CORRECTION -- Hain Celestial Reports Second Quarter 2023 Financial Results
Net Income of
Adjusted EBITDA on Constant Currency Basis of
Reaffirming Full Year Fiscal 2023 Guidance
In a release issued under the same headline earlier today by The Hain Celestial Group, Inc. (Nasdaq: HAIN), please note in the North America and International sections of the SEGMENT HIGHLIGHTS section, the third sentences in the third paragraphs have been corrected. The corrected release follows.
“I am honored and excited to be a part of the next phase of growth for our Company,” said
“We reported solid second quarter results, ahead of our guidance on both adjusted gross margin and adjusted EBITDA on a constant currency basis,” said
FINANCIAL HIGHLIGHTS*
Summary of Second Quarter Results Compared to the Prior Year Period
- Net sales decreased 5% to
$454.2 million compared to the prior year period. - When adjusted for foreign exchange, acquisitions, divestitures and discontinued brands, net sales decreased 2% compared to the prior year period.
- Gross profit margin of 22.9%, a 170-basis point decrease from the prior year period.
- Adjusted gross profit margin of 22.9%, a 170-basis point decrease from the prior year period.
- Net income of
$11.0 million compared to$30.9 million in the prior year period; net income margin of 2.4%, a 410-basis point decrease from the prior year period. - Adjusted net income of
$18.3 million compared to$34.3 million in prior year period; adjusted net income margin of 4.0%, a 318-basis point decrease from the prior year period. - Adjusted EBITDA on a constant currency basis of
$52.7 million compared to$59.3 million in the prior year period; Adjusted EBITDA margin on a constant currency basis of 11.0%, a 144-basis point decrease compared to the prior year period. - Earnings per diluted share (“EPS”) of
$0.12 compared to$0.33 in the prior year period. - Adjusted EPS of
$0.20 compared to$0.36 in the prior year period.
* 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
The Company operates under two reportable segments:
Segment gross profit was
Segment operating income was
Adjusted EBITDA on a constant currency basis was
International
International net sales were
Segment gross profit was
Segment operating income was
Adjusted EBITDA on a constant currency basis was
FULL YEAR FISCAL 2023 GUIDANCE**
The Company is reaffirming its financial guidance for adjusted net sales and adjusted EBITDA on a constant currency basis of -1% to +4% compared to the prior year, driven by:
- Stable North American topline performance with moderate price elasticities and inflation starting to plateau
- International performance returning to growth in the second half of the year, with additional pricing actions, a benefit from private label offerings, and the lapping of both the beginning of the
Russia -Ukraine war and the loss of the co-manufacturing contract and - Overall gross margin progression versus the prior year through continued improvement in supply chain performance with improved service levels, robust productivity, and continued cost management
“We are encouraged that we continued to see sequential improvement in our business and remain on track to deliver on our 2023 financial guidance,” added
** The forward-looking non-GAAP financial measures included in this section 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 certain 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.
Contacts:
Investor Relations:
ICR
hain@icrinc.com
Media:
robin@robincomm.com
Conference Call and Webcast Information
About
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 and inflation rates; our strategic initiatives; our business strategy; our supply chain, including the availability and pricing of raw materials; our 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, including with respect to freight and other distribution costs; foreign currency exchange risk; risks arising from the
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 and its related margin, 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 its related margin and operating free cash flows. 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.
The Company provides net sales adjusted for the impact of foreign currency, acquisitions, divestitures and discontinued brands to demonstrate 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 believes presenting net sales adjusted for the impact of foreign 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 net sales adjusted for the impact of foreign currency, current period net sales for entities reporting in currencies other than the
To present net sales adjusted for the impact of acquisitions, the net sales of an acquired business are excluded from fiscal quarters constituting or falling within the current period and prior period where the applicable fiscal quarter in the prior period did not include the acquired business for the entire quarter. To present net sales adjusted for the impact of divestitures and discontinued brands, the net sales of a divested business or discontinued brand are excluded from all periods.
The Company provides adjusted EBITDA and adjusted EBITDA on a constant currency basis because 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 provides 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.
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 losses (gains), certain litigation and related costs, CEO succession 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 on sales of assets, certain inventory write-downs, long-lived asset impairments and other adjustments. Adjusted EBITDA on a constant currency basis reflects adjusted EBITDA, as defined above, adjusted for the impact of foreign currency. To present adjusted EBITDA on a constant currency basis, current period adjusted EBITDA for entities reporting in currencies other than the
The Company views operating free cash flows as an important measure because it is one factor in evaluating the amount of cash available for discretionary investments. The Company defines operating free cash flows as cash used in or provided by operating activities (a GAAP measure) less purchases of property, plant and equipment.
