The Hain Celestial Group, Inc. (Nasdaq: HAIN) (“Hain Celestial”,
“Hain” or the “Company”), a leading organic and natural products
company with operations in North America, Europe, Asia and the
Middle East providing consumers with A Healthier Way of Life®,
today reported preliminary financial results for the fourth quarter
ended June 30, 2022. The company is also providing initial guidance
for fiscal year 2023.
Preliminary Fourth Quarter 2022
Results
- Net sales of approximately $457
million
- Adjusted net sales of approximately
$447 million
- Net income of approximately $3
million
- Adjusted EBITDA of approximately
$35 million
Fourth quarter adjusted net sales, which exclude
an approximate 440-basis point currency headwind, were
approximately flat compared to the prior year period, below our
previous low to mid-single digit growth guidance. Within North
America, the United States delivered approximately 8% adjusted net
sales growth, which excludes the That’s How We Roll acquisition –
approximately 180 basis points higher than the run rate for the
first nine months of fiscal year 2022. Strong distribution
momentum, innovation, share growth and robust pricing drove the
continued topline strength.
International adjusted net sales in the fourth
quarter, which exclude an approximate 930-basis point currency
headwind, were below our expectation, declining approximately 10%
compared to the prior year period. As reported by other companies
that compete throughout Europe and the United Kingdom, we also
faced numerous challenges driven by high inflation, the
Russia-Ukraine war, low consumer confidence, and softness in the
plant-based categories. That said, we are well positioned with nine
leading share brands and delivered strong share gains in a number
of categories, with momentum carrying into fiscal year 2023.
Adjusted EBITDA in the fourth quarter was
approximately $33 million below the prior year period. The majority
of the year-over-year adjusted EBITDA decline occurred in the
International business unit, driven by lower net sales compared to
the prior year period, inflation higher than our expectation and
manufacturing deleverage. In North America, we continued to battle
high inflation and supply disruptions, with progress made
throughout the quarter to set us up for a stronger start to fiscal
year 2023. Additionally, the fourth quarter adjusted EBITDA
includes charges of approximately $10 million to eliminate several
unprofitable brands and SKUs and write off obsolete inventory on
our sanitizer business, as we elected to continue to aggressively
reshape the portfolio during the quarter.
Mark Schiller, Hain Celestial President and
Chief Executive Officer said, “While we are disappointed with our
overall results this quarter, the major drivers were the extremely
volatile environment in Europe and our decision to eliminate
unprofitable SKUs to better position ourselves going forward. That
said, we remain encouraged by the continued strength of our growth
brands across the globe and the progress we are making in
addressing inflation and ongoing supply challenges. As a result, we
expect continued strong growth and momentum in North America in
fiscal year 2023. In International, it is very difficult to
forecast in such a volatile and challenging environment. Our
initial guidance assumes modestly improved performance as the year
progresses.”
The Company has not yet completed its quarterly
financial close or audit processes. The Company intends to provide
its full financial results for the fourth quarter and full fiscal
year on August 25, 2022. Until that time, the preliminary results
described in this press release are estimates only and remain
subject to change and finalization based on management’s ongoing
review of results of the quarter and completion of all quarter-end
and year-end close and audit processes.
Fiscal Year 2023 OutlookThe
Company expects a return to growth with low single digit adjusted
net sales growth and adjusted EBITDA growth on a constant currency
basis driven by:
- Ongoing momentum in North
America
- 2023 price increases, most of which
are already accepted by retail partners, to offset expected
mid-teens year-over-year inflation
- A robust productivity pipeline
and
- An uncertain, but improving, retail
environment in the United Kingdom, with continued challenges in
Europe
Conference Call and Webcast
InformationHain Celestial will host a conference call and
webcast on Thursday, August 25, 2022 at 8:30 AM Eastern Time to
discuss its results and business outlook. Investors interested in
participating in the live call can dial 877-407-9716 from the U.S.
and 201-493-6779 internationally. The call will be webcast and the
accompanying presentation will be available under the Investor
Relations section of the Company’s website at www.hain.com.
