Hain Celestial: Reports Q1-2018 Financial 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 financial results for the first quarter ended September 30, 2017.

«Our first quarter results were solid with improved net sales growth and profitability, meeting our expectations across our business segments», said Irwin D. Simon, Founder, President and Chief Executive Officer of Hain Celestial. «Importantly, we are on track to build momentum throughout the year as our execution of Project Terra continues to drive incremental sales growth and margin improvement to deliver long-term sustainable stockholder value».

Financial Highlights

First Quarter Results Summary

  • Net sales increased 4 percent to USD 708.3 million compared to the prior year period, or 3 percent on a constant currency basis, primarily reflecting double digit net sales increases from Canada and Europe and low single digit net sales increases from the United States, United Kingdom and Hain Pure Protein segments. Adjusted for both constant currency and acquisitions and divestitures, net sales increased 4 percent, compared to the prior year period.
  • Gross margin as a percentage of net sales of 18.6 percent; adjusted gross margin of 19.1 percent.
  • Operating income of USD 31.5 million; adjusted operating income of USD 39.7 million.
  • Net income of USD 19.8 million, an increase of 131 percent over the prior year period; adjusted net income of USD 23.7 million, an increase of 59 percent over the prior year period.
  • Ebitda increased 60 percent to USD 51.3 million compared to USD 32.2 million in the prior year period; adjusted Ebitda increased 30 percent to USD 59.5 million compared to USD 45.6 million in the prior year period.
  • EPS of USD 0.19 compared to USD 0.08 in the prior year period; adjusted EPS per diluted share of USD 0.23 compared to USD 0.14 in the prior year period.

First Quarter Operating Segment Highlights

Hain Celestial United States

Net sales for Hain Celestial United States increased 4 percent to USD 263.7 million over the prior year period, reflecting growth from the Pure Personal Care, Better-for-You Baby and Better-for-You Pantry platforms including Alba Botanica®, Jason®, Avalon Organics®, Live Clean®; Earth’s Best®; Spectrum® and Imagine® brands; partially offset by declines in Fresh Living with The Greek Gods® brand, Better-for-You-Snacking with Garden of Eatin’® brand and Tea with Celestial Seasonings® brand. The prior year first quarter results were also negatively impacted by inventory realignment at certain customers. Segment operating income was USD 20.9 million, an increase of 11 percent over the prior year period and adjusted operating income was USD 23.1 million, a decrease of 5 percent over the prior year period, driven primarily by higher marketing investments. The financial results for the current period as well as the prior year first quarter results excludes the United Kingdom operations of the Ella’s Kitchen® brand thereby eliminating net sales of approximately USD 23.1 million and USD 21.4 million, respectively as these net sales are now reported as part of the United Kingdom reportable segment.

Hain Celestial United Kingdom

Net sales for Hain Celestial United Kingdom increased 1 percent to USD 222.4 million over the prior year period, reflecting 8 percent growth from Tilda® and Ella’s Kitchen®, partially offset by a 1 percent decrease from Hain Daniels. Hain Daniels net sales, adjusted for both constant currency and acquisitions and divestitures, increased 2 percent over the prior year period, with strong brand performance from Hartley’s®, Linda McCartney’s®, New Covent Garden Soup Co.® and Sun-Pat® brands. Hain Celestial United Kingdom, on a consolidated basis, was up 4 percent over the prior year period in constant currency adjusted for acquisitions and divestitures. Segment operating income of USD 9.6 million increased 23 percent over the prior year period and adjusted operating income of USD 12.9 million increased 39 percent over the prior year period driven by strong contribution from the Hain Daniels brands. As discussed above, the financial results for the current period as well as the prior year first quarter results includes the United Kingdom operations of the Ella’s Kitchen® brand, which was previously reported as part of the United States reportable segment.

Hain Pure Protein

Net sales for Hain Pure Protein increased 2 percent to USD 119.1 million over the prior year period, reflecting a 6 percent increase from the combined FreeBird® and Plainville Farms® businesses while the Empire® Kosher business net sales declined 6 percent with more sales attributable in the prior year period due to the timing of the Jewish holidays. Segment operating income increased to USD 2.2 million from the prior year period loss of USD 1.0 million and adjusted operating income increased to USD 3.6 million from the prior year period loss of USD 1.0 million due to improvements in operating expenses across the business.

Rest of World

Net sales for Rest of World increased 14 percent to USD 103.1 million over the prior year period, or 9 percent on a constant currency basis driven by 13 percent growth from Hain Celestial Canada from Yves® Veggie Cuisine, Sensible Portions®, Live Clean® and Tilda® brands and 10 percent growth from Hain Celestial Europe from Danival® and Joya® brands and own label. Segment operating income increased over 77 percent to USD 9.0 million over the prior year period.

Fiscal Year 2018 Guidance

The Company reiterated its annual guidance for fiscal year 2018:

  • 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, accounting review costs 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.

The Company has not reconciled its expected adjusted Ebitda to net income or adjusted earnings per diluted share to earnings per share under «Fiscal Year 2018 Guidance» because certain items that impact net income and other reconciling metrics are out of the Company’s control and/or cannot be reasonably predicted at this time.

Effective July 1, 2017, due to changes to the Company’s internal management and reporting structure the United Kingdom operations of the Ella’s Kitchen® brand, which was previously included within the United States reportable segment, is included in the United Kingdom reportable segment. The prior period segment information contained below has been adjusted to reflect the Company’s new operating and reporting structure.

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