Consolidated Statements of Operations | |||||||||||||||
(unaudited and in thousands, except per share amounts) | |||||||||||||||
Second Quarter | Second Quarter Year to Date | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net sales | $ | 454,208 | $ | 476,941 | $ | 893,559 | $ | 931,844 | |||||||
Cost of sales | 350,351 | 359,646 | 695,367 | 709,131 | |||||||||||
Gross profit | 103,857 | 117,295 | 198,192 | 222,713 | |||||||||||
Selling, general and administrative expenses | 72,357 | 80,136 | 147,308 | 153,929 | |||||||||||
Amortization of acquired intangible assets | 2,785 | 2,049 | 5,573 | 4,144 | |||||||||||
Productivity and transformation costs | 986 | 2,786 | 1,759 | 6,769 | |||||||||||
Long-lived asset impairment | 340 | 303 | 340 | 303 | |||||||||||
Operating income | 27,389 | 32,021 | 43,212 | 57,568 | |||||||||||
Interest and other financing expense, net | 10,812 | 2,592 | 18,489 | 4,448 | |||||||||||
Other income, net | (1,062 | ) | (9,070 | ) | (2,852 | ) | (9,858 | ) | |||||||
Income before income taxes and equity in net loss of equity-method investees | 17,639 | 38,499 | 27,575 | 62,978 | |||||||||||
Provision for income taxes | 6,357 | 7,145 | 8,988 | 11,687 | |||||||||||
Equity in net loss of equity-method investees | 316 | 465 | 698 | 991 | |||||||||||
Net income | $ | 10,966 | $ | 30,889 | $ | 17,889 | $ | 50,300 | |||||||
Net income per common share: | |||||||||||||||
Basic | $ | 0.12 | $ | 0.33 | $ | 0.20 | $ | 0.53 | |||||||
Diluted | $ | 0.12 | $ | 0.33 | $ | 0.20 | $ | 0.52 | |||||||
Shares used in the calculation of net income per common share: | |||||||||||||||
Basic | 89,380 | 94,036 | 89,343 | 95,579 | |||||||||||
Diluted | 89,578 | 94,808 | 89,535 | 96,123 | |||||||||||
Consolidated Balance Sheets | |||||||
(unaudited and in thousands) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 43,437 | $ | 65,512 | |||
Accounts receivable, net | 177,058 | 170,661 | |||||
Inventories | 324,525 | 308,034 | |||||
Prepaid expenses and other current assets | 58,781 | 54,079 | |||||
Assets held for sale | 1,500 | 1,840 | |||||
Total current assets | 605,301 | 600,126 | |||||
Property, plant and equipment, net | 294,635 | 297,405 | |||||
927,078 | 933,796 | ||||||
Trademarks and other intangible assets, net | 470,956 | 477,533 | |||||
Investments and joint ventures | 13,260 | 14,456 | |||||
Operating lease right-of-use assets, net | 101,374 | 114,691 | |||||
Other assets | 25,554 | 20,377 | |||||
Total assets | $ | 2,438,158 | $ | 2,458,384 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 153,677 | $ | 174,765 | |||
Accrued expenses and other current liabilities | 85,168 | 86,833 | |||||
Current portion of long-term debt | 7,602 | 7,705 | |||||
Total current liabilities | 246,447 | 269,303 | |||||
Long-term debt, less current portion | 870,800 | 880,938 | |||||
Deferred income taxes | 95,131 | 95,044 | |||||
Operating lease liabilities, noncurrent portion | 92,587 | 107,481 | |||||
Other noncurrent liabilities | 24,552 | 22,450 | |||||
Total liabilities | 1,329,517 | 1,375,216 | |||||
Stockholders' equity: | |||||||
Common stock | 1,113 | 1,111 | |||||
Additional paid-in capital | 1,210,555 | 1,203,126 | |||||
Retained earnings | 786,987 | 769,098 | |||||
Accumulated other comprehensive loss | (163,346 | ) | (164,482 | ) | |||
1,835,309 | 1,808,853 | ||||||
Less: |
(726,668 | ) | (725,685 | ) | |||
Total stockholders' equity | 1,108,641 | 1,083,168 | |||||
Total liabilities and stockholders' equity | $ | 2,438,158 | $ | 2,458,384 | |||
Consolidated Statements of Cash Flows | |||||||||||||||
(unaudited and in thousands) | |||||||||||||||
Second Quarter | Second Quarter Year to Date | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||
Net income | $ | 10,966 | $ | 30,889 | $ | 17,889 | $ | 50,300 | |||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities | |||||||||||||||
Depreciation and amortization | 12,155 | 10,903 | 24,125 | 21,758 | |||||||||||
