1Q16 doesn’t seem a good quarter for the company
Hain Celestial Group (HAIN) didn’t record a profitable first quarter after the impressive performance in its fourth quarter. The company’s 1Q16 net sales of $687.2 million rose 9% over the corresponding quarter a year ago. However, they missed the consensus estimates by 2%. The company recorded adjusted net sales of $642.6 million on a constant currency basis, a rise of 11% over 1Q15.
The company earned net earnings of $31.3 million, a rise of 67% over 1Q15. The adjusted net income of $38.2 million was a 10% rise compared to the prior year’s first quarter. The company recorded first quarter earnings per diluted share of $0.30, a 67% rise over 1Q15. Adjusted earnings per diluted share were $0.37, a 9% rise over 1Q15. Gross profit rose 20.8% year-over-year to $152 million in the reported quarter. Operating income reported was $57.5 million or 8.4% of net sales, and adjusted operating income was $63.2 million or 9.2% of net sales.
Factors that impacted 1Q16 performance
Net sales were negatively impacted by $24 million as a result of foreign exchange rate movements versus the corresponding quarter a year ago. Foreign currencies negatively impacted reported results by $0.01 per diluted share. The company’s net sales fell by ~$24 million compared to 1Q15 due to the strengthening US dollar. Foreign exchange also partly played a role in the fall since 37% of the company’s sales are generated internationally.
The company showed strong sales growth in constant currency in some of its major brands like Plainville Farms, Linda McCartney, Terra, Alba Botanica, JASON, Tilda, and Garden of Eatin’. A few other brands that were acquired during fiscal 2015, like Empire, Kosher Valley, Joya, and Live Clean, also contributed to the growth in sales.
Hain Celestial’s competitors in the industry include Cal-Maine Foods (CALM) and Pinnacle Foods (PF). They reported gross margins of 43.1% and 27.8%, respectively, for their last quarter. The First Trust US IPO Index ETF (FPX) and the Guggenheim Mid-Cap Core ETF (CZA) invest 0.45% and 0.66%, respectively, of their portfolios in PF stock as of November 9.