Management said that it was current with all

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wrongdoing. Management said that it was current with all financial reporting obligations. Meanwhile, activist investor Engaged Capital LLC disclosed in late June 2017 that it had taken a 9.9% stake in Hain. Pursuant to their agreement, six new board members were appointed in September 2017, including Engaged Capital’s founder Glenn Welling. As of February, 2018, Engaged Capital reported an 11.3% stake in Hain. We believe that Engaged may push for the sale of the company. In March 2018, the board approved a plan to sell Hain Pure Protein, a noncore business that includes the Plainville Farms, Empire Kosher and FreeBird brands. We believe that the divestiture of the protein segment could make HAIN a more attractive acquisition target. In December 2017, Hain announced the acquisition of Clarks UK Ltd., a producer of natural sweeteners including maple syrup and honey. EARNINGS & GROWTH ANALYSIS Hain Celestial now has three reporting segments: United States (44% of 3Q18 revenue), United Kingdom (38%), and Rest of World (18%). Segment results for the 3Q18 are summarized below. In the U.S., net third-quarter sales declined 3% to $281.1 million. The segment adjusted operating margin decreased to 8.9% from 15.3% a year earlier. Results in the U.S. segment were driven by gains in Tea, Pure Personal Care and offset by weak performance in the Fresh Living and Better-for-You platforms. It expects to complete its SKU rationalization, which continues to impact U.S. performance, in the second half of 2018. Adjusted operating income declined 19% to $35.9 million. Management said 3Q results were negatively impacted by a planned increase in marketing investments, higher freight and commodity costs, and unfavorable mix. Management expects U.S. sales to be flat to slightly down in FY18. In the U.K., third-quarter net sales increased 18.6% to $238.3 million (up 5% on an adjusted basis). Sales benefited from 27% growth in Ella’s Kitchen, 20% growth in the Tilda brand, and 17% growth at Hain Daniels sales. The segment adjusted operating income rose 48% to $20.8 million, driven by strength in Hain Daniels. Management expects high-single to low-double digit sales growth in FY18. In the Rest of World segment, which includes Canada and Continental Europe, Hain posted a 15% increase in net third quarter sales (6% in constant currency), to $113.3 million, driven by increased sales of plant-based beverages in Europe, as well by stronger results in Canada. The segment adjusted operating income rose 32% year over year, to $12.3 million. Management expects high-single to low-double digit sales growth in FY18. Hain Pure Protein (HPP) is now reported as discontinued operations due to the company’s intention to sell all of the operations of the segment. Net sales for Hain Pure Protein were flat at $118.2 million and the operating loss was $2.1 million. Along with the fiscal third-quarter results, management updated FY18 guidance, which now excludes Hain Pure Protein. Earnings and EBITDA also now includes expectations for over $40 million in freight, commodity and inflation headwinds as well as $40 million in marketing expenses. It continues to project a 4%-6% increase in net sales,
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