Deferred income taxes | (486 | ) | (1,166 | ) | (1,983 | ) | (3,271 | ) | |||||||
Equity in net loss of equity-method investees | 316 | 465 | 698 | 991 | |||||||||||
Stock-based compensation, net | 3,435 | 4,156 | 7,429 | 8,443 | |||||||||||
Long-lived asset impairment | 340 | 303 | 340 | 303 | |||||||||||
Gain on sale of assets | (3,335 | ) | (8,645 | ) | (3,395 | ) | (8,921 | ) | |||||||
Other non-cash items, net | (1,048 | ) | (393 | ) | (2,505 | ) | (1,486 | ) | |||||||
Increase (decrease) in cash attributable to changes in operating assets and liabilities: | |||||||||||||||
Accounts receivable | 3,053 | 21,813 | (6,536 | ) | 12,370 | ||||||||||
Inventories | (1,722 | ) | 196 | (18,629 | ) | 2,473 | |||||||||
Other current assets | (2,872 | ) | (6,026 | ) | (331 | ) | (5,126 | ) | |||||||
Other assets and liabilities | 2,830 | 3,342 | 4,178 | 1,776 | |||||||||||
Accounts payable and accrued expenses | (21,168 | ) | (25,392 | ) | (23,932 | ) | (11,579 | ) | |||||||
Net cash provided by (used in) operating activities | 2,464 | 30,445 | (2,652 | ) | 68,031 | ||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||
Purchases of property, plant and equipment | (6,840 | ) | (10,186 | ) | (14,055 | ) | (27,996 | ) | |||||||
Acquisitions of businesses, net of cash acquired | - | (254,569 | ) | - | (254,569 | ) | |||||||||
Investments and joint ventures, net | 242 | (106 | ) | 433 | (514 | ) | |||||||||
Proceeds from sale of assets | 7,512 | 10,570 | 7,608 | 10,734 | |||||||||||
Net cash provided by (used in) investing activities | 914 | (254,291 | ) | (6,014 | ) | (272,345 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||
Borrowings under bank revolving credit facility | 105,000 | 420,000 | 185,000 | 540,000 | |||||||||||
Repayments under bank revolving credit facility | (124,875 | ) | (325,000 | ) | (194,750 | ) | (330,000 | ) | |||||||
Borrowings under term loan | - | 300,000 | - | 300,000 | |||||||||||
Payments of other debt, net | (87 | ) | (2,948 | ) | (159 | ) | (3,185 | ) | |||||||
Share repurchases | - | (89,830 | ) | - | (266,933 | ) | |||||||||
Employee shares withheld for taxes | (754 | ) | (29,858 | ) | (983 | ) | (31,033 | ) | |||||||
Net cash (used in) provided by financing activities | (20,716 | ) | 272,364 | (10,892 | ) | 208,849 | |||||||||
Effect of exchange rate changes on cash | 8,981 | (278 | ) | (2,517 | ) | (3,204 | ) | ||||||||
Net (decrease) increase in cash and cash equivalents | (8,357 | ) | 48,240 | (22,075 | ) | 1,331 | |||||||||
Cash and cash equivalents at beginning of period | 51,794 | 28,962 | 65,512 | 75,871 | |||||||||||
Cash and cash equivalents at end of period | $ | 43,437 | $ | 77,202 | $ | 43,437 | $ | 77,202 | |||||||
(unaudited and in thousands) | |||||||||||||||
International | Corporate/Other | Hain Consolidated | |||||||||||||
Net sales - Q2 FY23 | $ | 282,361 | $ | 171,847 | $ | - | $ | 454,208 | |||||||
Net sales - Q2 FY22 | $ | 275,014 | $ | 201,927 | $ | - | $ | 476,941 | |||||||
% change - FY23 net sales vs. FY22 net sales | 2.7 | % | (14.9 | )% | (4.8 | )% | |||||||||
Gross Profit | |||||||||||||||
Q2 FY23 | |||||||||||||||
Gross profit | $ | 71,127 | $ | 32,730 | $ | - | $ | 103,857 | |||||||
Non-GAAP adjustments(1) | 22 | (6 | ) | - | 16 | ||||||||||
Adjusted gross profit | $ | 71,149 | $ | 32,724 | $ | - | $ | 103,873 | |||||||
% change - FY23 gross profit vs. FY22 gross profit | 5.0 | % | (34.0 | )% | (11.5 | )% | |||||||||
% change - FY23 adjusted gross profit vs. FY22 adjusted gross profit | 4.8 | % | (33.8 | )% | (11.5 | )% | |||||||||
Gross margin | 25.2 | % | 19.0 | % | 22.9 | % | |||||||||
Adjusted gross margin | 25.2 | % | 19.0 | % | 22.9 | % | |||||||||
Q2 FY22 | |||||||||||||||
Gross profit | $ | 67,721 | $ | 49,574 | $ | - | $ | 117,295 | |||||||
Non-GAAP adjustments(1) | 183 | (168 | ) | - | 15 | ||||||||||
Adjusted gross profit | $ | 67,904 | $ | 49,406 | $ | - | $ | 117,310 | |||||||
Gross margin | 24.6 | % | 24.6 | % | 24.6 | % | |||||||||
