HAIN - Earnings call transcript Q1 2025 | The Hain Celestial Group, Inc.

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Operator

Good morning, ladies and gentlemen. Welcome to the Hain Celestial Fiscal First Quarter 202 Earnings Conference Call. This call is being recorded on Thursday, November 7, 2024. I would now like to turn the conference over to Alexis Tessier, Vice President of Investor Relations. Please go ahead.

Alexis Tessier

you quarter us results. thank of a and first our morning, for for joining review Good our I'm our Executive Boyce, President this and Financial joined morning Chief Officer; by and Wendy Davidson, Chief Officer. Lee

forward-looking our shows X statements Slide disclaimer.

expectations performance. you on regarding call, may involve this cause operations the and meaning federal company's make course include our These financial the we securities within future expectations. are laws. differ uncertainties aware, These statements expectations and As based that the results of actual of current materially statements during are forward-looking our and from risks and assumptions could to

as Please our release issued as morning to reports our and the for Form XX-K, this other of discussion a quarterly SEC reports filed from refer time the well report Form to risks. XX-Q annual press on time detailed on the with

also We which our posted on prepared inclusive financial heading. supplemental presentation hain.com Investors information, have of is the at a website additional under

this our As to slide webcast, an GAAP on as adjusted is the of Wendy. measures financial results will on reported, non-GAAP call financial are measures. we available or focus and will today, earnings results presentation in and to non-GAAP available discuss now call. the remarks Reconciliations call our noted be being made I'd And to over the archive website. like accompanying the This release turn unless

Wendy Davidson

of call through believe review to Reimagined with Hain XXXX. we've Thank you, our today's reasons on progress high-level today's the before second in morning, and the to Alexis, messages, made a start strategy good first I'll half growth pivot key fiscal quarter and of everyone. results in walking our

our more outlook. provide along detail then results our financial will Lee on with

strengthen capabilities half the well first have Our and as have of generated upon initiatives we global Hain growth expected. quarter put The Reimagined. in in operating back the for performance XXXX to positioned momentum place, streamline in us foundational our with model year of along in the fiscal the builds

short-term the earnings we the reductions and including of a last rate the promotion we instant sizes shift last decline formulations in quarter to timing year. third, first impact quarter, portfolio of saw including quarter to spoke all simplification initiatives, similar into expected said the headwinds quarter we in of out the be an impacts announced late led supply sales fourth the our case. to would of a net XXXX, in recovery and SKU snacks as In formula call, and These organic of the X%, the first number of decline of in

Importantly, the actions we've our improved stabilized profitability. better-than-planned businesses taken sales and generating on are net

adjusted delivery, We fuel EBITDA $XX debt. Adjusted and progress driven the in quarter, make gross reducing million. was net by we expansion in achieved to continue strong margin

the is quarter first the seasonally smallest reminder, a of As year. our typically

confident to guidance. are of building I'm the our blocks and XXXX in in fiscal We pleased back half deliver the reaffirm the our on to growth pivot to year,

pillars Let we've strategy. the Reimagined me now of X our on the discuss made progress Hain

organization core live in consumer customer integrated we with very our quarter, to we the have engagement to simplified Chris, structure we into pillar different the to initiatives align progress making goal go-to-market and company design transform unlock to growth enable, moving went portfolio is in Furthermore, an commercial the to new enterprise. a We focus find. Palm XXXX. a with the fiscal our has forward for drive of noncore quarter North before of of categories mind, redesign within drive sale first our greater brand. holistic that America Hain X In accelerated to undergone into continued in -- model said year. as focus first was we've better made XXXX, This and a Our organizational focus and we tremendous the our improved brand brands advance which first one this fiscal our further first

across driving leveraging scale expertise global are categories, functions chain. insights synergies across and and supply We leveraging our in

