Hain Celestial Q3 FY25 slides: sales decline 11% amid leadership transition

Introduction & Market Context

The Hain Celestial Group Inc (NASDAQ:HAIN) released its third-quarter fiscal year 2025 financial results presentation on May 7, revealing continued challenges for the better-for-you food and personal care products company. The presentation comes as Hain’s stock has fallen to $2.77, down 4.48% in the most recent session, with premarket trading indicating further decline. The company is now trading near its 52-week low of $2.68, far below its 52-week high of $9.43.

Executive Summary

Hain Celestial reported net sales of $390 million for Q3 FY25, representing an 11% year-over-year decline, while organic net sales fell 5% to $374 million. The company announced two significant strategic developments: a leadership transition with Alison Lewis (JO:LEWJ) appointed as Interim President and CEO, and the initiation of a formal review of the company’s portfolio to maximize shareholder value.

Adjusted EBITDA decreased 23% to $34 million, with adjusted net income falling 46% to $6 million. The company revised its full-year guidance downward, now projecting organic net sales growth of -5% to -6% for fiscal 2025.

Quarterly Performance Highlights

Hain Celestial’s performance summary shows significant declines across key metrics compared to the same period last year:

As shown in the following chart of quarterly performance metrics:

North America continued to underperform, with organic net sales declining 10% to $204 million and adjusted EBITDA falling 38% to $17 million. The International segment showed marginal improvement with organic net sales increasing 0.5% to $170 million, though adjusted EBITDA still declined 10% to $22 million.

The segment results for North America reveal the extent of the challenges in the company’s home market:

By contrast, the International segment managed to achieve slight growth in organic net sales:

Looking at performance by product category, only Meal Prep showed positive growth at 1%, while other categories experienced significant declines:

Detailed Financial Analysis

Hain Celestial’s free cash flow turned negative in Q3 FY25 at -$2 million, compared to positive $30 million in Q3 FY24. The company has made progress in working capital management, with Days Payable Outstanding improving from 37 in FY23 to 61 in Q3 FY25, though still below the target of 70+. Days Inventory Outstanding improved slightly from 82 in FY23 to 79 in Q3 FY25, but remains well above the target of 55.

The following chart illustrates these cash flow and working capital metrics:

The company has continued to reduce its net debt, which decreased from $728 million in Q3 FY24 to $665 million in Q3 FY25. However, the leverage ratio has worsened from 3.9x to 4.2x during the same period, moving further from the company’s FY27 goal of 2-3x.

The net debt and leverage ratio trends are shown in this chart:

Strategic Initiatives

Hain Celestial identified several performance challenges in Q3 FY25, including underperformance in Snacks promotional activity, delayed timing on Earth’s Best formula recovery, service issues with Celestial Seasonings at the start of tea season, and pricing not keeping pace with inflation.

The company outlined five key drivers to shift performance:

1. Simplifying the business

2. Accelerating brand renovation and innovation

3. Implementing strategic revenue growth management & pricing

4. Driving productivity and working capital reduction

5. Strengthening digital capabilities

Hain highlighted its in-region production strategy as a competitive advantage that makes the company less susceptible to tariffs:

Forward-Looking Statements

Hain Celestial revised its full-year guidance for FY25, now expecting:

• Organic net sales growth of approximately -5% to -6%
• Adjusted EBITDA of approximately $125 million
• Gross margin of approximately 21.5%
• Free cash flow of approximately $40 million

The revised guidance and quarterly sales trend are illustrated in this chart:

The company emphasized its positioning as a pure-play better-for-you company with a solid business foundation and strong productivity delivery. Management expressed confidence that the key drivers mentioned earlier, along with the formal portfolio review process, will help maximize shareholder value going forward.

This presentation follows Hain’s Q1 FY25 earnings call in November 2024, where the company had reported a similar 5% decline in organic net sales but expressed optimism about stronger performance in the latter half of the fiscal year. The continued challenges in Q3 suggest that the anticipated recovery has not yet materialized, placing additional pressure on the company’s strategic initiatives to deliver results.

Full presentation:

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