Q3 2024 The Hain Celestial Group Inc Earnings Call

Good day, everyone and welcome to the Hain Celestial fiscal third quarter 2024 earnings conference call.

At this time all participants are in a listen only mode.

Later, you will have the opportunity to ask questions. During the question and answer session.

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Please note this call maybe recorded and I will be standing by should you need any assistance.

It's now my pleasure to turn the conference over to Alexis Tessier, Vice President of IR. Please go ahead.

Good morning, and thank you for joining us on Hain celestial third quarter fiscal year 'twenty 'twenty four earnings conference call on the call today are Wendy Davidson, President and Chief Executive Officer, Lee Boys Executive Vice President and Chief Financial Officer, and Chad Martin Bloch, President North America.

During the course of this call we may make forward looking statements within the meaning of federal Securities laws. These include expectations and assumptions regarding the company's future operations and financial performance. These statements are based on our current expectations and involve risks and uncertainties that could cause actual results to differ materially from our expectations.

Please refer to our annual report on Form 10-K quarterly reports on Form 10-Q, and other reports filed from time to time with the SEC as well as the press release issued this morning for a detailed discussion of the risks. We've also prepared a presentation inclusive of additional supplemental financial information, which is posted on our website at Hain Dot com under.

The investors heading.

Please note that remarks made today will focus on non-GAAP or adjusted financial measures reconciliations of non-GAAP financial measures to the nearest GAAP results are available in the earnings release and slide presentation accompanying this call.

Call is being webcast and an archive will be made available on the website and now I'd like to turn the call over to Wendy.

Thank you Alexis and good morning, and thank you all for joining us today.

Wendy: At Investor Day in September we laid out four priorities underpinning our hain re imagine strategy.

One to focus and simplify our portfolio and footprint to deliver cost savings to be a few all to expand margins and invest in our business three to build the capabilities needed to drive scale and for it to grow in our core categories and brands.

Today, you'll hear about the progress we've made on the focus on fuel pillars of our strategy, which had been our first priorities and it's foundational year unlocking efficiencies in our P&L under the build pillar you'll hear how we are investing in capabilities to accelerate our return to growth and under the grow pillar, you'll hear more detail about how each of our key.

Categories are performing.

Wendy: You'll also hear that our starting point in some areas with less developed than we initially anticipated requiring a heavier lift and causing the pivot to growth to take longer than expected.

While we are disappointed and topline results in the quarter. We are pleased to deliver continued margin expansion and momentum and adjusted EBITA delivery free cash flow and net debt reduction.

Proof points that I'm sharing today reinforce our confidence in our ability to achieve the financial algorithm outlined with Shangri imagine in September.

Under the focus filler, we said we would focus on three initiatives to simplify our business, creating a winning portfolio consolidating our footprint and integrating our global operating model.

First as we shared last week, we have removed underperforming skus, representing 6% of items in our global portfolio. This includes the previously announced sale of a fenster spreads in snacks.

Wendy: Streamlining of our plant based meat free portfolio and meal prep and additional refinement and baby and kids and beverages as part of ongoing brand maintenance.

The largest portfolio of reduction is in personal care, where we are removing underperforming skus, representing 62% of items or 30% of net sales in the category, enabling us to focus on driving stronger velocities within the core assortment, reducing unnecessary complexity and delivering margin expansion.

Second we have streamlined our operating footprint to leverage synergies across the business and drive scale as we focus in our five core geographies.

Wendy: We announced the consolidation of our personal care manufacturing footprint, reducing our number of Haynes facilities from two to one and eliminating 60% of our co manufacturers from the personal care networks.

We also announced that we ceased all production and operations within our non strategic joint venture in India, and we'll be servicing the EMEA market via a distribution model.

Focus initiatives will drive increased capacity utilization and lower cost.

And third we have made tremendous progress on our global operating model transforming the company into a truly integrated enterprise. Historically Hain has operated as a collection of siloed entities without a common operating model systems or processes and without leveraging global capabilities over the course of the year.

We have created the foundational building blocks that will result in a more proactive and resilient growth driven company.

Have established functional centers of excellence across end to end supply chain procurement R&D quality.

Wendy: HR and finance.

Wendy: <unk> drive synergies and leverage scale and we are beginning to see results.

Wendy: Our work in the end to end supply chain effectiveness has resulted in improved reliability and service levels for the third quarter and in stock rates were over 94%, increasing 130 basis points from quarter, two and 400 basis points better than our peer set this is a significant improvement and positions us better to partner with our <unk>.

Wendy: Customers expand distribution and ensure reliable supply to invest in promotional and customer support.

Moving onto our fuel pillar, where we have made significant progress in unlocking cost savings through revenue growth management, working capital management and operational efficiency.

Our revenue growth management initiatives across both regions have unlocked 70 basis points of trade spend efficiency driving better net price realization and promotional effectiveness.

We are beginning to see this progress show end market in the U S with our promotional lifts improving in quarter three over the prior quarter and salty snacks and meal prep and particular yogurt soup and nut Butters and.

On working capital management, we have leverage new digital technology and improved processes to reduce inventory levels by nearly 10% year to date and extend days payable outstanding by nine days.

And we are driving end to end operational efficiency through sourcing and productivity initiatives, putting us on track to deliver $61 million and productivity for the year. These.

These efforts have enabled us to expand margins and deliver strong cash flow, while both offsetting inflation and investing in capabilities to enable our pivot to growth.

When we announced our transformation strategy, we highlighted our five focus categories, where our leading brands have an opportunity to drive greater awareness reach household penetration and share and.

Wendy: And we said we would drive more effective mix of working versus nonworking investment to get better before we increased our marketing spending.

Wendy: The third quarter, we increased our marketing slightly as a percent of revenue with a priority focus on snacks beverage and baby with continued support for the soup category in particular to support sustained category leadership in the U K.

Our brand building investments and the celestial seasonings tea brands are driving household penetration share growth and velocity gains in our top retail and E. Commerce partners and we are seeing momentum with successful innovation launches, including garden veggie flavor burst and celestial seasoning slightly time with melatonin anthro cooler and a new earth.

Wendy: Fast immunity boost their peer raised.

In addition, we are progressing our channel expansion strategy and margin accretive channels year to date away from home revenues have grown 13% in North America, and 8% internationally and as you see on the slide in the third quarter. We drove dollar share shift in channel mix to food convenience mass and e-commerce.

Wendy: As for the growth pillar in the last call. We said, we expected to pivot to growth in the overall business for the back half of this fiscal year and 85% of our business has grown over 3% year to date in line with our Hain re imagine growth algorithm.

Wendy: Getting this growth our double digit declines in the remaining 15% of our business, which is targeted for stabilization, including baby formula.

Specifically in the third quarter softness year over year was driven by the U S region, primarily by the personal care category, where we recently announced significant portfolio and manufacturing footprint simplification as a part of the stabilization plan. In addition, we faced continued challenges in our infant formula supply.

