Q1 2027 The Hain Celestial Group Earnings Conference Call - HAIN CELESTIAL GROUP INC

Explicit Guidance:

• No formal numerical guidance provided for FY2027 or FY2028 revenue, earnings, or cash flow due to pending international divestiture and capital structure discussions.
• Pro Forma Financials (Post-Completion): Management expects the North American business, once fully aligned and the international sale closed, to achieve a pro forma gross margin of >30% and adjusted EBITDA margins in the low double digits.
• Cost Reduction Targets: Full realization of $16 million in annualized SG&A cost improvements is expected by the first half of fiscal 2028 (majority of actions completed during FY2027).
• Debt Maturity: Specific focus on addressing debt maturities in December (2026).

Business-Segment Outlook:

• North America: Expectation that the "Greek Gods" brand will return to its historical growth trajectory once temporary supply disruptions and weather-related headwinds pass. Focus on accelerating renovation and innovation for core brands.
• International: "Ella's Kitchen" returned to growth (high single-digit sales increase); management intends to build on this momentum for the remainder of the fiscal year.
• Product Launches: International innovation pipeline includes 27 new SKUs listed in Q1; future launches expected to support distribution (e.g., Hartley's high protein jelly, Yorkshire Provender casseroles, New Covent Garden lunch pot).
• Business Divestitures:
  • Snacks (NA): Sale to Aurelius pending credit agreement amendment; transaction aims to create a focused North America business.
  • Personal Care: Decision made to wind down the personal care business due to subscale status and lack of attractive growth investment requirements.

Market and Competitive Outlook:

• Demand Trends: Consumer demand expected to increase; focus on driving commercial execution and innovation to support sustained category growth.
• Pricing & Volume: In Q1, organic net sales declined due to volume/mix weakness (tea, spreads/drizzles, meal prep); management prioritizes volume recovery while applying selective pricing in the international segment.
• Share Shifts:
  • Wellness (T): Gained share to 18% of the category.
  • Ella's Kitchen: Maintained or grew market share in international core brands.
  • Greek Gods: Gained market share despite temporary headwinds.
• Distribution: Continued expansion in baby and kids distribution channels; retailer support expected to secure additional distribution for new international innovations.

Macro / Industry Outlook:

• Inflation & Costs: Elevated energy costs (well above historical levels), freight, and packaging costs expected to continue pressuring results; timing and pace of normalization remain uncertain.
• Supply Chain: Temporary supply disruptions in yogurt and warm weather impacts (hot tea) resolved; supply chain issues now "behind us."
• Regulatory: Final regulatory approval for the international sale to Aurelius received; closing conditional on credit agreement amendment by October 12, 2026.

Strategic Initiatives:

• Portfolio Simplification: Concentrating resources on core brands and strongest categories; completed removal of $25 million in stranded overhead costs from the NA snacks sale (ahead of schedule).
• Brand Modernization: Comprehensive restages for Celestial Seasonings and Earth's Best to modernize packaging/communications; commercial benefits expected to build in future quarters.
• Digital Transformation: Core businesses growing faster than categories on largest pure-play e-commerce customer; T and Earth's Best baby/kids platforms growing >30% YoY on these platforms.
• Capital Structure: Active discussions with lenders regarding capital structure management and all paths to reduce debt.
• International Sale: Pursuing path forward to close sale to Aurelius; proceeds intended to reduce debt.

Risks and Headwinds to Outlook:

• Transaction Uncertainty: Sale of international business is conditional; if the credit agreement amendment by October 12, 2026, is not satisfied, the transaction path may change.
• Cost Inflation: Energy, freight, and packaging costs remain volatile and could pressure margins.
• Category Headwinds: Highly competitive baby/kids segments and softness in meal prep/spreads/drizzles categories.
• Execution Risk: Realization of pro forma margin improvements and cost savings depends on successful completion of the international sale and full execution of SG&A realignment.
• Debt Maturity: December credit facility maturity presents an immediate liquidity and refinancing risk.

Management Tone on the Future:

• Cautious Optimism: Tone reflects progress on strategic simplification and cost alignment but is heavily constrained by unresolved capital structure issues and pending M&A.
• Hedges: Management explicitly states they "remain in discussions" and will "provide updates when we have material information," withholding specific numerical guidance.
• Focus: Emphasis on "financial position" and "survival/stabilization" rather than aggressive growth expansion.
• Confidence: High confidence in the fundamental turnaround of specific core brands (Greek Gods, Ella's Kitchen) but low visibility on near-term aggregate financial results due to the pending sale.

Miscellaneous:

• No Q&A session conducted due to ongoing discussions with lenders and pending international sale.
• Financial Position: Cash on hand $63 million; Net debt $523 million; Net leverage 5.3x.
• Innovation Rate: International innovation renewal rate reached 14% (9th consecutive quarter of improvement).
• Brand Performance: "Greek Gods" grew mid-single digits YoY; "Ella's Kitchen" grew high single digits YoY.