Key which driving strategic distribution opportunities increased conversations relationships, beginning changes, of our around are partners take advisory category the notice improved are retail brands. and to

this expect to to in delivered continued XXXX. a pillar We the foundational strong The growth. key fuel our be into progress fiscal of enabler and has our year, pivot momentum

robust XXXX. will we confident target productivity fiscal We that have a in our pipeline fuel are realize and

suite promotion of and enhanced In the mix maximize have management a as Hanri will a key design, margin goals of RGM as well and capabilities, in-house point imagined. we our our We improvement optimization optimize ROI in quarter, drove improved building improve full expansion revenue rate. decision-making. trade gross XX be enabler basis growth trade to volume a price,

we Within from in $XXX you'll We in release X/X million a recall, our since days management, cumulative in first of and from working capital improvement have inventory first Through capital investments as multiyear by we year. processes extended part and approximately our working technology XXXX. that fiscal outlined payables levels X unlocked have cash days the of just digital fiscal by reduced strategy. XXXX XX quarter,

expect the for also net e-commerce, America strong from our driven fuel We particularly build the especially fiscal weeks. for first in in in growth accretive first Hain. seeing North quarter, TDPs sales dollar pure-play away and deliver and Away in in brands capabilities. Under our double and with again fiscal progress reduction strategy, Sedor we both XX leverage expansion both debt sales in by up and in improvement and channels channel in XX% in predominantly quarter, the gross saw XX% Veggie home We pillar, grew In our the grew margin channel. margin expansion with international. growth E-commerce digits further Garden Home the in latest investment to up XXXX adjusted in from to continue are

brands our by In in we Seasonings snacks share for increased soup And North basis online double-digit growth Garden refrigerated Veggie Best. points. America, and play Celestial international, tea, pure saw XXX Earth in for

meaningful e-commerce XXXX fiscal growth in to both and from expect of drivers to beyond. continue We and be home away

building Kitchen. on such focus Para Our penetration household brand on improved Veggie, and brands Garden key driven has as Ella's

snacks new well as including drive for penetration campaigns and meat-free brand Garden the reach as Veggie We brand in U.K. and improved master to share. targeted Seasons have awareness, campaigns, are Lyndon McCartney household Celestial campaigns These new

us the pipeline Our to the of percentage renewal has process redesigned rate coming range. Historically, innovation innovation positioned increase our in products. our new has growth been from mid-single-digit

quarter, the shift Celestial as teas, and Jacket as Our high-digit Yorkshire goal rest X imagined XXXX. Seasonings well to by drop contribution new to Henry is first leapyTime launched Herbal the Bioten In Provender, and in beauty honey fiscal lemon we U.K. Toastoppers in this

Veggie birth find launch, will options, leverage and snacks, in and craveability continue Garden continues portfolio better-for-you the to demand upon to grocery distribution, drive better-for-you especially to we delivering our expand them. convenience. building for Flavor addition, grow Consumer shoppers In leading stores looking trial snacking, are beyond of and natural

been to leader you, Hain has meet space focused more well this better in need. years a this As for for global XX uniquely than is in positioned and

household teens, the outlined Imagine availability to single awareness yet the strategy, brands digits. we our more and brand some XX% opportunity significant reach we hangry drive have of even As in or in key in low that penetration with have

brands, driving expansion As but we've meet said find, have be distribution we will key very hard demand. have a loved to this to we the made them enabler before, consumer

including initiatives, XXXX sight initiatives half of portfolio the snacks that rebuild activity place, the simplification the growth supply ramp-up our lapping into full with a third Best care. back line in of We have to of and number the our in clear fiscal and Earth quarter, and formula campaigns return of of personal promotional to shifted a the primarily brand of business, infant key in

and now each Let's in believe reasons of review pivot the growth in our to to XXXX. fiscal categories the

Garden promotional and first Veggie on earlier, quarter. event, quarter quarter quarter. in impact, retailer execution by which to these the a Garden was mid-single-digit softness the in reset. key expect in saw We the our faced rebound we X PDP As Veggie to the the impacting shifted I growth category Terra, quarter mentioned X which both quarter first additional Despite third impacted Veggie snacks Garden from

and launch for driving the size new partners. salty retail continues strong the Flavor Garden the Where is basket a snack to accelerating Better-for-You saw are incremental brand, Burst category in we trial, sales repeat MULO+C in be to increased year-to-date. Veggie #X XX%

social trial. drive We support with launch disruptive and the digital to the of awareness in engagement second events will media brand continue to sampling with along quarter

