The Hain Celestial Group, Inc. (HAIN) Bundle
Understanding The Hain Celestial Group, Inc. (HAIN) Revenue Streams
Understanding Hain Celestial Group’s Revenue Streams
The total net sales for the three months ended September 30, 2024, were $394.6 million, reflecting a decrease of $30.4 million or 7.2% compared to $425.0 million in the same period of 2023. This decline included an unfavorable impact of $13.1 million (or 2.9%) related to divestitures, discontinued brands, and exited product categories, along with a favorable impact of $3.3 million (or 0.8%) from foreign exchange.
Year-over-Year Revenue Growth Rate
Year-over-year revenue growth rates indicate a significant decline in net sales. The organic net sales, which exclude the effects of foreign exchange, acquisitions, divestitures, discontinued brands, and exited product categories, decreased by $20.6 million or 5.1% from the previous year.
Contribution of Different Business Segments to Overall Revenue
The revenue breakdown by reportable segments for the three months ended September 30, 2024, is as follows:
| Segment | Net Sales (2024) | Net Sales (2023) | Change ($) | Change (%) |
|---|---|---|---|---|
| North America | $231.1 million | $260.1 million | $(28.9 million) | (11.1%) |
| International | $163.5 million | $165.0 million | $(1.5 million) | (0.9%) |
| Consolidated Total | $394.6 million | $425.0 million | $(30.4 million) | (7.2%) |
Analysis of Significant Changes in Revenue Streams
The decrease in net sales was primarily driven by lower sales in the snacks and meal preparation categories within North America. Specifically, snacks experienced a drop due to a timing shift of a promotional event, while meal preparation saw a decline in sales volume. Conversely, growth was noted in the beverages category.
For the international segment, the decrease was largely attributed to lower sales in the beverages and baby & kids categories, reflecting a downturn in branded sales.
Overall, the company’s performance in both segments indicates a need for strategic adjustments to address declining revenue streams and enhance sales efficiency moving forward.
A Deep Dive into The Hain Celestial Group, Inc. (HAIN) Profitability
A Deep Dive into The Hain Celestial Group, Inc. Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit was $81.6 million, resulting in a gross profit margin of 20.7%, compared to 19.7% for the same period in 2023. This reflects a decrease in gross profit of 2.8% year-over-year, attributed mainly to lower sales volume in North America.
Operating Profit: Operating income for the three months ended September 30, 2024, was $3.1 million, a significant turnaround from an operating loss of $2.3 million in the previous year.
Net Profit Margin: The net loss for the three months ended September 30, 2024, was $19.7 million, leading to a net loss margin of (5.0%). This contrasts with a net loss of $10.4 million, or a net loss margin of (2.4%) for the same period in 2023, marking an increase in the net loss of 89.5%.
Trends in Profitability Over Time
| Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Gross Profit | $81.6 million | $83.9 million | $(2.3 million) | (2.8%) |
| Operating Income | $3.1 million | $(2.3 million) | $5.4 million | |
| Net Loss | $(19.7 million) | $(10.4 million) | $(9.3 million) | 89.5% |
| Adjusted EBITDA | $22.4 million | $24.1 million | $(1.7 million) | (7.1%) |
Comparison of Profitability Ratios with Industry Averages
When comparing the profitability metrics with industry averages, the gross profit margin of 20.7% is below the industry average of approximately 25%. The operating income margin stands at 0.8%, which is lower than the industry average of 5%. The net loss margin of (5.0%) indicates that the company is performing worse than the industry average of 1-2% net profit margin.
Analysis of Operational Efficiency
Cost Management: Selling, general, and administrative expenses decreased to $71.3 million for Q3 2024, a 7.6% reduction from $77.2 million in Q3 2023. This decrease is attributed to lower marketing and employee-related expenses.
Gross Margin Trends: Despite a decrease in absolute gross profit, the gross margin improved due to better product mix and productivity improvements. The gross margin increased from 19.7% to 20.7%, indicating enhanced operational efficiency in managing production costs.
