The Hain Celestial Group Q1 2027 Earnings Results & Report

The Hain Celestial Group EPS Results

• Actual EPS: -$0.07
• Consensus EPS: -$0.0290
• Beat/Miss: Missed by -$0.0410
• One Year Ago EPS: -$0.23
• EPS Beat Rate: 1 of last 8 quarters

The Hain Celestial Group Revenue Results

• Actual Revenue: $260.27 million
• Expected Revenue: $283.03 million
• Beat/Miss: Missed by -$22.76 million
• YoY Revenue Growth: N/A

The Hain Celestial Group (NASDAQ:HAIN) is a natural and organic products company that develops, markets and distributes food, beverage and personal-care products. Its portfolio includes plant-based foods, snacks, pantry staples, beverages, baby and children’s products, and personal-care items sold through grocery stores, mass retailers, specialty retailers, e-commerce channels and other outlets.

The company’s brands have included Celestial Seasonings, Earth’s Best, Terra, Garden of Eatin’, Sensible Portions, Imagine, Alba Botanica, Avalon Organics and JASON. Products are marketed under various dietary and lifestyle attributes, including organic, plant-based, gluten-free and non-GMO offerings, depending on the brand and product category.

Hain Celestial was founded in 1993 and expanded through acquisitions, including its combination with Celestial Seasonings in 2000. The company serves consumers in North America and selected international markets, with operations and distribution activities spanning regions such as the United States, Canada and Europe. Its products are primarily focused on health-conscious and natural-products consumers.

The Hain Celestial Group Q1 2027 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Debt and transaction uncertainty remain the most pressing risks. The required credit-agreement amendment for the international sale was not completed by the deadline, discussions with AURELIUS continue, and the company is also negotiating with lenders ahead of a December debt maturity; net leverage was 5.3x.
• Negative Sentiment: Organic net sales fell 6.7%, with volume and mix down about 7%, and adjusted EBITDA declined to approximately $18 million from $20 million. Management cited weaker volume, cost inflation, and a 29% decline in international adjusted EBITDA.
• Positive Sentiment: Adjusted gross margin improved 320 basis points to 22.8%, and adjusted EBITDA margin rose 140 basis points to 6.8%. The company attributed much of the gross-margin gain to the North American snacks divestiture; it also completed actions addressing $25 million of stranded overhead and implemented $8 million of a targeted $16 million in annual SG&A savings.
• Neutral Sentiment: Brand performance was mixed: North American yogurt grew, The Greek Gods gained share despite temporary supply constraints, and Ella’s Kitchen returned to high-single-digit growth. However, North American and international organic sales fell 6% and 7%, respectively, with weakness in baby and kids, tea, and international spreads and drizzles.

Presentation

[Operator]

Michael, please go.

[Company Representative at The Hain Celestial Group]

Good morning, and thank you for joining us for a review of our first quarter 2027 results. I am joined by Alison Lewis, President, Chief Executive Officer, and Lee Boyce, Chief Financial Officer. During the course of this call, management may make forward-looking statements within the meaning of federal securities laws. These include expectations and assumptions regarding the company's future operations and financial performance and condition. These statements are based on current expectations and involve risks and uncertainties that could cause actual results to differ materially from such statements. Please refer to the company's annual report on Form 10-K, quarterly reports on Form 10-Q, and other reports filed with the SEC, as well as the press release issued this morning for additional discussion of the risks.

[Company Representative at The Hain Celestial Group]

We have also prepared a presentation inclusive of additional supplemental financial information, which is posted on the company's corporate website at hain.com under the Investors heading. Today's remarks will focus on non-GAAP or adjusted financial measures, unless noted as reported. Reconciliations of non-GAAP financial measures to GAAP results are available in the earnings release and the slide presentation accompanying this call. This call is being webcast, and an archive will be made available on the website. Now, I'd like to turn the call over to Alison.

[Alison Lewis, President and CEO at The Hain Celestial Group]

Thank you, Mike. Good morning, and thanks for joining the call. Today, we will provide an update on our strategic review before discussing the results for the quarter. On our last earnings call, we announced that we reached a definitive agreement to sell our International business to global private equity firm AURELIUS. Earlier this month, the final required regulatory approvals were received, satisfying the regulatory approval condition to closing. However, as previously noted, the transaction is conditioned upon entering into an amendment of our credit agreement by October 12th, 2026. While t his condition was not satisfied, we remain in discussions with AURELIUS, and we continue to pursue a path forward for completing the transaction. If completed, the transaction would result in a more focused North America business, allowing us to concentrate our resources behind our strongest brands and categories while using proceeds to reduce debt.

[Alison Lewis, President and CEO at The Hain Celestial Group]

We also remain in discussions with our lenders regarding our capital structure, and we continue to evaluate and pursue all available paths to manage our financial position. We will provide an update as appropriate. During the quarter, we took actions to align our organization and cost structure with the scale and needs of the future North America business. We implemented approximately half of the targeted $16 million annual run rate of SG&A cost improvement. We remain on track and expect the majority of these actions to be completed during fiscal 2027, with full realization by the first half of fiscal 2028. Turning now to our performance. The first quarter results demonstrate progress against our strategy to simplify our portfolio and create a more focused business with stronger underlying economics.

