HAIN Reports Q4 Loss During Portfolio Overhaul

Overview of Hain Celestial Group's Q4 Fiscal 2025 Performance

The Hain Celestial Group, Inc. recently released its fourth-quarter fiscal 2025 results, revealing a decline in both revenue and earnings compared to the same period last year. The company also fell short of analyst expectations on both fronts, highlighting ongoing challenges in its business operations.

Despite these difficulties, Hain Celestial is implementing a comprehensive turnaround strategy aimed at streamlining its operations and refining its product offerings. The plan emphasizes key categories such as Snacks, Baby & Kids, Beverages, and Meal Prep, which are seen as critical to the company’s long-term success.

To unlock value for shareholders, the company has initiated a thorough portfolio review. This includes cost reduction efforts, simplifying its distribution network, and enhancing digital capabilities to improve market execution. Additional goals include accelerating innovation, maintaining disciplined pricing strategies, and improving supply-chain productivity and working-capital efficiency.

Financial Performance Highlights

In the fourth quarter, Hain Celestial reported an adjusted loss of two cents per share, missing the Zacks Consensus Estimate of four cents. The bottom line declined significantly from 13 cents in the previous year’s quarter. Net sales came in at $363.3 million, falling short of the estimated $375 million by nearly $12 million. This represents a 13.2% year-over-year decline in total sales, with organic sales dropping 10.8%.

The drop in organic net sales was primarily driven by an 11-point decrease in volume/mix, with pricing remaining stable. Adjusted gross profit for the quarter was $74.3 million, down 24.1% from the previous year. The adjusted gross margin contracted by 290 basis points to 20.5%, meeting internal projections.

SG&A expenses were $67.4 million, a 6.7% decrease from the prior year’s $72.3 million. However, as a percentage of net sales, this rose to 18.6% from 17.9% in the same period last year. Adjusted EBITDA dropped to $19.9 million, a 49.7% decline from $39.5 million in the prior year. The adjusted EBITDA margin fell to 5.5%, down 390 basis points year over year.

Segment Performance

The North America segment saw a significant decline in net sales, falling 20.8% to $205.8 million, below the expected $225.3 million. Organic net sales dropped 14.4% due to weaker snack sales and softness in meal prep. Adjusted gross profit for the region fell 32.6% to $39.5 million, with the adjusted gross margin declining to 19.2%. Adjusted EBITDA was $10.4 million, down from $20.9 million, largely due to lower volume/mix and increased trade spending.

The International segment experienced a 1.0% decline in net sales to $157.6 million, slightly exceeding the estimated $158.8 million. Organic net sales fell 5.9% due to weakness in meal prep and beverages. Adjusted gross profit dropped 11.7% to $34.8 million, while the adjusted gross margin fell to 22.1%. Adjusted EBITDA decreased 22.5% to $20.9 million, with the margin declining to 13.3%.

Category Sales Insights

In the Snacks category, organic net sales dropped 19.1%, reflecting ongoing challenges in sales velocity and distribution losses. In the Baby & Kids category, organic net sales fell 9.3%, driven by weaker puree sales in North America and international markets. Beverages saw a 3.1% decline in organic net sales, attributed to weaker North American tea sales and private-label non-dairy beverages in Europe.

Meal Prep sales declined 7.6%, impacted by lower oil and nut butter sales in North America and meat-free products in the U.K., despite growth in North American yogurt.

Stock Performance and Financial Position

Hain Celestial’s stock has gained 25.7% over the past three months, outperforming the industry’s 2.5% decline. The company ended the quarter with $54.4 million in cash and cash equivalents, long-term debt of $697.2 million, and total shareholders’ equity of $475 million. Net cash used in operating activities was $2.6 million during the quarter.

Better-Ranked Stocks to Consider

Investors looking for alternatives may consider stocks with better rankings, such as Celsius Holdings, Inc. (CELH), Post Holdings (POST), and Chefs' Warehouse Holdings, LLC (CHEF). These companies have shown strong performance and positive earnings surprises in recent quarters, indicating potential for future growth.