Contacts:
Investor Relations:Chris Mandeville and Anna Kate HellerICR
hain@icrinc.com
Media:Robin Shallowrobin@robincomm.com
About The Hain Celestial Group,
Inc.
The Hain Celestial Group, Inc. (Nasdaq: HAIN) is
a leading organic and natural products company that has been
committed to creating A healthier way of Life® since 1993.
Headquartered in Lake Success, NY with operations in North America,
Europe, Asia and the Middle East, Hain Celestial’s food and
beverage brands include Celestial Seasonings®, Clarks™, Cully &
Sully®, Earth’s Best®, Ella’s Kitchen®, Frank Cooper’s®, Garden of
Eatin’®, Hain Pure Foods®, Hartley’s®, Health Valley®, Imagine®,
Joya®, Lima®, Linda McCartney’s® (under license), MaraNatha®,
Natumi®, New Covent Garden Soup Co.®, ParmCrisps®, Robertson’s®,
Rose’s® (under license), Sensible Portions®, Spectrum®, Sun-Pat®,
Terra®, The Greek Gods®, Thinsters®, Yorkshire Provender® and Yves
Veggie Cuisine®. Hain Celestial’s personal care brands include Alba
Botanica®, Avalon Organics®, JASON®, Live Clean® and Queen Helene®.
For more information, visit hain.com.
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 rates; our strategic initiatives, business
strategy, supply chain, 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; supply chain disruptions, cybersecurity risks
and other risks arising from the Russia-Ukraine war; disruption of
operations at our manufacturing facilities; reliance on independent
contract manufacturers; challenges and uncertainty resulting from
the COVID-19 pandemic; changes to consumer preferences; customer
concentration; reliance on independent distributors; the
availability of organic ingredients; risks associated with our
international sales and operations; risks associated with
outsourcing arrangements; our ability to execute our cost reduction
initiatives and related strategic initiatives; our ability to
identify and complete acquisitions or divestitures and our level of
success in integrating acquisitions; our reliance on independent
certification for a number of our products; the reputation of our
Company and our brands; our ability to use and protect trademarks;
general economic conditions; foreign exchange risk; the United
Kingdom’s exit from the European Union; cybersecurity incidents;
disruptions to information technology systems; the impact of
climate change; liabilities, claims or regulatory change with
respect to environmental matters; potential liability if our
products cause illness or physical harm; the highly regulated
environment in which we operate; pending and future litigation;
compliance with data privacy laws; compliance with our credit
agreement; the discontinuation of LIBOR; our ability to issue
preferred stock; the adequacy of our insurance coverage;
impairments in the carrying value of goodwill or other intangible
assets; and other risks and matters described in our most recent
Annual Report on Form 10-K and our other filings from time to time
with the U.S. Securities and Exchange Commission.
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 includes the following
non-GAAP financial measures: adjusted net sales, adjusted EBITDA
and adjusted EBITDA on a constant currency basis. The Company
defines adjusted net sales as net sales adjusted for the impact of
foreign currency changes, acquisitions, divestitures and
discontinued brands. 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 gains and
losses, litigation and related 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 or losses
on sales of assets and businesses, inventory write-downs,
impairment of long-lived assets and other adjustments. Adjusted
EBITDA on a constant currency basis reflects adjusted EBITDA, as
defined above, excluding the impact of foreign currency
changes.
The reconciliations of historic non-GAAP
financial measures to the comparable GAAP financial measures are
provided 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 in
connection with the Company’s Consolidated Statements of Operations
and Cash Flows presented in accordance with GAAP when
available.
Certain forward-looking non-GAAP financial
measures included in this press release 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 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.
