It has been about a month since the last earnings report for Hain Celestial (HAIN Quick QuoteHAIN - Free Report) . Shares have lost about 1.7% 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 catalysts.

Hain Celestial Q1 Earnings Beat Estimates, Decline Y/Y

Hain Celestial posted first-quarter fiscal 2024 results, wherein the bottom line beat the Zacks Consensus Estimate, but the top line missed the same. Both metrics fell from the year-ago fiscal quarter’s reported figures.

Quarter in Detail

The company posted an adjusted loss of 4 cents per share, narrower than the Zacks Consensus Estimate of a loss of 6 cents. The bottom line declined from earnings of 10 cents per share reported in the prior-year fiscal quarter.

Net sales of $425 million missed the consensus estimate of $433 million. The top line dipped 3.3% from the year-ago fiscal quarter’s reported figure. After adjusting for foreign exchange, acquisitions, divestitures and discontinued brands, adjusted net sales slipped 2.9% from the year-ago fiscal quarter’s reported figure.

Adjusted gross profit of $87.3 million decreased 7.5% from the prior-year quarter’s figure, while the adjusted gross margin contracted 95 basis points (bps) from the year-ago fiscal quarter’s reported figure to 20.5%. We had expected the adjusted gross margin to contract by 240 bps to 19.1%.

SG&A expenses increased 2.9% to $77.2 million. The metric, as a percentage of net sales, increased 110 bps year over year to 18.2%. We had expected SG&A expenses, as a percentage of net sales, to increase by 20 bps to 17.3%.

Adjusted operating income was $9.7 million in the reported quarter, down 52.5% from the year-ago fiscal quarter. Adjusted EBITDA dropped 33.1% from the year-ago fiscal quarter’s reported figure to $24.1 million, while adjusted EBITDA margin decreased 250 bps to 5.7%. We had expected an adjusted EBITDA margin contraction of 370 bps to 4.5%.

Segmental Results

Net sales in the North America segment tumbled 9.8% from the year-ago fiscal quarter’s reported figure to $260.1 million. After adjusting currency movements, divestitures and discontinued brands, adjusted net sales fell 9.3%. The decline was due to lower sales in baby & kids due to industry-wide challenges in organic formula supply. Softness in personal care owing to the timing shift of a sun care program and in snacks on the optimization of promotional activity for Terra hurt its performance as well. We expected North America’s sales to fall 7.4% to $267.1 million in the reported quarter.

The segment’s adjusted EBITDA amounted to $18.7 million, down 39.2% on a year-over-year basis. Adjusted EBITDA margin in the quarter decreased 350 bps to 7.2%.  

The International segment’s net sales grew 9.3% from the year-ago fiscal quarter’s reported figure to $165 million. The sales growth was primarily driven by strength in meal preparation and beverages businesses. We had anticipated the segment’s sales to rise 14% to $172 million in the reported quarter.

Adjusted EBITDA came in at $17.4 million, up 16.7% from the year-ago fiscal quarter’s reported figure. Adjusted EBITDA margin in the quarter expanded 70 bps to 10.6%.

Other Financials

Hain Celestial ended the reported quarter with cash and cash equivalents of $38.3 million, long-term debt (excluding the current portion) of $807.4 million and total shareholders’ equity of $981 million.

The company reported cash provided by operating activities of $14 million and an operating free cash flow of $7.1 million during the first three months of fiscal 2024.

Guidance

HAIN reaffirmed its financial outlook for fiscal 2024. For the fiscal year, adjusted net sales are likely to increase by 2-4% year over year and adjusted EBITDA is expected to be in the band of $155-$165 million. Free cash flow is anticipated to be between $50 million and $55 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -24.56% due to these changes.

VGM Scores

At this time, Hain Celestial has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. 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 B. 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 Quick QuoteMDLZ - Free Report) , has gained 3.3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.

Mondelez reported revenues of $9.03 billion in the last reported quarter, representing a year-over-year change of +16.3%. EPS of $0.82 for the same period compares with $0.74 a year ago.

Mondelez is expected to post earnings of $0.76 per share for the current quarter, representing a year-over-year change of +4.1%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.6%.

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 F.