The Hain Celestial Group, Inc. HAIN posted lackluster results in the third quarter of fiscal 2022, in which sales and earnings lagged Zacks’ consensus estimate. Net income also fell year over year. Management said the third fiscal quarter was a difficult time due to high inflation, supply chain disruptions, ingredient and packaging shortages and eroding consumer confidence. Europeans, mainly because of the Russian-Ukrainian conflict. These factors weighed on quarterly performance.

Despite these weaknesses, management is confident in its Hain Celestial 3.0 initiative. The 3.0 strategy mainly focuses on the expansion of distribution and innovation to boost sales.

Over the past three months, shares of this currently ranked No. 4 player (selling) Zacks have fallen 7.4% against an industry rise of 1.5%.

Quarter in detail

Hain Celestial posted adjusted earnings of 33 cents per share, below Zacks’ consensus estimate of 46 cents. Net income also fell 25% from 44 cents in the prior year quarter.

The Hain Celestial Group, Inc. Price, Consensus, and EPS Surprise

The Hain Celestial Group, Inc. price-consensus-eps-surprise-chart | Quote from Hain Celestial Group, Inc.

Net sales came in at $502.9 million and missed the consensus mark of $528 million. However, the metric rose 2.1% year-over-year. Adjusting for foreign exchange rates, divestments and discontinued brands, net sales increased 1.5% year-over-year. Currency effects pushed sales down nearly 150 basis points (bps), while brand acquisitions, divestitures and exits contributed 210 bps to sales.

Adjusted gross profit was $117.6 million, down 13% from the year-ago quarter count. Adjusted gross margin contracted 400 basis points year-over-year to 23.4%. HAIN has experienced high inflation as well as industry-wide disruptions and pressures on warehouse costs due to the labor crisis, availability of freight carriers and costs freight during the quarter.

Adjusted operating income was $42.4 million in the quarter, down 29% from $59.7 million in the prior year quarter.

Adjusted EBITDA fell 20.5% year-over-year to $58.7 million, while Adjusted EBITDA margin fell 330 basis points to 11.7%.

The story continues

Sector results

Net sales in the North America grew 13% year over year to $325.7 million. Adjusting for currency fluctuations, acquisitions, divestitures and discontinued brands, net sales increased 9% due to higher sales in the snacks, baby products and personal care categories.

Adjusted operating profit by segment fell 29% to $31.4 million. The segment’s adjusted EBITDA amounted to $37.3 million, down nearly 23%. The adjusted EBITDA margin contracted by 540 basis points to 11.4%.

International net sales decreased 14% year over year to $177.2 million. After adjusting for foreign currency fluctuations, divestments and discontinued brands, net sales fell 8% year-over-year due to a decline in the operating segments in Europe and UK. This was somewhat offset by higher sales in the Ella’s Kitchen UK operating segment.

Adjusted operating profit by segment fell 36% to $18.8 million. Adjusted EBITDA was $26.5 million, down 28% year-over-year. The adjusted EBITDA margin contracted by 300 basis points to 14.9%.

Other finance

Hain Celestial ended the quarter with cash and cash equivalents of $57.8 million, long-term debt (excluding current portion) of $827.8 million and total equity of $1,144 million. dollars.

Cash provided by operating activities from continuing operations was $99.2 million and operating free cash flow from continuing operations was $65.2 million in the first three quarters of fiscal year 2022.

Hain Celestial’s board of directors has approved an additional $200 million share buyback authorization. Share buybacks under this authorization began in February 2022, following the full utilization of HAIN’s previous $300 million authorization. During the current quarter, HAIN repurchased 3.6 million shares at a value of $130.4 million, excluding commissions. As of March 31, 2022, HAIN had $186.6 million available under its $200 million authorization.

Outlook

For the fourth fiscal quarter, management expects a low to mid-single digit increase in adjusted net sales, supported by double-digit growth in North America. Reported net sales growth is expected to be 500 basis points, higher than the adjusted net sales growth rate, mainly driven by the acquisition of That’s How We Roll. Sales in North America are expected to increase by double digits thanks to solid consumption. Management expects a slight reduction in adjusted gross margin and a decline in adjusted EBITDA to low to mid-single digits, including approximately 300 basis points of currency headwinds, for the same quarter.

For fiscal 2022, management expects nearly flat adjusted net sales, a slight decline in adjusted gross margin and a low double-digit decline in adjusted EBITDA. These forecasts reflect the impact of tariff actions on North America, the UK and the EU, mitigated by the operational inflationary landscape, including continued supply chain disruptions.

Previously, Hain Celestial expected low single-digit year-over-year adjusted net sales growth for the full fiscal year.

Can’t-miss staple consumer picks

Some higher ranked stocks are Inter Parfums IPAR, McCormick & Company MKC and Sysco Corporation SYY.

Inter Parfums develops, manufactures and distributes prestigious perfumes and cosmetics. IPAR currently carries a Zacks Rank #2 (Buy). IPAR has a surprise on earnings for the last four quarters of 46.7% on average. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks consensus estimate for Inter Parfums’ current year sales and EPS suggests growth of 12.5% ​​and 10.9%, respectively, over corresponding period figures. last year.

McCormick is a leading manufacturer, marketer and marketer of spices, seasonings, specialty foods and flavors. MKC currently carries a Zacks rank of 2.

Zacks’ consensus estimate for McCormick’s current year sales and EPS suggests growth of 5% and 3.9%, respectively, over reported figures for the same period a year earlier. MKC has a last four quarter earnings surprise of 7.3% on average.

Sysco, the distributor and marketer of food and related products, is currently ranked No. 2 in Zacks. SYY has a four-quarter earnings surprise of 3.7% on average.

Zacks’ consensus estimate for Sysco’s current-year sales and earnings suggests growth of 30.4% and 120.1%, respectively, over reported figures for the corresponding period of the year previous.

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