HAIN Stock Falls 20% After Reporting Q2 Loss & Y/Y Sales Decline

Core Insights - Hain Celestial Group, Inc. reported a decline in both top and bottom lines for Q2 fiscal 2026, with net sales of $384.1 million, a 6.7% year-over-year decrease, although it surpassed consensus estimates [3][10] - The adjusted loss per share was 3 cents, down from adjusted earnings of 8 cents in the same quarter last year [3] - The stock price fell 19.5% due to significant volume declines, particularly in snacks and baby categories, and near-term margin pressures [1][10] Financial Performance - Adjusted gross profit decreased to $74.9 million from $94.3 million year-over-year, with the adjusted gross margin contracting 340 basis points to 19.5% [4] - SG&A expenses were reduced to $60.9 million, down 13.2% from $70.2 million in the prior-year quarter, reflecting lower employee-related expenses [5] - Adjusted EBITDA was $24.3 million, a 35.9% decline from $37.9 million in the prior-year quarter, with an adjusted EBITDA margin of 6.3% [6] Segment Performance - North America segment net sales fell 13.7% year-over-year to $197.8 million, with organic net sales down 10.3% due to weakness in snacks and baby formula [7] - International segment net sales increased 2.3% year-over-year to $186.3 million, benefiting from foreign currency tailwinds, although organic net sales slipped 2.7% [10][11] - In the Snacks category, organic net sales plunged 19.9% year-over-year, while Baby & Kids sales fell 14.2% [13] Cash Flow and Debt Management - The company ended the quarter with cash and cash equivalents of $68 million and long-term debt of $0.4 million [16] - Net cash provided by operating activities was $37 million, up from $30.9 million in the prior-year period, with free cash flow inflow of $30 million compared to $24.5 million last year [16] Strategic Outlook - The company is not providing numeric guidance for fiscal 2026 due to uncertainties related to the strategic review and the divestiture of the North American Snacks business, expected to close in February [19] - Post-divestiture, the North American portfolio is anticipated to generate a gross margin above 30% and an EBITDA margin in the low-double digits [20] - Hain Celestial aims to strengthen its financial position through initiatives to stabilize sales, improve profitability, optimize cash flow, and reduce debt [22]