Hain Celestial Reports Second Quarter Fiscal Year 2020 Finan

|Feb 6|magazine90 min read

LAKE SUCCESS, N.Y., Feb. 6, 2020 /PRNewswire/ -- The Hain Celestial Group, Inc. (Nasdaq: HAIN) ("Hain Celestial" 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 second quarter ended December 31, 2019. 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, "Our team continues to execute on our transformational strategic plan, as we demonstrate another quarter of operational and financial improvement on a year-over-year basis. We have made significant progress in a very short period of time. We are delivering on the commitments we communicated to further simplify the portfolio and organization, strengthen our core capabilities, expand our margins and cash flow as well as reinvigorate profitable sales growth in a core set of high potential brands. We remain committed to delivering strong, consistent results for all our stakeholders."

FINANCIAL HIGHLIGHTS1

Summary of Second Quarter Results from Continuing Operations2 

  • Net sales of $506.8 million decreased 5% on an as reported and constant currency basis compared to the prior year period.
  • When adjusted for Foreign Exchange, Divestitures and Stock Keeping Unit ("SKU") rationalization3, net sales decreased 1% compared to the prior year period.
  • Gross margin of 20.8%, a 180 basis point increase from the prior year period.
  • Adjusted gross margin of 22.0%, a 220 basis point increase from the prior year period.
  • Operating income of $9.2 million compared to an operating loss of $20.9 million in the prior year period.
  • Adjusted operating income of $29.5 million compared to $24.4 million in the prior year period.
  • Net income of $1.9 million compared to a net loss of $31.8 million in the prior year period.
  • Adjusted net income of $17.6 million compared to $13.0 million in prior year period.
  • EBITDA of $24.9 million compared to $12.2 million in the prior year period.
  • EBITDA margin of 4.9%, a 260 basis point improvement from the prior year period.
  • Adjusted EBITDA of $45.0 million compared to $37.9 million in the prior year period.
  • Adjusted EBITDA margin of 8.9%, a 180 basis point increase compared to the prior year period.
  • Earnings per diluted share ("EPS") of $0.02 compared to a loss of $0.31 per share in the prior year period.
  • Adjusted EPS of $0.17 compared to $0.12 in the prior year period.

__________________
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 America

North America net sales in the second quarter were $280.7 million, a decrease of 8% compared to the prior year period. When adjusted for Divestitures and SKU rationalization3, net sales decreased 2% from the prior year period.

Segment gross profit in the second quarter was $65.0 million, a 13% increase from the prior year period. Adjusted gross profit was $69.4 million, an increase of 14% from the prior year period. Gross margin was 23.1%, a 430 basis point increase from the prior year period and adjusted gross margin was 24.7%, a 480 basis point increase from the prior year.

Segment operating income in the second quarter was $20.1 million, a 110% increase from the prior year period. Adjusted operating income was $25.0 million, a 51% increase from the prior year period.

Segment EBITDA in the second quarter was $23.4 million, a 47% increase from the prior year period. Adjusted EBITDA was $30.1 million, a 41% increase from the prior year period. As a percent of sales on a constant currency basis, North America adjusted EBITDA margin was 10.7%, a 370 basis point increase from the prior year period.

International

International net sales in the second quarter were $226.1 million, a decrease of 1% from the prior year period. When adjusted for Foreign Exchange, Divestitures and SKU rationalization3, net sales increased 1% compared to the prior year period.

Segment gross profit in the second quarter was $40.6 million, an 8% decrease from the prior year period. Adjusted gross profit was $42.2 million, a decrease of 6% from the prior year period. Gross margin was 18.0%, a 130 basis point decrease from the prior year period and adjusted gross margin was 18.7%, a 90 basis point decrease from the prior year period. 

Segment operating income in the second quarter was $12.9 million, a 15% decrease from the prior year period. Adjusted operating income was $16.5 million, a decrease of 12% from the prior year period. 

Segment EBITDA in the second quarter was $21.6 million, a 5% decrease from the prior year period. Adjusted EBITDA was $25.1 million, a 5% decrease from the prior year period. As a percent of sales on a constant currency basis, International adjusted EBITDA margin was 11.1%, a 50 basis point decrease from the prior year period.

