Hain Celestial: Announces Q4 and Fiscal 2017 Results

Lake Success / NY. (hc) The Hain Celestial Group Inc., a leading organic and natural products company with operations in North America, Europe and India providing consumers with A Healthier Way of Life, reported results for the fourth quarter and fiscal year ended June 30, 2017. «We are pleased to have achieved sales growth in all of our business segments on a constant currency basis in the fourth quarter, despite an ever changing operating environment for food manufacturers and retailers», said Irwin D. Simon, Founder, President and Chief Executive Officer of Hain Celestial. «Building upon our core platforms and cost savings initiatives, our global team has made significant progress during the year executing on our strategic plan. The business momentum and operational improvements we experienced in the fourth quarter of fiscal 2017 reinforces our confidence in the tremendous opportunities ahead to generate the growth we know we are capable of achieving over the next several years».

«We are pleased to have achieved sales growth in all of our business segments on a constant currency basis in the fourth quarter, despite an ever changing operating environment for food manufacturers and retailers», said Irwin D. Simon, Founder, President and Chief Executive Officer of Hain Celestial. «Building upon our core platforms and cost savings initiatives, our global team has made significant progress during the year executing on our strategic plan. The business momentum and operational improvements we experienced in the fourth quarter of fiscal 2017 reinforces our confidence in the tremendous opportunities ahead to generate the growth we know we are capable of achieving over the next several years».

Financial Highlights

Fourth Quarter Fiscal Year 2017

For fourth quarter fiscal year 2017, the Company reported:

  • Net sales of USD 725.1 million, a 2 percent decrease, or a 2 percent increase on a constant currency basis, compared to the prior year period. Net sales were impacted by USD 28.2 million from foreign exchange rate movements versus the prior year period.
  • Operating income of USD 8.6 million; adjusted operating income of USD 67.2 million.
  • Ebitda of USD 82 million compared to USD 83 million in the prior year period; adjusted Ebitda of USD 86 million compared to USD 91 million in the prior year.
  • Earnings per diluted share was breakeven compared to a loss per diluted share of USD 0.86 in the prior year period; adjusted earnings per diluted share of USD 0.43 was in-line with the prior year period, and foreign currency exchange rates impacted reported results by USD 0.03 per diluted share.
  • Strong operating cash flow of USD 69 million.

Fiscal Year 2017

For fiscal year 2017, the Company reported:

  • Net sales of USD 2.853 billion, a 1 percent decrease, or a 3 percent increase on a constant currency basis, compared to fiscal 2016 net sales of USD 2.885 billion. Net sales were impacted by USD 124.3 million in foreign exchange rate movements compared to the prior year.
  • Operating income of USD 111 million; adjusted operating income of USD 202 million.
  • Ebitda of USD 239 million compared to USD 362 million in the prior year; adjusted Ebitda of USD 275 million compared to USD 379 million in the prior year.
  • Earnings per diluted share of USD 0.65 compared to USD 0.46 in the prior year; adjusted earnings per diluted share of USD 1.22 compared to USD 1.85 in the prior year, and foreign currency exchange rates impacted reported results by USD 0.12per diluted share.
  • Strong operating cash flow of USD 217 million.

Segment Highlights

Fourth Quarter 2017

Hain Celestial United States reported net sales of USD 309.0 million, an increase of 1 percent on a year-over-year basis including a USD 4.5 million impact from product rationalization and USD 2.9 million in foreign exchange movements. Hain Celestial United Kingdom reported net sales of USD 194.8 million, a 10 percent decrease, compared to the prior year period, or a 3 percent increase adjusted for constant currency, acquisitions and divestitures. Hain Pure Protein reported net sales of USD 122.2 million, an 8 percent increase compared to the prior year period. Within the Rest of World segment, Hain Celestial Canada reported net sales of USD 40.2 million, a 2 percent increase, or a 7 percent increase on a constant currency basis, compared to the prior year period; Hain Celestial Europe reported net sales of USD 44.8 million, a 2 percent increase, or a 5 percent increase on a constant currency basis, compared to the prior year period. The Company had strong brand sales in constant currency during the fourth quarter.

