Earnings call transcript Q2 2023

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Operator

Greetings, and welcome to The Hain Celestial Group Second Quarter Fiscal 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Chris Mandeville with ICR. you. Thank

begin. may You

Chris Mandeville

thank fiscal joining XXXX and Celestial's on second quarter earnings you morning us for Hain Good conference call.

today Chris President call Executive the are President Davidson, On and Officer; and Chief Bellairs, and Vice Executive Financial Officer. Wendy Chief

the regarding this within of operations financial the securities company's course federal make include These meaning may performance. call, future the forward-looking management During expectations the laws. of statements the and assumptions and

differ risks are from its discussion based current any from and Form for made materially this Celestial's Hain time on and Form uncertainties on time Securities to described the actual materially reports actual involve quarterly or and of on XX-K, and those statements. implied could to in statements forward-looking events the release filed These as a press Please morning with forward-looking detailed expectations well that annual that management's these those expressed other differ Exchange report results XX-Q statements reports could and risks from to in cause issued as today. Commission refer

GAAP be prepared will today call. call it presentation is non-GAAP adjusted This has Investor also on website results financial are heading. available and the this accompanying the archive in financial available financial of management's of on to Reconciliations measures Hain a is on the and company being non-GAAP presentation the earnings inclusive slide Celestial's release under made an website. supplemental of Relations note, webcast, Please information, will The focus which remarks additional posted measures. or

the Wendy. turn to to I'd And now over like call

Wendy Davidson

joining earnings since and good joining morning, Hain. you us my for first Chris, call Thank everyone. We you, appreciate

company role. the the my a for Mark and and resource through the thank portfolio the has month, transition his four First, our been operating significant of leadership Schiller years let transformation In model. into past company of company Mark the over of a time valuable past me in

weeks brand the key had connect weeks, the locations to few and to of local in And into join a further learned review across a will my to I space. and job, in opportunity coming the has I've greater plans build our businesses. consumer opportunity only have decision far thus I'm What only and chain our visit our our many my understanding. I more confirmed our better-for-you teams with supply Hain and business profitable have a but to brands leading commercial, the with to opportunity high-growth sustainable,

impressed potential early many During their my been the team, brands, one number of or of have which our are category. weeks I number in with our two

it been variety However, sustained investment while generate apparent the of portfolio to productivity, brands. a and much work challenges has have is simplify our to prevented done scale that

below we I've historically some our And instances, industry certain been far fact, brand over in largest has off spend been have noticed building year air on of brands. for In our average. a

help our and more the efforts building business, they and we understand our committing and state impressed Moving and capacity I spent the categories time our forward, me see our in sustained to strong of I’m will across opportunities. in and drive organizational the fully to investing talent support. support do spending growth anticipate enable appreciate geographies. accelerated potential category I with with those peers brands, reach line to capabilities eventually to in the with and more But so, brand growth and growth. are need brands the expanded team with we have behind channels ensure to our greater capabilities on

will our we and business, American model international improve of improving in in seen integrated our our In are And operating experience, implementation, business improvement. impact market our in firsthand we forecasting end can the stages resources the end-to-end be performance, by advancing our capabilities encouraged business. while in I've this North early go-to-market the distribution discipline in progress streamlining have in are I'm planning adding the chain business supply we to to and planning commercial across our my and potential. accelerate

as enhance are on of we have facing number our and growth While the on company the brands. to to the and drive are initiatives organization improve our to opportunity we of headwinds similar scale The and service productivity, categories and in has the levels challenges rest markets, taken passionate team industry a deliver drive and margins.

in As elements key of I'm algorithm. strategy the growth Hain weeks, the my examining still and I'm current early X.X

say to growth be years, in few long-term past ready plan. summer be formal and not execute more and with sometime to will plan am thoughts sustainable growth. to to strategic late early level our the to top the have providing and committed In and a plans of forward clear I and line will will I as except or strategy providing performance my which I we the quarter share continue, path a next our today, I in that I growth strategic transparency outlook look detailed our you update any bottom working building updates and a shape into our fall. we to established

I'll For business to now, Chris it for turn update. the

Chris Bellairs

everyone. Wendy, Thanks, and morning, good

adjusted EBITDA of to both second pleased on basis. are solid a a ahead guidance constant currency margin report gross in adjusted We and quarter

business in quarter net at adjusted improvements EBITDA sequential and plus year. guidance see and sales And X% units. reaffirming to both versus of full better-than-expected are international to we America year constant currency North the adjusted a X% continue prior with minus our we second Importantly,

to portions. prior our period. our snacks As dollars brands, in consumption double-digit gains in continue on it U.S. year bright driven business in-market by grew X%, our see sensible spots versus consumption relates underlying to the of health we

as saw double-digit and for successfully also business We snacks U.S. growth in channels. distribution new entered markets our the we quarter

