Greetings, and welcome to The Hain Celestial Group fourth quarter 2020 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Anna Kate Heller, for opening remarks. Thank you. You may begin.
Thank you. Good morning, and thank you for joining us on Hain Celestial's fourth quarter and fiscal year 2020 earnings conference call. On the call today are Mark Schiller, President and Chief Executive Officer, and Javier Idrovo, Executive Vice President and Chief Financial Officer. During the course of this call, management may make forward-looking statements within the meaning of the federal securities laws. These include expectations and assumptions regarding the company's future operations and financial performance, including expectations and assumptions related to the impact of the COVID-19 pandemic. These statements are based on management's current expectations and involve risks and uncertainties that could differ materially from actual events and those described in these forward-looking statements.
Please refer to Hain Celestial's annual report on Form 10-K, quarterly reports on Form 10-Q, and other reports filed from time to time with the Securities and Exchange Commission and its press release issued this morning for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. The company has also prepared a few presentation slides and additional supplemental financial information, which are posted on Hain Celestial's website under the Investor Relations heading. Please note, management's remarks today will focus on non-GAAP or adjusted financial measures. Reconciliations of GAAP results to non-GAAP financial measures are available in the earnings release and the slide presentation accompanying this call.
As a reminder, beginning in Q1 of fiscal year 2020, the company changed its segment reporting to focus on North America, International, and Corporate, which had previously been reported as the U.S., U.K., and rest of world segments. This call is being webcast, and an archive of it will also be available on the website. I'd also like to note that we are conducting our call today from our respective remote locations. As such, there may be brief delays, crosstalk, or other minor technical issues during this call. We thank you in advance for your patience and understanding. Now I'd like to turn the call over to Mark Schiller.
Thank you, Anna Kate. Good morning, everyone. Before we begin, I'd like to thank our global team for their collaboration, agility, and compassion throughout the pandemic. We continue to operate in a very dynamic environment with the health and wellbeing of our employees, customers, and consumers remaining our top priority. On today's call, I'll discuss our strong fiscal 2020 results, including the impact of COVID-19, explain how we're setting ourselves up for sustainable long-term growth, and provide some color around our fiscal 2021 expectations. Let me start with our full fiscal year 2020 results. For the year, we delivered against all planned metrics that we provided in our beginning of year guidance 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 profit and margin and adjusted EBITDA margin in dollars grew every quarter, consistent with FY 2020 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 2020, 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 an additional $20 million in net sales, mostly in Q3, with about $10 million-$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 was 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 2021. 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 America gross profit grew 20% in the quarter, and adjusted EBITDA grew 46% versus year ago. On the Get Bigger brands, which represent two-thirds of our North America sales, we guided that the second half would show improvement in the top line compared to low single digit in the first half. After strong double-digit top line growth last quarter, our Get Bigger brands delivered an even stronger Q4.
We grew sales in all of our Get Bigger categories and have seen relatively stable double-digit consumption growth during the last five months of the pandemic after the initial surge in March. In addition, EBITDA margin for the quarter was almost 18% inclusive of an investment in marketing in the quarter. On the Get Better brands, we continue to focus on improving profitability, in quarter four, our gross margin and adjusted EBITDA margins grew 300 and 360 basis points respectively. Sales of the Get Better brands also improved to virtually flat after adjusting for divestitures and discontinued brands, driven by strong momentum in our center of store cooking brands. Turning to International, we delivered slight negative top line in constant currency with modest margin improvement in adjusted EBITDA margin.
Within International, we had strong growth in a number of our number one and number two brands in constant currency, with non-dairy beverages continuing double-digit growth that started last year. However, we did see significant declines in our food service-oriented fruit business, which is 20% of our international sales. Excluding the fruit business, Q4 international net sales would have been up over 10%. Clearly the remainder of our international business is performing well. In addition, the fruit business was a 270-point drag on the International adjusted EBITDA margins in fourth quarter due to significant stranded overhead and input costs. We undertook significant reductions in SG&A during the fourth quarter to mitigate that impact, and the benefit of those changes will be seen in future quarters.
We're pleased with much of our results with International, but we believe there is still significant opportunity to focus resources, expand margin, and share best practices. As a result, we are adopting much of the U.S. playbook there and have consolidated down to only two distinct divisions from five when I joined Hain in late 2018. This organizational simplification will create significant opportunities that will begin to impact our financial performance later this year. For the quarter, COVID had virtually no net impact on top line of the total company, although there was a clear benefit in North America offset by the fruit business decline in the U.K. From an adjusted EBITDA standpoint, we delivered a total impact of about $5 million-$6 million in the fourth quarter. In Q4, we were also successful in continuing our efforts to simplify our business.
We sold or discontinued four brands, including Rudi's, BluePrint, Fountain of Truth, and DeBoles. These brands contributed a total of $27 million in sales and a loss of approximately $1 million in adjusted EBITDA. Last month, we also sold our Danival business in Europe after the quarter ended. This brand had sales of $22 million and adjusted EBITDA of $1 million. As you can see, we continue to have success selling or exiting small and non-strategic brands that consume a disproportionate share of management time and add supply chain complexity. Without them, we can redeploy and focus our resources on bigger growth opportunities, which will further strengthen our results. Overall, we're proud of the strong quarterly and annual results we just delivered. As laid out on Investor Day, our transformation plan is clearly working and delivering results, particularly in North America.
