Hain Celestial Reports Fourth Quarter and Fiscal Year 2020 Financial Results
Profitability at the High-End of Company Expectations
Strong Margin Improvement Through Continued Execution of Transformational Plan
Generated $92.8 Million in Operating Cash Flow During the Quarter
Lake Success, NY, August 25, 2020—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 fourth quarter and fiscal year ended June 30, 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, “We are pleased to report profitability at the high-end of our expectations for the fiscal year. Our results were strong because of our team’s execution of our transformational strategic plan, which resulted in strong margin improvement and operating cash flow generation. In this dynamic operating environment, we believe we will maintain our positive momentum and remain committed to sustainable long-term growth as we deliver on our four key pillars for growth - portfolio simplification, capability building, cost control and sales acceleration.”
FINANCIAL HIGHLIGHTS1
Summary of Fourth Quarter Results from Continuing Operations2
•Net sales increased 1% to $511.7 million, or 3% on a constant currency basis, compared to the prior year period.
•When adjusted for Foreign Exchange, Divestitures, discontinued brands and Stock Keeping Unit (“SKU”) rationalization3, net sales increased 7% compared to the prior year period.
•Gross margin of 25.4%, a 658 basis point increase from the prior year period.
•Adjusted gross margin of 25.3%, a 257 basis point increase from the prior year period.
•Operating income of $25.3 million compared to an operating loss of $2.6 million in the prior year period.
•Adjusted operating income of $47.9 million compared to $34.4 million in the prior year period.
•Net income of $3.7 million compared to a net loss of $7.3 million in the prior year period.
•Adjusted net income of $32.3 million compared to $19.9 million in prior year period.
•Adjusted EBITDA of $62.2 million compared to $49.4 million in the prior year period.
•Adjusted EBITDA margin of 12.1%, a 237 basis point increase compared to the prior year period.
•Earnings per diluted share (“EPS”) of $0.04 compared to a loss of $0.07 in the prior year period.
•Adjusted EPS of $0.32 compared to $0.19 in the prior year period.
•Repurchased 0.1 million shares, or 0.1% of the outstanding common stock, at an average price of $24.97 per share.
•Net cash provided by continuing operations of $92.8 million compared to $21.0 million in prior year period.
•Operating free cash flow4 from continuing operations of $78.9 million compared to $0.3 million in prior year period.
1This 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.”
2Unless otherwise noted all results included in this press release are from continuing operations.
3Refer to “Net Sales Growth at Constant Currency" and "Adjusted for Divestitures, discontinued brands and SKU Rationalization” provided herein.
4Refer to Non-GAAP Financial Measures below for definition of operating free cash flow from continuing operations.
The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com
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Summary of Fiscal Year 2020 Results from Continuing Operations2
•Net sales decreased 2% to $2,053.9 million compared to the prior year.
•Net sales decreased 1% on a constant currency basis compared to the prior year.
•When adjusted for Foreign Exchange, Divestitures, discontinued brands and “SKU” rationalization3, net sales increased 3% compared to the prior year.
•Gross margin of 22.7%, a 374 basis point increase over the prior year.
•Adjusted gross margin of 23.2%, a 257 basis point increase over the prior year.
•Operating income of $56.0 million compared to operating loss of $32.5 million in the prior year.
•Adjusted operating income of $140.0 million compared to $109.9 million in the prior year.
•Net income of $25.6 million compared to net loss of $53.4 million in the prior year.
•Adjusted net income of $87.1 million compared to $62.1 million in prior year.
•Adjusted EBITDA of $200.0 million compared to $165.1 million in the prior year.
•Adjusted EBITDA margin of 9.7%, a 189 basis point increase compared to the prior year.
•EPS of $0.25 compared to a loss of $0.51 in the prior year.
•Adjusted EPS of $0.84 compared to $0.60 in the prior year.
•Repurchased 2.6 million shares, or 2.4% of the outstanding common stock, at an average price of $23.59 per share.
•Net cash provided by continuing operations of $156.9 million compared to $39.3 million in prior year.
•Operating free cash flow4 from continuing operations of $96.0 million compared to negative operating free cash flow of $36.4 million in prior year.
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 fourth quarter were $298.6 million, an increase of 5% compared to the prior year period. When adjusted for Foreign Exchange, Divestitures, discontinued brands and SKU rationalization3, net sales increased 13% from the prior year period.
Segment gross profit in the fourth quarter was $83.6 million, a 65% increase from the prior year period. Adjusted gross profit was $82.9 million, an increase of 20% from the prior year period. Gross margin was 28.0%, a 1,021 basis point increase from the prior year period and adjusted gross margin was 27.7%, a 354 basis point increase from the prior year period.
Segment operating income in the fourth quarter was $31.9 million, compared to a loss of $2.7 million in the prior year period. Adjusted operating income was $38.9 million, a 57% increase from the prior year period.
Adjusted EBITDA in the fourth quarter was $43.8 million, a 46% increase from the prior year period. As a percentage of sales on a constant currency basis, North America adjusted EBITDA margin was 14.7%, a 418 basis point increase from the prior year period.
North America net sales in fiscal year 2020 were $1,171 million, a decrease of 2% compared to the prior year. When adjusted for Foreign Exchange, Divestitures, discontinued brands and SKU rationalization3, net sales increased 5% from the prior year.
Segment gross profit in fiscal year 2020 was $293.5 million, a 30% increase from the prior year. Adjusted gross profit was $300.9 million, an increase of 17% from the prior year. Gross margin was 25.1%, a 619 basis point increase from the prior year and adjusted gross margin was 25.7%, a 422 basis point increase from the prior year.
Segment operating income in fiscal year 2020 was $95.9 million, a 194% increase from the prior year. Adjusted operating income was $121.0 million, a 53% increase from the prior year.
The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com
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Adjusted EBITDA in fiscal year 2020 was $140.9 million, a 43% increase from the prior year. As a percentage of sales on a constant currency basis, North America adjusted EBITDA margin was 12.0%, a 381 basis point increase from the prior year.
International
International net sales in the fourth quarter were $213.1 million, a decrease of 3% compared to the prior year period. When adjusted for Foreign Exchange, Divestitures, discontinued brands and SKU rationalization3, net sales were flat compared to the prior year period.
Segment gross profit in the fourth quarter was $46.3 million, a 5% increase from the prior year period. Adjusted gross profit was $46.4 million, an increase of 2% from the prior year period. Gross margin was 21.7%, a 162 basis point increase from the prior year period and adjusted gross margin was 21.8%, a 104 basis point increase from the prior year period.
