Q4 2024 The Hain Celestial Group Inc Earnings Call

August 27, 2024

Operator: Fiscal Fourth Quarter, 2024, Erning Conference Call. This time, all participants will be in listen-only mode. Question and answer session will follow the formal presentation.

Speaker Change: Greetings, welcome to the Haintsi Asked Shields Fiscal 4th Quarter 2021 Irvings Conference Call. The time-up just depends on the listening mode. Question and answer session, we'll follow the formal presentation.

Operator: If anyone today should acquire operative assistance during the conference, please press star zero from your telephone keypad. Please note, this conference is being recorded.

Speaker Change: If anyone today should acquire operative systems during the conference, please press star zero from your telephone keypad. Please note this conference is being recorded.

Alexis Tessier: At this time, I'll turn the conference over to Alexis Tessier with Investor Relations. Alexis, you may now begin.

Speaker Change: At this time, I'll turn the conference over to Alexis Tessier with the Vester relations.

Alexis Tessier: Good morning, and thank you for joining us for a review of our fourth quarter results. I am joined this morning by Wendy Davidson, our President and Chief Executive Officer, and Lee Boyce, our Chief Financial Officer.

Speaker Change: and Alexis, you may now begin.

Speaker Change: Good morning and thank you for joining us for a review of our fourth quarter results.

Speaker Change: I am joined this morning by Wendy Davidson, our President and Chief Executive Officer and Lee Boyce, our Chief Financial Officer. Slide 2 shows our forward-looking statements disclaimer. As you are aware during the course of this call, we may make forward-looking statements within the meaning of federal security laws.

Unknown Executive: Slide two shows our forward-looking statements disclaimer. As you are aware, during the course of this call, we may make forward-looking statements within the meaning of federal securities laws. These includes 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.

Speaker Change: These includes expectations and assumptions regarding the company's future operations and financial performance.

Speaker Change: These statements are based in our current expectations and involve risks and uncertainties that could cause actual results to differ materially from our expectations.

Unknown Executive: Please refer to our annual report on Form 10-Pay, quarterly reports on Form 10-Queue and other reports from files from time to time with the SEC, as well as the press release issued this morning for a detailed discussion of the risk.

Speaker Change: Please refer to our annual report on Form 10K, Quarterly Reports on Form 10K, and other reports in style from time to time with the SEC, as well as the press release issued this morning for a detailed discussion of the risk.

Unknown Executive: We have also prepared a presentation, inclusive additional supplemental financial information, which is posted on our website at pain.com under the Investor's heading. As we discuss our results today, unless noted as reported, our remarks will focus on non-GAAP or exhausted financial measures. Reconciliation of non-GAAP financial measures to GAAP results are available in the earnings release and the slide presentation accompanying the call.

Speaker Change: We have also prepared a presentation, inclusive of additional supplemental financial information, which is posted on our website at hane.com under the Investors Head.

Speaker Change: As we discuss our results today, unless noted as reported, our remarks will focus on non-gap or exhausted financial measures.

Speaker Change: Reconciliation of non-depth financial measures to gap results are available in the earnings release and the slide presentation accompanying the call. This 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.

Unknown Executive: This call is being passed, and an archive will be made available on the website.

Wendy Davidson: And now I'd like to turn the call over to Wendy. Thank you, Alexis, and good morning, everyone. I'll start by reviewing today's key messages, the progress we've made on our Hain Reimagined strategy, and reasons to believe in our pivot to growth in fiscal 2025. I'll then turn the call over to Lee, who will provide additional detail on our fourth quarter and full year results and our outlook for the coming year. We'll close out the call with time for Q&A. Let me start by saying that I'm pleased that we delivered on our updated guidance, with organic net sales growth ahead of our guidance and adjusted EBITDA at the upper end of our guidance, and continued progress in adjusted growth margin expansion.

Wendy: Thank you, Alexis, and good morning, everyone.

Wendy: I'll start by reviewing today's key messages, the progress we've made on our Hainry Imagine Strategy and Reasons to Believe in our pivot to growth in fiscal 2025.

Wendy: I'll then turn the call over to Lee who will provide additional detail on our fourth quarter and full year results and our outlook for the coming year will close out the call with time for Q&A.

