EPS of $-1.15 decreased by 666.7% from previous year
Gross margin of 22.7%
Net income of -103.98M
"“100% of Hain's global portfolio is free from artificial colors. … GLP-one friendly criteria … begin marketing certain items within our portfolio to GLP-one users in the near future.”" - Wendy Davidson, CEO
HAIN QQ2 2025 Financial Analysis: The Hain Celestial Group Inc (HAIN) – Consumer Defensive Pivot to Growth Amid Margin Restoration and Balance Sheet Repositioning
Executive Summary
The Hain Celestial Group reported QQ2 2025 results highlighting a challenging top-line quarter with organic net sales down 7% year over year, driven primarily by North America in snacks and personal care, while the company made meaningful progress on debt reduction and cash flow. Management signaled a strategic pivot toward growth in the back half of fiscal 2025, supported by improved infant formula supply, distribution gains, and a shift in marketing toward lower-funnel, conversion-focused activation, particularly in the Garden Veggie/Terra snack lines and in e-commerce. Adjusted EBITDA reached $38 million with a 9.2% margin in the quarter, reflecting productivity gains and selective pricing/trade investments, even as gross margin declined ~60 basis points versus the prior year.
Organic net sales: -7% YoY; North America down 9% YoY, International down 4% YoY.
Adjusted EBITDA: $38.0 million; Adjusted EBITDA margin: 9.2% (vs Q1 2025 and vs prior year).
Net income: -$104.0 million; EPS: -$1.15;
Free cash flow: +$25.0 million in the quarter; Net debt: ~$672–$747 million (company disclosures vary by source); Net leverage: ~4.1x (as reported under credit agreement).
Financial Highlights
- Revenue (Q2 2025): $411.5 million; YoY change: -9.4% (per equity disclosures). QoQ change: +4.3% vs Q1 2025.
- Organic net sales: -7% YoY; North America down 9% YoY, International down 4% YoY.
- Adjusted EBITDA: $38.0 million; Adjusted EBITDA margin: 9.2% (vs Q1 2025 and vs prior year).
- Net income: -$104.0 million; EPS: -$1.15;
- Free cash flow: +$25.0 million in the quarter; Net debt: ~$672–$747 million (company disclosures vary by source); Net leverage: ~4.1x (as reported under credit agreement).
- Liquidity/Capital allocation: Days payable ~56; Days inventory ~77; Capex run-rate expected < $40 million for fiscal 2025; Net debt reduction of $12 million in Q2.
- Management guidance (full-year 2025): organic net sales down 2–4%; adjusted EBITDA flat YoY; gross margin expansion of at least 90 bps; free cash flow ≥ $60 million; longer-term targets include 3%+ organic net sales exit rate by 2027 and gross margin ≥ 26% by 2027.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
411.49M
-9.38%
4.28%
Gross Profit
93.45M
-8.57%
14.51%
Operating Income
-91.90M
-11 666.84%
-3 110.12%
Net Income
-103.98M
-668.19%
-428.79%
EPS
-1.15
-666.67%
-422.73%
Key Financial Ratios
currentRatio
1.9
grossProfitMargin
22.7%
operatingProfitMargin
-22.3%
netProfitMargin
-25.3%
returnOnAssets
-5.3%
returnOnEquity
-12.9%
debtEquityRatio
1
operatingCashFlowPerShare
$0.34
freeCashFlowPerShare
$0.27
priceToBookRatio
0.69
priceEarningsRatio
-1.33
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key strategic and operational takeaways from management comments and Q&A:
- Strategy and GLP-One positioning: CEO Wendy Davidson emphasized a focus on better-for-you products with no artificial colors in 100% of the US portfolio and >95% globally; GLP-One friendly criteria are being developed with plans to market select items to GLP-One users in the near term. Quote: “100% of Hain's global portfolio is free from artificial colors” and “we are developing our criteria to define what is GLP-one friendly.”
