LAKE SUCCESS, NY. – The Hain Celestial Group, Inc.’s acquisition of the Parmcrisps and Thinsters brands from private equity company Clearlake Capital Group LP for $259 million opens new opportunities in the healthy snacking space, according to the company.
Parmcrisps are formulated using Parmesan cheese. Thinsters are reduced-calorie, bite-size cookies. Parmcrisps are available in several applications, including chips, tubs and snack mixes.
Mark Schiller, president and chief executive officer of The Hain Celestial Group, said during a presentation at the virtual ICR Conference taking place Jan. 10-12 that the acquisition will make his company a “bigger fish” in the US and Canadian snack segments.
“It’s a mid-teens growth business which will have mid-teens EBITDA margins next year once we get some of the synergies in place and get some of the pricing in place,” he said. “They haven’t taken pricing yet to cover inflation and so it fits really nicely. It also is very incremental to what we have today.”
He added that Parmcrisps gives Hain a variety of advantages. It gives the company a presence in snack mixes and its high protein, low carbohydrate profile gives it a competitive profile against meat snacks and protein bars, two categories the company is not in. Additionally, he said Parmcrisps may open opportunities for innovation in foodservice and as a salad topper.
The Hain Celestial management team has identified $1 billion in growth opportunities it will be competing for in the years ahead.
“If you just look at our algorithm, we’ve got a $2 billion business that we expect we will get into the 6% to 9% top-line growth space per year, so that’s about $150 million a year if you will, and we said it would take us a couple of years to get there,” Mr. Schiller said. “So, I expect that you’ll see a little bit of choppiness, but you’ll see us moving toward higher growth as we go forward, starting in the second half of this year. We’ve publicly said that we expect that we will have much higher growth in the second half of the year than the first half.”
Contributing to the growth will be distribution gains, consumption, which is up double-digits in North America, according to the company, replenishment of inventory by retailers, and the Parmcrisps and Thinsters acquisition.
Regarding the supply chain, Mr. Schiller said Hain Celestial is doing well with the aspects of the business under its control like staffing, manufacturing and distribution.
“Where we’re struggling, which is where everybody is struggling, is the external things that we don’t control,” he said. “So, inbound materials whether they’re coming in or not, trucks showing up on time, co-mans who are having their own labor problems that may not be able to keep up with demand and have to choose among many people that they supply in terms of how they divvy out what capacity they have.”
Two inflationary issues the company is currently dealing with are energy costs in Europe and absenteeism due to the omicron variant of COVID-19.
“Right now, gas and electric (in Europe) are running somewhere between 5- and 10-times the cost of a year ago, and as our contracts roll-off, we’re experiencing some of that inflation,” Mr. Schiller said. “Were continuing to see costs going up. I will say on things like commodities and transportation, they seem to be stabilizing at a very high level.”