Fiscal Year 2017

Hain Celestial United States reported net sales of USD 1.2 billion, a decrease of 5 percent on a year-over-year basis including a USD 60.0 million impact from inventory realignment of certain customers and product rationalization and USD 14.0 million in foreign exchange movements, which will be reported in the United Kingdomsegment commencing in fiscal year 2018. Hain Celestial United Kingdom reported net sales of USD 768.3 million, a 1 percent decrease, compared to the prior year, or a 6 percent increase adjusted for constant currency and acquisitions and divestitures. Hain Pure Protein reported net sales of USD 509.6 million, a 3.5 percent increase compared to the prior year. Within the Rest of World segment, Hain Celestial Canada net sales of USD 151.5 million, a 7 percent increase on an actual and constant currency basis, compared to the prior year; Hain Celestial Europe reported net sales of USD 172.6 million, a 12 percent increase, or a 14 percent increase on a constant currency basis, compared to the prior year.  The Company had strong brand sales in constant currency during the fiscal year.

Fiscal Year 2017 Achievements

The Company highlighted several of its achievements during fiscal year 2017, including executing on its strategic plan initiated in fiscal year 2016 to drive net sales and margin expansion, as follows:

  • Invested in Top Brands and Capabilities Globally
    • Increased strategic investments and consumer engagement in brand building assets.
    • Enhanced in-market and online retail activation.
    • Introduced over 200 new products worldwide.
  • Strategic Transactions
    • Expanded branded portfolio through two strategic acquisitions in the growing chilled category:
      • «Yorkshire Provender» under Hain Daniels and
      • «Better Bean» under Cultivate Ventures.
    • Entered into strategic joint venture with Future Group in India.
    • Licensed «Rosetto» brand to Rosetto Foods LLC, a joint venture in which the Company holds a minority interest.
  • Project Terra
    • Established new core category platforms:
      • Better-For-You Baby, Better-For-You Pantry, Better-For-You Snacking, Fresh Living, Tea, Pure Personal Care and Cultivate Ventures.
    • Implemented stock-keeping unit (SKU) rationalization, eliminating USD 24 million in net sales, or 20 percent of the SKUs in the United States.
    • Expanded global cost savings initiative to USD 350 million through fiscal year 2020 including annual productivity.
  • Enhanced Leadership Team to Deliver Strategic Plan
    • Strengthened management team with seasoned professionals including deep consumer products, brand building and natural product experience as well as financial industry expertise.

Irwin Simon concluded, «We are well-positioned among some of the fastest growing trends, categories and channels in consumer products today and are fortunate to have the financial flexibility to support our future business growth and capital allocation priorities. We believe our continued ability to evolve our business as we grow our organic, natural and better-for-you brands, expand relationships with new and existing customers and attract new consumers globally, paired with Project Terra, will fuel our success and create long-term value for our shareholders».

Fiscal Year 2018 Guidance

The Company provided its annual guidance for fiscal year 2018:

  • Total net sales of USD 2.967 billion to USD 3.036 billion, an increase of approximately 4 percent to 6 percent as compared to fiscal year 2017.
  • Adjusted Ebitda of USD 350 million to USD 375 million, an increase of approximately 27 percent to 36 percent as compared to fiscal year 2017.
  • Adjusted earnings per diluted share of USD 1.63 to USD 1.80, an increase of approximately 34 percent to 48 percent as compared to fiscal year 2017.

Guidance, where adjusted, is provided on a non-GAAP basis, which excludes acquisition-related expenses, integration and restructuring charges, start-up costs, unrealized net foreign currency gains or losses, reserves for litigation matters and other non-recurring items that have been or may be incurred during the Company’s fiscal year 2018, which the Company will continue to identify as it reports its future financial results. Guidance excludes the impact of any future acquisitions.

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