Hain Celestial Reports Fourth Quarter and Fiscal Year 2023 Financial Results
Hain Celestial Group reports Q4 and FY 2023 results near high end of expectations, provides fiscal 2024 outlook. Net sales decreased 2.0% in Q4 and 5.0% in FY 2023. Adjusted gross profit margin increased in both periods. Net loss in Q4 was $18.7 million, while adjusted net income was $10.0 million. CFO transition announced. Fiscal 2024 guidance expects low single-digit organic net sales growth.
Positive
Q4 and FY 2023 results near high end of expectations
Adjusted gross profit margin improvement
CFO transition announced
Fiscal 2024 guidance expects growth
Negative
Net sales decrease in Q4 and FY 2023
Net loss in Q4
08/24/2023 - 07:00 AM
Results Near High End of Expectations, Company Provides Fiscal 2024 Outlook Company Announces CFO Transition
BOULDER, Colo., Aug. 24, 2023 (GLOBE NEWSWIRE) -- Hain Celestial Group (Nasdaq: HAIN) (“Hain”, “Hain Celestial” or the “Company”), a leading manufacturer of better-for-you brands to inspire healthier living, today reported financial results for the fourth quarter and fiscal year ended June 30, 2023.
“I am pleased to report that our fourth quarter and full-year results were near the high end of our expectations. We made significant progress during the quarter in key areas including a return to growth for both Sensible Portions and Celestial Seasonings bagged tea and an increase in net sales for our international business, despite a slight decline in overall net sales compared to the prior year,” said Wendy P. Davidson, President and Chief Executive Officer.
Davidson continued, “The actions we have taken to enhance our capabilities, organizational design, end-to-end supply chain, and brand building are beginning to drive positive momentum and set a solid foundation as we shape our future for sustainable growth. We are thinking differently about nearly every aspect of our business and are redefining what is possible as a global enterprise and as a leader in the better-for-you space. We are encouraged by these positive indicators as a precursor to our Hain Reimagined Strategy, which we will unveil at our Investor Day on September 13th. It is an exciting time to be at Hain.”
FINANCIAL HIGHLIGHTS *
Summary of Fourth Quarter Results Compared to the Prior Year Period
Net sales decreased 2.0% compared to the prior year period to $447.8 million . When adjusted for foreign exchange, divestitures and discontinued brands, adjusted net sales decreased 1.5% compared to the prior year period. Gross profit margin was 22.5% , a 300-basis point increase from the prior year period. Adjusted gross profit margin was 22.7% , a 325-basis point increase from the prior year period. Net loss was $18.7 million compared to net income of $3.0 million in the prior year period. Adjusted net income was $10.0 million compared to $7.6 million in the prior year period. Net loss margin was (4.2% ), a 490-basis point decrease compared to the prior year period. Adjusted net income margin was 2.2% , a 60-basis point increase compared to the prior year period. Adjusted EBITDA on a constant currency basis was $43.5 million compared to $35.4 million in the prior year period; Adjusted EBITDA margin on a constant currency basis was 9.7% , a 200-basis point increase compared to the prior year period. Loss per diluted share was $0.21 compared to earnings per diluted share (“EPS”) of $0.03 in the prior year period. Adjusted EPS was $0.11 compared to $0.08 in the prior year period. * 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 and other non-GAAP financial calculations are provided in the tables included in this press release.
Summary of Fiscal Full Year 2023 Results Compared to the Prior Year
Net sales decreased 5.0% compared to the prior year to $1,796.6 million . When adjusted for foreign exchange, acquisitions, divestitures and discontinued brands, adjusted net sales decreased 2.7% compared to the prior year. Gross profit margin was 22.1% , a 50-basis point decrease from the prior year. Adjusted gross profit margin was 22.1% , a 75-basis point decrease from the prior year. Net loss was $116.5 million compared to net income of $77.9 million in the prior year. Net loss for fiscal 2023 included pre-tax non-cash impairment charges of $175.5 million ($131.9 million after-taxes) related to ParmCrisps®, Thinsters® and other intangible assets. Adjusted net income was $44.9 million compared to $95.5 million in the prior year. Net loss margin was (6.5% ), a 1060-basis point decrease compared to the prior year. Adjusted net income margin was 2.5% , a 255-basis point increase compared to the prior year. Adjusted EBITDA on a constant currency basis was $174.2 million compared to $200.6 million in the prior year; Adjusted EBITDA margin on a constant currency basis was 9.3% , a 130-basis point decrease compared to the prior year. Loss per diluted share was $1.30 compared to EPS of $0.83 in the prior year. Adjusted EPS was $0.50 compared to $1.02 in the prior year. CASH FLOW AND BALANCE SHEET HIGHLIGHTS
Net cash provided by operating activities in the fourth quarter was $40.5 million Free cash flow in the fourth quarter was $34.1 million Total debt at the end of the fourth quarter was $828.7 million compared to $856.6 million at the end of the third quarter Net debt was $775.4 million at the end of the fourth quarter compared to $812.9 million at the end of the third quarter The Company ended the quarter with a net secured leverage ratio of 4.3x as calculated under our amended credit agreement as compared to 4.6x at the end of the third quarter S EGMENT HIGHLIGHTS
The Company operates under two reportable segments: North America and International.
