we will continue to see solid margin expansion and profit growth as we progress through the second half of fiscal year 2021."

FINANCIAL HIGHLIGHTS1

Summary of Second Quarter Results from Continuing Operations2

  • Net sales increased 4% to $528.4 million, or 2% on a constant currency basis, compared to the prior year period.
  • When adjusted to exclude the effects of foreign exchange, divestitures and discontinued brands, net sales increased 6% compared to the prior year period.
  • Gross margin of 24.6%, a 376 basis point increase from the prior year period.
  • Adjusted gross margin of 25.3%, a 331 basis point increase from the prior year period.
  • Operating income of $13.0 million compared to $9.2 million in the prior year period.
  • Adjusted operating income of $48.1 million compared to $29.5 million in the prior year period.
  • Net income of $2.2 million compared to $1.9 million in the prior year period.
  • Adjusted net income of $34.7 million compared to $17.6 million in the prior year period.
  • Adjusted EBITDA of $62.2 million compared to $45.0 million in the prior year period.
  • Adjusted EBITDA margin of 11.8%, a 288 basis point increase compared to the prior year period.
  • Earnings per diluted share ("EPS") of $0.02, flat compared to the prior year period.
  • Adjusted EPS of $0.34 compared to $0.17 in the prior year period.
  • Repurchased 0.9 million shares, or 0.9% of the outstanding common stock, at an average price of $32.15 per share.
  • Net cash provided by continuing operations of $63.9 million compared to $20.7 million in prior year period.
  • Operating free cash flow from continuing operations of $46.3 million compared to $4.6 million in prior year period.

SEGMENT HIGHLIGHTS FROM CONTINUING OPERATIONS

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

North America
North America net sales in the second quarter were $282.6 million, an increase of 1% compared to the prior year period. When adjusted for foreign exchange, divestitures and discontinued brands, net sales increased 6% from the prior year period.

Segment gross profit in the second quarter was $78.3 million, a 21% increase from the prior year period. Adjusted gross profit was $80.5 million, an increase of 16% from the prior year period. Gross margin was 27.7%, a 455 basis point increase from the prior year period, and adjusted gross margin was 28.5%, a 376 basis point increase from the prior year period.

Segment operating income in the second quarter was $32.4 million, a 62% increase from the prior year period. Adjusted operating income was $35.4 million, a 42% increase from the prior year period.

Adjusted EBITDA in the second quarter was $39.6 million, a 31% increase from the prior year period. As a percentage of sales on a constant currency basis, North America adjusted EBITDA margin was 14.0%, a 327 basis point increase from the prior year period.

International
International net sales in the second quarter were $245.8 million, an increase of 9% compared to the prior year period. When adjusted for foreign exchange, divestitures and discontinued brands, net sales increased 6% compared to the prior year period.

Segment gross profit in the second quarter was $51.7 million, a 27% increase from the prior year period. Adjusted gross profit was $53.4 million, an increase of 26% from the prior year period. Gross margin was 21.0%, a 305 basis point increase from the prior year period, and adjusted gross margin was 21.7%, a 303 basis point increase from the prior year period.

Segment operating loss in the second quarter was $2.7 million, compared to operating income of $12.9 million in the prior year period. The operating loss for the current period includes an impairment charge of $23.6 million related to the reserve recorded against the assets of the Company's United Kingdom fruit business resulting from held for sale classification. Adjusted operating income was $25.1 million, an increase of 51% from the prior year period.

Adjusted EBITDA in the second quarter was $32.2 million, a 28% increase from the prior year period. As a percentage of sales on a constant currency basis, International adjusted EBITDA margin was 13.0%, a 186 basis point increase from the prior year period.

CAPITAL MANAGEMENT

During the second quarter fiscal year 2021, the Company repurchased 0.9 million shares, or 0.9% of the outstanding common stock, at an average price of $32.15 per share for a total of $29.7 million, excluding commissions under our share repurchase program. As of December 31, 2020, the Company had remaining authorization of $118.1 million under this program.

SALE OF U.K. BASED FRUIT BUSINESS, ORCHARD HOUSE ®

Effective January 13, 2021, the Company completed the divestiture of its U.K. fruit business, including the Orchard House Foods Limited business and associated brands, to Elaghmore, a U.K. based private equity firm. Details of the transaction were not disclosed.

FISCAL YEAR 2021 GUIDANCE

Due to the continuing uncertainty around the duration and impact of the COVID-19 pandemic, the Company is not providing specific financial guidance for fiscal year 2021. The Company reaffirms its expectation for gross and adjusted EBITDA margin expansion as well as strong double-digit adjusted EBITDA and operating free cash flow growth for fiscal year 2021. However, for the third quarter fiscal year 2021, in comparison to the prior year period, the Company expects strong gross margin and EBITDA margin improvement and adjusted EBITDA growth near 10%.

