Hain Celestial Q2 Earnings Rise Y/Y, Ests Lag - Analyst Blog
February 05 2014 - 9:40AM
Zacks
Yesterday, The Hain
Celestial Group, Inc. (HAIN) posted improved financial
results on a year-over-year basis for second-quarter fiscal 2014,
with both the top and bottom lines registering double digit growth.
Despite that, the share price of this natural food and personal
care products retailer fell approximately 7.9% in yesterday’s
after-hour trading session as its top and bottom lines both fell
short of the Zacks Consensus Estimate. Moreover, investors remain
concerned about the company’s margins that were hit hard by
increased input costs.
The company’s adjusted earnings of
87 cents from continuing operations for the quarter registered a
rise of 17.6% from the year-ago quarter figure of 74 cents. The
year-over-year growth came primarily on the back of a rise in sales
and leveraged selling, general and administrative (SG&A)
expenses. However, quarterly earnings missed the Zacks Consensus
Estimate by a penny. On a reported basis, the company’s earnings
came in at 84 cents per share, up 25.4% from the year-ago quarter
figure of 67 cents.
Management stated that a healthy
industry trend, consumer demand and new products facilitated the
company to post the strong quarterly sales of $534.9 million, up
17.5% from the prior-year quarter. However, the reported figure
came below the Zacks Consensus Estimate of $544.0 million.
Net sales in the United States
increased 16.9% year over year to $327.7 million in the quarter,
while net sales in the United Kingdom increased 21.5% to $146.1
million. Operations in the Rest of World segment witnessed a 11.6%
increase in net sales to $61.1 million.
The company witnessed strong
performance across all of its brands with 19 brands registering
double-digit year-over-year growth while 5 brands registered
mid-to-high single-digit growth. Hain Celestial’s top line recorded
robust contribution from Spectrum, MaraNatha, The Greek Gods,
Garden of Eatin’, Arrowhead Mills, Celestial Seasonings, Jason,
Alba Botanica, Linda McCartney, Cully & Sully, Danival and
Europe's Best brands. The company also experienced solid sales
across new brands acquired after first-quarter fiscal 2013
including Hartley's, Robertson's, Sun-Pat, Frank Cooper's, Gale's
and BluePrint and Ella’s Kitchen.
Adjusted gross profit rose 11.1%
year over year to $145.3 million in the quarter. However, as a
percentage of sales, it contracted 150 basis points (bps) to 27.2%
due to increased commodity costs, unfavorable product mix and
negative impact from change in recording trade spending.
Adjusted operating income rose
21.5% to $66.9 million in the quarter. Moreover, adjusted operating
margin expanded approximately 40 bps to 12.5% primarily driven by
leveraged SG&A expenses which more than offset the negative
impact of lower gross margin.
Other Financial
Details
The company ended the quarter with
cash and cash equivalents of $67.5 million, long-term debt
excluding current maturities of $627.5 million and shareholders’
equity of $1,351.1 million, reflecting a debt-to-capitalization of
31.7%. Cash flow from operating activities in the first six
months of fiscal 2014 was $52.7 million.
Outlook
We believe that the company will
sustain the strong momentum across entire business segments and
will be favorably poised to capitalize on the growing global demand
for organic products.
Alongside, buoyed by improved
quarterly results and taking into account the recent acquisition of
Tilda Limited, a renowned name in Basmati rice, Hain Celestial
raised its top and bottom-line outlook for fiscal 2014. The company
now anticipates sales to come in the range of $2,115 – $$2,145
million, up from the previously forecasted range of $2,025 – $2,050
million, marking a year-over-year increase of 22% to 24%. Earnings
per share are now expected to come between $3.07 and $3.15 against
the earlier projection of $2.95 to $3.05. The Zacks Consensus
Estimate for the fiscal year stands at $3.10 per share.
Other Stocks to
Consider
Currently, Hain Celestial carries a
Zacks Rank #2 (Buy). Some other stocks that look promising in the
food industry include ConAgra Foods, Inc.
(CAG), Green Mountain Coffee Roasters, Inc.
(GMCR) and J&J Snack Foods Corp. (JJSF). All
of these carry the same Zacks Rank as Hain Celestial.
CONAGRA FOODS (CAG): Free Stock Analysis Report
GREEN MTN COFFE (GMCR): Free Stock Analysis Report
HAIN CELESTIAL (HAIN): Free Stock Analysis Report
J&J SNACK FOODS (JJSF): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Hain Celestial (NASDAQ:HAIN)
Historical Stock Chart
From Mar 2024 to Apr 2024
Hain Celestial (NASDAQ:HAIN)
Historical Stock Chart
From Apr 2023 to Apr 2024