Adjusted EBITDA: Adjusted EBITDA for Q3 2024 was $22.4 million, resulting in an adjusted EBITDA margin of 5.7%. This is a decrease from 5.7% in the prior year, reflecting the challenges faced in maintaining profitability amid declining sales.
| Cost Management Metrics | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Selling, General & Administrative Expenses | $71.3 million | $77.2 million | $(5.9 million) | (7.6%) |
| Productivity and Transformation Costs | $5.0 million | $6.4 million | $(1.4 million) | (21.6%) |
| Amortization of Acquired Intangible Assets | $2.2 million | $2.0 million | $0.2 million | 11.5% |
Debt vs. Equity: How The Hain Celestial Group, Inc. (HAIN) Finances Its Growth
Debt vs. Equity: How Hain Celestial Group, Inc. Finances Its Growth
The company's total debt as of September 30, 2024, was $740.4 million, a decrease from $744.1 million at June 30, 2024, reflecting net repayments during the period.
Breaking down the debt structure:
| Debt Type | Amount (in millions) |
|---|---|
| Long-term Debt | $732.8 |
| Short-term Debt | $7.6 |
| Total Debt | $740.4 |
The debt-to-equity ratio stands at approximately 0.77, calculated from total debt of $740.4 million and total stockholders' equity of $963.7 million as of September 30, 2024. This ratio is below the industry average of 1.0, indicating a relatively conservative approach to leveraging debt compared to peers.
Recent debt activity includes the maintenance of a credit facility with a total capacity of $1.1 billion, which comprises $300 million in term loans and $800 million in revolving credit. The weighted average interest rate on outstanding borrowings was 7.76% as of September 30, 2024.
The company has taken steps to manage its debt levels effectively, including recent refinancing efforts to optimize interest rates and extend maturities. For instance, the term loans and revolving credit facility are set to mature on December 22, 2026.
In terms of equity funding, the company has issued 111,964,000 shares of common stock, with an additional paid-in capital of $1.23 billion. The balance sheet reflects a strong equity position, which helps mitigate risks associated with high debt levels.
In summary, the company demonstrates a balanced approach to financing its operations through a mix of debt and equity, maintaining a lower-than-average debt-to-equity ratio while actively managing its debt obligations.
Assessing The Hain Celestial Group, Inc. (HAIN) Liquidity
Assessing Liquidity and Solvency
Liquidity Ratios
The current ratio, a measure of liquidity that indicates the ability to cover short-term obligations, was calculated at 1.01 as of September 30, 2024. The quick ratio, which excludes inventory from current assets, stood at 0.80 during the same period. This indicates a moderate liquidity position, as the current ratio is slightly above 1, suggesting that the company can cover its current liabilities with its current assets, while the quick ratio indicates potential liquidity concerns when inventory is not considered.
Working Capital Trends
As of September 30, 2024, working capital was reported at $283.3 million, reflecting an increase of $7.8 million from $275.6 million at the end of fiscal year 2024. This positive trend in working capital demonstrates improved operational efficiency and better management of short-term assets and liabilities.
Cash Flow Statement Overview
The cash flow statements for the three months ended September 30, 2024, revealed the following trends:
| Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) | Change (in thousands) |
|---|---|---|---|
| Operating Activities | $(10,787) | $14,030 | $(24,817) |
| Investing Activities | $6,309 | $(5,649) | $11,958 |
| Financing Activities | $(4,198) | $(17,584) | $13,386 |
| Net Cash Flow | $2,546 | $(15,084) | $17,630 |
Cash flows from operating activities were negative at $(10.8 million), a significant decrease from the prior year's cash provided by operations of $14.0 million. The decline was primarily attributed to increased cash utilization for working capital accounts, particularly a $22.8 million drop in accounts payable and accrued expenses. In contrast, cash provided by investing activities increased to $6.3 million, mainly due to higher proceeds from asset sales. Financing activities showed a reduced cash outflow of $(4.2 million) compared to $(17.6 million) in the prior year, indicating improved management of debt repayment.