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's™ (under license), MaraNatha®, Natumi®, New Covent Garden Soup Co.®, Robertson's®, Sensible Portions®, Spectrum®, Sun-Pat®, 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 adjusted operating income and its related margin, adjusted gross margin, adjusted net income, adjusted earnings per diluted share, net sales adjusted for the impact of foreign exchange, divestitures and discontinued brands, 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 provided herein in the tables. 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.

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 the impact of foreign currency, 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 (loss) before income taxes, net interest expense, depreciation and amortization, equity in net loss of equity-method investees, stock-based compensation, net, impairment of long-lived assets and intangibles, unrealized currency gains and losses, productivity and transformation costs, proceeds from an insurance claim, gains or losses on sales of businesses, warehouse and manufacturing consolidation and other costs, plant closure related costs, SKU rationalization and inventory write-downs, litigation and related expenses 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.

The Company defines operating free cash flow as cash provided by or used in operating activities from continuing operations (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.

_________________________

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 and other non-GAAP financial calculations are provided herein in the tables.
2 Unless otherwise noted all results included in this press release are from continuing operations.

 

THE HAIN CELESTIAL GROUP, INC.

Consolidated Balance Sheets

 (unaudited and in thousands) 

           
     

December 31, 2020

 

June 30, 2020

ASSETS

     

Current assets:

     
 

Cash and cash equivalents

$                     46,813

 

$                     37,771

 

Accounts receivable, net

185,576

 

170,969

 

Inventories

311,988

 

248,170

 

Prepaid expenses and other current assets

39,250

 

95,690

 

Assets held for sale

52,828

 

8,334

 

Total current assets

636,455

 

560,934

Property, plant and equipment, net

296,013

 

289,256

Goodwill

 

876,993

 

861,958

Trademarks and other intangible assets, net

326,272

 

346,462

Investments and joint ventures

16,926

 

17,439

Operating lease right-of-use assets

89,971

 

88,165

Other assets

22,969

 

24,238

 

Total assets 

$                2,265,599

 

$                2,188,452

LIABILITIES AND STOCKHOLDERS' EQUITY

     

Current liabilities:

     
 

Accounts payable

$                   216,782

 

$                   171,009

 

Accrued expenses and other current liabilities

118,732

 

124,045

 

Current portion of long-term debt

899

 

1,656

 

Liabilities related to assets held for sale

29,292

 

3,567

 

Total current liabilities

365,705

 

300,277

Long-term debt, less current portion

293,332

 

281,118

Deferred income taxes 

32,098

 

51,849

Operating lease liabilities, noncurrent portion

83,268

 

82,962

Other noncurrent liabilities

36,547

 

28,692

 

Total liabilities

810,950

 

744,898

 

Total stockholders' equity

1,454,649

 

1,443,554

 

Total liabilities and stockholders' equity

$                2,265,599

 

$                2,188,452

 

 

THE HAIN CELESTIAL GROUP, INC.

 Consolidated Statements of Operations 

 (unaudited and in thousands, except per share amounts) 

               
 

Second Quarter

 

Second Quarter Year to Date

 

2021

 

2020

 

2021

 

2020

               

Net sales

$             528,418

 

$             506,784

 

$          1,027,045

 

$             988,860

Cost of sales

398,453

 

401,177

 

777,916

 

785,422

Gross profit

129,965

 

105,607

 

249,129

 

203,438

Selling, general and administrative expenses

83,620

 

79,078

 

162,772

 

159,758

Amortization of acquired intangible assets

2,193

 

3,189

 

4,626

 

6,272

Productivity and transformation costs

6,016

 

12,260

 

7,818

 

26,435

Proceeds from insurance claim

-

 

-

 

-

 

(2,562)

Long-lived asset and intangibles impairment

25,179

 

1,889

 

57,676

 

1,889

Operating income

12,957

 

9,191

 

16,237

 

11,646

Interest and other financing expense, net

2,337

 

4,737

 

4,790

 

11,031

Other (income) expense, net

(1,045)

 

1,244

 

(2,418)

 

2,572

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

11,665

 

3,210

 

13,865

 

(1,957)

Provision for income taxes

8,438

 

1,020

 

21,400

 

489

Equity in net loss of equity-method investees

1,076

 

338

 

1,095

 

655

   Net income (loss) from continuing operations

$                 2,151

 

$                 1,852

 

$                (8,630)

 

$                (3,101)

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

(11)

 

(2,816)

 