Segment operating income in the fourth quarter was $14.7 million, a 19% decrease from the prior year period. Adjusted operating income was $22.7 million, a decrease of 1% from the prior year period.
Adjusted EBITDA in the fourth quarter was $29.9 million, a 3% decrease from the prior year period. As a percentage of sales, International adjusted EBITDA margin was 14.0%, a 9 basis point increase from the prior year period.
International net sales in fiscal year 2020 were $882.4 million, a decrease of 3% when compared to the prior year. When adjusted for Foreign Exchange, Divestitures, discontinued brands and SKU rationalization3, net sales increased 1% compared to the prior year.
Segment gross profit in fiscal year 2020 was $172.2 million, flat when compared to the prior year. Adjusted gross profit was $174.9 million, a decrease of 1% from the prior year. Gross margin was 19.5%, a 50 basis point increase from the prior year and adjusted gross margin was 19.8%, a 37 basis point increase from the prior year.
Segment operating income in fiscal year 2020 was $55.3 million, a 6% decrease from the prior year. Adjusted operating income was $73.9 million, a decrease of 1% from the prior year.
Adjusted EBITDA in fiscal year 2020 was $105.7 million, flat when compared to the prior year. As a percentage of sales on a constant currency basis, International adjusted EBITDA margin was 12.0%, a 32 basis point increase from the prior year.
CAPITAL MANAGEMENT
During fiscal year 2020, the Company repurchased 2.6 million shares, or 2.4% of the outstanding common stock, at an average price of $23.59 per share for a total of $60.2 million, excluding commissions. As of June 30, 2020, the Company had $189.8 million remaining authorization under the share repurchase program.
SALE OF RUDI’S BAKERY
Effective May 1, 2020, the Company completed the divestiture of its Rudi’s business, a component of the United States reporting unit to an affiliate of Promise Gluten Free. Details of the transaction were not disclosed.
SALE OF DANIVAL
Effective July 21, 2020, the Company completed the divestiture of Danival® to a subsidiary of Wessanen N.V. Details of the transaction were not disclosed.
FISCAL YEAR 2021 GUIDANCE
Due to the uncertainty around the duration and impact of the COVID-19 pandemic, the Company is not providing specific financial guidance for fiscal 2021. For fiscal 2021, the Company expects continued margin expansion, strong double digit adjusted EBITDA growth and double digit operating free cash flow growth. The Company believes that the first half of fiscal 2021 will yield stronger net sales and adjusted EBITDA growth than the second half of the year due to its strong consumer and customer plans as well as increased at home eating occasions related to COVID-19. For the first quarter, based on actual results to date, the Company expects mid-single digit net sales growth after adjusting for divestitures and discontinued brands, and several hundred basis points of margin improvement and adjusted EBITDA growth.
The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com
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Contacts:
Katie Turner and Ashley DeSimone
ICR
646-277-1228
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 Celestial Seasonings®, Clarks™, Cully & Sully®, Dream®, Earth's Best®, Ella's Kitchen®, Farmhouse Fare™, Frank Cooper's®, GG UniqueFiber®, Gale's®, Garden of Eatin'®, Hain Pure Foods®, Hartley's®, Health Valley®, Imagine®, Joya®, Lima®, Linda McCartney® (under license), MaraNatha®, Natumi®, New Covent Garden Soup Co.®, Orchard House®, Robertson's®, Sensible Portions®, Spectrum®, Sun-Pat®, Sunripe®, Terra®, The Greek Gods®, William's™, Yorkshire Provender® and Yves Veggie Cuisine®. The Company's personal care products are marketed under the Alba Botanica®, Avalon Organics®, Earth's Best®, JASON®, Live Clean®, One Step® 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 2021 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, general economic and financial market conditions, the United Kingdom’s exit from the European Union, consolidation of customers or the loss of a significant customer, reliance on independent distributors, 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 implement cost reduction initiatives, the impact of our debt covenants, the potential discontinuation of LIBOR, 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 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, 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
The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com
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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 reflect changes in underlying assumptions or factors or 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, discontinued brands and certain other items, including SKU rationalization, as applicable in each case, adjusted operating income and its related margin, adjusted gross margin, adjusted net income, adjusted earnings per diluted share, Adjusted EBITDA and its related margin 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 twelve months ended June 30, 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 twelve months ended June 30, 2020 and 2019, Operating Free Cash Flow from continuing operations was calculated as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | | | Twelve Months Ended June 30, | | |
| 2020 | | 2019 | | 2020 | | 2019 |
| | | | | | | |
| (unaudited and in thousands) | | | | | | |
| | | | | | | |
| Cash flow provided by operating activities from continuing operations | $ | 92,822 | | | $ | 21,001 | | | $ | 156,914 | | | $ | 39,333 | |