FISCAL YEAR 2020 GUIDANCE

The Company narrows and reaffirms its annual guidance for continuing operations for fiscal year 2020:


Fiscal Year 2020


Reported

Constant Currency

Adjusted EBITDA

$177 Million to $192 Million

$179 Million to $194 Million

% Growth

+7% to +16%

+8% to +18%

Adjusted EPS

$0.62 to $0.72

$0.64 to $0.74

% Growth

+3% to +20%

+7% to +23%

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®, Casbah®, Celestial Seasonings®, Clarks™, Coconut Dream®, Cully & Sully®, Danival®, DeBoles®, Earth's Best®, Ella's Kitchen®, Europe's Best®, 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®, Rudi's Gluten-Free Bakery™, Rudi's Organic Bakery®, 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 Statement

Certain 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, 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 Measures

This 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, EBITDA, 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 six months ended December 31, 2019 and 2018 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 six months ended December 31, 2019 and 2018, Operating Free Cash Flow from continuing operations was calculated as follows:


Three Months Ended December 31,


Six Months Ended December 31,


2019


2018


2019


2018


(unaudited and in thousands)









Cash flow provided by (used in) operating activities - continuing operations

$              20,729


$              19,566


$              17,148


$                     (4)

Purchases of property, plant and equipment

(16,173)


(18,737)


(29,337)


(40,998)

Operating Free Cash Flow - continuing operations

$                4,556


$                   829


$             (12,189)


$             (41,002)

The Company's Operating Free Cash Flow from continuing operations was $4.6 million for the three months ended December 31, 2019, an increase of $3.7 million from the three months ended December 31, 2018. The Company's Operating Free Cash Flow from continuing operations was negative $12.2 million for the six months ended December 31, 2019, an increase of $28.8 million from the six months ended December 31, 2018. The improvement in operating free cash flow resulted primarily from an improvement in net loss adjusted for non-cash charges in the current year and a decrease in capital expenditures. 

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 EBITDA as net income (loss) from continuing operations (a GAAP measure) before income taxes, net interest expense, depreciation and amortization, 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, long-lived asset and intangible impairments and unrealized currency gains and losses. The Company defines segment EBITDA as operating income (a GAAP measure) before depreciation and amortization, stock-based compensation, net and long-lived asset impairments. Adjusted EBITDA is defined as EBITDA before divestiture related expenses, including integration and restructuring charges, 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 six months ended December 31, 2019 and 2018, EBITDA and Adjusted EBITDA from continuing operations was calculated as follows:


Three Months Ended December 31,


Six Months Ended December 31,


2019


2018


2019


2018


(unaudited and in thousands)









Net loss

$                  (964)


$             (66,501)


$           (107,985)


$           (103,926)

Net loss from discontinued operations

(2,816)


(34,714)


(104,884)


(49,052)

Net income (loss) from continuing operations

$                1,852


$             (31,787)


$               (3,101)


$             (54,874)









Provision (benefit) for income taxes

1,020


5,097


489


(4,869)

Interest expense, net

4,000


4,884


8,552


8,688

Depreciation and amortization

13,219


12,205


27,142


25,065

Equity in net loss of equity-method investees

338


11


655


186

Stock-based compensation, net

3,083


1,776


5,820


1,562

Stock-based compensation expense in connection with
Chief Executive Officer Succession Agreement

-


117


-


429

Long-lived asset and intangibles impairment

1,889


19,473


1,889


23,709

Unrealized currency (gains) losses

(485)


439


1,199


1,029

EBITDA

$              24,916


$              12,215


$              42,645


$                   925

















Productivity and transformation costs

12,260


9,872


26,435


20,205

Chief Executive Officer Succession Plan expense, net

-


10,031


-


29,272

Proceeds from insurance claim

-


-


(2,562)


