Hain Reports Q2 2022 Results

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Lake Success, NY—Hain Celestial has reported financial results for the second quarter ended December 31, 2021, in a press release.

Mark L. Schiller, Hain Celestial’s President and Chief Executive Officer, commented, “Our second quarter results delivered adjusted net sales growth consistent with initial guidance, behind strong U.S. consumption growth, despite industry-wide labor and supply chain challenges. We have utilized aggressive pricing and productivity to offset most of the cost headwinds and have revised guidance to reflect the expectation of accelerating topline growth in the second half of the year and continued elevated supply chain costs and disruptions. We believe that many of these costs will abate over time and remain very focused on our Hain 3.0 strategy as we pivot toward becoming a high growth and highly profitable global health and wellness company.”

Financial highlights include:

  • Net sales decreased 10% to $476.9 million compared to the prior year period.
  • When adjusted for foreign exchange, acquisitions, divestitures and discontinued brands, net sales decreased 2% compared to the prior year period.
  • Gross margin of 24.6% was flat compared to the prior year period.
  • Adjusted gross margin of 24.6%, a 74 basis point decrease from the prior year period.
  • Operating income of $32.0 million compared to $13.0 million in the prior year period.
  • Adjusted operating income of $45.7 million compared to $48.1 million in the prior year period.
  • Net income of $30.9 million compared to $2.2 million in the prior year period.
  • Adjusted net income of $34.3 million compared to $34.7 million in prior year period.
  • Adjusted EBITDA of $59.3 million compared to $62.2 million in the prior year period.
  • Adjusted EBITDA margin of 12.4%, a 66 basis point increase compared to the prior year period.
  • Earnings per diluted share (“EPS”) of $0.33 compared to $0.02 in the prior year period.
  • Adjusted EPS of $0.36 compared to $0.34 in the prior year period.
  • Repurchased 2.0 million shares, or 2.1% of the outstanding common stock, at an average price of $44.31 per share.

The Board of Directors approved an additional $200m share repurchase authorization. Purchases under that budget will begin after the existing $300m authorization is fully utilized. During the second quarter of FY 2022, Hain repurchased 2 million shares, or 2.1% of the outstanding common stock, at an average price of $44.31 per share, for a total of $89.8 million, excluding commissions. As of December 31, 2021, Hain had $117m remaining under the original $300m authorization.

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Hain has updated its guidance for FY 2022, and now expects:

  • Low single digit adjusted net sales growth consistent with prior guidance,
  • Modest adjusted gross margin reduction, and
  • Adjusted EBITDA approximately flat versus prior year.

Looking at North America specifically, highlights include:

  • Net sales of $275.0 million, a decrease of 3% compared to the prior year period. When adjusted for foreign exchange, acquisitions, divestitures and discontinued brands, net sales increased 1% from the prior year period mainly due to stronger sales in the snacks category.
  • Segment gross profit in the second quarter was $67.7 million, a 13% decrease from the prior year period. Adjusted gross profit was $67.9 million, a decrease of 16% from the prior year period.
  • Gross margin was 24.6%, a 310 basis point decrease from the prior year period, and adjusted gross margin was 24.7%, a 380 basis point decrease from the prior year period. The decrease was mainly driven by higher cost of sales, including delivery and warehouse expenses in the United States operating segment.
  • Segment operating income in the second quarter was $27.2 million, a 16% decrease from the prior year period. Adjusted operating income was $29.0 million, an 18% decrease from the prior year period.
  • Adjusted EBITDA in the second quarter was $33.3 million, a 16% decrease from the prior year period. As a percentage of sales, North America adjusted EBITDA margin was 12.1%, a 190 basis point decrease from the prior year period.

Internationally, the highlights include:

  • Net sales of $201.9 million, a decrease of 18% compared to the prior year period. When adjusted for foreign exchange, divestitures and discontinued brands, net sales decreased 6% compared to the prior year period mainly due to a decline in the Europe operating segment, partially offset by an increase in sales in the Ella’s Kitchen UK operating segment.
  • Segment gross profit in the second quarter was $49.6 million, a 4% decrease from the prior year period. Adjusted gross profit was $49.4 million, a decrease of 7% from the prior year period. The decrease was mainly due to the aforementioned decrease in sales compared to the prior year period.
  • Gross margin was 24.6%, a 350 basis point increase from the prior year period, and adjusted gross margin was 24.5%, a 280 basis point increase from the prior year period. The improvement was driven by the divestiture of the fruit business in the third quarter of fiscal year 2021 and the implementation of productivity initiatives, partially offset by inflationary pressures.
  • Segment operating income in the second quarter was $27.4 million, compared to a loss of $2.7 million in the prior year period. Adjusted operating income was $27.8 million, an increase of 11% from the prior year period. The increase in operating income reflects non-recurring impairment charges associated with the fruit business that were recognized in the prior year period. Additionally, there were lower selling, general and administrative expenses mainly driven by lower labor-related expenses compared to the prior year period.
  • Adjusted EBITDA in the second quarter was $34.3 million, a 7% increase from the prior year period. As a percentage of sales, International adjusted EBITDA margin was 17.0%, a 390 basis point increase from the prior year period.