Our strategies of simplification, capability building, cost containment, and profitable growth have enabled exceptional execution during the pandemic. Many initiatives which were underway before the pandemic accelerated performance within the quarter. Innovation, marketing, and assortment optimization have already started delivering top-line accelerations. Initiatives like consolidation of the U.S. and Canada into one North America operating entity, automation in our plants, and the elimination of low-margin SKUs were already lowering our costs. While we, as most CPGs, have benefited from COVID thus far, we have confidence that the improvements made before and during the pandemic will continue going forward. The Get Bigger brands, which are the foundation of our growth agenda, have been particularly strong and have significant momentum that we believe will endure well into the future. Let me provide a few statistics.
Since the pandemic began, we've had nearly 2.5 million new households try our Get Bigger portfolio, a 10% increase in household penetration. Velocities and buying rate improved as well, with 18.6% more repeat buyers than year ago. We've excelled in all four of our priority Get Bigger growth categories. Celestial Seasonings tea increased household penetration by 37% and repeat buyers by 25% since the pandemic began, with both metrics outpacing the category. For the most recent 12 weeks, Celestial Seasonings also gained a full share point, with velocity growing over 40%, again outpacing the category. Our TeaWell innovation continues to expand distribution and is performing very well. We're bringing out 14 new SKUs this fall with new category benefits. In snacks, Hain was growing new buyers and repeat rates before the onset of the virus.
During COVID-19, we continued to add new buyers, and repeat purchases improved 8%. Sensible Portions led the way, growing shares significantly and delivering double-digit top-line growth on top of double-digit growth last year. Our Screamin' Hot innovation has very strong velocities, and we continue to expand distribution, and we have innovation on Garden of Eatin' and Terra, which will ship later this year. In yogurt, Greek Gods added more buyers and improved repeat rates more than any other leading yogurt brand in the category, and we also gained share, grew TDPs, and grew velocity well ahead of the category. Our advertising has been working and strengthens our brand point of difference. Our keto yogurt, which we've just started shipping, addresses one of the big barriers for trial on the brand.
Within personal care, which was negatively impacted at the beginning of the pandemic when consumers were self-isolating, we have also had much success. Much of our business skews toward unmeasured channels like e-commerce and parts of club and the natural channel, where we have significant sales. When accounting for all channels, our personal care portfolio is growing 30% faster than what you can see in the 12-week MULO data, with Alba and Live Clean consumption for both brands growing more than 40%. We've launched a number of new products, including our hemp line, that is also off to a great start. In summary, we've had significant strength across the Get Bigger portfolio in Q4. Sales, share, velocity, household penetration, new trial repeat rates, and margin are all growing. Consumers have tried our products for the first time during the pandemic and are repeating. Our marketing and innovation are working.
We've sharpened our pricing. Our supply chain and in-store execution has delivered. Given the terrific results that we just delivered, our strong execution during the pandemic, and the momentum we have entering 2021, we're set up for a great year and have complete confidence in the things we control. That said, as we turn to fiscal 2021, consistent with most of our peers, we have decided not to provide specific guidance. On my first day, I committed to you a culture of credibility, and while I have complete confidence in our team, our brands, and our business plans, given the unprecedented volatility and uncertainty of COVID's impact on consumers, customers, and the economy, there are many unknowns that make it difficult to provide specific guidance. Having said that, we have enough visibility into our plan that we can provide you with confidence some directional information.
First, we expect continued gross profit dollar and margin expansion in fiscal 2021. We also anticipate delivering strong double-digit growth in adjusted EBITDA dollars and continued EBITDA margin expansion. Given the current at-home eating trends and the impact it's having on our top line, we are expecting the first half of fiscal 2021 to be stronger on both the top line and bottom line than the second half, as we are assuming that the current eating at-home trends moderate throughout the year. Top line should grow in the first half, adjusted for divestitures and discontinued brands, with the Get Bigger brands in North America growing double digits, continuing the momentum delivered in the second half of last year.
While we're expecting a slowing of growth in the second half of fiscal 2021, in reality, the outlook for the second half of the year is less clear given the macro factors discussed and the need to lap the growth associated with the pandemic. That said, compared to pre-COVID second half of fiscal 2019, we expect strong growth in gross profit dollars, gross margin, EBITDA dollars, and EBITDA margins. Normally, we wouldn't give out headlines within the current quarter, but because we aren't giving specific guidance for the year and are already 2/3 of the way through the quarter, we also have some directional information on Q1. For the quarter ending September 30th, we expect mid-single-digit top-line growth after adjusting for divestitures and discontinued brands with margin improvement and adjusted EBITDA growth comparable to what we delivered in the second half of fiscal 2020.
When I joined Hain, I committed to provide a new level of transparency, and I also committed to deliver what I promised, so I want to make sure I continue to do both and am providing as much detail as I can reasonably forecast at this time. With that, let me turn it over to Javier, who will give you more details on our financial performance and fiscal 2021 expectations.
Thank you, Mark, good morning, everyone. There are five key aspects of the fourth quarter financial information that we will review today that demonstrate significant performance from the execution of our transformation plan. First, we delivered top-line growth versus the prior year for the second consecutive quarter. Second, our growth was supported by continued margin expansion. Third, we are generating much better cash flows. Fourth, we have built a healthy balance sheet with excellent capital allocation flexibility. Finally, our business is well positioned for continued success. Let's drill into each of these aspects, starting with the top line. Keep in mind I will focus my discussion on our financial results from continuing operations. Fourth quarter consolidated net sales increased 1% year-over-year to $512 million, in line with our expectations. Foreign exchange impact on the quarter was a headwind of 160 basis points.