-

Accounting review and remediation costs, net of
insurance proceeds

-


920


-


4,334

SKU rationalization

3,927


1,530


3,916


1,530

Loss on sale of business

1,783


-


1,783


-

Plant closure related costs

1,522


1,490


2,354


3,319

Warehouse/manufacturing facility start-up costs

639


1,708


2,518


6,307

Litigation and related expenses

-


122


48


691

Adjusted EBITDA

$              45,047


$              37,888


$              77,137


$              66,583

 

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 12/31/19

$                280,693

$                226,091

$                          -

$                506,784

Net sales - Three months ended 12/31/18

$                305,574

$                227,992

$                          -

$                533,566

% change - FY'20 net sales vs. FY'19 net sales

(8.1)%

(0.8)%


(5.0)%






Gross Profit





Three months ended 12/31/19





Gross profit

$                  64,969

$                  40,638

$                          -

$                105,607

Non-GAAP adjustments (1)

4,439

1,590

-

6,029

Adjusted gross profit

$                  69,408

$                  42,228

$                          -

$                111,636

Gross margin

23.1%

18.0%


20.8%

Adjusted gross margin

24.7%

18.7%


22.0%






Three months ended 12/31/18





Gross profit

$                  57,410

$                  43,941

$                          -

$                101,351

Non-GAAP adjustments (1)

3,470

824

-

4,294

Adjusted gross profit

$                  60,880

$                  44,765

$                          -

$                105,645

Gross margin

18.8%

19.3%


19.0%

Adjusted gross margin

19.9%

19.6%


19.8%






Operating income (loss)





Three months ended 12/31/19





Operating income (loss)

$                  20,062

$                  12,899

$               (23,770)

$                   9,191

Non-GAAP adjustments (1)

4,965

3,647

11,729

20,341

Adjusted operating income (loss)

$                  25,027

$                  16,546

$               (12,041)

$                 29,532

Operating income margin

7.1%

5.7%


1.8%

Adjusted operating income margin

8.9%

7.3%


5.8%






Three months ended 12/31/18





Operating income (loss)

$                   9,563

$                  15,153

$               (45,596)

$                (20,880)

Non-GAAP adjustments (1)

6,995

3,644

34,624

45,263

Adjusted operating income (loss)

$                 16,558

$                  18,797

$               (10,972)

$                  24,383

Operating income (loss) margin

3.1%

6.6%


(3.9)%

Adjusted operating income margin

5.4%

8.2%


4.6%






(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 - Six months ended 12/31/19

$                552,394

$                436,466

$                          -

$                988,860

Net sales - Six months ended 12/31/18

$                596,765

$                455,279

$                          -

$             1,052,044

% change - FY'20 net sales vs. FY'19 net sales

(7.4)%

(4.1)%


(6.0)%






Gross Profit





Six months ended 12/31/19





Gross profit

$                127,330

$                  76,108

$                          -

$                203,438

Non-GAAP adjustments (1)

6,164

2,666

-

8,830

Adjusted gross profit

$                133,494

$                  78,774

$                          -

$                212,268

Gross margin

23.1%

17.4%


20.6%

Adjusted gross margin

24.2%

18.0%


21.5%






Six months ended 12/31/18





Gross profit

$                107,034

$                  83,225

$                          -

$                190,259

Non-GAAP adjustments (1)

8,799

2,357

-

11,156

Adjusted gross profit

$                115,833

$                  85,582

$                          -

$                201,415

Gross margin

17.9%

18.3%


18.1%

Adjusted gross margin

19.4%

18.8%


19.1%






Operating income (loss)





Six months ended 12/31/19





Operating income (loss)

$                  35,194

$                  22,006

$                 (45,554)

$                  11,646

Non-GAAP adjustments (1)

8,861

5,991

19,951

34,803

Adjusted operating income (loss)

$                  44,055

$                  27,997

$                 (25,603)

$                  46,449

Operating income margin

6.4%

5.0%


1.2%

Adjusted operating income margin

8.0%

6.4%


4.7%






Six months ended 12/31/18





Operating income (loss)

$                  14,069

$                  20,813

$                 (83,726)

$                 (48,844)

Non-GAAP adjustments (1)

13,821

10,290

66,119

90,230

Adjusted operating income (loss)

$                  27,890

$                  31,103

$                 (17,607)