Adjusted gross margin | 24.7 | % | 24.5 | % | 24.6 | % | |||||||||
Operating income (loss) | |||||||||||||||
Q2 FY23 | |||||||||||||||
Operating income (loss) | $ | 32,262 | $ | 11,940 | $ | (16,813 | ) | $ | 27,389 | ||||||
Non-GAAP adjustments(1) | 75 | 525 | 7,363 | 7,963 | |||||||||||
Adjusted operating income (loss) | $ | 32,337 | $ | 12,465 | $ | (9,450 | ) | $ | 35,352 | ||||||
% change - FY23 operating income (loss) vs. FY22 operating income (loss) | 18.8 | % | (56.4 | )% | (25.3 | )% | (14.5 | )% | |||||||
% change - FY23 adjusted operating income (loss) vs. FY22 adjusted operating income (loss) | 11.6 | % | (55.1 | )% | (14.2 | )% | (22.7 | )% | |||||||
Operating income margin | 11.4 | % | 6.9 | % | 6.0 | % | |||||||||
Adjusted operating income margin | 11.5 | % | 7.3 | % | 7.8 | % | |||||||||
Q2 FY22 | |||||||||||||||
Operating income (loss) | $ | 27,162 | $ | 27,368 | $ | (22,509 | ) | $ | 32,021 | ||||||
Non-GAAP adjustments(1) | 1,802 | 396 | 11,498 | 13,696 | |||||||||||
Adjusted operating income (loss) | $ | 28,964 | $ | 27,764 | $ | (11,011 | ) | $ | 45,717 | ||||||
Operating income margin | 9.9 | % | 13.6 | % | 6.7 | % | |||||||||
Adjusted operating income margin | 10.5 | % | 13.7 | % | 9.6 | % | |||||||||
(1) See accompanying table "Adjusted Gross Profit, Adjusted Operating Income, Adjusted Net Income and Adjusted EPS" | |||||||||||||||
(unaudited and in thousands) | |||||||||||||||
International | Corporate/Other | Hain Consolidated | |||||||||||||
Net sales - Q2 FY23 YTD | $ | 570,757 | $ | 322,802 | $ | - | $ | 893,559 | |||||||
Net sales - Q2 FY22 YTD | $ | 540,539 | $ | 391,305 | $ | - | $ | 931,844 | |||||||
% change - FY23 net sales vs. FY22 net sales | 5.6 | % | (17.5 | )% | (4.1 | )% | |||||||||
Gross Profit | |||||||||||||||
Q2 FY23 YTD | |||||||||||||||
Gross profit | $ | 136,662 | $ | 61,530 | $ | - | $ | 198,192 | |||||||
Non-GAAP adjustments(1) | 52 | - | - | 52 | |||||||||||
Adjusted gross profit | $ | 136,714 | $ | 61,530 | $ | - | $ | 198,244 | |||||||
% change - FY23 gross profit vs. FY22 gross profit | 9.7 | % | (37.3 | )% | (11.0 | )% | |||||||||
% change - FY23 adjusted gross profit vs. FY22 adjusted gross profit | 7.5 | % | (37.8 | )% | (12.3 | )% | |||||||||
Gross margin | 23.9 | % | 19.1 | % | 22.2 | % | |||||||||
Adjusted gross margin | 24.0 | % | 19.1 | % | 22.2 | % | |||||||||
Q2 FY22 YTD | |||||||||||||||
Gross profit | $ | 124,530 | $ | 98,183 | $ | - | $ | 222,713 | |||||||
Non-GAAP adjustments(1) | 2,593 | 707 | - | 3,300 | |||||||||||
Adjusted gross profit | $ | 127,123 | $ | 98,890 | $ | - | $ | 226,013 | |||||||
Gross margin | 23.0 | % | 25.1 | % | 23.9 | % | |||||||||
Adjusted gross margin | 23.5 | % | 25.3 | % | 24.3 | % | |||||||||
Operating income (loss) | |||||||||||||||
Q2 FY23 YTD | |||||||||||||||
Operating income (loss) | $ | 56,707 | $ | 19,615 | $ | (33,110 | ) | $ | 43,212 | ||||||
Non-GAAP adjustments(1) | 411 | 852 | 11,301 | 12,564 | |||||||||||
Adjusted operating income (loss) | $ | 57,118 | $ | 20,467 | $ | (21,809 | ) | $ | 55,776 | ||||||
% change - FY23 operating income (loss) vs. FY22 operating income (loss) | 28.9 | % | (61.9 | )% | (12.6 | )% | (24.9 | )% | |||||||
% change - FY23 adjusted operating income (loss) vs. FY22 adjusted operating income (loss) | 15.4 | % | (61.4 | )% | (2.9 | )% | (30.3 | )% | |||||||
Operating income margin | 9.9 | % | 6.1 | % | 4.8 | % | |||||||||
Adjusted operating income margin | 10.0 | % | 6.3 | % | 6.2 | % | |||||||||
Q2 FY22 YTD | |||||||||||||||
Operating income (loss) | $ | 44,004 | $ | 51,437 | $ | (37,873 | ) | $ | 57,568 | ||||||
Non-GAAP adjustments(1) | 5,497 | 1,572 | 15,424 | 22,493 | |||||||||||
Adjusted operating income (loss) | $ | 49,501 | $ | 53,009 | $ | (22,449 | ) | $ | 80,061 | ||||||
Operating income margin | 8.1 | % | 13.1 | % | 6.2 | % | |||||||||
Adjusted operating income margin | 9.2 | % | 13.5 | % | 8.6 | % | |||||||||
(1) See accompanying table "Adjusted Gross Profit, Adjusted Operating Income, Adjusted Net Income and Adjusted EPS" |
