Earnings call transcript Q3 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to The Hain Celestial Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Alexis Tessier, Head of Investor Relations. Thank you.

You may begin.

Alexis Tessier

you Year us XXXX thank Third Hain and Fiscal Quarter Earnings morning, for on joining Celestial's 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

and management the the the the and risks statements actual performance. company's involve laws. future course securities forward-looking expectations include are of make management's These call, in operations the materially that statements may based these current uncertainties During and could federal to These statements. events of within from meaning assumptions expectations described on and those regarding forward-looking financial cause differ

time to implied Celestial's has XX-Q a statements from cause and which risks Exchange with Please materially Investor Hain those Hain annual refer differ is its could a Form on posted prepared also today. or Commission as reports and expressed supplemental made well under Form to inclusive release on for presentation filed XX-K, morning actual financial that Relations the website as issued reports additional information, this the on forward-looking to the any quarterly other press The results Celestial's in detailed heading. Securities report time of discussion company from

remarks available call call. Reconciliations will on archive the management's earnings this and webcast, will of note, release made financial accompanying today or are being measures. non-GAAP This in available the Please slide and GAAP focus be non-GAAP adjusted financial on measures results to is the website. an presentation

it Wendy. like I'd And to turn to now over

Wendy Davidson

Celestial. of categories. morning, joining is the call and learned America past board about our across welcome. months, you and U.K. thank you Hain Hain our I've the full Celestial. potential of This our connect In We're Good local and the have operations the and Alexis, with visit growth had everyone, on Thank North for as opportunity today. first with many our X locations in teams. Head our new brands Relations I've to and quarter explore our Investor my the to for of market the you, excited to potential

robust third And end and results actions I we our drivers and of to initial performance necessary of the the will while a review understand and our the teams. them. quarter fall with the year outlook are conducted below current address expectations, taking key

stabilization our these growth see look results, I despite to we more a remain expect ahead, our portfolio. Importantly, I opportunities categories. that And continued confident challenged of have in I some categories and within strong key as

top X% Looking our weaker back performance, adjusted at QX than expected, line basis. an on nearly came in year-on-year down

Best, and North In several both However, grew Earth's digits. we brands, America, North brand Greek see both largest Gods did America spots and X double category with across and our of bright international.

within the were eclipsed sensible building up the has promotion. driver these top and Snacks, trends in weaker-than-expected quarter was Within The brand Unfortunately, by quarter year-to-date, softness line double the in slowed primary been to but snacks, of spending fiscal in the highlights tea results Portions digits brand categories. trending personal Sensible competitive portions. due care our and

As service you on levels. impacts we pulled in brand building, supply given back will recall, on XXXX, chain

consumption long-term promotions The XX% just beginning levels largely recovery this in gaining in and supply growth supported growing are in-store dollar service the With for us, chain quarter behind the in Terra we innovation confident brand. Chips building, outlook are and challenges share. strong now and brand a brand, to the for reinvest in

of discuss return resulting ParmCrisps in which we data was our loss dollar The and indicates in inflection have as Chris as Recent significant expected year-over-year by later. distribution, an impairment, seen many in will point performance it detail down consumption brand impacted categories. a was an to of growth

the Earth tea, and in Best to velocities. the ago Seasonings grew consumption perform double-digit growth despite dollar X% XX consumption is Celestial well. share, industry-wide formula very Yogurt in X% year cycling weeks, reflecting XX%, Gods share. dollar In dollar supply the latest continues growing particular, gaining In brand's and Greek issues. grew consumption gaining surge

formula, grew up dollar with Excluding the consumption double velocities XX% brand digits.

distribution Snacks up Terra X. of dollar was strong drug First up X% our snack Portions. and Best driven by and the growth nearly consumption for Overall, as overall an the channels, important This growth XX%, consumption Chips strategy. distribution Total distribution by Sensible part driven future continued total margin-accretive new grew in Hain velocity. gains quarter X%, and portfolio was in convenience snacks and reflecting dollar stores. such is

the Care Personal stabilize new have the future. and we profitable return quarter, In steps taken leadership and turn we has in to portfolio business the and to business Our most significant this brand around brought on the in recent been the sharing forward growth. for more challenged, to strategy to look

and More mineral consumption have a planned improving, media with and Botanica merchandising, promotion the line. dollar season the we recent of sun Alba Alba shows is support robust earned data advertising strong to