$                  41,386

Operating income (loss) margin

2.4%

4.6%


(4.6)%

Adjusted operating income margin

4.7%

6.8%


3.9%






(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) 










 December 31, 


 June 30, 




2019


2019

ASSETS




Current assets:





Cash and cash equivalents

$              37,024


$              31,017


Accounts receivable, net

206,583


209,990


Inventories

283,127


299,341


Prepaid expenses and other current assets

50,019


51,391


Current assets of discontinued operations

-


110,048


Total current assets

576,753


701,787

Property, plant and equipment, net

298,558


287,845

Goodwill


879,705


875,881

Trademarks and other intangible assets, net

378,796


380,286

Investments and joint ventures

18,990


18,890

Operating lease right of use assets

83,845


-

Other assets

48,298


58,764

Noncurrent assets of discontinued operations

-


259,167


Total assets 

$          2,284,945


$          2,582,620


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:





Accounts payable

$            187,376


$            219,957


Accrued expenses and other current liabilities

123,272


114,265


Current portion of long-term debt

1,387


17,232


Current liabilities of discontinued operations

-


31,703


Total current liabilities

312,035


383,157

Long-term debt, less current portion

324,864


613,537

Deferred income taxes 

35,012


34,757

Operating lease liabilities, noncurrent portion

76,726


-

Other noncurrent liabilities

15,225


14,489

Noncurrent liabilities of discontinued operations

-


17,361

Total liabilities

763,862


1,063,301

Stockholders' equity:





Common stock

1,091


1,088


Additional paid-in capital

1,164,618


1,158,257


Retained earnings

586,593


695,017


Accumulated other comprehensive loss

(120,197)


(225,004)




1,632,105


1,629,358


Treasury stock

(111,022)


(110,039)


Total stockholders' equity

1,521,083


1,519,319


Total liabilities and stockholders' equity

$          2,284,945


$          2,582,620

 

THE HAIN CELESTIAL GROUP, INC.

 Consolidated Statements of Operations 

 (unaudited and in thousands, except per share amounts) 










Three Months Ended December 31,


Six Months Ended December 31,


2019


2018


2019


2018









Net sales

$            506,784


$            533,566


$            988,860


$          1,052,044

Cost of sales

401,177


432,215


785,422


861,785

Gross profit

105,607


101,351


203,438


190,259

Selling, general and administrative expenses

79,078


78,496


159,758


154,473

Amortization of acquired intangibles

3,189


3,322


6,272


6,681

Productivity and transformation costs

12,260


9,872


26,435


20,205

Chief Executive Officer Succession Plan expense, net

-


10,148


-


29,701

Proceeds from insurance claim

-


-


(2,562)


-

Accounting review and remediation costs, net of insurance
proceeds

-


920


-


4,334

Long-lived asset and intangibles impairment

1,889


19,473


1,889


23,709

Operating income (loss)

9,191


(20,880)


11,646


(48,844)

Interest and other financing expense, net

4,737


5,428


11,031


9,742

Other expense, net

1,244


371


2,572


971

Income (loss) from continuing operations before income taxes
and equity in net loss of equity-method investees

3,210


(26,679)


(1,957)


(59,557)

Provision (benefit) for income taxes

1,020


5,097


489


(4,869)

Equity in net loss of equity-method investees

338


11


655


186

   Net income (loss) from continuing operations

$                1,852


$             (31,787)


$               (3,101)


$             (54,874)

   Net loss from discontinued operations, net of tax

(2,816)


(34,714)


(104,884)


(49,052)

Net loss

$                 (964)


$             (66,501)


$           (107,985)


$           (103,926)









Net income (loss) per common share:








Basic net income (loss) per common share from continuing
operations

$                  0.02


$                 (0.31)


$                 (0.03)


$                 (0.53)

Basic net loss per common share from discontinued
operations

(0.03)


(0.33)


(1.01)


(0.47)

   Basic net loss per common share

$                 (0.01)


$                 (0.64)


$                 (1.04)


$                 (1.00)









Diluted net income (loss) per common share from
continuing operations

$                  0.02


$                 (0.31)


$                 (0.03)


$                 (0.53)

Diluted net loss per common share from discontinued
operations

(0.03)


(0.33)


(1.01)


(0.47)

   Diluted net loss per common share

$                 (0.01)


$                 (0.64)


$                 (1.04)


$                 (1.00)









Shares used in the calculation of net income (loss) per common share:







Basic

104,318


104,056


104,272


104,009

Diluted

104,619


104,056


104,272


104,009

 

THE HAIN CELESTIAL GROUP, INC.