| Purchases of property, plant and equipment | (13,932) | | | (20,719) | | | (60,893) | | | (75,792) | |
| Operating Free Cash Flow from continuing operations | $ | 78,890 | | | $ | 282 | | | $ | 96,021 | | | $ | (36,459) | |
The Company’s Operating Free Cash Flow from continuing operations was $78.9 million for the three months ended June 30, 2020, an increase of $78.6 million from the three months ended June 30, 2019. The Company’s Operating Free Cash Flow from continuing operations was $96.0 million for the twelve months ended June 30, 2020, an increase of $132.5 million from the twelve months ended June 30, 2019. The improvement in Operating Free Cash Flow for both periods resulted primarily from an improvement in net income adjusted for non-cash charges in the current year and a decrease in our 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, discontinued brands, 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-
The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com
5
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 twelve months ended June 30, 2020 and 2019, Adjusted EBITDA from continuing operations was calculated as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | | | Twelve Months Ended June 30, | | |
| 2020 | | 2019 | | 2020 | | 2019 |
| | | | | | | |
| (unaudited and in thousands) | | | | | | |
| | | | | | | |
| Net income (loss) | $ | 3,239 | | | $ | (13,551) | | | $ | (80,407) | | | $ | (183,314) | |
| Net loss from discontinued operations | (460) | | | (6,215) | | | (106,041) | | | (129,887) | |
| Net income (loss) from continuing operations | $ | 3,699 | | | $ | (7,336) | | | 25,634 | | | $ | (53,427) | |
| | | | | | | |
| Provision (benefit) for income taxes | 15,958 | | | (1,306) | | | 6,205 | | | (3,232) | |
| Interest expense, net | 2,467 | | | 5,484 | | | 14,351 | | | 19,450 | |
| Depreciation and amortization | 12,019 | | | 13,350 | | | 52,088 | | | 50,898 | |
| Equity in net loss of equity-method investees | 770 | | | 264 | | | 1,989 | | | 655 | |
| Stock-based compensation, net | 3,497 | | | 3,982 | | | 13,078 | | | 9,471 | |
| Stock-based compensation expense in connection with Former Chief Executive Officer Succession Plan | — | | | — | | | — | | | 429 | |
| Goodwill impairment | 394 | | | — | | | 394 | | | — | |
| Long-lived asset and intangibles impairment | 12,079 | | | 10,010 | | | 27,493 | | | 33,719 | |
| Unrealized currency losses (gains) | 355 | | | (3,401) | | | 543 | | | (850) | |
| Productivity and transformation costs | 10,194 | | | 10,494 | | | 47,596 | | | 39,958 | |
| Former Chief Executive Officer Succession Plan expense, net | — | | | — | | | — | | | 29,727 | |
| Proceeds from insurance claim | — | | | (4,460) | | | (2,962) | | | (4,460) | |
| Accounting review and remediation costs, net of insurance proceeds | — | | | — | | | — | | | 4,334 | |
| Loss (gain) on sale of business | 1,448 | | | (534) | | | 3,564 | | | (534) | |
| Warehouse/manufacturing facility start-up costs | 385 | | | 8,107 | | | 3,440 | | | 17,636 | |
| Plant closure related costs | 3 | | | 1,232 | | | 2,357 | | | 4,734 | |
| SKU rationalization and inventory write-down | (1,103) | | | 10,346 | | | 4,175 | | | 12,381 | |
| Litigation and related expenses | — | | | 455 | | | 48 | | | 1,517 | |
| Realized currency loss on repayment of international loans | — | | | 2,706 | | | — | | | 2,706 | |
| Adjusted EBITDA | $ | 62,165 | | | $ | 49,393 | | | $ | 199,993 | | | $ | 165,112 | |
The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com
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| | | | | | | | | | | | | | |
| 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 6/30/20 | $ | 298,644 | | $ | 213,102 | | $ | — | | $ | 511,746 | |
| Net sales - Three months ended 6/30/19 | $ | 284,893 | | $ | 220,412 | | $ | — | | $ | 505,305 | |
| % change - FY'20 net sales vs. FY'19 net sales | 4.8 | % | (3.3) | % | | 1.3 | % |
| | | | |
| Gross Profit | | | | |
| Three months ended 6/30/20 | | | | |
| Gross profit | $ | 83,589 | | $ | 46,348 | | $ | — | | $ | 129,937 | |
Non-GAAP adjustments(1) | (728) | | 13 | | — | | (715) | |
| Adjusted gross profit | $ | 82,861 | | $ | 46,361 | | $ | — | | $ | 129,222 | |
| Gross margin | 28.0 | % | 21.7 | % | | 25.4 | % |
| Adjusted gross margin | 27.7 | % | 21.8 | % | | 25.3 | % |
| | | | |
| Three months ended 6/30/19 | | | | |
| Gross profit | $ | 50,659 | | $ | 44,371 | | $ | — | | $ | 95,030 | |
Non-GAAP adjustments(1) | 18,308 | | 1,284 | | — | | 19,592 | |
| Adjusted gross profit | $ | 68,967 | | $ | 45,655 | | $ | — | | $ | 114,622 | |
| Gross margin | 17.8 | % | 20.1 | % | | 18.8 | % |
| Adjusted gross margin | 24.2 | % | 20.7 | % | | 22.7 | % |
| | | | |
| Operating income (loss) | | | | |
| Three months ended 6/30/20 | | | | |
| Operating income (loss) | $ | 31,867 | | $ | 14,667 | | $ | (21,273) | | $ | 25,261 | |
Non-GAAP adjustments(1) | 7,020 | | 8,056 | | 7,521 | | 22,597 | |
| Adjusted operating income (loss) | $ | 38,887 | | $ | 22,723 | | $ | (13,752) | | $ | 47,858 | |
| Operating income margin | 10.7 | % | 6.9 | % | | 4.9 | % |
| Adjusted operating income margin | 13.0 | % | 10.7 | % | | 9.4 | % |
| | | | |
| Three months ended 6/30/19 | | | | |
| Operating (loss) income | $ | (2,745) | | $ | 18,112 | | $ | (18,008) | | $ | (2,641) | |
Non-GAAP adjustments(1) | 27,500 | | 4,878 | | 4,706 | | 37,084 | |
| Adjusted operating income (loss) | $ | 24,755 | | $ | 22,990 | | $ | (13,302) | | $ | 34,443 | |
| Operating (loss) income margin | (1.0) | % | 8.2 | % | | (0.5) | % |
| Adjusted operating income margin | 8.7 | % | 10.4 | % | | 6.8 | % |
(1) See accompanying table of "Reconciliation of GAAP Results to Non-GAAP Measures"
