Tuesday, 24. November 2020
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Hain Celestial: Reports Q1-2021 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, 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 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 first quarter results, which exceeded our initial expectations of several hundred basis points of margin expansion, significant growth in adjusted Ebitda and mid-single digit adjusted net sales growth. The strength in adjusted earnings, in both the North America and International segments once again showcases our continued ability to execute against our transformational plan. While the current macro operating environment remains fluid, we remain confident and committed to sustainable long-term growth, including continued gross and adjusted Ebitda margin expansion and double-digit adjusted Ebitda growth in fiscal year 2021.»

Financial highlights

This statement includes certain non-GAAP financial measures, which are intended to supplement, not substitute for, comparable GAAP financial measures. Unless otherwise noted all results included here are from continuing operations.

Summary of First Quarter Results from Continuing Operations

  • Net sales increased 3 percent to USD 498.6 million, or 1 percent 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 5 percent compared to the prior year period.
  • Gross margin of 23.9 percent, a 360 basis point increase from the prior year period.
  • Adjusted gross margin of 24.1 percent, a 326 basis point increase from the prior year period.
  • Operating income of USD 3.3 million compared to USD 2.5 million in the prior year period.
  • Adjusted operating income of USD 38.8 million compared to USD 16.9 million in the prior year period.
  • Net loss of USD 10.8 million primarily driven by the United Kingdom fruit business impairment of USD 32.5 million compared to USD 5.0 million in the prior year period.
  • Adjusted net income of USD 27.4 million compared to USD 8.4 million in prior year period.
  • Adjusted Ebitda of USD 54.9 million compared to USD 32.1 million in the prior year period.
  • Adjusted Ebitda margin of 11.0 percent, a 435 basis point increase compared to the prior year period.
  • Loss per diluted share of USD 0.11 compared to USD 0.05 in the prior year period.
  • Adjusted earnings per diluted share (EPS) of USD 0.27 compared to USD 0.08 in the prior year period.
  • Repurchased 1.3 million shares, or 1.3 percent of the outstanding common stock, at an average price of USD 32.81 per share.
  • Net cash provided by continuing operations of USD 40.7 million compared to net cash used in continuing operations of USD 3.6 million in prior year period.
  • Operating free cash flow from continuing operations of USD 28.5 million compared to negative operating free cash flow of USD 16.7 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 first quarter were USD 280.7 million, an increase of 3 percent compared to the prior year period. When adjusted for foreign exchange, divestitures and discontinued brands, net sales increased 10 percent from the prior year period.

Segment gross profit in the first quarter was USD 75.0 million, a 20 percent increase from the prior year period. Adjusted gross profit was USD 75.9 million, an increase of 19 percent from the prior year period. Gross margin was 26.7 percent, a 378 basis point increase from the prior year period and adjusted gross margin was 27.1 percent, a 347 basis point increase from the prior year period.

Segment operating income in the first quarter was USD 33.3 million, a 120 percent increase from the prior year period. Adjusted operating income was USD 34.7 million, an 83 percent increase from the prior year period.

Adjusted Ebitda in the first quarter was USD 39.1 million, a 63 percent increase from the prior year period. As a percentage of sales on a constant currency basis, North America adjusted Ebitda margin was 13.9 percent, a 510 basis point increase from the prior year period.

International

International net sales in the first quarter were USD 218.0 million, an increase of 4 percent compared to the prior year period. When adjusted for foreign exchange, divestitures and discontinued brands, net sales decreased 1 percent compared to the prior year period.

Segment gross profit in the first quarter was USD 44.1 million, a 25 percent increase from the prior year period. Adjusted gross profit was USD 44.4 million, an increase of 22 percent from the prior year period. Gross margin was 20.3 percent, a 340 basis point increase from the prior year period and adjusted gross margin was 20.4 percent, a 299 basis point increase from the prior year period.

Segment operating loss in the first quarter was USD 15.9 million, compared to operating income of USD 9.1 million in the prior year period. The operating loss for the current period includes an impairment charge of USD 32.5 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 USD 17.3 million, an increase of 51 percent from the prior year period.

Adjusted Ebitda in the first quarter was USD 26.7 million, a 35 percent increase from the prior year period. As a percentage of sales on a constant currency basis, International adjusted Ebitda margin was 12.2 percent, a 280 basis point increase from the prior year period.

Capital management

During the first quarter fiscal year 2021, the Company repurchased 1.3 million shares, or 1.3 percent of the outstanding common stock, at an average price of USD 32.81 per share for a total of USD 42.0 million, excluding commissions. As of September 30, 2020, the Company had USD 147.8 million remaining authorization under its share repurchase program.

Fiscal year 2021 guidance

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. 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. However, for second quarter fiscal year 2021, the Company expects mid-single digit topline growth (on a constant currency basis adjusted for divestitures and discontinued brands) with several hundred basis points of gross margin improvement and adjusted Ebitda growth similar to the growth in the second half of prior year.