Rise in consumption, expanded distribution and productivity
The Hain Celestial Group Inc
) to post first-quarter 2013 adjusted earnings of 40 cents a
share, up 33.3% from the prior-year quarter's earnings of 30
cents. Moreover, earnings came ahead of the Zacks Consensus
Estimate of 39 cents.
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HAIN CELESTIAL (HAIN): Free Stock Analysis
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Including one-time items, earnings came in at 42 cents compared
with 28 cents a share earned in the year-ago quarter.
Net sales from continuing operations surged 25.4% year over year
to $359.8 million, reflecting rise in demand for natural organic
products. The company noted that total consumption grew 9%.
Including sales of the United Kingdom private label chilled ready
meals operations (discontinued business), revenue came in at $372
million compared with $292.3 million in the year-ago quarter. The
Zacks Consensus Estimate was $371 million for the quarter.
The company registered elevated consumption in core categories
with robust contribution from Earth's Best, MaraNatha, Terra,
Garden of Eatin, The Greek Gods, Sensible Portions, New Covent
Garden Soup Co, Johnson's Juice Co, Cully & Sully, Linda
McCartney, Spectrum, Arrowhead Mills, Alba Botanica and Europe's
Best. Hain Celestial also experienced solid sales across
Gross profit ascended 19.3% year over year to $95.2 million
during the quarter. However, gross margin contracted
approximately 130 basis points during the quarter to 26.5%.
Adjusted operating profit jumped 29.8% to $32.9 million in the
quarter, while adjusted operating margin expanded approximately
30 basis points to 9.1%, indicating an approximate 170 basis
points decline in SG&A as a percentage of sales.
The company ended the quarter with cash and cash equivalents of
$36.2 million, long-term debt of $360.2 million and shareholders'
equity of $1,008.9 million.
Acquisitions Driving Growth
The company recently completed the earlier announced acquisition
of leading packaged grocery brands -Hartley's, Gale's
Robertson's, Frank Cooper's and Sun-Pat - from Premier Foods plc.
Acquisitions have played a vital role in Hain Celestial's
strategy of building market share. These have not only widened
the company's geographical presence, but also provided
opportunities to cross-sell products in the U.S., Canadian, and
The company expects the deal to be accretive to its second
quarter 2013 results. Moreover, it is expected to result in
incremental sales since it will provide the company a strong
foothold in the packaged food and grocery market, which is
swiftly strengthening its grip.
As the buyout has now been completed, Premier Foods will be a
part of the Hain Daniels Group and is expected to generate sales
of about $180 million for the 8 months period closing on June 30,
2013. Moreover, it will add approximately 25 cents, excluding the
charges related to acquisition, to the earnings.
In a separate story, the company announced that it has agreed to
acquire the New York based BluePrint. However, the financial
terms of the deal were not disclosed. The company expects to
close the deal by the end of calendar year 2012.
The company hopes to sustain strong momentum across entire
business segments as it remains well positioned to capitalize on
the growing global demand for organic products.
Alongside, the company anticipates sales to be in the range of
$1.780 billion to $1.795 billion in fiscal 2013 (excluding
results for the discontinued operations of private label chilled
ready meals). Earnings are expected to be in the range of $2.35
to $2.45 a share.
Going forward, we believe that the company will be able to
mitigate the cost pressures through increased productivity and
Moreover, Hain Celestial has undertaken a number of initiatives
to improve its performance and has put itself on the growth
trajectory. The company's Stock Keeping Unit ("SKU")
rationalization program has helped eliminate SKUs, which had
lower sales volume or weak margins. Management remains focused on
improving profitability through new product introductions while
Currently, we have a long-term 'Neutral' recommendation on the
stock. Hain Celestial, which competes with
General Mills Inc
) holds a Zacks #3 Rank, which translates into a short-term