North America $281.8 million , a 5.1% decrease compared to the prior year period. When adjusted for foreign exchange, divestitures and discontinued brands, adjusted net sales decreased by 4.3% from the prior year period. The decrease was mainly due to lower sales in personal care and ParmCrisps® as a result of reduced customer distribution and promotion, partially offset by higher sales in yogurt, baby and tea.
Segment gross profit in the fourth quarter was $63.1 million , an increase of 5.5% from the prior year period. Adjusted gross profit was $64.1 million , an increase of 7.7% from the prior year period. Gross margin was 22.4% , a 225-basis point improvement from the prior year period, and adjusted gross margin was 22.7% , a 270-basis point improvement from the prior year period. The increase was driven by greater pricing and productivity, partially offset by higher inflation.
Adjusted EBITDA in the fourth quarter was $27.0 million , a decrease of 2.0% from the prior year period. Adjusted EBITDA in the fourth quarter on a constant currency basis was $27.0 million , a 1.8% decrease from the prior year period. The decrease was driven by lower sales and increased marketing spend. Adjusted EBITDA margin was 9.6% , a 30-basis point improvement from the prior year period. Adjusted EBITDA margin on a constant currency basis was 9.5% , a 30-basis point improvement from the prior year period. The increase in Adjusted EBITDA margin was driven by reduced selling, general and administrative expenses as a percentage of sales as compared to the prior year period.
North America net sales in fiscal 2023 were $1,139.2 million , a 2.1% decrease compared to the prior year. When adjusted for foreign exchange, acquisitions, divestitures and discontinued brands, adjusted net sales decreased by 3.8% from the prior year period. The decrease was mainly due to lower sales in personal care and tea.
Segment gross profit in fiscal 2023 was $262.5 million , an increase of 1.1% from $259.5 million in the prior year. Adjusted gross profit was $263.6 million , as compared to $263.7 in the prior year. Gross margin was 23.0% , a 75-basis point improvement from the prior year, and adjusted gross margin was 23.1% , a 45-basis point improvement from the prior year. The margin improvement was mainly driven by greater pricing and productivity, partially offset by higher cost of goods.
Adjusted EBITDA in fiscal 2023 was $123.4 million , a 1.0% increase from the prior year. Adjusted EBITDA in fiscal 2023 on a constant currency basis was $124.1 million , a 1.5% increase from the prior year. The increase was driven by pricing and productivity more than offsetting inflation and volume loss. Adjusted EBITDA margin was 10.8% , a 35-basis point improvement from the prior year. Adjusted EBITDA margin on a constant currency basis was 10.8% , a 30-basis point improvement from the prior year.
International $166.1 million , a 3.7% increase compared to the prior year period. When adjusted for foreign exchange, adjusted net sales increased 3.6% compared to the prior year period. The increase was mainly due to growth in the United Kingdom, partially offset by continued softness, though moderating, in plant-based categories in the rest of Europe.
Segment gross profit in the fourth quarter was $37.7 million , a 28.8% increase from the prior year period. Adjusted gross profit was $37.7 million , an increase of 28.4% from the prior year period. Gross margin and adjusted gross margin were both 22.7% , representing a 445-basis point and a 440-basis point increase from the prior year period, respectively. The increase in gross profit was mainly due to pricing and productivity, partially offset by inflation.
Adjusted EBITDA in the fourth quarter was $27.5 million , a 62.9% increase from the prior year period. Adjusted EBITDA in the fourth quarter on a constant currency basis was $27.5 million , a 62.8% increase from the prior year period. The increase was driven by pricing and productivity more than offsetting inflation and volume loss. Adjusted EBITDA margin was 16.6% , a 600-basis point improvement from the prior year period. Adjusted EBITDA margin on a constant currency basis was 16.6% , a 600-basis point increase from the prior year period.
International net sales in fiscal 2023 were $657.5 million , a 9.8% decrease compared to the prior year. When adjusted for foreign exchange, adjusted net sales decreased 1.0% compared to the prior year. The decrease was driven by softness in plant-based categories in Europe which were partially offset by growth in the United Kingdom.