 Consolidated Statements of Cash Flows  

(unaudited and in thousands)










Three Months Ended December 31,


Six Months Ended December 31,


2019


2018


2019


2018

CASH FLOWS FROM OPERATING ACTIVITIES








Net loss

$                  (964)


$             (66,501)


$           (107,985)


$           (103,926)

   Net loss from discontinued operations

(2,816)


(34,714)


(104,884)


(49,052)

   Net income (loss) from continuing operations

1,852


(31,787)


(3,101)


(54,874)

Adjustments to reconcile net income (loss) from continuing operations to net cash provided
by (used in) operating activities from continuing operations:








Depreciation and amortization

13,219


12,205


27,142


25,065

Deferred income taxes

(751)


(9,448)


(5,155)


(22,666)

Chief Executive Officer Succession Plan expense, net

-


10,031


-


29,272

Equity in net loss of equity-method investees

338


11


655


186

Stock-based compensation, net

3,083


1,893


5,820


1,991

Long-lived asset and intangibles impairment

1,889


19,473


1,889


23,709

Other non-cash items, net

897


444


2,661


1,285

Increase (decrease) in cash attributable to changes in operating assets and liabilities:








Accounts receivable

8,393


5,774


7,540


9,540

Inventories

14,896


12,892


9,389


(5,748)

Other current assets

(12,328)


(1,531)


1,895


(1,528)

Other assets and liabilities

(1,386)


4,626


(1,242)


4,594

Accounts payable and accrued expenses

(9,373)


(5,017)


(30,345)


(10,830)

Net cash provided by (used in) operating activities - continuing operations

20,729


19,566


17,148


(4)

CASH FLOWS FROM INVESTING ACTIVITIES








Purchases of property and equipment

(16,173)


(18,737)


(29,337)


(40,998)

Proceeds from sale of businesses and other

13,120


4,515


13,120


3,863

Net cash used in investing activities - continuing operations

(3,053)


(14,222)


(16,217)


(37,135)

CASH FLOWS FROM FINANCING ACTIVITIES








Borrowings under bank revolving credit facility

67,000


80,000


147,000


150,000

Repayments under bank revolving credit facility

(67,000)


(77,646)


(245,500)


(137,646)

Repayments under term loan

-


(3,750)


(206,250)


(7,500)

(Funding of) proceeds from discontinued operations entities

(2,266)


16,661


309,929


13,550

(Repayments) borrowings of other debt, net

(510)


175


(501)


(601)

Shares withheld for payment of employee payroll taxes

(672)


(1,943)


(984)


(2,922)

Net cash (used in) provided by financing activities - continuing operations

(3,448)


13,497


3,694


14,881

Effect of exchange rate changes on cash - continuing operations

2,274


(822)


1,382


(1,492)

CASH FLOWS FROM DISCONTINUED OPERATIONS








Cash provided by (used in) operating activities

2,339


11,728


(5,687)


(2,859)

Cash (used in) provided by investing activities

(4,605)


(1,551)


301,815


(3,472)

Cash provided by (used in) financing activities

2,266


(9,965)


(304,100)


(4,417)

Effect of exchange rate changes on cash - discontinued operations

-


(87)


(537)


(477)

Net cash flows provided by (used in) discontinued operations

-


125


(8,509)


(11,225)

Net increase (decrease) in cash and cash equivalents

16,502


18,144


(2,502)


(34,975)

Cash and cash equivalents at beginning of period

20,522


59,899


39,526


113,018

Cash and cash equivalents and restricted cash at end of period

$              37,024


$              78,043


$              37,024


$              78,043

Less: cash and cash equivalents of discontinued operations

-


(17,098)


-


(17,098)

Cash and cash equivalents and restricted cash of continuing operations at end of period

$              37,024


$              60,945


$              37,024


$              60,945

 

THE HAIN CELESTIAL GROUP, INC.