Divestitures, brand discontinuations, and SKU rationalizations were a further headwind of about 430 basis points. When adjusting for these factors, net sales increased 7% versus the prior year period. From a profitability perspective, as we had guided, Q4 delivered year-over-year improvement in both adjusted gross profit and EBITDA and adjusted gross margin and EBITDA margin. Specifically, for the fourth quarter, adjusted gross profit increased 13% versus the prior year period to $129 million. Currency impact on gross profit was a headwind of about $2 million. Gross margin improved 260 basis points, driven by our top-line growth, improved product mix, better overhead absorption in our plants, and significant supply chain productivity initiatives. Distribution and warehousing costs as a percentage of sales improved versus the prior year period, driven by the consolidation of shipping locations, resulting in fuller truckloads.
The North America SKU rationalization that started last year also helped fuel our quarterly consolidated gross margin. As regular business practice, we continue to evaluate our portfolio for further simplification to position ourselves for success in this dynamic operating environment. For Q4, SG&A as a percent of net sales was 16.9%, right in line with the prior year period. This performance was achieved by consolidating our North America operations into one entity and COVID-related reductions in travel, offset by increased marketing spending of about 9% and increased incentive compensation accruals to match our stronger performance. Fourth quarter adjusted EBITDA increased to $62 million compared to $49 million in the prior year period. This represents a 26% increase versus Q4 last year. Currency impact on adjusted EBITDA was a headwind of about $1 million.
Adjusted EBITDA margin of 12% represented an improvement of about 240 basis points year-over-year, driven by gross margin improvement. We reported adjusted EPS of $0.32 based on an effective tax rate of 26.1% compared to $0.19 in Q4 last year, with an effective tax rate of 27.5%. The lower tax rate was mainly driven by lower GILTI inclusion than in the prior year period. Now, to provide some detail on the individual reporting segments. Let's start with our North American Business, where we saw net sales and profit growth as well as profit margin expansion. Starting with the top line, fourth quarter net sales increased 5% year-over-year to $299 million. Foreign exchange impact on the quarter was about 50 basis points. Divestitures, brand discontinuations, and SKU rationalizations were a further headwind of about 800 basis points.
When adjusting for these factors, net sales increased 13% versus the prior year period. From a profitability perspective, Q4 delivered year-over-year adjusted gross margin and dollar expansion and adjusted EBITDA margin and dollar expansion. Specifically for the fourth quarter, our North America business expanded adjusted gross margin by about 350 basis points, resulting in adjusted gross profit of $83 million, or an increase of 20% versus Q4 last year. This improvement was mostly driven by our stronger top line, product mix towards the higher margin Get Bigger brands, and productivity initiatives and efficiencies in our supply chain system. Adjusted EBITDA increased to $44 million compared to $30 million in the prior year period, a 46% increase. Currency impact on adjusted EBITDA was minimal. Adjusted EBITDA margin of 14.7% represented an improvement of about 420 basis points over the prior year period, driven by gross margin improvement.
Our North America region has delivered great results thus far, as Mark mentioned, we believe we are well-positioned for further improvement in fiscal 2021. Our team remains focused on executing against multiple opportunities that we have identified for further improvement of our margin structures. Looking into the components of the North American portfolio, the Get Bigger brands experienced 18% net sales growth. The tailwinds from COVID-19 that we experienced in Q3 continued in Q4, as Mark described earlier. This growth primarily came from several product lines: tea, our snacks product line driven by Sensible Portions, yogurt, and personal care lines such as Alba and Live Clean. The adjusted EBITDA margin for the Get Bigger brands improved 340 basis points compared to Q4 last year, yielding a margin of 17.9%.
While it is only one quarter, that is the high end of the EBITDA target range that we communicated during Investor Day in 2019. The Get Better brands, which are being managed primarily for profit, showed an adjusted EBITDA margin improvement of 360 basis points from Q4 last year, yielding a margin of 8.3%. Let me shift to our International business, where results for the quarter were consistent with our expectations. Net sales decreased 3% and were roughly flat when adjusted for foreign exchange compared to Q4 of last year. Foreign exchange represented a $7 million headwind. Similar to Q3, the impact of COVID-19 on results for the quarter were mixed. Our non-dairy product line with brands such as Joya and Natumi delivered strong growth during the quarter. The Linda McCartney and Hartley's brands with leading market share positions in the U.K. also experienced robust growth.
In contrast, as Mark stated, our food business with large exposure to the food service channel experienced decreases in revenue, although this was in line with our expectations. Nonetheless, adjusted gross margin and dollars and EBITDA margins were all up in the quarter versus the prior year period. Now, shifting to cash flow. fourth quarter operating cash flow improved by $72 million to $93 million, and operating free cash flow, defined as operating cash flow less CapEx, improved by about $79 million from practically zero in the prior year period. For the full year, operating cash flow improved by $118 million to $157 million, and operating free cash flow improved by $132 million to $96 million. These improvements resulted primarily from stronger earnings, a decrease in cash used in working capital, and a decrease in our capital expenditures.
At the end of Q4, our inventory was $51 million lower than the levels at the end of June 2019, mainly driven by divestitures, a reduction in the number of shipping locations in our network, and the COVID-19 surge in demand for our products. Throughout the quarter, we have been replenishing inventory while maintaining our service levels, and we expect to be at normalized levels as we enter the second half of 2021. Our cash conversion cycle was consistent with the prior quarter at 53 days. This is below a target of 60 days, driven by the decrease in inventory levels just mentioned. Capital expenditures in the quarter were $14 million, compared to $21 million for the prior year period, due to COVID-related delays in receiving equipment from suppliers.