increased in and include new is date weeks, our Snacks, Garden in with launched XX campaign, Veggie a major in addition, master for generated has leading double Hartley the price relaunch spots digits snacks velocity architecture which listings the retailers Terra, Other impressions for new latest to awareness. U.K. yum pack across In new bright up to to million brand believably improving delicious, and and contributing brand first Canada XX quarter the U.S. nearly the

find supply XXXX limited momentum expanded as sales accelerate with We formula improvement in well elevated driving recovery to in all to return to and first net growth Snacks we on fiscal focus going across Baby Best organic to marketing in The distribution. through first trends. saw Kids, In infant we expect Earth's year-over-year sizes. and continue throughout mind, formulations the of

stock X. We continue end to of the by portfolio balance be the fully to of quarter in expect the

parents a market working sensitive, organic grew and of with over been and returned by parents strength and which regain our that is in offer digits double Best superior largest position for Furthermore, organic key distribution, At formula on the dairy, formulations. XX contains historical toddler over The broader of last compared have support where online and USDA babies to we health Earth's velocities dramatically brands we are brain aggressively we are the or promotes has years, other the non-GMO, emphasizing we to has have the formula sales range SKUs, few our organic retailers, regained certified years. and with USDA grown by the gentle demonstrating beating on prebiotics eye leadership to quarter. for options infant our brand, category trusted and

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brand and We strong and T expanding season programs are trial presence away-from-home to our awareness. greater building drive

more are channel. In by beverage, points label Growth in shift the overall to quarter, first for there a Natumi and category nondairy a the private grew where the share we natural XXX than discounters was and in player. key basis moderated

Our with nondairy October. holding we share along the have beverage seen the market trends And rebound in growth quarter. while flowed in

new for to gained fiscal half XXXX, in key have year listing our confidence full retailers We second providing outlook. the of

the strong our in of each Meal Covent to extend In see our private #X and Provender wins with label Yorkshire TDP and we in we branded growth sales Prep, have soup demonstrating soup #X growth to launches. as Cully into position organic in Garden, brands, and continue net Sully New and retailers the U.K. Heading -- we new double expect key digits. across double-digit season, #X

up the In Destination Prep potato hot we bulls. and by recent category in primarily adjacent These the lunch moderate end versus contracts. hot quarter up lap lost concentration. we velocities law. section convenient private is [indiscernible] showing label in and the addition, the spreads we driven as quarter lunch label distribution, offerings softness growth. diversified The suits away penetration short-term historical including was a affordable for toast innovation, and customers overall recently latest showcasing jacket Household strong impacts the of in In fresh quarter anniversary year. velocity drizzles [indiscernible the -- and the by our launched contract as Yogurt declined in hoppers mix and Resto to unit private Meal decline is is and with as we from second lunch, prior will channel

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lastly, footprint we our are stabilization SKUs, of sales of improvement in X,XXX outlined manufacturing And we XX% grow, category. incorporates care. strategy net of executing an elimination this margin previously, shrink as consolidation Care, gross over basis in the the -- expected strategy Personal personal XX% of of our This representing over points. and to The

portfolio double of this sales result, digits. a As net quarter first focused organic declined

a and than from notable the However, expected performance prior quarter. was improvement better

portfolio and are natural channels. driving consolidation execution e-commerce momentum margin we in improvement, the and manufacturing winning both seeing and Our are

is momentum and XXXX build business return we upon our year to back foundational critical of the imagine the Henry Fiscal as to a half. growth the in work

tea, the have promotion the Veggie in the snacks, our We baby & new distribution the innovation to recovery expect Garden gains, and shift along contracts Celestial the with and building In gains of veggie Best second in by we we be a growth nondairy key campaign campaign. beverage master Kids, infant beverages, have few beverage and with and and Ella's timing building driven categories. the new critical snacks, in new In formula in in Snacks Baby in brand blocks brand kids garden Europe. new Earth's distribution full supply half coupled Seasonings

be and supported baby both snacks will and particular, e-commerce. growth expansion, stores C and snacks further Our by channel in and

pay And outlook addition, now productivity will and working revenue first in growth we In will I'll Lee XXXX debt, to expansion and generate turn and back over it detail. capital margin invest we business, our results drive fuel to discuss in to continue profitability. gross more down optimization to financial management, use to leverage the quarter fiscal improved

