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Hain Celestial (HAIN) Q4 Earnings Miss Estimates, Sales Down
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The Hain Celestial Group, Inc.’s (HAIN - Free Report) fourth-quarter fiscal 2021 sales and earnings missed the Zacks Consensus Estimate. On a year-over-year basis, the top line declined, while earnings improved.
Quarterly performance was affected by tough year-over-year comparisons, thanks to elevated demand conditions stemming from the pandemic in the prior-year quarter. Divestitures and brand discontinuations were other headwinds. The company provided a dismal view for the first half of fiscal 2022, as it continues to lap the gains of high consumption in the year-ago quarter.
Shares of this organic and natural products company declined 9.1% during the trading session on Aug 26, following fourth-quarter results announcement. The company’s shares declined 10.8% in the past three months against the industry’s fall of 7.9%.
Image Source: Zacks Investment Research
Quarter in Detail
Hain Celestial posted adjusted earnings of 39 cents a share that came a penny below the Zacks Consensus Estimate of 40 cents. Nonetheless, the bottom line increased 22% from 32 cents reported in the prior-year quarter. Higher margins acted as an upside.
Net sales came in at $450.7 million that fell short of the consensus mark of $462.3 million. The top line declined 12% year on year on a reported basis and 17% on a constant-currency (cc) basis. Overlapping of pandemic-led volume surge witnessed in the prior-year quarter affected the top line. Divestitures and brand discontinuations hurt sales by 900 basis points (bps). Currency acted as a tailwind and contributed around 470 bps to sales. On adjusting for divestitures, discontinued brands and foreign exchange, net sales fell 8% year over year. Adjusted net sales increased 5% from fourth-quarter fiscal 2019 levels.
Adjusted gross margin increased 49 bps year on year to 25.7%, buoyed by gains from supply-chain productivity initiatives and sale of the fruits business. The upsides were partly offset by labor cost inflation as well as higher delivery and warehousing expenses in the United States. Adjusted gross margin improved more than 300 bps from fourth-quarter fiscal 2019 levels.
Adjusted operating income was $53 million in the reported quarter, up 10.6% from $47.9 million in the year-ago quarter. Adjusted EBITDA increased 9.5% year on year to $68.1 million. Adjusted EBITDA margin expanded 296 bps to 15.1%. The expansion was fueled by high gross margin and lower SG&A expenses.
The Hain Celestial Group, Inc. Price, Consensus and EPS Surprise
Net sales in the North America segment fell 15% year over year to $253.3 million. On adjusting for currency movements, divestitures and discontinued brands, net sales declined 12%. The decline was caused by lapping of elevated at-home food consumption in the prior-year quarter, due to the pandemic. The lapping of strong hand sanitizer sales in the prior-year quarter marked a headwind of more than 300 bps. Sales of the Get Bigger brands, which accounted for nearly 71% of North America net sales, showed a 9% decline year on year.
Segment adjusted operating income declined 24% to $29.6 million. The segment’s adjusted EBITDA amounted to $34.8 million, down nearly 20%. Moreover, adjusted EBITDA margin contracted 92 bps to 13.7%.
International net sales declined 7% year over year to $197.3 million. Foreign exchange aided sales by nearly 9%, while divestitures marred sales by 16%. On adjusting for foreign currency fluctuations, divestitures and discontinued brands, net sales dropped 1% year over year.
Segment adjusted operating income rose 38% to $31.3 million. Adjusted EBITDA was $38.3 million, up 28% year over year. Adjusted EBITDA margin expanded 536 bps to reach 19.4%.
Other Financials
The Zacks Rank #3 (Hold) company ended the reported quarter with cash and cash equivalents of $75.9 million, long-term debt (excluding current portion) of $230.5 million and total shareholders’ equity of $1,522.9 million.
Cash provided by operating activities from continuing operations was $50.2 million and operating free cash flow from continuing operations was $31.8 million in the reported quarter.
The company’s board approved an additional share repurchase plan worth nearly $300 million. The new buyback plan will commence after the company completes its existing 2017 authorization. As of Jun 30, 2021, the company had $82.4 million remaining under the 2017 authorization.
In the fourth quarter, the company repurchased 0.7 million shares for $27.2 million, excluding commissions, under its existing share buyback program. During fiscal 2021, the company repurchased 3.1 million shares for $107.4 million, excluding commissions.
Outlook
For fiscal 2022, the company expects low single digits growth in adjusted net sales, year on year. Considering high demand witnessed in the first half of fiscal 2021, stemming from the pandemic, timing of price increases and other factors, the company expects adjusted net sales to be down low to mid single digits in the first half of fiscal 2022. For the second half of the fiscal, adjusted net sales is expected to be up in the mid to high single digit. The company expects adjusted net sales growth of high single digits from fiscal 2019 levels.
The company anticipates adjusted gross margin to expand in fiscal 2022. Adjusted EBITDA is expected to grow in the mid to high single digit range, year on year. Adjusted EBITDA is expected to be close to flat in the first half of fiscal 2022 and up high single digits to low double digits in the second half. It expects adjusted EBITDA and EBITDA margin growth to be at least 65% and 500 bps, respectively, from fiscal 2019 figures.
For first-quarter fiscal 2022, the company expects adjusted net sales to be down low to mid single digits, year on year. On a reported basis, net sales are expected to be down low double digits year on year. Adjusted net sales is expected to be up mid to high single digits from first-quarter fiscal 2020 levels. Adjusted gross margin is expected to expand year on year, while adjusted EBITDA is expected to decline in mid to high teens range.