Segment gross profit in fiscal 2023 was $134.0 million , a 20.2% decrease from the prior year. Adjusted gross profit was $134.0 million , a decrease of 20.6% from the prior year. Gross margin and adjusted gross margin were both 20.4% , representing a 270-basis point and a 280-basis point decrease from the prior year, respectively. The decrease in gross profit was mainly due to inflation and volume loss, partially offset by pricing and productivity.
Adjusted EBITDA in fiscal 2023 was $82.9 million , a 24.6% decrease to the prior year. Adjusted EBITDA in fiscal 2023 on a constant currency basis was $90.0 million , an 18.3% decrease from the prior year. The decrease was driven by higher inflation and volume loss, partially offset by pricing and productivity. Adjusted EBITDA margin was 12.6% , a 250-basis point decline from the prior year. Adjusted EBITDA margin on a constant currency basis was 12.5% , a 265-basis point decrease from the prior year.
SUBSEQUENT EVENT S
On August 22, 2023, the Company amended its Credit Agreement to provide for, among other things, (a) a maximum net secured leverage ratio of 5.00x until September 30, 2023, 5.25x until December 31, 2023, 5.00x until December 31, 2024 and 4.25x thereafter and (b) a minimum interest coverage ratio of 2.50x.
On August 24, 2023, in a separate press release, the Company announced that Lee Boyce, Chief Financial Officer of Hearthside Food Solutions, will succeed Chris Bellairs as Chief Financial Officer effective September 5, 2023.
FISCAL 202 4 GUIDANCE **
“We view fiscal 2024 as an inflection point, where we expect to strengthen our foundation and return to top line growth,” said Chris Bellairs, Chief Financial Officer. “We anticipate balanced growth across the portfolio with both our North America and International segments achieving low single digit organic net sales growth. We will make brand building investments in key brands to drive growth, and modest investments in our away from home and ecommerce capabilities. We expect these investments along with the refunding of our incentive plan to create an adjusted EBTIDA drag year-over-year of approximately $20 million as we invest for the future.”
The Company is offering the following guidance for fiscal 2024:
Adjusted net sales up 2% to 4% versus the prior year, and Adjusted EBITDA to be between $155 million and $165 million ** The forward-looking non-GAAP financial measures included in this section are not reconciled to the comparable forward-looking GAAP financial measures. The Company is not able to reconcile these forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures without unreasonable efforts because the Company is unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures but would not impact the non-GAAP measures. Such items may include certain litigation and related expenses, transaction costs associated with acquisitions and divestitures, productivity and transformation costs, impairments, gains or losses on sales of assets and businesses, foreign exchange movements and other items. The unavailable information could have a significant impact on the Company’s GAAP financial results.
Conference Call and Webcast Information www.hain.com . Investors and analysts can access the live call by dialing 877-407-9716 or 201-493-6779. A replay of the call will be available approximately 3 hours after the conclusion of the live call and can be accessed by dialing 844-512-2921 or 1-412-317-6671; the conference access ID is 13740157.
About The Hain Celestial Group TM Snacks, Terra® chips, Garden of Eatin’® snacks, Earth’s Best® and Ella’s Kitchen® baby and toddler foods, Celestial Seasonings® teas, Joya® and Natumi® plant-based beverages, Greek Gods® yogurt, Yorkshire Provender®, Cully & Sully® and Covent Garden® soups, Yves® and Linda McCartney’s® (under license) meat-free, Alba Botanica® natural sun care, and Live Clean® personal care products, among others. For more information, visit hain.com and LinkedIn .
Forward-Looking Statements
Risks and uncertainties that may cause actual results to differ materially from forward-looking statements include: challenges and uncertainty resulting from the impact of competition; our ability to manage our supply chain effectively; input cost inflation, including with respect to freight and other distribution costs; disruption of operations at our manufacturing facilities; reliance on independent contract manufacturers; changes to consumer preferences; customer concentration; reliance on independent distributors; risks associated with operating internationally; pending and future litigation, including litigation relating to Earth’s Best® baby food products; the reputation of our Company and our brands; compliance with our credit agreement; foreign currency exchange risk; the availability of organic ingredients; risks associated with outsourcing arrangements; our ability to execute our cost reduction initiatives and related strategic initiatives; risks arising from the Russia-Ukraine war; our ability to identify and complete acquisitions or divestitures and our level of success in integrating acquisitions; our reliance on independent certification for a number of our products; our ability to use and protect trademarks; general economic conditions; cybersecurity incidents; disruptions to information technology systems; changing rules, public disclosure regulations and stakeholder expectations on ESG-related matters; the impact of climate change; liabilities, claims or regulatory change with respect to environmental matters; potential liability if our products cause illness or physical harm; the highly regulated environment in which we operate; compliance with data privacy laws; our ability to issue preferred stock; the adequacy of our insurance coverage; impairments in the carrying value of goodwill or other intangible assets; and other risks and matters described in our most recent Annual Report on Form 10-K and our other filings from time to time with the U.S. Securities and Exchange Commission.