Driven by PARAGARD operational shutdowns to ensure their ability to meet FDA guidelines for safe and assured supply.

Wendy: Youll recall that in February we stated that we had received a commitment to rebuild our formula supply in the second half of fiscal 2024, while we understand paragons of interventions and investments to drive quality controlled and reliable manufacturing these actions and corresponding allocation of supply have had a material adverse impact on our business.

We have been working closely with Terra go to ensure we recover as quickly as possible to meet the needs of the consumers who love our Earth's best brand. They are committed to a full recovery beginning in the second half of 2024.

Wendy: We believe these two issues are short term in nature and are working swiftly to correct them.

Wendy: Let's review, our brand and category performance.

Wendy: As I mentioned in aggregate, our grow and maintain brands, excluding formula, which together account for approximately 85% of our revenues year to date are growing net sales were up 1% in the third quarter.

Wendy: Stabilized brands, along with Formula are the source of the softness with net sales down 25% in the quarter.

Wendy: As a reminder, the grow category should expect to receive a disproportionate investment and deliver better than category growth and share gains.

Maintain businesses are an important core of our portfolio, but do not require outsized investments to enable their growth and those businesses ring fenced and stabilize our both underperforming and require a focused effort to stabilize and provide optionality once stabilized, we will determine where and if they fit within the haynesville.

Wendy: Folio.

And snacks net sales for the third quarter were essentially flat year over year, which is an improvement from the second quarter. The main driver of the improvement with strength in garden Veggie and the successful flavor burst innovation launched which is still ramping up.

Offsetting garden bench strength with softness in Terra as it has taken longer than expected to expand our channel mix outside of prior concentration and a low margin channel as.

As we build upon the brand we know the Terra consumer loves this product and the brand is without a clear substitute our investments in supply chain capacity now put us in a comfortable position to leverage that brand love with expanded distribution.

Wendy: Driving distribution expansion remains a key strategy for growth in snacks.

We have identified significant fair share opportunities by driving the core assortment of our products and we believe we are in a position to fix our mix to unlock both distribution and velocity across our brands.

We will leverage our better for you snacks portfolio of brands and our saver Your summer snacking promotion, our first ever National multi brand merchandising program.

Wendy: And baby and kids net sales were essentially flat year over year, excluding formula.

Wendy: The challenges with Formula supply, we continue to see strength in our baby business, where we have leading brands in Earth's best and Ella's kitchen in fact, Earth's best grew dollar share in the quarter and natural cereal couches and toddler snacks and distribution was up double digits versus a year ago.

In the U K Ella's kitchen is the clear leading brand and we have had success leveraging our global baby category teams to share insights innovation and commercial strategies across both of our brands with a robust opportunity pipeline for fiscal 2025.

The beverage category continued its positive momentum with third quarter net sales up high single digits year over year, our fourth consecutive quarter of growth.

Wendy: Growth is being driven by both celestial seasonings tea and non dairy beverage within celestial seasonings were outpacing the category and gaining share due to velocity gains and brand building and end market data shows our promotional lift on tea is outpacing the category in the quarter.

Non dairy beverage has continued to deliver growth led by own label and then the journey and Joya brands in Europe are focusing on innovation, the non dairy beverage market and our core geography isn't attractive space with strong consumer demand and overall category growth.

Wendy: Mid single digits in value and low double digits in volume and we are adding shifts to meet new contracts and increased demand. Our success in non dairy beverage is an example of progress from the end to end rigor applied to our stabilized bran from supply chain reliability to portfolio optimization brand building innovation.

Wendy: And channel expansion. This coordinated effort is enabling us to shift the non dairy beverage business from the stabilized category and into maintain and we're well positioned in branded and own label to drive growth.

Wendy: Meal prep net sales declined low single digits in the quarter, primarily driven by plant based meat free while the overall plant based meat free category is still struggling in the market. The eaves brand in Canada continues to outperform the category and gained share.

The Linda Mccartney Foods brand, we have made both portfolio and operations changes to reduce costs and increase efficiency and contrast, there continues to be one of our best performing categories with strong growth in our branded soup in both the UK and in North America.

And finally net sales in personal care, our smallest category declined over 30% our brands have struggled with over proliferation of skus across many subcategories that simply haven't been productive for either our retail partners or Hain, we're hyper focused on the execution of our stabilization plan this strength to grow turnaround.

Wendy: You can see we have taken a number of actions to deliver progress towards our Hain re imagine goals, we set a high bar for change for ourselves when we announced our strategy in September and while we may not be where we expect it to be at this time, we are confident in our end goal and have a clear line of sight to get there to that end, we have launched an initiative to access.

Wendy: Our commercial execution to support the Hain re imagine strategy drive realign the business in North America under New leadership, Chad Mark Ward.

Like to now introduce Chad who joined in April as our new President of North America that has a tremendous leader who brings deep strategic expertise and the better for you consumer packaged good space. We are thrilled to have him on the one hand team.

Thank you Andy.

Speaker Change: Want to begin by expressing my enthusiasm for joining hain and the opportunity to drive the growth potential of pain re imagine I've worked in the consumer packaged goods industry for over 25 years in the health and wellness space.

Chad: And what attracted me to Hain was twofold, the strength of our brands in growing categories.

Hains portfolio uniquely focused on better for you.

Chad: In my first month I've been focused on learning the business meeting with team members and visiting our facilities.

I've also had the opportunity to meet with some of our largest customer partners to understand what is working and what we need to improve upon to enhance our strategic partnerships.

Chad: The strength of our brands with consumers.

We need to make them more available whenever and wherever they are shopping.

Chad: And we need to drive household penetration with messaging and marketing that is disruptive and delivers on our potential as a challenger in our categories as our brands grow we will help our retail partners grow through insight led solutions and the creation of stronger partnership and performance.

I'm incredibly excited for the opportunities we have before us.

Chad: We are an organization that can drive the capabilities empower of a scale enterprise, but with the agility and creativity challenger brand companies.

Our teams are focused on driving first to mind first defined and all that we do to drive awareness and expanded distribution.

We will bring the magic of Hain to life for our consumers, who love our brands.

And with our customers, who will help us meet the needs of making better for you available and within arm's reach of our shoppers.

Chad: Mark our team's full potential we have already initiated several new work streams designed to accelerate our performance.

Chad: Can you our productivity efforts with RJ, EM and elevate our engagements with our consumers and our customers.

Speaker Change: Thrilled to be a part of the Hain re imagined journey and I look forward to sharing our success with you into the future.

Now I'll turn it over to Lee.

Lee: Thank you Chad and good morning, everyone.

Despite strong progress in the focus on fuel pillars of Hain re imagined Q3 results fell short of our expectations.