The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com
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| | | | | | | | | | | | | | |
| 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 - Twelve months ended 6/30/20 | $ | 1,171,478 | | $ | 882,425 | | $ | — | | $ | 2,053,903 | |
| Net sales - Twelve months ended 6/30/19 | $ | 1,195,979 | | $ | 908,627 | | $ | — | | $ | 2,104,606 | |
| % change - FY'20 net sales vs. FY'19 net sales | (2.0) | % | (2.9) | % | | (2.4) | % |
| | | | |
| Gross Profit | | | | |
| Twelve months ended 6/30/20 | | | | |
| Gross profit | $ | 293,545 | | $ | 172,225 | | $ | — | | $ | 465,770 | |
Non-GAAP adjustments (1) | 7,309 | | 2,679 | | — | | 9,988 | |
| Adjusted gross profit | $ | 300,854 | | $ | 174,904 | | $ | — | | $ | 475,758 | |
| Gross margin | 25.1 | % | 19.5 | % | | 22.7 | % |
| Adjusted gross margin | 25.7 | % | 19.8 | % | | 23.2 | % |
| | | | |
| Twelve months ended 6/30/19 | | | | |
| Gross profit | $ | 225,707 | | $ | 172,790 | | $ | — | | $ | 398,497 | |
Non-GAAP adjustments (1) | 30,952 | | 3,948 | | — | | 34,900 | |
| Adjusted gross profit | $ | 256,659 | | $ | 176,738 | | $ | — | | $ | 433,397 | |
| Gross margin | 18.9 | % | 19.0 | % | | 18.9 | % |
| Adjusted gross margin | 21.5 | % | 19.5 | % | | 20.6 | % |
| | | | |
| Operating income (loss) | | | | |
| Twelve months ended 6/30/20 | | | | |
| Operating income (loss) | $ | 95,934 | | $ | 55,333 | | $ | (95,225) | | $ | 56,042 | |
Non-GAAP adjustments (1) | 25,083 | | 18,559 | | 40,296 | | 83,938 | |
| Adjusted operating income (loss) | $ | 121,017 | | $ | 73,892 | | $ | (54,929) | | $ | 139,980 | |
| Operating income margin | 8.2 | % | 6.3 | % | | 2.7 | % |
| Adjusted operating income margin | 10.3 | % | 8.4 | % | | 6.8 | % |
| | | | |
| Twelve months ended 6/30/19 | | | | |
| Operating income (loss) | $ | 32,682 | | $ | 58,808 | | $ | (123,983) | | $ | (32,493) | |
Non-GAAP adjustments (1) | 46,430 | | 16,143 | | 79,780 | | 142,353 | |
| Adjusted operating income (loss) | $ | 79,112 | | $ | 74,951 | | $ | (44,203) | | $ | 109,860 | |
| Operating income (loss) margin | 2.7 | % | 6.5 | % | | (1.5) | % |
| Adjusted operating income margin | 6.6 | % | 8.2 | % | | 5.2 | % |
(1) See accompanying table of "Reconciliation of GAAP Results to Non-GAAP Measures"
The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com
8
| | | | | | | | | | | |
| THE HAIN CELESTIAL GROUP, INC. | | | |
| Consolidated Balance Sheets | | | |
| (unaudited and in thousands) | | | |
| | | |
| June 30, | | June 30, |
| 2020 | | 2019 |
| ASSETS | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 37,771 | | | $ | 31,017 | |
| Accounts receivable, net | 170,969 | | | 209,990 | |
| Inventories | 248,170 | | | 299,341 | |
| Prepaid expenses and other current assets | 104,024 | | | 51,391 | |
| Current assets of discontinued operations | — | | | 110,048 | |
| Total current assets | 560,934 | | | 701,787 | |
| Property, plant and equipment, net | 289,256 | | | 287,845 | |
| Goodwill | 861,958 | | | 875,881 | |
| Trademarks and other intangible assets, net | 346,462 | | | 380,286 | |
| Investments and joint ventures | 17,439 | | | 18,890 | |
| Operating lease right-of-use assets | 88,165 | | | — | |
| Other assets | 24,238 | | | 58,764 | |
| Noncurrent assets of discontinued operations | — | | | 259,167 | |
| Total assets | $ | 2,188,452 | | | $ | 2,582,620 | |
| | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 171,009 | | | $ | 219,957 | |
| Accrued expenses and other current liabilities | 127,612 | | | 114,265 | |
| Current portion of long-term debt | 1,656 | | | 17,232 | |
| Current liabilities of discontinued operations | — | | | 31,703 | |
| Total current liabilities | 300,277 | | | 383,157 | |
| Long-term debt, less current portion | 281,118 | | | 613,537 | |
| Deferred income taxes | 51,849 | | | 34,757 | |
| Operating lease liabilities, noncurrent portion | 82,962 | | | — | |
| Other noncurrent liabilities | 28,692 | | | 14,489 | |
| Noncurrent liabilities of discontinued operations | — | | | 17,361 | |
| Total liabilities | 744,898 | | | 1,063,301 | |
| Stockholders' equity: | | | |
| Common stock | 1,092 | | | 1,088 | |
| Additional paid-in capital | 1,171,875 | | | 1,158,257 | |
| Retained earnings | 614,171 | | | 695,017 | |
| Accumulated other comprehensive loss | (171,392) | | | (225,004) | |
| 1,615,746 | | | 1,629,358 | |
| Treasury stock | (172,192) | | | (110,039) | |
| Total stockholders' equity | 1,443,554 | | | 1,519,319 | |
| Total liabilities and stockholders' equity | $ | 2,188,452 | | | $ | 2,582,620 | |
The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com
9
| | | | | | | | | | | | | | | | | | | | | | | |
| THE HAIN CELESTIAL GROUP, INC. | | | | | | | |
| Consolidated Statements of Operations | | | | | | | |
| (unaudited and in thousands, except per share amounts) | | | | | | | |
| | | | | | | |
| Three Months Ended June 30, | | | | Twelve Months Ended June 30, | | |
| 2020 | | 2019 | | 2020 | | 2019 |
| Net sales | $ | 511,746 | | | $ | 505,305 | | | $ | 2,053,903 | | | $ | 2,104,606 | |
| Cost of sales | 381,809 | | | 410,275 | | | 1,588,133 | | | 1,706,109 | |
| Gross profit | 129,937 | | | 95,030 | | | 465,770 | | | 398,497 | |
| Selling, general and administrative expenses | 79,171 | | | 78,439 | | | 324,376 | | | 314,000 | |
| Amortization of acquired intangibles | 2,192 | | | 3,188 | | | 11,638 | | | 13,134 | |
| Productivity and transformation costs | 10,840 | | | 10,494 | | | 48,789 | | | 40,107 | |
| Former Chief Executive Officer Succession Plan expense, net | — | | | — | | | — | | | 30,156 | |
