16 July 2024
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Global Industry

Hain Celestial: Reports Q4 and Fiscal Year 2019 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 fourth quarter and fiscal year ended June 30, 2019. The results contained herein are presented with the Hain Pure Protein operating segment being treated as a discontinued operation.

«We are pleased with our team’s solid execution on our transformational strategic plan during the fourth quarter. Our financial results demonstrate the third consecutive quarter of sequential adjusted margin improvement along with key operational improvements in the United States and internationally,» commented Mark L. Schiller, Hain Celestial’s President and Chief Executive Officer. «In a very short period of time, we have started to make significant progress on our key strategies in the United States including simplifying the portfolio, strengthening our core capabilities and expanding margins and cash flow. The team is delivering on the plan we outlined at our Investor Day in February which was to first get smaller and more profitable so that we could then focus our resources on reinvigorating profitable topline growth in a core set of brands by optimizing in-store assortment, building innovation and enhancing marketing. For fiscal 2020, we remain confident in our ability to generate significant further improvements in overall profit across our business and in building the foundation for future accelerated growth.»

Financial Highlights

Summary of Fourth Quarter Results from Continuing Operations

  • Net sales decreased 10 percent to USD 557.7 million compared to the prior year period.
  • Net sales decreased 7 percent on a constant currency basis compared to the prior year period.
  • When adjusted for Foreign Exchange and Acquisitions, Divestitures and certain other items, including the Project Terra Stock Keeping Unit (SKU) rationalization3, net sales decreased 6 percent compared to the prior year period.
  • Gross margin of 19.0 percent, a 120 basis point decrease over the prior year period and a 190 basis point decrease from the third quarter of fiscal 2019.
  • Adjusted gross margin of 23.0 percent, a 190 basis point increase over the prior year period and a 140 basis point increase from the third quarter of fiscal 2019.
  • Operating income of USD 0.7 million compared to USD 16.6 million in the prior year period and USD 23.9 million in the third quarter of fiscal 2019.
  • Adjusted operating income of USD 40.5 million compared to USD 44.5 million in the prior year period and USD 38.9 million in the third quarter of fiscal 2019.
  • Net loss of USD 7.7 million compared to USD 4.6 million in the prior year period and net income of USD 10.1 million in the third quarter of fiscal 2019.
  • Adjusted net income of USD 22.4 million compared to USD 27.7 million in prior year period and USD 21.7 million in the third quarter of fiscal 2019.
  • Ebitda of USD 25.9 million compared to USD 45.8 million in the prior year period and USD 41.5 million in the third quarter of fiscal 2019.
  • Ebitda margin of 4.6 percent, a 280 basis point decrease compared to the prior year period and 230 basis point decrease from the third quarter of fiscal 2019.
  • Adjusted Ebitda of USD 57.0 million compared to USD 61.4 million in the prior year period and USD 55.5 million in the third quarter of fiscal 2019.
  • Adjusted Ebitda margin of 10.2 percent, a 30 basis point increase compared to the prior year period and a 90 basis point increase from the third quarter of fiscal 2019.
  • Loss per diluted share of USD 0.07 compared to USD 0.04 in the prior year period and earnings per diluted share (EPS) of USD 0.10 in the third quarter of fiscal 2019.
  • Adjusted EPS of USD 0.21 compared to USD 0.27 in the prior year period and USD 0.21 in the third quarter of fiscal 2019.

Summary of Fiscal Year 2019 Results from Continuing Operations

  • Net sales decreased 6 percent to USD 2,302.5 million compared to the prior year.
  • Net sales decreased 4 percent on a constant currency basis compared to the prior year.
  • When adjusted for Foreign Exchange and Acquisitions, Divestitures and certain other items, including the Project Terra SKU rationalization3, net sales decreased 2 percent compared to the prior year.
  • Gross margin of 19.3 percent, a 170 basis point decrease over the prior year.
  • Adjusted gross margin of 21.0 percent, a 110 basis point decrease over the prior year.
  • Operating loss of USD 14.9 million compared to operating income of USD 106.0 million in the prior year.
  • Adjusted operating income of USD 130.2 million compared to USD 186.1 million in the prior year.
  • Net loss of USD 49.9 million compared to net income of USD 82.4 million in the prior year.
  • Adjusted net income of USD 68.7 million compared to USD 121.3 million in prior year.
  • Ebitda of USD 80.7 million compared to USD 197.2 million in the prior year.
  • Ebitda margin of 3.5 percent, a 450 basis point decrease compared to the prior year.
  • Adjusted Ebitda of USD 191.4 million compared to USD 255.9 million in the prior year.
  • Adjusted Ebitda margin of 8.3 percent, a 210 basis point decrease compared to the prior year.
  • Loss per diluted share of USD 0.48 compared to EPS of USD 0.79 in the prior year.
  • Adjusted EPS of USD 0.66 compared to USD 1.16 in the prior year.

