Hain Celestial(HAIN)2024-11-07 20:39Financial Data and Key Metrics Changes - Organic net sales declined by 5% year-over-year, similar to the decline rate in the fourth quarter of 2024, driven by a 4-point decrease in volume mix and a 1-point decrease in price [34][39] - Adjusted EBITDA for the first quarter was 24 million a year ago, with an adjusted EBITDA margin of 5.7% [35][39] - Adjusted gross margin increased to 20.8%, up approximately 20 basis points year-over-year, driven by productivity improvements [35][39] Business Line Data and Key Metrics Changes - Snacks category faced challenges due to a promotional event shift, resulting in a decline, but Garden Veggie saw mid-single-digit TDP growth [20][21] - Baby & Kids segment showed improvement with the recovery of Earth's Best infant formula, with online sales growing double-digits [23][24] - Beverage category saw low-single-digit growth in Celestial Seasonings bag tea, with expectations for improved consumption due to marketing shifts [26][27] Market Data and Key Metrics Changes - North America organic net sales declined 6% year-over-year, primarily due to lower sales in Snacks and Meal Prep [39] - International organic net sales declined 3%, driven by lower sales in Meal Prep and Baby & Kids, but adjusted EBITDA increased by 17% [41] - Free cash flow was an outflow of 7 million in the prior year, reflecting working capital impacts [42] Company Strategy and Development Direction - The company is focused on its Hain Reimagined strategy, emphasizing brand portfolio simplification and operational efficiency to drive growth [11][12] - Key initiatives include channel expansion in away-from-home and e-commerce, with double-digit growth in both channels [15][16] - The company aims to enhance household penetration for key brands and increase the contribution from new products in its innovation pipeline [16][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the pivot to growth in the second half of fiscal 2025, driven by promotional timing shifts and recovery in infant formula supply [10][45] - The macro environment remains challenging, but there is a growing consumer interest in better-for-you products [48][49] - The company expects to achieve flat or better organic net sales for fiscal 2025, with adjusted EBITDA growth in the mid-single-digit percentage range [45][46] Other Important Information - The company has taken 115 million and 6 million in the quarter, with a long-term goal to lower leverage to 3 times adjusted EBITDA or less [43][44] Q&A Session Summary Question: Thoughts on overall category performance in snacking - Management noted that known promotional shifts impacted quarter one, but confidence remains for the back half of the year due to substantial known programs [52][53] Question: Outlook for Baby's formula and supply chain redundancies - Management confirmed that Earth's Best formula is a key growth vehicle, with supply restored across all formulations and redundancies built into inventory and manufacturing [59][60] Question: Consumer behavior in North America and Europe - Management highlighted a shift to private label in Europe, while in the U.S., consumers with discretionary income lean towards premium products, impacting shopping behavior [69][72]