Hain Celestial Reports Third Quarter Fiscal Year 2020 Financial Results
LAKE SUCCESS, N.Y., May 7, 2020 /PRNewswire/ -- 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 financial results for the third quarter ended March 31, 2020. The results contained herein are presented with the Hain Pure Protein and Tilda operating segments being treated as discontinued operations.
Mark L. Schiller, Hain Celestial's President and Chief Executive Officer, commented, "I am pleased to be raising our full year guidance for 2020 as third quarter financial performance exceeded our previous guidance and is expected to show continuing strength in the current quarter. With our transformation plan taking hold and food-at-home consumption accelerating, Hain Celestial's natural and organic product offerings resonated with consumers, resulting in year-over-year growth in third quarter net sales, the first such increase since fiscal 2018."
Schiller continued, "Across our organization, we are taking necessary safety measures to best manage our business in the current operating environment as we continue to deliver against our transformational strategic plan. I am proud of how Hain associates across the globe rose to the occasion to partner with our valued customers and suppliers to deliver for our consumers and local communities in the face of unprecedented global challenges. As a result of the actions we have taken, we are well positioned to manage through this unprecedented crisis and emerge an even stronger company."
FINANCIAL HIGHLIGHTS1
Summary of Third Quarter Results from Continuing Operations2
- Net sales increased 1% to $553.3 million or 2% on a constant currency basis compared to the prior year period.
- When adjusted for Foreign Exchange, Divestitures and Stock Keeping Unit ("SKU") rationalization3, net sales increased 6% compared to the prior year period.
- Gross margin of 23.9%, a 324 basis point increase from the prior year period.
- Adjusted gross margin of 24.3%, a 282 basis point increase from the prior year period.
- Operating income of $19.1 million compared to $19.0 million in the prior year period.
- Adjusted operating income of $45.7 million compared to $34.0 million in the prior year period.
- Net income of $25.0 million compared to $8.8 million in the prior year period.
- Adjusted net income of $28.8 million compared to $20.2 million in prior year period.
- Adjusted EBITDA of $60.7 million compared to $49.1 million in the prior year period.
- Adjusted EBITDA margin of 11.0%, a 199 basis point increase compared to the prior year period.
- Earnings per diluted share ("EPS") of $0.24 compared to $0.08 in the prior year period.
- Adjusted EPS of $0.28 compared to $0.19 in the prior year period.
- Repurchased 2.4 million shares, or 2.3% of the outstanding common stock, at an average price of $23.52 per share.
1 This press release includes certain non-GAAP financial measures, which are intended to supplement, not substitute for, comparable GAAP financial measures. Reconciliations of non-GAAP financial measures to GAAP financial measures are provided herein in the tables "Reconciliation of GAAP Results to Non-GAAP Measures." 2 Unless otherwise noted all results included in this press release are from continuing operations. 3 Refer to "Net Sales Growth at Constant Currency" and "Adjusted for Divestitures and SKU Rationalization" provided herein.
SEGMENT HIGHLIGHTS FROM CONTINUING OPERATIONS
Historically, the Company had three reportable segments: United States, United Kingdom and Rest of World. Effective July 1, 2019, the Company reassessed its segment reporting structure, pursuant to which the Company's Canada and Hain Ventures operating segments, which were included within the Rest of World reportable segment, were moved to the United States reportable segment and renamed the North America segment. Additionally, the Europe operating segment, which was included in the Rest of World reportable segment, was combined with the United Kingdom reportable segment and renamed the International reportable segment. Accordingly, the Company now operates under two reportable segments: North America and International. Prior period segment information included herein has been adjusted to reflect the Company's new reporting structure.
North AmericaNorth America net sales in the third quarter were $320.4 million, an increase of 2% compared to the prior year period. When adjusted for Divestitures and SKU rationalization3, net sales increased 9% from the prior year period.
Segment gross profit in the third quarter was $82.6 million, a 21% increase from the prior year period. Adjusted gross profit was $84.5 million, an increase of 18% from the prior year period. Gross margin was 25.8%, a 415 basis point increase from the prior year period and adjusted gross margin was 26.4%, a 351 basis point increase from the prior year.
Segment operating income in the third quarter was $28.9 million, a 35% increase from the prior year period. Adjusted operating income was $38.1 million, a 44% increase from the prior year period.
Adjusted EBITDA was $42.9 million, a 36% increase from the prior year period. As a percentage of sales on a constant currency basis, North America adjusted EBITDA margin was 13.4%, a 338 basis point increase from the prior year period.
InternationalInternational net sales in the third quarter were $232.9 million, flat when compared to the prior year period. When adjusted for Foreign Exchange, Divestitures and SKU rationalization3, net sales increased 2% compared to the prior year period.
Segment gross profit in the third quarter was $49.8 million, a 10% increase from the prior year period. Adjusted gross profit was $49.8 million, an increase of 9% from the prior year period. Gross margin was 21.4%, a 197 basis point increase from the prior year period and adjusted gross margin was 21.4%, a 184 basis point increase from the prior year period.
Segment operating income in the third quarter was $18.7 million, a 6% decrease from the prior year period. Adjusted operating income was $23.2 million, an increase of 11% from the prior year period.
Adjusted EBITDA was $30.9 million, a 7% increase from the prior year period. As a percentage of sales on a constant currency basis, International adjusted EBITDA margin was 13.3%, an 89 basis point increase from the prior year period.
CAPITAL MANAGEMENT
During the month of March, the Company repurchased 2.4 million shares, or 2.3% of the outstanding common stock, at an average price of $23.52 per share for a total of $57.4 million, excluding commissions. As of March 31, 2020, the Company had $192.6 million remaining authorization under the share repurchase program.
SALE OF RUDI'S BAKERY
Effective May 1, 2020, the Company has completed the divestiture of the Rudi's Gluten Free BakeryTM and Rudi's Organic Bakery® brands to an affiliate of Promise Gluten Free. Details of the transaction were not disclosed.