While the pivot to growth is taking longer than anticipated. We are pleased with our free cash flow generation gross margin expansion and improvement in leverage as we continue to prioritize the reduction in debt.

Lee: Let's flip to the quarterly results in more detail.

Lee: Consolidated net sales for the third quarter were down three 7% year over year to $438 million.

Lee: Organic net sales for the third quarter adjusted to exclude the effects of divestitures and discontinued brands also decreased three 7%.

Organic net sales closed in the third quarter reflects a 1.3 percentage point benefit from foreign exchange.

Lee: The decrease in organic net sales was driven by lower sales in the North American segment.

Lee: Partially offset by sales growth in the international segment.

Factors driving the decline in North America, with personal care and baby Formula I just wanted you discussed.

Representing drags on consolidated organic net sales of approximately 310 basis points and 50 basis points respectively.

Lee: We delivered third quarter, adjusted EBITDA of $44 million up 17, 5% year over year.

Lee: Adjusted EBITDA margin was 10%, representing a 180 basis point increase versus the prior year.

Lee: Adjusted gross margin was 22, 3% in the third quarter.

Lee: Increasing approximately 90 basis points year over year.

Lee: The increase was driven by productivity and pricing on the success of fuel and revenue growth management initiatives, partially offset by deleverage on lower sales volume mix and cost inflation.

SG&A decreased 11, 1% year over year to $67 million, representing 15, 2% of net sales for the quarter as compared to 16, 5% in the year ago period.

The decrease was driven by a reduction in the accrual for our incentive program.

Lee: Excluding the reduction SG&A as a percentage of net sales would have been roughly flat year over year as cost optimization and the realization of operating model savings offsetting inflation.

Lee: During the quarter, we took charges totaling $10 million associated with actions under the restructuring program, including contract termination cost.

Asset write downs employee related costs and other transformation related expenses.

Of these charges $2 million were noncash.

Year to date, we have taken $50 million in charges, including $26 million in noncash charges of the expected 90 to 100 million total for the restructuring program.

Lee: These charges are excluded from adjusted operating results.

Lee: Interest cost rose five 3% to $14 million due to the higher variable interest on the unhedged portion of our debt.

Lee: Partially offset by lower outstanding borrowings.

As a reminder, we have hedged out rates exposure on approximately 50% of our loan facility with fixed rates at five 6% and remain keenly focused on driving down net debt over time.

Lee: These factors combined to produce net loss of $48 million.

54 cents per diluted share.

Compared to a net loss of $116 million or $1 29 per diluted net share in the prior year period.

Lee: Adjusted net income.

Lee: Which excludes the effect of restructuring charges amongst other items was $11 million or 13.

Lee: 13 cents per diluted share versus $7 million or eight cents in the prior year period.

Lee: Turning now to our individual reporting segments.

In North America reported net sales decreased six 5% year over year to $268 million.

The decrease was primarily driven by a decline in the personal care business, which represented a 480 basis point drag on North America sales and <unk>.

Lower sales in baby Formula, which wasn't 70 basis point drag.

This was partially offset by growth in beverages.

Third quarter adjusted gross margin in North America was 22, 2%, a 40 basis point increase versus the prior year period, driven by productivity and pricing on the success of fuel and revenue growth management initiatives.

Lee: She offset by cost inflation and deleverage on lower sales volume.

Lee: Adjusted EBITDA in North America was $28 million, a two 5% increase year over year.

Lee: And adjusted EBITDA margin was 10, 4% a.

A 90 basis point increase.

Lee: The year over year improvement resulted primarily from lower SG&A, partially offset by lower volume and inflation.

Lee: In our international business reported net sales grew by 1% to $117 million.

Lee: Organic net sales growth was also 1% in the quarter.

Lee: This reflects three full percentage points of growth from FX.

Lee: As Wendy mentioned beverages demonstrated growth in the quarter.

Lee: This was offset by continued softness in plant based meat free a stabilized business in our mill prep category.

Lee: International adjusted gross margin was 22, 4% up approximately 180 basis points year over year, driven by pricing and productivity, partially offset by deleverage on lower volume.

Lee: International adjusted EBITDA was $25 million, a 15.4% increase year over year, driven primarily by pricing and productivity, partially offset by lower volumes.

Lee: Adjusted EBITDA margin was 14.4% off of approximately 180 basis points.

Lee: Shifting to cash flow and the balance sheet.

Lee: We generated third quarter cash from operating activities of $42 million versus $29 million a year ago.

Lee: The increase resulted from working capital management initiatives.

Lee: Days payable outstanding improved to 46 from 37 in fiscal year, 'twenty, three and out days inventory outstanding improved to 77 from 82 in fiscal year 'twenty three.

Lee: While we still have a long way to go to reach the targets set out in hanging re imagined of 70, plus days payable outstanding and 55 days of inventory on hand by fiscal year 'twenty. Seven we are pleased with the progress we are seeing.

Lee: Capex was $12 million in the quarter and we continue to expect expenditures to be in the mid <unk> fiscal year 2024.

Lee: Finally, we closed the quarter with cash on hand of $50 million and net debt of $728 million translating into a net leverage ratio of three nine times as calculated under our amended credit agreement.

Lee: We drove leverage lower than expected due to better cash flow a momentum from our fuel initiatives.

Lee: We expect our net leverage to tick up modestly in the fourth quarter and the first quarter of fiscal year 'twenty five before ending fiscal 'twenty five in the high threes, we're comfortable we have plenty of headroom under the existing covenants.

Lee: Paying down debt and strategically investing in the business continues to be our priorities for cash and we have reduced net debt by $47 million since the beginning of the fiscal year.

Lee: Our long term goal remains to reduce the balance sheet leverage to three times adjusted EBITDA or less.

Lee: Turning now to our outlook.

Lee: We have made solid progress under Hain me imagined, particularly in the focus in fuel pillars. However, the pivot to growth, which we are actively addressing is taking longer than anticipated.

Lee: The largest driver in our outlook revision is the fact that our infant formula supplier did not deliver upon that commitment.

Lee: In addition, one outperformance in the snacks categories continued to improve sequentially.

Lee: Execution in snacks distribution expansion has been short of expectations.

Lee: Lastly, stabilization in personal care is taken longer than expected and we are aggressively taking actions to simplify our portfolio and operating footprint.

Lee: Taking these factors into consideration along with performance to date, we are adjusting our guidance for the full year.

Lee: Our revised fiscal 2020 full guidance is as follows we expect organic net sales to decline approximately 3% to 4% year over year.

Lee: Adjusted EBITDA to be between 150 and $155 million.

Lee: Gross margin expansion of up to 50 basis points.

Lee: And free cash flow of $40 million to $45 million.

Lee: And now I hand, it back over to Wendy.

Wendy: Thanks, Lee and my first year with Hain, we've spoken with a lot of investors and we've heard some very clear theme your belief in the potential of our business your desire for more visibility into drivers and your need for more clarity on where we believe hain can win the potential of our brands and the actions, we're taking to accelerate our performance.