Non-GAAP to GAAP Reconciliation
Tables
THE HAIN
CELESTIAL GROUP, INC. AND SUBSIDIARIES |
Adjusted Net
Sales Growth |
(unaudited and in
thousands) |
|
|
|
|
|
|
Q4
FY22 |
North America |
|
International |
|
Hain Consolidated |
Net sales |
$ |
296,851 |
|
|
$ |
160,159 |
|
|
$ |
457,010 |
|
Acquisitions, divestitures and discontinued brands |
|
(29,634 |
) |
|
|
- |
|
|
|
(29,634 |
) |
Impact of
foreign currency exchange |
|
1,243 |
|
|
|
18,385 |
|
|
|
19,628 |
|
Net sales on
a constant currency basis adjusted for acquisitions, divestitures
and discontinued brands |
$ |
268,460 |
|
|
$ |
178,544 |
|
|
$ |
447,004 |
|
|
|
|
|
|
|
Q4
FY21 |
|
|
|
|
|
Net
sales |
$ |
253,348 |
|
|
$ |
197,305 |
|
|
$ |
450,653 |
|
Divestitures
and discontinued brands |
|
(778 |
) |
|
|
(32 |
) |
|
|
(810 |
) |
Net sales
adjusted for divestitures and discontinued brands |
$ |
252,570 |
|
|
$ |
197,273 |
|
|
$ |
449,843 |
|
|
|
|
|
|
|
Net sales
growth (decline) |
|
17.2 |
% |
|
|
(18.8 |
)% |
|
|
1.4 |
% |
Impact of
acquisitions, divestitures and discontinued brands |
|
(11.4 |
)% |
|
|
- |
|
|
|
(6.4 |
)% |
Impact of
foreign currency exchange |
|
0.5 |
% |
|
|
9.3 |
% |
|
|
4.4 |
% |
Net sales
growth (decline) on a constant currency basis adjusted for
acquisitions, divestitures and discontinued brands |
|
6.3 |
% |
|
|
(9.5 |
)% |
|
|
(0.6 |
)% |
|
|
|
|
|
|
* These preliminary
results are estimates only and remain subject to change and
finalization based on management’s ongoing review of results of the
quarter and completion of all quarter-end and year-end close and
audit processes. |
THE HAIN
CELESTIAL GROUP, INC. AND SUBSIDIARIES |
Adjusted
EBITDA |
(unaudited and in
thousands) |
|
|
|
|
|
Fourth Quarter |
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
Net
income |
$ |
3,042 |
|
|
$ |
40,485 |
|
Net income
from discontinued operations, net of tax |
|
- |
|
|
|
- |
|
Net income
from continuing operations |
$ |
3,042 |
|
|
$ |
40,485 |
|
|
|
|
|
Depreciation
and amortization |
|
12,453 |
|
|
|
11,801 |
|
Equity in
net loss of equity-method investees |
|
1,528 |
|
|
|
566 |
|
Interest
expense, net |
|
4,549 |
|
|
|
1,099 |
|
Provision
for income taxes |
|
3,291 |
|
|
|
7,896 |
|
Stock-based
compensation, net |
|
3,322 |
|
|
|
3,771 |
|
Unrealized
currency (gains) losses |
|
(162 |
) |
|
|
1,287 |
|
Litigation
and related costs |
|
|
|
Litigation expenses |
|
2,298 |
|
|
|
943 |
|
Proceeds from insurance claim |
|
- |
|
|
|
- |
|
Restructuring activities |
|
|
|
Plant closure related costs, net |
|
34 |
|
|
|
41 |
|
Productivity and transformation costs |
|
1,726 |
|
|
|
3,620 |
|
Warehouse/manufacturing consolidation and other costs |
|
89 |
|
|
|
4,061 |
|
Acquisitions, divestitures and other |
|
|
|
Transaction and integration costs, net |
|
1,904 |
|
|
|
1,815 |
|
Gain on sale of assets |
|
(2 |
) |
|
|
(4,900 |
) |
Gain on sale of businesses |
|
- |
|
|
|
(3,897 |
) |
Impairment
charges |
|
|
|
Inventory write-down |
|
(305 |
) |
|
|
(732 |
) |
Long-lived asset and intangibles impairment |
|
1,600 |
|
|
|
244 |
|
Adjusted
EBITDA |
$ |
35,367 |
|
|
$ |
68,100 |
|
|
|
|
|
* These preliminary
results are estimates only and remain subject to change and
finalization based on management’s ongoing review of results of the
quarter and completion of all quarter-end and year-end close and
audit processes. |
|
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