 Reconciliation of GAAP Results to Non-GAAP Measures 

 (unaudited and in thousands, except per share amounts) 










Three Months Ended December 31,


2019 GAAP

Adjustments

2019 Adjusted


2018 GAAP

Adjustments

2018 Adjusted









Net sales

$                506,784

-

$                506,784


$                533,566

-

$                533,566

Cost of sales

401,177

(6,029)

395,148


432,215

(4,294)

427,921

Gross profit

105,607

6,029

111,636


101,351

4,294

105,645

Operating expenses (a) 

84,156

(2,052)

82,104


101,291

(20,029)

81,262

Productivity and transformation costs

12,260

(12,260)

-


9,872

(9,872)

-

Chief Executive Officer Succession Plan expense, net

-

-

-


10,148

(10,148)

-

Accounting review and remediation costs, net of insurance proceeds

-

-

-


920

(920)

-

Operating income (loss)

9,191

20,341

29,532


(20,880)

45,263

24,383

Interest and other expense (income), net (b) 

5,981

(1,298)

4,683


5,799

(439)

5,360

Provision (benefit) for income taxes

1,020

5,889

6,909


5,097

934

6,031

   Net income (loss) from continuing operations

1,852

15,750

17,602


(31,787)

44,768

12,981

   Net (loss) income from discontinued operations, net of tax

(2,816)

2,816

-


(34,714)

34,714

-

Net (loss) income

(964)

18,566

17,602


(66,501)

79,482

12,981









Diluted net income (loss) per common share from continuing operations

0.02

0.15

0.17


(0.31)

0.43

0.12

Diluted net (loss) income per common share from discontinued operations

(0.03)

0.03

-


(0.33)

0.33

-

   Diluted net (loss) income per common share

(0.01)

0.18

0.17


(0.64)

0.76

0.12









Detail of Adjustments:










Three Months Ended
December 31, 2019




Three Months Ended
December 31, 2018


SKU rationalization


$                      3,927




$                      1,530


Plant closure related costs


1,626




1,056


Warehouse/manufacturing facility start-up costs


476




1,708


Cost of sales


6,029




4,294










Gross profit


6,029




4,294










Intangibles impairment


1,889




17,900


Warehouse/manufacturing facility start-up costs


163




-


Litigation and related expenses


-




122


Long-lived asset impairment charge associated with plant closure 


-




1,573


Plant closure related costs


-




434


Operating expenses (a) 


2,052




20,029










Productivity and transformation costs


12,260




9,872


Productivity and transformation costs


12,260




9,872










Chief Executive Officer Succession Plan expense, net


-




10,148


Chief Executive Officer Succession Plan expense, net


-




10,148










Accounting review and remediation costs, net of insurance proceeds


-




920


Accounting review and remediation costs, net of insurance proceeds


-




920










Operating income (loss)


20,341




45,263










Unrealized currency (gains) losses


(485)




439


Loss on sale of business


1,783




-


Interest and other expense (income), net (b) 


1,298




439










Income tax related adjustments


(5,889)




(934)


Provision (benefit) for income taxes


(5,889)




(934)










   Net income (loss) from continuing operations


$                    15,750




$                    44,768










(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, 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) 










Six Months Ended December 31,


2019 GAAP

Adjustments

2019 Adjusted


2018 GAAP

Adjustments

2018 Adjusted









Net sales

$                988,860

-

$                988,860


$             1,052,044

-

$             1,052,044

Cost of sales

785,422

(8,830)

776,592


861,785

(11,156)

850,629

Gross profit

203,438

8,830

212,268


190,259

11,156

201,415

Operating expenses (a) 

167,919

(2,100)

165,819


184,863

(24,834)

160,029

Productivity and transformation costs

26,435

(26,435)

-


20,205

(20,205)

-

Chief Executive Officer Succession Plan expense, net

-

-

-


29,701

(29,701)

-

Proceeds from insurance claim

(2,562)