FISCAL YEAR 2020 GUIDANCE
The Company now expects all profit metrics for the full year ending June 30, 2020 to be higher than their previously provided ranges as a result of the ongoing execution of our transformation plan and higher food-at-home consumption related to the COVID-19 pandemic. The Company acknowledges that the magnitude and duration of increased demand remains uncertain and a challenge it faces as a result of the pandemic is its ability to maintain the level of supply needed to keep up with the increased demand. Hain Celestial's outlook assumes its supply chain continues to operate with minimal disruption for the remainder of fiscal 2020. The Company is raising its annual guidance for continuing operations for fiscal year 2020 as follows:
Fiscal Year 2020 | ||
Reported | Constant Currency | |
Adjusted EBITDA | $190 Million to $200 Million | $195 Million to $205 Million |
% Growth | +15% to +21% | +18% to +24% |
Adjusted EPS | $0.75 to $0.82 | $0.78 to $0.85 |
% Growth | +25% to +37% | +30% to +42% |
Guidance, where adjusted, is provided on a non-GAAP basis and excludes: acquisition and divestiture related expenses; integration charges; restructuring charges, start-up costs, consulting fees and other costs associated with the Company's productivity and transformation initiatives; 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, divestitures, or share repurchases.
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.
Webcast Presentation Hain Celestial will host a conference call and webcast today at 8:30 AM Eastern Time to discuss its results and business outlook. 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.
About The Hain Celestial Group, Inc.The Hain Celestial Group (Nasdaq: HAIN), headquartered in Lake Success, NY, is a leading organic and natural products company with operations in North America, Europe, Asia and the Middle East. Hain Celestial participates in many natural categories with well-known brands that include Almond Dream®, Bearitos®, Better Bean®, BluePrint®, Celestial Seasonings®, Clarks™, Coconut Dream®, Cully & Sully®, Danival®, DeBoles®, Earth's Best®, Ella's Kitchen®, Farmhouse Fare™, Frank Cooper's®, Gale's®, Garden of Eatin'®, GG UniqueFiber™, Hain Pure Foods®, Hartley's®, Health Valley®, Imagine™, Johnson's Juice Co.™, Joya®, Lima®, Linda McCartney® (under license), MaraNatha®, Mary Berry (under license), Natumi®, New Covent Garden Soup Co.®, Orchard House®, Rice Dream®, Robertson's®, Sensible Portions®, Spectrum® Organics, Soy Dream®, Sun-Pat®, Sunripe®, Terra®, The Greek Gods®, Walnut Acres®, Yorkshire Provender®, Yves Veggie Cuisine® and William's™. The Company's personal care products are marketed under the Alba Botanica®, Avalon Organics®, Earth's Best®, JASON®, Live Clean® and Queen Helene® brands.
Safe Harbor StatementCertain statements contained in this press release constitute "forward-looking statements" within the meaning of federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements are predictions based on expectations and projections about future events and are not statements of historical fact. You can identify forward-looking statements by the use of forward-looking terminology such as "plan", "continue", "expect", "anticipate", "intend", "predict", "project", "estimate", "likely", "believe", "might", "seek", "may", "will", "remain", "potential", "can", "should", "could", "future" and similar expressions, or the negative of those expressions, or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. You can also identify forward-looking statements by discussions of the Company's strategic initiatives, including productivity and transformation, the Company's Guidance for Fiscal Year 2020 and our future performance and results of operations.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, levels of activity, performance or achievements of the Company, or industry results, to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements, and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and may not be able to be realized. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). Such factors include, among others, challenges and uncertainty resulting from the COVID-19 pandemic, the impact of competitive products and changes to the competitive environment, changes to consumer preferences, the United Kingdom's exit from the European Union, consolidation of customers or the loss of a significant customer, reliance on independent distributors, general economic and financial market conditions, risks associated with our international sales and operations, our ability to manage our supply chain effectively, volatility in the cost of commodities, ingredients, freight and fuel, our ability to execute and realize cost savings initiatives, including SKU rationalization plans, the impact of our debt and our credit agreements on our financial condition and our business, our ability to manage our financial reporting and internal control system processes, potential liabilities due to legal claims, government investigations and other regulatory enforcement actions, costs incurred due to pending and future litigation, potential liability, including in connection with indemnification obligations to our current and former officers and members of our Board of Directors that may not be covered by insurance, potential liability if our products cause illness or physical harm, impairments in the carrying value of goodwill or other intangible assets, our ability to consummate divestitures, our ability to integrate past acquisitions, the availability of organic ingredients, disruption of operations at our manufacturing facilities, loss of one or more independent co-packers, disruption of our transportation systems, risks relating to the protection of intellectual property, the risk of liabilities and claims with respect to environmental matters, the reputation of our brands, our reliance on independent certification for a number of our products, and other risks detailed from time-to-time in the Company's reports filed with the United States Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and our subsequent reports on Forms 10-Q and 8-K. As a result of the foregoing and other factors, the Company cannot provide any assurance regarding future results, levels of activity and achievements of the Company, and neither the Company nor any person assumes responsibility for the accuracy and completeness of these statements. All forward-looking statements contained herein apply as of the date hereof or as of the date they were made and, except as required by applicable law, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflects changes in underlying assumptions or factors of new methods, future events or other changes.
Non-GAAP Financial MeasuresThis press release and the accompanying tables include non-GAAP financial measures, including net sales adjusted for the impact of Foreign Exchange, Divestitures and certain other items, including SKU rationalization, as applicable in each case, adjusted operating income, adjusted gross margin, adjusted net income, adjusted earnings per diluted share, Adjusted EBITDA and operating free cash flow. The reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are presented in the tables "Reconciliation of GAAP Results to Non-GAAP Measures" for the three and nine months ended March 31, 2020 and 2019 in the paragraphs 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 only in connection with the Company's Consolidated Statements of Operations presented in accordance with GAAP.
The Company defines Operating Free Cash Flow as cash provided by or used in operating activities from continuing operations (a GAAP measure) less capital expenditures. The Company views Operating Free Cash Flow as an important measure because it is one factor in evaluating the amount of cash available for discretionary investments.