Segment Highlights from Continuing Operations

Hain Celestial United States

Hain Celestial United States net sales in the fourth quarter were USD 239.8 million, a decrease of 11 percent over the prior year period. When adjusted for Acquisitions, Divestitures and certain other items including the Project Terra SKU rationalization3, net sales decreased 8 percent over the prior year period. Segment operating loss in the fourth quarter was USD 2.6 million, a 114 percent decrease from the prior year period and a 115 percent decrease from the third quarter of fiscal 2019. Adjusted operating income was USD 20.3 million, a 12 percent decrease over the prior year period and a 7 percent decrease from the third quarter of fiscal 2019. Segment Ebitda in the fourth quarter was USD 6.0 million, a 73 percent decrease from the prior year period and a 71 percent decrease from the third quarter of fiscal 2019. Adjusted Ebitda was USD 24.2 million, a 10 percent decrease over the prior year period and a 5 percent decrease from the third quarter of 2019.

Hain Celestial United States net sales in fiscal year 2019 were USD 1,009.4 million, a decrease of 7 percent over the prior year. When adjusted for Acquisitions, Divestitures and certain other items including the Project Terra SKU rationalization3, net sales decreased 4 percent over the prior year. Segment operating income in fiscal year 2019 was USD 23.9 million, a 72 percent decrease from the prior year. Adjusted operating income was USD 63.2 million, a 44 percent decrease over the prior year. Segment Ebitda in fiscal year 2019 was USD 44.6 million, a 59 percent decrease from the prior year. Adjusted Ebitda was USD 77.9 million, a 40 percent decrease over the prior year.

Hain Celestial United Kingdom

Hain Celestial United Kingdom net sales in the fourth quarter were USD 214.4 million, a decrease of 10 percent over the prior year period. When adjusted for Foreign Exchange, Acquisitions and Divestitures and certain other items3 net sales decreased 5 percent over the prior year period. The net sales decrease compared to the prior year period was driven by 14 percent and 7 percent declines from Hain Daniels and Ella’s Kitchen®, respectively, partially offset by 3 percent growth from «Tilda», or 9 percent and 2 percent declines from Hain Daniels and Ella’s Kitchen®, respectively, and 8 percent growth from «Tilda», after adjusting for Foreign Exchange, Acquisitions and Divestitures and certain other items3. The results for the United Kingdom segment compared to the prior year period were primarily driven by declines from the New Covent Garden Soup Co.®, Yorkshire Provender® and Johnson’s Juice Co.™ brands and private label sales, offset in part by growth in the Linda McCartney®, Hartley’s® and Cully + Sully® brands. Segment operating income was USD 15.6 million, an 18 percent decrease over the prior year period and a 14 percent decrease from the third quarter of fiscal 2019. Adjusted operating income was USD 22.3 million, an increase of 10 percent over the prior year period and a 17 percent increase from the third quarter of fiscal 2019. Segment Ebitda in the fourth quarter was USD 27.1 million, a 1 percent increase from the prior year period and a 5 percent increase from the third quarter of fiscal 2019. Adjusted Ebitda was USD 29.4 million, a 7 percent increase over the prior year period and 10 percent increase from the third quarter of 2019.

Hain Celestial United Kingdom net sales in fiscal year 2019 were USD 885.5 million, a decrease of 6 percent over the prior year. When adjusted for Foreign Exchange, Acquisitions and Divestitures and certain other items3 net sales decreased 1 percent over the prior year. The results for the United Kingdom segment compared to the prior year reflected a 9 percent decline in Hain Daniels, or 4 percent after adjusting for Foreign Exchange, Acquisitions and Divestitures and certain other items3, primarily driven by declines from the New Covent Garden Soup Co.® and Johnson’s Juice Co.™ brands and private label sales, offset in part by growth in the Linda McCartney® and Hartley’s® brands. This was partially offset by 3 percent growth from «Tilda» and 1 percent growth from Ella’s Kitchen®, or 8 percent and 5 percent growth, respectively, after adjusting for Foreign Exchange, Acquisitions and Divestitures and certain other items3. Segment operating income was USD 52.4 million, a 7 percent decrease over the prior year. Adjusted operating income was USD 70.2 million, flat compared to the prior year. Segment Ebitda in fiscal year 2019 was USD 90.9 million, a 2 percent increase from the prior year. Adjusted Ebitda was USD 99.5 million, a 1 percent decrease over the prior year.