Adjusted Gross Profit, Adjusted Operating Income, Adjusted Net Income and Adjusted EPS | |||||||||||||||
(unaudited and in thousands, except per share amounts) | |||||||||||||||
Reconciliation of Gross Profit, GAAP to Gross Profit, as Adjusted: | |||||||||||||||
Second Quarter | Second Quarter Year to Date | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Gross profit, GAAP | $ | 103,857 | $ | 117,295 | $ | 198,192 | $ | 222,713 | |||||||
Adjustments to Cost of sales: | |||||||||||||||
Inventory write-down | - | (46 | ) | - | (46 | ) | |||||||||
Plant closure related costs, net | 16 | (188 | ) | 52 | 808 | ||||||||||
Warehouse/manufacturing consolidation and other costs, net | - | 249 | - | 2,538 | |||||||||||
Gross profit, as adjusted | $ | 103,873 | $ | 117,310 | $ | 198,244 | $ | 226,013 | |||||||
Reconciliation of Operating Income, GAAP to Operating Income, as Adjusted: | |||||||||||||||
Second Quarter | Second Quarter Year to Date | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Operating income, GAAP | $ | 27,389 | $ | 32,021 | $ | 43,212 | $ | 57,568 | |||||||
Adjustments to Cost of sales: | |||||||||||||||
Inventory write-down | - | (46 | ) | - | (46 | ) | |||||||||
Plant closure related costs, net | 16 | (188 | ) | 52 | 808 | ||||||||||
Warehouse/manufacturing consolidation and other costs, net | - | 249 | - | 2,538 | |||||||||||
Adjustments to Operating expenses(a): | |||||||||||||||
CEO succession | 5,113 | - | 5,113 | - | |||||||||||
Transaction and integration costs, net | 402 | 8,963 | 1,769 | 8,732 | |||||||||||
Certain litigation expenses, net(b) | 2,482 | 1,624 | 4,945 | 3,384 | |||||||||||
Long-lived asset impairment | 340 | 303 | 340 | 303 | |||||||||||
Plant closure related costs, net | 37 | 5 | (1 | ) | 5 | ||||||||||
Productivity and transformation costs | 986 | 2,786 | 1,759 | 6,769 | |||||||||||
Warehouse/manufacturing consolidation and other costs, net | (1,413 | ) | - | (1,413 | ) | - | |||||||||
Operating income, as adjusted | $ | 35,352 | $ | 45,717 | $ | 55,776 | $ | 80,061 | |||||||
Reconciliation of Net Income, GAAP to Net Income, as Adjusted: | |||||||||||||||
Second Quarter | Second Quarter Year to Date | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net income, GAAP | $ | 10,966 | $ | 30,889 | $ | 17,889 | $ | 50,300 | |||||||
Adjustments to Cost of sales: | |||||||||||||||
Inventory write-down | - | (46 | ) | - | (46 | ) | |||||||||
Plant closure related costs, net | 16 | (188 | ) | 52 | 808 | ||||||||||
Warehouse/manufacturing consolidation and other costs, net | - | 249 | - | 2,538 | |||||||||||
Adjustments to Operating expenses(a): | |||||||||||||||
CEO succession | 5,113 | - | 5,113 | - | |||||||||||
Transaction and integration costs, net | 402 | 8,963 | 1,769 | 8,732 | |||||||||||
Certain litigation expenses, net(b) | 2,482 | 1,624 | 4,945 | 3,384 | |||||||||||
Long-lived asset impairment | 340 | 303 | 340 | 303 | |||||||||||
Plant closure related costs, net | 37 | 5 | (1 | ) | 5 | ||||||||||
Productivity and transformation costs | 986 | 2,786 | 1,759 | 6,769 | |||||||||||
Warehouse/manufacturing consolidation and other costs, net | (1,413 | ) | - | (1,413 | ) | - | |||||||||
Adjustments to Interest and other expense (income), net(c): | |||||||||||||||
Gain on sale of assets | (3,355 | ) | (8,656 | ) | (3,395 | ) | (9,102 | ) | |||||||
Unrealized currency losses (gains) | 2,160 | (480 | ) | 449 | (1,503 | ) | |||||||||
Adjustments to Provision for income taxes: | |||||||||||||||
Net tax impact of non-GAAP adjustments | 526 | (1,110 | ) | (20 | ) | (4,020 | ) | ||||||||
Net income, as adjusted | $ | 18,260 | $ | 34,339 | $ | 27,487 | $ | 58,168 | |||||||
Net income margin | 2.4 | % | 6.5 | % | 2.0 | % | 5.4 | % | |||||||
Adjusted net income margin | 4.0 | % | 7.2 | % | 3.1 | % | 6.2 | % | |||||||
Diluted shares used in the calculation of net income per common share: | 89,578 | 94,808 | 89,535 | 96,123 | |||||||||||