We are C-stores up increased growth with encouraged in and gains TDPs particularly double-digits. dollar was XX%, as early

saw industry-wide quarter repeat buyers with the velocities With Earth's supply category, challenges year-on-year straight food behind also Terra a up us, and U.S. second consumption And quarter due our Sensible the Both supply in XX% in the strong chain growing chain XX%. to challenges U.S. the growth an baby in X%. increases positive impressive the grew in yogurt largely growth and U.S., formula standout, XX% Terra In Best realized remains despite Gods XX% velocity U.S. over continued pouch Greek in up TDPs the velocity driven of driven and persistent shortages. by for by

prior quarter store with Now compete for market grew total the shifting to versus performance UK, quarter international we period. the consumption In our in X%. end X% the sales categories the growing in, year

two period, UK jams Hartley’s Excluding points X%. portfolio up versus picking over share. full of plant-based up our were XX% grew prior categories, year

soups year standout Sully with up with prior versus Our was Cully portfolio XX% growth. UK & XX% period as a

we label, private seeing also the We're Europe strength nondairy are category, supplier. especially significant a Continental in in where

Germany, XX%. label example, with For total category growing in quarter the grew XX% by private in the almost the year period, prior versus

second and to In during in sales the impact consolidated decreased versus turning approximate included results. from our sales reported Consolidated Now X.X% adjusted select year decreased $XXX.X prior net quarter, the America North the retailer net reductions X% quarter. X.X% to million. period inventory

the net million sales was a quarter. in $XX Foreign reported headwind exchange

year in gross approximately the the basis quarter, period. versus XXX was Adjusted of XX.X% margin a prior decrease second points

realization to to into fiscal However, guidance outcome our adjusted gains as elevated sequentially, a us as quarter-over-quarter, expect as flat supply year. gross of allowed we second relative chain. to basis favorable within which of productivity increased we margin well our XXX points actions greater These to driven modestly up head strong approximately plateau half offset price by the inflation, the

margin material modest as the adjusted QX million lower our versus Partly currency a QX, and approximately was on as and year-over-year constant we shift spend. result $XX.X respectively, a million. impact million exchange, of on by EBITDA basis EBITDA basis XX% in timing in a to productivity only dollars currency $XX.X higher Including for $XX.X points, called period. improvement. finished adjusted inflation where and increased goods to pricing, volumes. and XXX was Relative was EBITDA basis guidance marketing EBITDA favorably constant compares Adjusted well prior The offset year foreign the which lower by adjusted of raw

$X.XX period. in expense as result accounted rising as rates half, spend investment $X.X note moderating we higher was EPS in $X.XX the approximately million our compared as Adjusted have year decline chain in Increased into In year-over-year year dollars interest debt as prior brand-building quarter. challenges well the versus balance these in expense supply for moved shifts marketing categories to select outstanding of an please $X.XX inventory prior a The incremental reductions. QX. that of guidance second a the from retailer sales and the interest for into translated

period. our excluding In net customers this, increased X.X% to to prior versus sales net quarter, particularly by turning of adjusted X.X% And reporting reduced saw sales being net we our have year of been by guidance the we reported in America, reducing ahead segments. quarterly inventory segment decreased quarter. the prior to would In flat North period. levels, aggressively the year versus second tea, growth the period. prior Now Adjusted our this year sales $XXX.X million in select the individual X%

in and continued as well. to Select such categories perform up the snacks, up quarter double-digits yogurt single-digits, high

in the took progress well-documented also surge, greater comp category, supply baby year good lost in activities, strength particularly business inventory faced top industry-wide and call. quarter areas softness retailer ParmCrisps tea, difficult QX where negotiated programs ago were Omicron personal our as offset care is a by Canadian pouch we discussed on and last hold. the previously our While by and to due formula customer in These pricing showing line reduction created food challenges of

point XX.X%, versus period. QX basis and a basis the was a adjusted improvement margin in year gross prior America North versus point XXX improvement XX QX

resulted to prior currency further our increase at our versus period. hold, million Our million, North took margin has America in or in was and EBITDA actions as XX.X% additional the continued sequentially $XX.X constant productivity efficiencies. pricing improve a efforts performance $X.X year Adjusted

the $XXX.X currency year the a a quarter. second point $XX from sequential business. North North declined our basis XX.X% adjusted sales period. year of on to exchange net International million, basis was last XXX the is the strengthened of the When EBITDA for prior increase declined compared point million foreign evidence business, margin improvement America's XX.X% the further prior sales potential to XXX of of This a in America representing impact X.X% constant quarter. period, reported In from basis, adjusted net

category for we within we to to benefited of nondairy private category have due QX Europe decline notably Continental shift UK increase XXXX and sales by a baby net adjusted our international and was reflects for Continental offset more for because Europe. The offerings, decline driven a diverse the XX.X% where X.X% in toward shift ongoing beverage the decline was improved rate private increase presence. a food label. that label from The performance our portfolio when year-over-year Our by the of than compared mix UK meaningful