Lee Boyce

everyone. Thank you, Wendy, good morning, and

For the the to X% in lower was by similar and first declined sales in year-over-year. segments decrease, decline America saw we organic rate sales the the which North driven quarter, both This international fourth net quarter. of were

offset decrease margin compared to first of . We net point decrease ago. volume million year sales margin communicated on the growth $XX mix in Adjusted line in last decline the million a in Adjusted EBITDA earnings adjusted approximately in we basis efficiencies lower EBITDA prior volume. net partially North $XX resulting X.X% increase reflects in year in commercial reset As year-over-year a and a quarter, points the for operating personnel as X-point X% in sales quarter year-ago the and XX.X% call, and by first integrated The was the XX.X% and and to gross which X lower services on organic XX.X% by with year-over-year. price. the increasing delivered by quarter deleverage compared in XX margin America, in fees. million, was period. costs primarily of cost decrease to productivity, was lower The decreased driven our SG&A representing $XX the model inflation driven period. was enabled sales

inclusive To During associated date, program, $XX the employee-related expenses. costs contract charges with transformation-related actions potential with brand taken charges, inventory million $X transformation $XX to restructuring charges $XX restructuring comprised expected million as charges transformation $XX the costs, write-downs. of discussed, $XXX we million including termination of totaling of program, write-downs million total million -- exits. million and be and which are associated in Of quarter, category other took noncash under program approximately $X with associated asset have inventory charges write-downs $XXX related million and and million to of is to expenses were these previously of we the the

Interest adjusted offset costs inventory slightly to operating $XXX driven partially Restructuring in $XX borrowing from quarter, million our by borrowings. by results. rates, are year-over-year lower expected the million are higher charges excluding to outstanding write-downs $XX be X% excluded to rose million and

more rate XX% on our reminder, of fixed at loan than our facility we exposure with X.X%. a have rates As hedged

over prioritize net time. to debt continue We reducing

Adjusted restructuring in share million of the was charges which in net $X.XX the period. items, line the excludes diluted with other per prior year $X quarter loss, effect or amongst

fiscal America, as reporting a call. net this prep. the in Due This into now by In growth Turning segments. as highlighted to of sales snacks event North our year, earnings decrease year was organic from individual by third promotional X% the fiscal quarter meal year-over-year. last lower The beverages. on declined well sales quarter partially shift first by primarily timing the last offset we driven in to was as the

North of building promotion shift We innovation America key and back the to growth the by building. Infant return in fully brand driven and brand expect and campaign. formula year, as to growth supply on accelerates, new the the half snacks recovers accelerates

driven quarter First Adjusted point as offset XX margin inflation customer XX.X%, related America the basis was from decrease a prior lower was and in decrease period. versus by in by deleverage gross margin as $XX partially EBITDA decline costs year adjusted primarily million period, North pricing, a to productivity. to ago basis resulted America the by And North million, well on inflation, EBITDA volume partially as year-over-year. year compared The was in offset point and X.X%, year-over-year XXX $XX productivity. adjusted mix

sales the in label loss baby sales declined mill our business, and in prep quarter, net private we lower kids. a In in and of as by cycle sales primarily the driven international X% organic lower contract spreads

on spreads label We growth expect back loss brand we building. in as accelerates return to of region TDPs and half contract, the the Ella's the private to increased international Kitchen the lap

was approximately contracts of XXX new productivity year offset by year-over-year driven efficiency as improved XX%, margin lower And by EBITDA and than lower up we an volume. promotional improved basis compared increase to International volume. partially XX% productivity in beverage. of International adjusted impact won benefit adjusted promotional prior efficiency, points nondairy more gross the realized million, the and the of $XX was period, offset

lowest and outflow margin typically in up million cash and XX.X% to first quarter compared Free Shifting of was was flow approximately sheet. Adjusted EBITDA year generation points basis to restructuring XXX an working the flow customer our our $XX the the quarter driven balance year of inflow year-over-year. of to The the cash an $X of period. geographic as prior accounts the versus charges decrease in and magnitude the as related well ago of payable million year timing by impacts capital and was mix and the receivables. the cash