As a result, for the fiscal year, CapEx was approximately $61 million compared to $76 million in fiscal 2019, at the lower end of our guidance. We closed the fiscal year on June 30th with a cash balance of $38 million, net debt of $245 million, and gross debt leverage of 2.1. This is a healthy balance sheet with excellent capital allocation flexibility. Given the decrease in leverage due to the company's strong performance, we are investing in all attractive internal opportunities, and we have also executed share repurchases at attractive market prices. In fiscal 2020, the company used $60 million to repurchase 2.6 million shares, or 2.4% of our outstanding common stock. This leaves us with $190 million of additional repurchases authorized under our 2017 share repurchase authorization. Let's turn to our final key aspect of our financial results, our outlook for the business.
As Mark mentioned, we have tremendous confidence in our team's ability to manage the controllable aspects of our business. Given the ongoing uncertainty related to COVID-19, including the magnitude and duration of the pandemic and its impact on consumer shopping behaviors, we have decided not to provide specific guidance for fiscal 2021. Since Mark already covered the company's perspective for the first quarter and first half of 2021, I would like to discuss the full year in more details. Because of the divestments and brand discontinuations, $60 million have been removed from the fiscal year 2021 base. For the full year, compared to prior year, we anticipate the following: gross profit dollar and margin expansion, strong double-digit growth in adjusted EBITDA with continued margin expansion, and strong double-digit growth in operating free cash flow.
In addition, for 2021, we expect capital expenditures to be around 4% of net sales. This is an increase from fiscal 2020, which will be used to accelerate several large productivity projects across our supply chains. Our cash conversion cycle is expected to be consistent with our target of 60 days. In summary, we made a tremendous amount of progress in fiscal 2020. We delivered top-line growth versus prior year in two consecutive quarters. We delivered profit margin expansion versus prior year every quarter. We improved our cash flow generation, and we have built a healthy balance sheet. We believe Hain Celestial remains well-positioned for long-term growth, even as we continue to navigate through the pandemic. We remain confident in our transformational strategic plan and ability to make further improvements in fiscal 2021 and beyond. I will now turn the call back to Mark.
As you can see, we had a tremendous year. Hopefully, you got a good understanding of our results, momentum, and expectations for fiscal 2021 this morning. We will provide more detail around the fiscal 2021 plan, key drivers, and outlook in the coming months, starting at the Barclays conference in two weeks. On behalf of our board of directors and management team, I'd like to thank our global team at Hain Celestial for how well they have embraced our transformation journey and executed against our goals, particularly in this evolving and dynamic environment. What we've collectively achieved in fiscal 2020 is just the beginning of the success that we believe lies ahead for the company. With that, let me turn it over to the operator for questions.
Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. In order to allow for as many questions as possible, we ask that you please ask one question and one follow-up each. Our first question comes from the line of David Palmer with Evercore ISI. Please proceed with your question.
Thanks. Good morning. A question on gross margin. You reached over 25% in the second half of the fiscal year, which was great. I know you've targeted 30% gross margins over time. When do you think Hain can reach that sort of a gross margin? To date, a lot of the gross margin expansion has resulted from divestitures and other rationalization, and of course, you had that boost with regard to COVID during this period, which will continue into the next fiscal year. How should we think about the pace of improvement from here? Maybe you want to break that down also into the Get Bigger versus Get Better portfolio. Thanks.
Yeah, I'd be happy to take that one. Look, we're going to see continued steady progress on margin. You saw several hundred basis points of margin growth this year, about 250 something points in the fourth quarter. Frankly, had it not been for the fruit business, you would've seen another 170 something points of margin expansion on top of the 25 that we delivered. We clearly have an issue on the fruit business that we have to deal with. If you take that aside, we're already close to 27, and we will get several hundred basis points on top of that. The Get Bigger brands are already at the 30% margin level, and we said that we anticipate that we will get those more into the mid-30s. We're well on track to do that.
The key to doing that continues to be top-line growth because most of those are self-manufactured, and we get tremendous absorption benefits as we fill up the plants. We also have very robust programs in terms of automation. We have some consolidations left to do. We still have some opportunity on SKUs and on uneconomic spending. We continue to believe that there's significant margin improvement to still be had on the Get Bigger brands. By the way, mix also plays a big role on those businesses as well. On the Get Better brands, which, remember back at Investor Day, they were 50% of our sales and virtually 0% of our profit. They're now about 33% of our sales in North America and 20% of our profit.
They've significantly improved the margin 600 basis points over the year, and we expect, again, that there will be continued improvement there coming through the same kinds of things, design to value, taking out the bells and whistles that consumers aren't willing to pay for in the products and cost reducing them. Continued management of distribution and warehousing costs, better forecasting, which leads to less discards and customer fines. There is a mix benefit within there as well because there are some high margin businesses in the Get Better bucket, like our oils business that's growing double digits now. There's a mix opportunity within the Get Better bucket as well. Long story short, we expect. You've seen a couple hundred basis points of margin this year. We expect you'll see another couple hundred basis points of margin next year.
By the time we get to the FY 2022 plan, we should be delivering pretty darn close to that 30% margin that we promised.
Thank you. That's helpful. Just a quick follow-up on, if you were to think about a fiscal year beyond the COVID period, fiscal 2022 is probably the first clean year. Is the EBITDA for that in your own internal planning, EBITDA for that year higher after versus say, six months ago, either as a result of COVID itself and some of the factors you see playing out, or just internally what's running in parallel in terms of your own portfolio management? How do you think about your post-COVID EBITDA reality versus six months ago? Thanks.