XX%, in growth As recovery evidence that versus adjusted International year improved gross months six prior the flat half. ongoing saw of was sequentially XXXX further energy Adjusted net year the of fixed gross ongoing compression margin sales costs meaningful Europe, Continental margin high first materials, QX cost compared in deleverage. five note with to to raw inflation and in in due results. the period increased essentially prior

the the points in period. basis said, International from year-over-year decline That sequentially at down EBITDA down points improved XXX year to decrease basis prior million, currency a adjusted rate first was versus XX.X% $XX.X quarter. constant of the XXX

first net was year period, the adjusted points basis XXX of the yet constant up EBITDA down currency prior a compared XXX sales versus quarter. points percentage basis, on to As basis a XX.X%,

sheet. balance Shifting the to cash flow and

Second invested quarter for reduction ago. as resulted in to operating inflation in $XX.X from flow use income net The million a working and year value million was operating continued cash cash lower net capital inventory. cash increase the $X.X versus of a

million quarter, incremental generating down resulting positive than we fiscal was anticipate second approximately million $X.X of expect CapEx cash cash to used the in half debt. to lower $X.X we As would QX the XXXX. be flow the year, pay in

net calculated of we our million as hand under the ended debt into ratio X.X on agreement. a $XXX $XX leverage Finally, credit amended with of translating of quarter cash times net and million

X% minus on reaffirming a for outlook, basis. sales EBITDA full of growth we constant adjusted are our growth and adjusted year plus X% currency Regarding to our ranges net

I things. some think to color Before remainder provide of about two the the updated year, would note how on I

and $X.XX the and the recent First, in $XX now full $XX adjusted of pound against remainder sales rate against year, has headwind strength second, for respectively. expectations $XX we bit in a And a $X.XX EBITDA, of to net euro quite reaffirming for expense such for currency for we assuming year our the dollar as XXXX. approximately million million are fiscal expect be net the months our dollar the exchange exchange million of the adjusted approximately and moderated interest

year-over-year digit versus prior to expect half year savings net actions robust on we productivity of and For XXXX, fiscal year gross the sequentially benefit growth pricing up from period. basis, our margins recognize low-single better now we sales adjusted Adjusted agenda. a half consolidated first the from as to and the of a second the be in ramp than continue our

currency as at And due consistent with well half both expect disruptions, our we pressures chain second adjusted to comparisons existing easing original weighted constant to increased productivity. planned and EBITDA guidance, as abating realized growth greater benefits and pricing actions from be plateauing inflationary supply

to Turning outlook. our segment

by and as low-single discuss offset realized QX that sales the business in we adjusted consistently trends America expect second North other areas will as of be year in snacks For will period versus growth of net softer partially growth momentarily. areas the prior half, strong I during in that we yogurt digits the such

adjusted expected but EBITDA America flat as period. to to our prior versus are accelerate growth. margins in first Yet first up line high-single gross year approximately the constant to this compared be we approximately the prior when digits with last, future up investments of brand-building the support to better year half compared North currency adjusted when half period. the And year,

year new pricing expanded implemented the For actions and is store the up to performance for total last consumer significant prior lack the sales Adjusted the half the to net Russian-Ukraine already first by accelerated second return UK of compared expect start expected growth by the of period, to of in driven sales distribution war. growth from and following positive we be confidence driven after to mid-single as UK plunged the and year declines international, relative year. the half. digits to the

margins and half non-dairy ramp performance subsidies, as private addition, meaningfully improve performance which year we and our actions, in to period early business in improve, a from versus of stabilizing. International gross benefit the label pricing will category continues aforementioned first we inflation we where significant materially savings, caps In supplier. are versus the improved the as energy cost and prior especially productivity anticipate adjusted signs

half strong constant on second growth prior this of adjusted last, points of the margins year currency with expected than a first And hundred is versus the EBITDA several and fiscal year half basis basis realize to higher period both XXXX.

quarter adjusted be formula American prior in baby and down basis, food the the year baby shortages promotional expect to the net category, within and due to digits sales Speaking formula third consolidated specifically mentioned part persistent period, ParmCrisps. growth America previously in Care now. North in On the Personal in low-single a with we and tapping for North demand programs customer coupled packaging lost surge

down QX investments QX. being a currency year modestly increase sequentially expected versus shift previously the as spend the margins discussed prior gross at brand well with earlier. broader improvement to Adjusted Wendy of constant expected in are basis be be in marketing compared mid-$XX as decline in in expected driven to XXXX the million adjusted period EBITDA is range the building majority to the and the noted with by And

In conclusion, fiscal have encouraged half, very the the we we of are as and strategic half leaving remain second momentum priorities our highly XXXX. enter we focused by the on we executing first

line take to to against the higher our this bottom behind greater We’ve to primary of top we we inflationary opportunity our secure will profitability, balance while accelerating brands actions taken And offset growth. continue and focus significant to invest costs. steps necessary and the

me to Wendy. allow it back to With turn that,

Wendy Davidson

we of fiscal brands, great our guidance momentum the their are Chris. be of can growth. but into support tracking and the done to several as half second summarize, To in Thanks, more year, showing we our head

sustainable mentioned the late we’ve quarter focus maximize in assess return as I potential our few brands invest renewed and the actions more operating look And I to capabilities, early to forward and my shareholder of As earlier, streamline behind to leadership weeks, portfolio. growth to brands we look this some model, brands. our the fully the of needed to full fall unlock next long-term our first leverage our in made in year. value I providing early our or global decisions unveiling summer forward and details our our plans to

back to operator your like turn questions. open I’d to the it Now the for to line

Operator

we’ll conducting this Thank At you. Thank time, be [Operator question-and-answer a Instructions] session. you.