Wendy: We hope that by providing details on category performance. This quarter has helped with visibility. In addition, we plan to report price volume mix and currency elements of sales growth starting in fiscal 'twenty five.

Wendy: While our year one progress in driving improvement in our topline is behind our expectations. We have made significant headway in the focus and fueled pillars of our Hain re imagine strategy, we have focused our business by creating a winning portfolio simplifying our global footprint and building a more effective and efficient integrated operating model.

Wendy: Which extends far beyond how the business is structured how it's managed reported and wired across common function.

Wendy: This will enable greater focus on execution, a reduction in cost and improved control of our business from end to end.

Wendy: And we're generating fuel by leveraging our scale and driving operational efficiencies in our supply chain unlocking working capital and strategically focusing on revenue growth management.

Wendy: We will continue to build our capabilities by investing in brand building and innovation and driving channel expansion in Underpenetrated markets. Ultimately this will enable us to reliably grow our business through focused investments.

Wendy: And innovation in snacks, baby and kids and beverages, while continuing to pay down debt.

Wendy: Pain is a leader in better for you brands across key developed markets and we are uniquely positioned with the better for you consumer to deliver sustained category growth in natural and organic are work in building our end to end supply chain capacity and in brand building puts us in position to partner with our retail customers to win with the consumer.

Wendy: We have ample distribution white space and we have begun to ramp up our channel expansion with an improved core assortment to ensure we have the right products at the right price and the right place to meet consumer demand.

Wendy: We set a high bar for the pace of change and we are just eight months into our multi year strategy and while much of the progress. We shared today is not as visible outside the walls of Hain internally, we are fundamentally a very different company than we were one year ago. Our teams are stronger our capabilities are more robust and the team is working together.

Wendy: They're more effectively as a global enterprise a true transformational step change and Haynes 30 year history, and now we're doubling down on execution. The progress, we're making already fortifies, our confidence in our strategy and in our ability to drive reliable and sustainable growth.

Wendy: We remain confident in our ability to achieve the full potential of Hain re imagined before.

Speaker Change: Before we open it up for Q&A I would be remiss if I didn't thank all of our team members, who are committed to our strategy to our brands and to our purpose of inspiring healthier living through better for you brand and to harnessing the power of performance as one Hain team operator, please open the line for questions.

Speaker Change: At this time, if you would like to ask a question. Please press the star and one where your telephone keypad.

Speaker Change: You may withdraw your question by pricing start to.

Speaker Change: Once again to ask a question. Please press star one on your telephone keypad.

Speaker Change: And we'll take our first question from Jim <unk> with Stephens, Inc. Please go ahead.

Jim: Hey, guys. Good morning, Thanks for taking my question.

Jim: Wanted to drill down a little bit on the execution in snacks distribution. Later, you mentioned is that part just due to kind of the overall consumer backdrop, maybe retailers being more sensitive on price and wanting to expand some private label offerings.

Jim: Is there anything that you guys can give us detail on health.

Jim: Nope.

Jim: Improved execution on snacks in the near term.

Speaker Change: Yeah, Good morning, Jim Great to hear from you.

Speaker Change: Max is actually sort of a tale of two cities. So if you look at garden Veggie for instance, we've actually had very strong execution and very strong performance. In fact, some of our data now shows that garden Veggie core Skus actually turn at a greater velocity on shelf and some of the leading brands.

Speaker Change: In the better for you space that have more distribution, but in the past you would recall that we had some.

Speaker Change: Some supply chain challenges that made assured supply a bit of a challenge we are in a better position to earn our place on shelf with greater distribution, because we have really a stronger supply chain. The garden Veggie core is performing very well, we've actually picked up incremental distribution I think in the law.

Speaker Change: Last quarter, we talked about.

Speaker Change: The incremental distribution in C store.

Speaker Change: Somewhere north of 10000 stores on Garden Veggie, and then obviously the successful launch of flavor burst, which is actually still in fairly limited distribution is just now starting to ramp up broader distribution, but the turns of flavor bursts or better than we expected and north of 80% is incremental to the category.

Speaker Change: So we feel very good about innovation, we feel very good about brand building and very good about channel expansion on garden Veggie and we haven't even begun the master brand campaign. It starts this summer Terra if you recall last year, well, probably the last 18 months or so we had some significant supply.

Speaker Change: Chain challenges, we've made investments in capacity and capability on Terra we're less dependent on additional outside manufacturing to support Terra. So we've right sized our operations footprint to assure supply under our control.

Speaker Change: Counter to that we also were very concentrated in the club channel and that meant that we didn't have the ability to expand distribution in other points of distribution. So the combination of a more stable supply chain better consume are better on shelf availability and the work that's taking place around.

Speaker Change: Channel expansion will help terra in the long run and we will see some of those play out as we go into the summer because this summer will be the first multi brand snack promotion that we will have ever done as a company and will be the favorite your summer multi brands merchandising program always had really good pick up in secondary placement.

Speaker Change: Great I appreciate all the details.

Speaker Change: Maybe just as a follow up on that.

Speaker Change: Can you just comment on how sensitive retailers are to price gaps between.

Speaker Change: Stacking skus in private label, just again, given that we've seen consumers excuse me be more value seeking uncertain.

Speaker Change: So sub segments channels.

Speaker Change: Yeah, sorry, I missed that part of your question.

Speaker Change: What we've seen in some of the consumer data is actually in the snack category. The consumer is less private label sensitive probably of all the food categories, ending something less than 15% of the categories actually penetrated by private label.

Speaker Change: To that when we look at our brands in the research that we've done for instance, I'll talk Terra Terra has no natural substitute and the consumer what we learned is the consumer loves the brand we've made it hard for them to find it.

Speaker Change: But they don't see another substitute for the Terra brand. So our opportunity is to actually take that brand love and make it available to the consumer in more places.

Speaker Change: But where we are premium we're not super premium Loretta and affordable premium to conventional categories.

Speaker Change: Thus far we've not seen either retail push to us or consumer pushback relative to price, but we've probably been a bit more surgical in our pricing and have focused instead on net price realization through our revenue growth management initiatives.

Speaker Change: Okay, Great I appreciate that one thing and one thing I would one thing I would add to that is while we've been tracking promotional spend and in snacks. We're promoting at about the same level as the category, but we're seeing a greater lift than category. So I think our promotion effectiveness has been more productive for us.

Speaker Change: In the last year since we've invested around revenue growth management.

Speaker Change: Okay. Thanks, a lot whether it's I'll pass along.

Speaker Change: Thanks, Tim.

Speaker Change: Our next question comes from Ken Goldman with JP Morgan. Please go ahead.

Kenneth B. Goldman: Hi, Thank you.

Kenneth B. Goldman: First just a quick one.

