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HAIN CELESTIAL GROUP INC (HAIN)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 FY2025 net sales were $394.6M, down 7% YoY, with adjusted EBITDA of $22.4M (5.7% margin) and GAAP diluted EPS of -$0.22; adjusted EPS was -$0.04. Gross margin expanded YoY to 20.7% (adjusted 20.8%) despite lower volumes. Sequentially, margins and EBITDA stepped down from Q4’s seasonal strength.
  • Management reaffirmed FY2025 guidance: organic net sales flat or better, adjusted EBITDA up mid-single digits, gross margin +≥125 bps, and ≥$60M free cash flow; EBITDA cadence expected 40%/60% first-half/back-half with sequential step-ups each quarter.
  • The quarter was pressured by a planned snacks promotion timing shift (from Q1 last year to Q3 this year), late-quarter infant formula supply recovery, and portfolio simplification. International margins improved; North America deleveraged on lower volume and inflation.
  • Near-term stock catalysts: Q3 snacks promotion reset, full infant formula supply across all sizes by end of Q2, e-commerce and Away-from-Home distribution gains, and brand campaigns (e.g., Garden Veggie, Celestial Seasonings).

What Went Well and What Went Wrong

What Went Well

  • Gross margin expansion and fuel delivery: consolidated gross margin rose 90 bps YoY to 20.7% (adjusted +20 bps to 20.8%), driven by productivity and improved promo efficiency. “The capabilities…have positioned us well for growth in the back half of FY25.”
  • International profitability: International adjusted EBITDA increased 17% YoY to $20.4M, with adjusted EBITDA margin up ~190 bps to 12.5% on productivity and improved promotional efficiency.
  • Channel expansion: Away-from-Home net sales grew double digits in both regions; e-commerce grew, with strong gains in pure-play for Celestial Seasonings, Garden Veggie, and Earth’s Best.

What Went Wrong

  • Top-line decline: net sales fell 7% YoY and organic net sales declined 5% (volume/mix -4 points, price -1), reflecting snacks promo timing shift, softness in private label spreads/drizzles, and ongoing personal care stabilization.
  • North America deleverage: NA adjusted EBITDA dropped from $18.7M to $12.5M (margin 5.4%), pressured by lower volumes and inflation despite productivity.
  • Cash outflow and leverage: free cash flow was -$16.5M (seasonally weakest quarter); net secured leverage rose to 3.9x, with management expecting leverage to be flat in Q2 then trend down in H2.

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Net Sales ($USD Millions)$438.0 $418.8 $394.6
GAAP Diluted EPS ($)-$0.54 -$0.03 -$0.22
Adjusted EPS ($)$0.13 $0.13 -$0.04
Gross Margin % (GAAP)N/A23.4% 20.7%
Adjusted Gross Margin %22.3% 23.4% 20.8%
Adjusted EBITDA ($USD Millions)$44.0 $39.5 $22.4
Adjusted EBITDA Margin %10.0% 9.4% 5.7%

Segment net sales and growth (Q1 FY2025):

SegmentNet Sales ($USD Millions)Reported Growth YoYFX ImpactOrganic Growth YoY
North America$231.1 -11.1% 0% -6.5%
International$163.5 -0.9% +2% -3.1%
Total$394.6 -7.2% +0.8% -5.1%

Category net sales and organic trends (Q1 FY2025):

CategoryNet Sales ($USD Millions)Reported Growth YoYOrganic Growth YoY
Snacks$99.5 -15.0% -8.7%
Baby & Kids$60.8 -3.0% -3.1%
Beverages$56.7 +1.0% +0.4%
Meal Prep$159.4 -4.0% -4.8%
Personal Care$18.3 -24.0% -10.7%

KPIs and balance sheet:

KPIQ4 2024Q1 2025
Cash from Operations ($USD Millions)$39.4 -$10.8
Free Cash Flow ($USD Millions)$30.7 -$16.5
Net Debt ($USD Millions)$689.8 $683.5
Net Secured Leverage Ratio (x)3.7x 3.9x
CapEx ($USD Millions)$8.7 $5.8
Days Payables Outstanding (DPO)52 55
Days Inventory Outstanding (DIO)79 80

