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Hain Celestial(HAIN) - 2025 Q3 - Earnings Call Transcript
2025-05-07 13:02
Financial Data and Key Metrics Changes - The company reported a 5% decline in organic net sales and adjusted EBITDA of $34 million, which is over 20% below last year's performance [14][22] - Adjusted gross margin fell 50 basis points to 21.8% in the third quarter, and adjusted EBITDA margin decreased by 140 basis points to 8.6% of net sales [22][24] - Free cash flow in the third quarter was an outflow of $2 million compared to an inflow of $30 million in the prior year [31] Business Line Data and Key Metrics Changes - In North America, organic net sales declined 10% year over year, primarily driven by lower sales in Snacks and Baby and Kids [25] - International organic net sales grew 0.5% in the quarter, led by growth in Meal Prep and Baby and Kids [26] - Snacks category saw a 13% decline in organic net sales year over year, while Baby and Kids experienced a 6% decline [28] Market Data and Key Metrics Changes - The North American segment accounted for 80% of the top line shortfall, with two-thirds attributed to Snacks [42] - The international segment is expected to improve sequentially in the fourth quarter due to pricing actions and new innovations [26] Company Strategy and Development Direction - The company has initiated a strategic review of its portfolio to maximize shareholder value, retaining Goldman Sachs as a financial advisor [10][62] - The focus is on simplifying operations, enhancing brand innovation, and improving revenue growth management [19][37] - The company aims to reduce overhead spending and strengthen digital capabilities to drive operational productivity [19][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged disappointing third-quarter results and emphasized the need for clarity, focus, and action moving forward [12][36] - The company expects organic net sales growth for the full year to decline approximately 5% to 6% and adjusted EBITDA to be around $125 million [35] - Management remains optimistic about the future, citing strong brand potential and a growing market for better-for-you products [36][84] Other Important Information - The company has taken $83 million in charges associated with its transformation program, with total charges expected to be between $115 million and $125 million by fiscal 2027 [23] - Interest costs fell 16% year over year to $12 million, driven by lower outstanding borrowings and reduced interest rates [24] Q&A Session Summary Question: Insights on Snacks and Infant Nutrition Categories - Management noted that 80% of the top line shortfall came from North America, with two-thirds from Snacks, and emphasized the need for improved execution and marketing [42][44] Question: Visibility and Forecasting Improvements - Management acknowledged the need for better forecasting and visibility, highlighting investments in the commercial team and digital capabilities [52][53] Question: Strategic Review Details - The strategic review will evaluate a broad range of options to enhance shareholder value, but specifics are not yet available as the process is still early [62] Question: Pricing Strategy in Current Environment - Management confirmed that pricing is under review and emphasized the importance of revenue growth management to address pricing execution issues [93][94] Question: Brand Positioning and Value Creation - Management stated that the focus will be on creating value through innovation and marketing, aiming to charge appropriate prices for their brands [78][79]
Mastercard's Cross-Border Surge And Pricing Actions Drive Analyst Optimism
Benzingaยท 2025-05-02 18:36
Core Viewpoint - JP Morgan analyst Tien-tsin Huang maintains an Overweight rating on Mastercard Inc. with a price target of $610, reflecting confidence in the company's growth potential and performance metrics [1][7]. Financial Performance - Mastercard reported fiscal first-quarter net revenues of $7.25 billion, a 14% increase, surpassing the analyst consensus estimate of $7.12 billion [1]. - Adjusted EPS rose 13% to $3.73, exceeding the analyst consensus estimate of $3.57 [1]. - Revenue yield was approximately 0.9 basis points ahead of expectations and increased by two basis points year-over-year, supported by acquisitions, currency volatility, and pricing [1]. Growth Outlook - The company anticipates mid-teens net revenue growth for the second quarter, compared to the $7.78 billion consensus estimate [4]. - For fiscal 2025, Mastercard expects low teen-digit revenue growth, against a consensus estimate of $31.51 billion [4]. - Huang projects rounded 12% foreign exchange neutral or organic revenue growth in 2025, with a slight decrease to 11% for 2026 [6]. Market Trends - Despite a leap year causing expected deceleration in volume growth, Mastercard achieved stable, mid-teens organic revenue growth in the first quarter [2]. - Cross-border growth decelerated slightly more than anticipated but remains comfortably in the mid-teens, with management expressing optimism about diversifying the high-margin cross-border business [3]. Pricing and Valuation - The price target of $610 is based on a 33 times multiple of Huang's calendar 2026 EPS, aligning with the current next-twelve-months multiple and ahead of its three-year average [7]. - The analyst noted that this multiple is justified by Mastercard's premium growth and pricing actions that mitigate near-term foreign-exchange-neutral or organic estimates [7]. Stock Performance - Mastercard's stock is currently up 1.96% at $557.09 [8].