The Hain Celestial Group, Inc. (HAIN Quick QuoteHAIN - Free Report) posted mixed results in second-quarter fiscal 2024 results, wherein the bottom line beat the Zacks Consensus Estimate while the top line missed the same.

Shares of this manufacturer, marketer, distributor and seller of organic and natural products have increased 1.9% in the past three months against the industry’s 3.5% drop.

Quarter in Detail

HAIN posted adjusted earnings of 12 cents per share, outpacing the Zacks Consensus Estimate of 11 cents. The bottom line declined from adjusted earnings of 20 cents per share reported in the year-ago fiscal quarter.

Net sales of $454.1 million missed the consensus estimate of $460 million. The top line was flat year over year. After adjusting for acquisitions, divestitures and discontinued brands, organic sales rose 0.2% from the year-ago fiscal quarter’s reported figure.

Adjusted gross profit of $106.8 million rose 2.8% from the year-ago quarter’s figure while the adjusted gross margin increased 60 basis points (bps) from the year-ago fiscal quarter’s reported figure to 23.5%. We had expected the adjusted gross margin to expand 110 bps to 19.1%.

SG&A expenses increased 2.2% to $74 million. The metric, as a percentage of net sales, increased 40 bps year over year to 16.3%. We had expected SG&A expenses, as a percentage of net sales, to increase 300 bps to 18.9%.

Adjusted EBITDA dropped 5.4% from the year-ago fiscal quarter’s reported figure to $47.1 million, while adjusted EBITDA margin decreased 60 bps to 10.4%. We had expected an adjusted EBITDA margin contraction of 210 bps to 8.9%.

Segmental Results

Net sales in the North America segment tumbled 5.2% from the year-ago fiscal quarter’s reported figure to $267.7 million. After adjusting currency movements, divestitures and discontinued brands, adjusted net sales fell 4.8%. The decline was due to lower sales of baby formula stemming from persistent industry-wide challenges in organic formula supply, along with an optimized channel mix for better trade efficiency. This was partly offset by growth in Beverages. We expected North America’s sales to fall 2% to $276.7 million in the reported quarter.

The segment’s adjusted EBITDA amounted to $31.2 million, down 18.9% on a year-over-year basis. Adjusted EBITDA margin in the quarter decreased 190 bps to 11.7%.  

The International segment’s net sales grew 8.5% from the year-ago fiscal quarter’s reported figure to $186.4 million. The sales growth was primarily driven by a 5.8 percentage points increase from favorable currency impacts and growth in Meal Prep and Beverages. We had anticipated the segment’s sales to rise 9.6% to $188.3 million in the reported quarter.

Its adjusted EBITDA was $26 million, up 35% from the year-ago fiscal quarter’s reported figure. Adjusted EBITDA margin in the quarter expanded 270 bps to 13.9%.

Other Financials

Hain Celestial ended the reported quarter with cash and cash equivalents of $53.7 million, long-term debt (excluding the current portion) of $801.7 million and total shareholders’ equity of $995.8 million.

The company reported cash provided by operating activities of $34.7 million and an operating free cash flow of $22 million during the year-to-date period of fiscal 2024.

Guidance

This Zacks Rank #3 (Hold) company has been seeing early progress against Hain Reimagined. The company has accelerated its few initiatives outlined in the Focus Pillar, including the portfolio and channel mix improvements. This is likely to result in a near-term revenue headwind. Additionally, it forecasts less tailwind from foreign exchange than it had initially expected in August. HAIN updated its outlook for fiscal 2024. For the fiscal year, management projects organic sales growth of about 1% or more compared with the earlier guidance of a 2-4% rise.

It now expects adjusted EBITDA between $155 million and $160 million versus the earlier expectation of $155-$165 million. The company now anticipates a free cash flow of $40-$45 million compared with $50-$55 million guided earlier.

Stocks to Consider

We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Church & Dwight Co. (CHD Quick QuoteCHD - Free Report) , Colgate-Palmolive (CL Quick QuoteCL - Free Report) and Inter Parfums (IPAR Quick QuoteIPAR - Free Report) .

Church & Dwight, offering a broad range of household, personal care and specialty products, currently carries a Zacks Rank #2 (Buy). CHD has a trailing four-quarter earnings surprise of 10.1%, on average. You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Church & Dwight’s current financial year’s sales and earnings suggests growth of 8.7% and 6.4%, respectively, from the year-ago numbers.

Colgate, a leading consumer goods company, currently carries a Zacks Rank of 2. CL has a trailing four-quarter earnings surprise of 4.2%, on average.

The Zacks Consensus Estimate for CL’s current financial-year sales and earnings suggests growth of 3.5% and 7.7%, respectively, from the year-ago reported figures.

Inter Parfums is engaged in the manufacturing, distribution and marketing of a wide range of fragrances and related products. It currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for IPAR’s current financial-year sales and earnings indicates advancements of 20.9% and 20.2%, respectively, from the prior-year figures. It has a trailing four-quarter earnings surprise of 45.7%, on average.