We continue days XX and to to XX year days 'XX in in our days outstanding. fiscal make days from outstanding days days year 'XX. improved DIO inventory progress from improved XX XX on -- to payable fiscal and

outstanding we with towards quarter. the pleased progress payable are are We by year inventory XX was days days CapEx Henry our in outstanding the million fiscal $X of targets XX-plus making and Imagine 'XX.

to in we outlined last call, approximately fiscal we XXXX. $XX As the million expect for be expenditures

Finally, of quarter of cash hand million million. with $XXX net on the $XX and we closed debt

up under ticked X.Xx. ratio, calculated cash XX credit basis expected seasonal Our leverage our by based as to net agreement, on flows as points

covenants. and Xs to before in our and that expect comfortable the year under trending have our the leverage we fiscal of XXXX to down through QX mid- remain anticipate high the net headroom existing sufficient balance remain We in ending constant

$X in priorities million to debt business quarter. Paying continues cash, net debt in the by investing for be the down we and strategically our reduced and

Our remains EBITDA adjusted balance reduce long-term sheet agreement. credit our as under leverage calculated to to goal Xx less

Turning our outlook. now to

the follows. back to expect in to reaffirming as and to pivot of guidance continue the We year half our growth

least XXXX at expand Adjusted cash percentage, to of points We better. mid-single-digit at $XX by or gross free flow to basis grow sales flat EBITDA XXX organic to million. by least and margin expect fiscal net be a

shape expect the continue the the to cadence year We last we of discussed quarter. to follow

of As year. in growth expect the sales and the such, we accelerating growth back flattish quarter organic year-over-year in second half net the

the Wendy full gains driven brand The in back infant supply building. be timing acceleration of promotional snacks. half and formula will mentioned, an in by As recovery shifts the distribution

in for ramps and increase. growth EBITDA adjusted up be the expect the to to continue year productivity back driven we as by full half sales net growth Lastly,

of of XX% to half year being of of the expect first We and be half in generated the the being split the approximately with EBITDA the year. EBITDA to back in of EBITDA generated XX% XX% XX%

second, EBITDA back Wendy sequentially step to remarks. Furthermore, quarters. for we to each and third turn expect fourth now up I'll the in And of closing it

Wendy Davidson

the we you, Lee. blocks foundational Fiscal pivotal is we the place. Thank year Henry imagined for as benefits put XXXX see a in from have to begin building

lifting, capabilities. portfolio, activating model, have resetting for the our streamlining success much fuel our We groundwork our key laying investing heavy our completed the of program global and by in operating

line commercial execution are hyper top and growth. bottom drive to on We both now focused

While to an stretched. challenging of remains area the the premium for continue interest and they for macro environment be growing products. continues and consumers remains look consumer Better-for-you to

white drive We well for growth to are needs, we space and shopper meet ample to positioned have beloved brands. our

in fuel to and to ratio driving last the investing debt robust free our gross cash our the Reimagine us year. realize and of we the Our will flow I strategy potential enable confident while expansion. improve continue business pipeline reduce margin remain to ability Hain introduced in and generation strong leverage net

and to healthier always, life who every want As members our through values who bring brands, to inspiring of dedicated to Better-for-You single our all team living remain I thank day.

our possible. their Henry is our to that and company It make imagine customers commitment

line Operator, please for open the questions.

Operator

Stephens. Ladies line you. now from we [Operator Your and James from Instructions] question Thank first of gentlemen, question-and-answer Salera begin session. the the will comes

James Salera

gains? we performance? just particularly add do still like performance really distribution kind this variability category of half sight on that? regardless thoughts around as I overall as you -- feel in to kind wanted if on about we Or of snacking, category good line you category the year, And of there are have think we at what of about softness into any think is see back level ramp the your continued the of your

