Hain Celestial: Q2 Earnings Surpass Expectations as Company Reaffirms Guidance
The Hain Celestial Group bested analysts’ expectations in its Q2 earnings report today, as the company saw net sales decline just -4.8% while growing its snack business and expanding distribution.
Speaking on an earnings call today, Hain Celestial EVP and CFO Christopher J. Bellairs said the earnings surpassed the company’s own projections, allowing it to reaffirm its full year 2023 guidance for adjusted net sales and adjusted EBITDA on a constant currency basis of -1% to +4%.
The optimistic results stemmed from a solid 3% increase in North American net sales to $282.4 million with gross profit up 5% to $71.1 million. However, when adjusted for foreign exchange, acquisitions, divestitures and discontinued brands, net sales were down -2% due to retail inventory adjustments and lower personal care sales.
Meanwhile, international net sales dropped -15% to $171.8 million, with gross profit down -34% to $32.7 million. Total net sales for the quarter with $454.2 million with a gross profit margin of 22.9%.
“We continued to see sequential improvements in both the International and North American business units,” Bellairs said in a statement. “While we experienced some retailer inventory reductions in North America that impacted our topline results, we continue to see strong momentum in key categories such as better-for-you snacks, baby, and yogurt. Additionally, while the European market remains somewhat uncertain, we see early indications of stabilization.”
Bellairs highlighted “bright spots” in the results, noting a 5% gain for the U.S. snack business with double-digit gains on the Sensible Portion brand and double-digit distribution expansion, particularly in the convenience channel where dollar growth increased 90%. Vegetable chip brand Terra reported U.S. velocities up 15% and baby food brand Earth’s Best also grew over 15%. Yogurt line The Greek Gods was a “standout,” he added, up 19% in the quarter.
The report marks the first earnings call for new Hain Celestial CEO Wendy Davidson, who assumed the position from outgoing president and CEO Mark Schiller at the beginning of the year. Davidson told investors and analysts that she is still becoming acquainted with the business but has already reviewed the company’s supply chain structure and aims to invest more in marketing the company’s largest brands.
“I have noticed our brand building spend has historically been far below industry average and in certain instances we have been off air for over a year on some of our largest brands,” Davidson said on the call. “Moving forward I anticipate committing greater support behind those brands and eventually spending more in line with our category growth peers with sustained brand building support.”
Davidson said she intends to provide more detailed strategy updates in the upcoming quarterly reports.