Lee: Let me start by saying that I'm pleased that we delivered on our updated guidance with organic net sales growth ahead of our guidance and adjusted EBITDA at the upper end of our guidance and continued progress in adjusted gross margin expansion.

Wendy Davidson: And importantly, we exceeded our free cash flow expectations based on strong delivery from our fuel initiatives, especially in working capital, revenue growth management, and operational efficiency. This enabled us to further pay down debt and improve our leverage position. Approximately 85% of our business grew in fiscal year 24, with organic net sales growth of plus 3%, and we have initiatives in place to stabilize the remaining 15%. I believe we are well positioned as we head into fiscal year 2025 to pivot to growth. Building upon this solid foundation and momentum, we are pivoting our focus to stronger commercial execution to deliver top and bottom line growth and fiscal 25.

Lee: and importantly, we exceeded our free cash flow expectations based on strong delivery from our fuel initiative, especially in working capital, revenue growth management and operational efficiency.

Lee: Disenabled us to further pay down debt and improve our leverage position. Approximately 85% of our business grew in fiscal year 24, with organic net sales growth of plus 3% and we have initiatives in place to stabilize the remaining 15%.

Lee: I believe we are well-sufficient as we head into fiscal year 2025 to pivot to growth.

Lee: Building upon this solid foundation and momentum, we are pivoting our focus to stronger commercial execution to deliver top and bottom line growth in fiscal 25.

Wendy Davidson: We remain committed to the Hain Reimagined algorithm we outlined last year, so we are now using fiscal 24 as the base for our organic net sales growth. We are confident in the strength of our diversified portfolio and geographic footprint, the benefits of scale in our operating model, and our ability to deliver sustainable growth. Let me now discuss the progress we've made on the four pillars of our Hain re-imagined strategy, starting with focus. In fiscal 24, we made tremendous progress under the focus pillar to drive our five core categories and five core geographies while transforming the company into an integrated enterprise.

Lee: We remain committed to the Hainry Imagine algorithm we outlined last year, though we are now using fiscal 24 as the base for our organic net sales growth.

Lee: We are confident in the strength of our diversified portfolio and geographic footprint, the benefits of scale in our operating model and our ability to deliver sustainable growth.

Speaker Change: Let me now discuss the progress we've made on the four pillars of our Henry Imagine Strategy starting with focus.

Speaker Change: In fiscal 24, we made tremendous progress under the focus pillar to drive our 5 core categories and 5 core geographies while transforming the company into an integrated enterprise.

Wendy Davidson: We consolidated our global manufacturing footprint to reduce complexity within our supply chain and drive synergies and scale. We exited non-strategic categories, geographies, and brands, including the divestitures of Queen Helene and Sensors, and we are creating a winning portfolio of brands with stronger velocities and growth margins. Importantly, we integrated the business globally to operate at scale and establish a clear Hain culture based on performance and values. Our supply chain team is a strong example of the strides we're making in building a performance-driven culture. Across our global Hain manufacturing operations, we've achieved world-class safety levels, and the team continuing to invent the processes, systems, and recognition to ensure we are focused on the safety of our people, our plants, and our equipment as we generate fuel and build our brands and our business.

Speaker Change: We consolidated our global manufacturing footprint to reduce complexity within our supply chain and drive synergies with scale.

Speaker Change: We exited non-strategic categories, geographies, and brands, including the divestitures of Queen Haleen and Sencers, and we are creating a winning portfolio of brands with stronger velocities and growth margins.

Speaker Change: Importantly, we integrated the business globally to operate at scale and establish a clear hand culture based on performance and values. Our supply chain team is a strong example of the strides we're making and building a performance driven culture.

Speaker Change: Across our global-hain manufacturing operations, we've achieved world-class safety levels and the team continues to embed the processes, systems, and recognition to ensure we are focused on the safety of our people, our plants, and our equipment as we generate fuel and bill our brands and our business.