Wendy Davidson

were on call, when from X quarter there quarter -- our the known into we category, as last think I James. X. some we appreciate that, mentioned And about moves Yes. earnings snacks

snacking, automatically substantial. year confidence gives in quarter They're of to those because programs. that but half go into of the X us so the fairly the we visibility as back drivers known And are

those quarter fact, snack been digits In category X, low up the been Veggie digits. low X would and single without Garden would drags have have in single overall up

the were same as that category. looking said gaining the they to we drag with the X material back At X time, snacks the activities as we in distribution So to quarter a X promotional activity some incremental we're half as quarter distribution continued in fall in then at continues go the today. in and so quarter remarks, beyond into those were X and we it up incremental burst sits success of that where Flavor ramp

James Salera

total Great. category. total mean I'm clarify, snacking, stacking entire sort across snacking, the I but when your entire to And the in not of total like maybe

of that on retail channels? softness snacking might just so expected across thoughts the year pickups any at the back distribution variability your kind half have category And into the and of on

Wendy Davidson

sense. makes That

Okay.

broader deep perspective the very some on environment seeing large to little we're the velocities. season snacking by in me So summer a clearly there what discounting give let during was drive some players

is to a got and digits. north space distribution, they've they've all case As XX% penetration a Terra, single awareness, of In where before, the biggest that's we've opportunity drive Garden our of Veggie that said is. in the got household white but actually

the brands. love that know we consumers them. just find can't They So

we're velocities, is behavior time, drove of on And think a same where launch that what deep our So distribution, opportunity for brand irrational Veggie. mentioned, probably Veggie, discounting, some affected we we doesn't Garden garden seeing we're that's the seeing had everybody it impressions. excited of for velocities, of campaign has exist Terra especially terms the seeing that we're I some I when But strong on others. think master TDP in that an bit. the most nice have at we gains as about we're really pricing on of which recent stabilize that us But see

to We into as go will we continue forward. lean that

working But been of at partners well that, can objective time, in-store discount. where us for don't some successful, is create find and brands #X generate that we same they brands excitement people the done that making our retail love, respond it's but with success our deep will know both we've that the to our to sure

Our trade display on spent, the consumer sort disruption feature and traffic dollars best are journey. that of for their driving

And opportunity continue then a snacking underpenetrated a for to and up double we driving in to have obviously, consumers and and C-store is distribution quarter to for in in we really awareness great was C-store the into. made us this our we last will channel And snacks that this as comments reach that distribution lean quarter relative the quarter, that's channel. mentioned digits

Operator

[Operator Instructions]

from Your next question comes Anthony the Maxim of line Vendetti from Group.

Anthony Vendetti

a shortages? . And I follow-up I just in just baby there? have redundancies Maybe leverage. year if little future on formula. full then in expand wanted then the to just you have the a bit any outlook hone And could on you on built chain supply prevent to

Wendy Davidson

Yes, absolutely.

a still and material disruption formula and As meaningful category And in North is it's also us. Best vehicle said Best America. margin-accretive and the key The natural for we've for Earth Earth was before, the us, is Best Earth's growth formula leading brand. organic for brand a

on in not back are the all in but fully sizes. formulations, We of supply the all

baby of of formula So available, end not sizes, be are in but our the the quarter quarter just they all this in varieties by all will the X.

in inventory carrying X partner more than give our elements X formula is location. we of qualified to in has more historically are and produce our some timing had that built ourselves redundancy redundancy. is we than One to We've

feel manufacturing location redundancy good us location about. we very gives also that that So -- very,

disruption, than velocities brand brand. tells it new and on the have we're the the regaining So regained been at of retail they where seeing brand feel gained made we we've And we've for things, supply. distribution, up. prior XX those partners to over that where is our have available, we it more trusted either our better now us combination where which shelf a trust and our love we're with What pick of the supply trusted new space for They've prior as are velocities focused the distribution the back were consumers very years. solid looking on or or and distribution

We unique see consumer another are of to will Best, have digital you and consumer social Earth's we difficulty formula the back where ease qualities quarter, and from competitors. a supply will also switching turning some the our of the Earth's in us on of continually in marketing that marketplace, from to they brand the know finding advertising this Best

we that from the we and the point being opportunity we headed out continue to of parent brand, opportunities time the And backpack. born, as unique birth few from the that our see see they're of where that all is X And to tremendous journey us. that until a baby the are way food partner provides school, to distinctiveness to for baby on actually

will seeing vehicle. it I'm distribution, as expectations a picked key we're that happy actually on formula. say our So up delivery some we've to be growth over to