Our your first of line Barclays. question Please comes the Lazar from Andrew with with question. proceed

Andrew Lazar

Hi, welcome, good Wendy. morning, and

Wendy Davidson

Good morning. Thanks.

Andrew Lazar

experience X.X Hain’s and and think generally, of lot successful portfolio though many was, as as I of complexity. I It in a moving turnaround rationalization we’re of part recent Glanbia sort ways, work optimization and program. Sure. to sounds most similar cost the SKU at think done your

was could accelerate bit course brand reinvest several the particularly talk in in about follow-up. building mentioned I the prepared then a a sort And the to the behind of more remarks growth? deck, hoping just experience I’ve times you’ve and of got to you brands Hain’s as your equities, slide plan

Wendy Davidson

our behind mental available message. place pack that then that in always-on architecture right we sure making they’re have the and to products driving investment Thank ensure Andrew, to you. experience to, reach, was the Chris portfolio right and Yes. so the of physical year that The to able great brands, relative consumer price to that you was with work it’s right an about prohibited behind Mark the us put physical that for opens done in brands the chain really that growth with the arrival largely last us, at supply availability as to my both and There to lots – opportunity mentioned, we it those of some and focus and for chat the you, were driving similar channel for streamlining those be higher challenges in talked to prior are Glanbia availability, the growth.

bit some the surprised to in them a our was haven’t company keep haven’t top in we position been be a to brands on year, the with consumer. a air joining and able I of mind over that been of

So supply have of because chain because to that savings we’re be in half in much both will model do to that, to this a better it the year productivity of our but the back a do that able built into so. we have also support position we

Andrew Lazar

and given guess spend than in it. the the you marketing this sounds where Or step-up got marketing to going brand it in in spend half place. at in in versus is think fiscal And obviously business the chains fiscal or I structure going it, marketing XXXX in the a back better year plan? I you’re XXXX guess like, increase more about will start original Got the be the so of this higher was is step-up point? really supply

Wendy Davidson

will be the this back it year. of bit A of closer half to

of allows us into think momentum. be to able with four XXXX quarter stronger a and So to it much start

takes it on, As when while impact. feel back turn marketing, you a impact feel you also it to when know, a you the off takes it turn to the while

ramping So in that period. bit we’ll quarter in four. see more get four time up be expect until quarter investing We to impact our we quarter won’t revenues to a significant three in the into

Andrew Lazar

Thank you.

Looking forward meeting to you.

Wendy Davidson

Absolutely.

Operator

you. Thank

your of Please question line next proceed the with Stifel. Matt comes question. from Our with Smith

Matt Smith

morning. you. Hi, good Thank

Chris Bellairs

Good Matt. morning,

Matt Smith

the second Could that in measured on volume you well. marketing to an supply we performance talk pricing the as impact capture Kind track can channels, of and of performance but elasticity the taking increase in improve would expectation chain trends around that half. in about your the spend comment the

increased can to chain you that talk investment and improvement. your elasticity expectation So the supply in about moderating relation marketing

Wendy Davidson

to be some of seeing continue we talk of some is that to categories consumer. Mark protected we price a the point standpoint, and with recession-sensitive tend bit morning. and play past than you’ve place this elasticity an Good be line a heard the And allowed less to to you. more in the us Thank parts our category categories about appeal – able in elasticity what into our Yes. expected. price our in of about to brands the we’re actually From end premium probably that’s

be. line So have expected elasticities to where we been them in with

marketing distribution. will In shopper right into cases, have programs. to go ensure year, it’s that half points allows of we shippers. got the be incremental back the of this us we’ve as investments But It able behind some to

just So time. traditional will all but right invest it in it’s marketing, right us not right place, allow message, to

Matt Smith

should today, there Thank And you for Can it lead there you up you you. response. leave promotional the elasticity? investment to Thank need that. in believe And your follow-on. it your on to spending investment volume Or quick that talk improved to and is in performance? snacking particularly increase a do shore the just about portfolio? pass a there the I’ll gaps the after price marketing

Chris Bellairs

were examples you’ve Matt, we It’s with Across remained Board, We portfolio, both Price remained before few something, a the thresholds our relative have very calls. about snacks price started and and the gaps competition. in monitor as broader prior on isolated where the gaps heard gaps price that the to taking have price. our they closely. prices,

And there, much a of of really examples. seen a so the haven’t change few again, isolated we with exception

where behavior. that as lead that to and player of it’s – don’t they some And we now. we elasticities again, therefore then stable didn’t see And cases, a why gap main reasons really that snacks the better, one in right to performance because it’s reasons of even consumer has competition performed in been being or a would really one have so the thought major

Matt Smith

I’ll it you. Thank Great. on. pass

Operator

Thank you.

next Our proceed of comes Ken question. Goldman Please with line from question JPMorgan. the with your

Ken Goldman

Hi, good morning.

Wendy Davidson

morning. Good

Ken Goldman

I you gathering early mode information guess, – Hain’s you understanding, out what do competence? in, there’s asking the there Hain as I When some think core about with because what greatest questions really you’re for. see still I’m stands do on

big Given in categories, big Europe but U.S. you diverse have the pretty of a you’re pretty in set also

the curious the broad realize your maybe market. gives little in are are least win getting. very the thoughts I’m what I a you ask there. Hain’s to think and early it’s of What just sort question to curious, a I’m I initial But right at questions people overall that.

