Hain Celestial earnings: Sales -7% as pricing and cost cuts build
- Hardik Shah
- 3 minutes ago
- 4 min read
TLDR
Revenue Strength: Net sales $368M (-7% reported; -6% organic); sequential improvement vs. Q4.
Margin Trends: Gross margin 18.5% (-220 bps); adjusted gross margin 19.5% (-120 bps). Adjusted EBITDA $20M.
Forward Outlook: No numeric FY26 guide; management expects stronger 2H and positive free cash flow.
Business Overview
Hain Celestial is a global health-and-wellness Consumer Packaged Goods (CPG) company spanning Snacks, Baby & Kids, Beverages, and Meal Prep, with brands such as Garden Veggie Snacks, Celestial Seasonings teas, Greek Gods yogurt, and Ella’s Kitchen baby foods. Products sell across retail, e-commerce, and away-from-home in 70+ countries, with reporting segments in North America and International.
Hain Celestial earnings
Revenue:
Net sales: $367.9M, -7% YoY reported; -6% organic (volume/mix -7 pts, price +1 pt).
By segment (reported / organic): North America $204M (-12% / -7%); International $164M (0% / -4%).
Margins & Profitability:
Gross margin: 18.5% (-220 bps); Adjusted gross margin: 19.5% (-120 bps). Drivers: lower volume/mix, inflation; partly offset by productivity and pricing/trade efficiencies.
Adjusted EBITDA: $19.7M vs. $22.4M LY; Adjusted EPS: -$0.08 (GAAP EPS -$0.23).
SG&A: $66M, down ~8% YoY as cost-takeout actions begin to flow through.
Cash & Leverage:
Free cash flow: -($13.7M) in Q1 (seasonal), better than LY. Cash: ~$48M. Net debt: $668M; secured leverage: 4.8x (below 5.5x covenant).
Drivers & Mix:
Pricing up ~1 pt; volume/mix down 7 pts. Inflation still a headwind; productivity savings and trade efficiency offset part of pressure.
“First-quarter results were in line with expectations… with building blocks in place to drive improved trends in the back half.” — Alison Lewis, Interim CEO.
Forward Guidance
No numeric FY26 revenue/EPS guidance; positive free cash flow expected. 2H stronger than 1H on cost cuts, pricing/RGM (Revenue Growth Management), and innovation support.
Risks & Opportunities:
Opportunities: Pricing actions across every category; >$60M FY26 productivity pipeline; SG&A realignment (12% people-related reduction targeted) to compound in 2H.
Risks: Category softness in U.K. baby purees; inflation; FX; competitive dynamics; ongoing strategic review may create timing uncertainty.
“We’re not providing numeric guidance… we still expect positive free cash flow and stronger second-half performance.” — Lee Boyce, CFO.
Operational Performance
Cost & Execution:
SG&A reduced; restructuring underway (charges taken; benefits to ramp through year). Trade spend rate improved ~40 bps. Working-capital actions lowered North America inventory ~10% vs. Q4.
Segment Performance Snapshot
North America: Organic sales -7%; Adjusted GM 22.7% (+200 bps); Adj. EBITDA $17M (+37%) — productivity + pricing offset volume/mix pressure.
International: Organic sales -4%; Adj. GM 15.7% (-530 bps); Adj. EBITDA $13M (-38%) on lower volume/mix and inflation. Recovery expected in 2H (Ella’s, ops efficiency, RGM).
Market Insights
Retailer behavior: Heightened focus on ROI of trade and promo; Hain pruning low-ROI events and shifting to digital-first marketing with positive ROAS (Return on Advertising Spend).
Category trends: U.K. wet baby food softness post negative media coverage; tea in North America showing growth with wellness innovation; meat-free softness in U.K.; yogurt strength in North America.
Private label: Limited share shifts in Hain’s core categories vs. historical downturns; better-for-you value props help defend brands.
Consumer Behavior & Sentiment
Consumers remain value-seeking: more trips, lower spend per trip; shifts to value channels (club, mass, dollar) and to SKUs with accessible price points. Hain is leaning into price-pack architecture and premiumization to preserve value perception while broadening entry points.
Strategic Initiatives
Portfolio simplification: Exit of North America meat-free; targeting ~30% SKU reduction in North America by FY27 to unlock supply-chain and shelf productivity. Strategic review (with Goldman Sachs) evaluating further streamlining.
Renovation & Innovation:
Garden Veggie relaunch (avocado oil, recipe upgrades, new sweet-potato straw, refreshed packaging); early velocity improvement in multi-packs and convenience channel.
Greek Gods: club expansion (48-oz), single-serve rollout; dollar sales up mid-teens.
Ella’s Kitchen: Nutty Blends and “Kids” range (10 SKUs) slated for back half. Earth’s Best secured Clean Label Project Purity Award; baby registry sponsorship to support funnel.
Joya: higher-protein plant-based beverages; RTD (ready-to-drink) launch.
RGM & Pricing: Pricing rolling through tea and baby; acceleration in meal prep and snacks (price/pack, premiumization). Trade spend down 40 bps YoY in Q1.
Digital & Demand Gen: Digital-first marketing, CRM (“Earth’s Festies”), and Ibotta performance programs to drive penetration and incrementality.
“We’re executing our five actions to win—streamlining the portfolio, renovating brands, RGM, productivity, and digital—while deleveraging.” — Alison Lewis.
Capital Allocation
Debt & Liquidity: Net debt $668M; >50% of loan facility hedged at ~7.1% fixed; priority on deleveraging to ≤3x over time.
Buybacks/Dividends: No updates disclosed this quarter; cash use prioritized for debt paydown and selective brand/innovation investment.
The Bottom Line
2H setup: Cost reductions, pricing/RGM, and stepped-up marketing/innovation support a back-half improvement; watch for stabilization in Snacks and recovery in U.K. Baby.
Mix & margins: North America margin expansion despite top-line pressure is a proof point; International margin recovery is the swing factor.
Balance sheet: Leverage remains elevated but manageable (4.8x), with FCF expected to turn positive for FY26—deleveraging is a central theme.
Valuation context and peer multiples weren’t provided by management; investors should anchor on the cadence of sequential revenue moderation, margin mix improvement, and cash generation as key near-term checkpoints.
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