The Hain Celestial Group, Inc. (NASDAQ:HAIN) Q4 2020 Earnings Conference Call - Final Transcript

Aug 25, 2020 • 08:30 am ET

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The Hain Celestial Group, Inc. (NASDAQ:HAIN) Q4 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Mark L. Schiller

and ended the year with adjusted EBITDA at the high end of our revised guidance range which we raised at the end of Q3. For the year, net sales declined 2.4% as reported, but grew 3% in constant currency excluding, divestitures, discontinued brands and SKU rationalization.

We exited the year with two consecutive quarters of total company sales growth after eight quarters of declining top line. Gross margin, gross profit and margin and adjusted EBITDA margin in dollars grew every quarter consistent with fiscal '20 guidance that we provided last summer. Importantly, our adjusted EBITDA dollars grew 21% for the year, while increasing our marketing spending. The North America business continued its successful transformation resulting in over 400 basis points of adjusted gross margin improvement and 380 basis points of adjusted EBITDA margin improvement and adjusted EBITDA dollars grew 43.2%. Within North America, the Get Bigger brands grew 6.4% for the full year in line with our Investor Day guidance. That compares positively to our planned decline in the first half of fiscal 2020 with modest improvement in the second half.

The Get Better brands, which are being managed for profit grew adjusted EBITDA dollars 214% and improved adjusted EBITDA margin, a very strong 600 basis points to 8.4%. You'll recall that this set of brands had a collective EBITDA margin of just 2% on Investor Day last year and is now contributing significantly to our overall success.

The International business delivered sales that were close to flat in constant currency for fiscal '20 with modest gross margin and adjusted EBITDA margin expansion. We achieved these results despite the significant decline of our large food service oriented fruit business which was impacted by COVID in the second half. Adjusted earnings per share increased 40% year-over-year and exceeded our guidance. While the business has performed exceptionally well over delivering our plan, the pandemic did accelerate performance in the second half of the year. COVID-19 which I will discuss more in a few minutes, added in just an additional $20 million in net sales, mostly in Q3 with about $10 million to $12 million of adjusted EBITDA for the year split between Q3 and Q4. The North America business benefited more than that, partially offset by an international fruit business which is adversely impacted. All in all, it was a great year for Hain with terrific results before the pandemic and great execution during the pandemic, leaving us with tremendous momentum as we head into fiscal '21.

Now let me shift to talking about Q4 specifically, while Javier will provide more detail in a few minutes, yet again, our team delivered against all of our key profit metrics and delivered the top end of the raised guidance we gave at the end of Q3. Gross margin and adjusted EBITDA dollars and margin were each up over 200 basis points, that's the seventh straight quarter of adjusted EBITDA dollar improvement and fourth straight quarter of adjusted EBITDA dollar growth. Within the divisions, North