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Hain Celestial Q1 Earnings In Line, Sales Miss; View Intact

The Hain Celestial Group, Inc.HAIN came out with its first-quarter fiscal 2016 results, posting its third straight quarter of in-line earnings, while revenues succumbed to a miss after beating estimates in the past two quarters. Shares of the Zacks Rank #4 (Sell) company slipped 1.9% in the after-market session, following the announcement.

The company delivered quarterly adjusted earnings of 37 cents per share that met the Zacks Consensus Estimate and climbed 8.8% year over year. On a reported basis, the company's earnings came in at 30 cents per share, up 66.7% from the year-ago period. This included a negative impact from unfavorable currency movements of approximately a penny.

Net sales advanced 8.9% to $687.2 million, benefiting from the company's diverse brand portfolio, along with gains from acquisitions. However, the top line, which bore the brunt of foreign currency headwinds, fell short of the Zacks Consensus Estimate of $703 million. On a currency neutral basis, sales grew 11% year over year.

Net sales in the U.S. dipped 1.7% year over year to $331.2 million in the quarter, whereas net sales in the U.K. went down nearly 4% to $165.4 million. Operations in the Rest of World segment witnessed a 29.7% increase in net sales to $66.6 million, while Hain Pure Protein Corporation ("HPPC"), which was acquired in Jul 2014, saw a spectacular 75.4% surge in net sales to roughly $124 million.

During the quarter, the company registered strong year-over-year growth on a constant currency basis from brands like The Greek Gods, Lima, Plainville Farms, Linda McCartney, Alba Botanica, Terra, JASON, Yves Veggie Cuisine, Garden of Eatin', Celestial Seasonings, Tilda, and FreeBird. Also, the top line received robust contributions from Joya, Kosher Valley, Empire and Live Clean brands, acquired earlier.

Gross profit jumped 20.8% year over year to $152 million in the reported quarter. Adjusted operating income grew 7.5% to $63.2 million, while adjusted operating margin remained flat at 9.2% of sales.

Other Financial Details

The company ended the quarter with cash and cash equivalents of $147.7 million, long-term debt (excluding current maturities) of nearly $843.3 million, and shareholders' equity of $1,781.6 million. Cash flow from operating activities in the first quarter came in at $5.8 million, while capital expenditures were $19.5 million. The company generated operating free cash flow of ($13.7) million during the quarter.

Guidance

The company's performance remains impressive, marked by record sales and earnings growth as well as its focus on productivity enhancement which led to profitable global expansion. Management is particularly pleased with contributions from the HPPC segment and strength noted in its global businesses in Canada, Continental Europe and the U.K. (all on a currency neutral basis).

Going forward, Hain Celestial is likely to sustain its strong momentum and appears favorably positioned to capitalize on the growing global demand for organic products, given its diversified portfolio, solid consumer base and efforts to make constant brand investments. Alongside, the company is poised to gain from its recent acquisitions of Mona Group, Belvedere International and EK Holdings, Inc. Taking cue from these positives, the company retained its sales and earnings guidance for fiscal 2016,.

Management anticipates net sales in the band of $2.97-$3.11 billion, up 10%-15% year over year. Further, earnings per share are now envisioned in the range of $2.11-$2.26, an increase of 12%-20% from fiscal 2015. The current Zacks Consensus Estimate for the fiscal stands at $2.18 per share.

Additionally, the company continues to expect productivity savings to the tune of $60 million for fiscal 2016, against $55 million achieved in fiscal 2015.

With regard to the second quarter of fiscal 2016, management anticipates it to be the strongest from the sales perspective. From the bottom-line viewpoint, the second quarter is expected to witness slight year-over-year improvement.

Stocks to Consider

Better-ranked stocks in the same industry include B&G Foods Inc. BGS , Boulder Brands, Inc. BDBD and The Chefs' Warehouse, Inc. CHEF , each with a Zacks Rank #1 (Strong Buy).

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HAIN CELESTIAL (HAIN): Free Stock Analysis Report

B&G FOODS CL-A (BGS): Free Stock Analysis Report

BOULDER BRANDS (BDBD): Free Stock Analysis Report

CHEFS WAREHOUSE (CHEF): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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