Total Net Sales Increased 2.1%; North America Net Sales Increased 13.3%

EPS of $0.27; Adjusted EPS of $0.33

Multiple Actions Being Taken to Offset Input Cost Inflation and Improve Margins

LAKE SUCCESS, N.Y., May 05, 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 third quarter ended March 31, 2022.

Mark L. Schiller, Hain Celestial’s President and Chief Executive Officer, commented, “Despite a very challenging quarter, we are pleased to see underlying strength in our brands and accelerating topline growth in Q3, while navigating supply chain and labor disruptions and escalating inflationary costs. Consumption growth in the U.S. was extremely strong and is expected to continue into the fourth quarter. To offset cost pressures and deliver sequential margin improvement in Q4, we have increased prices and are delivering additional supply chain productivity initiatives. The team remains confident in our Hain 3.0 strategy and laser-focused on delivering accelerating top line and long-term profitable growth.”

FINANCIAL HIGHLIGHTS

Summary of Third Quarter Results from Continuing Operations Compared to the Prior Year Period

• Net sales increased 2.1% to $502.9 million compared to the prior year period.
• When adjusted for foreign exchange, acquisitions, divestitures and discontinued brands, net sales increased 1.5% compared to the prior year period.
• Gross profit margin of 23.0%, a 340 basis point decrease from the prior year period.
• Adjusted gross profit margin of 23.4%, a 400 basis point decrease from the prior year period.
• Operating income of $35.2 million compared to $49.6 million in the prior year period.
• Adjusted operating income of $42.4 million compared to $59.7 million in the prior year period.
• Net income of $24.5 million compared to $34.3 million in the prior year period.
• Adjusted net income of $29.7 million compared to $44.7 million in prior year period.
• Adjusted EBITDA of $58.7 million compared to $73.8 million in the prior year period.
• Adjusted EBITDA margin of 11.7%, a 330 basis point decrease compared to the prior year period.
• Earnings per diluted share (“EPS”) of $0.27 compared to $0.34 in the prior year period.
• Adjusted EPS of $0.33 compared to $0.44 in the prior year period.
• Repurchased 3.6 million shares, or 3.8% of the outstanding common stock, at an average price of $36.48 per share.
  

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* 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.

SEGMENT HIGHLIGHTS FROM CONTINUING OPERATIONS

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

North America
North America net sales in the third quarter were $325.7 million, an increase of 13% compared to the prior year period. When adjusted for foreign exchange, acquisitions, divestitures and discontinued brands, net sales increased by approximately 9% from the prior year period mainly due to stronger sales in the snacks, baby and personal care categories.

Segment gross profit in the third quarter was $75.2 million, a 4% decrease from the prior year period. Adjusted gross profit was $77.1 million, a decrease of 6% from the prior year period. Gross margin was 23.1%, a 420 basis point decrease from the prior year period, and adjusted gross margin was 23.7%, a 480 basis point decrease from the prior year period. The decrease was mainly driven by higher inflation, including increased distribution and warehousing costs, compared to the prior year period.

Segment operating income in the third quarter was $28.5 million, a 28% decrease from the prior year period. Adjusted operating income was $31.4 million, a 29% decrease resulting primarily from inflationary and supply chain challenges above and beyond the level we were able to price for (such as continued industry-wide distribution and warehousing cost pressures driven by labor shortages, freight carrier availability and other freight cost issues) and lower net sales in the Canada operating segment when compared to the prior year period.

Adjusted EBITDA in the third quarter was $37.3 million, a 23% decrease from the prior year period. As a percentage of net sales, North America adjusted EBITDA margin was 11.4%, a 540 basis point decrease from the prior year period.

International
International net sales in the third quarter were $177.2 million, a decrease of 14% compared to the prior year period. Foreign exchange and divestitures reduced third quarter net sales by 360 and 180 basis points, respectively. When adjusted for foreign exchange and divestitures, net sales decreased 8% compared to the prior year period mainly due to a decline in the Europe and United Kingdom operating segments, partially offset by an increase in sales in the Ella's Kitchen UK operating segment.

Segment gross profit in the third quarter was $40.5 million, a 21% decrease from the prior year period. Adjusted gross profit was $40.6 million, a decrease of 24% from the prior year period. Gross margin was 22.8%, a 220 basis point decrease from the prior year period, and adjusted gross margin was 22.9%, a 310 basis point decrease from the prior year period. 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 period.

Segment operating income in the third quarter was $18.3 million, a 32% decrease from the prior year period. Adjusted operating income was $18.8 million, a decrease of 36% 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 third quarter was $26.5 million, a 28% decrease from the prior year period. As a percentage of net sales, International adjusted EBITDA margin was 14.9%, a 300 basis point decrease from the prior year period.

CAPITAL MANAGEMENT

As previously disclosed, the Board of Directors of the Company approved an additional $200 million share repurchase authorization in February 2022. Share repurchases under this authorization commenced in February 2022, after the Company’s $300 million authorization was fully utilized. The extent to which the Company repurchases its shares and the timing of such repurchases will be at the Company’s discretion and will depend upon market conditions and other corporate considerations. Repurchases may be made from time to time in the open market, pursuant to pre-set trading plans, in private transactions or otherwise.

During the third quarter of fiscal year 2022, the Company repurchased 3.6 million shares, or 3.8% of the outstanding common stock, at an average price of $36.48 per share for a total of $130.4 million, excluding commissions. As of March 31, 2022, the Company had $186.6 million remaining under its $200 million authorization.

GUIDANCE

For the fourth quarter fiscal year 2022, compared to the prior year period, the Company expects:

• Low to mid single digit adjusted net sales growth supported by double digit growth in North America,
• Modest adjusted gross margin reduction, and
• Adjusted EBITDA down low to mid single digits (including approximately 300 basis points of foreign exchange headwind).
  

The Company updates its adjusted net sales and adjusted EBITDA guidance for full fiscal year 2022 compared to fiscal year 2021 and now expects:

• Approximately flat adjusted net sales,
• Modest adjusted gross margin reduction, and a
• Low double digit adjusted EBITDA decline.
  

Notes: Adjusted net sales is defined as adjusted for the impact of foreign currency changes, acquisitions, divestitures, and discontinued brands. All references in this “Guidance” section to growth or declines in adjusted net sales or adjusted EBITDA compared to a prior year period represent percentage growth or percentage decline.

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; our strategic initiatives, business strategy, supply chain, brand portfolio and product performance; the COVID-19 pandemic; the success of our pricing negotiations; 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; challenges and uncertainty resulting from the COVID-19 pandemic; our ability to manage our supply chain effectively; supply chain disruptions, cybersecurity risks and other risks arising from the war in Ukraine; disruption of operations at our manufacturing facilities; reliance on independent contract manufacturers; changes to consumer preferences; customer concentration; reliance on independent distributors; the availability of 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; input cost inflation; 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 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.

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 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 (income) 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 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.

Source: The Hain Celestial Group, Inc.