Diluted net income per common share, GAAP | $ | 0.12 | $ | 0.33 | $ | 0.20 | $ | 0.52 | |||||||
Diluted net income per common share, as adjusted | $ | 0.20 | $ | 0.36 | $ | 0.31 | $ | 0.61 | |||||||
(a) Operating expenses include amortization of acquired intangibles, selling, general and administrative expenses, long-lived asset impairment and productivity and transformation costs. | |||||||||||||||
(b) Expenses and items relating to securities class action and baby food litigation. | |||||||||||||||
(c) Interest and other expense (income), net includes interest and other financing expenses, net, unrealized currency losses (gains), gain on sale of assets and other expense, net. | |||||||||||||||
Adjusted Net Sales Growth | |||||||||||
(unaudited and in thousands) | |||||||||||
Q2 FY23 | International | Hain Consolidated | |||||||||
Net sales | $ | 282,361 | $ | 171,847 | $ | 454,208 | |||||
Acquisitions, divestitures and discontinued brands | (16,849 | ) | - | (16,849 | ) | ||||||
Impact of foreign currency exchange | 2,075 | 23,720 | 25,795 | ||||||||
Net sales on a constant currency basis adjusted for acquisitions, divestitures and discontinued brands | $ | 267,587 | $ | 195,567 | $ | 463,154 | |||||
Q2 FY22 | |||||||||||
Net sales | $ | 275,014 | $ | 201,927 | $ | 476,941 | |||||
Acquisitions, divestitures and discontinued brands | (2,280 | ) | - | (2,280 | ) | ||||||
Net sales adjusted for acquisitions, divestitures and discontinued brands | $ | 272,734 | $ | 201,927 | $ | 474,661 | |||||
Net sales growth (decline) | 2.7 | % | (14.9 | )% | (4.8 | )% | |||||
Impact of acquisitions, divestitures and discontinued brands | (5.4 | )% | - | (3.0 | )% | ||||||
Impact of foreign currency exchange | 0.8 | % | 11.7 | % | 5.4 | % | |||||
Net sales decline on a constant currency basis adjusted for acquisitions, divestitures and discontinued brands | (1.9 | )% | (3.2 | )% | (2.4 | )% | |||||
Q2 FY23 YTD | International | Hain Consolidated | |||||||||
Net sales | $ | 570,757 | $ | 322,802 | $ | 893,559 | |||||
Acquisitions, divestitures and discontinued brands | (34,499 | ) | - | (34,499 | ) | ||||||
Impact of foreign currency exchange | 3,143 | 49,506 | 52,649 | ||||||||
Net sales on a constant currency basis adjusted for acquisitions, divestitures and discontinued brands | $ | 539,401 | $ | 372,308 | $ | 911,709 | |||||
Q2 FY22 YTD | |||||||||||
Net sales | $ | 540,539 | $ | 391,305 | $ | 931,844 | |||||
Acquisitions, divestitures and discontinued brands | (4,832 | ) | - | (4,832 | ) | ||||||
Net sales adjusted for acquisitions, divestitures and discontinued brands | $ | 535,707 | $ | 391,305 | $ | 927,012 | |||||
Net sales growth (decline) | 5.6 | % | (17.5 | )% | (4.1 | )% | |||||
Impact of acquisitions, divestitures and discontinued brands | (5.5 | )% | - | (3.2 | )% | ||||||
Impact of foreign currency exchange | 0.6 | % | 12.7 | % | 5.6 | % | |||||
Net sales growth (decline) on a constant currency basis adjusted for acquisitions, divestitures and discontinued brands | 0.7 | % | (4.8 | )% | (1.7 | )% | |||||
Adjusted EBITDA | |||||||||||||||
(unaudited and in thousands) | |||||||||||||||
Second Quarter | Second Quarter Year to Date | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net income | $ | 10,966 | $ | 30,889 | $ | 17,889 | $ | 50,300 | |||||||
Depreciation and amortization | 12,155 | 10,903 | 24,125 | 21,758 | |||||||||||
Equity in net loss of equity-method investees | 316 | 465 | 698 | 991 | |||||||||||
Interest expense, net | 10,379 | 1,685 | 17,658 | 2,831 | |||||||||||
Provision for income taxes | 6,357 | 7,145 | 8,988 | 11,687 | |||||||||||
Stock-based compensation, net | 3,435 | 4,156 | 7,429 | 8,443 | |||||||||||
Unrealized currency losses (gains) | 2,160 | (480 | ) | 449 | (1,503 | ) | |||||||||
Litigation and related costs | |||||||||||||||
Certain litigation expenses, net(a) | 2,482 | 1,624 | 4,945 | 3,384 | |||||||||||
Restructuring activities | |||||||||||||||
CEO succession | 5,113 | - | 5,113 | - | |||||||||||