11,255

 

(104,884)

Net income (loss)

$                 2,140

 

$                  (964)

 

$                 2,625

 

$            (107,985)

               

Net income (loss) per common share: 

             

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

$                   0.02

 

$                   0.02

 

$                 (0.09)

 

$                 (0.03)

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

-

 

(0.03)

 

0.11

 

(1.01)

   Basic net income (loss) per common share

$                   0.02

 

$                 (0.01)

 

$                   0.02

 

$                 (1.04)

               

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

$                   0.02

 

$                   0.02

 

$                 (0.09)

 

$                 (0.03)

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

-

 

(0.03)

 

0.11

 

(1.01)

   Diluted net income (loss) per common share

$                   0.02

 

$                 (0.01)

 

$                   0.02

 

$                 (1.04)

               

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

             

Basic

100,117

 

104,318

 

100,837

 

104,272

Diluted

100,562

 

104,619

 

100,837

 

104,272

 

 

THE HAIN CELESTIAL GROUP, INC.

 Consolidated Statements of Cash Flows  

(unaudited and in thousands)

               
 

Second Quarter

 

Second Quarter Year to Date

 

2021

 

2020

 

2021

 

2020

CASH FLOWS FROM OPERATING ACTIVITIES

             

Net income (loss)

$                 2,140

 

$                  (964)

 

$                 2,625

 

$            (107,985)

Net (loss) income from discontinued operations

(11)

 

(2,816)

 

11,255

 

(104,884)

Net income (loss) from continuing operations

2,151

 

1,852

 

(8,630)

 

(3,101)

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

             

Depreciation and amortization

11,193

 

13,219

 

24,954

 

27,142

Deferred income taxes

1,022

 

(751)

 

92

 

(5,155)

Equity in net loss of equity-method investees

1,076

 

338

 

1,095

 

655

Stock-based compensation, net

3,823

 

3,083

 

8,190

 

5,820

Long-lived asset and intangibles impairment

25,179

 

1,889

 

57,676

 

1,889

Other non-cash items, net

(98)

 

897

 

(1,765)

 

2,661

(Decrease) increase in cash attributable to changes in operating assets and liabilities:

             

Accounts receivable

(5,948)

 

8,393

 

(9,523)

 

7,540

Inventories

(13,550)

 

14,896

 

(58,512)

 

9,389

Other current assets

17,849

 

(12,328)

 

55,718

 

1,895

Other assets and liabilities

504

 

(1,386)

 

(1,037)

 

(1,242)

Accounts payable and accrued expenses

20,660

 

(9,373)

 

36,272

 

(30,345)

Net cash provided by operating activities from continuing operations

63,861

 

20,729

 

104,530

 

17,148

CASH FLOWS FROM INVESTING ACTIVITIES

             

Purchases of property, plant and equipment

(17,516)

 

(16,173)

 

(29,671)

 

(29,337)

Proceeds from sale of businesses and other

-

 

13,120

 

4,427

 

13,120

Net cash used in investing activities from continuing operations

(17,516)

 

(3,053)

 

(25,244)

 

(16,217)

CASH FLOWS FROM FINANCING ACTIVITIES

             

Borrowings under bank revolving credit facility

95,000

 

67,000

 

150,000

 

147,000

Repayments under bank revolving credit facility

(90,000)

 

(67,000)

 

(137,000)

 

(245,500)

Repayments under term loan

-

 

-

 

-

 

(206,250)

(Repayments) proceeds from discontinued operations entities

-

 

(2,266)

 

-

 

309,929

Repayments of other debt, net

(272)

 

(510)

 

(1,711)

 

(501)

Share repurchases

(29,684)

 

-

 

(71,736)

 

-

Shares withheld for payment of employee payroll taxes

(1,255)

 

(672)

 

(1,723)

 

(984)

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

(26,211)

 

(3,448)

 

(62,170)

 

3,694

Effect of exchange rate changes on cash from continuing operations

3,234

 

2,274

 

5,734

 

1,382

CASH FLOWS FROM DISCONTINUED OPERATIONS

             

Cash provided by (used in) operating activities

-

 

2,339

 

-

 

(5,687)

Cash (used in) provided by investing activities

-

 

(4,605)

 

-

 

301,815

Cash provided by (used in) financing activities

-

 

2,266

 

-

 

(304,100)

Effect of exchange rate changes on cash from discontinued operations

-

 

-

 

-

 

(537)

Net cash flows used in discontinued operations

-

 

-

 

-

 

(8,509)

Net increase (decrease) in cash and cash equivalents

23,368

 

16,502

 

22,850

 

(2,502)

Cash and cash equivalents at beginning of period

37,253

 

20,522

 

37,771

 

39,526

Cash and cash equivalents at end of period

$               60,621

 

$               37,024

 

$               60,621

 

$               37,024

               

Cash and cash equivalents included in the line item Assets held for sale on the Consolidated Balance Sheets as shown below, represents amounts included within held for sale accounting related to the sale of the Company's U.K. fruit business, the Orchard House Foods Limited business and associated brands.

