LAKE SUCCESS, N.Y- The Hain Celestial Group, Inc. (Nasdaq: HAIN) ('Hain Celestial' or the 'Company'), 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, 2019. The results contained herein are presented with the Hain Pure Protein and Tilda operating segments being treated as discontinued operations.
Mark L. Schiller, Hain Celestial's President and Chief Executive Officer, commented, 'Our team continues to execute on our transformational strategic plan, as we demonstrate another quarter of operational and financial improvement on a year-over-year basis. We have made significant progress in a very short period of time. We are delivering on the commitments we communicated to further simplify the portfolio and organization, strengthen our core capabilities, expand our margins and cash flow as well as reinvigorate profitable sales growth in a core set of high potential brands. We remain committed to delivering strong, consistent results for all our stakeholders.'
FINANCIAL HIGHLIGHTS1
Summary of Second Quarter Results from Continuing Operations2
Net sales of $506.8 million decreased 5% on an as reported and constant currency basis compared to the prior year period.
When adjusted for Foreign Exchange, Divestitures and Stock Keeping Unit ('SKU') rationalization3, net sales decreased 1% compared to the prior year period.
Gross margin of 20.8%, a 180 basis point increase from the prior year period.
Adjusted gross margin of 22.0%, a 220 basis point increase from the prior year period.
Operating income of $9.2 million compared to an operating loss of $20.9 million in the prior year period.
Adjusted operating income of $29.5 million compared to $24.4 million in the prior year period.
Net income of $1.9 million compared to a net loss of $31.8 million in the prior year period.
Adjusted net income of $17.6 million compared to $13.0 million in prior year period.
EBITDA of $24.9 million compared to $12.2 million in the prior year period.
EBITDA margin of 4.9%, a 260 basis point improvement from the prior year period.
Adjusted EBITDA of $45.0 million compared to $37.9 million in the prior year period.
Adjusted EBITDA margin of 8.9%, a 180 basis point increase compared to the prior year period.
Earnings per diluted share ('EPS') of $0.02 compared to a loss of $0.31 per share in the prior year period.
Adjusted EPS of $0.17 compared to $0.12 in the prior year period.
1 This press release includes certain non-GAAP financial measures, which are intended to supplement, not substitute for, comparable GAAP financial measures. Reconciliations of non-GAAP financial measures to GAAP financial measures are provided herein in the tables 'Reconciliation of GAAP Results to Non-GAAP Measures.'
2 Unless otherwise noted all results included in this press release are from continuing operations.
3 Refer to 'Net Sales Growth at Constant Currency' and 'Adjusted for Divestitures and SKU Rationalization' provided herein.
SEGMENT HIGHLIGHTS FROM CONTINUING OPERATIONS
Historically, the Company had three reportable segments: United States, United Kingdom and Rest of World. Effective July 1, 2019, the Company reassessed its segment reporting structure, pursuant to which the Company's Canada and Hain Ventures operating segments, which were included within the Rest of World reportable segment, were moved to the United States 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 United Kingdom 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.
North America
North America net sales in the second quarter were $280.7 million, a decrease of 8% compared to the prior year period. When adjusted for Divestitures and SKU rationalization3, net sales decreased 2% from the prior year period.
Segment gross profit in the second quarter was $65.0 million, a 13% increase from the prior year period. Adjusted gross profit was $69.4 million, an increase of 14% from the prior year period. Gross margin was 23.1%, a 430 basis point increase from the prior year period and adjusted gross margin was 24.7%, a 480 basis point increase from the prior year.
Segment operating income in the second quarter was $20.1 million, a 110% increase from the prior year period. Adjusted operating income was $25.0 million, a 51% increase from the prior year period.
Segment EBITDA in the second quarter was $23.4 million, a 47% increase from the prior year period. Adjusted EBITDA was $30.1 million, a 41% increase from the prior year period. As a percent of sales on a constant currency basis, North America adjusted EBITDA margin was 10.7%, a 370 basis point increase from the prior year period.
International
International net sales in the second quarter were $226.1 million, a decrease of 1% from the prior year period. When adjusted for Foreign Exchange, Divestitures and SKU rationalization3, net sales increased 1% compared to the prior year period.
Segment gross profit in the second quarter was $40.6 million, an 8% decrease from the prior year period. Adjusted gross profit was $42.2 million, a decrease of 6% from the prior year period. Gross margin was 18.0%, a 130 basis point decrease from the prior year period and adjusted gross margin was 18.7%, a 90 basis point decrease from the prior year period.
Segment operating income in the second quarter was $12.9 million, a 15% decrease from the prior year period. Adjusted operating income was $16.5 million, a decrease of 12% from the prior year period.
Segment EBITDA in the second quarter was $21.6 million, a 5% decrease from the prior year period. Adjusted EBITDA was $25.1 million, a 5% decrease from the prior year period. As a percent of sales on a constant currency basis, International adjusted EBITDA margin was 11.1%, a 50 basis point decrease from the prior year period.
FISCAL YEAR 2020 GUIDANCE
The Company narrows and reaffirms its annual guidance for continuing operations for fiscal year 2020:
See full details at: http://ir.hain.com/news-releases/news-release-details/hain-celestial-reports-second-quarter-fiscal-year-2020-financial
THE HAIN CELESTIAL GROUP, INC. 
