EPS of $-1.49 decreased by 175.9% from previous year
Gross margin of 21.7%
Net income of -134.59M
""Our third quarter results are far short of expectations, and our full year results will not be where we expected to finish."" - Lee Boyce
The Hain Celestial Group Inc (HAIN) QQ3 2025 Results: Strategic Reset Underway as North America Nutritional Snacks Drag Returns and Portfolio Review Initiates Value Creation
Executive Summary
The Hain Celestial Group’s fiscal third quarter of 2025 (quarter ended 2025-03-31) delivered a material profits deterioration amid a 5% sequential decline in organic net sales and a $34 million adjusted EBITDA, more than 20% below the prior year, with net income of -$134.6 million and EPS of -$1.49. The quarter was characterized by a pronounced weakness in North America, especially Snacks and Earth’s Best formula, alongside inflationary pressure and higher trade investment that outpaced pricing actions. Management attributed the shortfall to four primary drivers within North America (Snacks underperformance, delayed Earth’s Best formula recovery, Celestial Seasonings’ tea season, and pricing/trade-inflation dynamics), while noting improvements in International organic net sales, and ongoing productivity savings that partially offset headwinds. In response, the Board launched a formal strategic portfolio review and appointed Alison Lewis as interim CEO, signaling a top-line and margin re-acceleration plan centered on five levers: simplify the business, renovate and innovate brands, implement revenue growth management (RGM) and pricing actions, boost productivity and working capital efficiency, and strengthen digital capabilities. The company also disclosed material transformation charges totaling $83 million year-to-date, with the transformation program expected to be $115–$125 million by fiscal 2027, excluding future inventory write-downs. Looking ahead, the company guided for fiscal 2025 organic net sales down ~5% to 6% with adjusted EBITDA around $125 million and gross margin near 21.5%; free cash flow around $40 million, indicating a still-challenging near-term environment but with a path to margin expansion through the five strategic levers and potential portfolio realignment. Investors will be monitoring the portfolio review outcome, pricing execution improvements, and the pace of deleveraging as working capital improvements and operating efficiency efforts unfold.
Key Performance Indicators
Revenue
390.35M
QoQ: -5.14% | YoY:-10.95%
Gross Profit
84.65M
21.69% margin
QoQ: -9.42% | YoY:-12.43%
Operating Income
-121.08M
QoQ: -31.75% | YoY:-333.96%
Net Income
-134.59M
QoQ: -29.44% | YoY:-179.26%
EPS
-1.49
QoQ: -29.57% | YoY:-175.93%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $390.351 million in Q3 2025, down 10.95% YoY and -5.14% QoQ
- Revenue: $390.351 million in Q3 2025, down 10.95% YoY and -5.14% QoQ
- Gross profit: $84.650 million; gross margin 21.69% (0.217)
- Operating income: -$121.079 million; operating margin -31.02%
- EBITDA: -$111.806 million; EBITDA margin -28.64%
- Net income: -$134.588 million; net margin -34.48%
- Earnings per share (diluted): -$1.49; weighted average diluted shares: 90.247 million
- Adjusted net income: $6.0 million; adjusted EPS: $0.07
- SG&A: $63.0 million; SG&A as % of net sales: 16.1%
- Interest expense: $11.866 million; D&A: $10.455 million
- Transformation charges: $8.0 million in the quarter; cumulative transformation charges: $83.0 million (approximately $80m restructuring, $3m inventory write-downs); noncash portion ~$31.0 million
- Free cash flow: -$2.28 million; Operating cash flow: $4.65 million; Capex: $6.92 million; Free cash flow yield negative due to EBITDA decline
- Balance sheet: cash $44.43 million; total debt $73.55 million; net debt $29.13 million; total assets $1.844 billion; total equity $696.7 million
- Cash conversion and liquidity: current ratio 1.81x; quick ratio 0.99x; cash ratio 0.15x; days payable outstanding ~61.8d; days inventory outstanding ~79d; CCC ~113d
- Outlook (FY2025): organic net sales down 5–6%; adjusted EBITDA ~ $125 million; gross margin ~21.5%; free cash flow ~ $40 million
- Segments: North America organic net sales down 10% YoY; International organic net sales up 0.5% YoY; NA adjusted EBITDA $17m (7.8% margin) vs prior-year $28m; International adjusted EBITDA $22m (13.2% margin)
- Category trends: Snacks down ~13% YoY; Baby & Kids down ~6% YoY; beverages down ~7% YoY; Meal Prep back to growth (+1% YoY); Greek Gods yogurt positive; UK soup growth and market share gains
- Strategic actions: distribution network shift, office footprint consolidation, supplier base reductions, cost structure optimization; 2026 run-rate savings targeted at >$25 million; RGM and pricing actions to offset inflation