               
               

Cash and cash equivalents 

$               46,813

 

$               37,024

 

$               46,813

 

$               37,024

Cash and cash equivalents classified in assets held for sale

13,808

 

-

 

13,808

 

-

Total cash and cash equivalents shown in the Consolidated Statements of Cash Flows

$               60,621

 

$               37,024

 

$               60,621

 

$               37,024

 

 

THE HAIN CELESTIAL GROUP, INC.

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

 (unaudited and in thousands) 

               
 

North America

 

International

 

Corporate/Other

 

Hain Consolidated

Net Sales

             

Net sales - Q2 FY21

$                 282,612

 

$                 245,806

 

$                            -

 

$                 528,418

Net sales - Q2 FY20

$                 280,693

 

$                 226,091

 

$                            -

 

$                 506,784

% change - FY'21 net sales vs. FY'20 net sales

0.7%

 

8.7%

     

4.3%

               

Gross Profit

             

Q2 FY21

             

Gross profit

$                   78,285

 

$                   51,680

 

$                            -

 

$                 129,965

Non-GAAP adjustments (1)

2,233

 

1,675

 

-

 

3,908

Adjusted gross profit

$                   80,518

 

$                   53,355

 

$                            -

 

$                 133,873

Gross margin

27.7%

 

21.0%

     

24.6%

Adjusted gross margin

28.5%

 

21.7%

     

25.3%

               

Q2 FY20

             

Gross profit

$                   64,969

 

$                   40,638

 

$                            -

 

$                 105,607

Non-GAAP adjustments (1)

4,439

 

1,590

 

-

 

6,029

Adjusted gross profit

$                   69,408

 

$                   42,228

 

$                            -

 

$                 111,636

Gross margin

23.1%

 

18.0%

     

20.8%

Adjusted gross margin

24.7%

 

18.7%

     

22.0%

               

Operating income (loss)

             

Q2 FY21

             

Operating income (loss)

$                   32,440

 

$                   (2,741)

 

$                 (16,742)

 

$                   12,957

Non-GAAP adjustments (1)

3,003

 

27,800

 

4,320

 

35,123

Adjusted operating income (loss)

$                   35,443

 

$                   25,059

 

$                 (12,422)

 

$                   48,080

Operating income (loss) margin

11.5%

 

(1.1)%

     

2.5%

Adjusted operating income margin

12.5%

 

10.2%

     

9.1%

               

Q2 FY20

             

Operating income (loss)

$                   20,062

 

$                   12,899

 

$                 (23,770)

 

$                     9,191

Non-GAAP adjustments (1)

4,965

 

3,647

 

11,729

 

20,341

Adjusted operating income (loss)

$                   25,027

 

$                   16,546

 

$                 (12,041)

 

$                   29,532

Operating income margin

7.1%

 

5.7%

     

1.8%

Adjusted operating income margin

8.9%

 

7.3%

     

5.8%

               

(1)See accompanying table "Adjusted Gross Profit, Adjusted Operating Income, Adjusted Net Income and Adjusted EPS"

   

 

 

THE HAIN CELESTIAL GROUP, INC.

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

 (unaudited and in thousands) 

               
 

North America

 

International

 

Corporate/Other

 

Hain Consolidated

Net Sales

             

Net sales - Q2 FY21 YTD

$                 563,280

 

$                 463,765

 

$                            -

 

$              1,027,045

Net sales - Q2 FY20 YTD

$                 552,394

 

$                 436,466

 

$                            -

 

$                 988,860

% change - FY'21 net sales vs. FY'20 net sales

2.0%

 

6.3%

     

3.9%

               

Gross Profit

             

Q2 FY21 YTD

             

Gross profit

$                 153,300

 

$                   95,829

 

$                            -

 

$                 249,129

Non-GAAP adjustments (1)

3,166

 

1,915

 

-

 

5,081

Adjusted gross profit

$                 156,466

 

$                   97,744

 

$                            -

 

$                 254,210

Gross margin

27.2%

 

20.7%

     

24.3%

Adjusted gross margin

27.8%

 

21.1%

     

24.8%

               

Q2 FY20 YTD

             

Gross profit

$                 127,330

 

$                   76,108

 

$                            -

 