For the three and nine months ended March 31, 2020 and 2019, Operating Free Cash Flow from continuing operations was calculated as follows:
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||
2020 | 2019 | 2020 | 2019 | |||||
(unaudited and in thousands) | ||||||||
Cash flow provided by operating activities - continuing operations | $ 46,944 | $ 18,335 | $ 64,092 | $ 18,331 | ||||
Purchases of property, plant and equipment | (17,624) | (14,075) | (46,961) | (55,073) | ||||
Operating Free Cash Flow - continuing operations | $ 29,320 | $ 4,260 | $ 17,131 | $ (36,742) | ||||
The Company's Operating Free Cash Flow from continuing operations was $29.3 million for the three months ended March 31, 2020, an increase of $25.1 million from the three months ended March 31, 2019. The Company's Operating Free Cash Flow from continuing operations was $17.1 million for the nine months ended March 31, 2020, an increase of $53.9 million from the nine months ended March 31, 2019. The improvement in Operating Free Cash Flow resulted primarily from an improvement in net income adjusted for non-cash charges in the current year and a decrease in cash used in working capital accounts.
The Company believes presenting net sales at constant currency provides useful information to investors because it provides transparency to underlying performance in the Company's consolidated net sales by excluding the effect that foreign currency exchange rate fluctuations have on period-to-period comparability given the volatility in foreign currency exchange markets. To present this information for historical periods, current period net sales for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average monthly exchange rates in effect during the corresponding period of the prior fiscal year, rather than at the actual average monthly exchange rate in effect during the current period of the current fiscal year. As a result, the foreign currency impact is equal to the current year results in local currencies multiplied by the change in average foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year.
The Company provides net sales adjusted for constant currency, divestitures, and certain other items including SKU rationalization, as applicable in each case, to understand the growth rate of net sales excluding the impact of such items. The Company's management believes net sales adjusted for such items is useful to investors because it enables them to better understand the growth of our business from period-to-period.
The Company defines Adjusted EBITDA as net income (loss) before income taxes, net interest expense, depreciation and amortization, impairment of long-lived and intangible assets, equity in net loss of equity-method investees, stock-based compensation, net, stock-based compensation expense in connection with the Company's former CEO Succession Plan, Productivity and transformation costs, SKU rationalization and certain inventory write-downs, unrealized currency gains and losses and other adjustments. The Company's management believes that these presentations provide useful information to management, analysts and investors regarding certain additional financial and business trends relating to its results of operations and financial condition. In addition, management uses these measures for reviewing the financial results of the Company as well as a component of performance-based executive compensation.
For the three and nine months ended March 31, 2020 and 2019, Adjusted EBITDA from continuing operations was calculated as follows:
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||
2020 | 2019 | 2020 | 2019 | ||||
(unaudited and in thousands) | |||||||
Net income (loss) | $ 24,339 | $ (65,837) | $ (83,646) | $ (169,763) | |||
Net loss from discontinued operations | (697) | (74,620) | (105,581) | (123,672) | |||
Net income (loss) from continuing operations | $ 25,036 | $ 8,783 | $ 21,935 | $ (46,091) | |||
(Benefit) provision for income taxes | (10,242) | 2,943 | (9,753) | (1,926) | |||
Interest expense, net | 3,332 | 5,278 | 11,884 | 13,966 | |||
Depreciation and amortization | 12,927 | 12,483 | 40,069 | 37,548 | |||
Equity in net loss of equity-method investees | 564 | 205 | 1,219 | 391 | |||
Stock-based compensation, net | 3,761 | 3,927 | 9,581 | 5,489 | |||
Stock-based compensation expense in connection with Chief Executive Officer Succession Agreement | - | - | - | 429 | |||
Long-lived asset and intangibles impairment | 13,525 | - | 15,414 | 23,709 | |||
Unrealized currency (gains) losses | (1,011) | 1,522 | 188 | 2,551 | |||
Productivity and transformation costs | 10,967 | 9,259 | 37,402 | 29,464 | |||
Chief Executive Officer Succession Plan expense, net | - | 455 | - | 29,727 | |||
Proceeds from insurance claim | (400) | - | (2,962) | - | |||
Accounting review and remediation costs, net of insurance proceeds | - | # | - | - | # | 4,334 | |
Warehouse/manufacturing facility start-up costs | 537 | 3,222 | 3,055 | 9,529 | |||
Loss on sale of business | 332 | - | 2,115 | - | |||
SKU rationalization and inventory write-down | 1,362 | 505 | 5,278 | 2,035 | |||
Plant closure related costs | - | 184 | 2,354 | 3,502 | |||