Guidance Changes

MetricPeriodPrevious Guidance (Aug 27, 2024)Current Guidance (Nov 7, 2024)Change
Organic Net Sales GrowthFY2025Flat or better Flat or better Maintained
Adjusted EBITDA GrowthFY2025Mid-single digits Mid-single digits Maintained
Gross Margin ExpansionFY2025≥125 bps ≥125 bps Maintained
Free Cash FlowFY2025≥$60M ≥$60M Maintained
EBITDA CadenceFY2025N/A~40% H1 / ~60% H2; sequential step-ups in Q2–Q4 New color (cadence)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 & Q4 FY2024)Current Period (Q1 FY2025)Trend
Snacks promo timing & distributionQ3: “Savor Your Summer” multi-brand promo; Garden Veggie Flavor Burst #1 new BFY salty snack; expanding ACV and C-store distribution . Q4: Promo shifted from Q1 to Q3; expecting back-half acceleration .Q1: Promo shift materially dragged; without two drags, Garden Veggie and total snacks would have been up low-single digits; distribution gains continue (C-store up double digits) .Back-half acceleration expected; execution focus on feature/display and channel expansion .
Infant formula supply recoveryQ3: Supplier disruptions; stabilization required; Earth’s Best strong velocities where on shelf . Q4: Full recovery targeted by end H1 FY25; back-half growth expected .All formulations back in supply, sizes to be fully recovered by end of Q2; redundancies added (inventory and multi-location manufacturing) .Recovery underway; back-half growth catalyst .
Channel expansion (Away-from-Home, e-commerce, C-store)C-store count +42% in FY2024; Away-from-Home revenues grew double digits; e-commerce growth across key brands .Away-from-Home net sales grew double digits; e-commerce pure-play growth; fastest-moving BFY snacks in C-store; continued distribution gains .Positive structural tailwind; margin accretive .
Personal Care stabilizationAggressive SKU rationalization (62% of items; ~30% of category net sales), footprint consolidation (2 plants to 1), co-man reduction (~60%), targeting +1100 bps margin .Organic net sales -11% YoY; performance better than expected; stabilization continues per plan .Improving trajectory; margin uplift expected in H2 FY25 .
Non-dairy beverageStrength in Europe led FY2024 growth; new contracts secured; innovation in oat; Natumi share gains .Bag tea up low-single digits; nondairy beverage trends rebounded in October; new listings secured for H2 FY25 in Europe .Continuing growth with contract wins; supportive of back-half improvement .
Working capital & leverageFY2024 unlocked >1/3 of $165M target; DPO 52, DIO 79; net debt down $86M to 3.7x .DPO 55, DIO 80; net secured leverage 3.9x (seasonality); expect leverage flat Q2 then down through FY25 to mid-high 3s .Progress continues; leverage reduction resumes H2 .
Gross margin & productivityQ3 adjusted GM 22.3% (+90 bps YoY); fuel savings ahead of plan . Q4 adjusted GM 23.4% (+70 bps YoY) .Q1 adjusted GM 20.8% (+20 bps YoY); sequential GM to improve; back-half expansion vs prior year .Sequential build; back-half YoY expansion .

Management Commentary

  • “Our performance in the first quarter built upon the momentum from our foundational year… positioned us well for growth in the back half of FY25.” — Wendy Davidson, CEO
  • “We are pleased to reaffirm our fiscal 2025 guidance.” — Lee Boyce, CFO
  • “Adjusted EBITDA was $22 million… adjusted gross margin expansion… we continue to make progress in reducing net debt.” — Wendy Davidson
  • “Away from Home net sales grew double digits in both North America and international… e-commerce also grew… particularly strong growth in C-store.” — Wendy Davidson
  • “We expect EBITDA to step up sequentially in each of the second, third and fourth quarters.” — Lee Boyce

Q&A Highlights

  • Snacks trajectory: “Without those two drags in Q1, Garden Veggie would have been up low single digits and the overall snack category would have been up low single digits.” Distribution gains and master brand campaign to drive back-half acceleration.
  • Infant formula redundancy: All formulations in supply; all sizes by end of Q2; added inventory buffers and multi-site manufacturing qualification to ensure continuity.
  • Gross margin cadence: Sequential improvement through FY25; YoY expansion primarily back half as productivity ramps.
  • Consumer/macro dynamics: Europe/U.K. more acute inflation led to private label/trade-down and discounter shift; U.S. bifurcation with value-focused consumers shifting channels (club, mass) and premium shoppers sustaining demand.
  • Leverage path: Leverage flat in Q2 then trending down in H2; continued focus on working capital unlocking toward $165M target.

Estimates Context

  • S&P Global consensus estimates for EPS and revenue were unavailable at the time of analysis due to API request limits; therefore, beat/miss versus Street consensus cannot be assessed for Q1 FY2025. As a result, estimates comparisons are not included.
  • Given management’s reaffirmed FY2025 guidance and explicit back-half weighting of growth and EBITDA, sell-side models may need to reweight FY25 quarterly phasing toward Q3/Q4 for both revenue and margins.

Key Takeaways for Investors

  • Back-half setup intact: Expect sequential improvements and a Q3 inflection aided by snacks promotion reset, formula supply normalization, and brand campaigns; H2 carries 60% of FY EBITDA per management.
  • Margin trajectory: Despite Q1 volume pressure, adjusted gross margin expanded YoY and is guided to improve sequentially, with full-year gross margin +≥125 bps supported by productivity and RGM.
  • Watch channel expansion: Continued double-digit Away-from-Home growth and e-commerce gains, plus C-store distribution increases for Garden Veggie and Terra, are margin-accretive and should support mix.
  • Balance sheet discipline: Seasonal leverage uptick to 3.9x should reverse in H2; net debt already declined to $683.5M with working capital progress (DPO 55, DIO 80).
  • Category divergence: Beverages resilient; soups in the U.K. strong; personal care stabilizing with SKU rationalization and footprint consolidation; plant-based meat-free remains challenged but gaining share in core markets.
  • North America execution focus: Addressing deleverage via promo efficiency, feature/display rather than deep discounting, and expanded ACV; monitoring customer mix and inflation impacts.
  • Near-term trading implications: Q2 likely “flattish” organic sales; positioning ahead of Q3 promotional events and formula full availability may be key for timing exposure.