$                 203,438

Non-GAAP adjustments (1)

6,164

 

2,666

 

-

 

8,830

Adjusted gross profit

$                 133,494

 

$                   78,774

 

$                            -

 

$                 212,268

Gross margin

23.1%

 

17.4%

     

20.6%

Adjusted gross margin

24.2%

 

18.0%

     

21.5%

               

Operating income (loss)

             

Q2 FY21 YTD

             

Operating income (loss)

$                   65,696

 

$                 (18,630)

 

$                 (30,829)

 

$                   16,237

Non-GAAP adjustments (1)

4,491

 

60,994

 

5,125

 

70,610

Adjusted operating income (loss)

$                   70,187

 

$                   42,364

 

$                 (25,704)

 

$                   86,847

Operating income (loss) margin

11.7%

 

(4.0)%

     

1.6%

Adjusted operating income margin

12.5%

 

9.1%

     

8.5%

               

Q2 FY20 YTD

             

Operating income (loss)

$                   35,194

 

$                   22,006

 

$                 (45,554)

 

$                   11,646

Non-GAAP adjustments (1)

8,861

 

5,991

 

19,951

 

34,803

Adjusted operating income (loss)

$                   44,055

 

$                   27,997

 

$                 (25,603)

 

$                   46,449

Operating income margin

6.4%

 

5.0%

     

1.2%

Adjusted operating income margin

8.0%

 

6.4%

     

4.7%

               

(1)See accompanying table "Adjusted Gross Profit, Adjusted Operating Income, Adjusted Net Income and Adjusted EPS"

   

 

 

THE HAIN CELESTIAL GROUP, INC.

 Adjusted Gross Profit, Adjusted Operating Income, Adjusted Net Income and Adjusted EPS 

 (unaudited and in thousands, except per share amounts) 

               
 

Second Quarter

 

2021 GAAP

Adjustments

2021 Adjusted

 

2020 GAAP

Adjustments

2020 Adjusted

               

Net sales

$          528,418

$                -

$          528,418

 

$          506,784

$                -

$          506,784

Cost of sales

398,453

(3,908)

394,545

 

401,177

(6,029)

395,148

Gross profit

129,965

3,908

133,873

 

105,607

6,029

111,636

Operating expenses (a) 

110,992

(25,199)

85,793

 

84,156

(2,052)

82,104

Productivity and transformation costs

6,016

(6,016)

-

 

12,260

(12,260)

-

Operating income

12,957

35,123

48,080

 

9,191

20,341

29,532

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

1,292

(234)

1,058

 

5,981

(1,298)

4,683

Provision for income taxes

8,438

2,827

11,265

 

1,020

5,889

6,909

   Net income from continuing operations

2,151

32,530

34,681

 

1,852

15,750

17,602

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

(11)

11

-

 

(2,816)

2,816

-

Net income (loss) 

2,140

32,541

34,681

 

(964)

18,566

17,602

               

Diluted net income per common share from continuing operations

0.02

0.32

0.34

 

0.02

0.15

0.17

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

-

-

-

 

(0.03)

0.03

-

   Diluted net income (loss) per common share

0.02

0.32

0.34

 

(0.01)

0.18

0.17

               

Detail of Adjustments:

             
   

Q2 FY21

     

Q2 FY20

 

Warehouse/manufacturing consolidation and other costs

 

$           3,325

     

$              476

 

Plant closure related costs

 

476

     

1,626

 

SKU rationalization and inventory write-down

 

107

     

3,927

 

Cost of sales

 

3,908

     

6,029

 
               

Gross profit

 

3,908

     

6,029

 
               

Long-lived asset impairment 

 

25,179

     

-

 

Plant closure related costs

 

20

     

-

 

Intangibles impairment

 

-

     

1,889

 

Warehouse/manufacturing consolidation and other costs

 

-

     

163

 

Operating expenses (a) 

 

25,199

     

2,052

 
               

Productivity and transformation costs

 

6,016

     

12,260

 

Productivity and transformation costs

 

6,016

     

12,260

 
               

Operating income

 

35,123

     

20,341

 
               

Unrealized currency losses (gains) 

 

225

     

(485)

 

Loss on sale of businesses

 

9

     

1,783

 

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

 

234

     

1,298

 
               

Income tax related adjustments

 

(2,827)

     

(5,889)

 

Provision for income taxes

 

(2,827)

     

(5,889)

 
               

   Net income from continuing operations

 

$         32,530

     

$         15,750

 
               

(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.