Wendy Davidson: Hain today is markedly different from the company we were just one year ago. We are leveraging insights and expertise across global categories, driving synergies across functions, and capitalizing on areas of scale in our supply chain, positioning us to pivot to growth in fiscal 25. In this first year, our team delivered strong progress in our fuel pillar, with end-to-end operational efficiency generating $65 million in savings for the year, ahead of our $61 million target. Our robust productivity pipeline for fiscal 2025 gives us confidence in our ability to deliver another strong year of fuel. We continue to drive better net price realization and promotional effectiveness through revenue growth management.

Speaker Change: Today is markedly different from the company we were just one year ago. We are leveraging insights and expertise across global categories, driving synergies across functions, and capitalizing on areas of scale in our supply chain. Positioning us to pivot to growth in fiscal 25.

Speaker Change: In this first year, our team delivered strong progress in our fuel pillar with end-to-end operational efficiency, generating $65 million in savings for the year. A head of our $61 million target.

Speaker Change: Our robust productivity pipeline for fiscal 2025 gives us confidence in our ability to deliver another strong year of fuel. We continue to drive better net-price realization and promotional effectiveness through revenue growth management.

Wendy Davidson: In fiscal 24, we enhanced RGM capabilities across the organization with a key emphasis on trade spend efficiency, contributing to a 50 basis point improvement year over year in trade rates. These capabilities will enable continued progress and delivery in RGM for net price realization, trade efficiency, and mix in fiscal year 25. Within working capital management, investments in digital technology and improved processes enabled improved forecast accuracy to drive inventory levels down by three days. Additionally, we extended days' payable outstanding by 15 as we drive towards our hangry imagined goals. Our successful fuel initiatives in fiscal 24 facilitated material debt paydown reduction and leverage investments in the business, adjusted gross margin expansion, offsetting inflation and volume due leverage, and delivery of our updated guidance.

Speaker Change: In fiscal 24, we enhanced RGM capabilities across the organization with a key emphasis on trade spend efficiency, contributing to a 50 basis point improvement year over year and trade rate.

Speaker Change: These capabilities will enable continued progress and delivery in RGMs for net-priced realization, free efficiency, and mix in fiscal year 25.

Speaker Change: with in working capital management, investments in digital technology and improved processes, enabled improved forecast accuracy to drive inventory levels down by three days. Additionally, we extended days' payable outstanding by 15, as we drive towards our hangry imagine goal.

Speaker Change: Our successful fuel initiatives in fiscal 24 facilitated material debt paydowns, reduction in leverage, investments in the business, adjusted growth margin expansion, offsetting inflation and volume due leverage, and delivery of our updated guidance.

Wendy Davidson: As we head into fiscal year 25, we believe that significant opportunities remain in working capital on our path to deliver the $165 million we outlined on Investor Day. This year, we launched our agile and ant brand building model and rolled out a number of campaigns to drive greater awareness, reach, household penetration, and share on key brands such as Celestial Seasonings, Ellis Kitchen, and Earth Best. We will continue to drive brand campaigns that leverage the scale of a larger company with the consumer focus of smaller challenger brands as we strive to outsmall the big and outbick the small.

Speaker Change: As we head into fiscal year 25, we believe that significant opportunities remain in working capital on our path to deliver the 155 million dollars we outlined on investor day.

Speaker Change: This year, we launched our Agile and Anth brand-building model and rolled out a number of campaigns to drive greater awareness, reach, household penetration, and share on key brands such as celestial seasonings, Ellis kitchen and earth theft.

Speaker Change: We will continue to drive brand campaigns that leverage the scale of a larger company with the consumer focus of smaller challenge your brands as we strive to outsmall the big and outbig the small.

Wendy Davidson: We continue to progress our channel expansion strategy with a particular focus on ensuring our products and brands are available where the shopper is shopping. In this first year, we leaned into a way from home many commerce where we have established focus teams to drive reach and growth in these margin accretive channels. Northwest expanded our route to market with distribution partners and expanded food service in both North America and international. Garden Veggie and Tara, in particular, saw strong growth in sea stores, with garden veggie dollar sales up 49% and Tara up 48% this year. Within e commerce, we saw growth in North America from key strategic brands including Garden Veggie up low single digit for the year and Celestial up mid single digit as well as double digit growth and snacks and pouches for us best.

