• Organic Net Sales Decline: 5% year-over-year decrease.
• Adjusted EBITDA: $22 million, compared to $24 million a year ago.
• Adjusted Gross Margin: 20.8%, a 20 basis point increase year-over-year.
• SG&A Expenses: Decreased 8% year-over-year to $71 million.
• Restructuring Charges: $5 million in the quarter, with total program charges expected to be $115 million to $125 million.
• Interest Costs: Increased 4% year-over-year to $14 million.
• Adjusted Net Loss: $4 million or $0.04 per diluted share.
• North America Organic Net Sales Decline: 6% year-over-year.
• International Organic Net Sales Decline: 3% in the quarter.
• Free Cash Flow: Outflow of $17 million compared to an inflow of $7 million a year ago.
• Net Debt: $684 million with a net leverage ratio of 3.9x.
• Fiscal 2025 Guidance: Organic net sales to be flat or better, adjusted EBITDA to grow by mid-single-digit percentage, gross margin to expand by at least 125 basis points, and free cash flow of at least $60 million.

• Warning! GuruFocus has detected 5 Warning Signs with HAIN.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• The Hain Celestial Group Inc (NASDAQ:HAIN) achieved adjusted gross margin expansion in the first quarter, driven by strong productivity and fuel delivery.
• The company has made significant progress in its Hain Reimagined strategy, particularly in simplifying its brand portfolio and enhancing its revenue growth management capabilities.
• The away-from-home and e-commerce channels showed strong growth, with double-digit sales increases in North America and international markets.
• The company has successfully extended payables and reduced inventory levels, contributing to improved working capital management.
• Hain Celestial reaffirmed its fiscal 2025 guidance, expecting organic net sales to be flat or better and adjusted EBITDA to grow by a mid-single-digit percentage.

Negative Points

• The Hain Celestial Group Inc (NASDAQ:HAIN) experienced a 5% decline in organic net sales year-over-year, driven by lower sales in both North America and international segments.
• Adjusted EBITDA decreased to $22 million from $24 million a year ago, with a margin of 5.7%, indicating challenges in maintaining profitability.
• The company's North America segment saw a 6% decline in organic net sales, primarily due to lower sales in snacks and meal prep.
• Free cash flow was an outflow of $17 million in the first quarter, compared to an inflow of $7 million in the prior year period.
• The company faces ongoing challenges in the personal care category, with a double-digit decline in organic net sales due to SKU reductions and manufacturing consolidation.

Q & A Highlights

Q: Wendy, as we think about the ramp into the back half of the year, particularly in snacking, what are your thoughts around overall category performance? Is there any variability if we see continued softness at the category level on your distribution gains? A: Wendy Davidson, President and CEO: We have visibility into the drivers of Q1 in snacking and confidence for the back half due to known programs. Without Q1 drags, Garden Veggie and the overall snack category would have been up low single digits. We're gaining distribution and expect continued success with Flavor Burst and promotional activities in Q3 and Q4.

Q: Could you expand on the full-year outlook for baby formula? Have you built in supply chain redundancies to prevent future shortages? A: Wendy Davidson, President and CEO: Earth's Best formula is a key growth vehicle and margin-accretive. We are back in supply on all formulations, with full size availability expected by the end of Q2. We've built in redundancies by carrying more inventory and qualifying production in multiple locations. We're focused on regaining shelf space and have seen strong velocities where distribution has been regained.

Q: Are there any other steps being taken to reduce leverage outside of organic cash flow? A: Lee Boyce, CFO: Our focus is on organic cash flow and net working capital initiatives. We've unlocked over a third of our $165 million target in net working capital improvements. We expect leverage to remain flat in Q2 and decrease in the back half of the year.

Q: Could you discuss consumer behavior in North America and Europe, particularly in terms of switching to private label or discount stores? A: Wendy Davidson, President and CEO: In Europe, consumers have traded down to private label and shifted to discount channels. We benefited from private label production in certain categories. In North America, we see a bifurcation with premium buyers and value-focused consumers. Our strategy includes channel expansion and ensuring the right price pack architecture.

Q: How should we think about the cadence of gross margin expansion throughout the year? A: Lee Boyce, CFO: We expect gross margin to sequentially improve quarter-to-quarter, with significant expansion occurring in the back half of the year. Our productivity pipeline will continue to step up, contributing to this expansion.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.