 Adjusted Gross Profit, Adjusted Operating Income, Adjusted Net Income and Adjusted EPS 

 (unaudited and in thousands, except per share amounts) 

               
 

Second Quarter Year to Date

 

2021 GAAP

Adjustments

2021 Adjusted

 

2020 GAAP

Adjustments

2020 Adjusted

               

Net sales

$       1,027,045

$                -

$       1,027,045

 

$          988,860

$                -

$          988,860

Cost of sales

777,916

(5,081)

772,835

 

785,422

(8,830)

776,592

Gross profit

249,129

5,081

254,210

 

203,438

8,830

212,268

Operating expenses (a) 

225,074

(57,711)

167,363

 

167,919

(2,100)

165,819

Productivity and transformation costs

7,818

(7,818)

-

 

26,435

(26,435)

-

Proceeds from insurance claims

-

-

-

 

(2,562)

2,562

-

Operating income

16,237

70,610

86,847

 

11,646

34,803

46,449

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

2,372

1,588

3,960

 

13,603

(3,957)

9,646

Provision (benefit) for income taxes

21,400

(1,735)

19,665

 

489

9,689

10,178

   Net (loss) income from continuing operations

(8,630)

70,757

62,127

 

(3,101)

29,071

25,970

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

11,255

(11,255)

-

 

(104,884)

104,884

-

Net income (loss) 

2,625

59,502

62,127

 

(107,985)

133,955

25,970

               

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

(0.09)

0.71

0.62

 

(0.03)

0.28

0.25

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

0.11

(0.11)

-

 

(1.01)

1.01

-

   Diluted net income (loss) per common share

0.02

0.60

0.62

 

(1.04)

1.29

0.25

               

Detail of Adjustments:

             
   

Q2 FY21 YTD

     

Q2 FY20 YTD

 

Warehouse/manufacturing consolidation and other costs

 

$           3,715

     

$           2,355

 

Plant closure related costs

 

1,055

     

2,559

 

SKU rationalization and inventory write-down

 

311

     

3,916

 

Cost of sales

 

5,081

     

8,830

 
               

Gross profit

 

5,081

     

8,830

 
               

Long-lived asset impairment 

 

57,676

     

-

 

Plant closure related costs

 

35

     

-

 

Intangibles impairment

 

-

     

1,889

 

Warehouse/manufacturing consolidation and other costs

 

-

     

163

 

Litigation and related expenses

 

-

     

48

 

Operating expenses (a) 

 

57,711

     

2,100

 
               

Productivity and transformation costs

 

7,818

     

26,435

 

Productivity and transformation costs

 

7,818

     

26,435

 
               

Proceeds from insurance claims

 

-

     

(2,562)

 

Proceeds from insurance claims

 

-

     

(2,562)

 
               

Operating income

 

70,610

     

34,803

 
               

Unrealized currency (gains) losses 

 

(977)

     

1,199

 

(Gain) loss on sale of businesses

 

(611)

     

1,783

 

Deferred financing cost write-off

 

-

     

975

 

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

 

(1,588)

     

3,957

 
               

Income tax related adjustments

 

1,735

     

(9,689)

 

Provision (benefit) for income taxes

 

1,735

     

(9,689)

 
               

   Net income from continuing operations

 

$         70,757

     

$         29,071

 
               

(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.

Adjusted Net Sales Growth

(unaudited and in thousands)

           

Q2 FY21

North America

 

International

 

Hain Consolidated

 Net sales 

$                 282,612

 

$                 245,806

 

$                 528,418

 Divestitures and discontinued brands 

(406)

 

-

 

(406)

 Impact of foreign currency exchange 

(465)

 

(9,819)

 

(10,284)

 Net sales on a constant currency basis adjusted for divestitures
   and discontinued brands 

$                 281,741

 

$                 235,987

 

$                 517,728

           

Q2 FY20

         

 Net sales  

$                 280,693

 

$                 226,091

 

$                 506,784

 Divestitures and discontinued brands 

(13,694)

 

(4,048)

 

(17,742)

 Net sales adjusted for divestitures and discontinued
    brands  

$                 266,999

 

$                 222,043

 

$                 489,042

           

 Net sales growth 

0.7%

 

8.7%

 

4.3%

 Impact of foreign currency exchange 

(0.2)%

 

(4.3)%

 

(2.0)%

 Impact of divestitures and discontinued brands 

5.0%

 

1.9%

 

3.6%

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

5.5%

 

6.3%

 

5.9%

           

Q2 FY21 YTD

North America

 

International

 

Hain Consolidated

 Net sales 

$                 563,280

 

$                 463,765

 

$              1,027,045

 Divestitures and discontinued brands 

(3,785)

 

(908)

 

(4,693)

 Impact of foreign currency exchange 

(101)

 

(19,705)

 

(19,806)