performance international in business the business Europe. snacking the stabilize led North in in challenged, to better-for-you was U.K., in continues America Hartley's nondairy by the While primarily and and improve,

dollar marmalade, we and consumption In the fresh share and X with growth several up growth share the the the soup jams weeks quarter our quarter. such latest gaining dollar dollar in in gained U.K., consumption and points our consumption as in better-for-you consumption ingredients X in XX%, and X points accelerated, categories

longer-term to strategic I'll from. few our year-over-year minutes where stage conversation North Now as to the our a projections 'XX I'd with America. fiscal come start the it will sets spend talking like as growth about for more

for is palm digits exception single crisps year with portfolio tenders. 'XX grow Our year-over-year high projected the of fiscal overall to snacks and

the has in marketing well While we customer not spend slowdown as were this year. programs prior second the and driven in year have seen in the a by pullback brand been it repeated that building half, as

begin quarter, the we support to this calendar as in within of with last year. materialize mentioned half We the back benefits reinvestment on seeing are call, and the the addressing this anticipate

our pleased projected programs brands Earth's key demand we the place lapping business, in report our I'm year some customers up be some Best The despite to of surge challenges increase supply the and formula, on with and single a year. is that significant for last of in have next for to ongoing major distribution digits. high

Made and about We which are good Earth brand continues brand Best very is and resonate The launched business, consumers excited is in driving our demonstrating delivering expectations recently total velocity. preference. growth above Food with campaign strong in fun to and awareness distribution

the forward is to the mid-teens year with promotions. Our level finish in projected growth are because and from a and service unit recovery growth reinvestment the Greek of brand in year-over-year we strong ago to and excited Gods going media response

down it digits pandemic-related the due surge finish marketing pullback to weakness lapped high and Our demand tea is business category in in brand in building prior support a the overall projected as single part and to year. the

the a brand Celestial leading impacted As was Seasonings in category, as well.

brand shelf magic partners activated your engage and To with impact X in in assortment quarter campaign optimizing with our to our growth, we and counter retail Mug this the the sets. and on media return continue to

of largest new to most recent innovation brand beginning recovery the some our fiscal as returning and includes 'XX. growth customers head distribution in at We outlook we weeks launches the the are and into improved to in see

Turning our metrics. key with sequentially improving now expectations across while broadly all also to international. The line international segment in performed

and the business macro in label stabilization our branded the execution out velocities the planned and in encouraged to improving as and better-for-use due by business pricing the by gains and seek business pricing, the Our Europe. U.K., environment, of improvement stabilizing and consumers non-dairy to in beverage in participation value, in continues our both strengthen We're distribution private service. snacking led

to past players. years stabilization the We're from accelerated with beginning to of label meet growth. new you the entrance The growth returning meat-free category in is beginning the private and and reset to for X category see

efficiency improvements initiatives margin headwinds we significant while operational addition, business. of across significant cost core robust the underway prevented and Despite continue and productivity protecting to distribution. inflationary programs In actions, erosion our see price the combination management in

discuss taking our outcomes. detail of After full and direction quarter I to to as drive our which, thinking the the successful some promised, will our greater actions already to guidance. I'll of year And about I our share turn over now are share future the and call focus. some around share to towards we Chris will

Chris Bellairs

morning, good and everyone. Wendy, Thanks,

the of than a resulting XXX approximately as increased inclusive negative decrease Third versus greater lower points by year by basis productivity quarter, sales decreased net a an On quarter $XX million, versus exchange. impact was the foreign consolidated X.X% more pricing sales period, from of Adjusted million the well XX.X% deleverage X.X% mix. plant from and consolidated inflation, $XXX.X driven decreased quarter. the net prior year in gross as offset volume margin third a period in basis, to prior adjusted

prior Adjusted million year quarter, of to $XX.X XX.X% mix adjusted EBITDA impact net in for increased line million currency up a the accompanied exchange, million. the the at constant due was including by QX softness versus the largely sales period. came was This of short $XX.X trade on quarter. of top in EBITDA negative basis our foreign guidance. SG&A the spend, Total came and $XX.X in

per which of Net The or of was and after ParmCrisps share we to the noncash million negative related in per or underperformance a million period. impact conducted $XXX. compared a $XXX to million inter resulting impairment was analysis, of X the the tax. diluted loss Due in income resulted million, $X.XX an quarter impairment in X prior $X.XX $XX. a assets. $XXX of intangible an primarily year totaling loss to for diluted quantitative brands, share the