[Alison Lewis, President and CEO at The Hain Celestial Group]

Gross margin and adjusted gross margin improved by 330 basis points and 320 basis points respectively year-over-year, reflecting the benefits of portfolio simplification, including the sale of our North America snacks business. At the same time, we are concentrating our resources behind our core brands and the categories where we have the strongest positions and demonstrate the greatest potential. During the quarter, the performance in our core brands showed encouraging signs as our actions to accelerate renovation and innovation, implement strategic revenue growth management, and strengthen our digital capabilities gained traction. We saw continued growth in yogurt in North America and a return to growth for Ella's Kitchen in international. These results provide tangible evidence of the progress we are making against our commercial priorities. Turning to North America, organic net sales declined 6% year-over-year, reflecting several headwinds that affected our reported results.

[Alison Lewis, President and CEO at The Hain Celestial Group]

These included a temporary supply disruption in yogurt, unseasonably warm weather impacting the hot tea category, and the cycling of prior year pricing and customer inventory builds in tea. Despite the supply disruption, The Greek Gods grew by a mid-single-digit percent versus the year-ago period while gaining market share. Supply constraints are now behind us, and we expect The Greek Gods to return to its historical growth trajectory. With consumer demand continuing to increase, our focus is on driving strong commercial execution and advancing innovation to support sustained growth in the category. In tea, broader category softness, warmer seasonal weather, and the comparison against prior year pricing customer inventory builds weighed on reported sales. Orders improved as the quarter progressed, while wellness tea remained a standout. Building on last year's launches and three new wellness innovations this year, we gained share to 18% of the category and continued to expand distribution.

[Alison Lewis, President and CEO at The Hain Celestial Group]

In baby and kids, share and distribution losses in certain segments remained challenged in a highly competitive category. To address these challenges in our Earth's Best portfolio, we will prioritize investment in cereals, purees, and finger foods, where we have strong positions and see continued opportunities through innovation and improved execution. We are also prioritizing marketing investment behind our core brands and proven avenues for growth. Marketing work in the first quarter focused on strengthening the foundation of our brands, including advancing comprehensive restages of Celestial Seasonings and Earth's Best. These efforts are intended to sharpen each brand's consumer proposition, modernize packaging and communications, and create a stronger platform for innovation and distribution growth. The commercial benefits of this work are expected to build in future quarters. Our digital transformation is also demonstrating potential as a proven avenue for growth.

[Alison Lewis, President and CEO at The Hain Celestial Group]

Across our largest pure play e-commerce customer, our core businesses are growing faster than their respective categories, with sales in tea and our priority, Earth's Best baby and kids platforms, growing more than 30% year-over-year. Turning to international, organic net sales declined 7% year-over-year, reflecting weakness in certain parts of the portfolio, specifically spreads and drizzles. However, a majority of our core brands maintained or grew market share in the quarter compared to the prior year period. Notably, Ella's Kitchen returned to growth, with net sales increasing by high-single-digit percent, supported by innovation, new distribution, and improved wet food and finger food performance. We will look to build on this success through the remainder of the fiscal year. Innovation is making a measurable contribution.

[Alison Lewis, President and CEO at The Hain Celestial Group]

The international segment's innovation renewal rate, which is a measure of the percent of net sales coming from new or relaunched SKUs in the last three years, reached 14%, improving for the ninth consecutive quarter, with 27 new SKUs listed during the quarter. Launches included Hartley's high-protein jelly and fruit spreads, Yorkshire Provender casseroles, and New Covent Garden's lunch pots. Retailer support for this innovation helped secure additional distribution. Inflation remains a challenge, with elevated energy, freight, and packaging costs continuing to pressure results. Energy costs, in particular, remain well above historical levels, although timing and pace of normalization remain uncertain. As we move forward, we are prioritizing volume recovery while applying pricing selectively across our international brands.

[Alison Lewis, President and CEO at The Hain Celestial Group]

For the remainder of the second quarter, our priorities are straightforward: address the upcoming debt maturities, progress towards the anticipated close on our international sale, advance our SG&A cost realignment, and continue to improve execution behind our core brands. Our immediate priority remains our financial position and the December maturity of our credit facilities. As mentioned, we are engaged in discussions with our lenders regarding our capital structure and with AURELIUS regarding the international transaction. We will provide updates when we have material information to share. With that, I will turn the call over to Lee.