- Pivot to growth and back-half plan: Management reiterated that the back half of fiscal 2025 should see a pivot to growth aided by infant formula supply recovery, distribution gains, and marketing realignment to lower-funnel activation. Quote: “We are confident that these actions … will drive organic net sales growth in the second half.”
- Snack category dynamics and in-store execution: The company faced in-store activation and promotional timing issues in snacks (Garden Veggie, Terra, and UK Hartley’s), with expectations of improved performance in the second half via increased distribution (up 17% YoY) and new flavor innovations (Garden Veggie Flavor Burst). Quote: “promotional activity shifted from front half into back half” and “conversion-driven marketing activation in-store.”
- Infant formula and baby/kids: Earth's Best infant formula supply has fully recovered; consumption pivoted to growth (+29% YoY in formula). Ella’s Kitchen distribution gains continued in the UK. Quote: “Earth’s Best infant formula supply has fully recovered … consumption of infant formula pivoted to growth in the quarter, increasing 29% year over year.”
- International supply and service challenges: Short-term service issues in international are noted but have been addressed; management expects back-half improvement as the company laps the issues and regains service levels. Quote: “service challenges … have since been addressed.”
- Financial practicality and outlook: The CFO highlighted a cadence of sequential improvement in gross margin and EBITDA; guidance includes FX headwinds (~$2 million unfavorably) and a cautious stance given macro volatility. Quote: “gross margin and adjusted EBITDA to improve sequentially with a material step up in Q4.”
- Balance sheet and leverage: The company aims to reduce debt and target leverage of 2–3x by 2027; current net leverage stood around 4.1x; capital allocation focuses on debt reduction and brand investments. Quote: “our long-term goal remains to reduce balance sheet leverage to three times adjusted EBITDA or less.”
“100% of Hain's global portfolio is free from artificial colors. … GLP-one friendly criteria … begin marketing certain items within our portfolio to GLP-one users in the near future.”
— Wendy Davidson, CEO
“We are confident that these actions, combined with … promotion, fully recovered infant formula supply in North America, brand campaign momentum, and confirmed distribution gains in both regions will drive organic net sales growth in the second half.”
— Wendy Davidson, CEO
Forward Guidance
Assessment of management guidance and achievability:
- Near-term visibility: QQ2 2025 commentary indicates sequential improvement in gross margin and EBITDA through H2, with a pivot to growth beginning in Q3 2025. The company expects organic net sales to be down 2–4% for fiscal 2025, a softer outcome than prior periods, but with a path to margin expansion and cash flow recovery.
- Growth algorithm and exit-rate targets: Hain Reimagine targets call for a 3%+ organic net sales exit rate by 2027, gross margin of at least 26% by 2027, and adjusted EBITDA margins of 12%+ by 2027, alongside $165 million of working capital improvement and leverage of 2–3x. The management commentary acknowledges that the front-half softness implies a slower ramp to growth, but the team maintains confidence in the longer-term growth algorithm.
- Risks to achievability: Key risks include continued macro volatility, execution risks in marketing and promotions, dependence on successful shelf resets and distribution gains, supply-chain volatility in international markets, and potential further FX headwinds. The guidance explicitly notes that changes in exchange rates affect adjusted EBITDA and not organic net sales growth, with an approximate $2 million negative impact to EBITDA since the guidance was issued.
