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Hain Celestial off to a strong start in FY 2018

Hain Celestial’s first-quarter performance met expectations across key metrics including net sales and profitability. Here's what leadership says is working.

Plant-based foods, personal care and e-commerce drove growth for Hain Celestial in the first quarter of the natural and organic products company’s fiscal year 2018.

Net sales grew 4 percent from the prior year period to $708.3 million, reflecting double-digit sales increases for key brands including Earth’s Best, FreeBird, Spectrum, Alba Botanical, Jason, Yves Veggie Cuisine, Avalon Organics and Arrowhead Mills, CEO Irwin Simon said on an earnings call Tuesday. The e-commerce channel saw an uptick of more than 30 percent compared to the same quarter last year, and Simon commented that Hain is already seeing benefits from Amazon’s acquisition of Whole Foods Market.

In the U.S., sales grew 4 percent to $263.7 million, reflecting strong performance by the Pure Personal Care, Better-for-You Baby and Better-for-You Pantry platforms, as well as Imagine Brands, which was the first to benefit from revised packaging and brand support.

As part of Project Terra—the company’s strategic plan to improve performance and margins—Hain is investing in building its top brands that account for 90 percent of sales. “Every retailer that I’ve met with at senior levels, one of the reasons they’re moving to private label is, they feel that a lot of the other consumer packaged goods companies are not investing in their brands, not innovating in their brands,” Simon explained. “They’re saying, ‘Why should we pay a premium? Let’s go out and do a private label because our brand may be stronger.’”

Hain was also boosted by strong sales growth in its Rest of the World segment—14 percent, to be exact. Simon expressed optimism about opportunities in India and the Middle East and believes that by 2020, those regions could represent $100 million in sales.

Other highlights from the quarter include:

  • Operating income of $31.5 million; adjusted operating income of $39.7 million.
  • EBITDA increased 60 percent to $51.3 million, compared with $32.2 million in the prior year period.
  • EPS of 19 cents compared with 8 cents in the prior year period; adjusted EPS per diluted share of 23 cents compared with 14 cents in the prior year period.

Hain reiterated its guidance for 2018, which calls for net sales growth of 4 percent to 6 percent and adjusted earnings per diluted share of $1.63 to $1.80.

Looking forward, Simon noted that household penetration will need to increase to drive sales growth—another part of the reason Hain is investing in efforts to engage with consumers and build brands that resonate.

“I think everybody out there is focused on two things: data and content. Supporting your brands and driving household penetration will drive sales,” Simon said. “It’s not about price, price, price anymore. On commodity items it is, but on organic products and natural products, I think it’s important that you get out there and bring awareness to your brands.”

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