Hain Celestial(US:HAIN)2025-09-15 13:02Financial Data and Key Metrics Changes - The company reported an organic net sales decline of 11% year over year for Q4 2025, driven by lower sales in both North America and international segments [25][28] - Adjusted gross margin decreased to 20.5%, a decline of approximately 290 basis points year over year, attributed to lower volume mix, cost inflation, and higher trade spend [25][27] - Adjusted net loss was $2 million, or $0.02 per diluted share, compared to adjusted net income of $11 million, or $0.13 per diluted share in the prior year [27] - Adjusted EBITDA was $20 million, down from $40 million a year ago, with an adjusted EBITDA margin of 5.5% [27] Business Line Data and Key Metrics Changes - In North America, organic net sales declined 14% year over year, primarily due to lower sales in snacks and meal preparation products [28] - Adjusted gross margin in North America was 19.2%, a decrease of 340 basis points, with adjusted EBITDA of $10 million compared to $21 million in the prior year [28] - International organic net sales declined 6%, with adjusted gross margin at 22.1%, approximately 270 basis points below the prior year [29] Market Data and Key Metrics Changes - The snacks category saw organic net sales growth down 19% year over year, driven by velocity challenges and distribution losses [29] - The beverages category experienced a 3% decline in organic net sales, primarily due to softness in tea in North America [30] - The meal prep category's organic net sales growth was down 8%, mainly due to softness in oils and nut butters in North America [30] Company Strategy and Development Direction - The company is focused on a turnaround strategy that includes streamlining the portfolio, accelerating brand renovation and innovation, and enhancing digital capabilities [11][22] - A new regional operating model is being implemented to reduce complexity and improve decision-making speed [9][10] - The company plans to exit unprofitable or low-margin SKUs and is committed to reducing the number of tea blends from 91 to less than 55 over the next two years [12] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with Q4 performance, citing challenges in both North America and international segments [5][6] - The company is taking decisive actions to optimize cash, deleverage the balance sheet, and stabilize sales while improving profitability [22][24] - Management anticipates stronger top and bottom line performance in the second half of fiscal 2026 compared to the first half [34] Other Important Information - The company has taken $88 million in charges associated with the transformation program, with restructuring charges expected to reach $100 million to $110 million by fiscal 2027 [26] - Free cash flow in Q4 was an outflow of $9 million, compared to an inflow of $31 million in the prior year [31] - The company closed the quarter with cash on hand of $54 million and net debt of $650 million, having reduced net debt by $14 million in the quarter [32] Q&A Session Summary Question: How does the company manage reinvestment in the context of a strained balance sheet? - Management emphasized the need for financial flexibility and tough decisions to focus investments on high-return areas [38] Question: What are the differences between the current strategy and the previous Hain Reimagined program? - Management noted a shift towards decisive actions and a focus on innovation and local empowerment to drive growth [46][49] Question: What is the expected timeline for restructuring and CEO replacement? - The restructuring process is ongoing, with most changes effective between October 1 and November 1, while the CEO search is progressing in parallel with the strategic review [76][77]