- Management commentary: leadership transition to Alison Lewis (Interim CEO); board-initiated portfolio review with Goldman Sachs as adviser; emphasis on digital capabilities and e-commerce; potential strategic options including portfolio optimization and reorganizations
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
390.35M
-10.95%
-5.14%
Gross Profit
84.65M
-12.43%
-9.42%
Operating Income
-121.08M
-333.96%
-31.75%
Net Income
-134.59M
-179.26%
-29.44%
EPS
-1.49
-175.93%
-29.57%
Key Financial Ratios
currentRatio
1.81
grossProfitMargin
21.7%
operatingProfitMargin
-31%
netProfitMargin
-34.5%
returnOnAssets
-7.3%
returnOnEquity
-19.3%
debtEquityRatio
0.11
operatingCashFlowPerShare
$0.05
freeCashFlowPerShare
$-0.03
priceToBookRatio
0.54
priceEarningsRatio
-0.7
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- Strategy and leadership: The Board announced a leadership transition to Alison Lewis as Interim CEO and a formal portfolio review with Goldman Sachs as adviser, signaling a material shift toward a clearer growth plan and portfolio optimization (Dawn Zier). “We are not where we need to be, and we cannot afford to stand still. To that end, we are taking a hard look at our strategic plan to leverage what is working and address the areas in which we need to make changes.” (Alison Lewis)
- Operational focus and five levers: Management highlighted five drivers to shift performance: simplify the business, renovate and innovate brands, implement revenue growth management (pricing/mix), drive productivity and working capital, and strengthen digital capabilities (Lee Boyce; Alison Lewis). “We are focused on 5 key drivers: simplifying our business and reducing overhead spending, accelerating renovation and innovation in our brands, implementing strategic revenue growth management and pricing actions driving operational productivity and working capital reduction; and finally, strengthening our digital capabilities.”
- Near-term performance and category dynamics: The leadership commentary emphasizes continued weakness in Snacks and improved performance internationally as a bright spot, with Earth’s Best velocity improving in some retailers but lapping prior-year declines; Celestial Seasonings faced a teething period in the hot tea season with service issues earlier in Q2 that affected Q3 volumes (Lee Boyce). “The shortfall in both third quarter sales and earnings was driven primarily by 4 factors, principally in our North American business: Underperformance in Snacks, delayed timing in the expected recovery in Earth's Best formula, a challenging start to the hot tea season for Celestial Seasonings and Trade Investment and Inflation impacts ahead of pricing.”
- Capital structure and cash flow: Management noted deleveraging goals and ongoing capital discipline, with net debt at $29.13 million (per balance sheet) and a plan to reduce leverage toward 3x adjusted EBITDA over time; operating cash flow was modest in Q3 ($4.65 million) with free cash flow negative by ~$2.28 million, reflecting working capital needs and inventory build for service level recovery. “Paying down debt and strategically investing in the business continue to be our priorities for cash, and we reduced net debt by $8 million in the quarter.”
- Market backdrop and pricing: There is acknowledgment of inflation and pricing headwinds; the company is accelerating pricing actions in fiscal 2026 as part of RGM and intends to use new packaging and format changes to support margin expansion (Lee Boyce; Alison Lewis). “Pricing actions did not keep pace with trade investment and cost inflation across the portfolio. We are addressing this as we move forward.”
"Our third quarter results are far short of expectations, and our full year results will not be where we expected to finish."
— Lee Boyce
"We must face our challenges directly, and we will."
— Alison Lewis
Forward Guidance
- FY2025 guidance: Organic net sales expected to decline 5–6%, adjusted EBITDA around $125 million, gross margin approximately 21.5%, and free cash flow around $40 million. This reflects a still-difficult near-term backdrop but sets the stage for margin recovery through executing the five strategic levers.
- 2026 outlook and visibility: Management signaled a multi-quarter portfolio review with no fixed timetable; the plan is to complete evaluation and communicate course(s) of action when a concrete path is approved. Alison Lewis indicated a focus on assessing and prioritizing actions that yield the greatest near-term return, with plans to share more specifics on the next earnings call. Investors should monitor the portfolio review progress, progress on RGM/pricing execution, and working capital improvements as primary near-term catalysts.