Increased rates the into $XX.X higher and balance compared approximately the Adjusted debt prior prior to well year-over-year in outstanding year in year a as of quarter. $X.XX the interest $X.XX for rising as period. decline EPS incremental was an million expense versus translated accounted expense as interest $X.XX

XX% turning The lapped XX.X% decline America, surge was decreased net for In $XXX.X the year category function sales tea. as Adjusted reporting discussed lost Now sales customer by well million decreased our prior in the the prior individual softer-than-expected year-on-year period. snacks mainly quarter. a year and reported to declines of formula third we to the versus results segments. programs promotional baby net as North as in demand previously

softness, a growth period. challenges show category. a brand point versus XXX-basis was versus and prior function As year building Wendy the continued pullback in mentioned, XX.X% snacks QX to America decrease the tea and we the the marketing and North margin slowdown was adjusted in category and underperformed while in the for of with ParmCrisps. support largely a gross continued

Our volume margin inflation, and productivity. offset by and and mix performance reflects partially trade unfavorable pricing increased

chain performance improved versus deleverage. volume greatly the plant has While prior drove our lower supply additionally year,

XXX a the $XX.X North X.X% from at $X.X our million, North prior currency year quarter. the versus currency international basis decrease $XXX.X period. X.X% America's prior on net in decrease a EBITDA XX.X% margin point in Adjusted a business, declined year In America constant or constant basis. to was period. EBITDA was million million sales reported adjusted third the

million, When sales sequential representing the exchange of net a X.X% foreign compared improvement last period, from adjusted impact prior of the year for to quarter. $XX basis point the XXX increased

an net in offset international Continental decline for adjusted by increase sales year-over-year Our U.K., reflects X.X% an X.X% in increase Europe. the

in Continental new we Europe -- shift The have U.K. shift mix driven ongoing the acquisition private for presence. moderated marmalade customer the on improvement a meaningful by performance to label a further and the due jams, increase and of category. strong decline soup performance, diverse private year-over-year category where non-dairy rate label from once to offerings. the beverage was within and of The again our our back benefit continued

XX.X%, adjusted of meaningfully basis, sequentially elevated. Inflation moderate adjusted experienced gross actions, with mix. points margin gross of approximately positive up in continues XXX We margin rate QX. what pricing decline remains a On on and compression to was and less half than recent year-over-year the basis International productivity we

relief of and subsidies are providing we energy However, seeing recent stabilization are signs well. as

constant at was decrease year EBITDA XX.X% adjusted million, $XX.X from period. a the currency International prior

cash was points yet As to a balance demonstrating basis adjusted compared to continued percentage and currency XX.X%, versus period, up of Shifting quarter, the XXX constant year a second improvement. the net sheet. down points flow on basis, sales, the XXX prior EBITDA basis

for million Third flow from capital. versus operating net $XX.X a million working reduction a was The quarter net $XX operating cash cash income in ago. lower of and cash resulted year use

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

for agreement. cash, ended hand the $XX end Consistent with into our million, priority with first $XX we of debt fiscal since of credit quarter of XXXX. a ratio by quarter as calculated under we stated the net million of and Finally, of cash translating amended leverage net debt X.Xx on have our $XXX reduced the million

expectations fourth to QX minus our XX%. sales basis full decline net quarter, and of decline follows: we for X% sales to and minus adjusted EBITDA to for both updated our constant light currency year on adjusted revising results X%. net In a to EBITDA minus are XX% Adjusted as be the minus outlook be adjusted

expect For year digits low to for our period. and sequentially, single basis, consolidated agenda margins continue productivity on the the recognize we improvements. be actions pricing and as in a from supply fourth net down our ramp prior we quarter, now year-over-year Adjusted to be savings up a and sales versus to chain benefit gross adjusted

investments increased volume currency the be plateauing inflationary as benefits capability well building $XX constant planned increased actions productivity. as approximately $XX to abating pressure pricing disruptions, organizational quarter, expected and realized from chain supply and Adjusted sales driven to million in and EBITDA million, lower by brand greater at

