The Hain Celestial Group, Inc. (HAIN Quick QuoteHAIN - Free Report) posted weak third-quarter fiscal 2023 results, wherein sales and earnings lagged the Zacks Consensus Estimate. Both the top and the bottom lines also fell from the year-ago fiscal quarter’s reported figure. Management updated its view for 2023.

Nonetheless, the company is focused on designing an operating model to drive sustainable scalability and future growth. Management has undertaken key actions to expand capabilities aiding operating improvement and efficiencies, mainly within the supply chain and service levels. It also remains committed to brand-building efforts.

Shares of this manufacturer, marketer, distributor and seller of organic and natural products have increased 2% in the past three months, compared with the industry’s 4.7% rise.

Quarter in Detail

Hain Celestial posted adjusted earnings of 8 cents a share, lagging the Zacks Consensus Estimate of earnings of 16 cents per share and our consensus estimate of earnings of 15 cents per share. Also, the bottom line significantly plunged from 33 cents per share reported in the prior-year fiscal quarter.

Net sales of $455.2 million missed the Zacks Consensus Estimate of $480 million and our consensus mark of $478.9 million. The top line dipped 9% from the year-ago fiscal quarter’s reported figure. After adjusting for foreign exchange, acquisitions, divestitures and discontinued brands, net sales slipped 6% 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 the adjusted gross margin contracted 200 basis points (bps) from the year-ago fiscal quarter’s reported figure to 21.4%.

Adjusted operating income was $22.2 million in the reported quarter, down 47.6% from the year-ago fiscal quarter. Also, the adjusted operating margin contracted 350 bps from the year-earlier fiscal quarter to 4.9%.

Adjusted EBITDA on a constant-currency basis dropped 33% from the year-ago fiscal quarter’s reported figure to $39.3 million, while adjusted EBITDA margin fell 340 bps to 8.3%.

Segmental Results

Net sales in the North America segment tumbled 12% from the year-ago fiscal quarter’s reported figure to $286.6 million. After adjusting currency movements, acquisitions, divestitures and discontinued brands, net sales fell 11%. The decline was owing to lower sales in snacks, personal care and tea, somewhat offset by increased sales in yogurt. Lower distribution and customer promotions in relation to the ParmCrisps brand hurt the snack’s sales.

Segment-adjusted operating income plunged 32.5% to $21.2 million, mainly driven by weak sales, somewhat mitigated by an improvement in costs. The segment’s adjusted EBITDA on a constant currency basis amounted to $27.4 million, down nearly 26.5%. Adjusted EBITDA margin on a constant-currency basis contracted 200 bps to 9.5%.

The International segment’s net sales declined 5% from the year-ago fiscal quarter’s reported figure to $168.6 million. Upon adjusting for foreign currency fluctuations, net sales rose 4%, owing to increases in the United Kingdom, partly offset by weak plant-based categories in the rest of Europe.

Segment-adjusted operating income tumbled 26% to $13.9 million with an adjusted operating margin of 8.3%, which declined 240 bps. Adjusted EBITDA on a constant currency basis was $23.1 million, down 12.8% from the year-ago fiscal quarter’s reported figure. Adjusted EBITDA margin contracted 230 bps to 12.6%.

Other Financials

Hain Celestial ended the reported quarter with cash and cash equivalents of $43.7 million, long-term debt (excluding the current portion) of $849 million and total shareholders’ equity of $1,006.5 million.

This presently Zacks Rank #2 (Buy) player reported cash provided by operating activities of $26.3 million and an operating free cash flow of $4.9 million during the third quarter year-to-date period of fiscal 2023.

Guidance

Hain Celestial revised guidance for adjusted net sales and adjusted EBITDA on a constant currency basis. Adjusted net sales are likely to decline 3-4% year over year and adjusted EBITDA at constant currency is expected to fall 13-15%. Earlier, management anticipated both metrics in the range of a decline of 1% to a rise of 4% from the year-ago fiscal period’s reading.

For the fourth quarter of 2023, the company estimates adjusted net sales to decline to low single-digit percentages year over year while the adjusted gross margin to rise year over year and sequentially. It forecasts adjusted EBITDA at constant currency in the band of $40-$44 million.

Three Better-Ranked Consumer Staples Stocks

Some better-ranked stocks are Inter Parfums (IPAR Quick QuoteIPAR - Free Report) , General Mills (GIS Quick QuoteGIS - Free Report) and Kimberly-Clark Corporation (KMB Quick QuoteKMB - Free Report) .

IPAR has an expected long-term earnings growth rate of 15% and a trailing four-quarter earnings surprise of 36.2%, on average. Inter Parfums currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Inter Parfums’ current financial year's sales and earnings suggests growth of 15.2% and 7.3%, respectively, from the year-ago reported numbers.

General Mills is a major designer, marketer and distributor of premium lifestyle products. It currently carries a Zacks Rank #2 (Buy). GIS has a trailing four-quarter earnings surprise of 8.1%, on average.

The Zacks Consensus Estimate for General Mills’ current financial year's sales and earnings suggests growth of 6.3% and 7.4%, respectively, from the year-ago reported numbers.

Kimberly-Clark is engaged in the manufacture and marketing of a wide range of consumer products around the world. It currently has a Zacks Rank of 2. KMB has a trailing four-quarter earnings surprise of 5.1%, on average.

The Zacks Consensus Estimate for Kimberly-Clark’s current financial year's sales and earnings suggests growth of 2.2% and 9.4%, respectively, from the year-ago reported numbers.