 Net sales on a constant currency basis adjusted for divestitures
   and discontinued brands  

$                 559,394

 

$                 443,152

 

$              1,002,546

           

Q2 FY20 YTD

         

 Net sales 

$                 552,394

 

$                 436,466

 

$                 988,860

 Divestitures and discontinued brands 

(33,403)

 

(5,660)

 

(39,063)

 Net sales adjusted for divestitures and discontinued
    brands  

$                 518,991

 

$                 430,806

 

$                 949,797

           

 Net sales growth 

2.0%

 

6.3%

 

3.9%

 Impact of foreign currency exchange 

-

 

(4.5)%

 

(2.0)%

 Impact of divestitures and discontinued brands 

5.8%

 

1.1%

 

3.7%

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

7.8%

 

2.9%

 

5.6%

 

 

THE HAIN CELESTIAL GROUP, INC.

 Adjusted EBITDA 

 (unaudited and in thousands) 

               
 

Second Quarter

 

Second Quarter Year to Date

 

2021

 

2020

 

2021

 

2020

               

Net income (loss)

$                 2,140

 

$                  (964)

 

$                 2,625

 

$            (107,985)

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

(11)

 

(2,816)

 

11,255

 

(104,884)

Net income (loss) from continuing operations

$                 2,151

 

$                 1,852

 

$                (8,630)

 

$                (3,101)

               

Provision for income taxes

8,438

 

1,020

 

21,400

 

489

Interest expense, net

1,300

 

4,000

 

3,454

 

8,552

Depreciation and amortization

11,193

 

13,219

 

24,954

 

27,142

Equity in net loss of equity-method investees

1,076

 

338

 

1,095

 

655

Stock-based compensation, net

3,823

 

3,083

 

8,190

 

5,820

Unrealized currency losses (gains)

225

 

(485)

 

(977)

 

1,199

Productivity and transformation costs

5,363

 

12,260

 

6,513

 

26,435

Proceeds from insurance claim

-

 

-

 

-

 

(2,562)

Long-lived asset and intangibles impairment

25,179

 

1,889

 

57,676

 

1,889

Warehouse/manufacturing consolidation and other costs

3,325

 

639

 

3,715

 

2,518

SKU rationalization and inventory write-down

107

 

3,927

 

311

 

3,916

Loss (gain) on sale of businesses

9

 

1,783

 

(611)

 

1,783

Plant closure related costs

2

 

1,522

 

(4)

 

2,354

Litigation and related expenses

-

 

-

 

-

 

48

Adjusted EBITDA

$               62,191

 

$               45,047

 

$             117,086

 

$               77,137

 

 

THE HAIN CELESTIAL GROUP, INC.

Adjusted EBITDA by Segment

(unaudited and in thousands)

               
 

North America

 

International

 

Corporate/
Other

 

Hain Consolidated

Q2 FY21

             

Operating income (loss)

$                      32,440

 

$                   (2,741)

 

$                 (16,742)

 

$                  12,957

Depreciation and amortization

4,117

 

6,418

 

658

 

11,193

Productivity and transformation costs

751

 

2,529

 

2,083

 

5,363

Long-lived asset impairment

-

 

23,596

 

1,583

 

25,179

Warehouse/manufacturing consolidation and other costs

1,622

 

1,703

 

-

 

3,325

SKU rationalization and inventory write-down

107

 

-

 

-

 

107

Plant closure related costs

29

 

(27)

 

-

 

2

Loss (gain) on sale of businesses

16

 

-

 

(7)

 

9

Other

518

 

695

 

2,843

 

4,056

Adjusted EBITDA

$                      39,600

 

$                  32,173

 

$                   (9,582)

 

$                  62,191

               
               
 

North America

 

International

 

Corporate/
Other

 

Hain Consolidated

Q2 FY20

             

Operating income (loss)

$                      20,062

 

$                  12,899

 

$                 (23,770)

 

$                    9,191

Depreciation and amortization

4,201

 

8,339

 

679

 

13,219

Productivity and transformation costs

332

 

2,056

 

9,872

 

12,260

Intangibles impairment

-

 

-

 

1,889

 

1,889

SKU rationalization and inventory write-down

3,927

 

-

 

-

 

3,927

Loss on sale of businesses

1,783

 

-

 

-

 

1,783

Warehouse/manufacturing consolidation and other costs

639

 

-

 

-

 

639

Plant closure related costs

35

 

1,487

 

-

 

1,522

Other

(838)

 

367

 

1,088

 

617

Adjusted EBITDA

$                      30,141

 

$                  25,148

 

$                 (10,242)

 

$                  45,047

 

 

THE HAIN CELESTIAL GROUP, INC.