Potential Liquidity Concerns
Despite the increase in working capital, the negative cash flow from operating activities raises potential liquidity concerns. The free cash flow for the three months ended September 30, 2024, was reported at $(16.5 million), a stark decrease from $7.1 million in the prior year. This indicates that the company is currently using more cash than it generates from its core operations, which could affect its ability to meet future obligations without additional financing.
Debt Management
As of September 30, 2024, total debt decreased to $740.4 million, down from $744.1 million at the end of the previous fiscal year. The company has a significant amount of debt relative to its equity, which could pose risks if cash flow issues persist. The debt-to-equity ratio, a key measure of financial leverage, remains a critical area for monitoring as the company navigates its liquidity challenges.
Is The Hain Celestial Group, Inc. (HAIN) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key financial ratios, stock price trends, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio for the company as of the latest financial data is approximately –. This figure indicates the market's valuation of the company's earnings. A higher P/E ratio may suggest overvaluation, while a lower ratio could indicate undervaluation.
Price-to-Book (P/B) Ratio
The P/B ratio stands at approximately –, reflecting the market's valuation relative to the company's book value. A P/B ratio below 1 may suggest the stock is undervalued.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is currently –, which is a critical measure for understanding the company's valuation in relation to its earnings before interest, taxes, depreciation, and amortization. This ratio is particularly useful for comparing companies within the same industry.
Stock Price Trends
Over the past 12 months, the stock price has experienced fluctuations. The stock opened the year at $– and reached a high of $– and a low of $–. As of the latest data, the stock price is approximately $–, reflecting a –% change year-to-date.
| Period | Opening Price | Highest Price | Lowest Price | Current Price | Year-to-Date Change (%) |
|---|---|---|---|---|---|
| Last 12 Months | $– | $– | $– | $– | –% |
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, indicating a dividend yield of 0%. This lack of dividends may suggest that the company is reinvesting earnings for growth instead of returning capital to shareholders.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a rating of –, suggesting that analysts recommend a buy, hold, or sell position based on their assessments of the company's financial health and market conditions.
| Analyst Rating | Number of Analysts | Consensus Recommendation |
|---|---|---|
| – | – | – |
Key Risks Facing The Hain Celestial Group, Inc. (HAIN)
Key Risks Facing The Hain Celestial Group, Inc.
The financial health of the company is influenced by various internal and external risk factors. Understanding these risks is crucial for investors.
Industry Competition
The company operates in a highly competitive market, facing pressure from both established players and new entrants. For the three months ended September 30, 2024, net sales decreased by $30.4 million, or 7.2%, compared to the prior year, largely due to declining sales in key categories such as beverages and baby & kids. Organic net sales fell 5.1% during the same period.
Regulatory Changes
Changes in food safety regulations and labeling requirements can impact operations. The effective income tax rate for the company was 22.0% for the three months ended September 30, 2024, compared to a benefit of 35.3% for the same period in the previous year.
Market Conditions
Fluctuations in commodity prices, particularly for raw materials, can significantly affect profit margins. For instance, gross profit for the three months ended September 30, 2024, was $81.6 million, a decrease of 2.8% from $83.9 million in the previous year.
Operational Risks
Operational inefficiencies can arise from supply chain disruptions. The company recognized a non-cash impairment charge of $0.7 million related to certain equipment in North America during the three months ended September 30, 2023.
Financial Risks
The company's total debt decreased to $740.4 million as of September 30, 2024, down from $744.1 million in June 2024. Interest and other financing expenses totaled $13.7 million for the three months ended September 30, 2024.
Strategic Risks
The ongoing transformation program, known as the Hain Reimagined Program, is designed to optimize the company's portfolio. Expenses related to this program totaled $5.0 million for the three months ended September 30, 2024.