Kenneth B. Goldman: Infant Formula you mentioned that the issues with the supplier or short term, but at the same time you relegated formula into the stabilized bucket I'm just trying to reconcile these two items of the <unk>.

Kenneth B. Goldman: Issues are primarily short term why relegate.

Speaker Change: Yeah Fair question, Ken and good morning.

Speaker Change: The the issue that we face is and so pair ago as our primary.

Speaker Change: Infant formula supplier, you would've heard pair of those speak to some of their supply chain shut downs on their earnings call. This week as well we believe that the issues are relatively acute but to be honest. We've had challenges over this last year with assured supply. So we're taking a prudent approach in studying it and stabilize.

Speaker Change: Realizing two things one is we need to ensure that we have stable supply that's reliable. The other is because we've been off shelf for a while we have to re earn that space on shelf with our retail partners, we've had to rationalize and focus our distribution with a few customer partners and.

Speaker Change: And we need to go back and make sure that we are in a good solid position there.

Speaker Change: So that's really the reason for putting it in that category I would say that the guidance that we gave for a quarter for the balance of this year includes all of the inventory we have on hand, so we don't have a supply risk to our outlook and forecast for the balance of this fiscal year, but I think we're taking a prudent approach as we go into.

Speaker Change: Two fiscal 'twenty fives around supply availability, how we drive customer reach and how we make sure that we've got a balance between supply and where were on shelf as you know infant formula is how we recruit the consumer into our Earth's best brand I think it says a lot about the strength of the brand that we've continued to grow.

Speaker Change: Oh baby food puree, and toddler snacks, when we're not able to recruit people in at the infant stage. So we're excited about the work to be able to do to re recruit while we leverage the strength that we've got in baby food and PRA.

Speaker Change: Okay. Thank you for that and then.

Speaker Change: Shifting topics I appreciate you haven't given guidance for 2025, yet but.

Speaker Change: Given that were only seven weeks away from the end of 'twenty four I'm, hoping you might be in a position to speak Directionally and I guess to cut to the chase consensus is looking for low single digit sales growth next year. Despite some fairly clear headwinds in personal care and meals et cetera, but obviously some excellent.

Speaker Change: And the majority of the business at least what Youre seeing today. So do you think it's reasonable for the street to model low single digit growth at this point or is it just too soon to say for sure.

Speaker Change: We're really not in a position yet to give guidance for next year, but I think that you you're appropriately looking at where we think some of the growth areas would be and where we think some of the the weaker areas as we aggressively drive stabilization so more.

Speaker Change: Sorry, but just building upon that I mean, a couple of things we talked about formula getting stabilization of that moving forward. So we've got some things that obviously negatively impacted us in the current year.

Speaker Change: Personal care, we've obviously got that stabilized we're making some actions on that in terms of the SKU pruning. So some of those things again have been headwinds in the current year that we should we should cycle against as we move forward.

Speaker Change: Okay. Thank you.

Speaker Change: Thanks, Ken.

Speaker Change: Our next question comes from Jon Andersen with William Blair. Please go ahead.

Jon Robert Andersen: Hey, good morning, everybody. Thanks for the question.

Jon Robert Andersen: Good morning.

Jon Robert Andersen: It's a smaller part of the business, but on.

Jon Robert Andersen: On the personal care.

Jon Robert Andersen: Okay.

Jon Robert Andersen: Can you talk a little bit about where you are in terms of the.

Jon Robert Andersen: The full.

Jon Robert Andersen: Full efforts on <unk>.

Jon Robert Andersen: SKU rationalization and it may be more important how you think about that business longer term is that core to the hain portfolio, how much kind of.

Jon Robert Andersen: Management time.

Jon Robert Andersen: <unk> resources do you.

Jon Robert Andersen: One kind of apply to that.

Jon Robert Andersen: Ongoing basis. Thanks.

Speaker Change: Good morning, and I appreciate the question so.

Speaker Change: Relative to personal care. It is it's the smallest part of our portfolio. It is the one category, where unfortunately I think I mentioned this in the prepared remarks that we've got an over proliferation of skus to be honest, we took some of our brands into every possible personal care category, where we really didn't have a right to play or.

Speaker Change: Or a right to win that just creates a lot of complexity in the business and a lot of excess inventory all the way around so she was very inefficient and those were highly unproductive skus both for us, but also for our retail partners and they just sat on shelf and so not a good not a good place to be we actually ring fenced.

Speaker Change: The personal care business. So there is a separate team that's focused on personal care stabilization with the goal of getting that business stabilized. So then we have optionality and to decide then where and if it falls in the Hain portfolio, but we do need certainly for to do the best thing for our shareholders is to get that.

Speaker Change: Isn't it stabilized for for the best options. We've made some very aggressive decisions that were a part of hain re imagined, but we've pulled them forward into fiscal 'twenty four really to stabilize that business more quickly. So rationalizing our supply chain from two hain locations down to.

Speaker Change: <unk> will improve our capacity utilization at the core facility, we've reduced our co mans by five which is about 60% of the co manufacturers on the personal care business that takes a lot of complexity out of managing that network and reduces what's on shelf we are streamlining.

Speaker Change: The skus and the categories that we're in by brand, you'll see a chunk of that flow through in quarter. Four and then it'll begin to really play out in quarter, one and quarter. Two is we really get that to be a right sized portfolio all of those decisions help us get to an improvement of 11.

Speaker Change: And margin points on the personal care business, but more importantly puts us in position to make some decisions about that business, but also to better manage that business because it'll be a much simpler portfolio. There are some strong brands in that portfolio, but we've not allowed them to actually really be able to be successful because they were.

Speaker Change: Really buried in lots of subcategories that we really shouldn't be and so I think we'll be in better position to make some decisions, but our but to your question around distraction of managements time. There is a dedicated team focused on personal care. So and it is the smallest portfolio. So it really doesn't take a lot of everybody's time.

Speaker Change: That's super helpful.

Speaker Change: Switching to I guess your largest business meal prep.

Speaker Change: Could you talk when do you a little bit about what youre seeing in that business I think that grew last quarter. It was down a little bit this quarter, what maybe has changed.

Speaker Change: Over the past few months, there and what your expectations or.

Speaker Change: Focus areas are for for that part of the business going forward. Thanks.

Speaker Change: Yeah, the meal prep category actually took a bit of a step down really driven by the plant based meat free category and that's not unlike what others are seeing in the space with a lot of the industry consolidation taking place. So it really was driven by meat free in the UK.

Speaker Change: Hey, with the Linda Mccartney brand and in Canada, with the eaves brand Ironically, because the category is consolidating we're actually gaining share in fact, we gained share with the eaves brand in Canada, So were declining less than the category and picking up distribution and gaining share, but we are still.

