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Hain Celestial (HAIN) Down 14.7% 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 14.7% 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 Beats Q2 Earnings, Revises View
Hain Celestial reported better-than-expected earnings and sales for second-quarter fiscal 2020. Also, the bottom line improved year over year, thanks to improved margins. Further, Hain Celestial is on track with its saving initiatives and expects adjusted gross margin and adjusted EBITDA margin expansion in each quarter of fiscal 2020. As a result, management raised the low end of adjusted EBITDA and adjusted earnings per share view for the current fiscal year.
Quarter in Detail
The company posted adjusted earnings of 17 cents a share that surpassed the Zacks Consensus Estimate by a couple of cents and increased 41.7% year over year. This marked the company’s second consecutive beat.
Net sales were $506.8 million, which outshined the Zacks Consensus Estimate of $499 million. The metric declined 5% on both reported and constant-currency basis. The top line was hurt by soft performance by the company’s North America and the International segments. On adjusting for currency fluctuations, buyouts, divestitures and various other items like SKU rationalization, net sales edged down 1%.
Net sales at the North America segment fell 8% year over year to $280.7 million. On adjusting for divestitures and SKU rationalization, net sales declined 2%. Segment adjusted operating income rose a solid 51% to $25 million.
International net sales inched down 1% to $226.1 million, while the metric remained flat at constant currency. On adjusting for currency fluctuations, divestitures and SKU rationalization, net sales edged up 1%. Segment adjusted operating income fell 12% to $16.5 million.
Costs & Margins
Adjusted gross margin expanded 220 basis points (bps) to 22%, courtesy of trade efficiencies, lower supply-chain expenses in the United States and productivity savings. However, foreign currency fluctuations impacted gross profit slightly in the quarter.
Adjusted operating income was $29.5 million in the quarter, up 20.9% from $24.4 million in the year-ago period. Adjusted operating margin rose 120 bps to 5.8%. Adjusted EBITDA grew 18.7% to $45 million, while adjusted EBITDA margin expanded 180 bps to 8.9%. The expansion was fueled by improved profitability in North America and supply-chain efficiencies.
Other Financials
The company ended the quarter with cash and cash equivalents of $37 million, long-term debt (excluding current portion) of $324.9 million and total shareholders’ equity of $1,521.1 million. Cash used in operating activities from continuing operations totaled $17.1 million during the first six months of fiscal. The company’s operating free cash flow from continuing operations was negative $12.2 million during the first six months.
Capital expenditures were around $16 million in the fiscal second quarter.
For fiscal 2020, cash flow from operations is now anticipated at the low end of $110-$140 million or about $110 million. Further, capital expenditures are expected between $60 million and $70 million.
Other Developments & Guidance
Hain Celestial concluded the sale of Arrowhead Mills and SunSpire brands in the fiscal second quarter. Moreover, the company is on track to consolidate Canada and the United States into a single North American operating unit. This is likely to generate additional cost savings of $5-$8 million in the next 12-18 months.
Furthermore, management projects that the rate of sales decline in the back half of fiscal 2020 will improve in comparison to the first half. The improvement will be mainly backed by strength in Get Bigger brands from assortment optimization, promotional activity and innovation.
All said, Hain Celestial updated its outlook for fiscal 2020. Adjusted EBITDA is now expected to grow 7-16% to $177-$192 million. Earlier, it expected the same to grow 2-16% to $168-$192 million. At constant currency, adjusted EBITDA is likely to improve 8-18% to $179-$194 million.
Additionally, Hain Celestial now envisions adjusted earnings per share of 62-72 cents, which suggests growth of 3-20% from fiscal 2019. Previously, management projected earnings per share of 59-72 cents, which suggested a decline of 2% to an increase of 20%.
How Have Estimates Been Moving Since Then?
Estimates review followed an upward path over the past two months.