Turning outlook. to our segment

in fourth softness We ParmCrisps brand and For in to the ParmCrisps hold. expect creating return though decline net We in while decline top American portions material Care, expect building we as growth see but digits results. sensible adding than Personal a prior period, our America takes year, North QX. line top North do versus to the high prior adjusted versus ramp-up the line to investments single to we quarter, lower rate on drag continues in continued realized the year sales

to to investments, in the the the third support North the future period we continue growth to with when year period. gross near quarter compared show when versus expected compared which are adjusted brand-building year adjusted while lastly, margins EBITDA And prior limiting term. improvement currency constant will declines America and our to EBITDA growth as accelerate prior

due the the for as net new year. elasticities between to versus we brand For Adjusted shifts consumers pace label. following at net the quarter a to expect the quarter. but pricing deliver versus actions, sales prior international, fourth growth slower third private and of

the increased label both portfolio has stranded for third the in both diversified quarter space and brand improvements Our and by challenges adjusted period gross offset impacts. prior a Continuous as in growth. margins, opportunities versus overhead year and supplier we due from significant to mix pricing provides the sustained private productivity, benefit and

And and prior the benefit a versus versus both by both lastly, margin, adjusted third basis of EBITDA pricing the and period, prior to currency the year we overhead basis and quarter XXX constant the period over increased due on year mix gross margins adjusted as grow in quarter to offset versus the challenges third impacts. quarter points improvements Continued fourth improving from productivity, and XXXX. stranded with

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

Wendy Davidson

Thank you, Chris.

future on of year of has is for future, our not where up would business about success. optimistic me the While the we review I'm detailed the and focused the like, the rest company setting

assessment and have our strategy active We the of are to invest development. in already our started and brands stages behind

future continue ability to the our to and return portfolio of our brands profitable and our I to in growth. have potential confidence

is made do point the we efficiencies. to lower we have believed operating have building drive capabilities business, transform to progress starting than and to our improvements and Although already previously work

commercial synergies global will I'll working excellence. alignment across our and implemented center to and chain new global simplified few distribution In and supply under We've our be both and in-market share international February, structure organization. our to a resources effectiveness. We're our improve performance. drive we globalize of organizational a end-to-end driving and examples. enhanced leadership simplify efficiency structure We've the to

improved cash productivity improvements We balance on projects and through with flow inventory a and forecasting of reduction. sheet have underway a number focus

hub-and-spoke office leveraging better model and hybrid model. our enable a working more to robust optimizing We're footprint our

we our we've result, future made our we headquarter aligned a can of as and in and and lease to Success, culture closely in are to more a workspace the process Lake team. the changes exited As vision. by finalizing focused you on are leadership smaller needs talent, see And our

how-to-win the in and last The a is to review blocks well begun the of building progressing strategic Hain confirm mentioned strategy. define we choices call, our as the underway I have As expected. clearly X.X where-to-Xplay earnings and process

portfolio While with categories necessary and reach the the capabilities simplified to last to brands leverage our the yet years we generate investment sustained to enable performance. brand few have company over its of potential, our scale to tremendous in building and

We of of power Better models growth are traditional predictable, committed disruptive scale. of and operational you path smaller of to building to a sustainable aspects bottom-line those opportunity portfolio, with clear we to blend achievable growth. top the while And and Hain harnessing growth an our the our brands for for to enable CPG see

heard out out-bigging big the You've me and the small. this as to refer smalling

based several categories, portfolio number X/X to value of on committed with core tailwinds our needed assets have their including the fuel excellence, a to culture. to which tenets, to a brands, operational reach our be of shareholders attractive for for and shopping, inspire are consumer-centric more unlocking to approach achieve growth geographies organization potential, in key categories better-for-you is few mindset the our to core organization growth to building or where the We our in healthier leverage expanding growth, executing within we're and a and a a living. The high-performance purpose consumer is commercial generating X is that to invest X driving number strong with taking aligned and

brands balance performance. sequencing the growth deliver Importantly, in we and the and of to to investments margin with needed will pacing work categories in capabilities,

our live our growth, and will our impact. our look early to a committed sharing efforts to short-term living, the clarifying healthier which with framework, as capability. company our company and fall inspire on and business we between purpose balance we Investor will As to grow These our long-term from we to work our underpin grow urgency to people, center Day. strategy our grow growth focus our pivot we portfolio brands, at the our And shaping grow are forward accelerated long-term tenets