- Macro dynamics and risk factors: Tariffs/regulatory shifts and raw material cost volatility remain potential headwinds; Hain stressed limited tariff exposure for finished goods in many regions, but pre-emptive inventory building and supply chain reformulation are being pursued to mitigate potential tariff impacts. The company will monitor consumer demand for better-for-you products as macro conditions evolve.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
HAIN Focus
21.69%
-31.00%
-19.30%
-69.60%
BRBR
36.80%
21.70%
-30.30%
25.56%
FLO
49.80%
7.57%
4.62%
18.17%
INGR
25.60%
15.00%
4.70%
11.93%
JJSF
33.60%
11.40%
3.87%
21.69%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
The Hain Celestial turnaround remains underway, anchored by a formal strategic portfolio review and a leadership transition designed to sharpen strategic focus. Near-term metrics reflect a difficult quarter, with a 5–6% expected decline in FY2025 organic net sales and EBITDA still below the prior-year level. However, the company has clear levers to potentially re-accelerate: accelerated renovation/innovation of core brands, centralized revenue growth management and pricing discipline, ongoing overhead and supply chain productivity, and a digital/e-commerce uplift. If the portfolio review yields meaningful optimization (potentially divestitures or strategic partnerships) and pricing/mix improvements take hold, EBITDA and margin recovery could emerge in FY2026, supported by the expected significant working capital improvements and controlled capex. The key variables for investors to monitor are: (i) progress and outcomes of the portfolio review, (ii) effectiveness of pricing actions and RGM implementation in North America and internationally, (iii) the pace of working capital reduction toward the company’s 70+ days payable and 55 days inventory targets, (iv) the trajectory of category momentum in Snacks and Earth’s Best, and (v) any external tariff/cost pressures that could impact margins. Given the current data, the stance is cautiously constructive but remains contingent on tangible execution milestones and the portfolio strategy’s clarity over the next several quarters.
Key Investment Factors
Growth Potential
- Attractive long-term category growth in Better-for-You/packaged foods; international markets showing stabilization and growth (e.g., expansion in Baby & Kids and Meal Prep categories); pipeline of brand renovations and new SKUs in Snacks expected in 2026; e-commerce and digital analytics enhancements to boost direct-to-consumer and retailer performance.
Profitability Risk
- Execution risk in Snacks and North America given the outsized impact on revenue; ongoing transformation charges and near-term margin pressures; leverage rebound dependent on successful pricing/mix improvements and working capital optimization; strategic portfolio review could lead to material changes to brand portfolio and go-to-market models; tariff/regulatory exposure and commodity cost volatility.
Financial Position
- Balance sheet shows modest cash position ($44.4M) and total debt of $73.6M with net debt of $29.1M; leverage (per balance sheet) around 4.2x; management targets deleveraging toward 3x EBITDA; Capex guidance remains conservative (<$40M for FY2025); ample liquidity to fund turnaround initiatives; ongoing working capital optimization to unlock cash (target >$165M total working capital reduction realization by year-end).
SWOT Analysis
Strengths
Strong Better-for-You brand portfolio (Celestial Seasonings, Earth's Best, Greek Gods, JASON Live Clean) with meaningful consumer awareness in attractive categories.
International exposure with some return to YoY organic growth and share gains in select markets.
Solid cash flow discipline and ongoing cost-savings program; progress toward >$25M run-rate cost savings by 2H FY2026.
Low pension-like debt load and a commitment to reduce net debt over time; diversified channel presence (specialty, natural, mass, ecommerce).
Management’s depth in brand management and a track record of operational productivity improvements.
Weaknesses
Concentrated vulnerability in North America, particularly Snacks, which drove the majority of Q3 shortfall (80% of topline miss; Snacks ~2/3 of that).
Negative EBITDA and net income, pressuring earnings multiple and investor sentiment.
Significant transformation charges ($83M year-to-date, including $31M noncash) that exclude from adjusted metrics; ongoing restructuring uncertainty.
Portfolio complexity and execution gaps in go-to-market and promotions; reliance on reinstating velocity in key SNACK brands (Garden Veggie) and improving Earth’s Best formula velocity.
Limited near-term visibility into 2026 profitability and strategic portfolio outcomes until the portfolio review concludes.
Opportunities
Portfolio optimization via strategic review to shed non-core assets and focus on best-growth platforms.
Pricing optimization and RGM discipline to offset inflation and improve gross/margin structure.
Digital transformation and ecommerce growth to enhance consumer reach and margin, including improved analytics for route-to-market.
Product reformulation and packaging changes to support margin expansion and multi-format strategies.
International growth potential in Baby & Kids and Meal Prep categories; potential entry points for better distribution and new SKUs in Tea, Snacks, and soups.
Threats
Macro headwinds from inflation, tariffs, and consumer price sensitivity in discretionary food categories.
Competitive intensity in Snacks and Baby nutrition, with elevated promotional activity and shifting retailer dynamics.
Sustainability of efficiency gains and the ability to sustain large-scale cost-reduction programs without sacrificing growth investments.
Tariff exposure and supply chain disruption risk given raw material sourcing outside the U.S.
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