What Drove Hain Celestial’s Strong Revenue in Fiscal 3Q16?



Fiscal 3Q16 revenue was driven by acquisitions

Hain Celestial Group’s (HAIN) fiscal 3Q16 year-over-year revenue growth of 13% was due to the Joya and Orchard House Foods acquisitions. These acquisitions were completed after the third quarter of fiscal 2015. Net sales for fiscal 3Q16 came in around $750 million, beating analysts’ estimates by 2%.

Other acquisitions such as those of The Orchard House, Mona Group, Empire, Kosher, and Belvedere also contributed $93.5 million to net sales in fiscal 3Q16. However, foreign exchange had an impact of $13.9 million on revenue. The company operates through four geographical segments, which showed a strong performance for the quarter. Brands that have contributed to the revenue growth are Imagine, Garden of Eatin’, Plainville Farms, The Greek Gods, Terra, Tilda, Yves, FreeBird, Spectrum, and Sensible Portions, along with personal care brands such as Alba Botanica and JASON.

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Earnings rose

Earnings for the third quarter grew 9% year-over-year and were in line with analysts’ estimates. Adjusted EPS (earnings per share) came in around $0.49 for fiscal 3Q16, with an impact of $0.01 per diluted share from currency translation.

Gross margin fell slightly

Various factors were responsible for the 120-basis-point decrease in gross margin for 3Q16. These factors included the composition of the US segment’s sales mix. On a sequential basis, the company’s margin increased 100 basis points with the impact of Project Castle and the cost of US dollar purchases in the company’s Canadian business.

Peers’ performances

Hain Celestial’s competitors in the industry include Cal-Maine Foods (CALM), Mead Johnson Nutrition Company (MJN), and Pinnacle Foods (PF). They recorded revenues of $303 million, $942 million, and $756 million, respectively, for their last reported quarters. The PowerShares DWA Consumer Staples Momentum Portfolio (PSL) invests 3.4% of its holdings in Pinnacle Foods.


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