Speaker Change: Seen some of that category contraction in our UK business, we made a bit of an aggressive move in really right sizing both what our manufacturing capacity was but also right sizing the SKU mix that we have in our Linda Mccartney brand to get to the hardest working core and so you see some.

Speaker Change: Of that SKU reduction playing into the meal prep data in the quarter, but that but I feel like it we will have a much more productive overall mix there offsetting that in meal prep is the continued strength of the soup category. That's just on fire and its actually in both regions. So the image.

Speaker Change: In soup business in the U S grew double digits in the quarter and in the UK and Ireland. We have the number one number two and number three soup brands with Cully, and Sully Yorkshire, Provender, and new Covent Garden and are by far the share leader, especially in the refrigerated soups category So field.

Speaker Change: Really good about the sup part of the portfolio in Greek gods yogurt, you would have heard us talk about that as growth in the past.

Speaker Change: We've done some reset of our retailer relationships and the assortment on shelf and so you will see the Greek gods business return into growth as we go forward and we feel very good about that brand.

Speaker Change: Great. Thanks, so much.

Speaker Change: Our next question comes from Michael Lavery with Piper Sandler. Please go ahead.

Michael Scott Lavery: Thank you and good morning.

Michael Scott Lavery: Good morning.

Michael Scott Lavery: Just wanted to come back to the portfolio.

Michael Scott Lavery: And you're demoted formula you touched on that just a minute ago, but also promoted the non dairy beverages to maintain and.

Michael Scott Lavery: Touching on some of the execution improvement there, but I guess a couple of things.

Michael Scott Lavery: Is that a reflection of.

Michael Scott Lavery: A definitive commitment to it you've characterized stabilized there's a little bit of a.

Michael Scott Lavery: Get it fixed and figure it out at least obviously for personal care.

Michael Scott Lavery: Does it reflect stronger consumer demand what are all the <unk>.

Michael Scott Lavery: Right pieces of the context, there to understand how that shift that took place.

Speaker Change: Yeah, that's a great question and good morning.

Speaker Change: When we look at what's in stabilize we actually ask ourselves a bit wider of a question is it a category that is large and growing is it a space, where we have a brand that can compete do we have capabilities that make us unique and distinctive is at the right place to be and can we make money at it. So can we grow in <unk>.

Speaker Change: We make money at it when we look at the non dairy beverage category in the markets, where we play it is a very large and growing category. We have a wonderful position in both private label and brand.

Speaker Change: But the issues that we had in the past where because we were highly concentrated with a particular partner. So our manufacturing capacity was eaten up in that way, we werent running the plants.

Speaker Change: In a normal five day work week, we were running a lot of overtime. So they were inefficient and our operations and we werent really investing behind the brands with a core assortment to be able to win in the markets. We were in so when you check the boxes or is it a category we want to be and is it a category that is large and growing are we unique.

Speaker Change: And distinctive can we compete and win all of those check the boxes. So then it became an internal end to end fixed how do we need to right size our operations, how do we make sure that they're well run how do we make sure we're investing around the right brands you would've heard us I think in the last quarter talk about the SKU portfolio work that we did in <unk>.

Speaker Change: Erie beverage, where we reduced about 50% of the Skus and one of the brands and got to a much harder working core that grew velocities double digit so driving right assortment in the brand on shelf was better product productivity for us and for our retail partners. So all those things combined now is delivering.

Speaker Change: And is that quarter on quarter is up double digits and driving great margins. So it's a place where we want to be yeah. We've had we've had three straight quarters of growth on that business. So that is why he said to me we've had improving profitability positive outlook for the growing category. So it fits in all the criteria.

Speaker Change: But to your question on Baby Formula is the reason why we said that into stabilize is again, we look at the same criteria, yes, we want to be in baby formula because it's how we recruit consumers into our Earth's best brand yes.

Speaker Change: Yes. It is a category that is large and growing especially in the organic baby food category. So those I'll check the box, but the challenge we have is stable and reliable consistent high quality supply and that's what needs to be stabilized. So it doesn't mean that the business necessarily is an area, where we feel the need to stabilize but we definitely need.

Speaker Change: Do acknowledge that we've got to have a much more consistent available supply of baby formula.

Speaker Change: That's great color, Thank you and.

Speaker Change: Just a little bit of a follow up for the brands that aren't on.

Speaker Change: For I think it's slide 12 for example.

Speaker Change: How do we think about those they're almost all quite small.

Speaker Change: There is.

Speaker Change: And maybe at least I think I can come up with that arent listed.

Speaker Change: What's the future look like.

Speaker Change: Is there a buyer for any of those as they're just brand discontinuation that makes sense, how do they fit in.

Speaker Change: Oh in the the ones that we have mapped out on grow maintain and stabilize.

Speaker Change: The ones that aren't shown yeah like a.

Speaker Change: Like a farmhouse fare or a Hollywood or health valley or Lima, or any of those that are they're just.

Speaker Change: A bit smaller obviously quite a lot smaller I think.

Speaker Change: Yeah, I would tell you that those the things that arent on the slide are what I would refer to as sort of bits and bobs in our portfolio.

Speaker Change: And doesn't necessarily mean anything other than they don't require a substantial amount of investment or time and they don't represent a large percentage of the sales.

Speaker Change: Pretty common in most of the companies I've worked there are some brands that just don't really ever pop to the top but I wouldn't read anything into it other than that.

Speaker Change: So just as you're looking at things like SKU rationalizations that there wouldn't be a risk of that.

Speaker Change: Sort of a cleaning house, where there's a hit from from those getting reconfigured somehow.

Speaker Change: You know I would say that our view of portfolio simplification in the focused pillar will always include a review of brands categories and Skus.

Speaker Change: Print all of those things so I wouldn't put it I wouldn't put it off the table that we're not taking a hard look at every brand to make sure that they are a brand that is worth us spending both time and resources against.

Speaker Change: Okay. That's helpful. Thank you.

Speaker Change: So almost next with Andrew Wolf with C. L. King. Please go ahead.

Speaker Change: Okay.

Andrew Wolf: Thank you I'd like to start with kind of a.

Andrew Wolf: Softball question for you just the business kind of pivot to growth if you exclude.

Andrew Wolf:

Andrew Wolf: Personal care and.

Andrew Wolf: Yeah.

Andrew Wolf: Baby.

Andrew Wolf: <unk> formula.

Andrew Wolf: Well certainly adds or was that on the prepared remarks.

Andrew Wolf: And expected, that's what I'm really getting at.

Andrew Wolf: Yeah.

Andrew Wolf: So the one thing we do I mean, we did plan that's how we broke out the portfolio, 85% of the portfolio on a year to date basis.

Andrew Wolf: It was up over 3% and you know if you go back to Hain re imagined the 3% was a longtime algorithms so.

Andrew Wolf: That's why we kind of isolated the two pieces, but 85% of the portfolio year to date was up over 3%.

Andrew Wolf: And where the attendant profit expectations reasonably close to what you would've expected.