- Key watchpoints for investors: pace and longevity of the Snacks turnaround (conversion-focused marketing, shelf availability, and promo effectiveness), the durability of Earth’s Best and Ella’s Kitchen distribution gains, the effectiveness of GLP-One branding and product qualification, and the speed of deleveraging given current net debt levels. Investors should monitor free cash flow progression toward the $60 million target, working capital improvements, and the evolution of the North America vs International performance during the back half of FY2025.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
HAIN Focus
22.71%
-22.30%
-12.90%
-1.33%
BRBR
32.30%
16.20%
-23.10%
40.65%
FLO
49.90%
7.77%
4.84%
16.92%
INGR
27.00%
16.80%
3.99%
12.63%
JJSF
26.90%
1.69%
0.52%
131.44%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, HAIN trades as a leveraged, turnaround-oriented consumer staples play with a clear strategic path (Hain Reimagine) toward a pure-play better-for-you foods and beverages company. The QQ2 2025 results underscore a mid-cycle pause in top-line growth, but with several catalysts that could unlock value in the medium term: (i) recovery and stabilization of infant formula supply and ongoing distribution gains in baby/kids, soups, and Greek yogurt; (ii) a reoriented promotional strategy in snacks toward conversion marketing and social media engagement, with expansion of Garden Veggie/ Terra footprint in convenience and value channels; (iii) GLP-One friendly product marketing could unlock a new growth vector among diet-specific consumers; and (iv) ongoing margin expansion through productivity and cost-reduction programs under the fuel pillar and working capital optimization.
Key risks to monitor include the pace of the back-half recovery in US snacks, potential delays in achieving the 2027 financial targets, currency headwinds, and continued macro volatility. Given management’s guidance for FY2025 (organic net sales down 2–4%; adjusted EBITDA flat; margin expansion of at least 90 bps; FCF ≥ $60m) and the longer-term targets (3%+ exit rate by 2027, gross margin ≥ 26%, EBITDA margins ≥ 12%), the investment thesis hinges on execution discipline and the speed with which the company can translate distribution gains and improved marketing effectiveness into consistent top-line growth. The stock could be attractive on a re-rating if HAIN achieves sustained gross-margin expansion and a durable EBITDA recovery in 2026–2027, supported by deleveraging toward 3x and continued brand-driven cash generation.
Key Investment Factors
Growth Potential
The portfolio is positioned around higher-growth better-for-you categories (baby/kids, soups, Greek yogurt, plant-based beverages) with meaningful distribution opportunities in North America and select international markets. GLP-One friendly product development and heightened focus on conversion marketing in snacks offer near-term upside to measurable top-line gains in H2 2025 and beyond.
Profitability Risk
Execution risk in marketing activation and shelf resets in snacks; macroeconomic volatility affecting consumer spending and price/mix dynamics; ongoing supply-chain challenges in international; FX headwinds affecting EBITDA; potential delays in achieving Hain Reimagine milestones and leverage targets.
Financial Position
Net debt around the high- $600s to low-$700s million range with a target leverage of 2–3x by 2027. Current net leverage (~4.1x) signals continued deleveraging needs. Free cash flow generation was positive in QQ2 2025 ($25m) and is expected to improve toward the $60m target for FY2025; Capex guidance for FY2025 is < $40m, supporting cash generation and debt reduction.
SWOT Analysis
Strengths
Strong better-for-you brand portfolio focusing on organic, natural products.
Leading infant formula and baby/kids brands (Earth's Best, Ella's Kitchen) with fully recovered supply in key markets.
Growing distribution footprint, including value channel and C-store normalization, with mid-single-digit distribution gains in Garden Veggie and Terra.
Cash generation capability (positive free cash flow in QQ2 2025) and disciplined capital allocation including debt reduction.
Weaknesses
High variability in quarterly organic net sales and negative near-term profitability (negative net income in QQ2 2025; EBITDA margin around 9.2%).
Significant leverage and ongoing transformation charges under Hain Reimagine, with cumulative charges disclosed ($75m total, including $29m noncash).
Snack category execution dependency and promotional effectiveness, with remaining risk from in-store activation and promotion timing shifts.
Opportunities
GLP-One positioning alignment to consumer dietary needs creating new marketing and product opportunities.
Expanded distribution and new product innovations (Garden Veggie Flavor Burst) to drive category velocity and incremental SKUs in key retailers.
Expansion of away-from-home channels and C-store distribution to grow snacking and meal-prep categories.
Portfolio simplification may unlock additional capital for brand investments and strategic options for personal care exit.
Threats
Macro uncertainty affecting consumer confidence and discretionary spend.
Competition in the better-for-you space and potential sector-wide shifts towards price competition in value channels.
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