Today I’m focusing on The Hain Celestial Group, Inc. (NASDAQ:HAIN) – a major player in the natural and organic products category. They participate in several natural categories with well-recognized brands that include Celestial Seasonings, Spectrum Naturals, Spectrum Essentials, Almond Dream, and a host of others.
Record Net Sales
The Hain Celestial Group, Inc. (NASDAQ:HAIN) had net sales of $455.3 million in the second quarter of Fiscal Year 2013, compared to prior year period net sales of $364.8 million. This represents an increase of 24.8 percent. These robust net sales results show the company is giving consumers the unique healthier products they desire. For example, they offer their Earth’s Best Organic line, which is the first complete line of organic foods for infants. Another example is their Nile Spice brand – the company’s all-natural soup cups.
Growth in Different Geographic Regions
The Hain Celestial Group, Inc. (NASDAQ:HAIN) had 9.4% gross sales growth on a comparable basis. Hain Daniels in the United Kingdom concentrated on “higher margin” brand growth. Furthermore, Hain Celestial experienced profitable growth in Canada as well as Europe. Hain Celestial US also had greater profitability.
Strength via Acquisitions
Hain Celestial acquired top brands during the quarter, including Hartley’s jam and Sun-Pat peanut butter. Both brands lead their categories in the UK. In December 2012, the company acquired the BluePrint brand. With this brand, The Hain Celestial Group, Inc. (NASDAQ:HAIN) is now acting quite naturally in the 100% natural, unpasteurized, juice class.
Comprehensive Brand Strength
Top brands, including Celestial Seasonings, Imagine, Alba Botanica, Lima, and Linda McCartney, among several others, led the company’s brand strength. Investors should consider that Hain Celestial is leaving no stone unturned in the natural and organic field in which they play, having products across a host of food categories.
Healthy
Operating Free Cash Flow
Hain Celestial had operating free cash flow of $106.8 million for the 12 months ended Dec. 31, 2012. This represents an increase of 47.6%.
A healthy operating free cash flow means a company has the money to engage in product development, and it gives them leverage for undertaking acquisitions as well, among other initiatives. This cash flow is significant because the company still generated major cash after utilizing the financial resources needed to maintain and build their assets.
Bottom Line Strength
The company’s GAAP net income was $31.6 million, representing an increase of 57.8%. Of note to investors is that Hain Celestial is efficiently managing their costs, which is one component that manifests itself in bottom line strength.
Of course, other companies are aggressively marketing natural and organic products. Kellogg Company (NYSE:K) and General Mills, Inc. (NYSE:GIS) are entering the natural and organic fields as well.
Kellogg’s U.S.Morning Foods/Kashi segment had internal net sales growth of 2.7 percent in 2012. This segment had 6.3 percent internal net sales growth in the fourth quarter of 2012. Morning Foods provides whole grain oats to the food ingredient and manufacturing sectors. Kashi is the company’s natural, nutritious food product line. The Kashi line is building their reputation with their innovation in natural cereals and bars.
General Mills, Inc. (NYSE:GIS) has their Cascadian Farm certified organic foods and Muir Glen organic tomatoes, sauces and soups. The company also has their Lärabar natural fruit and nut food bars. All of these products are part of General Mills’ “Small Planet Foods” division. Within this U.S. retail segment, the Small Planet Foods division (along with the Snacks and Meals divisions) experienced net sales gains in 2Q Fiscal 2013.
General Mills, Inc. (NYSE:GIS) Chairman and CEO, Mr. Ken Powell, stated, “Our U.S. Retail segment posted gains in pound volume, net sales and operating profit.”
Consumers today are demanding healthier eating choices. Processed & packaged goods companies focused on gaining more supermarket shelf space and market share cannot ignore this movement. Therefore, they’re trying to act naturally as they innovate to stay on trend with consumers’ wishes.
The article All They’re Trying to Do is Act Naturally originally appeared on Fool.com and is written by Michael Ugulini.
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