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

Operator

[Operator Lazar Instructions] with comes Barclays. Andrew first from question Our

Andrew Lazar

is think just mentioned you whether XX sequencing the a sense Wendy, Han I profitability normal a sort more of 'XX? profitability Or Great. to allow you lower to trying still you fiscal 'XX, somewhat get at should of profitability think the to and year? could potentially that you takes of do frame muted business spend. grow expectation just maybe balancing pacing I -- of the be time. before the responding in a reinvestment also likely do base some I'm I'm a to around reinvestment and And cadence need guess somewhat time our what of reinvestment likely is given in guess 'XX transition more getting at more a a sometimes bit the

Wendy Davidson

appreciate brand. there were question. I meant questions the in call I conference And the I reinvestment about know Yes, some by in the what last

So 'XX back or 'XX means in frame provide that what 'XX. me it longer marketing quarter X promotional term. think on then dollars let spend little In we actually for spending in 'XX, I that and mentioned didn't we much pulled for we quarter a X. outlook In or

we loaded. So back

spending actually we actual what slightly totally and equivalent. Our about year-on-year It's is 'XX in marketing below

'XX fiscal was backloaded the what 'XX. it's spend in entire into but fiscal

it to see new some some start in gains. market expect So basis, seeing flat. on a of But in campaign you'll we of the have activity. in the to some in fact, response weeks we recent -- year-on-year relatively distribution

we able it That's that prioritization. we sequencing this is and intent as fruit and to that to later. this months the X go pacing hopes in start bear what with by invest mean than Our investing will rather we're pacing

good in came In And more taking the offset deleverage back fund we actually we pipeline. but that is productivity planned. from productivity feel that aren't this delivered out. going in margins volume what the year, it that in the My pipeline to plants than Unfortunately, actually we intent in about to giant we're went we have step we it forward. able a the

as clarify. helps hope of that sort that go year. balance next we we'll into so And the I

Operator

Our next JP Goldman comes question Morgan. with from Ken

Ken Goldman

but Thinsters, ago. price. realize over It I Wendy, of wasn't Hain for and long the purchase the acquisition wrote around that ParmCrisps today, down you went half

hindsight I you just But from was share step prices XXXX, made error do X was Han just if X what see timing, does or in a do taking trying what just -- little M&A, bad to category it, was rose. Just a back, next processes road, course. the deal, the saw. of it think taking and is there as hand it private future down a further more case always we I'm as it so successful than see for of it's whenever little of sense a in imagine was label you this the get that internal the you the last take place,

Wendy Davidson

-- a me were Ken, we morning of made, and let scrutinizing Monday to but time look it's that always transpired what into and happened that fair assumptions tough the on quarterback have the amount has acquisition back decisions went and spent sense.

what We you certainly Here's believe tell believe got was snacking in this a category, snacking, that play better-for-you better-for-you the in we in right. protein. absolutely. will I high And we

category. that consumer So from were where headwinds of it anticipated relative acquisition. and at of the in ParmCrisps That acutely One got -- time on the that we diet keto probably the wrong, the decline the consumer correct. reliance keto subsequent ways. probably some to gave as we're the in is as trends a all weren't and X potentially standpoint

that The -- other opposite. pacing happen was actually And actually those things concentration, risk and is than potential concentration. customer the believe would of I I channel channel were which the internally, was I know thought was think expansion channel the of outlined, X faster it

take that say, now outside growth ParmCrisps, is for we're seeing where customer what today. actually been base factor you're a resetting concentration of I sits brand of the the has good. would outlook our of But -- So out and the recognizing sort right also where our

before. just recovery customer good feel I we We're helps. so brand of the than forward. anticipating that that And a point new going from rather concentration about hope resetting large starting

Ken Goldman

wanted I follow-up. to ask then a And helpful. quick very that's No,

do terms the you're to reinvestments, How think information? brands some asking that is to data to syndicated nicely in in quite what we I'm business see for that least uptick mentioned or great which is Hain's about measure case it hear. starting react that get of to doesn't some of terms of look at What consumption we You to U.S. consumption? be expect see a for acceleration enough kind is, meaningful? or where, visible maybe to some should really of in Or we hey,

Wendy Davidson

Yes.

of So I to you'd would data. a see say syndicated that couple this things able in be

