Hain Celestial(US:HAIN)2021-05-06 16:09Financial Data and Key Metrics Changes - Consolidated net sales decreased 11% year-over-year to $493 million, impacted by foreign exchange and divestitures [35][36] - Adjusted gross margin improved by 317 basis points, while adjusted EBITDA increased to $74 million, representing a 22% increase year-over-year [12][38] - Adjusted EBITDA margin reached 15%, a significant improvement of about 400 basis points year-over-year [39] Business Line Data and Key Metrics Changes - North American net sales decreased 10% year-over-year to $287.5 million, with adjusted EBITDA increasing by 13% [40][42] - International net sales decreased 12% on a reported basis, but adjusted EBITDA grew by 19% versus the prior year [48][51] - The "Get Bigger" brands showed a net sales decrease of about 4%, but adjusted EBITDA margins improved close to 300 basis points [43][46] Market Data and Key Metrics Changes - E-commerce sales in North America accounted for about 12% of total sales, with robust growth of approximately 30% in the quarter [90] - Consumption in international markets was up 12% compared to 2019, significantly outpacing shipments [18] Company Strategy and Development Direction - The company is focused on sustainable profitable growth, with a strong emphasis on margin improvement and productivity initiatives [11][20] - Future strategies include pursuing significant margin opportunities and expanding distribution points for key brands [30][27] - The company plans to continue investing in marketing and innovation to drive growth in its core categories [111][115] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future performance, citing strong momentum exiting Q3 and favorable macro trends [23][24] - The company anticipates continued challenges from COVID-19 but expects to offset these with productivity initiatives and pricing strategies [57][84] - Management highlighted the importance of consumer health trends and e-commerce growth as key drivers for future success [24][90] Other Important Information - The company completed the sale of its North American non-dairy beverage business, which represented about $40 million in annualized net sales [47] - Operating cash flow for Q3 was $42 million, with a strong balance sheet allowing for significant capital allocation flexibility [52][54] Q&A Session Summary Question: Thoughts on fourth quarter outlook and guidance - Management acknowledged the uncertainty surrounding COVID-19's impact but expressed confidence in delivering expected results, with a guidance range of -5% to -8% for top line growth [67][70] Question: Status of distribution gains and shelf resets - Management confirmed that more shelf resets are expected, with significant distribution gains anticipated in baby and snack categories [72][74] Question: Clarification on organic sales growth guidance - Management explained that while there are headwinds from COVID-19, underlying growth is expected to be mid-single digits compared to 2019 [82] Question: Non-dairy beverage business sale details - The non-dairy beverage business had about $40 million in sales, with a couple million dollars of EBITDA [89] Question: E-commerce performance and growth - E-commerce sales grew significantly, with the "Get Bigger" brands seeing growth in the 50% range [90] Question: Addressing concerns about baby food safety - Management stated compliance with FDA regulations and ongoing efforts to ensure product safety [91] Question: Overall distribution potential and ACV penetration - Management indicated that ACV penetration ranges from 30% to 75% for key brands, with significant opportunities for growth [97] Question: Pricing strategies in response to cost inflation - Management confirmed ongoing pricing strategies to offset inflation, focusing on selective pricing and productivity initiatives [100][102] Question: Future promotional activities - Management confirmed that a significant club program will return next year, providing a tailwind for fiscal 2022 [105]