Plant closure related costs, net | 53 | (183 | ) | 51 | 813 | ||||||||||
Productivity and transformation costs | 986 | 2,247 | 1,759 | 5,451 | |||||||||||
Warehouse/manufacturing consolidation and other costs, net | (1,972 | ) | 249 | (1,972 | ) | 2,538 | |||||||||
Acquisitions, divestitures and other | |||||||||||||||
Transaction and integration costs, net | 402 | 8,963 | 1,769 | 8,732 | |||||||||||
Gain on sale of assets | (3,355 | ) | (8,656 | ) | (3,395 | ) | (9,102 | ) | |||||||
Impairment charges | |||||||||||||||
Inventory write-down | - | (46 | ) | - | (46 | ) | |||||||||
Long-lived asset impairment | 340 | 303 | 340 | 303 | |||||||||||
Adjusted EBITDA | $ | 49,817 | $ | 59,264 | $ | 85,846 | $ | 106,580 | |||||||
(a) Expenses and items relating to securities class action and baby food litigation. | |||||||||||||||
Adjusted EBITDA by Segment | |||||||||||||||
(unaudited and in thousands) | |||||||||||||||
Q2 FY23 | International | Corporate/ Other | Hain Consolidated | ||||||||||||
Operating income (loss) | $ | 32,262 | $ | 11,940 | $ | (16,813 | ) | $ | 27,389 | ||||||
Depreciation and amortization | 4,803 | 6,300 | 1,052 | 12,155 | |||||||||||
Stock-based compensation, net | 1,273 | 773 | 1,389 | 3,435 | |||||||||||
Certain litigation expenses, net(a) | - | - | 2,482 | 2,482 | |||||||||||
CEO succession | - | - | 5,113 | 5,113 | |||||||||||
Plant closure related costs, net | 58 | (5 | ) | - | 53 | ||||||||||
Productivity and transformation costs | 29 | 521 | 436 | 986 | |||||||||||
Warehouse/manufacturing consolidation and other costs, net | - | - | (1,972 | ) | (1,972 | ) | |||||||||
Transaction and integration costs, net | (11 | ) | 9 | 404 | 402 | ||||||||||
Long-lived asset impairment | - | - | 340 | 340 | |||||||||||
Other | 96 | (296 | ) | (366 | ) | (566 | ) | ||||||||
Adjusted EBITDA | $ | 38,510 | $ | 19,242 | $ | (7,935 | ) | $ | 49,817 | ||||||
Q2 FY22 | |||||||||||||||
Operating income (loss) | $ | 27,162 | $ | 27,368 | $ | (22,509 | ) | $ | 32,021 | ||||||
Depreciation and amortization | 3,654 | 6,295 | 954 | 10,903 | |||||||||||
Stock-based compensation, net | 778 | 346 | 3,032 | 4,156 | |||||||||||
Certain litigation expenses, net(a) | - | - | 1,624 | 1,624 | |||||||||||
Plant closure related costs | 122 | (305 | ) | - | (183 | ) | |||||||||
Productivity and transformation costs | 1,577 | 255 | 415 | 2,247 | |||||||||||
Warehouse/manufacturing consolidation and other costs, net | 106 | 143 | - | 249 | |||||||||||
Transaction and integration costs, net | 43 | - | 8,920 | 8,963 | |||||||||||
Inventory write-down | (46 | ) | - | - | (46 | ) | |||||||||
Long-lived asset impairment | - | 303 | - | 303 | |||||||||||
Other | (59 | ) | (106 | ) | (808 | ) | (973 | ) | |||||||
Adjusted EBITDA | $ | 33,337 | $ | 34,299 | $ | (8,372 | ) | $ | 59,264 | ||||||
(a) Expenses and items relating to securities class action and baby food litigation. |
Adjusted EBITDA by Segment | |||||||||||||||
(unaudited and in thousands) | |||||||||||||||
Q2 FY23 YTD | International | Corporate/ Other | Hain Consolidated | ||||||||||||
Operating income (loss) | $ | 56,707 | $ | 19,615 | $ | (33,110 | ) | $ | 43,212 | ||||||
Depreciation and amortization | 9,695 | 12,895 | 1,535 | 24,125 | |||||||||||
Stock-based compensation, net | 2,356 | 1,164 | 3,909 | 7,429 | |||||||||||
Certain litigation expenses, net(a) | - | - | 4,945 | 4,945 | |||||||||||
CEO succession | - | - | 5,113 | 5,113 | |||||||||||
Plant closure related costs, net | 53 | (2 | ) | - | 51 | ||||||||||
Productivity and transformation costs | 370 | 859 | 530 | 1,759 | |||||||||||
Warehouse/manufacturing consolidation and other costs, net | - | - | (1,972 | ) | (1,972 | ) | |||||||||
Transaction and integration costs, net | (11 | ) | (6 | ) | 1,786 | 1,769 | |||||||||
Long-lived asset impairment | - | - | 340 | 340 | |||||||||||
Other | 121 | (336 | ) | (710 | ) | (925 | ) | ||||||||
Adjusted EBITDA | $ | 69,291 | $ | 34,189 | $ | (17,634 | ) | $ | 85,846 | ||||||