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Hain Celestial (HAIN) Q4 Earnings Miss Estimates, Sales Down
The Hain Celestial Group, Inc.’s (HAIN - Free Report) fourth-quarter fiscal 2021 sales and earnings missed the Zacks Consensus Estimate. On a year-over-year basis, the top line declined, while earnings improved.
Quarterly performance was affected by tough year-over-year comparisons, thanks to elevated demand conditions stemming from the pandemic in the prior-year quarter. Divestitures and brand discontinuations were other headwinds. The company provided a dismal view for the first half of fiscal 2022, as it continues to lap the gains of high consumption in the year-ago quarter.
Shares of this organic and natural products company declined 9.1% during the trading session on Aug 26, following fourth-quarter results announcement. The company’s shares declined 10.8% in the past three months against the industry’s fall of 7.9%.
Quarter in Detail
Hain Celestial posted adjusted earnings of 39 cents a share that came a penny below the Zacks Consensus Estimate of 40 cents. Nonetheless, the bottom line increased 22% from 32 cents reported in the prior-year quarter. Higher margins acted as an upside.
Net sales came in at $450.7 million that fell short of the consensus mark of $462.3 million. The top line declined 12% year on year on a reported basis and 17% on a constant-currency (cc) basis. Overlapping of pandemic-led volume surge witnessed in the prior-year quarter affected the top line. Divestitures and brand discontinuations hurt sales by 900 basis points (bps). Currency acted as a tailwind and contributed around 470 bps to sales. On adjusting for divestitures, discontinued brands and foreign exchange, net sales fell 8% year over year. Adjusted net sales increased 5% from fourth-quarter fiscal 2019 levels.
Adjusted gross margin increased 49 bps year on year to 25.7%, buoyed by gains from supply-chain productivity initiatives and sale of the fruits business. The upsides were partly offset by labor cost inflation as well as higher delivery and warehousing expenses in the United States. Adjusted gross margin improved more than 300 bps from fourth-quarter fiscal 2019 levels.
Adjusted operating income was $53 million in the reported quarter, up 10.6% from $47.9 million in the year-ago quarter. Adjusted EBITDA increased 9.5% year on year to $68.1 million. Adjusted EBITDA margin expanded 296 bps to 15.1%. The expansion was fueled by high gross margin and lower SG&A expenses.
The Hain Celestial Group, Inc. Price, Consensus and EPS Surprise
The Hain Celestial Group, Inc. price-consensus-eps-surprise-chart | The Hain Celestial Group, Inc. Quote
Segmental Results
Net sales in the North America segment fell 15% year over year to $253.3 million. On adjusting for currency movements, divestitures and discontinued brands, net sales declined 12%. The decline was caused by lapping of elevated at-home food consumption in the prior-year quarter, due to the pandemic. The lapping of strong hand sanitizer sales in the prior-year quarter marked a headwind of more than 300 bps. Sales of the Get Bigger brands, which accounted for nearly 71% of North America net sales, showed a 9% decline year on year.
Segment adjusted operating income declined 24% to $29.6 million. The segment’s adjusted EBITDA amounted to $34.8 million, down nearly 20%. Moreover, adjusted EBITDA margin contracted 92 bps to 13.7%.
International net sales declined 7% year over year to $197.3 million. Foreign exchange aided sales by nearly 9%, while divestitures marred sales by 16%. On adjusting for foreign currency fluctuations, divestitures and discontinued brands, net sales dropped 1% year over year.
Segment adjusted operating income rose 38% to $31.3 million. Adjusted EBITDA was $38.3 million, up 28% year over year. Adjusted EBITDA margin expanded 536 bps to reach 19.4%.
Other Financials
The Zacks Rank #3 (Hold) company ended the reported quarter with cash and cash equivalents of $75.9 million, long-term debt (excluding current portion) of $230.5 million and total shareholders’ equity of $1,522.9 million.
Cash provided by operating activities from continuing operations was $50.2 million and operating free cash flow from continuing operations was $31.8 million in the reported quarter.
The company’s board approved an additional share repurchase plan worth nearly $300 million. The new buyback plan will commence after the company completes its existing 2017 authorization. As of Jun 30, 2021, the company had $82.4 million remaining under the 2017 authorization.
In the fourth quarter, the company repurchased 0.7 million shares for $27.2 million, excluding commissions, under its existing share buyback program. During fiscal 2021, the company repurchased 3.1 million shares for $107.4 million, excluding commissions.
Outlook
For fiscal 2022, the company expects low single digits growth in adjusted net sales, year on year. Considering high demand witnessed in the first half of fiscal 2021, stemming from the pandemic, timing of price increases and other factors, the company expects adjusted net sales to be down low to mid single digits in the first half of fiscal 2022. For the second half of the fiscal, adjusted net sales is expected to be up in the mid to high single digit. The company expects adjusted net sales growth of high single digits from fiscal 2019 levels.
The company anticipates adjusted gross margin to expand in fiscal 2022. Adjusted EBITDA is expected to grow in the mid to high single digit range, year on year. Adjusted EBITDA is expected to be close to flat in the first half of fiscal 2022 and up high single digits to low double digits in the second half. It expects adjusted EBITDA and EBITDA margin growth to be at least 65% and 500 bps, respectively, from fiscal 2019 figures.
For first-quarter fiscal 2022, the company expects adjusted net sales to be down low to mid single digits, year on year. On a reported basis, net sales are expected to be down low double digits year on year. Adjusted net sales is expected to be up mid to high single digits from first-quarter fiscal 2020 levels. Adjusted gross margin is expected to expand year on year, while adjusted EBITDA is expected to decline in mid to high teens range.
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