Yeah, it's a great question. It's very hard to forecast that given that nobody knows at this point what post-COVID looks like, and how much of these incremental trials that we got are going to remain. It's hard for me to answer the question. What I would say though is we were transforming the business before the pandemic. You know, I had promised that you would see the top line starting to bend on the Get Bigger brands beforehand. I think in one of the charts that we put in with the earnings today, you'll see that there was, I think, 8% growth on the Get Bigger brands the month before the pandemic started. We had already started to turn it. Right now, all of our Get Bigger brand categories, we're seeing growth in.
If we can sustain that growth, we will have a very robust profit picture when we come out of COVID. Obviously, there's a lot of the game to be played between now and the end of COVID, but I think given how we have performed during COVID, given our scrappy entrance into things like hand sanitizer, the amount of innovation that we're bringing out right now at a time when others are pulling back on innovation, the addition of marketing at a time when others are pulling back on marketing. I think all of that sets us up for a very good exit from COVID, but it's premature right now to say what does that look like in terms of a P&L.
Thanks very much.
Thank you. Our next question comes from the line of Ken Goldman with JP Morgan. Please proceed with your question.
Good morning. This is Anoori Naughton for Ken. I have one question and then one follow-up. The first question is, within personal care, you benefited from strong hand sanitizer sales in the fourth quarter. To what extent are you guys expecting sales in this category to continue to remain strong into the first quarter and beyond?
The hand sanitizer opportunity was obviously a once in a lifetime opportunity that came in front of us. We did have a business in Canada. We quickly expanded into the U.S. We had a strong fourth quarter in hand sanitizer. If you go to the store now, you'll see pretty much every store in America has got a lot of hand sanitizer in it. The good news is we are picking up permanent distribution on sanitizer. Whereas a lot of these others are in and out, and there have been many instances where people are using the wrong kind of alcohol and have had to recall their sanitizer. We think we're going to have a nice steady business for the long haul. We don't anticipate that sanitizer sales are going to be as elevated as they were during the beginning of the pandemic.
It's a very nice incremental business that we didn't have before, and it makes a great addition to a personal care portfolio that was growing very nicely beforehand and continues to grow very nicely through the pandemic.
Okay, great. Thank you. For a follow-up, I just wanted to ask a little bit about, are there any brands or categories that may be lagging your expectations, or areas that you'd call out where you could improve in fiscal 2021?
Yeah, so from a pandemic standpoint, the two categories that have been hit the hardest are fruit, which we talked a lot about on the call, and baby food. Moms were making their own baby food when they were self-isolating and mashing up bananas and carrots and things that they would typically buy in a packaged good format when they're out and about and need something on the go. We've seen that category start to rebound. We certainly have been unhappy with the results that we've had in baby over the last five, six months. That said, we have a terrific brand in the U.K., Ella's, which is a super premium brand, category leader. It has consistently picked up share during the pandemic, although, again, sales have been somewhat challenged. In the United States, we have Earth's Best, which is another fantastic brand.
You'll remember that Earth's Best only had a 2% EBITDA margin on Investor Day. We've been very aggressively doing SKU rationalization on that business and have improved the profitability considerably. We are now returning to how do we get the top line back to low single-digit growth. That's where we've got some work to do. We have some innovation coming, particularly in snacking in baby food, which is a much higher margin than the formula and the pouches. We're optimistic that we will start to see the top-line turn and the profitability will continue to expand.
Thank you.
Thank you. Our next question comes from the line of Michael Lavery with Piper Sandler. Please proceed with your question.
Good morning. Thank you.
Morning.
Morning, Michael.
You had mentioned that for the quarter, COVID had virtually no net impact on the top line at the total company level. Obviously, you called out some puts and takes between fruit and U.K. and then the upside in the U.S. You still at the total company level were in around a mid-single digit range. Would we hear you correctly that that's your expectation for a normalized top-line growth run rate?
Yeah, so we, you know, what we did was looked at what was our expectation for the quarter before COVID happened and what did we actually deliver. We delivered pretty much to the penny what we thought we were going to deliver on the top line. What's important again to note is we had a $25 million drag from the fruit business. That business by itself had a big impact on the overall COVID results. We saw some nice bumps in the results in North America. We saw some nice bump in the grocery business in Hain Daniels. I would tell you that the European non-dairy business has been growing high teens for several years, and frankly, we're capacity constrained. It has nothing to do with COVID, the fact that that has been growing as rapidly as it has been.
The $25 million drag from fruit offset the $25 million of gain that we had in those other parts of the business, netting us to basically zero for the quarter. I know it sounds hard to believe given COVID that there was no impact, but the math basically says we were up 25 and then we lost it all on fruits.
No, yeah. I think the mechanics you've laid out really nicely. I just want to understand maybe the thinking on a normalized pace and just if your plan was for this same arguably good top-line level, is this, depending on which way you measure, kind of three to seven, call it mid-single digit growth rate, what we should expect in a normal world is a little bit what I'm trying to get at, I think.
Yeah. What we had promised on Investor Day was mid-single digit top line on the Get Bigger brands. We were not quite there yet. We had been declining 1%-2% in the first half, and it was turning at the beginning of third quarter to low single digit top line. The International business had been growing about 1%-2%. We would expect that would've been its run rate ex-COVID. The Get Better brands, which had been declining mid-teens, we said we were going to get it into the -5 to -10 range, and it was moving in that area before COVID hit.
I think we're still, if you've stripped everything out, I would say we were pretty much at our long-term guidance already on the top line on the Get Better brands and the international piece, and we were moving toward our long-term guidance on Get Bigger with more work to do. We've really gotten the biggest bump on the Get Bigger brands, we had momentum before. We've got all this great innovation and marketing that I've been talking about that frankly has been muted by the pandemic because our ability to sell in innovation right now is less than it would've been otherwise when customers aren't resetting their shelves.