Wendy Davidson

answer it I than why with I so headed morning. think I going to I’ll forward. guess Hain Good came the say I Yes. where we’re would less reasons –

a Hain categories. shared. think number are I has in largely two their indexed category, of one at and the when that opening, we number I my broader brands. we’re portfolio And But under fantastic in as under said look or

be baby, you in better-for-you snacking, player better-for-you blank, around for can better-for-you fill a categories better So bigger we yogurt, for the better plant-based. the you in

lots of has leveraged the we’re in to under So some that, across may channels and Hain categories across space credibility ways, that continues consumer that to reach and in reach that a look we be in our geographies.

So why those I ahead here and see opportunities I us. are came reasons that of still the the those are

when a We’ve group in people. I interested I says are also say, as you why it’s we’re unique the early the consumer, came think, a to to that, they asked I stayed and And my days the bringing you in I you in got, for that Hain passionate really they all centers but really Every the better or all people well, of here. know very we’re everybody person with around consumer at company, why company, well. met Hain, belief to come a where

it’s So people inspiring the to really here. see

win opportunity an ourselves share, the get where categories can fair align and think player across share a around that to I and us be brands our marketplace. full full bigger there’s we potential for with can

Ken Goldman

kind share, about that. out. your I’ve that that. of of fair achieve often, Thank getting you follow-up, you fair you think sort It’s companies pointed And share about harder as for found talk a quick to

a you of of with the ask question for it share. the plan of But to in sense a a this premature they steps marketing? Hain be? about do And Is a while fair distribution. about trying expand its steps I’m Is right? this, attack of it maybe is to a how what there been a because on might of sort little just might Hain conversations question think getting the customers? leaning question it So a get has for can be top-to-top

Wendy Davidson

Yes.

where play, we that the along many a that of had team portfolio few the Streamlining should focus we in and instead small be put you with last the us really position distracted the done too of a opportunities brands the lines. those four that of placing lots I around organization we to When be the great entire think categories over company. work is the years in in complexity brands energies bets. big should small have

So I to to to will say think after early that so you the how if be positioned we sort It’s will the me do for able of that. go say days, too we’re opportunity. I better – market look right soon place way? have portfolio CPG-XXX, the the to all at Do price in be it’s the the right you places? – right right the do and have in size you pack architecture core right in

baseline but around and are from bets. Those – assessing the go Is mean, innovation is I’m need we fresh your enables and investment shape sales I the support innovation up in to basic playbook in And around where high-growth planful all has are marketplace news sustained follow you that to building team points businesses. brands executing here. keeps That’s P&L brands that brands, distribution. that we what built the the you way want? where you consistently you have across the the a a with around that of big And building as then

Ken Goldman

much. you Thank so

Wendy Davidson

You bet.

Operator

Thank you.

proceed from line question the comes Bernstein. of question. Our Howard Alexia next with with Please your

Alexia Howard

Good morning.

Wendy Davidson

Good morning.

Alexia Howard

Hi. and missing. about continue Ken’s Can capabilities I with more ask competencies, but about question what’s

really in It as that stepped And something need investment But financial shoring are been up few in any capabilities sounds up. do weeks that’s a then what view, follow-up. to given that be seen on you’ve a the though your marketing so needs for far? there you’ve So now. side, have the business I

Wendy Davidson

and what sight starting around explore. me of assess But at to for looking to of see too to and I’ll around give to analytics need our line to those marketplace point the some at and happening poking sure our we’re where insights insights we and really and It’s I’m soon be. analytics make able what’s capabilities category around that sort I’m capabilities. to consumer of in

and around strong things to what model. support agency ability and looking relations. strategies a at around even also model brand our our innovation like public and communications capabilities, We’re do build we looking but lot I’m our

media So to doing but news how where to you brands delivering earned need strong need top and category be be need leader, not just be media, we the we’re great with paid are our categories getting for even to and a know media. to mind, brand the you about of categories, you credit most

those are the at. things So I’m looking

have and we and where customer we brands. have products do side, Do got our are right would we should sales the market to we’ve channel areas, too right the playing resources in? channels see the all space concentrated mix, in and white we the against On that consumer be particular expect the in the

it’s looking potential at where gaps So might those be.

Alexia Howard

you And just more the into visibility on. And better and of you we for you. sort how that remainder a management year. that? Thank come it and much Europe energy more they in Do Thank of pass now were were I’ll it the follow-up now? unknown has previous the remember team, much. Are big about okay front have on expected, a through talking and costs than so Great. quick then to I talking specifically,

Chris Bellairs

We great question. A do, Alexia.

there materially in going a to So a the some that we have better going actually up but little back of of not be changing, where visibility, it’s maybe a risk. to bit and half, shoring a places we tailwind bit have feeling be were

subsidy know, UK and the those. some programs out think the both so now Austria, probably of a and government, you the Germany, laid programs as primarily be exposure have also in as rolled in some we of that off I So they any CAP result and in

visibility relative better slight So been we had seeing a to before. what and tailwind

Alexia Howard

pass I’ll Thank Great. much. it you very on.