If quarter you drag Care, you at you'd see roll. categories And some see X in year-on-year year-on-year how drags can look the Personal -- data in or a North see America, a the those of that's in inside some you'd we of the brands particular, in points. in drag

also You'd channels. Terra, measured sensible in across growth in the see the you'd see growth the

points see shopper total and start where the the look improvement reinvestment in is velocities, seeing market. at to in-aisle brands the can at picking you look activation. would the to the actually in then because you'll in responding distribution -- investments is to distribution we're where the and I that responding some up consumer assortment the

able little in you'll actually, a So of food see where some mass convenience, drug that see a from be recovery. bit you'll to

Operator

next with Piper Lavery Sandler. Michael comes Our from question

Michael Lavery

perhaps. normal ad budgeting some cycles. there's that back in I to it sounds out help a little you I to X, that spending it I the the hoc think on we a you as versus come want covers Is understand adjustments I year next probably Can road that for mentioned or of like year that guess 'XX you -- to and a but the begun within to bit laying and you've maybe spending fiscal added guess I the release invest year? the the understand think mindful some needed of a go know with little us the just reinvesting. be July it just just color map starting spending wanted is different touched bit. you've timing this, right could picture. budget, you

Wendy Davidson

have our to is the look all today to you the half the instance, dollars, the in in the in year absolute spending year. a were from would sufficient the We've P&L bit we upside our a behind question. move What no investment. for half isn't in Yes. focus. at to inside is those back and of fiscal in the ratios Thanks say versus able as it the of brands of of be nonworking a fuel spending of working front categories 'XX the driver also in I see the marketing almost spend invest But just marketing, it's hard the the taken the down quality a for and past.

and So more media. marketing working working we're into leaning

the on On programs activation the trade nonworking working than same trade side, we're also trade. thing doing on shopper our and our rather trade

to it and of core to using the it categories. So drive distribution, brands using velocity drive

growth, those margin and conversation expansion think into actually of talked -- are we As I we as we accretive channels. this lean channel about in this channels ago, our investor a months few

of more of Hain channels maybe points than distribution fuel focus. actually those So more other traditional generate

So have the to around growth. growth combination the us to we our drive should generate as the we of forward, that of enable use where invest today, dollars we as how going well fuel pacing

Michael Lavery

follow-up the us or a that scanner X think just this difference crisp. of And seems America a to basically, you be should on quarters line? about we North when timing? what helpful. see we there and of in data loss between more can top the we to sense shipment just is And distribution give modeling That's very in partly be the certainly maybe number The Okay. much farm related the related --

Chris Bellairs

Michael. way about Yes, that's it, think to exactly the

we As we first got quarter then on an into turned year, more okay had this challenging. farm things crisp and

quarters of that couple of quarters a more into a we're we say, sit today you as as and So go. couple here to

Operator

Matt with Our next Smith question Stifel. comes from

Matt Smith

the about to second I some the in the the here third level half increased in year. performance again, to not of offset wanted relative gross of is look year. at that inflation, pricing question phasing of quarter. investment in the prior to we I realize was margin When ask a the the just enough productivity quarter, and

you're move to where level Just of increased to about less expanding? pricing is place inflation investment, get as and -- margins and inflation and to forward? your are there we starting going inflation offsetting productivity the So this we think helpful. a taper a do increase therefore, to and you with when there Or be color you expect would margin contribution there's forward perhaps little

Wendy Davidson

had Yes, quarter that were Chris versus volume there then saw took were pricing what some the in bit sufficient came little impacts we color. When we we start I'll to plants. we the still our and add inflation. of actions was below The at across the year, of a look and X business fairly out were prior challenge have cover that while elasticities X

And in drove the to that's be ended support some absorbed. the as as up instead deleverage used the original really business, of growth of where That intent. used to to be his costs And able productivity remarks, being that being Chris mentioned deleverage. fuel of was which sort incremental had led our some to

as think As raw heard labor we that a I energy that's rates, we while on probably see side, look and still and may well forward, from you've the material bit others inflation still subside elevated.

pipeline price used we'll where -- come things but allow see those the And be seeing will impact, we're less X we a so elasticity productivity back and think able be offsets we'll as it of the that the around, growth. volumes have to for to