We undertake no obligation to update forward-looking statements to reflect actual results or changes in assumptions or circumstances, except as required by applicable law.
Non-GAAP Financial Measures
The Company provides net sales adjusted for the impact of foreign currency, acquisitions, divestitures and discontinued brands to demonstrate 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 believes presenting net sales adjusted for the impact of foreign 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 net sales adjusted for the impact of foreign currency, 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 monthly foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year.
To present net sales adjusted for the impact of acquisitions, the net sales of an acquired business are excluded from fiscal quarters constituting or falling within the current period and prior period where the applicable fiscal quarter in the prior period did not include the acquired business for the entire quarter. To present net sales adjusted for the impact of divestitures and discontinued brands, the net sales of a divested business or discontinued brand are excluded from all periods.
During the fourth quarter of 2023, we determined that our measure of segment profitability is Adjusted EBITDA of each reportable segment. Accordingly, our CEO evaluates performance and allocates resources based primarily on Segment Adjusted EBITDA. The Company provides adjusted EBITDA and adjusted EBITDA on a constant currency basis because 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. The Company believes presenting adjusted EBITDA on a constant currency basis provides useful information to investors because it provides transparency to underlying performance in the Company’s adjusted EBITDA by excluding the effect that foreign currency exchange rate fluctuations have on period-to-period comparability given the volatility in foreign currency exchange markets.
The Company defines adjusted EBITDA as net (loss) income before net interest expense, income taxes, depreciation and amortization, equity in net (gain) loss of equity-method investees, stock-based compensation, net, unrealized currency losses (gains), certain litigation and related costs, CEO succession costs, plant closure related costs, net, productivity and transformation costs, warehouse and manufacturing consolidation and other costs, costs associated with acquisitions, divestitures and other transactions, gains on sales of assets, certain inventory write-downs, intangibles and long-lived asset impairments and other adjustments. Adjusted EBITDA on a constant currency basis reflects adjusted EBITDA, as defined above, adjusted for the impact of foreign currency. To present adjusted EBITDA on a constant currency basis, current period adjusted EBITDA 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 monthly foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year.
The Company views operating free cash flows as an important measure because it is one factor in evaluating the amount of cash available for discretionary investments. The Company defines operating free cash flows as cash used in or provided by operating activities (a GAAP measure) less purchases of property, plant and equipment.
Contacts
Investor Relations:Investor.Relations@hain.com
Media:Jen.Davis@hain.com
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Operations (unaudited and in thousands, except per share amounts) Fourth Quarter Fourth Quarter Year to Date 2023 2022 2023 2022 Net sales $ 447,841 $ 457,010 $ 1,796,643 $ 1,891,793 Cost of sales 347,098 367,985 1,400,229 1,464,352 Gross profit 100,743 89,025 396,414 427,441 Selling, general and administrative expenses 66,878 70,790 289,233 300,469 Intangibles and long-lived asset impairment 18,578 1,600 175,501 1,903 Amortization of acquired intangible assets 1,601 2,960 10,016 10,214 Productivity and transformation costs 1,592 1,726 7,284 10,174 Operating income (loss) 12,094 11,949 (85,620 ) 104,681 Interest and other financing expense, net 13,873 4,898 45,783 12,570 Other expense (income), net 591 (810 ) (1,822 ) (11,380 ) (Loss) income before income taxes and equity in net (gain) loss of equity-method investees (2,370 ) 7,861 (129,581 ) 103,491 Provision (benefit) for income taxes 16,421 3,291 (14,178 ) 22,716 Equity in net (gain) loss of equity-method investees (92 ) 1,528 1,134 2,902 Net (loss) income $ (18,699 ) $ 3,042 $ (116,537 ) $ 77,873 Net (loss) income per common share: Basic $ (0.21 ) $ 0.03 $ (1.30 ) $ 0.84 Diluted $ (0.21 ) $ 0.03 $ (1.30 ) $ 0.83 Shares used in the calculation of net (loss) income per common share: Basic 89,477 89,659 89,396 92,989 Diluted 89,477 89,826 89,396 93,345
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES Consolidated Balance Sheets (unaudited and in thousands) June 30, 2023 June 30, 2022 ASSETS Current assets: Cash and cash equivalents $ 53,364 $ 65,512 Accounts receivable, net 160,948 170,661 Inventories 310,341 308,034 Prepaid expenses and other current assets 65,128 54,079 Assets held for sale 1,250 1,840 Total current assets 591,031 600,126 Property, plant and equipment, net 296,325 297,405 Goodwill 938,640 933,796 Trademarks and other intangible assets, net 298,105 477,533 Investments and joint ventures 12,798 14,456 Operating lease right-of-use assets, net 95,894 114,691 Other assets 25,846 20,377 Total assets $ 2,258,639 $ 2,458,384 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 134,780 $ 174,765 Accrued expenses and other current liabilities 88,520 86,833 Current portion of long-term debt 7,567 7,705 Total current liabilities 230,867 269,303 Long-term debt, less current portion 821,181 880,938 Deferred income taxes 72,086 95,044 Operating lease liabilities, noncurrent portion 90,014 107,481 Other noncurrent liabilities 26,584 22,450 Total liabilities 1,240,732 1,375,216 Stockholders' equity: Common stock 1,113 1,111 Additional paid-in capital 1,217,549 1,203,126 Retained earnings 652,561 769,098 Accumulated other comprehensive loss (126,216 ) (164,482 ) 1,745,007 1,808,853 Less: Treasury stock (727,100 ) (725,685 ) Total stockholders' equity 1,017,907 1,083,168 Total liabilities and stockholders' equity $ 2,258,639 $ 2,458,384
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (unaudited and in thousands) Fourth Quarter Fourth Quarter Year to Date 2023 2022 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) income $ (18,699 ) $ 3,042 $ (116,537 ) $ 77,873 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities Depreciation and amortization 12,868 12,453 50,777 46,849 Deferred income taxes 18,856 1,646 (25,953 ) 9,020 Equity in net (gain) loss of equity-method investees (92 ) 1,528 1,134 2,902 Stock-based compensation, net 3,766 3,322 14,423 15,611 Intangibles and long-lived asset impairment 18,578 1,600 175,501 1,903 Loss (gain) on sale of assets - 281 (3,529 ) (8,588 ) Other non-cash items, net 255 547 (1,271 ) (1,608 ) Increase (decrease) in cash attributable to changes in operating assets and liabilities: Accounts receivable 20,993 (19,497 ) 13,067 (5,347 ) Inventories 8,723 (20,901 ) 189 (25,272 ) Other current assets (3,286 ) 537 (2,831 ) (10,459 ) Other assets and liabilities (950 ) 1 2,546 (2,704 ) Accounts payable and accrued expenses (20,502 ) (3,504 ) (40,697 ) (19,939 ) Net cash provided by (used in) operating activities 40,510 (18,945 ) 66,819 80,241 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment (6,445 ) (6,026 ) (27,879 ) (39,965 ) Acquisitions of businesses, net of cash acquired - 489 - (259,985 ) Investments and joint ventures, net - (80 ) 433 (694 ) Proceeds from sale of assets 48 1,579 7,806 12,335 Net cash used in investing activities (6,397 ) (4,038 ) (19,640 ) (288,309 ) CASH FLOWS FROM FINANCING ACTIVITIES Borrowings under bank revolving credit facility 53,000 81,000 328,000 759,000 Repayments under bank revolving credit facility (79,000 ) (26,000 ) (380,000 ) (396,000 ) Borrowings under term loan - - - 300,000 Repayments under term loan (1,875 ) (1,875 ) (7,500 ) (3,750 ) Payments of other debt, net (29 ) (88 ) (2,145 ) (3,320 ) Share repurchases - (13,075 ) - (410,480 ) Employee shares withheld for taxes (364 ) (33 ) (1,415 ) (32,663 ) Net cash (used in) provided by financing activities (28,268 ) 39,929 (63,060 ) 212,787 Effect of exchange rate changes on cash 3,837 (9,242 ) 3,733 (15,078 ) Net increase (decrease) in cash and cash equivalents 9,682 7,704 (12,148 ) (10,359 ) Cash and cash equivalents at beginning of period 43,682 57,808 65,512 75,871 Cash and cash equivalents at end of period $ 53,364 $ 65,512 $ 53,364 $ 65,512