Operator

Thank you.

from Please proceed question. Evercore of comes the your next question with line David Palmer with Our ISI.

David Palmer

What advertising and brand pretty high a comment your of doesn’t not of advertising the for Hain The would they’re building some your that a a for sales that is at brands while, some time. to X% people Wendy, and Where of to of perhaps the to scale as as perhaps some would percent is say advertising for even at pushback at, morning. time? Good about it you legacy categories going has low see make a interesting. sense. been pretty that or Thanks. over advertising do leadership X.X% just And that? to long say, for your as going you much be sales

Wendy Davidson

for say marketing Yes. you would would on be I of that right the depends Good on what’s and part it the that morning. brand. focused

sure we brand, that will consistently awareness by that to of be advertising. brands differ won’t time, at differ a level by the we to want behind just That a but will it it it over category. investing are make allow through in So category, break will

the of we mind vehicles but not we it use what’s brand-building that keep e-commerce, building we role just Brand to will top drive doing our programs? to our our can shopper consumer. doing that be activation on distribution? that holistically the top use as brands Are e-commerce, things – are channels using digital with of brands even keeps – we of traditional own mind Are

rather So just I would advertising. look marketing at XXX it of the as traditional than

be mass in and brands the categories media. Our going to to necessarily aren’t and even appealing were consumers

David Palmer

outspent spending? advertising, basis that your to you more being that be And of get category categories think sales might you a you’re maybe size there is then for where you on there specifically, get are competitors more a certain to? at likely Thanks. your categories nearing So think would do that percentage

Wendy Davidson

exactly voice Yes. in at. I I say versus can behind or are the me soon come that then around out truly would to long-term provide for what I be to big the it for ensure we really then building be our able we year. have to looking also that competitors – want we say think it’s that’s be brands, to and ourselves say brands continuous and brand we is to have the optimum in later should would How starve that benchmark against. where investment just spend we support want do not me way the and a to a share in second investing and we’re in our where year be wouldn’t later early of But the to position

out our right of and key what that shape next figuring each a like part So for category of focus. looks will be phase brand

David Palmer

Okay. Thank you.

Wendy Davidson

bet. You

Operator

you. Thank

the question Cowen Our Please your next line Company. and Brian with comes from of with question. proceed Holland

Brian Holland

in inventory the the had top the XXXX, you retail half morning of shifting parts there, line I Good the about We some second obviously brand could moving obviously, reaffirmed and welcome, thanks. adjustments. just of some but Yes, of ask If the guide, spend. Wendy.

the second adjustments guess, would a the Thanks. anything So specifically? expected than bit ahead changed wondering, into of of little inventory back Do quarter. what last guidance, plan, the I around retailer within And that you productivity half? faster I’m reaffirmed a little coming bit is the have just of has some shape remain or therefore, similarly, a second half capacity pain through maybe

Chris Bellairs

reaffirm for the we sales confirm, to year. net full both Brian, and So EBITDA

number comfortable your And parts. we a So service of of moving the to about kind that feel there below are that. point,

how the on is or little versus depending different guidance, we’re we’re upon there a original certainly, getting the and believe quarter. same the track So we

talk and the for fourth heard then look third relative the You will of have quarter what us that we to about view like course. the kind of quarter,

an the through that quarter, destocking that point, back-end your in took was the quarter. that more overhang the productivity, see worst plan retailer to of don’t for the ahead of as for of I the second loaded. year. the And On we’re place isolated balance we continued second of thing that, think

we’ve now our built savings is So half embedded XX-XX into right it’s the versus say about I and productivity half. guidance, that would front in back forecast

and the that talked the fruition. on come year, we we ramp last seeing So productivity that as in we’ve certainly throughout to call, guidance, will talked original believe as the we’re

Brian Holland

too concessions. recent talk And looking But reversing what conversations, of are maybe about inflation your broadly yet. And about of just you’re moderating seeing any because quite about Chris. is new one price supplier I’m for customer. Great has but I in I if talking story specifically that you possible just what – won’t and some may folks wondering, appreciated, ask, color. not Whole it here, talked Foods curious kind more weeks, not not could what’s I want Much then fully we’re out retail just to appreciate in a from really you?

plan So taking as about conversations just how on price think those where shape or having from you here how goes here? are – we

Wendy Davidson

More of morning. a pricing broadly, actions color. pricing would took you will sort profit some inflation have is was offset we all. take to or want of inflation want Chris along start that date, at efficiency when that good add to delivery but then you our inside And initiatives. cover to profit taken that look company additional I you and and the the to that’s not Yes, your of it some but to balance pricing initiatives Hain’s can in passing do there’s do consumer. let taken for what to productivity fully can, majority the assure where without customers you the not I’ll through then And you cover all our the

– international. the few And around us especially have I been feel year to We still inflation the in through pricing packaging, additional of offset a but some we’ve comfortable around areas, except coming and majority to that. done won’t our space, team has some especially effectively we think the that this at for pressures able that take need productivity

that parts an of our said, point fact premium are categories, I’m I in that of the into not of we That because price anticipating think largely entry the we’re because and that more that backwards. don’t closely Chris, monitor know, will position we need take something that’s if to ourselves Chris want I any to add very where a color? we you additional said. But as