| Proceeds from insurance claim | — | | | (4,460) | | | (2,962) | | | (4,460) | |
| Accounting review and remediation costs, net of insurance proceeds | — | | | — | | | — | | | 4,334 | |
| Goodwill impairment | 394 | | | — | | | 394 | | | — | |
| Long-lived asset and intangibles impairment | 12,079 | | | 10,010 | | | 27,493 | | | 33,719 | |
| Operating income (loss) | 25,261 | | | (2,641) | | | 56,042 | | | (32,493) | |
| Interest and other financing expense, net | 3,190 | | | 6,781 | | | 18,258 | | | 22,517 | |
| Other expense (income), net | 1,644 | | | (1,044) | | | 3,956 | | | 994 | |
| Income (loss) from continuing operations before income taxes and equity in net loss of equity-method investees | 20,427 | | | (8,378) | | | 33,828 | | | (56,004) | |
| Provision (benefit) for income taxes | 15,958 | | | (1,306) | | | 6,205 | | | (3,232) | |
| Equity in net loss of equity-method investees | 770 | | | 264 | | | 1,989 | | | 655 | |
| Net income (loss) from continuing operations | $ | 3,699 | | | $ | (7,336) | | | $ | 25,634 | | | $ | (53,427) | |
| Net loss from discontinued operations, net of tax | (460) | | | (6,215) | | | (106,041) | | | (129,887) | |
| Net income (loss) | $ | 3,239 | | | $ | (13,551) | | | $ | (80,407) | | | $ | (183,314) | |
| | | | | | | |
| Net income (loss) per common share: | | | | | | | |
| Basic net income (loss) per common share from continuing operations | $ | 0.04 | | | $ | (0.07) | | | $ | 0.25 | | | $ | (0.51) | |
| Basic net loss per common share from discontinued operations | — | | | (0.06) | | | (1.02) | | | (1.25) | |
| Basic net income (loss) per common share | $ | 0.04 | | | $ | (0.13) | | | $ | (0.77) | | | $ | (1.76) | |
| | | | | | | |
| Diluted net income (loss) per common share from continuing operations | $ | 0.04 | | | $ | (0.07) | | | $ | 0.25 | | | $ | (0.51) | |
| Diluted net loss per common share from discontinued operations | — | | | (0.06) | | | (1.02) | | | (1.25) | |
| Diluted net income (loss) per common share | $ | 0.04 | | | $ | (0.13) | | | $ | (0.77) | | | $ | (1.76) | |
| | | | | | | |
| Shares used in the calculation of net income (loss) per common share: | | | | | | | |
| Basic | 101,895 | | | 104,167 | | | 103,618 | | | 104,076 | |
| Diluted | 102,280 | | | 104,167 | | | 103,937 | | | 104,076 | |
| | | | | | | |
The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com
10
| | | | | | | | | | | | | | | | | | | | | | | |
| THE HAIN CELESTIAL GROUP, INC. | | | | | | | |
| Consolidated Statements of Cash Flows | | | | | | | |
| (unaudited and in thousands) | | | | | | | |
| | | | | | | |
| | Three Months Ended June 30, | | | | Twelve Months Ended June 30, | | |
| | 2020 | | 2019 | | 2020 | | 2019 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | |
| Net income (loss) | $ | 3,239 | | | $ | (13,551) | | | $ | (80,407) | | | $ | (183,314) | |
| Net loss from discontinued operations | (460) | | | (6,215) | | | (106,041) | | | (129,887) | |
| Net income (loss) from continuing operations | 3,699 | | | (7,336) | | | 25,634 | | | (53,427) | |
| Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities from continuing operations: | | | | | | | |
| Depreciation and amortization | 12,019 | | | 13,350 | | | 52,088 | | | 50,898 | |
| Deferred income taxes | 45,195 | | | 818 | | | 36,160 | | | (23,706) | |
| Former Chief Executive Officer Succession Plan expense, net | — | | | (29,727) | | | — | | | — | |
| Equity in net loss of equity-method investees | 770 | | | 264 | | | 1,989 | | | 655 | |
| Stock-based compensation, net | 3,497 | | | 3,982 | | | 13,078 | | | 9,900 | |
| Goodwill impairment | 394 | | | — | | | 394 | | | — | |
| Long-lived asset and intangibles impairment | 12,079 | | | 10,010 | | | 27,493 | | | 33,719 | |
| Other non-cash items, net | 1,571 | | | (2,504) | | | 3,906 | | | 1,193 | |
| Increase (decrease) in cash attributable to changes in operating assets and liabilities: | | | | | | | |
| Accounts receivable | 64,726 | | | 31,124 | | | 33,856 | | | 26,658 | |
| Inventories | (14,044) | | | 18,920 | | | 33,236 | | | 30,550 | |
| Other current assets | (55,639) | | | (6,992) | | | (45,337) | | | (7,215) | |
| Other assets and liabilities | 7,152 | | | (1,571) | | | 5,986 | | | 3,635 | |
| Accounts payable and accrued expenses | 11,403 | | | (9,337) | | | (31,569) | | | (33,527) | |
| Net cash provided by operating activities from continuing operations | 92,822 | | | 21,001 | | | 156,914 | | | 39,333 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | |
| Purchases of property and equipment | (13,932) | | | (20,719) | | | (60,893) | | | (75,792) | |
| Proceeds from sale of businesses and other | 1,337 | | | 3,282 | | | 15,765 | | | 7,145 | |
| Net cash used in investing activities from continuing operations | (12,595) | | | (17,437) | | | (45,128) | | | (68,647) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | |
| Borrowings under bank revolving credit facility | 65,000 | | | 45,000 | | | 262,000 | | | 285,000 | |
| Repayments under bank revolving credit facility | (147,169) | | | (82,000) | | | (401,669) | | | (268,791) | |
| Repayments under term loan | — | | | (78,750) | | | (206,250) | | | (90,000) | |
| Proceeds from discontinued operations entities | (538) | | | (477) | | | 305,645 | | | 56,643 | |
| Repayments of other debt, net | 398 | | | 90,458 | | | (2,040) | | | (2,166) | |
| Share repurchases | (2,815) | | | — | | | (60,221) | | | — | |
| Shares withheld for payment of employee payroll taxes | (425) | | | (461) | | | (1,931) | | | (3,532) | |
| Net cash used in financing activities from continuing operations | (85,549) | | | (26,230) | | | (104,466) | | | (22,846) | |