Speaker Change: We continue to progress our channel expansion strategy with a particular focus on ensuring our products and brands are available where the shopper is shopping.

Speaker Change: In this first year, we leaned into a way from home and e-commerce, where we have established focused teams to drive reach and growth in these margin-accrede channels.

Speaker Change: and fiscal 2024, away from home revenues grew low-double digit in both North America and international. As we grew our sea store count, by 42% in the U.S., expanded our route to market with distribution partners, and expanded food service in both North America and international.

Speaker Change: Garden Veggie and Tara, in particular, saucecrone grows in sea stores with garden veggie dollar sales up 49% and Tara up 48% this year.

Speaker Change: Within e-commerce, we found Rose in North America from keys for TJ Brandt, including Garden Veggie, up low-fingled digit for the year, and Celeste Show up mid-fingled digit, as well as double digit growth and snacks and pouches for Earth's best.

Wendy Davidson: In the U.K. Our online branded business grew low single digits and is outperforming the overall market growth. We expect both e-commerce and away from home to be meaningful drivers of growth in fiscal year 25 and beyond. We enhanced our innovation processes and pipeline with strong performance from Celestial Season in Sleepy Time with melatonin and Throat Cooler. In fact, Sleepy Time with melatonin broke into the top 100 skews in the entire tea category in its first year. We are particularly pleased with the launch of our garden veggie flavor burst, which is the number one new product in the better for you snack category.

Speaker Change: and the U.K. are online branded business group load single digits and is outperforming the overall market growth. We expect both e-commerce and away from home to the meaningful drivers of growth in fiscal year 25 and beyond.

Speaker Change: We enhance our innovation processes and pipelines, with strong performance from celestial season in sleepy time with melatonin and throatgoolir. In fact, sleepy time with melatonin, broken to the top 100 SKU's and the entire T category in its first year.

Speaker Change: We are particularly pleased with the launch of our Garden Veggie Flavor Burst, which is the number one new product in the better for you snack category.

Wendy Davidson: And we are excited about the upcoming opening of our Innovation Experience Center at our headquarters in Hoboken, where we will be collaborating to develop leading innovation that meets better-for-you consumer demands. And we look forward to sharing our new fiscal year 25 planned launches at the appropriate time. The final pillar of our Henry imagined strategy is grow where we see the greatest opportunity for improvement as we head into fiscal year 25 and where we are laser focused on commercial execution. While the grow pillar did not progress as much as expected in fiscal year 24, the 85% of the business comprised of our grow and maintain brand did grow in fiscal year 24 with organic net sales of 3%.

Speaker Change: and we are excited about the upcoming opening of our Innovation Experience Center at our headquarters in Hoboken, where we will be collaborating to develop leading innovations that meets better for you consumer demands. And we look forward to sharing our new fiscal year 25 planned launches at the appropriate time.

Speaker Change: The final pillar of our Henry Imagine Strategy is Grow, where we see the greatest opportunity for improvement as we head into fiscal year 25 and where we are laser focused on commercial execution.

Speaker Change: While the grow pillar did not progress as much as expected in fiscal year 24, the 85% of the business comprised of our grow and maintain brands did grow in fiscal year 24 with organic net sales up 3%.

Wendy Davidson: Double-digit declines in the 15% of the business targeted for stabilization more than offset that growth. However, the foundational work we did this year, including portfolio shaping, placing new leaders and key positions, and customer and channel prioritization, is already making a difference with new distribution and shelf assortment. These changes have positioned us well to deliver sustainable growth going forward as we shift our focus to accelerated commercial execution. Let's now review each of our categories, the drivers of improved momentum, and more reasons to believe in our pivot to growth in fiscal year 2025. In snacks, our momentum built throughout the year on the success of the Garden Veggie flavor burst innovation as well as improvement in tarot chips.

Speaker Change: Double digit declines in the 15% of the business targeted for stabilization more than offset that growth.

Speaker Change: However, the foundational work we did this year, including portfolio shaping, placing new leaders and key positions, and customer and channel prioritization, is already making a difference with new distribution and shelf assortment.

Speaker Change: These changes have positioned us well to deliver sustainable growth going forward as we shift our focus to accelerated commercial execution.

