LAKE SUCCESS, NY – A defining characteristic of The Hain Celestial Group, Inc. under the leadership of President and CEO Mark L. Schiller is that it is a smaller, more focused company. Since taking the helm in 2018, he has left 23 brands with nearly $ 1 billion in sales. Now he is transforming the company into a global food company focused on health and wellness.
Achieving its goal will require divesting Hain’s personal care business and investing in brands that meet management’s growth expectations, particularly in meat substitutes, dairy substitutes and snacks. Mr Schiller called this next phase Hain 3.0 during a virtual investor day on September 28 with securities analysts.
“Hain 2.0 is the transformation of a holding company into an operating company by simplifying the business and laying the foundation for profit growth,” he said. “Now, Hain 3.0… is about building a global healthy food and beverage business with industry-leading revenue growth. “
The personal care business is separated from the business with the goal of turning Hain Celestial into a food business. Mr. Schiller did not provide a timeline for when the separation could take place.
“… Our personal care business is a great company with significant growth and profitability opportunities where we can create a lot more value,” said Mr. Schiller. “And as a result, we will selectively invest in personal care and continue to drive shareholder value and growth until these brands are worth more to someone else than they are.” for us. “
The revitalization of Hain Celestial began in North America with the removal of brands and non-core assets, and this model has been used to improve business in Europe and other parts of the world.
“Hain 3.0 aims to build a global healthy food and beverage business with industry-leading revenue growth. – Mark Schiller, The Hain Celestial Group, Inc.
“We have adopted the North American strategy which has also resulted in a significant improvement in margins in international trade,” said Mr. Schiller. “To date, we have consolidated three operating entities, sold four businesses and eliminated several hundred unproductive SKUs (storage units). We strengthened our capabilities by creating a supply chain organization under the leadership of a newly hired seasoned leader, embracing North American productivity processes and finding global synergies.
Hain 3.0 will require management to focus on rejuvenating North America to focus on growing global brands, Mr. Schiller said. This will be accomplished by segmenting brands and investing behind those with the best growth potential. The company created four categories of brands and assigned brands to one category based on potential. The first, highest priority category is what the company calls the “turbocharged” brands and it includes meat and dairy alternatives as well as snacks sold under brands such as Linda McCartney’s, Yves Veggie Cuisine, Sensible Portions, Terra and Garden of Eatin ‘.
“In FY21, they (the turbocharger brands) accounted for 40% of our company’s total sales, up from 28% in FY19, and there was also 41% of our profit with strong profit margins for teens, ”Mr. Schiller said. noted.
Wolfgang Goldenitsch, CEO of Hain Celestial Europe, said the company’s combined meatless and dairy-free brands have grown by more than 18% in the past two years.
“Plants are one of the most dynamic areas of food today,” he said. “And even after years of strong growth, it still has tremendous potential as plant-based nutrition becomes more and more common around the world.”
The second bucket is called “targeted investment” and includes activities related to tea, baby food, yogurt and personal care. Food brands in this category include Celestial Seasonings, Earth’s Best Organic, Ella’s Kitchen, and Greek Gods.
“This category is made up of leading brands in low growth categories,” Mr. Schiller said. “To date, we have demonstrated our ability to generate market share and re-energize these categories and we hope to be able to continue to do so in the future. These brands represent 33% of our total sales, up from 28% in FY19, and they generated 37% of our profits with high profit margins. “
The last two categories are called “fuel for growth” and “simplify”. The fuel for growth category includes stable brands with teenage margins and simplification includes declining brands that may be discontinued.
“(The fuel brands) fund our growth investments,” said Christopher J. Boever, chief commercial officer. “We have a tremendous array of premium health and wellness pantry brands like Spectrum Cooking Oils, our top three UK soup brands and Maranatha Almond Butter which are well positioned to take advantage of the resurgence of home cooking.
“These brands have scale. They are stable in sales with very strong margins. We are focused on continuing to expand these margins while maintaining sales with relevant and disjointed innovation, as well as expanding space in key channels and customers. “
Mr Boever did not identify which brands fall into the simplified category, but reiterated that management’s goal is to maximize their value and divest at some point.
Javier H. Idrovo, chief financial officer, said “turbocharged” brands are expected to account for over 50% of Hain Celestial’s sales and profits. “Fuel for growth” brands are expected to account for 16% of total sales and 13% of total profits.
Mergers and acquisitions will also be part of the Hain 3.0 strategy.
“Our mergers and acquisitions will focus on growing brands, with particular emphasis on the ‘turbocharged’ segment with the aim of accelerating performance in terms of revenue and / or bottom line,” said Mr. Idrovo.
Management predicts that Hain 3.0 will result in adjusted sales growth of 7% to 10% and adjusted EBITDA growth of 9% to 12% by fiscal year 2025.
“This is a significant acceleration in our turnover, and we will take time and investment to achieve it,” said Mr. Idrovo.
In the fiscal year ended June 30, 2021, Hain Celestial’s net income was $ 77.4 million, or $ 77 per share on common stock, a reversal from a loss of $ 80.4 million. of dollars a year earlier. Net sales reached $ 1.97 billion, down 4.1% from $ 2.05 billion.