| Effect of exchange rate changes on cash from continuing operations | 1,544 | | | (748) | | | (566) | | | (1,522) | |
| CASH FLOWS FROM DISCONTINUED OPERATIONS | | | | | | | |
| Cash provided by (used in) operating activities | 398 | | | 15,563 | | | (5,748) | | | 1,936 | |
| Cash provided by investing activities | — | | | 70,166 | | | 297,592 | | | 36,605 | |
| Cash used in financing activities | (398) | | | (88,352) | | | (299,816) | | | (57,770) | |
| Effect of exchange rate changes on cash from discontinued operations | — | | | (129) | | | (537) | | | (580) | |
| Net cash flows used in discontinued operations | — | | | (2,752) | | | (8,509) | | | (19,809) | |
| Net decrease in cash and cash equivalents | (3,778) | | | (26,166) | | | (1,755) | | | (73,491) | |
| Cash and cash equivalents at beginning of period | 41,549 | | | 65,692 | | | 39,526 | | | 113,017 | |
| Cash and cash equivalents at end of period | $ | 37,771 | | | $ | 39,526 | | | $ | 37,771 | | | $ | 39,526 | |
| Less: cash and cash equivalents of discontinued operations | — | | | (8,509) | | | — | | | (8,509) | |
| Cash and cash equivalents of continuing operations at end of period | $ | 37,771 | | | $ | 31,017 | | | $ | 37,771 | | | $ | 31,017 | |
The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com
11
| | | | | | | | | | | | | | | | | | | | | | | |
| THE HAIN CELESTIAL GROUP, INC. | | | | | | | |
| Reconciliation of GAAP Results to Non-GAAP Measures | | | | | | | |
| (unaudited and in thousands) | | | | | | | |
| | | | | | | |
| Three Months Ended June 30, | | | | | | |
| 2020 GAAP | Adjustments | 2020 Adjusted | | 2019 GAAP | Adjustments | 2019 Adjusted |
| Net sales | $ | 511,746 | | — | | $ | 511,746 | | | $ | 505,305 | | — | | $ | 505,305 | |
| Cost of sales | 381,809 | | 715 | | 382,524 | | | 410,275 | | (19,591) | | 390,684 | |
| Gross profit | 129,937 | | (715) | | 129,222 | | | 95,030 | | 19,591 | | 114,622 | |
| Operating expenses (a) | 93,442 | | (12,079) | | 81,363 | | | 91,637 | | (11,459) | | 80,179 | |
| Productivity and transformation costs | 10,840 | | (10,840) | | — | | | 10,494 | | (10,494) | | — | |
| Proceeds from insurance claims | — | | — | | — | | | (4,460) | | 4,460 | | — | |
| Goodwill impairment | 394 | | (394) | | — | | | — | | — | | — | |
| Operating income (loss) | 25,261 | | 22,597 | | 47,858 | | | (2,641) | | 37,084 | | 34,443 | |
| Interest and other expense (income), net (b) | 4,834 | | (1,803) | | 3,031 | | | 5,737 | | 882 | | 6,619 | |
| Provision (benefit) provision for income taxes | 15,958 | | (4,243) | | 11,715 | | | (1,306) | | 8,962 | | 7,656 | |
| Net income (loss) from continuing operations | 3,699 | | 28,644 | | 32,343 | | | (7,336) | | 27,240 | | 19,904 | |
Net (loss) income from discontinued
operations, net of tax | (460) | | 460 | | — | | | (6,215) | | 6,215 | | — | |
| Net income (loss) | 3,239 | | 29,104 | | 32,343 | | | (13,551) | | 33,455 | | 19,904 | |
| | | | | | | |
| Diluted net income (loss) per common share from continuing operations | 0.04 | | 0.28 | | 0.32 | | | (0.07) | | 0.26 | | 0.19 | |
| Diluted net (loss) income per common share from discontinued operations | — | | — | | — | | | (0.06) | | 0.06 | | — | |
| Diluted net income (loss) per common share | 0.04 | | 0.28 | | 0.32 | | | (0.13) | | 0.32 | | 0.19 | |
(a) Operating expenses include amortization of acquired intangibles, selling, general, and administrative expenses and long-lived asset impairment.
(b) Interest and other expense (income), net includes interest and other financing expenses, net and other expense, net.
The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com
12
| | | | | | | | | | | |
| THE HAIN CELESTIAL GROUP, INC. | | | |
| Reconciliation of GAAP Results to Non-GAAP Measures | | | |
| (unaudited and in thousands) | | | |
| | | |
| Detail of Adjustments: | | | |
| Three Months Ended June 30, | | |
| 2020 | | 2019 |
| Warehouse/manufacturing facility start-up costs | $ | 385 | | | $ | 8,107 | |
| Plant closure related costs | 3 | | | 1,138 | |
| SKU rationalization and inventory write-down | (1,103) | | | 10,346 | |
| Cost of sales | (715) | | | 19,591 | |
| | | |
| Gross profit | (715) | | | 19,591 | |
| | | |
| Long-lived asset impairment | 12,079 | | | 10,010 | |
| Stock-based compensation acceleration | — | | | 875 | |
| Litigation and related expenses | — | | | 455 | |
| Plant closure related costs | — | | | 119 | |
Operating expenses (a) | 12,079 | | | 11,459 | |
| | | |
| Productivity and transformation costs | 10,840 | | | 10,494 | |
| Productivity and transformation costs | 10,840 | | | 10,494 | |
| | | |
| Proceeds from insurance claims | — | | | (4,460) | |
| Proceeds from insurance claims | — | | | (4,460) | |
| | | |
| Goodwill impairment | 394 | | | — | |
| Goodwill impairment | 394 | | | — | |
| | | |
| | | |
| | | |
| | | |
| Operating income (loss) | 22,597 | | | 37,084 | |
| | | |
| Loss (gain) on sale of business | 1,448 | | | (534) | |
| Unrealized currency losses (gains) | 355 | | | (3,401) | |
| Realized currency loss on repayment of international loans | — | | | 2,706 | |
| Deferred financing cost write-off | — | | | 347 | |
| Interest and other expense (income), net (b) | 1,803 | | | (882) | |
| | | |
| Income tax related adjustments | 4,243 | | | (8,962) | |
| Provision (benefit) provision for income taxes | 4,243 | | | (8,962) | |
| | | |
| Net income (loss) from continuing operations | $ | 28,644 | | | $ | 27,240 | |
(a) Operating expenses include amortization of acquired intangibles, selling, general, and administrative expenses and long-lived asset impairment.
(b) Interest and other expense (income), net includes interest and other financing expenses, net and other expense, net.
