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Hain Celestial (HAIN) Down 10.1% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Hain Celestial (HAIN - Free Report) . Shares have lost about 10.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Hain Celestial due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Hain Celestial Q2 Earnings Beat Mark, Sales Dip Y/Y
Hain Celestial posted second-quarter fiscal 2023 results, wherein sales lagged the Zacks Consensus Estimate while earnings beat the same. Both the top and the bottom line fell from the year-ago fiscal quarter’s reported figure. However, management reaffirmed its view for fiscal 2023.
Quarter in Detail
Hain Celestial posted adjusted earnings of 20 cents a share, which outpaced the Zacks Consensus Estimate and our consensus estimate of 14 cents each. However, the bottom line significantly plunged from 36 cents reported in the prior-year fiscal quarter.
Net sales of $454.2 million missed the Zacks Consensus Estimate of $456 million but came ahead of our consensus mark of $453.6 million. The top line dipped 5% from the year-ago fiscal quarter’s reported figure. After foreign exchange adjustment, acquisitions, divestitures and discontinued brands, net sales slipped 2% from the year-ago fiscal quarter’s reported figure.
Adjusted gross profit of $103.9 million fell 11.5% from the prior-year quarter’s tally, while adjusted gross margin contracted 170 basis points (bps) 22.9% from the year-ago fiscal quarter’s reported figure.
Adjusted operating income was $35.4 million in the reported quarter, down 22.7% from the year-ago fiscal quarter. Also, the adjusted operating margin contracted 180 bps from the year-earlier fiscal quarter to 7.8%.
Adjusted EBITDA on a constant-currency basis dropped 11.1% from the year-ago fiscal quarter’s reported figure to $52.7 million, while adjusted EBITDA margin fell 144 bps to 11%.
Segmental Results
Net sales in the North America segment rose 2.7% from the year-ago fiscal quarter’s reported figure to $282.4 million. After currency movements adjustment, acquisitions, divestitures and discontinued brands, net sales fell 2% owing to the retailer inventory adjustments, particularly in tea and soft sales in personal care. This was somewhat offset by increased sales of snacks.
Segment-adjusted operating income jumped 12% to $32.3 million, mainly aided by pricing increases, reduced marketing spending and productivity. The segment’s adjusted EBITDA on a constant currency basis amounted to $38.8 million, up nearly 16%. Adjusted EBITDA margin expanded 150 bps to 13.6%.
International net sales declined 14.9% from the year-ago fiscal quarter’s reported figure to $171.8 million. Upon adjusting for foreign currency fluctuations, net sales dropped 3% due to softness in plant-based categories in Europe.
Segment-adjusted operating income tumbled 55% to $12.5 million due to lower gross profit and sales coupled with elevated energy and supply-chain costs as well as under-absorption of overhead expenses at the company’s manufacturing facilities. Adjusted EBITDA on a constant currency basis was $21.9 million, down 36% from the year-ago fiscal quarter’s reported figure. Adjusted EBITDA margin contracted 580 bps to 11.2%.
Other Financials
Hain Celestial ended the reported quarter with cash and cash equivalents of $43.4 million, long-term debt (excluding the current portion) of $870.8 million and total shareholders’ equity of $1,108.6 million.
The company reported cash used in operating activities of $2.7 million and a negative operating free cash flow of $16.7 million during the second quarter year-to-date period of fiscal 2023.
Outlook
Hain Celestial reiterated guidance for adjusted net sales and adjusted EBITDA on a constant currency basis in the range of a decline of 1% to a rise of 4% from the year-ago fiscal period’s reading. Management anticipates currency exchange headwind to be roughly $85 million and $10 million for adjusted sales and adjusted EBITDA, respectively.
This is likely to be backed by stable North America top-line results with moderate price elasticities, International performance reverting to growth in the second half along with greater pricing efforts, gains from private label offerings and the lapping of the starting of the Russia-Ukraine war along with the loss of the co-manufacturing contract. Moreover, the overall gross margin progressed from the prior year on continued improvement in supply-chain results with greater service levels, productivity and cost management.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -37.26% due to these changes.
VGM Scores
Currently, Hain Celestial has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Hain Celestial has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Hain Celestial belongs to the Zacks Food - Miscellaneous industry. Another stock from the same industry, Mondelez (MDLZ - Free Report) , has gained 0.5% over the past month. More than a month has passed since the company reported results for the quarter ended December 2022.
Mondelez reported revenues of $8.7 billion in the last reported quarter, representing a year-over-year change of +13.5%. EPS of $0.73 for the same period compares with $0.71 a year ago.
Mondelez is expected to post earnings of $0.80 per share for the current quarter, representing a year-over-year change of -4.8%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Mondelez. Also, the stock has a VGM Score of C.