[Lee Boyce, CFO at The Hain Celestial Group]

Thank you, Alison. During the quarter, we made progress towards the realignment of our cost structure to match the size of our North American business. We took actions that achieved $8 million of targeted $16 million of annual run rate SG&A cost improvement, incurring one-time charges of $1.5 million to achieve them. As Alison mentioned, we remain on track with previously stated targets and timelines. These actions are being taken to simplify our operating model and strengthen the financial profile of our North American business, implying pro forma gross margin of approximately 30%+ and low-double-digit percent adjusted EBITDA margin once complete. We also completed all actions to remove the entirety of the $25 million in stranded overhead costs resulting from the sale of the North American snacks business. These actions were completed well ahead of our previously anticipated schedule. Turning now to our performance.

[Lee Boyce, CFO at The Hain Celestial Group]

For the first quarter, organic net sales declined 6.7% year-over-year, comprised of an approximately 7% decrease in volume mix, partially offset by an increase in pricing. Adjusted gross profit margin was 22.8% in the first quarter. This represents a 320 basis point increase year-over-year. The year-over-year increase was driven primarily by the North American snacks divestiture, partially offset by higher international energy costs, coupled with lower year-over-year sales of higher-margin meal prep brands. SG&A decreased 6% year-over-year to $62 million in the first quarter, primarily driven by a reduction in employee-related expenses. We delivered adjusted EBITDA of approximately $18 million in the first quarter, compared to $20 million a year ago. The decrease was driven primarily by lower volume mix and cost inflation, partially offset by productivity savings.

[Lee Boyce, CFO at The Hain Celestial Group]

Adjusted EBITDA margin was 6.8%, a 140 basis point increase from the prior year. Interest and other financing expense decreased 21% year-over-year to $12 million in the quarter, reflecting higher financing fees in the prior year period. Adjusted net loss, which excludes the effect of restructuring charges amongst other items, was approximately $7 million in the quarter, or $0.07 per diluted share, as compared to adjusted net loss of $7 million, or $0.08 per diluted share in the prior year period. Turning now to our individual reporting segments. In North America, organic net sales declined 6% year-over-year, primarily driven by lower sales in baby and kids, beverages, and meal prep. First quarter adjusted gross margin in North America was 33.5%, an increase of 1,080 basis points versus the prior year period.

[Lee Boyce, CFO at The Hain Celestial Group]

The increase was driven by the North American snacks transaction, partially offset by lower volume mix. Adjusted EBITDA in North America was $17 million, representing 15.6% of net sales versus 8.3% of net sales a year ago. The increase resulted primarily from the reduction in SG&A, as well as productivity savings and pricing, partially offset by lower volume mix. In our international business, organic net sales declined 7% year-over-year, driven by lower sales in meal prep, partially offset by growth in baby and kids and beverages. International adjusted gross margin was 14.9%, an 80 basis point decrease versus the prior year period. The decrease was driven primarily by cost inflation and lower volume mix, partially offset by productivity savings. Adjusted EBITDA in international was $9 million, reflecting a decrease of 29% compared to the prior year period, and representing 6% of net sales.

[Lee Boyce, CFO at The Hain Celestial Group]

The decrease was driven primarily by a decrease in gross profit associated with lower volume mix and cost inflation, partially offset by productivity savings. Now turning to category performance. In baby and kids, organic net sales were down 1% year-over-year, driven primarily by purees in North America, partially offset by growth in Earth's Best snacks. In the beverages category, organic net sales were down 1% year-over-year, driven by tea in North America and international, partially offset by growth in private label non-dairy beverage in international. In meal prep, organic net sales declined by 10% year-over-year, driven primarily by spreads and drizzles and soup in international, partially offset by growth in yogurt in North America. As a reminder, following the sale of North American snacks business, the snacks category is comprised solely of jellies in the international segment, where organic net sales were down 16% year-over-year.

[Lee Boyce, CFO at The Hain Celestial Group]

Lastly, we made the decision to wind down our personal care business. The business had become increasingly subscale, with a competitive position that no longer supported the level of investment required to drive attractive growth. Cash on hand at the end of the first quarter was $63 million, and net debt was $523 million, an increase of $23 million, or 5%, since the beginning of the fiscal year, driven by seasonality of working capital needs. We remain in compliance with all credit agreement covenants. Net leverage was 5.3x at the end of the quarter. We continue to prioritize debt reduction and are evaluating all possible paths to do so. As mentioned, we remain in discussions with our lenders regarding our capital structure, and we will provide an update when there is material information to share.

[Lee Boyce, CFO at The Hain Celestial Group]

Looking ahead, we remain focused on addressing our upcoming debt maturity, completing the sale of our international business, and advancing our cost reduction work. Given ongoing discussions with lenders and the pending international sale, we will not be hosting a Q&A session this quarter. The update we provided on today's call and in our SEC filings is the extent of the detail that we are able to share publicly. We will provide relevant updates as we are able. Finally, Alison and I wish to thank our employees, customers, consumers, and other stakeholders for their continued support. Thank you.

[Operator]

A reminder, there will be no Q&A session today. This concludes today's call. Thank you for attending. You may now disconnect.

Participants

Executives

• Company Representative
• Alison Lewis, President and CEO
• Lee Boyce, CFO