I think, long story short, low single top line digit on Get Bigger and international and mid- to high- single- digit decline on Get Better is about where we were performing before the pandemic and without COVID, about where we would be right now.
Okay. That's helpful color. A quick follow-up on margins. I know you called out the several hundred basis point lift you expect for first quarter. Can you just give a quick sense? That historically has been a seasonally lower quarter. I know your portfolio has evolved. Would that still be true, or is your margin run rate stabilizing across the year a little bit? Just trying to get a sense of just quite how high this might go.
Yeah. Q1 is typically our lowest margin quarter. Remember, we've got a big tea business and soup business. We tend to skew more heavily to the winter. The only business we really have that is summer-oriented is sun care. You sell all of that in the spring. The retailers see how much they sell through during the hot months. Really, it is our lowest volume quarter, and therefore, because we have less absorption in the plants, it tends to be our lowest margin quarter. That said, we're exiting 2020 with very strong momentum. We are 2/3 of the way through the quarter. I'll tell you, we're off to a very good start. The guidance that I gave around the quarter, we feel pretty confident that you're going to see some nice margin expansion within the quarter.
Great. Thank you very much.
Thank you. Our next question comes from the line of Bill Chappell with Truist Securities. Please proceed with your question.
Thanks. Good morning.
Morning.
Morning, Bill.
Hey, just first kind of big picture. You certainly in North America have some strong momentum, even excluding COVID. I'm just trying to understand, are your retail partners recognizing that? When I say that, as you look out to the planogram resets, to the innovation coming, stuff like that, is that something that will resonate in terms of shelf space gains, or is it just so, not chaotic, but there's such a mad rush for everything right now, it's tougher to pick the winners and losers per se for the retail partners? Just your thoughts. I know it's a ways off before the spring planogram reset, but there is some in the fall. Any thoughts there?
Yeah. Our relationships with customers have dramatically improved in the last 18 months for several reasons. First and foremost, we were not servicing the business 18 months ago. We had 70% service in personal care for nine months, as an example, and we couldn't keep the shelf stocked. Just our ability to keep the shelf stocked has improved our relationships, number one. Because any conversation with a retailer, when you come in and talk about promotions or innovation or whatever, their first response is, "I don't even want to talk to you until you can service the business." We've checked that box. Second, we came into the pandemic where other people really struggled with the surge in capacity, and we really serviced the business nicely through the pandemic.
We have, again, also kind of won some brownie points, if you will, around our ability to service the pandemic and things like the scrappiness on hand sanitizer when nobody could get it, and we were able to go to customers and provide them with something they desperately needed. All those kinds of things improved the relationship, then on top of that, we are now bringing a ton of innovation at a time when other people are pulling back their marketing and pulling back on their innovation because they're just trying to service the business. For example, in tea, where we've been growing 30%+ for the last five months, we're introducing 14 new items in tea. They're not just, here's another flavor of Sleepytime tea. It's energy, it's probiotics, it's melatonin.
It's a whole bunch of things that really didn't exist before within the category, that is being very well received by customers. We're bringing innovation at times when others aren't, and we're bringing real innovation versus line extensions, and that is going to bode well in terms of us picking up space. The last thing I would just say is, you got to remember, over the last 18 months, we've been reducing SKUs and eliminating uneconomic spending. As you're pulling money away from people and cutting back on the push with the retailer to grow the category, now that we've pivoted toward growth again, we are getting a very good reception from people, and they are excited about what we're bringing.
I believe that we are very well set up to be a net winner during the pandemic and a net winner coming out of the pandemic because of all the factors that I just mentioned.
Got it. No, that's extremely helpful. Just as a follow-up, back to kind of the gross margin question earlier on. Clearly, some of the gross margin benefit is just because you have high utilization rates. I know we don't know what consumption looks like post-COVID, but presumably it will go down some. I guess, how important is the step-up in CapEx over the next year to kind of holding those gross margin gains, or do you believe that actually gives you gross margin on top of what the gains you have? You can hold onto it and improve with this CapEx.
I think it will be on top of what we have. Look, one of the theses that we had when we did Investor Day was that the margin expansion that we were going to see on the Get Bigger businesses was going to be driven by plant absorption, was one of the key drivers. We're seeing that as given the surge in demand, we're certainly seeing very robust margins on the Get Bigger brands. We had EBITDA margins of 18% on Get Bigger in the fourth quarter with an investment in marketing, which is pretty strong EBITDA margins. Even if there's some mitigation in COVID. With the innovation and the marketing, the things that we said we were going to do to continue to grow mid- to high -single- digits on those businesses, that absorption should be there into the future.
The productivity programs that we have built in for fiscal 2021, there's a lot of automation on the back end of those lines. They're still very manual. Bringing automation will improve the margins even further. There's all the continued things that we've been doing in the middle of the P&L, like filling up trucks. When I got here, there was no volume minimum and no bracket pricing, so you got the same price whether you put one pallet on a truck or if it was a full truck. There was no incentive for people to fill up trucks, and we were paying for the same driver, the same maintenance, the same gas with an empty truck that now has moved from one or two pallets to, on average, a half a truck. Hopefully, as we move forward, we'll move toward being a full truck.
There's still plenty of innings left in the ballgame in the middle of the P&L in terms of margin, and we expect that those improvements will be on top of what we've already delivered.
That's great. Thanks so much.