Litigation and related expenses | - | 371 | 48 | 1,062 | |||
Adjusted EBITDA | $ 60,690 | $ 49,137 | $ 137,827 | $ 115,719 | |||
THE HAIN CELESTIAL GROUP, INC. | ||||
Net Sales, Gross Profit and Operating Income (Loss) by Segment | ||||
(unaudited and in thousands) | ||||
North America | International | Corporate/Other | Total | |
Net Sales | ||||
Net sales - Three months ended 3/31/20 | $ 320,440 | $ 232,857 | $ - | $ 553,297 |
Net sales - Three months ended 3/31/19 | $ 314,321 | $ 232,936 | $ - | $ 547,257 |
% change - FY'20 net sales vs. FY'19 net sales | 1.9% | (0.0)% | 1.1% | |
Gross Profit | ||||
Three months ended 3/31/20 | ||||
Gross profit | $ 82,626 | $ 49,769 | $ - | $ 132,395 |
Non-GAAP adjustments (1) | 1,873 | - | - | 1,873 |
Adjusted gross profit | $ 84,499 | $ 49,769 | $ - | $ 134,268 |
Gross margin | 25.8% | 21.4% | 23.9% | |
Adjusted gross margin | 26.4% | 21.4% | 24.3% | |
Three months ended 3/31/19 | ||||
Gross profit | $ 68,014 | $ 45,194 | $ - | $ 113,208 |
Non-GAAP adjustments (1) | 3,845 | 308 | - | 4,153 |
Adjusted gross profit | $ 71,859 | $ 45,502 | $ - | $ 117,361 |
Gross margin | 21.6% | 19.4% | 20.7% | |
Adjusted gross margin | 22.9% | 19.5% | 21.4% | |
Operating income (loss) | ||||
Three months ended 3/31/20 | ||||
Operating income (loss) | $ 28,873 | $ 18,660 | $ (28,398) | $ 19,135 |
Non-GAAP adjustments (1) | 9,202 | 4,512 | 12,824 | 26,538 |
Adjusted operating income (loss) | $ 38,075 | $ 23,172 | $ (15,574) | $ 45,673 |
Operating income margin | 9.0% | 8.0% | 3.5% | |
Adjusted operating income margin | 11.9% | 10.0% | 8.3% | |
Three months ended 3/31/19 | ||||
Operating income (loss) | $ 21,358 | $ 19,883 | $ (22,249) | $ 18,992 |
Non-GAAP adjustments (1) | 5,109 | 975 | 8,955 | 15,039 |
Adjusted operating income (loss) | $ 26,467 | $ 20,858 | $ (13,294) | $ 34,031 |
Operating income margin | 6.8% | 8.5% | 3.5% | |
Adjusted operating income margin | 8.4% | 9.0% | 6.2% | |
(1) See accompanying table of "Reconciliation of GAAP Results to Non-GAAP Measures" | ||||
THE HAIN CELESTIAL GROUP, INC. | ||||
Net Sales, Gross Profit and Operating Income (Loss) by Segment | ||||
(unaudited and in thousands) | ||||
North America | International | Corporate/Other | Total | |
Net Sales | ||||
Net sales - Nine months ended 3/31/20 | $ 872,834 | $ 669,323 | $ - | $ 1,542,157 |
Net sales - Nine months ended 3/31/19 | $ 911,086 | $ 688,215 | $ - | $ 1,599,301 |
% change - FY'20 net sales vs. FY'19 net sales | (4.2)% | (2.7)% | (3.6)% | |
Gross Profit | ||||
Nine months ended 3/31/20 | ||||
Gross profit | $ 209,956 | $ 125,877 | $ - | $ 335,833 |
Non-GAAP adjustments (1) | 8,037 | 2,666 | - | 10,703 |
Adjusted gross profit | $ 217,993 | $ 128,543 | $ - | $ 346,536 |
Gross margin | 24.1% | 18.8% | 21.8% | |
Adjusted gross margin | 25.0% | 19.2% | 22.5% | |
Nine months ended 3/31/19 | ||||
Gross profit | $ 175,048 | $ 128,419 | $ - | $ 303,467 |
Non-GAAP adjustments (1) | 12,644 | 2,665 | - | 15,309 |
Adjusted gross profit | $ 187,692 | $ 131,084 | $ - | $ 318,776 |
Gross margin | 19.2% | 18.7% | 19.0% | |
Adjusted gross margin | 20.6% | 19.0% | 19.9% | |
Operating income (loss) | ||||
Nine months ended 3/31/20 | ||||
Operating income (loss) | $ 64,067 | $ 40,666 | $ (73,952) | $ 30,781 |
Non-GAAP adjustments (1) | 18,063 | 10,503 | 32,775 | 61,341 |
Adjusted operating income (loss) | $ 82,130 | $ 51,169 | $ (41,177) | $ 92,122 |
Operating income margin | 7.3% | 6.1% | 2.0% | |
Adjusted operating income margin | 9.4% | 7.6% | 6.0% | |
Nine months ended 3/31/19 | ||||
Operating income (loss) | $ 35,427 | $ 40,696 | $ (105,975) | $ (29,852) |
Non-GAAP adjustments (1) | 18,930 | 11,264 | 75,074 | 105,268 |
Adjusted operating income (loss) | $ 54,357 | $ 51,960 | $ (30,901) | $ 75,416 |
Operating income (loss) margin | 3.9% | 5.9% | (1.9)% | |
Adjusted operating income margin | 6.0% | 7.5% | 4.7% | |
(1) See accompanying table of "Reconciliation of GAAP Results to Non-GAAP Measures" | ||||
THE HAIN CELESTIAL GROUP, INC. | |||||
Consolidated Balance Sheets | |||||
(unaudited and in thousands) | |||||
March 31, | June 30, | ||||
2020 | 2019 | ||||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $ 41,549 | $ 31,017 | |||
Accounts receivable, net | 237,719 | 209,990 | |||
Inventories | 238,133 | 299,341 | |||
Prepaid expenses and other current assets | 86,653 | 51,391 | |||
Current assets of discontinued operations | - | 110,048 | |||
Total current assets | 604,054 | 701,787 | |||
Property, plant and equipment, net | 287,629 | 287,845 | |||
Goodwill | 861,067 | 875,881 | |||
Trademarks and other intangible assets, net | 355,714 | 380,286 | |||
Investments and joint ventures | 18,103 | 18,890 | |||
Operating lease right-of-use assets | 81,959 | - | |||
Other assets | 27,611 | 58,764 | |||
Noncurrent assets of discontinued operations | - | 259,167 | |||
Total assets | $ 2,236,137 | $ 2,582,620 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
Current liabilities: | |||||
Accounts payable | $ 181,783 | $ 219,957 | |||
Accrued expenses and other current liabilities | 118,405 | 114,265 | |||
Current portion of long-term debt | 2,041 | 17,232 | |||
