The Hain Celestial Group, Inc. (Nasdaq: HAIN), a leading organic and natural products company with operations in North America, Europe, Asia and the Middle East providing consumers with A Healthier Way of Life™, today reported financial results for the second quarter ended December 31, 2020. The results contained herein are presented with the Hain Pure Protein and Tilda operating segments being treated as discontinued operations. All growth comparisons are against the corresponding prior year period unless otherwise noted.

Mark L. Schiller, Hain Celestial's President and Chief Executive Officer, commented, "We are very pleased with our second quarter results, delivering mid-single digit topline growth, several hundred basis points of gross margin improvement and strong adjusted EBITDA growth. Although the macro operating environment remains challenging, our team continues to execute well against our transformational agenda. As a result, I am confident we will continue to see solid margin expansion and profit growth as we progress through the second half of fiscal year 2021."

FINANCIAL HIGHLIGHTS1

Summary of Second Quarter Results from Continuing Operations2

• Net sales increased 4% to $528.4 million, or 2% on a constant currency basis, compared to the prior year period.
• When adjusted to exclude the effects of foreign exchange, divestitures and discontinued brands, net sales increased 6% compared to the prior year period.
• Gross margin of 24.6%, a 376 basis point increase from the prior year period.
• Adjusted gross margin of 25.3%, a 331 basis point increase from the prior year period.
• Operating income of $13.0 million compared to $9.2 million in the prior year period.
• Adjusted operating income of $48.1 million compared to $29.5 million in the prior year period.
• Net income of $2.2 million compared to $1.9 million in the prior year period.
• Adjusted net income of $34.7 million compared to $17.6 million in the prior year period.
• Adjusted EBITDA of $62.2 million compared to $45.0 million in the prior year period.
• Adjusted EBITDA margin of 11.8%, a 288 basis point increase compared to the prior year period.
• Earnings per diluted share ("EPS") of $0.02, flat compared to the prior year period.
• Adjusted EPS of $0.34 compared to $0.17 in the prior year period.
• Repurchased 0.9 million shares, or 0.9% of the outstanding common stock, at an average price of $32.15 per share.
• Net cash provided by continuing operations of $63.9 million compared to $20.7 million in prior year period.
• Operating free cash flow from continuing operations of $46.3 million compared to $4.6 million in prior year period.

SEGMENT HIGHLIGHTS FROM CONTINUING OPERATIONS

The Company operates under two reportable segments: North America and International.

North America

North America net sales in the second quarter were $282.6 million, an increase of 1% compared to the prior year period. When adjusted for foreign exchange, divestitures and discontinued brands, net sales increased 6% from the prior year period.

Segment gross profit in the second quarter was $78.3 million, a 21% increase from the prior year period. Adjusted gross profit was $80.5 million, an increase of 16% from the prior year period. Gross margin was 27.7%, a 455 basis point increase from the prior year period, and adjusted gross margin was 28.5%, a 376 basis point increase from the prior year period.

Segment operating income in the second quarter was $32.4 million, a 62% increase from the prior year period. Adjusted operating income was $35.4 million, a 42% increase from the prior year period.

Adjusted EBITDA in the second quarter was $39.6 million, a 31% increase from the prior year period. As a percentage of sales on a constant currency basis, North America adjusted EBITDA margin was 14.0%, a 327 basis point increase from the prior year period.

International

International net sales in the second quarter were $245.8 million, an increase of 9% compared to the prior year period. When adjusted for foreign exchange, divestitures and discontinued brands, net sales increased 6% compared to the prior year period.

Segment gross profit in the second quarter was $51.7 million, a 27% increase from the prior year period. Adjusted gross profit was $53.4 million, an increase of 26% from the prior year period. Gross margin was 21.0%, a 305 basis point increase from the prior year period, and adjusted gross margin was 21.7%, a 303 basis point increase from the prior year period.

Segment operating loss in the second quarter was $2.7 million, compared to operating income of $12.9 million in the prior year period. The operating loss for the current period includes an impairment charge of $23.6 million related to the reserve recorded against the assets of the Company's United Kingdom fruit business resulting from held for sale classification. Adjusted operating income was $25.1 million, an increase of 51% from the prior year period.

Adjusted EBITDA in the second quarter was $32.2 million, a 28% increase from the prior year period. As a percentage of sales on a constant currency basis, International adjusted EBITDA margin was 13.0%, a 186 basis point increase from the prior year period.

CAPITAL MANAGEMENT

During the second quarter fiscal year 2021, the Company repurchased 0.9 million shares, or 0.9% of the outstanding common stock, at an average price of $32.15 per share for a total of $29.7 million, excluding commissions under our share repurchase program. As of December 31, 2020, the Company had remaining authorization of $118.1 million under this program.

SALE OF U.K. BASED FRUIT BUSINESS, ORCHARD HOUSE ®

Effective January 13, 2021, the Company completed the divestiture of its U.K. fruit business, including the Orchard House Foods Limited business and associated brands, to Elaghmore, a U.K. based private equity firm. Details of the transaction were not disclosed.

FISCAL YEAR 2021 GUIDANCE

Due to the continuing uncertainty around the duration and impact of the COVID-19 pandemic, the Company is not providing specific financial guidance for fiscal year 2021. The Company reaffirms its expectation for gross and adjusted EBITDA margin expansion as well as strong double-digit adjusted EBITDA and operating free cash flow growth for fiscal year 2021. However, for the third quarter fiscal year 2021, in comparison to the prior year period, the Company expects strong gross margin and EBITDA margin improvement and adjusted EBITDA growth near 10%.

About The Hain Celestial Group, Inc.

The Hain Celestial Group (Nasdaq: HAIN), headquartered in Lake Success, NY, is a leading organic and natural products company with operations in North America, Europe, Asia and the Middle East. Hain Celestial participates in many natural categories with well-known brands that include Celestial Seasonings®, Clarks™, Cully & Sully®, Dream®, Earth's Best®, Ella's Kitchen®, Farmhouse Fare™, Frank Cooper's®, GG UniqueFiber®, Gale's®, Garden of Eatin'®, Hain Pure Foods®, Hartley's®, Health Valley®, Imagine®, Joya®, Lima®, Linda McCartney's™ (under license), MaraNatha®, Natumi®, New Covent Garden Soup Co.®, Robertson's®, Sensible Portions®, Spectrum®, Sun-Pat®, Terra®, The Greek Gods®, William's™, Yorkshire Provender® and Yves Veggie Cuisine®. The Company's personal care products are marketed under the Alba Botanica®, Avalon Organics®, Earth's Best®, JASON®, Live Clean®, One Step® and Queen Helene® brands.