2,562

-


-

-

-

Accounting review and remediation costs, net of insurance proceeds

-

-

-


4,334

(4,334)

-

Operating income (loss)

11,646

34,803

46,449


(48,844)

90,230

41,386

Interest and other expense (income), net (b) 

13,603

(3,957)

9,646


10,713

(1,029)

9,684

Provision (benefit) for income taxes

489

9,689

10,178


(4,869)

14,401

9,532

   Net (loss) income from continuing operations

(3,101)

29,071

25,970


(54,874)

76,858

21,984

   Net (loss) income from discontinued operations, net of tax

(104,884)

104,884

-


(49,052)

49,052

-

Net (loss) income

(107,985)

133,955

25,970


(103,926)

125,910

21,984









Diluted net (loss) income per common share from continuing operations

(0.03)

0.28

0.25


(0.53)

0.74

0.21

Diluted net (loss) income per common share from discontinued operations

(1.01)

1.01

-


(0.47)

0.47

-

   Diluted net (loss) income per common share

(1.04)

1.28

0.25


(1.00)

1.21

0.21









Detail of Adjustments:










Six Months Ended
December 31, 2019




Six Months Ended
December 31, 2018


SKU rationalization


$                      3,916




$                      1,530


Plant closure related costs


2,559




3,319


Warehouse/manufacturing facility start-up costs


2,355




6,307


Cost of sales


8,830




11,156










Gross profit


8,830




11,156










Intangibles impairment


1,889




17,900


Warehouse/manufacturing facility start-up costs


163




-


Litigation and related expenses


48




691


Long-lived asset impairment charge associated with plant closure 


-




5,809


Plant closure related costs


-




434


Operating expenses (a) 


2,100




24,834










Productivity and transformation costs


26,435




20,205


Productivity and transformation costs


26,435




20,205










Chief Executive Officer Succession Plan expense, net


-




29,701


Chief Executive Officer Succession Plan expense, net


-




29,701










Proceeds from insurance claim


(2,562)




-


Proceeds from insurance claim


(2,562)




-










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)


34,803




90,230










Loss on sale of business


1,783




-


Unrealized currency losses


1,199




1,029


Deferred financing cost write-off


975




-


Interest and other expense (income), net (b) 


3,957




1,029










Income tax related adjustments


(9,689)




(14,401)


Provision (benefit) for income taxes


(9,689)




(14,401)










   Net (loss) income from continuing operations


$                    29,071




$                    76,858










(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, 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 12/31/19 

$         506,784


$         280,693


$         226,091

 Impact of foreign currency exchange 

2,012


(69)


2,081

 Net sales on a constant currency basis - 
     Three months ended 12/31/19 

$         508,796


$         280,624


$         228,172







 Net sales - Three months ended 12/31/18 

$         533,566


$         305,574


$         227,992

 Net sales (decline) growth on a constant currency basis 

(4.6)%


(8.2)%


0.1%








Hain Consolidated


North America


International

 Net sales - Six months ended 12/31/19 

$         988,860


$         552,394


$         436,466

 Impact of foreign currency exchange 

13,706


287


13,419

 Net sales on a constant currency basis - 
     Six months ended 12/31/19 

$      1,002,566


$         552,681


$         449,885







 Net sales - Six months ended 12/31/18 

$      1,052,044


$         596,765


$         455,279

 Net sales decline on a constant currency basis  

(4.7)%


(7.4)%


(1.2)%







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 12/31/19 

$         508,796


$         280,624


$         228,172







 Net sales - Three months ended 12/31/18 

$         533,566


$         305,574


$         227,992

Divestitures

(7,024)


(7,024)


-

SKU rationalization

(13,811)


(12,239)


(1,572)

 Net sales on a constant currency basis adjusted for
   divestitures and SKU rationalization - Three months ended 12/31/18 

$         512,731


$         286,311


$         226,420

 Net sales (decline) growth on a constant currency
   basis adjusted for divestitures and SKU rationalization 

