Hain Celestial sorts through challenges

by Eric Schroeder
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Hain Celestial's decision to delay its financial results sent the company's shares into a tailspin.

LAKE SUCCESS, N.Y. — It has been almost two months since Hain Celestial Group Inc. announced it was delaying the release of its fourth-quarter and full-year financial results. The announcement — along with the disclosure that the company did not expect to achieve its previously announced guidance for fiscal 2016 — sent Hain Celestial’s shares into a tailspin.

On Aug. 15, the organic and natural products company with operations in North America, Europe and India saw its share price close at $53.40. But after the announcement, shares plunged more than 30% to as low as $37.25. On Oct. 13, with no date revealed for when financials might be released, Hain Celestial had yet to see a rebound in its share price. The company’s share price was at $35.32, just above its 52-week low of $34.25 set on Sept. 28.

Lake Success, N.Y.-based Hain Celestial has been quiet since making the announcement that during the fourth quarter management identified concessions that were granted to certain distributors in the United States. At the time, the company said it would evaluate whether the revenue associated with the concessions should have been recognized at the time the products sell through its distributors to the end customers. Previously, the company has recognized revenue pertaining to the sale of its products to certain distributors at the time the products are shipped to the distributors.

The company also is said to be evaluating whether the revenue associated with the concessions was accounted for in the correct period and is evaluating its internal control over financial reporting. The audit committee of the company’s board of directors is conducting an independent review of the matters and has retained independent counsel to assist in the review, according to the company.

Hain Celestial share price graph
Hain Celestial Group Inc. share price

“The company expects that any potential changes in the timing of the recognition of revenue with respect to these transactions should not impact the total amount of revenue ultimately recognized by the company with respect to such distributors and does not reflect on the validity of the underlying transactions with respect to such distributors,” the company said in a statement.

Perhaps more concerning to investors is the fact the company also said it does not expect to achieve its guidance for fiscal 2016 of total net sales in the range of $2.946 billion to $2.966 billion, which would have been an increase of approximately 9% to 10% as compared to fiscal year 2015, or earnings per diluted share in the range of $2 to $2.04, which would have been an increase of approximately 6% to 9% as compared to fiscal year 2015.

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