Hain Celestial reports 7% growth during Q3 2020, increased food-at-home consumption boosts profits

11 May 2020 --- Organic and natural products company Hain Celestial has released the results of its third quarter for fiscal year 2020 – ended March 31 – which have exceeded expectations and show significant growth. Hain Celestial went up by 7 percent from its latest closing price when compared to its one-year high value move up of 1.46 percent. Moreover, its stocks amassed an added 11 percent of profit via its last five trading sessions. The company expects further growth in Q4 if food-at-home consumption continues to rise due to the pandemic.

“We have raised our full-year guidance for 2020, as third quarter financial performance exceeded our previous guidance and is expected to show continuing strength in the current quarter. With our transformation plan taking hold and food-at-home consumption accelerating, Hain Celestial’s natural and organic product offerings resonate with consumers, resulting in year-over-year growth in third quarter net sales, the first such increase since fiscal 2018,” says Mark L. Schiller, Hain Celestial’s President and CEO.

The company carries operations in North America, Europe, Asia and the Middle East providing consumers with “A Healthier Way of Life” according to its slogan. 

Significantly, the results of Q3 were presented with the Hain Pure Protein and Tilda operating segments being treated as discontinued operations. This is as in June 2019, Hain Celestial sold all of its equity interest in Hain Pure Protein Corporation to Aterian Investment Partners III LP for a purchase price of US$80 million. In addition, August 2019 saw Hain Celestial complete the strategic sale of Tilda, its premium basmati and specialty rice brand, to Ebro Foods SA for a purchase price of US$342 million in cash.

“Across our organization, we are taking all the necessary safety measures to best manage our business in the current operating environment as we continue to deliver against our transformational strategic plan. As a result of the actions we have taken, we are well positioned to manage through this unprecedented crisis and emerge an even stronger company,” Schiller.

The most significant takeaways from the report include:

• Net sales increased 1 percent to US$553.3 million or 2 percent on a constant currency basis compared to the prior year period.
• When adjusted for Foreign Exchange, Divestitures and Stock Keeping Unit (SKU) rationalization, net sales increased 6 percent compared to the prior year period.
• Gross margin of 23.9 percent, a 324 basis point increase from the prior year period.
• Adjusted gross margin of 24.3 percent, a 282 basis point increase from the prior year period.
• Operating income of US$19.1 million compared to US$19 million in the prior year period.
• Adjusted operating income of US$45.7 million compared to US$34.0 million in the prior year period.
• Net income of US$25.0 million compared to US$8.8 million in the prior year period.
• Repurchased 2.4 million shares, or 2.3 percent of the outstanding common stock, at an average price of US$23.52 per share.

Three major markets
Historically, the company has had three reportable segments: US, UK and the rest of the world. Effective July 1, 2019, Hain reassessed its segment reporting structure, pursuant to the company’s Canada and Hain Ventures operating segments, which were included within the Rest of World reportable segment, were moved to the US 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 UK 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.

Going forward the acompany expects all profit metrics for the full year ending June 30, 2020 to be higher than their previously provided ranges as a result of the ongoing execution of our transformation plan and higher food-at-home consumption related to the COVID-19 pandemic. 

Hain also acknowledges that the magnitude and duration of increased demand remains uncertain and a challenge it faces as a result of the pandemic is its ability to maintain the level of supply needed to keep up with the increased demand. Moreover, its outlook assumes its supply chain continues to operate with minimal disruption for the remainder of fiscal 2020.

By Kristiana Lalou