Hain Celestial(HAIN) - 2025 Q3 - Quarterly Results

Executive Summary & Key Financial Highlights Hain Celestial reported disappointing Q3 FY25 results, with net sales down 11% and a $135 million net loss, announcing a CEO transition and strategic review - The company announced a CEO transition and a strategic review of its portfolio[2] - Management is focusing on five key drivers for improving value: simplifying the business, accelerating brand innovation, strategic revenue management, driving operational productivity, and strengthening digital capabilities[3] Q3 FY25 Financial Highlights vs. Prior Year (in millions) | Metric | Q3 FY25 | Q3 FY24 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $390M | $438M | -11% | | Organic Net Sales Growth | -5% | N/A | N/A | | Gross Profit Margin | 21.7% | 22.1% | -40 bps | | Adjusted Gross Profit Margin | 21.8% | 22.3% | -50 bps | | Net Loss | ($135M) | ($48M) | Widened | | Adjusted Net Income | $6M | $11M | -45.5% | | Loss per Diluted Share | ($1.49) | ($0.54) | Widened | | Adjusted EPS | $0.07 | $0.13 | -46.2% | Segment Performance Segment performance was mixed, with North America's organic net sales declining 10%, while International achieved 0.5% organic growth Segment Net Sales Performance (Q3 FY25 vs Q3 FY24, in millions) | Segment | Net Sales (Q3 FY25) | Reported Growth Y/Y | Organic Growth Y/Y | | :--- | :--- | :--- | :--- | | North America | $222M | -17.0% | -9.6% | | International | $168M | -1.4% | 0.5% | | Total | $390M | -11.0% | -5.3% | North America North America's organic net sales declined 10% due to lower snacks and baby & kids sales, resulting in a 37.9% drop in adjusted EBITDA to $17 million - Organic net sales decline of 10% was primarily driven by lower sales in snacks and baby & kids[10] - Adjusted EBITDA decreased to $17 million from $28 million in the prior year, with the margin contracting to 7.8% from 10.4%, driven by lower volume/mix and higher trade spend, partially offset by productivity[13] International International segment achieved 0.5% organic net sales growth from meal prep and baby & kids, despite a 10% drop in adjusted EBITDA to $22 million - Organic net sales grew 0.5% YoY, driven by growth in meal prep and baby & kids, and supply chain recovery from previous service issues[14] - Adjusted EBITDA decreased 10% to $22 million, with the margin falling to 13.2% from 14.4%, primarily driven by inflation and net pricing[16] Category Performance Category performance was generally weak, with Snacks declining 13% organically, while Meal Prep showed slight growth and Personal Care sales dropped Organic Net Sales Growth by Category (Q3 FY25 vs Q3 FY24) | Category | Organic Growth Y/Y | Key Drivers | | :--- | :--- | :--- | | Snacks | -13% | Lower promotion effectiveness, continued category softness | | Baby & Kids | -6% | Lapping lost formula sales, softness in pouches, SKU simplification | | Beverages | -7% | Channel mix shift in Europe, slow start to hot tea season | | Meal Prep | +1% | Growth in UK soup and North American yogurt | Financial Condition and Corporate Updates Free cash flow was negative $2 million, a significant decline, though total debt reduced to $709 million, and credit agreement amended for flexibility Key Balance Sheet and Cash Flow Metrics (in millions) | Metric | End of Q3 FY25 | Start of FY25 (June 30, 2024) | | :--- | :--- | :--- | | Total Debt | $709M | $744M | | Net Debt | $665M | $690M | | Metric | Q3 FY25 | Q3 FY24 | | Free Cash Flow | ($2M) | $30M | - Subsequent to the quarter end, the company amended its credit agreement to increase the maximum net secured leverage ratio to 4.75x through March 31, 2026, providing increased operational flexibility[22] Fiscal 2025 Guidance Hain Celestial revised its full-year fiscal 2025 guidance downwards, anticipating larger declines in organic net sales and lower adjusted EBITDA - Guidance was revised due to slower than anticipated volume recovery, a softening and volatile macroeconomic environment, and increased investment in promotional activities[23] Revised Fiscal 2025 Guidance | Metric | Revised FY2025 Guidance | | :--- | :--- | | Organic Net Sales Growth | Approx. -5% to -6% | | Adjusted EBITDA | Approx. $125 million | | Gross Margin | Approx. 21.5% | | Free Cash Flow | Approx. $40 million | Consolidated Financial Statements (Unaudited) This section presents unaudited consolidated statements of operations, balance sheets, and cash flows for Q3 FY25, detailing financial performance and position Consolidated Statements of Operations For Q3 FY25, the company reported net sales of $390.4 million and a net loss of $134.6 million, significantly impacted by impairment charges Q3 FY25 Consolidated Statement of Operations Highlights (in thousands) | Line Item | Q3 2025 | Q3 2024 | | :--- | :--- | :--- | | Net sales | $390,351 | $438,358 | | Gross profit | $84,650 | $96,671 | | Goodwill impairment | $110,251 | $- | | Operating loss | $(121,079) | $(27,901) | | Net loss | $(134,588) | $(48,194) | | Diluted loss per share | $(1.49) | $(0.54) | Consolidated Balance Sheets As of March 31, 2025, total assets were $1.84 billion, down from $2.12 billion due to reduced goodwill, with total liabilities at $1.15 billion Consolidated Balance Sheet Highlights (in thousands) | Line Item | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $44,425 | $54,307 | | Goodwill | $712,727 | $929,304 | | Total assets | $1,844,055 | $2,117,548 | | Total liabilities | $1,147,350 | $1,174,635 | | Total stockholders' equity | $696,705 | $942,913 | Consolidated Statements of Cash Flows For Q3 FY25, net cash from operating activities was $4.6 million, a significant decrease, resulting in negative free cash flow of $2.3 million Q3 FY25 Consolidated Statement of Cash Flows Highlights (in thousands) | Line Item | Q3 2025 | Q3 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $4,645 | $42,274 | | Purchases of property, plant and equipment | $(6,921) | $(12,034) | | Free cash flow | $(2,276) | $30,240 | Reconciliation of GAAP to Non-GAAP Measures This section reconciles non-GAAP financial measures to GAAP, adjusting for items like impairments and restructuring to provide a clearer view of operational performance - Non-GAAP measures are used to provide additional information on operational trends and for period-over-period comparisons, excluding items like acquisitions, divestitures, held for sale businesses, impairments, and restructuring costs[30][31] Reconciliation of Net Loss to Adjusted EBITDA (Q3 FY25, in thousands) | Description | Amount | | :--- | :--- | | Net loss (GAAP) | $(134,588) | | Depreciation and amortization | $10,455 | | Interest expense, net | $11,096 | | (Benefit) for income taxes | $(505) | | Stock-based compensation, net | $2,973 | | Goodwill impairment | $110,251 | | Long-lived asset and intangibles impairment | $24,012 | | Other adjustments (restructuring, litigation, etc.) | $8,921 | | Adjusted EBITDA (Non-GAAP) | $33,615 |