Current liabilities of discontinued operations | - | 31,703 | |||
Total current liabilities | 302,229 | 383,157 | |||
Long-term debt, less current portion | 363,526 | 613,537 | |||
Deferred income taxes | 40,136 | 34,757 | |||
Operating lease liabilities, noncurrent portion | 74,937 | - | |||
Other noncurrent liabilities | 16,261 | 14,489 | |||
Noncurrent liabilities of discontinued operations | - | 17,361 | |||
Total liabilities | 797,089 | 1,063,301 | |||
Stockholders' equity: | |||||
Common stock | 1,092 | 1,088 | |||
Additional paid-in capital | 1,168,378 | 1,158,257 | |||
Retained earnings | 610,932 | 695,017 | |||
Accumulated other comprehensive loss | (172,403) | (225,004) | |||
1,607,999 | 1,629,358 | ||||
Treasury stock | (168,951) | (110,039) | |||
Total stockholders' equity | 1,439,048 | 1,519,319 | |||
Total liabilities and stockholders' equity | $ 2,236,137 | $ 2,582,620 | |||
THE HAIN CELESTIAL GROUP, INC. | |||||||
Consolidated Statements of Operations | |||||||
(unaudited and in thousands, except per share amounts) | |||||||
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||
2020 | 2019 | 2020 | 2019 | ||||
Net sales | $ 553,297 | $ 547,257 | $ 1,542,157 | $ 1,599,301 | |||
Cost of sales | 420,902 | 434,049 | 1,206,324 | 1,295,834 | |||
Gross profit | 132,395 | 113,208 | 335,833 | 303,467 | |||
Selling, general and administrative expenses | 85,447 | 81,088 | 245,205 | 235,561 | |||
Amortization of acquired intangibles | 3,174 | 3,265 | 9,446 | 9,946 | |||
Productivity and transformation costs | 11,514 | 9,408 | 37,949 | 29,613 | |||
Chief Executive Officer Succession Plan expense, net | - | 455 | - | 30,156 | |||
Proceeds from insurance claim | (400) | - | (2,962) | - | |||
Accounting review and remediation costs, net of insurance proceeds | - | - | - | 4,334 | |||
Long-lived asset and intangibles impairment | 13,525 | - | 15,414 | 23,709 | |||
Operating income (loss) | 19,135 | 18,992 | 30,781 | (29,852) | |||
Interest and other financing expense, net | 4,037 | 5,994 | 15,068 | 15,736 | |||
Other (income) expense, net | (260) | 1,067 | 2,312 | 2,038 | |||
Income (loss) from continuing operations before income taxes and equity in net loss of equity-method investees | 15,358 | 11,931 | 13,401 | (47,626) | |||
(Benefit) provision for income taxes | (10,242) | 2,943 | (9,753) | (1,926) | |||
Equity in net loss of equity-method investees | 564 | 205 | 1,219 | 391 | |||
Net income (loss) from continuing operations | $ 25,036 | $ 8,783 | $ 21,935 | $ (46,091) | |||
Net loss from discontinued operations, net of tax | (697) | (74,620) | (105,581) | (123,672) | |||
Net income (loss) | $ 24,339 | $ (65,837) | $ (83,646) | $ (169,763) | |||
Net income (loss) per common share(1): | |||||||
Basic net income (loss) per common share from continuing operations | $ 0.24 | $ 0.08 | $ 0.21 | $ (0.44) | |||
Basic net loss per common share from discontinued operations | (0.01) | (0.72) | (1.01) | (1.19) | |||
Basic net income (loss) per common share | $ 0.23 | $ (0.63) | $ (0.80) | $ (1.63) | |||
Diluted net income (loss) per common share from continuing operations | $ 0.24 | $ 0.08 | $ 0.21 | $ (0.44) | |||
Diluted net loss per common share from discontinued operations | (0.01) | (0.72) | (1.01) | (1.19) | |||
Diluted net income (loss) per common share | $ 0.23 | $ (0.63) | $ (0.80) | $ (1.63) | |||
Shares used in the calculation of net income (loss) per common share: | |||||||
Basic | 104,032 | 104,117 | 104,192 | 104,045 | |||
Diluted | 104,337 | 104,334 | 104,489 | 104,045 | |||
(1)Net income (loss) per common share may not add in certain periods due to rounding. | |||||||
THE HAIN CELESTIAL GROUP, INC. | |||||||
Consolidated Statements of Cash Flows | |||||||
(unaudited and in thousands) | |||||||
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||
2020 | 2019 | 2020 | 2019 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net income (loss) | $ 24,339 | $ (65,837) | $ (83,646) | $ (169,763) | |||
Net loss from discontinued operations | (697) | (74,620) | (105,581) | (123,672) | |||
Net income (loss) from continuing operations | 25,036 | 8,783 | 21,935 | (46,091) | |||
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities from continuing operations: | |||||||
Depreciation and amortization | 12,927 | 12,483 | 40,069 | 37,548 | |||
Deferred income taxes | (3,880) | (1,858) | (9,035) | (24,524) | |||
Chief Executive Officer Succession Plan expense, net | - | 455 | - | 29,727 | |||
Equity in net loss of equity-method investees | 564 | 205 | 1,219 | 391 | |||
Stock-based compensation, net | 3,761 | 3,927 | 9,581 | 5,918 | |||
Long-lived asset and intangibles impairment | 13,525 | - | 15,414 | 23,709 | |||
Other non-cash items, net | (326) | 2,412 | 2,335 | 3,697 | |||
Increase (decrease) in cash attributable to changes in operating assets and liabilities: | |||||||
Accounts receivable | (38,410) | (14,006) | (30,870) | (4,466) | |||
Inventories | 37,891 | 17,378 | 47,280 | 11,630 | |||
Other current assets | 8,407 | 1,305 | 10,302 | (223) | |||
Other assets and liabilities | 76 | 612 | (1,166) | 5,206 | |||
Accounts payable and accrued expenses | (12,627) | (13,361) | (42,972) | (24,191) | |||