Thank you. Our next question comes from the line of Rob Dickerson with Jefferies. Please proceed with your question.
Hey, good morning. It's Matt on for Rob. Congrats to you and the team on the solid execution this year, all things considered. Thanks very much for the question.
Thank you.
As you've pointed out before, your 60/40 North America-international split allows you to compare trends and share strategy successes between the two segments. While the International business is trying to look more like the North America business from a top-line acceleration and margin expansion perspective, relative to peers without significant international exposure, you're getting a more hands-on education on pandemic trends abroad, and potentially future trends here in the U.S. First, just generally, what are some of the key differences that you're seeing between where the U.S. consumer is with COVID and perhaps the macroeconomic situation versus your European rest-of-world markets? In your opinion, are the European consumer behavior changes post-lockdown still the best guess for what's to come down the pike for the U.S.?
It's a great question. What's interesting about international, it's largely a European business for us, U.K. and continental Europe. It behaves a lot like the U.S. states do. You have some states that are in lockdown and are very slow to open, and you have other states that are acting like there's nothing going on. We see the same kind of behavior in Europe. The U.K., I would say, is still the one under the most lockdown. Restaurants have not opened yet. People are not working back in the office. The impact of the pandemic is much more like the beginning of the pandemic was here. When you get to continental Europe and you look at places like Germany or Austria, where we have factories, it's business as usual. They've been going to the office throughout the pandemic. They have an open society.
There's very little restrictions. Restaurants are full. People don't wear masks. It's a very different dynamic. It really depends on what you're looking at specifically. What I would tell you overall, I think Europe has its act together more than we do. You see that in the strengthening of their currencies versus the dollar. I think that they have figured out how to contain the pandemic and keep the economy moving, where it's been more either/or here. We're either doing one well or the other well. I think there are lessons to be learned in terms of how they're managing it. I think we are moving in that direction, and we'll be closer to continental Europe as we move forward. That's probably, for my business, that's the best leading indicator of what's coming here. I don't have great visibility into Asia, as an example.
I think continental Europe's ahead of us and the U.K. is behind us in terms of reopening of society and getting back to business as usual.
Okay. Yeah, that's very helpful. I guess on that topic, do you have any visibility into the international businesses' household penetration, repeat rates, and isolation? How would they compare to North America trends, and would that even be a fair proxy for North America trends directionally going forward?
Yeah, I don't have as much visibility into the panel data that we get here. In the Europe business, which is largely driven by our non-dairy beverages, a good portion of that is private label, so we don't even buy the syndicated data. We have some good brands there. They grow 20%. Like I said, we're more constrained by capacity than anything else. We could grow faster if we could get capacity faster, which is what has been our kind of relentless rally cry here. I think in the U.K., where we have a lot of number one and number two share brands, I think the surge from the pandemic was smaller than we saw here. I'm seeing high- teens growth on the Get Bigger brands here.
I'm seeing more like 10% growth on the brands there, but I don't have great visibility into panel data in terms of increased households and repeat rate. I do see similar center-of-store growth. I do see growth in more of the cooking brands like we see here in the United States. I think the consumer trends are similar. It's just a little bit more of a muted surge and certainly a slower reopening of the economy.
Okay. Thank you very much.
Thank you. Our next question comes from the line of Alexia Howard with Bernstein. Please proceed with your question.
Good morning, everyone.
Good morning.
Good morning, Alexia.
First of all, can I just dig into the productivity improvements that are causing the bump to CapEx this year? I think you've alluded to what kind of projects those are going to be. How much cost saving do you actually plan to get out, over what timeframe, as a result of that spend? Then I have a follow-up.
Yeah. All of the projects, we obviously look at the IRR and the NPV. I'd say on average, you're looking at a two- to three-year payback on the capital. We have probably 25% more capital this year than last year, so there's a robust number of productivity projects that we have. The implementation of those projects are staggered throughout the year. Some of them have already taken place, others will take place in the middle of the year or later. The other thing I would mention is with this integration of varying divisions in international, similar to what we've done in the U.S. with Canada, there's a whole stream of productivity projects that are just being finalized that will start to come online toward the end of the fiscal year and will reap big dividends as we get into FY 2022.
I think you're going to see similar several hundred basis points of margin expansion this year from productivity and a lot of acceleration of productivity projects into the FY 2022 algorithm, given the timing of the spending this year.
Great. As a quick follow-up, how much do you expect your marketing spend to be up this year, and how much was it up in fiscal 2020?
Do you know how much it was up in 2020? While Javier is looking up the exact number, I know it grew in the last three quarters of the year, but we'll get you that number while I answer the other question. What's interesting right now on marketing is, if you think about it, airlines aren't marketing, cruise lines aren't marketing, hotels aren't marketing. The cost of marketing has dropped dramatically. For flat spending, I can get 25%- 30% more bang for the dollar than I did in previous years. The amount that I'm going to spend this year, Alexia, is going to be dependent really on the cost. Right? If I can get 30% more impact for the same spending, I probably won't increase my marketing very much this year, but I'll get a hell of a lot more for what I'm spending.
If the economy comes back and everybody starts to spend at more normalized levels and the costs go back up, then we'll have to evaluate whether we need to add more spending or not. It's a little bit of a dynamic number depending on the cost per impression relative to what I've been paying historically. This year, Javier?
For this year, Alexia, our overall marketing spending grew about 5%. That's 2020 versus 2019. For 2021, the total dollar amount will be consistent with how we grew the marketing in 2020.
Got it. Thank you very much. I'll pass it on.