Mitigation Strategies
The company is focusing on improving productivity and managing costs effectively. Selling, general, and administrative expenses decreased to $71.3 million in the three months ended September 30, 2024, down from $77.2 million in the prior year.
| Risk Factor | Description | Impact |
|---|---|---|
| Industry Competition | Pressure from established and new entrants | Net sales decreased by $30.4 million, or 7.2% |
| Regulatory Changes | Changes in food safety regulations | Effective tax rate of 22.0% |
| Market Conditions | Fluctuations in commodity prices | Gross profit decreased by 2.8% |
| Operational Risks | Supply chain disruptions | Non-cash impairment charge of $0.7 million |
| Financial Risks | Total debt and interest expenses | Total debt of $740.4 million; interest expenses of $13.7 million |
| Strategic Risks | Transformation program expenses | Expenses related to the program of $5.0 million |
| Mitigation Strategies | Cost management and productivity improvement | SG&A expenses decreased to $71.3 million |
Future Growth Prospects for The Hain Celestial Group, Inc. (HAIN)
Future Growth Prospects for Hain Celestial Group, Inc.
Analysis of Key Growth Drivers
The Hain Celestial Group, Inc. is focusing on several key growth drivers to enhance its market presence and financial performance. Key initiatives include:
- Product Innovations: The company is investing in developing new products that align with consumer trends towards health and wellness. This includes expanding its organic and plant-based product lines.
- Market Expansions: The company is targeting international markets, particularly in regions like Asia and Europe, where demand for natural and organic products is growing.
- Acquisitions: Strategic acquisitions are being pursued to enhance product offerings and market share. The company has a history of acquiring brands that complement its existing portfolio.
Future Revenue Growth Projections and Earnings Estimates
For the fiscal year ending June 30, 2025, Hain Celestial is projecting revenues to increase modestly as it overcomes previous declines. Revenue estimates suggest:
- Projected Revenue for FY2025: Approximately $1.58 billion, reflecting a growth rate of 3.5% from FY2024.
- Adjusted EBITDA for FY2025: Estimated to be around $90 million, indicating a potential recovery from the $85 million reported in FY2024.
Strategic Initiatives or Partnerships That May Drive Future Growth
The Hain Celestial Group is pursuing several strategic initiatives aimed at driving future growth:
- Hain Reimagined Program: This multi-year transformation initiative aims to streamline operations and improve profitability. The program includes cost-saving measures projected to save $50 million by the end of fiscal 2027.
- Partnerships: Collaborations with retailers to enhance product placements and promotional strategies, focusing on increasing shelf space for new product lines.
Competitive Advantages That Position the Company for Growth
The company holds several competitive advantages that position it favorably for future growth:
- Brand Recognition: Established brands in the organic and natural foods market provide a strong foundation for consumer trust and loyalty.
- Diverse Product Portfolio: A wide range of products across various categories reduces reliance on any single product segment, allowing for more stable revenue streams.
- Operational Efficiency: Recent improvements in supply chain management and cost control measures have enhanced gross profit margins, which increased to 20.7% in Q1 FY2025 from 19.7% in Q1 FY2024.
| Metric | Q1 FY2025 | Q1 FY2024 | % Change |
|---|---|---|---|
| Net Sales | $394.6 million | $425.0 million | -7.2% |
| Adjusted EBITDA | $22.4 million | $24.1 million | -7.1% |
| Gross Profit Margin | 20.7% | 19.7% | +5.1% |
| Net Loss | $19.7 million | $10.4 million | +89.5% |
The data indicates a challenging revenue environment; however, the company's strategic initiatives and operational efficiencies could provide the necessary leverage for future growth.
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Updated on 16 Nov 2024
Resources:
- The Hain Celestial Group, Inc. (HAIN) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of The Hain Celestial Group, Inc. (HAIN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View The Hain Celestial Group, Inc. (HAIN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.