Hain Celestial today (24 August) reported quarterly results that beat Wall Street forecasts but there were some concerns among analysts about the US group’s current financial year.
The Linda McCartney veggie food and Celestial Seasonings tea owner booked quarterly organic sales and adjusted EBITDA that exceeded Wall Street predictions.
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However, Hain Celestial’s forecast for adjusted EBITDA for its current fiscal year was highlighted by some analysts covering the business.
Shares in the Parm Crisps brand owner were down 1.15% at $12.02 at 13:46 ET.
In the three months to the end of June, Hain Celestial generated net sales of $447.8m, down 2% on a year earlier but above analyst forecasts.
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On an organic basis, sales fell 1.5%, compared to the company’s guidance of a “low-single-digit” decline and an improvement on the third quarter’s 5.8% decrease.
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By GlobalDataAdjusted EBITDA was $43.5m, versus $35.4m a year earlier and above analyst forecasts. Earnings per share of $0.11 also exceeded Wall Street estimates.
President and CEO Wendy Davidson said the results were “near the high end of our expectations”.
She added: “We made significant progress during the quarter in key areas including a return to growth for both Sensible Portions and Celestial Seasonings bagged tea and an increase in net sales for our international business, despite a slight decline in overall net sales compared to the prior year.”
However, analysts following Hain Celestial flagged the company’s forecast for annual adjusted EBITDA in the new financial year that started in July.
The company is predicting its adjusted EBITDA will reach between $155m and $165m, which would be down 1-7% on the year just completed. Wall Street was forecasting $183m.
“We view fiscal 2024 as an inflection point, where we expect to strengthen our foundation and return to top-line growth,” outgoing CFO Chris Bellairs said. “We anticipate balanced growth across the portfolio with both our North America and international segments achieving low-single-digit organic net sales growth.
“We will make brand-building investments in key brands to drive growth and modest investments in our away-from-home and e-commerce capabilities. We expect these investments along with the refunding of our incentive plan to create an adjusted EBITDA drag year-over-year of approximately $20m as we invest for the future.”
Hain Celestial is forecasting annual adjusted net sales will increase 2-4%. Analysts were predicting 3%.
“The EBITDA outlook is well below our expectations,” Stifel analyst Matthew Smith wrote in a note to clients today.
AllianceBernstein’s Alexia Howard described the guidance as “weak” and said the bank was awaiting Hain Celestial’s investor day next month for “long-term guidance” and for more information on the company’s “strategic vision” under Davidson, who took the helm in January.
“Management described FY2024 as an inflection point to restart company growth. Following the first two quarters under the new CEO, management emphasised an effort to stabilise a business that has experienced declines to the top line in recent years,” Howard wrote in a note to clients today.
“Specifically, they called out sequential growth improvement in their meat-free categories and private label non-dairy beverage business, a category that could see further strength as consumer elasticities worsen for branded products. Admittedly, Q1 will be particularly challenging, but many of the headwinds to EBITDA were described as ‘one off’ and guidance implies a mid-single-digit growth trajectory for the remainder of the year.”
In the 12 months to 30 June, Hain Celestial generated net sales of $1.8bn, down 5% on a year earlier. Adjusted net sales decreased 2.7%.
Adjusted EBITDA was $174.2m, compared to $200.6m in the prior year.
The company booked a net loss of $116.5m, which compared to a net income of $77.9m in the year previous.
The net loss included pre-tax non-cash impairment charges of $175.5m related to the ParmCrisps and Thinsters brands, as well as other intangible assets.
Alongside the results, Hain Celestial named Hearthside Food Solutions finance chief Lee Boyce as its new CFO. Boyce will start in the new role on 5 September.
April 2023: “My bigger concern isn’t what we need to get rid of. It’s what we need to add” – Hain Celestial CEO Wendy Davidson talks strategy