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Hain Celestial (HAIN) Down 10.1% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Hain Celestial (HAIN - Free Report) . Shares have lost about 10.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Hain Celestial due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Hain Celestial Q2 Earnings Beat Mark, Sales Dip Y/Y
Hain Celestial posted second-quarter fiscal 2023 results, wherein sales lagged the Zacks Consensus Estimate while earnings beat the same. Both the top and the bottom line fell from the year-ago fiscal quarter’s reported figure. However, management reaffirmed its view for fiscal 2023.
Quarter in Detail
Hain Celestial posted adjusted earnings of 20 cents a share, which outpaced the Zacks Consensus Estimate and our consensus estimate of 14 cents each. However, the bottom line significantly plunged from 36 cents reported in the prior-year fiscal quarter.
Net sales of $454.2 million missed the Zacks Consensus Estimate of $456 million but came ahead of our consensus mark of $453.6 million. The top line dipped 5% from the year-ago fiscal quarter’s reported figure. After foreign exchange adjustment, acquisitions, divestitures and discontinued brands, net sales slipped 2% from the year-ago fiscal quarter’s reported figure.
Adjusted gross profit of $103.9 million fell 11.5% from the prior-year quarter’s tally, while adjusted gross margin contracted 170 basis points (bps) 22.9% from the year-ago fiscal quarter’s reported figure.
Adjusted operating income was $35.4 million in the reported quarter, down 22.7% from the year-ago fiscal quarter. Also, the adjusted operating margin contracted 180 bps from the year-earlier fiscal quarter to 7.8%.
Adjusted EBITDA on a constant-currency basis dropped 11.1% from the year-ago fiscal quarter’s reported figure to $52.7 million, while adjusted EBITDA margin fell 144 bps to 11%.
Segmental Results
Net sales in the North America segment rose 2.7% from the year-ago fiscal quarter’s reported figure to $282.4 million. After currency movements adjustment, acquisitions, divestitures and discontinued brands, net sales fell 2% owing to the retailer inventory adjustments, particularly in tea and soft sales in personal care. This was somewhat offset by increased sales of snacks.
Segment-adjusted operating income jumped 12% to $32.3 million, mainly aided by pricing increases, reduced marketing spending and productivity. The segment’s adjusted EBITDA on a constant currency basis amounted to $38.8 million, up nearly 16%. Adjusted EBITDA margin expanded 150 bps to 13.6%.
International net sales declined 14.9% from the year-ago fiscal quarter’s reported figure to $171.8 million. Upon adjusting for foreign currency fluctuations, net sales dropped 3% due to softness in plant-based categories in Europe.
Segment-adjusted operating income tumbled 55% to $12.5 million due to lower gross profit and sales coupled with elevated energy and supply-chain costs as well as under-absorption of overhead expenses at the company’s manufacturing facilities. Adjusted EBITDA on a constant currency basis was $21.9 million, down 36% from the year-ago fiscal quarter’s reported figure. Adjusted EBITDA margin contracted 580 bps to 11.2%.
Other Financials
Hain Celestial ended the reported quarter with cash and cash equivalents of $43.4 million, long-term debt (excluding the current portion) of $870.8 million and total shareholders’ equity of $1,108.6 million.
The company reported cash used in operating activities of $2.7 million and a negative operating free cash flow of $16.7 million during the second quarter year-to-date period of fiscal 2023.
Outlook
Hain Celestial reiterated guidance for adjusted net sales and adjusted EBITDA on a constant currency basis in the range of a decline of 1% to a rise of 4% from the year-ago fiscal period’s reading. Management anticipates currency exchange headwind to be roughly $85 million and $10 million for adjusted sales and adjusted EBITDA, respectively.
This is likely to be backed by stable North America top-line results with moderate price elasticities, International performance reverting to growth in the second half along with greater pricing efforts, gains from private label offerings and the lapping of the starting of the Russia-Ukraine war along with the loss of the co-manufacturing contract. Moreover, the overall gross margin progressed from the prior year on continued improvement in supply-chain results with greater service levels, productivity and cost management.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -37.26% due to these changes.
VGM Scores
Currently, Hain Celestial has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Hain Celestial has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Hain Celestial belongs to the Zacks Food - Miscellaneous industry. Another stock from the same industry, Mondelez (MDLZ - Free Report) , has gained 0.5% over the past month. More than a month has passed since the company reported results for the quarter ended December 2022.
Mondelez reported revenues of $8.7 billion in the last reported quarter, representing a year-over-year change of +13.5%. EPS of $0.73 for the same period compares with $0.71 a year ago.
Mondelez is expected to post earnings of $0.80 per share for the current quarter, representing a year-over-year change of -4.8%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Mondelez. Also, the stock has a VGM Score of C.