The Hain Celestial Group Q4 Earnings Call Highlights

Key Points

• Hain agreed to sell its international business to Aurelius for $323 million in cash, with closing expected in fiscal Q2 subject to lender approval extending its credit agreement. Net proceeds would repay all term loans and more than 35% of its revolver, reducing pro forma debt by roughly 55% to about $250 million.
• North America returned to organic sales growth, rising 2% in the fourth quarter, while adjusted EBITDA increased 55% to $16 million. International sales declined 4%, with adjusted EBITDA falling 41% amid cost inflation and margin pressure.
• Full-year free cash flow improved to $58 million from a $3 million outflow, supported by working-capital and productivity initiatives. Hain plans more than $16 million in annual cost savings, but withheld fiscal 2027 guidance because of the pending divestiture, lender discussions and related one-time costs.

The Hain Celestial Group NASDAQ: HAIN said it has agreed to sell its international business to private equity firm Aurelius for $323 million in cash, a transaction that would leave the company focused on a streamlined North American portfolio. The company expects the sale to close in its fiscal second quarter, subject to closing conditions including an amendment to extend the maturity of its credit agreement.

President and Chief Executive Officer Alison Lewis called fiscal 2026 “a pivotal year” marked by portfolio simplification, debt reduction, stronger cash generation and efforts to improve operating execution. The planned sale follows Hain’s fiscal third-quarter divestiture of its North American snacks business.

“Once the transaction is closed, the resulting portfolio would be a North American business comprised of leading brands in attractive categories with a more streamlined operating model and a greater focus on core growth opportunities,” Lewis said.

International sale tied to credit agreement amendment

Hain said net proceeds from the international sale are expected to range from $305 million to $310 million, based on current foreign-exchange rates. The company intends to use the funds to repay all outstanding term-loan borrowings and more than 35% of its revolver balance.

Chief Financial Officer Lee Boyce said the transaction would reduce pro forma total debt as of June 30, 2026, to approximately $250 million, a reduction of roughly 55%.

The sale remains contingent on Hain obtaining an amendment from lenders to extend the current maturity of its credit agreement. If an amendment is not obtained within 30 days of signing, Aurelius has the right to terminate the agreement, according to Boyce. The company said it remains in active discussions with lenders and could not assure investors that an amendment will be reached.

Hain ended the quarter with $58 million of cash, $500 million in net debt and $186 million of available revolver liquidity. Net debt declined by $151 million, or about 25%, during fiscal 2026. The company reported net leverage of 4.5 times, compared with a covenant threshold of 5.5 times.

North America returns to organic sales growth

For the fiscal fourth quarter, Hain reported a 2% year-over-year organic net sales decline overall, as lower international sales offset a 2% organic sales increase in North America. The company attributed the consolidated decline to a two-point reduction in volume mix and flat pricing.

North America’s fourth-quarter growth was led by meal-prep products, including yogurt, while baby and kids sales declined. North American adjusted gross margin rose nearly 1,200 basis points year over year to 31.1%, aided by the absence of the divested snacks business in the segment mix, productivity savings and a $1.9 million benefit from tariff refunds. North American adjusted EBITDA increased 55% to $16 million.

Lewis said The Greek Gods yogurt brand recorded strong double-digit growth and market-share gains. Celestial Seasonings tea also grew in the quarter and for the full year, supported in part by wellness tea innovation. Earth’s Best finger foods posted strong double-digit growth, according to the company.

In the international segment, organic net sales fell 4% year over year, an improvement from the 8% decline posted in the third quarter. The company cited sequential improvement in meal prep, beverages, and baby and kids, while spreads and drizzles continued to face pressure. International adjusted gross margin declined 555 basis points to 16.6%, primarily because of cost inflation, and adjusted EBITDA fell 41% to $12 million.

Cash flow and cost-reduction plans

Hain generated $7 million of free cash flow in the fourth quarter, compared with a $9 million outflow in the prior-year period. Full-year free cash flow was $58 million, compared with a $3 million outflow a year earlier. Boyce attributed the improvement to working-capital management, inventory reduction, productivity actions and cost control.

Days inventory outstanding improved to 80 days from 88 days a year earlier, though it increased from 73 days in the prior quarter. Boyce said each inventory day is worth approximately $3 million.

The company also said it has initiated actions to remove all $25 million of stranded costs associated with the North American snacks sale, ahead of its initial timeline. Proceeds from transition services provided to the divested business, combined with those actions, have “essentially eliminated” near-term stranded-cost effects, according to Boyce.

Looking ahead, Hain plans to implement more than $16 million in annual run-rate cost improvements following a zero-based budgeting review. The company expects the vast majority of savings to be captured by the end of fiscal 2027, with full implementation within 18 months. One-time implementation costs are estimated at approximately $20 million, with 70% expected in fiscal 2027 and the remainder in fiscal 2028.

• Hain expects pro forma gross margin of approximately 30% or more.
• It expects a low-double-digit adjusted EBITDA margin for the future North American business.
• Marketing investment is expected to increase by about 100 basis points of net sales, supporting Celestial Seasonings, The Greek Gods and Earth’s Best.

Management did not provide traditional fiscal 2027 guidance, saying the ongoing strategic review, planned divestiture and related one-time costs make such guidance challenging. The company also did not hold a question-and-answer session, citing ongoing lender discussions and the pending sale.

About The Hain Celestial Group (NASDAQ:HAIN)

The Hain Celestial Group, Inc NASDAQ: HAIN is a leading global producer and marketer of natural and organic branded products. The company operates through two principal segments—Grocery and Personal Care—offering a diversified portfolio that spans shelf-stable foods, snacks, beverages, condiments and natural personal care items. Its product lineup addresses growing consumer demand for clean-label, plant-based and ethically sourced offerings in everyday categories.

Within its Grocery segment, Hain Celestial markets well-known brands such as Celestial Seasonings teas, Earth's Best organic baby foods, Rudi's organic bakery items, Terra vegetable chips and Sensible Portions snacks.

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