Andrew Wolf: With some of the supply chain issues impacting that as well or.

Speaker Change: No I would say that.

Speaker Change: They were in line with what we've expected mean, one of the Big things you know as part of the Hain re imagined it was fuel as we looked at our supply chain initiatives and not necessarily just on the P&L, but on the cash flow side on terms of net working capital deliveries both of them being positive ahead of our expectations.

Speaker Change: Okay.

Speaker Change: Let me ask you about guidance before I get back to when he was the best.

Speaker Change: Operation side could you kind of parse out the guidance reduction.

Speaker Change: I think you said Q3, even though versus the street. It was an upside was below your internal expectations.

Speaker Change: You know.

Speaker Change: Versus internally the Q3 Miss and the.

Speaker Change: What you took down Q4, just to get a sense of where you think the momentum in the businesses versus your expectations.

Speaker Change: <unk>.

Speaker Change: So in terms of guidance that you just and again, we kind of as we went through I mean, the guidance changed the three elements.

Speaker Change: Obviously, what personal care. So as we said 85% of the business as it was growing but personal care pace of stabilization there didn't deliver against our expectations. So that was one one piece and obviously, we're making overall changes simplifying the portfolio and the operating footprint the second piece.

Speaker Change: When do you kind of gone through this one was really around formula.

Speaker Change: And based on the commitment from Perrigo, we expected to have more stable and dependable formula to meet the demand.

Speaker Change: So that that was the other large element and then the final piece that we've talked to you. Paul on is really just kind of the execution in snacks snacks is growing but it was not it was short of our expectations. So those are the three elements.

Speaker Change: Changed in the quarter that impacted our full year guidance.

Speaker Change: Thank you so just I'd like to follow up on two of those.

Randy: Randy on flavors.

Speaker Change: Did that also get impacted by supply chain.

Paul: And do you mean like your co Packers were you were shortened.

Randy: Oh no flavor Bruce.

Randy: Yeah flavor burst has been an outstanding launch them in fact, our production attainment is right at 100% of where we expect it to be so feel very good about the supply on flavor burst. We've begun the distribution we were in limited distribution really inside quarter, three you'll see that ramp up in quarter four.

Paul: And it'll be available and lots of locations. So I'm expecting you to buy it everywhere that you see at and then Youll see it featured as a part of our summer of snacking promotion with multi brand merchandising.

Paul: And once again that is star one on your telephone keypad and we ask that you ask one question and one follow up we will move next with Camille Gosh, why Wella with Jefferies. Please go ahead.

Paul: Thanks.

Camille Gosh: The common theme I guess through the color through the recent months has been on the supply chain issues, whether it's GE or terra.

Camille Gosh: So I'm just wondering is there something different at the core of maybe how the infrastructure was set up earlier, how you are changing it because it just <unk> seem to be relying on what might be a fragile supply chain and many of the issues are linked to a lack of supply. So I'm just curious if there's.

Paul: Anything we should know about in terms of just maybe they use like operating philosophy that used to exist versus what how you're approaching it now.

Speaker Change: Yeah, I guess I, let me clarify we have one category, where we have challenges in supply chain and that would be in formula.

Speaker Change: The others are legacy supply chain issues that began during COVID-19 that actually gay.

Speaker Change: Gave clarity around and visibility to issues that we had in our end to end supply chain. The work. The team has done in the last 18 months has been to create a much more reliable and sustainable supply chain.

Speaker Change: And it's everything from planning production and delivery, we have best in class safety in our facilities in the last year, we have best in industry availability on shelf as measured by <unk> better than our peer set and we have.

Speaker Change: A much more predictable and reliable work that the team's done all while reducing inventories in days on hand, so when we said that we've had a lot of supply chain work in this first year of Hain re imagined as a foundational year, we did focus on fuel and that was both delivering productivity savings, but it was.

Speaker Change: Also ensuring that we have the foundations of the company to be able to enable consistent reliable growth I'm I feel very confident in our supply chain and whether that's co manufacturers, excluding formula, but whether its our co manufacturer partners or our own manufacturing there.

Speaker Change: Team that's been put in place to manage our supply chain, including our co Mans is best in class and I'm very excited about what that will do for us being able to go out to our customers and walk them through the reasons why we should have more shelf space of our core brands, because they're highly productive and we can assure them reliably.

Speaker Change: We'll supply on shelf.

Speaker Change: Got it useful thank you.

Speaker Change: We'll move next with Anthony Vendetti with Maxim Group. Please go ahead.

Anthony V. Vendetti: Okay. Thanks.

Anthony V. Vendetti: So just.

Anthony V. Vendetti: Wendy on the 6% SKU reduction.

Anthony V. Vendetti: A lot of the SKU reduction is in personal care I guess, you said, 62% there.

Anthony V. Vendetti: Is that 6% is that more than the normal SKU rationalization as you look at the portfolio.

Speaker Change: And.

Speaker Change: If it is.

Speaker Change: Where is it more than personal care, which I know.

Speaker Change: Is the significant.

Speaker Change: A portion of the SKU reduction and then.

Speaker Change: The second the second part is.

Speaker Change: If it is more you know how is this different because different from sort of mid Mark Schiller took over for Irwin Simon.

Speaker Change: He put it in a.

Speaker Change: Multiyear SKU rationalization.

Speaker Change: How have things changed.

Speaker Change: Significantly since then that's requiring further SKU rationalization I was just wondering if you could put that whole thing in context.

Speaker Change: Yeah, a great question I would say its two things so is 6% I'm more than we would expect in the the average absolutely and certainly the 62% of personal care is much more than you would expect in any portfolio I would view this less about pure SKU rat.

Speaker Change: <unk> and much more around portfolio rationalization. So in terms of Skus, we talked about the sort of regular brand portfolio maintenance, that's going to be in baby and kids, a little bit in snacks and some of what's taking place and in the beverage category is much more.

Speaker Change: Around that portfolio maintenance, where you just you have underperforming skus in the tail you moved those out as you're bringing innovation is sort of this normal ebb and flow personal care and plant based meat free are much more significant and those are us recognizing that there are subcategories, we really shouldn't be in that arent productive.

Speaker Change: So it's less about SKU pruning and much more about category pruning them that that's more significant I'm not familiar with the work that was done.

Speaker Change: By Mark and team are in the prior strategy I've seen some of it but I'm not sure what it was predicated on but hopefully that helps explain some of the things that we're driving here.

Speaker Change: Yes, and then maybe this is more for for Chad.

Speaker Change:

Speaker Change: Chad mentioned first mind first the fine and then.

Chad: When do you mentioned that Terra chips.

Chad: It's hard to find how do you how do you fix that or what's the strategy to fix that since it's obviously one of the brands are focused on.

Chad: Yeah, Let me start and then I'll flip it over to Chad.