Net cash provided by operating activities - continuing operations | 46,944 | 18,335 | 64,092 | 18,331 | |||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Purchases of property and equipment | (17,624) | (14,075) | (46,961) | (55,073) | |||
Proceeds from sale of businesses and other | 1,308 | - | 14,428 | 3,863 | |||
Net cash used in investing activities - continuing operations | (16,316) | (14,075) | (32,533) | (51,210) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Borrowings under bank revolving credit facility | 50,000 | 90,000 | 197,000 | 240,000 | |||
Repayments under bank revolving credit facility | (9,000) | (49,145) | (254,500) | (186,791) | |||
Repayments under term loan | - | (3,750) | (206,250) | (11,250) | |||
(Funding of) proceeds from discontinued operations entities | (4,682) | (47,365) | 305,247 | (33,815) | |||
Repayments of other debt, net | (1,001) | (1,088) | (1,502) | (1,689) | |||
Share repurchases | (57,406) | - | (57,406) | - | |||
Shares withheld for payment of employee payroll taxes | (522) | (149) | (1,506) | (3,071) | |||
Net cash (used in) provided by financing activities - continuing operations | (22,611) | (11,497) | (18,917) | 3,384 | |||
Effect of exchange rate changes on cash - continuing operations | (3,492) | 718 | (2,110) | (774) | |||
CASH FLOWS FROM DISCONTINUED OPERATIONS | |||||||
Cash (used in) provided by operating activities | (459) | (10,768) | (6,146) | (13,627) | |||
Cash (used in) provided by investing activities | (4,223) | (30,089) | 297,592 | (33,561) | |||
Cash provided by (used in) financing activities | 4,682 | 34,999 | (299,418) | 30,582 | |||
Effect of exchange rate changes on cash - discontinued operations | - | 26 | (537) | (451) | |||
Net cash flows used in discontinued operations | - | (5,832) | (8,509) | (17,057) | |||
Net increase (decrease) in cash and cash equivalents | 4,525 | (12,351) | 2,023 | (47,326) | |||
Cash and cash equivalents at beginning of period | 37,024 | 78,043 | 39,526 | 113,018 | |||
Cash and cash equivalents and restricted cash at end of period | $ 41,549 | $ 65,692 | $ 41,549 | $ 65,692 | |||
Less: cash and cash equivalents of discontinued operations | - | (11,263) | - | (11,263) | |||
Cash and cash equivalents and restricted cash of continuing operations at end of period | $ 41,549 | $ 54,429 | $ 41,549 | $ 54,429 | |||
THE HAIN CELESTIAL GROUP, INC. | |||||||
Reconciliation of GAAP Results to Non-GAAP Measures | |||||||
(unaudited and in thousands, except per share amounts) | |||||||
Three Months Ended March 31, | |||||||
2020 GAAP | Adjustments | 2020 Adjusted | 2019 GAAP | Adjustments | 2019 Adjusted | ||
Net sales | $ 553,297 | - | 553,297 | $ 547,257 | - | $ 547,257 | |
Cost of sales | 420,902 | (1,873) | 419,029 | 434,049 | (4,153) | 429,896 | |
Gross profit | 132,395 | 1,873 | 134,268 | 113,208 | 4,153 | 117,361 | |
Operating expenses (a) | 102,146 | (13,551) | 88,595 | 84,353 | (1,023) | 83,330 | |
Productivity and transformation costs | 11,514 | (11,514) | - | 9,408 | (9,408) | - | |
Chief Executive Officer Succession Plan expense, net | - | - | - | 455 | (455) | - | |
Proceeds from insurance claims | (400) | 400 | - | - | - | - | |
Operating income | 19,135 | 26,538 | 45,673 | 18,992 | 15,039 | 34,031 | |
Interest and other expense (income), net (b) | 3,777 | 679 | 4,456 | 7,061 | (1,522) | 5,539 | |
(Benefit) provision for income taxes | (10,242) | 22,129 | 11,887 | 2,943 | 5,136 | 8,079 | |
Net income from continuing operations | 25,036 | 3,730 | 28,766 | 8,783 | 11,425 | 20,208 | |
Net (loss) income from discontinued operations, net of tax | (697) | 697 | - | (74,620) | 74,620 | - | |
Net income (loss) | 24,339 | 4,427 | 28,766 | (65,837) | 86,045 | 20,208 | |
Diluted net income per common share from continuing operations | 0.24 | 0.04 | 0.28 | 0.08 | 0.11 | 0.19 | |
Diluted net (loss) income per common share from discontinued operations | (0.01) | 0.01 | - | (0.72) | 0.72 | - | |
Diluted net income (loss) per common share | 0.23 | 0.04 | 0.28 | (0.63) | 0.82 | 0.19 | |
Detail of Adjustments: | |||||||
Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | ||||||
SKU rationalization and inventory write-down | $ 1,362 | $ 505 | |||||
Warehouse/manufacturing facility start-up costs | 511 | 3,222 | |||||
Plant closure related costs | - | 426 | |||||
Cost of sales | 1,873 | 4,153 | |||||
Gross profit | 1,873 | 4,153 | |||||
Intangibles impairment | 7,650 | - | |||||
Long-lived asset impairment | 5,875 | - | |||||
Warehouse/manufacturing facility start-up costs | 26 | - | |||||
Stock-based compensation acceleration | - | 583 | |||||
Litigation and related expenses | - | 371 | |||||
Plant closure related costs | - | 69 | |||||
Operating expenses (a) | 13,551 | 1,023 | |||||
Productivity and transformation costs | 11,514 | 9,408 | |||||
Productivity and transformation costs | 11,514 | 9,408 | |||||
Chief Executive Officer Succession Plan expense, net | - | 455 | |||||
Chief Executive Officer Succession Plan expense, net | - | 455 | |||||
Proceeds from insurance claims | (400) | - | |||||
Proceeds from insurance claims | (400) | - | |||||
Operating income | 26,538 | 15,039 | |||||