Rest of World

Rest of World net sales in the fourth quarter were USD 103.5 million, a decrease of 7 percent over the prior year period. When adjusted for Foreign Exchange, Acquisitions and Divestitures and certain other items3 net sales decreased 1 percent over the prior year period. Net sales for Hain Celestial Canada decreased 8 percent compared to the prior year period, or 2 percent after adjusting for Foreign Exchange, Acquisitions and Divestitures and certain other items3, primarily driven by declines from the Sensible Portions®, Europe’s Best® and Spectrum® Organics brands, offset in part by growth from the Live Clean® and Yves Veggie Cuisine® brands. Net sales for Hain Celestial Europe increased 1 percent, or 7 percent on a constant currency basis, primarily driven by growth from the Natumi® brand and private label sales, offset in part by declines from the Dream® and Joya® brands. Net sales for Hain Ventures, formerly known as Cultivate Ventures, decreased 29 percent, or 29 percent after adjusting for Acquisitions and Divestitures and certain other items3, primarily driven by declines from the BluePrint®, DeBoles® and SunSpire® brands, offset in part by growth from private label sales. Segment operating income in the fourth quarter was USD 5.7 million, a 29 percent decrease over the prior year period and a 47 percent decrease from the third quarter of fiscal 2019. Adjusted operating income was USD 11.2 million, a 13 percent increase over the prior year period and a 1 percent decrease from the third quarter of fiscal 2019. Segment Ebitda in the fourth quarter was USD 8.0 million, a 33 percent decrease from the prior year period and a 43 percent decrease from the third quarter of fiscal 2019. Adjusted Ebitda was USD 14.6 million, a 13 percent increase over the prior year period and a 1 percent increase from the third quarter of 2019.

Rest of World net sales in fiscal year 2019 were USD 407.6 million, a decrease of 6 percent over the prior year. When adjusted for Foreign Exchange, Acquisitions and Divestitures and certain other items3 net sales decreased 1 percent over the prior year. Net sales for Hain Celestial Canada decreased 8 percent compared to the prior year, or 2 percent after adjusting for Foreign Exchange, Acquisitions and Divestitures and certain other items3, primarily driven by declines from the Europe’s Best®, Dream® and Spectrum® Organics brands and private label sales, offset in part by growth from the Live Clean®, Sensible Portions® and Yves Veggie Cuisine® brands. Net sales for Hain Celestial Europe decreased 1 percent, or increased 4 percent on a constant currency basis, primarily driven by strong performance from the Joya® and Natumi® brands and private label sales, offset in part by declines from the Lima®, Danival® and Dream® brands. Net sales for Hain Ventures, formerly known as Cultivate Ventures, decreased 20 percent, or 18 percent after adjusting for Acquisitions and Divestitures and certain other items3, primarily driven by declines from the BluePrint®, DeBoles® and SunSpire® brands, offset in part by growth from the GG UniqueFiber™ brand and private label sales. Segment operating income in fiscal year 2019 was USD 32.8 million, a 15 percent decrease over the prior year. Adjusted operating income was USD 41.0 million, a 4 percent decrease over the prior year. Segment Ebitda in fiscal year 2019 was USD 44.0 million, a 13 percent decrease from the prior year. Adjusted Ebitda was USD 53.3 million, flat compared to the prior year.

Hain Pure Protein Discontinued Operations

As previously disclosed on May 5, 2018, the results of operations, financial position and cash flows related to the operations of the Hain Pure Protein business segment have been moved to discontinued operations in the current and prior periods. On February 15, 2019, the Company completed the sale of substantially all of the assets used primarily for the Plainville Farms business and on June 28, 2019 the Company completed the sale of its equity interest in Hain Pure Protein Corporation, which included the FreeBird® and Empire Kosher® businesses. Net sales for Hain Pure Protein in the fourth quarter were USD 58.7 million, a decrease of 48 percent compared to the prior year period. Net loss from discontinued operations, net of tax in the fourth quarter was USD 5.9 million and included loss on sale of USD 0.6 million.

For fiscal year 2019, net sales for Hain Pure Protein were USD 408.1 million, a decrease of 20 percent compared to the prior year. Net loss from discontinued operations, net of tax for fiscal year 2019 was USD 133.4 million and included a USD 80.0 millionnon-cash impairment charge and a loss on sale of USD 30.0 million.

Fiscal Year 2020 Guidance

The Company expects the following for fiscal year 2020 pro forma results excluding the contribution from its recently announced completed sale of «Tilda»:

Fiscal Year 2020 Reported Constant Currency
Adjusted Ebitda USD 168 Million to USD 192 Million USD 173 Million to USD 198 Million
% Growth +2% to +16% +5% to +20%
Adjusted EPS USD 0.59 to USD 0.72 USD 0.62 to USD 0.75
% Growth -2% to +20% +3% to +25%

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Guidance, where adjusted, is provided on a non-GAAP basis and excludes acquisition-related expenses; integration charges; restructuring charges, start-up costs, consulting fees and other costs associated with Project Terra; unrealized net foreign currency gains or losses, and other non-recurring items that may be incurred during the Company’s fiscal year 2020, which the Company will continue to identify as it reports its future financial results. Guidance also excludes the impact of any future acquisitions and divestitures.

The Company cannot reconcile its expected Adjusted Ebitda to net income or adjusted earnings per diluted share to earnings per diluted share under «Fiscal Year 2020 Guidance» without unreasonable effort 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.


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