Terra Chips Maker Hain Celestial Q2: Earnings Miss, Supply Chain Snags, Outlook Cut And More

Shares of food and personal-care company Hain Celestial Group Inc HAIN are trading lower on Monday following the second-quarter earnings result.

The company reported a second-quarter sales decline of 9.4% year-on-year to $411.49 million, missing the analyst consensus estimate of $431.55 million.

Organic net sales from North America decreased 9% Y/Y, driven primarily by lower sales in snacks due to in-store marketing activation and promotion effectiveness as well as by lower sales in personal care.

International organic sales declined 4%, due primarily to lower sales in meal prep and short-term service challenges.

Adjusted gross margin for the quarter contracted 60 basis points Y/Y to 22.9%. The operating loss for the quarter was $91.8 million versus a loss of $0.8 million last year.

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Adjusted EBITDA was $38 million compared to $47 million in the prior year period. Adjusted EBITDA margin was 9.2%, compared to 10.4% in the prior year period.

Adjusted EPS of $0.08 missed the consensus estimate of $0.12.

The company held $56.2 million in cash and equivalents as of December 31, 2024. Operating cash flow for the quarter was $31 million, with a free cash flow of $25 million.

Net debt at the end of the fiscal second quarter was $672 million compared to $690 million at the beginning of the fiscal year.

“Commercial execution and supply chain challenges drove second quarter results that were below our expectations. We have already taken steps to address these challenges and remain focused on disciplined execution. Recent distribution wins and the recovery of our infant formula supply bolster our belief that we are well positioned to pivot to growth in the back half of the year, however given performance to date and the challenging macroeconomic backdrop we are adjusting our full year outlook,” stated Lee Boyce, CFO.

Outlook: Hain Celestial sees FY25 organic net sales down 2%—4%, down from the prior view of flat or better organic net sales growth.

Adjusted EBITDA is expected to be flat year-on-year (prior view: grow by mid-single digits). Hain Celestial sees gross margin to improve by at least 90 basis points (prior view: increase by at least 125 basis points).

Price Action: HAIN shares are trading lower by 21.9% at $3.665 at the last check Monday.

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