The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com
13
| | | | | | | | | | | | | | | | | | | | | | | |
| THE HAIN CELESTIAL GROUP, INC. | | | | | | | |
| Reconciliation of GAAP Results to Non-GAAP Measures | | | | | | | |
| (unaudited and in thousands) | | | | | | | |
| | | | | | | |
| Twelve Months Ended June 30, | | | | | | |
| 2020 GAAP | Adjustments | 2020 Adjusted | | 2019 GAAP | Adjustments | 2019 Adjusted |
| Net sales | $ | 2,053,903 | | — | | $ | 2,053,903 | | | $ | 2,104,606 | | — | | $ | 2,104,606 | |
| Cost of sales | 1,588,133 | | (9,988) | | 1,578,145 | | | 1,706,109 | | (34,900) | | 1,671,209 | |
| Gross profit | 465,770 | | 9,988 | | 475,758 | | | 398,497 | | 34,900 | | 433,397 | |
| Operating expenses (a) | 363,507 | | (27,730) | | 335,777 | | | 360,853 | | (37,316) | | 323,537 | |
| Productivity and transformation costs | 48,789 | | (48,789) | | — | | | 40,107 | | (40,107) | | — | |
| Former Chief Executive Officer Succession Plan expense, net | — | | — | | — | | | 30,156 | | (30,156) | | — | |
| Proceeds from insurance claim | (2,962) | | 2,962 | | — | | | (4,460) | | 4,460 | | — | |
| Accounting review and remediation costs, net of insurance proceeds | — | | — | | — | | | 4,334 | | (4,334) | | — | |
| Goodwill impairment | 394 | | (394) | | — | | | — | | — | | — | |
| Operating income (loss) | 56,042 | | 83,938 | | 139,980 | | | (32,493) | | 142,353 | | 109,860 | |
| Interest and other expense (income), net (b) | 22,214 | | (5,082) | | 17,132 | | | 23,511 | | (1,669) | | 21,842 | |
| Provision (benefit) for income taxes | 6,205 | | 27,575 | | 33,780 | | | (3,232) | | 28,499 | | 25,267 | |
| Net income (loss) from continuing operations | 25,634 | | 61,445 | | 87,079 | | | (53,427) | | 115,521 | | 62,094 | |
Net (loss) income from discontinued operations, net of tax | (106,041) | | 106,041 | | — | | | (129,887) | | 129,887 | | — | |
| Net (loss) income | (80,407) | | 167,486 | | 87,079 | | | (183,314) | | 245,408 | | 62,094 | |
| | | | | | | |
| Diluted net income (loss) per common share from continuing operations | 0.25 | | 0.59 | | 0.84 | | | (0.51) | | 1.11 | | 0.60 | |
| Diluted net (loss) income per common share from discontinued operations | (1.02) | | 1.02 | | — | | | (1.25) | | 1.25 | | — | |
| Diluted net (loss) income per common share | (0.77) | | 1.61 | | 0.84 | | | (1.76) | | 2.36 | | 0.60 | |
(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. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com
14
| | | | | | | | | | | |
| THE HAIN CELESTIAL GROUP, INC. | | | |
| Reconciliation of GAAP Results to Non-GAAP Measures | | | |
| (unaudited and in thousands) | | | |
| | | |
| Detail of Adjustments: | | | |
| Twelve Months Ended June 30, | | |
| 2020 | | 2019 |
| SKU rationalization and inventory write-down | $ | 4,175 | | | $ | 12,381 | |
| Warehouse/manufacturing facility start-up costs | 3,251 | | | 17,636 | |
| Plant closure related costs | 2,562 | | | 4,883 | |
| Cost of sales | 9,988 | | | 34,900 | |
| | | |
| Gross profit | 9,988 | | | 34,900 | |
| | | |
| Long-lived asset impairment | 17,954 | | | 15,819 | |
| Intangibles impairment | 9,539 | | | 17,900 | |
| Warehouse/manufacturing facility start-up costs | 189 | | | — | |
| Litigation and related expenses | 48 | | | 1,517 | |
| Plant closure related costs | — | | | 622 | |
| Stock-based compensation acceleration | — | | | 1,458 | |
Operating expenses (a) | 27,730 | | | 37,316 | |
| | | |
| Productivity and transformation costs | 48,789 | | | 40,107 | |
| Productivity and transformation costs | 48,789 | | | 40,107 | |
| | | |
| Former Chief Executive Officer Succession Plan expense, net | — | | | 30,156 | |
| Former Chief Executive Officer Succession Plan expense, net | — | | | 30,156 | |
| | | |
| Proceeds from insurance claims | (2,962) | | | (4,460) | |
| Proceeds from insurance claims | (2,962) | | | (4,460) | |
| | | |
| Accounting review and remediation costs, net of insurance proceeds | — | | | 4,334 | |
| Accounting review and remediation costs, net of insurance proceeds | — | | | 4,334 | |
| | | |
| Goodwill impairment | 394 | | | — | |
| Goodwill impairment | 394 | | | — | |
| | | |
| Operating income (loss) | 83,938 | | | 142,353 | |
| | | |
| Loss (gain) on sale of business | 3,564 | | | (534) | |
| Unrealized currency losses (gains) | 543 | | | (850) | |
| Deferred financing cost write-off | 975 | | | 347 | |
| Realized currency loss on repayment of international loans | — | | | 2,706 | |
| Interest and other expense (income), net (b) | 5,082 | | | 1,669 | |
| | | |
| Income tax related adjustments | (27,575) | | | (28,499) | |
| Provision (benefit) for income taxes | (27,575) | | | (28,499) | |
| | | |
| Net income (loss) from continuing operations | $ | 61,445 | | | $ | 115,523 | |
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. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com
15
| | | | | | | | | | | | | | | | | |
| 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 6/30/20 | $ | 511,746 | | | $ | 298,644 | | | $ | 213,102 | |
| Impact of foreign currency exchange | 8,192 | | | 1,463 | | | 6,729 | |
| Net sales on a constant currency basis - Three months ended 6/30/20 | $ | 519,938 | | | $ | 300,107 | | | $ | 219,831 | |
| | | | | |
| Net sales - Three months ended 6/30/19 | $ | 505,305 | | | $ | 284,893 | | | $ | 220,412 | |
| Net sales growth (decline) on a constant currency basis | 2.9 | % | | 5.3 | % | | (0.3) | % |
| | | | | |
| Hain Consolidated | | North America | | International |
| Net sales - Twelve months ended 6/30/20 | $ | 2,053,903 | | | $ | 1,171,478 | | | $ | 882,425 | |
| Impact of foreign currency exchange | 27,471 | | | 2,227 | | | 25,244 | |
| Net sales on a constant currency basis - Twelve months ended 6/30/20 | $ | 2,081,374 | | | $ | 1,173,705 | | | $ | 907,669 | |
| | | | | |
| Net sales - Twelve months ended 6/30/19 | $ | 2,104,606 | | | $ | 1,195,979 | | | $ | 908,627 | |
| Net sales decline on a constant currency basis | (1.1) | % | | (1.9) | % | | (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 6/30/20 | $ | 519,938 | | | $ | 300,107 | | | $ | 219,831 | |
| | | | | |
| Net sales - Three months ended 6/30/19 | $ | 505,305 | | | $ | 284,893 | | | $ | 220,412 | |
