Executive Summary

Q3 2024 was mixed: net sales fell 3.7% year over year to $0.438B, but adjusted EBITDA rose 17.5% to $43.8M and adjusted gross margin expanded 90 bps to 22.3% .
Management cut FY2024 guidance: organic net sales now -3% to -4% (from +≈1%), adjusted EBITDA $150–$155M (from $155–$160M), free cash flow reaffirmed at $40–$45M; drivers were infant formula supply shortfalls, Snacks execution, and slower Personal Care stabilization .
Cash generation and de‑leveraging were bright spots: operating cash flow $42.3M, free cash flow $30.2M, net debt $728.0M, net secured leverage 3.9x; management expects a modest leverage tick-up in Q4, returning to “high‑3s” by FY2025 .
Near‑term stock catalysts: evidence of infant formula recovery, Terra distribution expansion, and sustained margin/cash flow execution; management emphasized “85% of our business delivered 3% growth year‑to‑date” and confidence in “Hain Reimagined” despite top‑line softness .

What Went Well and What Went Wrong

What Went Well

Gross margin and EBITDA improved: adjusted gross margin 22.3% (+90 bps YoY) and adjusted EBITDA $43.8M (+17.5% YoY), driven by productivity, pricing, and reduced SG&A .
Cash flow and leverage: operating cash flow $42.3M (vs $29.0M prior year), free cash flow $30.2M (vs $21.6M), net secured leverage down to 3.9x and net debt reduced since FY start .
Improved supply and execution: in‑stock rates >94%, up 130 bps vs Q2 and 400 bps vs peers; management: “we remain confident in our ability to reach the full potential of our Hain Reimagined strategy” .

What Went Wrong

Top‑line decline and NA weakness: consolidated net sales -3.7% YoY; North America -6.5% on Personal Care (-480 bps drag) and infant formula (-70 bps), partially offset by Beverages .
Infant formula supply shortfalls: Perrigo shutdowns impacted Earth’s Best; management relegated formula to “stabilize” bucket and pushed recovery into 2H 2024 .
Guidance cut: FY2024 organic net sales, EBITDA lowered; execution in Snacks distribution expansion “short of expectations,” and Personal Care stabilization taking longer than planned .

Financial Results

Consolidated performance (sequential comparison)

Metric	Q1 2024	Q2 2024	Q3 2024
Net Sales ($USD Billions)	$0.425	$0.454	$0.438
Diluted EPS (GAAP, $)	-$0.12	-$0.15	-$0.54
Adjusted EPS (Non-GAAP, $)	-$0.04	$0.12	$0.13
Gross Margin % (GAAP)	19.7%	22.5%	22.1%
Adjusted Gross Margin %	20.5%	23.5%	22.3%
Adjusted EBITDA Margin %	5.7%	10.4%	10.0%
Net Loss Margin % (GAAP)	-2.4%	-3.0%	-11.0%

Year-over-year snapshot

Metric	Q3 2023	Q3 2024
Net Sales ($USD Billions)	$0.455	$0.438
Diluted EPS (GAAP, $)	-$1.29	-$0.54
Adjusted EPS (Non-GAAP, $)	$0.08	$0.13
Gross Margin % (GAAP)	21.4%	22.1%
Adjusted Gross Margin %	21.4%	22.3%
Adjusted EBITDA Margin %	8.2%	10.0%

Segment breakdown (Q3 2024)

Segment	Net Sales ($M)	YoY %	Adjusted Gross Margin %	Adjusted EBITDA ($M)	Adjusted EBITDA Margin %
North America	$268.1	-6.5%	22.2%	$27.9	10.4%
International	$170.3	+1.0%	22.4%	$24.5	14.4%

Category KPIs (Q3 2024)

Category	Net Sales ($M)	YoY Growth	FX Impact
Snacks	$111.2	-0.4%	+0.3%
Baby & Kids	$64.3	-4.0%	+1.7%
Beverages	$68.4	+6.7%	+0.7%
Meal Prep	$165.7	-2.1%	+2.2%
Personal Care	$28.8	-33.5%	+0.1%

Cash and leverage (Q3 2024)

Metric	Q3 2024
Operating Cash Flow ($M)	$42.3
Free Cash Flow ($M)	$30.2
Net Debt ($M)	$728.0
Net Secured Leverage (x)	3.9x

Non-GAAP adjustments were significant (e.g., $49.4M intangibles & long‑lived impairments; productivity/transformation costs; litigation; plant closure and consolidation costs), underpinning adjusted margins and EPS improvements versus GAAP .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Organic Net Sales	FY 2024	≈+1% YoY (revised in Q2)	-3% to -4% YoY	Lowered
Adjusted EBITDA ($M)	FY 2024	$155–$160	$150–$155	Lowered
Free Cash Flow ($M)	FY 2024	$40–$45	$40–$45	Maintained
Gross Margin Expansion (bps)	FY 2024	+50–100 bps (Q2 commentary)	Up to +50 bps (Q3 commentary)	Lowered

Management cited: infant formula supplier did not deliver commitments; Snacks distribution expansion execution short of expectations; Personal Care stabilization requiring deeper SKU/footprint actions .