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES Net Sales, Gross Profit and Adjusted EBITDA by Segment (unaudited and in thousands) North America International Corporate/Other Hain Consolidated Net Sales Net sales - Q4 FY23 $ 281,756 $ 166,085 $ - $ 447,841 Net sales - Q4 FY22 $ 296,851 $ 160,159 $ - $ 457,010 % change - FY23 net sales vs. FY22 net sales (5.1 )% 3.7 % (2.0 )% Gross Profit Q4 FY23 Gross profit $ 63,051 $ 37,692 $ - $ 100,743 Non-GAAP adjustments(1) 1,025 - - 1,025 Adjusted gross profit $ 64,076 $ 37,692 $ - $ 101,768 % change - FY23 gross profit vs. FY22 gross profit 5.5 % 28.8 % 13.2 % % change - FY23 adjusted gross profit vs. FY22 adjusted gross profit 7.7 % 28.4 % 14.5 % Gross margin 22.4 % 22.7 % 22.5 % Adjusted gross margin 22.7 % 22.7 % 22.7 % Q4 FY22 Gross profit $ 59,766 $ 29,259 $ - $ 89,025 Non-GAAP adjustments(1) (272 ) 90 - (182 ) Adjusted gross profit $ 59,494 $ 29,349 $ - $ 88,843 Gross margin 20.1 % 18.3 % 19.5 % Adjusted gross margin 20.0 % 18.3 % 19.4 % Adjusted EBITDA Q4 FY23 Adjusted EBITDA 26,959 $ 27,487 $ (10,930 ) $ 43,516 % change - FY23 adjusted EBITDA vs. FY22 adjusted EBITDA (2.0 )% 62.9 % (21.2 )% 23.0 % Adjusted EBITDA margin 9.6 % 16.6 % 9.7 % Q4 FY22 Adjusted EBITDA $ 27,511 $ 16,871 $ (9,015 ) $ 35,367 Adjusted EBITDA margin 9.3 % 10.5 % 7.7 % (1) See accompanying table "Adjusted Gross Profit, Adjusted Operating Income, Adjusted Net Income and Adjusted EPS"
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES Net Sales, Gross Profit and Adjusted EBITDA by Segment (unaudited and in thousands) North America International Corporate/Other Hain Consolidated Net Sales Net sales - Q4 FY23 YTD $ 1,139,162 $ 657,481 $ - $ 1,796,643 Net sales - Q4 FY22 YTD $ 1,163,132 $ 728,661 $ - $ 1,891,793 % change - FY23 net sales vs. FY22 net sales (2.1 )% (9.8 )% (5.0 )% Gross Profit Q4 FY23 YTD Gross profit $ 262,455 $ 133,959 $ - $ 396,414 Non-GAAP adjustments(1) 1,099 10 - 1,109 Adjusted gross profit $ 263,554 $ 133,969 $ - $ 397,523 % change - FY23 gross profit vs. FY22 gross profit 1.1 % (20.2 )% (7.3 )% % change - FY23 adjusted gross profit vs. FY22 adjusted gross profit (0.1 )% (20.6 )% (8.1 )% Gross margin 23.0 % 20.4 % 22.1 % Adjusted gross margin 23.1 % 20.4 % 22.1 % Q4 FY22 YTD Gross profit $ 259,529 $ 167,912 $ - $ 427,441 Non-GAAP adjustments(1) 4,157 894 - 5,051 Adjusted gross profit $ 263,686 $ 168,806 $ - $ 432,492 Gross margin 22.3 % 23.0 % 22.6 % Adjusted gross margin 22.7 % 23.2 % 22.9 % Adjusted EBITDA Q4 FY23 YTD Adjusted EBITDA $ 123,443 $ 82,945 $ (39,766 ) $ 166,622 % change - FY23 adjusted EBITDA vs. FY22 adjusted EBITDA 1.0 % (24.6 )% (25.5 )% (16.9 )% Adjusted EBITDA margin 10.8 % 12.6 % 9.3 % Q4 FY22 YTD Adjusted EBITDA $ 122,235 $ 110,073 $ (31,692 ) $ 200,616 Adjusted EBITDA margin 10.5 % 15.1 % 10.6 % (1) See accompanying table "Adjusted Gross Profit, Adjusted Operating Income, Adjusted Net Income and Adjusted EPS"
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES Adjusted Gross Profit, Adjusted Operating Income, Adjusted Net Income and Adjusted EPS (unaudited and in thousands, except per share amounts) Reconciliation of Gross Profit, GAAP to Gross Profit, as Adjusted: Fourth Quarter Fourth Quarter Year to Date 2023 2022 2023 2022 Gross profit, GAAP 100,743 $ 89,025 $ 396,414 $ 427,441 Adjustments to Cost of sales: Inventory write-down - (305 ) - (351 ) Plant closure related costs, net 1,025 34 1,099 925 Transaction and integration costs, net - - - 1,756 Warehouse/manufacturing consolidation and other costs, net - 89 10 2,721 Gross profit, as adjusted 101,768 $ 88,843 $ 397,523 $ 432,492 Reconciliation of Operating Income (Loss), GAAP to