Chris Bellairs

we to plateauing, we in we see the on tailwind the doesn’t point. sit packaging at input in half in raw as for our year keep the the today. vast here mostly our this become mind, the costs, back a like And majority year. our costs of material the That and horizon look of back are locked but as remarks, in of Yes. prepared beginning sort reverse inflation and the of significant Brian, it’s said actually

some see if the begin pass when over is a and still to start to inflation will probably So little gross to – emerge, deflation our our structure even cost that did some horizon bit. actually beginning you margin out through

And seeing between America indicated you’re what is what Wendy North seeing there difference internationally still. in we’re a as and

still sign CPI in yet I month In international, to it news. the there think short-term. December are down running supports some remarks North are America, no we that good in I and going the that what over think pretty items month certainly, plateauing. prepared in And said around in that’s abate with coming hot

as So we’re differently seeing segments and the business definitely the well. managing two differently

Operator

you. Thank

Our Lavery Sandler. of next Please question with Piper the proceed from Michael with comes line question. your

Michael Lavery

morning. Good you. Thank

Wendy Davidson

morning. Good

Michael Lavery

much much of you over still others in of think in much again of you about these called America optimization category. given you quite organic further push and growth also but snacks that you’re double a growth? I – just North – make had these a drag how You out further if Wendy, know that are does the that can core that revenue looks you smaller still a streamlined. bit value that does the on there’s settling new, down and bunch some your strong like up little – but brands, then of X%, How still the you double-digits fairly just mentioned have portfolio a being How brands X%,

Wendy Davidson

of looking question forward, are are shape, But less categories we large currently bigger look is the or from a about a think we some able the I’m to get asking where backwards. portfolio Are in I What’s is What our those position? they as we focus probably bigger enough? go our relative larger the That’s growing? as forward. to share be opportunity categories?

those the So we’re that evaluating. things are

to around. are still that want But explore. our because we are some over that’s or areas some think those an and aren’t that one-time don’t some turn we the events episodic situation in there could aren’t or indication Those be last those that questions year categories. of softness in sort then that that chain in spaces But need resulted supply I of to

Michael Lavery

just That’s bit little related a And Okay. to Alexia’s helpful. a follow-up, question.

expected? those give spill Or you think next sense a Was we fiscal better offset those landed? year. must January You or would Obviously, around than you’re – be also that something that but the landed? these that Or think it just expected, by co-manufacturing also X. you into where that renewed reset what Can how else? contracts had offset you I extent – should about worse, guidance, so reiterating the to where

Chris Bellairs

continent? on about talking the contracts specifically you are non-dairy in co-man Mike, beverage the

Michael Lavery

Exactly, yes.

Chris Bellairs

Yes, Thanks. yes.

Okay.

are land yes, to contracts. So beginning we those

be full you before, those As in we’ve calendar previous heard calls, year to contracts. discussed as tend

of throughout portfolio. So of we’ve now that we’re volume back those beginning year. our come see the It’s bidding calendar on into to half And been some last slow.

some of Some move retailers think transiting old to the over that of of contract some the the the historically slowly I past taken in and contracts new the place inflation the have that’s there. they from priced more because contracts may those in than said have we new

are contracts ramp into next to year up that of first good So back see year the continue we’ll beginning and half over half of well. as the and won we’ve some see definitely this that, and to

Michael Lavery

so Thanks much. Okay.

Operator

Thank you.

with of Our Dickerson question. comes your Jefferies. line Rob the from Please proceed with next question

Rob Dickerson

Thanks been questions Great. so much. of have A lot asked.

build question specific your So categories further guess, of maybe I review But I a co-man us just think that get where on brands. more internal to it. capacity process the there? structure needs comments internally. will in Is brand any I’ll overall And to model? respect as and actually scale, to actually of to shift for is certain relative about as focused to over or least some of more you consider categories so the thereof it maybe speak part optimization little would kind time, much. specific or you to doing area likely you there then to logical kind the the bit. a doing in think more you’re adding on first Thanks capital be that bit ability at brands investment lack step-up That’s secondly, to CapEx

Wendy Davidson

I it because part think relates route of brand to a to comes co-man, or market. an that be think category. or were really I’ve we majority going issue was be a a areas was self-produced or the companies chain never not co-man, it supply to it unique. where the we manufacturing at to to As down distinctive whether it want that were the was worked brand was made where what they and It is

be category-by-category basis. brand-by-brand a it So will on basis,

own thing done and job a manage we has our That our do, need one to we similar team to co-manufacturing managing said, do of nice manufacturing. relationship the the how

standards to partners our same the ability end-to-end to of the making full that need monitoring our able levels and So that model we to our own of hold we chain plan manufacturing cost supply quality, some structures, we’re marketplace. that service has to hold would the We be same and in have model, do operating manufacturing a that that adjustments management. the locations so visibility attainment,

Rob Dickerson

see Got week. next Well, it. Super. you

Wendy Davidson

Sounds good.