And believe it that continual be so will for we driver us. a

Anthony Vendetti

on leverage to there you're Okay. I -- flow? obviously, taking cash the traditional any that outside Excellent. steps Are that is leverage, know other to being flow then cash of looking to used from organic . that. And reduce you're do reduce leverage, just

Lee Boyce

organic is flow. So right cash right, it you're now,

working initiatives the QX brought have So it is then leverage I the kind we pleased obviously, the $XX place. the that think, down, of net since We've brought and million. year. mean focus capital secondarily, that EBITDA in we're But down I over profile of we've last key driving

continue it a million was working capital. And kind we $XXX of to just So you momentum make unlocking net reminder, that saw there.

it of in first X/X or that locked are year. X/X the We of over

I we'll into So continued it it'll we'll the half down in we year, in that's flattish focus our back half see then of quarter, year. second see back leverage. the come be and the the as get mean, the of the

Anthony Vendetti

other any leverage there that point? that reduce are could fiscal for or this -- that Are year divestitures could 'XX not Okay. planned help at . or

Wendy Davidson

out distribution year, previously There's some none our still front prepared some that We've that talked simplification in our at are manufacturing the to consolidations, look location taking office have we they're playing of geographic They speak before we announced the those today. of and also but half announced were footprint, in consolidations, pillar last place. year. expansion, we're in still this to

Operator

the Andrew Your Wolf of CL from next question King. from comes line

Andrew Paul Wolf

But different. join -- in and or North little to the America or have some to you discount consumer it's to segments feeling of expand more U.K., kind if Wendy, kind had Or upon, tight of are if call just the people -- talked channels of could it, the switching you're When switching are and some about talk about They're you label. what a behavior I Europe stores. late. private stretched. kind

is expectations? that looking behavior that So -- or how coming you to how Hains impact either versus you impacting or consumer versus And brands? in your expectations expect your is

Wendy Davidson

good. Sounds

bit the Let in in broad it me speak the to in we've sort the different little a marketplace. they're of in is because also but as way markets the dynamics terms before, in talked both behaving, consumer

the Western U.K. the on international and Europe and we're start economic more I'll So the in consumer acute the environment, for that side. the about much environment markets in know inflationary international us in We feelings the

discounter to resulted And it down of in label. the a resulted into lot things. couple It channels in behavior. shifting consumers consumer included It trading between a private of

brand stretching where of private shift over us we year, of the produce so our and label also we saw spreads meals last saw that business that we in nondairy because label ourselves. few and to drizzles all And those a in we and are in both a is -- in The meat-free from impact products in for benefit also private categories. benefit this beverage

in some did although have mix So it of we overall actually benefited business. from the the that, shift

occasions. also lot ingredient meats we consumer few are the Linda stretching and drizzles of our element in a of also balls where then shift an their areas That or We demand shopping we supplier have meat brand, the and around where especially the a items and like ingredient in more McCarteny things in benefited make spreads menses us ground in their saw options free like and saw some and -- where discounters. we that third in and consumer meals

were had last team into in ensure of our year, all leaned the especially U.K., -- over the distribution. actually points that the reach available a market the We brands in broader to

variety mix growth saw a in business. the you certainly And looked we the the a and shift product, of we show impact, in international like for it but brand up little consumer private behavior and that shift So an channel in bit a label. of as benefited us, saw we and ways, in saw

more In we stabilize U.S. inflation We've down there things, level. normalized seen the to come market, the market the couple of and rates of a saw a consumer bifurcation.

consumers different So before. often basket than did value-focused We super lean they income although more saw strapped, who premium, size premium buying are and shopping locations to different continuing and and more those that had locations. they cash smaller discretionary more we're from into were

of us. played We've the our are that in lot for have available around continued the a Historically, Hain work large in partners, our driving One and pack channel to is price make X always right business channel been sure us team right locations. also that concentrated right expansion. a lean an has And opportunity retail for into products is expansion. the architecture the things to ensuring was out there done few

that. continuing So in drive we're of the what consumer seeing we sort that's are to But behavior.