Adjusted EBITDA by Segment

(unaudited and in thousands)

               
 

North America

 

International

 

Corporate/
Other

 

Hain Consolidated

Q2 FY21 YTD

             

Operating income (loss)

$                      65,696

 

$                 (18,630)

 

$                 (30,829)

 

$                  16,237

Depreciation and amortization

8,262

 

15,281

 

1,411

 

24,954

Productivity and transformation costs

1,305

 

2,974

 

2,234

 

6,513

Long-lived asset impairment

(11)

 

56,104

 

1,583

 

57,676

Warehouse/manufacturing consolidation and other costs

1,822

 

1,893

 

-

 

3,715

SKU rationalization and inventory write-down

311

 

-

 

-

 

311

Loss (gain) on sale of businesses

205

 

(1,344)

 

528

 

(611)

Plant closure related costs

(28)

 

24

 

-

 

(4)

Other

1,160

 

2,576

 

4,559

 

8,295

Adjusted EBITDA

$                      78,722

 

$                  58,878

 

$                 (20,514)

 

$                 117,086

               
               
 

North America

 

International

 

Corporate/
Other

 

Hain Consolidated

Q2 FY20 YTD

             

Operating income (loss)

$                      35,194

 

$                  22,006

 

$                 (45,554)

 

$                  11,646

Depreciation and amortization

8,549

 

16,265

 

2,328

 

27,142

Productivity and transformation costs

2,500

 

3,328

 

20,607

 

26,435

Proceeds from insurance claim

-

 

-

 

(2,562)

 

(2,562)

Intangibles impairment

-

 

-

 

1,889

 

1,889

SKU rationalization and inventory write-down

3,737

 

179

 

-

 

3,916

Warehouse/manufacturing consolidation and other costs

2,518

 

-

 

-

 

2,518

Loss on sale of businesses

1,783

 

-

 

-

 

1,783

Plant closure related costs

72

 

2,282

 

-

 

2,354

Litigation and related expenses

-

 

-

 

48

 

48

Other

(173)

 

799

 

1,342

 

1,968

Adjusted EBITDA

$                      54,180

 

$                  44,859

 

$                 (21,902)

 

$                  77,137

 

 

THE HAIN CELESTIAL GROUP, INC.

Adjusted EBITDA Margin at Constant Currency by Segment

(unaudited and in thousands)

               

Q2 FY21

North America

 

International

 

Corporate/
Other

 

Hain Consolidated

 Adjusted EBITDA 

$                    39,600

 

$                    32,173

 

$                    (9,582)

 

$                    62,191

 Impact of foreign currency exchange 

(72)

 

(1,528)

 

-

 

(1,600)

 Adjusted EBITDA on a constant currency basis 

$                    39,528

 

$                    30,645

 

$                    (9,582)

 

$                    60,591

               

 Net sales on a constant currency basis  

$                  282,147

 

$                  235,987

     

$                  518,134

 Adjusted EBITDA margin on a constant currency basis 

14.0%

 

13.0%

     

11.7%

               

Q2 FY21 YTD

North America

 

International

 

Corporate/
Other

 

Hain Consolidated

 Adjusted EBITDA 

$                    78,722

 

$                    58,878

 

$                  (20,514)

 

$                  117,086

 Impact of foreign currency exchange 

(11)

 

(2,810)

 

-

 

(2,821)

 Adjusted EBITDA on a constant currency basis 

$                    78,711

 

$                    56,068

 

$                  (20,514)

 

$                  114,265

               

 Net sales on a constant currency basis 

$                  563,179

 

$                  444,060

     

$               1,007,239

 Adjusted EBITDA margin on a constant currency basis 

14.0%

 

12.6%

     

11.3%

 

 

THE HAIN CELESTIAL GROUP, INC.

 Operating Free Cash Flow 

(unaudited and in thousands)

               
 

Second Quarter

 

Second Quarter Year to Date

 

2021

 

2020

 

2021

 

2020

               

Net cash provided by operating activities from continuing operations

$               63,861

 

$               20,729

 

$             104,530

 

$               17,148

Purchases of property, plant and equipment

(17,516)

 

(16,173)

 

(29,671)

 

(29,337)

Operating free cash flow from continuing operations (1)

$               46,345

 

$                 4,556

 

$               74,859

 

$              (12,189)

               

(1)The increase in operating free cash flow resulted primarily from an improvement in net income adjusted for non-cash charges in the current period and greater cash generation from our working capital accounts.

 

 

 

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SOURCE The Hain Celestial Group, Inc.

Chris Mandeville and Anna Kate Heller, ICR, 203-682-8304