Unrealized currency (gains) losses | (1,011) | 1,522 | |||||
Loss on sale of business | 332 | - | |||||
Interest and other expense (income), net (b) | (679) | 1,522 | |||||
Income tax related adjustments | (22,129) | (5,136) | |||||
(Benefit) provision for income taxes | (22,129) | (5,136) | |||||
Net income from continuing operations | $ 3,730 | $ 11,425 | |||||
(a)Operating expenses include amortization of acquired intangibles, selling, general, and administrative expenses and long-lived asset and intangibles impairment. | |||||||
(b)Interest and other expense (income), net includes interest and other financing expenses, net and other expense, net. | |||||||
THE HAIN CELESTIAL GROUP, INC. | |||||||
Reconciliation of GAAP Results to Non-GAAP Measures | |||||||
(unaudited and in thousands, except per share amounts) | |||||||
Nine Months Ended March 31, | |||||||
2020 GAAP | Adjustments | 2020 Adjusted | 2019 GAAP | Adjustments | 2019 Adjusted | ||
Net sales | $ 1,542,157 | - | $ 1,542,157 | $ 1,599,301 | - | $ 1,599,301 | |
Cost of sales | 1,206,324 | (10,703) | 1,195,621 | 1,295,834 | (15,309) | 1,280,525 | |
Gross profit | 335,833 | 10,703 | 346,536 | 303,467 | 15,309 | 318,776 | |
Operating expenses (a) | 270,065 | (15,651) | 254,414 | 269,216 | (25,857) | 243,359 | |
Productivity and transformation costs | 37,949 | (37,949) | - | 29,613 | (29,613) | - | |
Chief Executive Officer Succession Plan expense, net | - | - | - | 30,156 | (30,156) | - | |
Proceeds from insurance claim | (2,962) | 2,962 | - | - | - | - | |
Accounting review and remediation costs, net of insurance proceeds | - | - | - | 4,334 | (4,334) | - | |
Operating income (loss) | 30,781 | 61,341 | 92,122 | (29,852) | 105,269 | 75,416 | |
Interest and other expense (income), net (b) | 17,380 | (3,278) | 14,102 | 17,774 | (2,551) | 15,223 | |
(Benefit) provision for income taxes | (9,753) | 31,818 | 22,065 | (1,926) | 19,537 | 17,611 | |
Net income (loss) from continuing operations | 21,935 | 32,801 | 54,736 | (46,091) | 88,283 | 42,192 | |
Net (loss) income from discontinued operations, net of tax | (105,581) | 105,581 | - | (123,672) | 123,672 | - | |
Net (loss) income | (83,646) | 138,382 | 54,736 | (169,763) | 211,955 | 42,192 | |
Diluted net income (loss) per common share from continuing operations | 0.21 | 0.31 | 0.52 | (0.44) | 0.85 | 0.41 | |
Diluted net (loss) income per common share from discontinued operations | (1.01) | 1.01 | - | (1.19) | 1.19 | - | |
Diluted net (loss) income per common share | (0.80) | 1.32 | 0.52 | (1.63) | 2.04 | 0.41 | |
Detail of Adjustments: | |||||||
Nine Months Ended March 31, 2020 | Nine Months Ended March 31, 2019 | ||||||
SKU rationalization and inventory write-down | $ 5,278 | $ 2,035 | |||||
Warehouse/manufacturing facility start-up costs | 2,866 | 9,529 | |||||
Plant closure related costs | 2,559 | 3,745 | |||||
Cost of sales | 10,703 | 15,309 | |||||
Gross profit | 10,703 | 15,309 | |||||
Intangibles impairment | 9,539 | 17,900 | |||||
Long-lived asset impairment | 5,875 | 5,809 | |||||
Warehouse/manufacturing facility start-up costs | 189 | - | |||||
Litigation and related expenses | 48 | 1,062 | |||||
Plant closure related costs | - | 503 | |||||
Stock-based compensation acceleration | - | 583 | |||||
Operating expenses (a) | 15,651 | 25,857 | |||||
Productivity and transformation costs | 37,949 | 29,613 | |||||
Productivity and transformation costs | 37,949 | 29,613 | |||||
Chief Executive Officer Succession Plan expense, net | - | 30,156 | |||||
Chief Executive Officer Succession Plan expense, net | - | 30,156 | |||||
Proceeds from insurance claim | (2,962) | - | |||||
Proceeds from insurance claim | (2,962) | - | |||||
Accounting review and remediation costs, net of insurance proceeds | - | 4,334 | |||||
Accounting review and remediation costs, net of insurance proceeds | - | 4,334 | |||||
Operating income (loss) | 61,341 | 105,269 | |||||
Gain on sale of business | 2,115 | - | |||||
Unrealized currency losses | 188 | 2,551 | |||||
Deferred financing cost write-off | 975 | - | |||||
Interest and other expense (income), net (b) | 3,278 | 2,551 | |||||
Income tax related adjustments | (31,818) | (19,537) | |||||
(Benefit) provision for income taxes | (31,818) | (19,537) | |||||
Net income (loss) from continuing operations | $ 32,801 | $ 88,283 | |||||
(a)Operating expenses include amortization of acquired intangibles, selling, general, and administrative expenses and long-lived asset and intangibles impairment. | |||||||
(b)Interest and other expense (income), net includes interest and other financing expenses, net and other expense, net. | |||||||
THE HAIN CELESTIAL GROUP, INC. | |||||
Net Sales Growth at Constant Currency | |||||
(unaudited and in thousands) | |||||
Hain Consolidated | North America | International | |||
Net sales - Three months ended 3/31/20 | $ 553,297 | $ 320,440 | $ 232,857 | ||
Impact of foreign currency exchange | 5,572 | 477 | 5,095 | ||
Net sales on a constant currency basis - Three months ended 3/31/20 | $ 558,869 | $ 320,917 | $ 237,952 | ||
Net sales - Three months ended 3/31/19 | $ 547,257 | $ 314,321 | $ 232,936 | ||
