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A Quick Look at Hain Celestial’s Recent Performance

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Jan. 5 2018, Updated 2:30 p.m. ET

Fiscal 1Q18 recap

Hain Celestial’s (HAIN) sales of $708.3 million easily beat analysts’ consensus estimate of $698.1 million and rose 3.9% YoY (year-over-year) in fiscal 1Q18 (which ended on September 30, 2017). The company reported its fiscal 1Q18 results on November 7, 2017. Its sales were driven by strong performances in Europe and Canada.

In the United States, Hain’s sales improved 4%. Inventory realignment proved to be a drag on US sales to an extent. Moreover, the contribution from Ella’s Kitchen, which was included in the company’s US sales numbers, has been now moved to the UK segment.

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Several brands, including Earth’s Best, Hartley’s, Avalon Organics, New Covent Garden Soup, Arrowhead Mills, and Live Clean, reported double-digit growth in the quarter, according to the company. Hain added that organic products had witnessed mid-single-digit growth across the United States. Overall, the company’s sales rose 3.3% on a constant currency basis.

Ever since the arrival of Amazon (AMZN), consumer preferences have shifted toward online shopping. Hain Celestial, like most retailers, has been working on increasing the digital presence of its brands. In fiscal 1Q18, the company reported that its overall online sales had grown 30%, with many platforms registering growth of over 40%.

The company’s adjusted EPS (earnings per share) of $0.23 fell in line with analysts’ consensus estimate while growing 64.3% YoY.

Margins

The company’s adjusted gross margin rose 220 bps (basis points) to 19.1% driven by cost-effective trade promotions, higher margins at Hain Pure Protein, and operational effectiveness across the UK segment. Its adjusted operating margin was 5.6%, a rise of 160 bps YoY.

In comparison, peers ConAgra (CAG) and the Campbell Soup Company (CPB) reported subdued margins due to increased input, transportation, and logistics costs, which eroded the benefits of cost savings.

Guidance reiterated

Hain Celestial expects its sales to be in the range of ~$2.97 billion–$3.04 billion, representing a rise of 4%–6% YoY. Its adjusted earnings are estimated be ~$1.63–$1.80 per share, representing a rise of 34%–48% YoY. Its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) are projected to be in the range of $350 million–$375 million, a rise of 27%–36% YoY.

Let’s look at the performances and strategic efforts of the company’s segments in the next article.

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