| Divestitures and discontinued brands | (13,667) | | | (13,667) | | | — | |
| SKU rationalization | (6,835) | | | (6,335) | | | (500) | |
Net sales on a constant currency basis adjusted for
divestitures and SKU rationalization - Three months ended 6/30/20 | $ | 484,803 | | | $ | 264,891 | | | $ | 219,912 | |
Net sales growth on a constant currency basis adjusted for
divestitures and SKU rationalization | 7.2 | % | | 13.3 | % | | — | % |
| | | | | |
| Hain Consolidated | | North America | | International |
| Net sales on a constant currency basis - Twelve months ended 6/30/20 | $ | 2,081,374 | | | $ | 1,173,705 | | | $ | 907,669 | |
| | | | | |
| Net sales - Twelve months ended 6/30/19 | $ | 2,104,606 | | | $ | 1,195,979 | | | $ | 908,627 | |
| Divestitures and discontinued brands | (32,895) | | | (32,895) | | | — | |
| SKU rationalization | (50,257) | | | (41,885) | | | (8,372) | |
Net sales on a constant currency basis adjusted for
divestitures and SKU rationalization - Twelve months ended 6/30/20 | $ | 2,021,454 | | | $ | 1,121,199 | | | $ | 900,255 | |
Net sales growth on a constant currency basis adjusted for
divestitures and SKU rationalization | 3.0 | % | | 4.7 | % | | 0.8 | % |
The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com
16
| | | | | | | | | | | | | | | | | |
| THE HAIN CELESTIAL GROUP, INC. | | | | | |
| Net Sales Growth at Constant Currency Continued | | | | | |
| (unaudited and in thousands) | | | | | |
| | | | | |
| Adjusted EBITDA Growth at Constant Currency | | | | | |
| | | | | |
| Hain Consolidated | | North America | | International |
| Adjusted EBITDA - Three months ended 6/30/20 | $ | 62,165 | | | $ | 43,786 | | | $ | 29,909 | |
| Impact of foreign currency exchange | 1,214 | | | 275 | | | 938 | |
| Adjusted EBITDA on a constant currency basis - Three months ended 6/30/20 | $ | 63,379 | | | $ | 44,061 | | | $ | 30,847 | |
| | | | | |
| Net sales on a constant currency basis - Three months ended 6/30/20 | $ | 519,938 | | | $ | 300,107 | | | $ | 219,831 | |
| Adjusted EBITDA growth on a constant currency basis | 12.2 | % | | 14.7 | % | | 14.0 | % |
| | | | | |
| Hain Consolidated | | North America | | International |
| Adjusted EBITDA - Twelve months ended 6/30/20 | $ | 199,993 | | | $ | 140,886 | | | $ | 105,696 | |
| Impact of foreign currency exchange | 3,430 | | | 363 | | | 3,067 | |
| Adjusted EBITDA on a constant currency basis - Twelve months ended 6/30/20 | $ | 203,423 | | | $ | 141,249 | | | $ | 108,763 | |
| | | | | |
| Net sales on a constant currency basis - Twelve months ended 6/30/20 | $ | 2,081,374 | | | $ | 1,173,705 | | | $ | 907,669 | |
| Adjusted EBITDA growth on a constant currency basis | 9.8 | % | | 12.0 | % | | 12.0 | % |
The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com
17
| | | | | | | | | | | |
| THE HAIN CELESTIAL GROUP, INC. | | | |
| Operating Income (Loss) and Adjusted EBITDA | | | |
| Three Months Ended | | | |
| (unaudited and in thousands) | | | |
| | | |
| North America | | | |
| June 30, 2020 | | June 30, 2019 |
| Operating income (loss) | $ | 31,867 | | | $ | (2,745) | |
| Depreciation and amortization | 4,101 | | | 4,203 | |
| Long-lived asset impairment | 6,196 | | | 5,617 | |
| Other | (664) | | | (1,062) | |
| Productivity and transformation costs | 1,553 | | | 3,549 | |
| Loss (gain) on sale of business | 1,448 | | | (534) | |
| Warehouse/manufacturing facility start-up costs | 385 | | | 8,133 | |
| Plant closure related costs | 3 | | | 126 | |
| SKU rationalization and inventory write-down | (1,103) | | | 10,075 | |
| Realized currency loss on repayment of international loans | — | | | 2,563 | |
| | | |
| Adjusted EBITDA | $ | 43,786 | | | $ | 29,925 | |
| | | |
| International | | | |
| June 30, 2020 | | June 30, 2019 |
| Operating income | $ | 14,667 | | | $ | 18,112 | |
| Depreciation and amortization | 7,179 | | | 8,142 | |
| Goodwill impairment | 394 | | | — | |
| Long-lived asset impairment | 4,883 | | | 4,393 | |
| Other | 21 | | | (515) | |
| Productivity and transformation costs | 2,765 | | | (913) | |
| Plant closure related costs | — | | | 1,058 | |
| SKU rationalization and inventory write-down | — | | | 271 | |
| Realized currency loss on repayment of international loans | — | | | 105 | |
| Litigation and related expenses | — | | | 68 | |
| Adjusted EBITDA | $ | 29,909 | | | $ | 30,721 | |
The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com
18
| | | | | | | | | | | |
| THE HAIN CELESTIAL GROUP, INC. | | | |
| Operating Income (Loss) and Adjusted EBITDA | | | |
| Twelve Months Ended | | | |
| (unaudited and in thousands) | | | |
| | | |
| North America | | | |
| June 30, 2020 | | June 30, 2019 |
| Operating income | $ | 95,934 | | | $ | 32,682 | |
| Depreciation and amortization | 16,890 | | | 16,993 | |
| Long-lived asset impairment | 8,499 | | | 7,120 | |
| Other | (486) | | | 268 | |
| Productivity and transformation costs | 9,053 | | | 8,333 | |
| SKU rationalization and inventory write-down | 3,996 | | | 12,111 | |
| Warehouse/manufacturing facility start-up costs | 3,440 | | | 17,661 | |
| Loss (gain) on sale of business | 3,485 | | | (534) | |
| Plant closure related costs | 75 | | | 1,205 | |
| Realized currency loss on repayment of international loans | — | | | 2,563 | |
| | | |
| Adjusted EBITDA | $ | 140,886 | | | $ | 98,402 | |
| | | |
| International | | | |
| June 30, 2020 | | June 30, 2019 |
| Operating Income | $ | 55,333 | | | $ | 58,808 | |
| Depreciation and amortization | 31,437 | | | 31,515 | |
| Goodwill impairment | 394 | | | — | |
| Long-lived asset impairment | 8,454 | | | 8,698 | |
| Other | 583 | | | (174) | |
| Productivity and transformation costs | 7,034 | | | 3,186 | |
| Plant closure related costs | 2,282 | | | 3,467 | |
| SKU rationalization and inventory write-down | 179 | | | 271 | |
| Realized currency loss on repayment of international loans | — | | | 105 | |
| Litigation and related expenses | — | | | 87 | |
| Adjusted EBITDA | $ | 105,696 | | | $ | 105,963 | |
The Hain Celestial Group, Inc. • 1111 Marcus Avenue • Lake Success, NY 11042
516-587-5000 • www.hain.com
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