Sector News

Hain Celestial sees progress on U.S. business transformation

August 30, 2019
Food & Drink

The Hain Celestial Group, Inc. is making progress on key strategies to improve profitability in the United States, said Mark L. Schiller, president and chief executive officer. Actions have included divesting low-margin, low-growth businesses, eliminating unprofitable stock-keeping units and restructuring operations to reduce layers.

“We’ve consolidated five sales forces into one, created cross-functional business teams to better build our brands and increased resources in areas like innovation and consumer insight,” Mr. Schiller said during an Aug. 29 earnings call. “We’ve also implemented a new trade management system to give us better visibility to our spending and its effectiveness, allowing us to optimize promotions with customers. While we expect there will be some modest savings going forward from this restructuring, the primary drivers of these changes are efficiency and effectiveness.”

Portfolio simplification efforts further streamline the business by eliminating the need for about 20 co-manufacturers, Mr. Schiller said.

For the fiscal year ended June 30, Hain Celestial posted a net loss of $183,314,000, which compared with net income of $9,694,000 in the prior year. The company recorded impairment charges and expenses related to restructuring and leadership succession in the current year. Adjusted EBITDA was $191,420,000, which compared with $255,941,000 in the previous fiscal year.

Net sales totaled $2,302,468,000, down 6% from $2,457,769,000. On a constant currency basis, net sales were down 4% from the comparable period.

For the fourth quarter, Hain Celestial narrowed its loss to $13,551,000 from $69,941,000 in the year-ago period. Excluding special items, adjusted EBITDA was $56,987,000, down from $61,381,000 in the comparable period.

Net sales for the quarter declined 10% to $557,682,000 from $619,598,000. Net sales decreased 7% on a constant currency basis.

“As expected, these financial results demonstrate sequential and performance improvements in many key areas of our business, and we remain on track to achieve our fiscal 2020 operational and financial objectives that we laid out during our Investor Day in February,” Mr. Schiller said. “To summarize our Q4 results, our team generated operational improvements both in the U.S. and internationally. This execution on progress drove significant sequential improvement in consolidated adjusted gross margin, adjusted EBITDA margin and adjusted EBITDA dollars in Q4 compared with other quarters this fiscal year.”

Hain Celestial United States segment operating loss in the fourth quarter was $2,585,000, which compared with operating income of $15,591,000 in the year-ago quarter. The segment had net sales of $239,821,000, which were down 11% from the prior-year period.

“I noticed some of you look at the total U.S. top-line decline of 11% in the quarter and have questions about the underlying health of the business,” Mr. Schiller told analysts on the call. “To that end, let me first remind you that we articulated at Investor Day and our last earnings call that the top line in the U.S. would be choppy as we pull out uneconomic investment, reduce unproductive s.k.u.s and reassess pricing. I also explained that the faster we attack those issues, the faster the top line would erode, resulting in a smaller but more profitable business in the short term and a stronger foundation from which to grow in the future. As we evaluate our performance, we see several important signs that our top line is getting stronger, not weaker.”

By Monica Watrous

Source: Food Business News

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