CEO of Hain Celestial anticipates faster growth.
Mark L. Schiller, president and chief executive officer of The Hain Celestial Group, Inc., Lake Success, expressed satisfaction with the company’s “good” year and “solid” fourth quarter, stating that the business is well-positioned for an acceleration in growth in the coming year.
On August 26, Mr. Schiller addressed investment analysts on a conference call about the company’s fiscal 2021 financial results and 2022 forecasts.
A year before, Hain Celestial had lost $80.4 million, but in the year that ended June 30, the company’s net profits was $77.4 million, or 77¢ per share on the common stock. Net sales decreased 4.1% to $1.97 billion from $2.05 billion.
Hain Celestial’s net income increased significantly from $3.24 million, or 4¢, to $40.9 million, or 40¢ per share, in the fourth quarter. Sales decreased by 12% to $450.7 billion from $41.7 million.
The fourth-quarter results, according to Mr. Schiller, were either in line with or better than projected. Sales were down 11% to 14% (actually down 11.9%), margin improved by 100 basis points (actually up 296 points), and adjusted EBITDA dollar growth was 10% (actually 9.6%).
On the morning of August 26, investors seemed less optimistic about the Hain Celestial findings in Nasdaq trading. Late in the morning, the company’s shares fell $2.50, or 6.3%, to $37.50 a share.
The reaction from investors might have been a reflection of Hain’s North American business experiencing a more challenging sales environment in the fourth quarter of fiscal 2021 compared to the firm as a whole. North America’s operating income for the year was $129 million, a 34% increase from $95.93 million in fiscal 2020. In fiscal 2020, net sales were $1.171 billion; this represents a 6% decrease.
You may also like:
Food security in emerging nations: issues and remedies
Are drinks the secret to increasing cannabis use among consumers?
Managing the lack of labour for mushroom picking
North America’s operating profit for the fourth quarter was $23.8 million, a 25% decrease from $31.9 million in the same quarter last year. Net sales decreased by 15% to $253 million from $299 million.
“The same problems plaguing the entire industry drove a more difficult quarter,” Mr. Schiller stated. “As we spoke about on the previous call, there was a lot of inflation, and labor constraints impacted internal manufacturing, sourcing, and customer delivery of goods throughout the supply chain. These COVID overlap challenges consequently had an effect on margins and profitability during the quarter. Even though overall results fell short of the strong growth we have been achieving on a regular basis, adjusted EBITDA margin expanded by over 300 points and EBITDA was up 16% compared to Q4 F ’19 before the pandemic. Additionally, our adjusted EBITDA in North America for the whole year was higher than it was a year earlier.
Javier H. Idrovo, executive vice president and chief financial officer, stated that the current quarter outperformed an exceptionally strong April-June quarter in hand sanitizer sales, which by itself constituted a headwind of more than 300 basis points. This further accentuates the difficulties of drawing comparisons with fiscal 2020.
As we approach the fiscal year 2022, Mr. Schiller noted a number of reasons for hope. The business claims that the impact on volume has been negligible thus far and has already implemented pricing to offset increased costs. There has been a high level of customer acceptance. Additional obstacles that caused issues during the fourth quarter of the 2021 fiscal year have also been resolved.
“We expect the majority of our manufacturing, distribution, and sourcing headwinds to be fully behind us over the next few months. We’ve made terrific progress on them,” he stated. Our services have improved from quarter to quarter as proof of our progress. We also experienced one of our finest shipment weeks in a number of years last week.
Hain Celestial has projected mid- to high-single-digit increase in adjusted EBITDA for the fiscal year 2022, as well as low- to single-digit growth in adjusted net sales and adjusted gross margin. The business projects full-year adjusted net sales growth in the mid single digits relative to fiscal 2019, along with increase in adjusted EBITDA and EBITDA margin of at least 65% and 500 basis points, respectively.
Mr. Schiller stated that the company was ready to implement further pricing if needed, but the forecast is based on a number of assumptions, including stable inflation as opposed to rising it. It is anticipated that price increases and productivity gains will more than offset inflation, enabling increased marketing expenditures and “robust margin growth.” The outcomes will also depend on how well new products are introduced, which will increase shelf space.
The prediction also depends on the assumption that the Delta variation will cause only mild interruptions.
By the end of the year, he said, “we’ve assumed minimal short-term impact from the COVID Delta variant and that society gradually gravitates back to the pre-pandemic mix of in-home and out-of-home meeting occasions.”