Chris Bellairs

couple points. data Matt, of a So

the the year. margin First, progression did of in half first the see recall good we gross

hit I'd bit our negative was the of characterize guidance. gross in than than tea original business So as the third trade quarter some anticipate And was We had being were a first didn't There anomaly. softer the quarter. third second an that quarter. things that mix nonworking little margin a little quarter then as we better

the And then have than So in gross a saw that course. would the pretty we margin in do the in fourth quarter, a expected, bit gross third you of lower nice we see margin quarter. recovery

us very So a the gross to end increases will of yes, I margin and again, going offset I investment up the make. opportunity as step that so the mean, that healthy we're think see back you'll for progression to day, the at

Operator

Our Blair. Jon from next with question comes Andersen William

Jon Andersen

-- the portfolio and to back portfolio pivot through a of you're picture growth. either larger in to the bigger work kind the a though in at of smaller When aggregate? category-by-category you decisions from also brand-by-brand pivoting also basis or on reacceleration of terms that if the businesses more the of perhaps looking the business or and in at profitable a kind mentioned working looking there I'm taking core, or strategy noncore step potentially And basis wondering in simplification of parts future restructuring around play? are are

Wendy Davidson

bet. You

incremental to probably begin what So play categories work everybody life. where and for take to that in, it offer need we and that to growth. both we're the I be the upside where without that a we right the like in, acquisitions strategy I like to and approaching opportunities the have specifically bring the we're where for geographies like to win we're fuel will with does able you

have are we our do and is not of we around is pipeline That we behind focus. robust in innovation said, customers leverage things we're innovation to that and so our across do not be us those better-for-you scale potential we're invested insights have parts fair isolation. our the set how realize leverage categories. share get up doing looking able to how work in the channels the How in we categories. that's higher would fully at the markets to to undertaking to reach consumer able that and of could the growth our that we're expect what those And

is and that shaping leverage much really can you portfolio we invest organizational by the company and efficiencies was I then So reach. can Hain synergies believe largely operating model more around unlock scale where brand, allow That's didn't shaping category to we're I structured behind looking less overall and and think in growth. about past, by or

Jon Andersen

mentioned you for already to guess, number and And helpful. you've in the I structure leadership That's see global chain. a of the enhancements new I think global international COE commercial a business that supply changes resource some from, made

seems the It your planning to in of, activities. productivity, regarding annual basis? fuel be to reinvestment Just in that's on a to like aggregate, going you're what point, expectations say, providing that the your an for key demand part do generation are

at are us So year I able about a maybe has point historically, around to of in some kind $XX willing this you Hain million or think context give that? talked productivity

Wendy Davidson

run get number $XX inflation couple roll the enable that a is actually can we're you out will absolutely. of investment us million will productivity I behind end-to-end what restructure us Investor offset fall over that, structure next margin ongoing we'll to that those looking a Day this cost in brands. help about would for the P&L offset that continuous sustain say rate expect Yes, in some unlock things. can right impacts, would that is inside large-scale What at buckets much years probably that to that more bigger the of

to very the need is to to found, do so down to sustained we if of sure or speak, some brands both we more P&L, back over free company. had years are no was that able We we've the kind and kinds foundations fuel, back that look reinvest up had support. our the make to -- pay to in always-on also investment in some able be but What our episodic. of But little of sweating so an of of categories couple we're of need to those it debt of the to some of that, you the middle that last have

Operator

Our Bernstein. with question comes from Instructions] [Operator Howard Alexia next

Alexia Howard

to of higher it's sort repaying range. you given 'XX So guidance can into assume as going down it the plan at that for X% probably main in of that though well Xx, fiscal to How on looks above the of the about for bringing the X% cash I start time, and -- get think quickly ask we I of end as the downgrade the I leverage. the this uses moment. mean that can to debt do turn priority you be corner is

Chris Bellairs

we Indeed, as since the this we've priority. you my saw year. on this call, Alexia earlier remains call our made prepared progress in And have on said that remarks last the

twofold. identified a and helps on net that through we're through continuing growth, to then We're is on EBITDA going focus to to reductions, to continue continue focus and to plan cash will take the significant We've amounts today go -- working reducing our improve place to We've capital. the in of going both and So net got free within and flow part of got work debt we've opportunities debt. calculation, the capital directly system, inventory out working position. that, course, of of to plans

my side then always And on favorable more we debt, begin to to come the get the peak quarter And leverage leverage down I've in this will over has we of overlap so as quarters. and next reduce continue before, been year. calculation forecast into several was going of see EBITDA as the that third said net the to