Operator

Thank you.

line the from of Andrew King Wolf & comes proceed question C.L. next with Our Associates. question. your Please with

Andrew Wolf

morning welcome, Wendy. Good Thanks. and

Wendy Davidson

you. Thank

Andrew Wolf

also marketing. your is question on My

You’re welcome.

brands, of I Hain that’s guess different the see the global enough So that quite as brands? their distribution, segment structural potential like each is, to U.S. question almost I truly really for different Hain one you is the difference had come it’s in I my and with playbooks, kind the have between structurally their pretty different of at least things maturity, up the look than that. two growth versus kind and Europe, view, UK, at their

Wendy Davidson

around get strategy that where execution, global are go have questions global portfolio make effectively are could are and that how local more regional those strategic in sure And so, asking review and Well, we our is geographies. truly this do global we brands The through I our today brand awareness. if a brands. span portfolio be you right. few to best in big question have be Those do then though we we you’re brands or global that can execution? and There global is, do that how broader very we’ll will think could today, we as leverage

business that we we core have after areas today, my and or or in ourselves as one its exploring regional we will of have span that could to we’re their at be go some I It’s Those up number be that. in wonderful said in regional. brands do there. that, very setting local our play number to to able and their stay and gems But are region. outside geography, right remarks, have a opening may They categories some look local you possible only that two the

Andrew Wolf

was least the think have the follow-up, a Chris, just drive that had And it of category. happened? – – what quite a is or it just own was retailer? warm that you. demand what’s just it more look just late readjusting. referenced Or of the a Was while clarity negative U.S. from the can for that? and And fact fall, my the also for in give brand kind bet, you Could a on volumes at could retailers is have little disappointments destocking negative go-forward this just clarify, been had for they’re related? the Thank in of on Or the kind and you you you winter, it tea

Chris Bellairs

beginning sales it place. throughout category – Good part quarter. not calendar see a brand the second way We Yes. you the the Andy. things. actually year, Definitely of goes of December, the related. it mentioned all year the by the kind surge and that two in driven the question, depressed January tea at the One, it as of back weather to being part earlier the period was But when Omicron warmer related, took

bleed So down about right starting time the season. inventories prior their have that from the to Omicron been tea surged retailers would

of were of for of with left in bought season. Omicron second to retailers the So would lot tea have then round coming account they and a Omicron out that surge, a inventories inventory normally had faded heavier they

the inventory, of surge almost and left kind arrived two found season, then tea and some this of some they now over the at new. had we year’s they they again, ordered And sets so from from Omicron

just we So beginning the believe would to across to see tea Celestial. point, their category, We reduce the at inventories. selected on late quarter, in that the started retailers not

Andrew Wolf

it. That Okay. was clarifying. you. Thank Appreciate

Operator

Anthony Thank the you. Ladies Group. your and proceed Maxim Please of with from gentlemen, our question. line final comes with question Vendetti

Anthony Vendetti

you. Thank

of dollar probably been and towards obviously you decided back on just then a effort? marketing cash to that So XXXX. into amount half said comment you’d of being at the much that XXXX. do have will the positive know capital allocated But be XXXX up how there Wendy, Or you’ve look you pick if how second end about the the has balance? in determined? flow I

Wendy Davidson

assessing fill but need, the overall we also that what still really we’re shape. that something how That’s both into we

that way it Chris mean has I is expressed is But up, see ramp a ramp that what I think and dollars, which on terms in we’re So final is a up. yet. the of right, you’ll as not it

Anthony Vendetti

follow-up. as lastly just then And a

sales up the in I were though is the quarter X%. believe So and the Is XXXX. reason X% there this for – – American first up. fiscal what quarter in were second they up quarter, Net down North X% fiscal it’s up think the sales, you slow do still XXXX to even

Chris Bellairs

going So to be program the we was last of We QX some both a hair in had care year. that talked our bit about shipped of headwind year things in last a on QX. and were QX little last that the call

wasn’t piece repeated that sequentially. in So was we’ll that program, headwind the to year. we’ve a that little ParmCrisps overlap that a a to led QX see was led that got this to replace again in that club a as negative lower program QX But also of There headwind a store bit in QX. modestly growth of

a tea And North the North tea in destocking a of include the back it Andy, one The was So what sort were see with was led we accounted quarter. for growth for net expected on sales America – and I saw in on continuing little things talking of call QX event took that the guidance we we didn’t American the in that why lower guidance into see the that don’t of lower coming, we we most we think reduced shy on just our we half. the that reason in in last we what that QX. didn’t quarter again, about than thing guidance, place the and one-time were see our growth didn’t to sales in

Anthony Vendetti

much. so appreciate Thanks Great. it. Okay. I

Operator

floor Davidson comments. Thank final you. Ladies any Ms. and gentlemen, I’ll that turn session. the concludes question-and-answer back our to for

Wendy Davidson

business. Hain to like the I forward and joining Take I And us warm again strategic our reiterating fiscal be our how team the second thank these close I look months with and I review to our want long-term brands our and and to I’d quarter to today Hain by year updated orientation to few for in want welcome excited at sharing our in am of first their and prospects everybody you about weeks. to care. outlook action their for performance all initiatives outlook. on thank ahead. more

Operator

conference. Thank This concludes you. today’s

Thank disconnect you may at your for your participation. You time. lines this

The Hain Celestial Group, Inc. (HAIN) 7 Feb 232023 Q2 Earnings call transcript