Chad: I'm, giving him credit for only been here for four weeks, but on the so with Terra in particular the challenges that we had is a beloved brand that people see as unique and distinctive but because of the supply chain issues two years ago, The company rationalized where they were.

Chad: Selling it because they couldn't keep it on shelf everywhere because of some of those supply chain issues. So it made it very limited in distribution, which is why I mean, its its beloved but hard to find we've worked really hard in the last 18 months to invest in capital to add capacity and capability on Terra that will allow us to control.

Chad: Our destiny on the brand and we've made investments around the brand campaign to support Terra as we go forward all of that combined puts us in position to take that brand love and make it available to the consumer where they're shopping but I'll, let Chad talk about the work that he's driving and driving distribution expansion sure. So I think.

Chad: First and foremost Anthony I think as Wendy mentioned I think we're now taking that story external in terms of helping them understand what we have done different as hain in terms of our investments into our supply and that consistency of supply in my first month I've already been a part of note.

Chad: Three specific snack meetings externally with key customers and Theyre very excited about the future of Terra now it's us working together on what that distribution build looks like based on their timeline, but we're very excited for that future and as Wendy mentioned earlier. We also will have a new campaign starting in 'twenty five really to start reinvigorating that brand love to a broader arnie.

Chad: Some consumers.

Speaker Change: Okay. Thank you that was great color I'll hop back in the queue.

Speaker Change: Thanks, David Your next question.

Speaker Change: Our next question comes from Matt Smith with Stifel. Please go ahead.

Matthew Edward Smith: Hi, good morning.

Matthew Edward Smith: Ask a follow up question on guidance the implied fourth quarter EBITDA margin takes a step back sequentially in year over year can you talk about the level of investment in the fourth quarter is that stepping up or is it the margin performance more reflection of volume deleverage and maybe less benefit from pricing and productivity.

Matthew Edward Smith: Trying to get a better understanding of margin exiting the year as we look ahead to fiscal 'twenty five.

Speaker Change: Yeah, So a couple of things.

Speaker Change: You go through there is there is the margin deleveraging there is oh, sorry volume deleveraging there is the mix impact of Formula.

Speaker Change: Year over year in the fourth quarter, though we are lapping a benefit that we had in international in the prior year as well so you know that actually.

Speaker Change: Increase the margin percentage in Q4 over the prior year was a one time impact so we're lapping that as well. So we continue to feel good about the margins overall I mean, we talked about the productivity delivery to $61 million.

Speaker Change: Saying through you know from an inflationary expectation I mean, we can see continue to see some moderation there from.

Speaker Change: Commodity inflation, so again I think for the fourth quarter again year over year over year is kind of just lapping of this prior year benefit that we saw.

Speaker Change: Thank you and just a follow up on the personal care discussion.

Speaker Change: Can you talk about the cash costs associated on a go forward basis, and then the 11 point increase in margin that you are targeting from the rationalization does that does that timing lineup with the SKU rationalization that Wendy discuss fourth quarter first quarter and second quarter.

Speaker Change: Coming or is there a longer tail to realize that margin benefit.

Speaker Change: No I mean, the margin benefit is going through into the second half of 'twenty 25, So I think both pieces.

Speaker Change: Line, and then just kind of on the on the cash costs overall, I guess I would just tie back to the overall restructuring costs were we talked about the 90% to 150% of that being cash and noncash I mean, nothing has fundamentally changed on that overall profile and that's what we've seen kind of year to date, if you'd think about it.

Speaker Change: It would be 90 to 100, we've had $50 million year to date half of it being cash noncash so everything falls within that kind of overwhelmed bloke.

Speaker Change: Thank you I'll pass it on.

Speaker Change: And our next question comes from Alexia Howard with Bernstein. Please go ahead.

Alexia Jane Burland Howard: Good morning, everyone.

Alexia Jane Burland Howard: Good morning.

Alexia Jane Burland Howard: Okay. So I just have one question around the marketing spending I remember when you laid out Henry imagine there was a relatively modest increase in the plan for increasing marketing spending companywide and the idea was to reallocate and really focus on the areas, where you could get a decent return on that are you.

Alexia Jane Burland Howard: Rethinking that given the disappointment on the organic sales growth side, you need to up the marketing spending where are you in terms of why you think the appropriate long term level might be thank you and I'll pass it on.

Speaker Change: Yeah I appreciate the question and you're right. We said early on that when we turned back on marketing as a company. We wanted to make sure. We had an always on pressure to support our brands, but we wanted to get more efficient before we simply spent more and you'll see that reflected in the numbers on a consolidated basis will be up slightly this year versus.

Alexia Jane Burland Howard: As last year, but we're also more weighted to the back half of this year. Then we went to the front half because we wanted to make sure. We were supporting some of the big launches and some of the key seasons like soup season in the U K like the celestial seasonings tea season in the winter and then supporting the flavor bursts launch with appropriate support.

Alexia Jane Burland Howard: We've seen a sequential improvement in our working to non working so the shift is working.

Alexia Jane Burland Howard: We're also gaining and growing brand awareness and growing household penetration across our core brands and as Chad mentioned, we're driving incremental reach with some of our distribution gains all of those things focused on share the issues. We're seeing in the top line are really very acutely tied to a couple of things.

Alexia Jane Burland Howard: Tied to personal care and it's tied to baby formula spending more money against those would have both been bad spend because I would've spent against baby formula and not had available supply I would've spent against personal care subcategories that we really shouldn't be and so I'm not concerned with where the team chose.

Alexia Jane Burland Howard: To spend the dollars because I think where we've spent it when we evaluate marketing effectiveness. We are seen promotional lifts. We are seeing household penetration gains we are seeing the share gains and we are seeing a growing awareness, where we've invested our dollars. Our goal is to get those that 15% of the business that needs to be stabilized.

Alexia Jane Burland Howard: To stabilize them, so that where we're investing for growth, we're seeing that deliver all the way through the consolidated numbers and not just in the 85% of the business.

Alexia Jane Burland Howard: Okay.

Speaker Change: Thank you very much health hospital.

Speaker Change: Thank you.

Speaker Change: And I will turn the call back to Wendy for closing remarks.

Wendy: As we said earlier, we're very pleased with the progress that the teams made around focus and fuel initiatives because it's allowed us to expand our margins has allowed us to deliver strong free cash flow and importantly to reduce our debt which.

Wendy: Which we know are all things that are very important to the investment community and I feel very proud of the work that the team has done and our end to end supply chain and the overall business. We're investing I think appropriately around brand building and around the building our capabilities and we look forward to more than 85% of our business pivoting to grow.

Alexia Jane Burland Howard: As we go forward.

Speaker Change: But again I want to thank everybody for your time this morning, and for your belief and confidence in Hain as we re imagine our future.

Speaker Change: And this does conclude today's program. Thank you for your participation you may disconnect at any time.

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