VGM Scores
Currently, Hain Celestial has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Hain Celestial has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Hain Celestial (HAIN) Down 14.7% 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 14.7% 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 Beats Q2 Earnings, Revises View
Hain Celestial reported better-than-expected earnings and sales for second-quarter fiscal 2020. Also, the bottom line improved year over year, thanks to improved margins. Further, Hain Celestial is on track with its saving initiatives and expects adjusted gross margin and adjusted EBITDA margin expansion in each quarter of fiscal 2020. As a result, management raised the low end of adjusted EBITDA and adjusted earnings per share view for the current fiscal year.
Quarter in Detail
The company posted adjusted earnings of 17 cents a share that surpassed the Zacks Consensus Estimate by a couple of cents and increased 41.7% year over year. This marked the company’s second consecutive beat.
Net sales were $506.8 million, which outshined the Zacks Consensus Estimate of $499 million. The metric declined 5% on both reported and constant-currency basis. The top line was hurt by soft performance by the company’s North America and the International segments. On adjusting for currency fluctuations, buyouts, divestitures and various other items like SKU rationalization, net sales edged down 1%.
Net sales at the North America segment fell 8% year over year to $280.7 million. On adjusting for divestitures and SKU rationalization, net sales declined 2%. Segment adjusted operating income rose a solid 51% to $25 million.
International net sales inched down 1% to $226.1 million, while the metric remained flat at constant currency. On adjusting for currency fluctuations, divestitures and SKU rationalization, net sales edged up 1%. Segment adjusted operating income fell 12% to $16.5 million.
Costs & Margins
Adjusted gross margin expanded 220 basis points (bps) to 22%, courtesy of trade efficiencies, lower supply-chain expenses in the United States and productivity savings. However, foreign currency fluctuations impacted gross profit slightly in the quarter.
Adjusted operating income was $29.5 million in the quarter, up 20.9% from $24.4 million in the year-ago period. Adjusted operating margin rose 120 bps to 5.8%. Adjusted EBITDA grew 18.7% to $45 million, while adjusted EBITDA margin expanded 180 bps to 8.9%. The expansion was fueled by improved profitability in North America and supply-chain efficiencies.
Other Financials
The company ended the quarter with cash and cash equivalents of $37 million, long-term debt (excluding current portion) of $324.9 million and total shareholders’ equity of $1,521.1 million. Cash used in operating activities from continuing operations totaled $17.1 million during the first six months of fiscal. The company’s operating free cash flow from continuing operations was negative $12.2 million during the first six months.
Capital expenditures were around $16 million in the fiscal second quarter.
For fiscal 2020, cash flow from operations is now anticipated at the low end of $110-$140 million or about $110 million. Further, capital expenditures are expected between $60 million and $70 million.
Other Developments & Guidance
Hain Celestial concluded the sale of Arrowhead Mills and SunSpire brands in the fiscal second quarter. Moreover, the company is on track to consolidate Canada and the United States into a single North American operating unit. This is likely to generate additional cost savings of $5-$8 million in the next 12-18 months.
Furthermore, management projects that the rate of sales decline in the back half of fiscal 2020 will improve in comparison to the first half. The improvement will be mainly backed by strength in Get Bigger brands from assortment optimization, promotional activity and innovation.
All said, Hain Celestial updated its outlook for fiscal 2020. Adjusted EBITDA is now expected to grow 7-16% to $177-$192 million. Earlier, it expected the same to grow 2-16% to $168-$192 million. At constant currency, adjusted EBITDA is likely to improve 8-18% to $179-$194 million.
Additionally, Hain Celestial now envisions adjusted earnings per share of 62-72 cents, which suggests growth of 3-20% from fiscal 2019. Previously, management projected earnings per share of 59-72 cents, which suggested a decline of 2% to an increase of 20%.
How Have Estimates Been Moving Since Then?
Estimates review followed an upward path over the past two months.
VGM Scores
Currently, Hain Celestial has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Hain Celestial has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.