HAIN edges above 50-sma following in line results

Hain Celestial Group reported its Q4 results, delivering mixed performance compared to analyst expectations. The company posted adjusted earnings per share (EPS) of $0.13, slightly above the consensus estimate of $0.11, signaling modest earnings growth. Net sales were in line with expectations at $418.8 million, just edging out the estimate of $418.7 million. Both the North American and International segments met or slightly exceeded sales expectations, contributing $259.7 million and $159.1 million, respectively. Despite these achievements, the company faced challenges in certain segments, which impacted overall growth.

Shares of HAIN pushed above the 50-sma ($7.07) on the better than feared results. Holding above this level will be key for the stock as it tries to break out of a basing pattern dating back to early April.

The company’s adjusted operating income came in stronger than expected at $27.5 million, surpassing the $23.6 million estimate, while adjusted EBITDA reached $39.5 million, beating the $37.7 million forecast. Hain Celestial’s gross profit margin of 23.4% also slightly exceeded expectations, driven by pricing strategies and productivity improvements. However, the overall net sales decline of 6% year-over-year and the 4% decrease in organic net sales highlight ongoing challenges, particularly in the personal care and infant formula segments within North America.

Guidance for fiscal 2025 reflects cautious optimism. The company expects organic net sales growth to be flat or slightly positive, with adjusted EBITDA anticipated to grow by mid-single digits. Additionally, Hain Celestial forecasts a gross margin improvement of at least 125 basis points and free cash flow of at least $60 million. These projections suggest a focus on improving profitability and cash flow, even as top-line growth remains muted.

Key metrics showed some areas of concern. For instance, adjusted EBITDA for the fiscal fourth quarter was $21 million, down from $27 million in the same period last year, primarily due to lower sales volumes and inflationary pressures. The adjusted EBITDA margin also contracted to 8.0% from 9.6%, reflecting the impact of these challenges. Despite these headwinds, the company made strides in debt reduction, lowering net debt by $86 million over the year and improving its leverage ratio to 3.7x, with a goal to reach 2x to 3x by fiscal 2027.

In the International segment, the company achieved a 12% increase in gross profit for fiscal 2024, with a corresponding 15% rise in adjusted EBITDA, driven by strong performance in meal preparation products and beverages. The segment’s gross margin improved by 170 basis points to 22.1%, supported by effective pricing and productivity measures. However, the North American segment struggled, with a 6% decrease in organic net sales due to declines in personal care and infant formula sales, offset partially by growth in beverages.

Looking forward, Hain Celestial remains committed to its "Hain Reimagined" strategy, which emphasizes simplifying operations, reducing geographic complexity, and driving scale. The company’s leadership expressed confidence in its ability to deliver sustainable growth and long-term shareholder value through continued investment in capabilities and a focus on commercial execution. Despite the challenges highlighted in Q4, Hain Celestial's outlook suggests a measured approach to navigating the current market environment while laying the groundwork for future growth.