(0.8)%


(2.0)%


0.8%








Hain Consolidated


North America


International

 Net sales on a constant currency basis - 
     Six months ended 12/31/19 

$      1,002,566


$         552,681


$         449,885







 Net sales - Six months ended 12/31/18 

$      1,052,044


$         596,765


$         455,279

Divestitures

(8,955)


(8,955)


-

SKU rationalization

(33,281)


(26,028)


(7,253)

 Net sales on a constant currency basis adjusted for
   divestitures and SKU rationalization - Six months ended 12/31/18 

$      1,009,808


$         561,782


$         448,026

 Net sales (decline) growth on a constant currency
   basis adjusted for divestitures and SKU rationalization 

(0.7)%


(1.6)%


0.4%







Adjusted EBITDA Growth at Constant Currency








Hain Consolidated


North America


International

 Adjusted EBITDA - Three months ended 12/31/19 

$           45,047


$           30,141


$           25,148

 Impact of foreign currency exchange 

264


(11)


276

 Adjusted EBITDA on a constant currency basis - 
     Three months ended 12/31/19 

$           45,311


$           30,130


$           25,424







 Net sales on a constant currency basis - 
     Three months ended 12/31/19 

$         508,796


$         280,624


$         228,172

 Adjusted EBITDA growth on a constant currency basis 

8.9%


10.7%


11.1%








Hain Consolidated


North America


International

 Adjusted EBITDA - Six months ended 12/31/19 

$           77,137


$           54,180


$           44,859

 Impact of foreign currency exchange 

1,335


24


1,312

 Adjusted EBITDA on a constant currency basis - 
     Six months ended 12/31/19 

$           78,472


$           54,204


$           46,171







 Net sales on a constant currency basis - 
     Six months ended 12/31/19 

$      1,002,566


$         552,681


$         449,885

 Adjusted EBITDA growth on a constant currency basis 

7.8%


9.8%


10.3%

 

THE HAIN CELESTIAL GROUP, INC.

Segment EBITDA and Adjusted EBITDA

Three Months Ended

(unaudited and in thousands)





North America






December 31, 2019


December 31, 2018





Operating Income

$                    20,062


$                      9,563

Depreciation and amortization

4,201


4,269

Long-lived asset impairment

-


1,510

Other

(838)


610

EBITDA

$                    23,425


$                    15,952

Productivity and transformation costs

332


2,017

SKU rationalization

3,927


1,530

Loss on sale of business

1,783


-

Warehouse/manufacturing facility start-up costs

639


1,708

Plant closure related costs

35


231

Adjusted EBITDA

$                    30,141


$                    21,438









International






December 31, 2019


December 31, 2018





Operating Income

$                    12,899


$                    15,153

Depreciation and amortization

8,339


7,502

Long-lived asset impairment

-


62

Other

367


95

EBITDA

$                    21,605


$                    22,812

Productivity and transformation costs

2,056


2,349

Plant closure related costs

1,487


1,232

Adjusted EBITDA

$                    25,148


$                    26,393

 

THE HAIN CELESTIAL GROUP, INC.

Segment EBITDA and Adjusted EBITDA

Six Months Ended

(unaudited and in thousands)





North America






December 31, 2019


December 31, 2018





Operating Income

$                    35,194


$                    14,069

Depreciation and amortization

8,549


8,544

Long-lived asset impairment

-


1,503

Other

(173)


565

EBITDA

$                    43,570


$                    24,681

Productivity and transformation costs

2,500


3,521

SKU rationalization

3,737


1,530

Warehouse/manufacturing facility start-up costs

2,518


6,307

Loss on sale of business

1,783


-

Plant closure related costs

72


960

Adjusted EBITDA

$                    54,180


$                    36,999









International






December 31, 2019


December 31, 2018





Operating Income

$                    22,006


$                    20,813

Depreciation and amortization

16,265


15,674

Long-lived asset impairment

-


4,305

Other

799


26

EBITDA

$                    39,070


$                    40,818

Productivity and transformation costs

3,328


3,202

Plant closure related costs

2,282


2,331

SKU rationalization

179


-

Litigation and related expenses

-


19

Adjusted EBITDA

$                    44,859


$                    46,370

 

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SOURCE The Hain Celestial Group, Inc.