Q2 FY22 YTD | |||||||||||||||
Operating income (loss) | $ | 44,004 | $ | 51,437 | $ | (37,873 | ) | $ | 57,568 | ||||||
Depreciation and amortization | 7,396 | 12,705 | 1,657 | 21,758 | |||||||||||
Stock-based compensation, net | 1,414 | 1,067 | 5,962 | 8,443 | |||||||||||
Certain litigation expenses, net(a) | - | - | 3,384 | 3,384 | |||||||||||
Plant closure related costs, net | 1,118 | (305 | ) | - | 813 | ||||||||||
Productivity and transformation costs | 3,202 | 554 | 1,695 | 5,451 | |||||||||||
Warehouse/manufacturing consolidation and other costs, net | 1,519 | 1,019 | - | 2,538 | |||||||||||
Transaction and integration costs, net | (298 | ) | - | 9,030 | 8,732 | ||||||||||
Inventory write-down | (46 | ) | - | - | (46 | ) | |||||||||
Long-lived asset impairment | - | 303 | - | 303 | |||||||||||
Other | (870 | ) | (47 | ) | (1,447 | ) | (2,364 | ) | |||||||
Adjusted EBITDA | $ | 57,439 | $ | 66,733 | $ | (17,592 | ) | $ | 106,580 | ||||||
(a) Expenses and items relating to securities class action and baby food litigation. | |||||||||||||||
Adjusted EBITDA and Adjusted EBITDA Margin at Constant Currency by Segment | |||||||||||||||
(unaudited and in thousands) | |||||||||||||||
Q2 FY23 | International | Corporate/ Other | Hain Consolidated | ||||||||||||
Adjusted EBITDA | $ | 38,510 | $ | 19,242 | $ | (7,935 | ) | $ | 49,817 | ||||||
Impact of foreign currency exchange | 283 | 2,626 | - | 2,909 | |||||||||||
Adjusted EBITDA on a constant currency basis | $ | 38,793 | $ | 21,868 | $ | (7,935 | ) | $ | 52,726 | ||||||
Net sales on a constant currency basis | $ | 284,436 | $ | 195,567 | $ | 480,003 | |||||||||
Adjusted EBITDA margin on a constant currency basis | 13.6 | % | 11.2 | % | 11.0 | % | |||||||||
Q2 FY22 | |||||||||||||||
Adjusted EBITDA | $ | 33,337 | $ | 34,299 | $ | (8,372 | ) | $ | 59,264 | ||||||
Net sales | $ | 275,014 | $ | 201,927 | $ | 476,941 | |||||||||
Adjusted EBITDA margin | 12.1 | % | 17.0 | % | 12.4 | % | |||||||||
Q2 FY23 vs. Q2 FY22 | |||||||||||||||
Adjusted EBITDA growth on a constant currency basis (%) | 16.4 | % | (36.2 | )% | 5.2 | % | (11.0 | )% | |||||||
Adjusted EBITDA margin change on a constant currency basis (bps) | 152 | (580 | ) | (144 | ) | ||||||||||
Q2 FY23 YTD | International | Corporate/ Other | Hain Consolidated | ||||||||||||
Adjusted EBITDA | $ | 69,291 | $ | 34,189 | $ | (17,634 | ) | $ | 85,846 | ||||||
Impact of foreign currency exchange | 363 | 5,164 | - | 5,527 | |||||||||||
Adjusted EBITDA on a constant currency basis | $ | 69,654 | $ | 39,353 | $ | (17,634 | ) | $ | 91,373 | ||||||
Net sales on a constant currency basis | $ | 573,900 | $ | 372,308 | $ | 946,208 | |||||||||
Adjusted EBITDA margin on a constant currency basis | 12.1 | % | 10.6 | % | 9.7 | % | |||||||||
Q2 FY22 YTD | |||||||||||||||
Adjusted EBITDA | $ | 57,439 | $ | 66,733 | $ | (17,592 | ) | $ | 106,580 | ||||||
Net sales | $ | 540,539 | $ | 391,305 | $ | 931,844 | |||||||||
Adjusted EBITDA margin | 10.6 | % | 17.1 | % | 11.4 | % | |||||||||
Q2 FY23 YTD vs. Q2 FY22 YTD | |||||||||||||||
Adjusted EBITDA growth on a constant currency basis (%) | 21.3 | % | (41.0 | )% | (0.2 | )% | (14.3 | )% | |||||||
Adjusted EBITDA margin change on a constant currency basis (bps) | 151 | (648 | ) | (178 | ) | ||||||||||
Operating Free Cash Flows | |||||||||||||||
(unaudited and in thousands) | |||||||||||||||
Second Quarter | Second Quarter Year to Date | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net cash provided by (used in) operating activities | $ | 2,464 | $ | 30,445 | $ | (2,652 | ) | $ | 68,031 | ||||||
Purchases of property, plant and equipment | (6,840 | ) | (10,186 | ) | (14,055 | ) | (27,996 | ) | |||||||
Operating free cash flows | $ | (4,376 | ) | $ | 20,259 | $ | (16,707 | ) | $ | 40,035 | |||||
![](https://ml.globenewswire.com/media/MjAxNDRjZmYtZGVkZi00OTY3LWIxZjktYWRhN2E2Njk4MDg0LTEwMTc1Mzc=/tiny/The-Hain-Celestial-Group-Inc-.png)
Source: The Hain Celestial Group, Inc.