Wendy Davidson

of add color me around let a little bit that. And

think and around As last we made call at the service mentioned I But made that forecast we've operating we around the in we've some some problems. investments had our that and year, significant of issues looked last management. end-to-end investments level we chain model, supply forecast

levels actually have categories number from service our that went than the on in into a seeing wanted fixed first, were to assuring in ago. service on inventory top-tier fixed what we're but of we part and year is sure of working We we're across later year focus capital the sitting this we've focus. you're the data make in that and we could recent of actually, from we seen a marketplace level with we our that's more so IRI, And service comfortable, recover inventory that channels levels supply

we've customers' and So inventories as to on can now work that teams demand against active allows so now. down. also that we finished pack working reducing That but focus capital focused goods raw we're models get said, expectations. delivering both And us Chris on got and forecast our

Alexia Howard

brands CPG that point? of getting higher through follow-on than cetera. What supply and level chain companies sort in inning focused all back that much is service disruption? of and you're guys bigger mainstream that. in, with pretty and because the end behind more service Great. Are And the more this terms the in level sort Is maybe with et we One now supply that are hit normal? as of us you brands, to a at lot a theory of that question chain you to you disruptions harder smaller have

Wendy Davidson

working stabilized. packaging Yes. It's production where I well on dependency formula. without some few got continues way redundant on. I a We is the challenge about baby and have contingency couple few. a that a of pretty guess the in we talked space. I this materials to make the for want be before, pockets still in say to industry-wide assure think, we've supply sure everyone category areas to that around hot of And suppliers locations would we've we're there's a redundant

service that not it's is than really levels of work some So formula on our play, the but side. affecting still in other

Operator

Our with next question comes Maxim Vendetti from Group. Anthony

Anthony Vendetti

Yes. little about I was just wondering, could a pricing. Wendy, you if talk bit

the started just supply With costs? the catch pricing of trying a input up. do chain this sales, Or cover that on it was result costs the to gross just same lower sales, was finally the margin increased think you to environment lower fixed of some side, then in And cost.

Wendy Davidson

we because to But margin more actually Chris pricing, would do feel we like I back Yes. good taken with of bit we feel has want I'll relative to to what What let we more rather inflation than I'll right detail we pricing a the for where trade and -- we're have permanent talk question of have cover pricing ourselves transitory. so amount cover so say is or actually pull the to take through some to and And much didn't that in with start back. mix. is at. wouldn't that we've very to price

past probably the you've my joining. prior us to in think mention heard I

shopping the in those but is part but to categories tend be What's of great is tend for premium we where Hain at the point the in that. consumer be point categories, of also we price to entry

wants to option who consumer, price-sensitive be traditional tend better-for-you for the categories. to price point somebody less little a we and a So entry

as So for I think to be. that And was pricing to not it's us too future been the team actually it and place thoughtful sustain. to be to challenges able has as much much to would but cause take needed, a really great about take smart really

Chris Bellairs

the actually is We the original third question. year. gross consistent our that curve a quarter expect for second would margin shape with the plan little bit original the of our step on did down in Anthony, The plan. from So quarter the

largely to anticipated and we little Now X a more it bit stepped due than down what reasons. had

you X named think I of them.

So volume, negative there which mentioned I'm the across plant as there deleverage some I was lower earlier. mix, was system, to led

then one, third the mentioned I I that trade we nonworking earlier third some to repeat don't hit quarter were expect going in to think question forward. And well. and that an the as items this earlier

drive margin we pretty quarter. to expected. what do in conspire things consequently, the it nicely little a those gross the And we fourth then recovering in of all than So see third quarter, lower

Operator

there to at are to Wendy time. like this now back comments. Davidson appears turn no the further floor over concluding would questions I It for

Wendy Davidson

I scale look like for speaking seeing and opportunity brands, The months, engagement forward their energy people thank in strength team quarter to to and our want few seen and weeks for to our many capabilities business entire attention their these of the updated to again Hain I Day and and and you with performance the you us In the our and and to coming in review the quality, Investor the in first-hand impressive the passion year supply I've potential first all of third our of joining fiscal Take chain safety. our for exciting. the fall. I'd the of thank is outlook. and service care. and today

Operator

concludes conference. today's This

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

The Hain Celestial Group, Inc. (HAIN) 9 May 232023 Q3 Earnings call transcript