Speaker Change: Let's now review each of our categories, the drivers of improved momentum and more reasons to believe in our pivot to growth in fiscal year 2025.

Speaker Change: In snacks, our momentum builds throughout the year on the success of the Garden Veggie Slaverberg's innovation, as well as improvement in tarot chips.

Wendy Davidson: In fact, snacks organic net sales growth was positive in North America in the fourth quarter of low single digits. As I mentioned, Flavor Burst is the number one innovation launch in the Better For You Salty Snack category this year and drove Garden Veggie consumption of mid single digits in the quarter. The improvement in terror is being driven by better mix and price-effect architecture, improving service levels and marketing support. On the last call, we mentioned we were launching our first ever national multi-brand snack promotion, Savory Your Summer. Savory Your Summer is driving positive sales across brands with shipper and pallet sales of 28% over the last summer at key customers.

Speaker Change: In fact, Snacks Organic Net Sales Growth was positive in North America in the fourth quarter of low-single digits. As I mentioned, flavor verse is the number one innovation launch in the better for youth-salty snack category this year, and drove garden veggie consumption of mid-single digits in the quarter.

Speaker Change: The Improvement in Tara is being driven by better mix and price-set architecture, improving service levels and marketing support.

Speaker Change: On the last call we mentioned we were launching our first ever national multi-brand snack promotion, saver your summer.

Speaker Change: Favorite your summer is driving positive sales across brands with shipper and pallet sales up 28% over the last summer at key customers.

Wendy Davidson: The program received particularly strong merchandising support across natural and grocery channel customers and is on track to exceed all of our targets for consumer metrics, with impressions, consideration, and engagement all coming in better than expected. We expect momentum in snacks to accelerate into fiscal 2025, building upon the flavor burst success. We'll have new flavors, tax sizes, and have already secured expanded distribution in the coming year. Additionally, our new Garden Veggie Masterbrand campaign, Young Believably Delicious, launched this month and we have additional initiatives in flight to expand snacks distribution across food, drugs, masks, and away from home channels with key customer events occurring in fiscal 2025.

Speaker Change: The program received particularly strong merchandising support across natural and grocery channel customers and is on track to exceed all of our targets for consumer metrics, with impressions, consideration and engagement all coming in better than expected.

Speaker Change: We expect momentum in snacks to accelerate in the fiscal 2025. Building upon the flavor-verse success will have new flavors, exercises, and have already secured expanded distribution in the coming year.

Speaker Change: Additionally, our new Garden Veggie Masterbrand campaign, young, believably delicious, launched this month and we have additional initiatives in flight, so expand SNAC's distribution across food, drugs, masks, and away from home channels with key customer events occurring in fiscal 2025.

Wendy Davidson: Finally, our channel strategy on Hartley's in the UK positions us for a strong back to school season, where we are looking to double our feature space with an additional 800 shippers, a big one for Hartley's, which is our key better for you snack brand in the market and the number one jelly brand in the UK. Embatian Kids Organic Net Sales Growth was slightly positive for the year, excluding infant formula, which, as we've mentioned previously, was impacted by persistent supply disruption. For infant formula, we delivered on our expectations for the fourth quarter and expect formula to be a key driver of growth in fiscal 2025.

Speaker Change: Finally, our channel strategy on Heartlead, in the UK, positions us for a strong, back-to-school season.

Speaker Change: where we are looking to double our feature space with an additional 800 shippers of big ones for heartlies.

Speaker Change: which is our key better for you snack brand in the market and the number one jelly brand in the UK.

Speaker Change: In baby and kids, organic net sales growth was slightly positive for the year excluding and centormula, which as we've mentioned previously was impacted by persistent supply disruption.

Speaker Change: For instance, formula we delivered on our expectations for the fourth quarter and expect formula to be a key driver of growth in fiscal 2025.

Wendy Davidson: We are back in supply, though not yet in full for all formulations and sizes. We expect supply to be fully recovered by the end of the first half and should have significant formula growth in the back half of the fiscal year with healthy supply on all items. To support this, we have planned incremental marketing support to recruit new families into the brand. While we have worked to do in order to earn back distribution, loss due to the supply challenges, the Earth Best brand remains strong. Where we have full distribution, velocities are back to where they were before the supply disruption.