Yeah. The good news, Alexia, just one last comment, is we're getting close to 5% of sales on marketing in North America. It's higher for the Get Bigger brands and it's lower for Get Better. We're in a pretty good place on our spending. The one category we're probably still a little light on is personal care because it's more of a fashion business, if you will, and tends to have higher spending levels. Across the rest of the brands in North America, I think our spending levels are pretty good. It really comes down to improving the effectiveness of what we're spending, putting more into working dollars instead of non-working dollars. We've done a lot of agency consolidations to get more of those dollars working. What's really the cost of what I'm buying relative to what I've paid historically.
Thank you. Our next question comes from the line of John Baumgartner with Wells Fargo. Please proceed with your question.
Good morning. Thanks for the question.
Morning.
I guess first off, Mark, I wanted to come back to, you highlighted the strength in international sales, excluding the fruit business. Last quarter, one of the themes was that private label in Europe was benefiting from consumer trade down. I'm curious, why do you think private label is seeing that trade down in Europe, but as of yet, you haven't really seen it in the U.S.? Is this purely just differences in government stimulus, do you think, or is there something else going on at retail that explains that differential?
Yeah. In Europe, private label is a much, much, much bigger percentage of sales than it is in the U.S. The development of private label is double what it is here. You're looking at categories with 30%, 35%, 40% private label, whereas here, it's a much smaller number. Consumers are very used to buying private label. They consider those brands as good as the stuff coming from the manufacturers that are branded. It's a very different dynamic. When I tell you we've got a big private label non-dairy business in Europe, that is important because 40% of the category is private label. Even if you want to be a branded player, you probably have to provide some level of private label to get your foot in the door on the branded side.
It's not surprising to me that in a pandemic where people are cash-strapped, they're worried about their future, that they are trading down to private label. Here, I don't think people are as cash-strapped because of all the stimulus that we've put in place, and private label is less accepted here and used in normal life than it is over there. We've not seen a very big impact at all for private label thus far in our categories, and we don't anticipate that that's going to change very much as we go through the pandemic, particularly given that this is a virus and people are very worried about health and wellness. They're worried about immunity. They're worried about staying healthy.
Being at the core of health and wellness, which is where our company is situated, I think we're very well-positioned for this pandemic relative to other people that we compete against.
Okay, great, thanks for that. Just a follow-up on cash usage. Leverage is in a very good place right now at two times, as you mentioned, but there wasn't much activity in terms of share repurchase in Q4 as the stock moved higher. How do you think about the order of importance from here? Are buybacks still at the top of your list? Is M&A still at the bottom? In terms of M&A, with all the moving parts on restructuring right now, at what point will the activities be complete where you feel like you can bolt on, integrate new assets? When do you have that bandwidth, if you don't have it already? Thank you.
Yeah, let me answer the first part and then I'll have Javier talk about our capital allocation strategy. Look, we are continuing to reshape our portfolio and there will be additional divestitures along the way, but a lot of heavy lifting's been done. We've gotten rid of almost $800 million worth of sales over the last two years. While there still is a tail, and you saw that in the four brands that we divested in Q4 and Danival that we divested earlier this quarter, a lot of the heavy lifting has been done. The fruit business is something we're going to have to deal with at some point in the future. We are ready for acquisitions if the right one comes along. I'll let Javier talk about our capital allocation strategy.
Now that we've got debt in a good place, we're looking at a number of ways to return value to shareholders. Javier?
I would echo what Mark said. I wouldn't necessarily say that share repurchases come higher than M&A. After we take a look at all of our internal opportunities, we're sort of agnostic as to where to put our money, and we evaluate M&A, and if it's attractive, we dive deep into that. Otherwise, we look at share repurchases. It's just a matter of where do we think it's the most attractive place to put our money.
Great. Thanks, everyone.
Thank you.
Thank you. Our next question comes from the line of Anthony Vendetti with Maxim Group. Please proceed with your question.
Thank you. Just a quick follow-up, Mark, on the fruit business. I know you're aggressively trying to address that. Do you have a timeframe on when you expect to reach a decision on that? Just a follow-up on the online business. What have you seen there during this quarter?
Yeah. Look, on fruit, we are exploring optionality as we speak. We recognize it's a non-core asset, it's a different skill set, it's very low margin, and it has become a very significant drag on our performance that's masking some terrific performance in international and muting the overall performance of the company. More to come on that in the future. We are aggressively looking at options there. With regard to online, as I've said on previous calls, this is a very significant part of our business. It's more than 10% of our sales. It's been growing close to 100% consistently since the beginning of the pandemic. This company started in the natural channel in e-commerce, we are very well-positioned there. We have very strong relationships.
The one piece that has picked up considerably, that was not really a big part of our e-commerce business previously, was Instacart, which is now a very meaningful part of our e-commerce business. We've always had a very robust Amazon business. I think I've said on previous calls that Sensible Portions is one of the top food brands on Amazon. We sell a ton of personal care on Amazon. We sell a ton of baby food on Amazon. Now with the resurgence of Walmart.com and Target.com and Kroger, we continue to see very robust growth across the board and it has not really slowed down much at all. There was that initial massive surge in March and it's kind of stabilized at about double what it was pre-pandemic.
Okay, great. Thank you very much.
Thank you.
Thank you. Ladies and gentlemen, that concludes our question and answer session. I will turn the floor back to Mr. Schiller for any final comments.
Thank you all for your time today. Obviously, we are coming off a very strong year and feel very bullish on the year ahead. I hope you all have an opportunity to attend Barclays in a couple of weeks. We'll bring some more color to our plan for FY 2021. Thank you for your time today, and we look forward to continued dialogue. Have a great day.
Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.