Operating Income, as Adjusted: Fourth Quarter Fourth Quarter Year to Date 2023 2022 2023 2022 Operating income (loss), GAAP $ 12,094 $ 11,949 $ (85,620 ) $ 104,681 Adjustments to Cost of sales: Inventory write-down - (305 ) - (351 ) Plant closure related costs, net 1,025 34 1,099 925 Transaction and integration costs, net - - - 1,756 Warehouse/manufacturing consolidation and other costs, net - 89 10 2,721 Adjustments to Operating expenses (a) : CEO succession - - 5,113 - Transaction and integration costs, net 34 1,904 2,018 12,299 Certain litigation expenses, net(b) (4,732 ) 2,298 (1,369 ) 7,687 Intangibles and long-lived asset impairment 18,578 1,600 175,501 1,903 Plant closure related costs, net - - (1 ) 4 Productivity and transformation costs 1,592 1,726 7,284 10,174 Warehouse/manufacturing consolidation and other costs, net 127 - 2,696 - Operating income, as adjusted $ 28,718 $ 19,295 $ 106,731 $ 141,799 Reconciliation of Net Income (Loss), GAAP to Net Income, as Adjusted: Fourth Quarter Fourth Quarter Year to Date 2023 2022 2023 2022 Net (loss) income, GAAP $ (18,699 ) $ 3,042 $ (116,537 ) $ 77,873 Adjustments to Cost of sales: Inventory write-down - (305 ) - (351 ) Plant closure related costs, net 1,025 34 1,099 925 Transaction and integration costs, net - - - 1,756 Warehouse/manufacturing consolidation and other costs, net - 89 10 2,721 Adjustments to Operating expenses (a) : CEO succession - - 5,113 - Transaction and integration costs, net 34 1,904 2,018 12,299 Certain litigation expenses, net(b) (4,732 ) 2,298 (1,369 ) 7,687 Intangibles and long-lived asset impairment 18,578 1,600 175,501 1,903 Plant closure related costs, net - - (1 ) 4 Productivity and transformation costs 1,592 1,726 7,284 10,174 Warehouse/manufacturing consolidation and other costs, net 127 - 2,696 - Adjustments to Interest and other expense (income), net (c) : Gain on sale of assets - (2 ) (3,529 ) (9,049 ) Unrealized currency losses (gains) 451 (162 ) 1,102 (2,259 ) Adjustments to Provision (benefit) for income taxes: Net tax impact of non-GAAP adjustments 11,673 (2,653 ) (28,478 ) (8,206 ) Net income, as adjusted $ 10,049 $ 7,571 $ 44,909 $ 95,477 Net (loss) income margin (4.2 )% 0.7 % (6.5 )% 4.1 % Adjusted net income margin 2.2 % 1.7 % 2.5 % 5.0 % Diluted shares used in the calculation of net (loss) income per common share: 89,477 89,826 89,396 93,345 Diluted net (loss) income per common share, GAAP $ (0.21 ) $ 0.03 $ (1.30 ) $ 0.83 Diluted net income per common share, as adjusted $ 0.11 $ 0.08 $ 0.50 $ 1.02 (a) Operating expenses include amortization of acquired intangibles, selling, general and administrative expenses, intangibles and long-lived asset impairment and productivity and transformation costs.(b) Expenses and items relating to securities class action and baby food litigation. (c) Interest and other expense (income), net includes interest and other financing expenses, net, unrealized currency losses (gains), gain on sale of assets and other expense, net.
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES Adjusted Net Sales Growth (unaudited and in thousands) Q4 FY23 North America International Hain Consolidated Net sales $ 281,756 $ 166,085 $ 447,841 Divestitures and discontinued brands 4 - 4 Impact of foreign currency exchange 1,536 (213 ) 1,323 Net sales on a constant currency basis adjusted for divestitures and discontinued brands $ 283,296 $ 165,872 $ 449,168 Q4 FY22 Net sales $ 296,851 $ 160,159 $ 457,010 Divestitures and discontinued brands (967 ) - (967 ) Net sales adjusted for divestitures and discontinued brands $ 295,884 $ 160,159 $ 456,043 Net sales (decline) growth (5.1 )% 3.7 % (2.0 )% Impact of divestitures and discontinued brands 0.3 % - 0.2 % Impact of foreign currency exchange 0.5 % (0.1 )% 0.3 % Net sales (decline) growth on a constant currency basis adjusted for divestitures and discontinued brands (4.3 )% 3.6 % (1.5 )% Q4 FY23 YTD North America International Hain Consolidated Net sales $ 1,139,162 $ 657,481 $ 1,796,643 Acquisitions, divestitures and discontinued brands (34,659 ) - (34,659 ) Impact of foreign currency