the level. to down come a behavior, normalized inflation to however, Similar we've rates play seeing continue shopping more U.K., We're to out. seen

traffic in to continues So play out. levels discounters

a seen have shift. We

quantities. to from items, in in heard well buy drugstores, but and more in traffic probably You've buying they're this them and maybe to stores look others mass in premium them as club certainly convenience buying shifting into and they're or people larger bulk as

to that seen. affordable better make channel to that shift to to So to find an drives those first we've our products in And to available, people. the and accessible for and building value consumer clear goal in innovation behaviors brand mind, easy be our brands sort more you is products are our that continues of expansion make

lose Andrew I Did you,

Andrew Paul Wolf

me? -- I'm you can trying to hear

Wendy Davidson

Yes.

Andrew Paul Wolf

Is the value for overall more private because -- value label the no there's U.S. seeking. therefore, mix, more discretionary the

Wendy Davidson

Remember, North don't Hain, don't of in don't label lot we all, do lot private in -- -- for a American market. first we the we of a do

categories we in. really private play the in market label isn't in that penetrated the Second,

in, a in seen private definitely different in the in be for haven't label we this So market. certainly is European you big impact see geography, what better very we're than you in which but the categories

Andrew Paul Wolf

Or mainly are and purchasing. in influenced by the come more to to . sales kind and the at sectors discretionary of is consumers And restaurants see with thinking sort you actually is that brands. that point extent from Is better of all of inflationary like the bottom-up view? to Could to I outlook. discretionary your probably there's be that in of starting comment outlook back some same? assume But on might the the a it respect might guidance post-COVID your post-election period, more outlook

Wendy Davidson

I'll driving in innovation believe driving little based and perform. and where on very we have we the that fill a brand start, have expected I'll let but expansion are the we we're building and have continues it velocities and where impact additional, current is will bit much where Lee where that our channel then we distribution outlook to at

of yes, So for I channel less category growth on your or our our of a very and growth. a guess, part it's to up performance part much dependent bottoms question, so performance for

But want plan categories don't will want can that said control, have Lee know, our on so in growth that I if business participation what rates. you to... natural we that before to we've And we based less

Lee Boyce

that our by if talked outlook to a and about with gave driven mean, number I outlook guess a that obviously, about outlook talking and of we we've factors. -- we guidance our bottoms-up is regard mean, of I from perspective, the you're factors control. kind I

in the formula So programs baby we and talked in then that expansion and promo about the we've talked and driving We've in shifts our place put tea by category. snacks. about kids

expansion as our that it step-up So the a we that have distribution. in second outlook the of implies it's we guidance controllables by the us, half. and gave, think we for through Again, driven continued and

Operator

from Ken from JPMorgan. of comes question the next line Goldman Your

Unknown Analyst

on Laden Ken. for It's

year So margin we expansion the gross on Or about the expansion full throughout the to weighted? how of largely margin margin should back the quarter be year? cadence how should gross expected guide, think that about second to Is your relative in gross half? think half just back we

Lee Boyce

Yes.

we I look we year. So through see it, just go the as at improving gross the do margin way would sequentially

the really So about versus back think a sequentially half. ago, quarter-to-quarter. occur will you expansion in But the as it year

productivity of So for continue number will pipeline, that mean different pipeline I we feel a productivity that quarter-to-quarter. good things. step up about really to our

half. similar again, quarter So a year was the the is going expansion back taking it probably with what -- to yes, ago quarter to second second in be place

Operator

[Operator Instructions]

Davidson. turn continue. There further questions this will Please are I Wendy at time. no to now it back

Wendy Davidson

their to I later I reimagining on promise and around this And delivering our joining you. Thank strong And want our around especially execution continued morning the team further conversations brands. forward on I that, for business to commitment delivering everybody Wonderful. on to to world the members today. our with call with look thank appreciate and us everybody our the

Operator

your Ladies gentlemen, this for today's concludes and call. conference Thank you participation.

You now may disconnect.

The Hain Celestial Group, Inc. (HAIN) 7 Nov 242025 Q1 Earnings call transcript