- Hain Celestial said sales during its fourth quarter totaled $725.1 million, a 2% decrease compared to the prior year. The sales figure came in above the $719.0 million FactSet estimate reported by MarketWatch. Net income in the fourth quarter ended June 30 was $313,000, compared to a net loss of $88.6 million in the same period a year earlier.
- The organic and natural products company forecast fiscal 2018 sales of $2.967 billion to $3.036 billion and adjusted earnings per share of $1.63 to $1.80. The FactSet consensus is for sales of $2.97 billion and EPS of $1.65.
- "We are pleased to have achieved sales growth in all of our business segments on a constant currency basis in the fourth quarter, despite an ever changing operating environment for food manufacturers and retailers," Irwin Simon, Hain Celestial's founder, president and CEO said in a statement.
Hain has made significant progress during the year on its strategic plan, Simon said in the statement. "The business momentum and operational improvements we experienced in the fourth quarter of fiscal 2017 reinforces our confidence in the tremendous opportunities ahead to generate the growth we know we are capable of achieving over the next several years," he said.
Hain Celestial has been identified as a potential takeover target, but its erratic performance and the audit of its accounting discrepancies — it announced in June it would not revise any of its previous financial statements following a review into accounting discrepancies —have cast doubt on whether it will be able to find solid financial footing in the near term. Tuesday's results could help decide the question for M&A observers. Large food manufacturers that might be eyeing the company for acquisition could include General Mills, Kellogg, Danone, Mondelez, Coca-Cola and PepsiCo.
Additional pressure to sell may come from the nearly 10% stake Engaged Capital recently took in Hain Celestial. The California hedge fund has a record of successful investor activism and has already flexed significant muscle by nominating seven candidates to Hain Celestial's eight-member board.
"We would expect some strength in HAIN shares on the open, given the upside to F4Q17 EPS and reaffirmed FY18 sales and EBITDA guidance," Barclays analysts said in a report following the earnings announcement. "That said, we would not be surprised if enthusiasm is somewhat tempered by questions around sustainability of results given the recent deterioration in U.S. tracked channel consumer takeaway trends."
Hain shares initially spiked about 11% following the earnings report, before later reversing course to fall nearly $1 to $39.68 in mid-day trading.
Despite its struggles, Hain remains in a popular space as consumer interest in natural and organic products shows no sign of abating. Founded in 1993, Hain has acquired more than 55 brands, including BluePrint juice and Garden of Eatin snacks. It sells its products in 65 countries.
Hain is likely to remain under pressure to improve its operations, or it may have little choice but to sell itself to a cash-rich CPG company desperate for growth — especially with an activist investor agitating for change.