Hain Celestial is raising prices, increasing employee pay and benefits, and prioritizing customer service as it faces inflation, a tight labor market and supply chain disruptions, CEO Mark Schiller told investors during Tuesday morning's earnings call.

Those problems challenge the entire industry right now, he noted as he discussed the company's strategies to conquer them. Although Hain executives anticipated mid-single-digit inflation in North America and low-single-digit inflation in Europe, crop prices are higher than expected and transportation costs have skyrocketed, Schiller said.

Nonetheless, Hain's Q1 performance on both the top-line and the bottom-line were better than the guidance it provided during the last earnings call, he said.

The first quarter of fiscal year 2022 ended Sept. 30. Price increases of between 6% and 10% in North America were just starting to take effect in September, but consumers haven't changed their buying habits yet. With another $20 million to $25 million hit to the bottom line predicted, the company intends to raise prices again in the second half of the year, he said. Those increases likely will hit stores in the middle of the third quarter, he added.

"These increases will be across many brands and include multiple pricing levers," Schiller said.

Related:Hain Celestial introduces next strategy to increase sales, profits

To address its staffing needs—during Q4, the company couldn't fully staff third shifts at some of its factories, meaning the production lines weren't running 24 hours a day—Hain increased wages, improved benefits, provided incentive pay and offered "other things to make sure that we're the preferred manufacturer in town," he said. Distribution centers and warehouses are now fully staffed.

"We filled about two-thirds of the positions that we had open at the end of Q4. So, we've actually had a terrific quarter in terms of resolving some of the labor challenges that we have," Schiller said. "We've fully staffed up our distribution and warehousing facilities. We have made significant progress in our manufacturing plants, particularly where we were challenged in terms of our ability to manufacture enough product to keep up with demand. We still have some openings, but we're solving it."

The company can't do much about the shortage of truck drivers, though.

"Also impacting the entire industry, transportation remains our biggest challenge," Schiller said. "The shortage of drivers here and abroad is well known, resulting in delayed receipt of inbound materials, inability to secure trucks and many scheduled orders not being picked up on time. When this occurs, it impacts both service and costs."

Related:Hain Celestial meets EBITDA goal one year early

To reduce the number of trucks needed, Hain is consolidating orders and working with its customers to define delivery and pick-up windows.

"We’re prioritizing service even when it means increased costs because, one, in times of significant supply disruption, strong service leads to increased shelf space and merchandising opportunities," Schiller explained. "Two, additional sales growth will generate profit dollars to help offset the inflation. And three, it strengthens our customer relationships and positions us as a reliable, go-to partner in the future, especially when many are struggling with their service levels."

Q1 financials were better than expected

In its guidance for the first quarter of fiscal 2022, Hain expected a net sales drop in the low double-digits. But compared to last year, sales fell 9%; the decrease was 6% compared with fiscal 2020, before the COVID-19 pandemic started.

Adjusted net sales, which were predicted to drop in the low- to mid-single digits, were flat compared with fiscal 2021 and up 10% from fiscal 2020. In North America, adjusted net sales were down 1% and up 8% from fiscal 2020.

"This is strong performance given that year-ago comparisons include significant headwinds including overlapping $8 million of pandemic-driven hand sanitizer sales and explosive growth in several of our largest categories," Schiller said.

The company also forecast that adjusted EBITDA dollars would drop in the mid- to high teens range. Compared with fiscal 2021, it was down 14%, while it was up 47% compared with fiscal 2020.

"Particularly encouraging, we also experienced strong double-digit consumption growth that accelerated through the quarter and into Q2 across many of our growth brands which, collectively, make up about 70% of our North American sales," Schiller added.

Hain Celestial reported these Q1 results:

The company also reported that it repurchased 4.5 million shares, or 4.6% of the outstanding common stock, at an average price of $38.80 per share.

Chief Financial Officer Javier Idrovo said Hain expects to deliver on its full-year guidance, even as it estimates inflation to reach above 6%. The company's goal is to regain the profit dollars, not the margin percentage he said.

"We expect the following: net sales to be down low single-digits on an adjusted basis in the first half of fiscal year 2022, and improvement over our initial first-half guidance announced by mid-to-high single digits in the second half," he said. "To note, during Q2 fiscal year '22, we're overlapping a Brexit related volume pull forward that benefited net sales growth in Q2 fiscal year '21 by about 4%, and adjusted EBITDA to be down mid-single-digits in the first half of fiscal year 2022 and up-low double-digits in the second half."