exchange 6,560 64,053 70,613 Net sales on a constant currency basis adjusted for acquisitions, divestitures and discontinued brands $ 1,111,063 $ 721,534 $ 1,832,597 Q4 FY22 YTD Net sales $ 1,163,132 $ 728,661 $ 1,891,793 Acquisitions, divestitures and discontinued brands (8,109 ) - (8,109 ) Net sales adjusted for acquisitions, divestitures and discontinued brands $ 1,155,023 $ 728,661 $ 1,883,684 Net sales decline (2.1 )% (9.8 )% (5.0 )% Impact of acquisitions, divestitures and discontinued brands (2.3 )% - (1.4 )% Impact of foreign currency exchange 0.6 % 8.8 % 3.7 % Net sales decline on a constant currency basis adjusted for acquisitions, divestitures and discontinued brands (3.8 )% (1.0 )% (2.7 )%
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES Adjusted EBITDA (unaudited and in thousands) Fourth Quarter Fourth Quarter Year to Date 2023 2022 2023 2022 Net (loss) income $ (18,699 ) $ 3,042 $ (116,537 ) $ 77,873 Depreciation and amortization 12,868 12,453 50,777 46,849 Equity in net (gain) loss of equity-method investees (92 ) 1,528 1,134 2,902 Interest expense, net 13,354 4,549 43,936 10,226 Provision (benefit) for income taxes 16,421 3,291 (14,178 ) 22,716 Stock-based compensation, net 3,766 3,322 14,423 15,611 Unrealized currency losses (gains) 278 (162 ) 929 (2,259 ) Certain litigation expenses, net(a) (4,732 ) 2,298 (1,369 ) 7,687 Restructuring activities CEO succession - - 5,113 - Plant closure related costs, net 21 34 94 929 Productivity and transformation costs 1,592 1,726 7,284 8,803 Warehouse/manufacturing consolidation and other costs, net 127 89 1,026 2,721 Acquisitions, divestitures and other Transaction and integration costs, net 34 1,904 2,018 14,055 Gain on sale of assets - (2 ) (3,529 ) (9,049 ) Impairment charges Inventory write-down - (305 ) - (351 ) Intangibles and long-lived asset impairment 18,578 1,600 175,501 1,903 Adjusted EBITDA $ 43,516 $ 35,367 $ 166,622 $ 200,616 (a) Expenses and items relating to securities class action and baby food litigation.
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES Adjusted EBITDA and Adjusted EBITDA Margin at Constant Currency by Segment (unaudited and in thousands) Q4 FY23 North America International Corporate/ Other Hain Consolidated Adjusted EBITDA $ 26,959 $ 27,487 $ (10,930 ) $ 43,516 Impact of foreign currency exchange 50 (22 ) - 28 Adjusted EBITDA on a constant currency basis $ 27,009 $ 27,465 $ (10,930 ) $ 43,544 Net sales on a constant currency basis $ 283,292 $ 165,872 $ 449,164 Adjusted EBITDA margin on a constant currency basis 9.5 % 16.6 % 9.7 % Q4 FY22 Adjusted EBITDA $ 27,511 $ 16,871 $ (9,015 ) $ 35,367 Net sales $ 296,851 $ 160,159 $ 457,010 Adjusted EBITDA margin 9.3 % 10.5 % 7.7 % Q4 FY23 vs. Q4 FY22 Adjusted EBITDA (decline) growth on a constant currency basis (%) (1.8 )% 62.8 % (21.2 )% 23.1 % Adjusted EBITDA margin change on a constant currency basis (bps) 27 602 196 Q4 FY23 YTD North America International Corporate/ Other Hain Consolidated Adjusted EBITDA $ 123,443 $ 82,945 $ (39,766 ) $ 166,622 Impact of foreign currency exchange 611 7,011 - 7,622 Adjusted EBITDA on a constant currency basis $ 124,054 $ 89,956 $ (39,766 ) $ 174,244 Net sales on a constant currency basis $ 1,145,722 $ 721,534 $ 1,867,256 Adjusted EBITDA margin on a constant currency basis 10.8 % 12.5 % 9.3 % Q4 FY22 YTD Adjusted EBITDA $ 122,235 $ 110,073 $ (31,692 ) $ 200,616 Net sales $ 1,163,132 $ 728,661 $ 1,891,793 Adjusted EBITDA margin 10.5 % 15.1 % 10.6 % Q4 FY23 YTD vs. Q4 FY22 YTD Adjusted EBITDA growth (decline) on a constant currency basis (%) 1.5 % (18.3 )% (25.5 )% (13.1 )% Adjusted EBITDA margin change on a constant currency basis (bps) 32 (264 ) (127 )
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES Operating Free Cash Flows (unaudited and in thousands) Fourth Quarter Fourth Quarter Year to Date 2023 2022 2023 2022 Net cash provided by (used in) operating activities $ 40,510 $ (18,945 ) $ 66,819 $ 80,241 Purchases of property, plant and equipment (6,445 ) (6,026 ) (27,879 ) (39,965 ) Operating free cash flows $ 34,065 $ (24,971 ) $ 38,940 $ 40,276