Earnings Call Themes & Trends

Topic	Q2 2024 (Previous Mentions)	Q1 2024 (Previous Mentions)	Q3 2024 (Current Period)	Trend
Supply chain reliability	Sequential improvement; productivity offsets inflation; international margin gains	Building end‑to‑end capabilities; working capital improvements	In‑stock >94% (+130 bps vs Q2; +400 bps vs peers)	Improving
Infant formula	Expected 2H recovery; drag in Q2	Industry supply constraints; recovery planned for 2H	Supplier shutdowns; recovery “beginning in 2H 2024”; moved to stabilize bucket	Stabilization delayed
Snacks execution	Channel expansion (10k C‑stores), Flavor Burst launch	Innovation pipeline; omnichannel support	Garden Veggie strong; Terra distribution rebuilding; execution “short of expectations”	Mixed
Personal Care	Pull‑forward focus actions; top‑line drag expected	Stabilization work; e‑commerce growth	62% SKU reduction; consolidate to one plant; ~11pt margin improvement targeted	Restructuring
Beverages (nondairy, tea)	International nondairy growth; Celestial share gains	Tea & nondairy momentum; brand campaigns	Beverages +6.7% YoY; Celestial Seasonings growth continues	Improving
Working capital	DPO/DIO improvement; leverage down to 4.2x	Payables and inventory optimization initiated	DPO 46 (from 37), DIO 77 (from 82); leverage 3.9x	Improving
FX/macro	FX tailwind reduced; revised guidance	European private label resilience; NA behavior normalizing	FX contributed +1.3 pts to organic net sales; macro still mixed	Mixed

Management Commentary

“85% of our business delivered 3% growth year‑to‑date, and we are aggressively working to accelerate growth in the balance of our portfolio… We remain confident in our ability to reach the full potential of our Hain Reimagined strategy.” — Wendy Davidson, CEO .
“Fiscal third quarter results were below our expectations and we are revising our guidance… infant formula did not recover as expected… Snacks execution did not meet our standards… Personal Care stabilization is taking longer than expected.” — Lee Boyce, CFO .
“For the third quarter, Hain in‑stock rates were over 94%, increasing 130 basis points from quarter 2 and 400 basis points better than our peer set.” — Wendy Davidson .
“We generated third quarter cash from operating activities of $42 million… CapEx was $12 million… net leverage ratio of 3.9x… expect net leverage to tick up modestly in the fourth quarter and the first quarter of fiscal year ’25 before ending fiscal ’25 in the high 3s.” — Lee Boyce .

Q&A Highlights

Snacks distribution and private label sensitivity: Garden Veggie velocity strong; Terra rebuilding distribution; category less private‑label penetrated (<15%); pricing positioned as “affordable premium” .
Infant formula classification and outlook: moved to stabilized due to assured supply and shelf re‑earn; recovery inventory on hand covers FY outlook; broader recovery expected in 2H 2024 .
Personal Care strategy: aggressive SKU cuts (62%), consolidation to single facility and fewer co‑mans (‑60%); targeted ~11pt margin improvement by 2H FY2025 .
Margin cadence: implied Q4 margin step‑down reflects volume deleverage, mix (formula), and lapping a prior year international one‑time benefit; productivity savings remain on track .
Channel expansion: >10,000 new C‑store placements; foodservice wins; away‑from‑home growth margin‑accretive .

Estimates Context

Wall Street consensus (S&P Global) for Q3 2024 EPS and revenue was unavailable at the time of query, so we cannot assess beats/misses relative to Street estimates. As a result, estimate comparison columns below are labeled N/A.
Given the guidance cut (organic net sales, EBITDA), Street models likely need to reduce FY2024 revenue and EBITDA assumptions and temper gross margin expansion expectations (from 50–100 bps to “up to 50 bps”) .

Metric	Q3 2024 Actual	Q3 2024 Consensus	vs Consensus
Net Sales ($USD Billions)	$0.438	N/A	N/A
Adjusted EPS ($)	$0.13	N/A	N/A
Adjusted EBITDA ($M)	$43.8	N/A	N/A

Key Takeaways for Investors

Margin and cash discipline are working: adjusted gross margin +90 bps YoY; adjusted EBITDA +17.5%; FCF strong; deleveraging ongoing .
Top‑line headwinds persist in North America (Personal Care, infant formula), necessitating a more conservative FY2024 outlook and Street model resets .
Execution watch‑items: infant formula recovery (supplier performance), Terra distribution expansion, and Personal Care stabilization; these will drive sentiment and multiple .
International remains a ballast: modest net sales growth (+1%), stronger adjusted margins and EBITDA, aided by FX and productivity; Beverages solid .
Channel expansion and innovation are tangible levers: Flavor Burst ramp, C‑store and foodservice penetration; sustained support should bolster Snacks trajectory into FY2025 .
Near‑term trading setup: watch Q4 margin cadence (mix, lapping one‑time), cash conversion/working capital progress, and updates on FY2025 leverage path to “high‑3s” .
Medium‑term thesis: if Hain Reimagined continues to deliver fuel (productivity, working capital) and the “stabilize” bucket normalizes, the portfolio can pivot back to growth with improved mix/returns; monitor non‑GAAP adjustments’ trajectory for cleaner GAAP/adjusted convergence .

HAIN CELESTIAL GROUP INC (HAIN)·Q3 2024 Earnings Summary