The Hain Celestial Group (NASDAQ:HAIN) on Thursday reported earnings for the first quarter of its 2015 fiscal year, and it was another blowout. Here are the highlights:

  • Revenue rose 35% to $631 million.
  • Adjusted earnings per share rose 31% to $0.68.
  • Sales in the U.K. were up 51% YoY.

Even as competition ramps up in the natural and organic foods space, Hain Celestial continues to execute and grow. Even accounting for the impact of a recent nut butter recall, the company seems to be firing on all cylinders. Here are three key takeaways from the latest quarterly report.

Acquisitions continue to pay off
Hain's growth over the past decade has been amazing, and it's worth noting that the growth is coming from many sources. On the earnings call, founder and CEO Irwin Simon said 23 different brands had double-digit revenue growth over the quarter. This is strong evidence that the model of acquisition and integration that Simon has pursued over the past decade continues to generate strong results. 

Just this quarter, the company added $70.6 million in sales, and $3.8 million in operating income, from the purchase of the remaining stake of Hain Pure Protein it didn't own. Tilda and Rudi's Organic Bakery -- two other recent purchases -- are also starting to make meaningful contributions to sales. 

Remaining focused on consumers and shareholders
It seems in recent years that every month or so there has been another case of salmonella contamination, followed by a major product recall after dozens of people have become sick. Recently, Hain Celestial issued a voluntary recall for many of its nut butter products sold under the Arrowhead Mills and MaraNatha brands after determining that some 45 lots could have been contaminated. 

The total impact on sales, based on adjustments in the earnings release, was $10.4 million, and almost $10 million in net income. This is a significant hit, cutting earnings per share for the quarter nearly in half. And while it's likely that the Food and Drug Administration pressured Hain to issue the recall, for the company to make this call signifies to me a focus on the long-term picture. When the product was recalled nobody had become sick from eating any of the products in question. 

Sure, a $10 million hit to the bottom line stinks, but taking potentially dangerous products off the market before anyone gets sick -- or worse -- well, that's priceless. It's also aligned with what is in the best long-term interests of the company: safe, healthy products that consumers feel good about buying. 

Expansion opportunities growing
Only a few years ago, the kinds of products Hain Celestial sells would only be found in a natural foods store. Today, they can also be found in traditional grocers, mass merchant retail stores, and even convenience stores. The company has also begun expanding into e-commerce, which is growing at a great rate so far. 

Furthermore, the acquisition of Hain Pure Protein is a big step into supplying commercial food operations, as well as retail. Customers for the company's organic, natural, and antibiotic-free poultry include Chipotle Mexican Grill. As fast-casual restaurants increasingly feature more natural and organic options, this business is set to grow even further. The retail side is just as appealing, with the Plainville Farms brand expected to sell 1.5 million Thanksgiving turkeys this year. 

Looking to 2015 and beyond
The tailwind of strong consumer demand, along with Simon's excellent track record of integrating new brands into the Hain portfolio, continue to drive phenomenal growth. Hain is guiding for sales growth between 27% and 30% for the full year, and earnings growth of 17% to 23%. Yes, earnings will grow slower than sales this year, but that is partly a product of Hain Pure Protein's margins being about half those of the packaged foods businesses, as well as increasing costs due to expansion. Past results suggest the company will over time increasingly rationalize its costs as it further integrates new brands into the Hain family. 

My key takeaway? Combine a founder-led company with a solid track record of execution, within a growing industry, and the future looks pretty bright. 

 

 

Jason Hall owns shares of Apple, Chipotle Mexican Grill, and Hain Celestial. The Motley Fool recommends Apple, Chipotle Mexican Grill, and Hain Celestial. The Motley Fool owns shares of Apple, Chipotle Mexican Grill, and Hain Celestial. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.