Hain Celestial’s shares experienced a notable surge of 18.59% today, driven by the company’s impressive fiscal fourth-quarter earnings report, which exceeded expectations. By 2:57 p.m. EDT, the stock had risen by 21.2% fueled by the positive news.
Hain’s focus on enhancing profitability is yielding results.
Despite falling short of revenue forecasts, with a 6% decrease to $418.8 million compared to the anticipated $421.2 million, the producer of Celestial Seasonings tea and other goods caught investors’ attention with its cost management improvements. Organic revenue, excluding factors like divestitures, acquisitions, and currency fluctuations, experienced a 4% drop during the quarter.
Although the decline in revenue was a letdown, the company’s advancements in cost efficiency were well received. The adjusted gross margin saw a 70-basis-point increase to 23.4%, while adjusted net income grew modestly from $10 million to $11 million. Earnings per share rose from $0.11 to $0.13, surpassing the consensus estimate of $0.08.
During the fiscal year 2024, under the Hain Reimagined strategy, CEO Wendy Davidson highlighted the transition to a global operating model, emphasizing reduced geographic complexity and enhanced scale.
Additionally, the company made strides in reducing its debt, with net debt decreasing from $775 million to $690 million. It aims to further lower its leverage ratio to between two and three times adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).
Can Hain sustain its upward trajectory?
Hain’s stock has faced challenges over the past decade, experiencing a significant decline. However, investors remain optimistic about a potential recovery.
Looking ahead to fiscal 2025, the company anticipates stable or improved organic sales growth, with adjusted EBITDA growth projected in the mid-single digits. While these figures indicate positive momentum, more substantial growth will be essential for a successful turnaround.
For now, a cautious approach might be advisable, with investors potentially choosing to observe from the sidelines.