Net sales growth on a constant currency basis | 2.1% | 2.1% | 2.2% | ||
Hain Consolidated | North America | International | |||
Net sales - Nine months ended 3/31/20 | $ 1,542,157 | $ 872,834 | $ 669,323 | ||
Impact of foreign currency exchange | 19,279 | 764 | 18,515 | ||
Net sales on a constant currency basis - Nine months ended 3/31/20 | $ 1,561,436 | $ 873,598 | $ 687,838 | ||
Net sales - Nine months ended 3/31/19 | $ 1,599,301 | $ 911,086 | $ 688,215 | ||
Net sales decline on a constant currency basis | (2.4)% | (4.1)% | (0.1)% | ||
Net Sales Growth at Constant Currency and Adjusted for Divestitures and SKU Rationalization | |||||
Hain Consolidated | North America | International | |||
Net sales on a constant currency basis - Three months ended 3/31/20 | $ 558,869 | $ 320,917 | $ 237,952 | ||
Net sales - Three months ended 3/31/19 | $ 547,257 | $ 314,321 | $ 232,936 | ||
Divestitures | (10,273) | (10,273) | - | ||
SKU rationalization | (10,141) | (9,522) | (619) | ||
Net sales on a constant currency basis adjusted for divestitures and SKU rationalization - Three months ended 3/31/20 | $ 526,843 | $ 294,526 | $ 232,317 | ||
Net sales growth on a constant currency basis adjusted for divestitures and SKU rationalization | 6.1% | 9.0% | 2.4% | ||
Hain Consolidated | North America | International | |||
Net sales on a constant currency basis - Nine months ended 3/31/20 | $ 1,561,436 | $ 873,598 | $ 687,838 | ||
Net sales - Nine months ended 3/31/19 | $ 1,599,301 | $ 911,086 | $ 688,215 | ||
Divestitures | (19,228) | (19,228) | - | ||
SKU rationalization | (43,422) | (35,550) | (7,872) | ||
Net sales on a constant currency basis adjusted for divestitures and SKU rationalization - Nine months ended 3/31/20 | $ 1,536,651 | $ 856,308 | $ 680,343 | ||
Net sales growth on a constant currency basis adjusted for divestitures and SKU rationalization | 1.6% | 2.0% | 1.1% | ||
Adjusted EBITDA Growth at Constant Currency | |||||
Hain Consolidated | North America | International | |||
Adjusted EBITDA - Three months ended 3/31/20 | $ 60,690 | $ 42,920 | $ 30,927 | ||
Impact of foreign currency exchange | 880 | 63 | 818 | ||
Adjusted EBITDA on a constant currency basis - Three months ended 3/31/20 | $ 61,570 | $ 42,983 | $ 31,745 | ||
Net sales on a constant currency basis - Three months ended 3/31/20 | $ 558,869 | $ 320,917 | $ 237,952 | ||
Adjusted EBITDA growth on a constant currency basis | 11.0% | 13.4% | 13.3% | ||
Hain Consolidated | North America | International | |||
Adjusted EBITDA - Nine months ended 3/31/20 | $ 137,828 | $ 97,101 | $ 75,787 | ||
Impact of foreign currency exchange | 2,215 | 86 | 2,129 | ||
Adjusted EBITDA on a constant currency basis - Nine months ended 3/31/20 | $ 140,043 | $ 97,187 | $ 77,916 | ||
Net sales on a constant currency basis - Nine months ended 3/31/20 | $ 1,561,436 | $ 873,598 | $ 687,838 | ||
Adjusted EBITDA growth on a constant currency basis | 9.0% | 11.1% | 11.3% | ||
THE HAIN CELESTIAL GROUP, INC. | |||
Segment EBITDA and Adjusted EBITDA | |||
Three Months Ended | |||
(unaudited and in thousands) | |||
North America | |||
March 31, 2020 | March 31, 2019 | ||
Operating income | $ 28,873 | $ 21,358 | |
Depreciation and amortization | 4,240 | 4,246 | |
Long-lived asset impairment | 2,303 | - | |
Other | 352 | 765 | |
Productivity and transformation costs | 5,000 | 1,263 | |
SKU rationalization and inventory write-down | 1,362 | 506 | |
Warehouse/manufacturing facility start-up costs | 537 | 3,221 | |
Loss on sale of business | 253 | - | |
Plant closure related costs | - | 119 | |
Adjusted EBITDA | $ 42,920 | $ 31,478 | |
International | |||
March 31, 2020 | March 31, 2019 | ||
Operating income | $ 18,660 | $ 19,883 | |
Depreciation and amortization | 7,993 | 7,699 | |
Long-lived asset impairment | 3,571 | - | |
Other | (238) | 315 | |
Productivity and transformation costs | 941 | 897 | |
Plant closure related costs | - | 78 | |
Adjusted EBITDA | $ 30,927 | $ 28,872 | |
THE HAIN CELESTIAL GROUP, INC. | |||
Segment EBITDA and Adjusted EBITDA | |||
Nine Months Ended | |||
(unaudited and in thousands) | |||
North America | |||
March 31, 2020 | March 31, 2019 | ||
Operating income | $ 64,067 | $ 35,427 | |
Depreciation and amortization | 12,789 | 12,790 | |
Long-lived asset impairment | 2,303 | 1,503 | |
Other | 180 | 1,330 | |
Productivity and transformation costs | 7,500 | 4,784 | |
SKU rationalization and inventory write-down | 5,099 | 2,036 | |
Warehouse/manufacturing facility start-up costs | 3,055 | 9,528 | |
Loss on sale of business | 2,036 | - | |
Plant closure related costs | 72 | 1,079 | |
Adjusted EBITDA | $ 97,101 | $ 68,477 | |
International | |||
March 31, 2020 | March 31, 2019 | ||
Operating Income | $ 40,666 | $ 40,696 | |
Depreciation and amortization | 24,258 | 23,373 | |
Long-lived asset impairment | 3,571 | 4,305 | |
Other | 562 | 343 | |
Productivity and transformation costs | 4,269 | 4,099 | |
Plant closure related costs | 2,282 | 2,409 | |
SKU rationalization and inventory write-down | 179 | - | |
Litigation and related expenses | - | 19 | |
Adjusted EBITDA | $ 75,787 | $ 75,244 | |
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SOURCE The Hain Celestial Group, Inc.