Speaker Change: We are back in supply, so not yet in full for all formulations and sizes.

Speaker Change: We expect supply to be fully recovered by the end of the first half, and should have significant formula growth in the back half of the fiscal year with healthy supply on all items.

Speaker Change: To support this, we have planned incremental marketing support to recruit new families into the brand.

Speaker Change: While we have worked to do in order to earn back distribution, lost due to the supply challenges, the Earth's best brand remains strong. Where we have full distribution, the loss of these are back to where they were before the supply disruption.

Wendy Davidson: In the balance of the category, we saw strength and Earth Best snack driven in part by geographic expansion with a successful launch in Canada, where Earth Best Puff Snack was named winners of the Canadian Grand Prix, New Product Awards in 2024. Distribution in Canada is continuing to build, and later this year, we are rolling out our three top flavors of Earth Best smoothies, which have received strong retailer acceptance. Ellis Kitchen, which was again voted the most loved baby brand in the UK, outperformed the market and volume this year. During the quarter, we continued the roll out of our mono material pouches, which are fully curbside recyclable in the UK.

Speaker Change: In the balance of the category, we saw strength in Earth's best snack driven in part by geographic expansion with the successful launching Canada, where Earth's best puff snack was named winners of the Canadian Grand Prix New Product Awards in 2024.

Speaker Change: Distribution in Canada is continuing to build, and later this year we are rolling out our three top flavors of Earth's best movies, which have received strong retailer acceptance.

Speaker Change: Ellis Titian, which was again voted the most loved baby brand in the UK, outperform the market in volume this year.

Speaker Change: During the quarter, we continue to roll out of our monomaterial pouches, which are fully curb-siber-cycle in the UK.

Wendy Davidson: Our target is to have over 70% of our entire pouch range converted by the end of this calendar year. This is a strong point of distinction in the category and a driver of brand preference. Recruitment into the Ellis Kitchen brand continues to accelerate, with 53% of all first-time parents in the UK signing up to join the Ellis Kitchen community, who are become a friend program our highest recruitment attainment ever. And we continue to look for opportunities to partner with our customers for brand activation. Ellis recently launched an in-store partnership with Tesco to encourage more little ones to eat their five portions of fruit and vegetables today, and the brand is well positioned for growth in fiscal 2025.

Speaker Change: are targeted to have over 70% of our entire pouch range converted by the end of this calendar year. This is a strong point of distinction in the category and a driver of brand preference.

Speaker Change: Recruitment into the Ellis kitchen brand continues to accelerate with 53% of all first-time parents in the UK, signing up to join the Ellis kitchen community who are become a friend's program, our highest recruitment attainment ever.

Speaker Change: and we continue to look for opportunities to partner with our customers for brand activation. Ellis recently launched an insure partnership with Tessgo to encourage more little ones to eat their five portions of fruit and vegetable today and the brand is well positioned for growth in fiscal 2025.

Wendy Davidson: The beverage category was our strongest category this year, with mid-single digit organic net sales growth. This growth was primarily driven by strength in our European non-dairy beverage business. The European non-dairy beverage market continues to grow mid to high single digits, led by own label, where Hain has a leading role. We will be launching a new master-brand campaign ahead of hot tea season with a focus on taste and continuing to reinforce the sustainability benefits of the plastic overlap removal from our packaging. We expect a campaign and the expansion into black and green tea to contribute to accelerating growth in Celestial Seasonings in fiscal 2025.

Speaker Change: The beverage category was our strongest category this year with mid-Single Digital Organic Net Sales Growth. This growth was primarily driven by strength in our European non-dairy beverage business.

Speaker Change: The European Non-Berry beverage market continues to grow mid to high-synchled digits led by one label where Hain has a leading role.

Speaker Change: Franian brand Natumi also saw strong growth this year. We expect to continue to drive growth in non-dairy beverage in fiscal year 25, with new secured contracts and innovation in the Oak category, building upon the success of our zero sugar oat launch.

Speaker Change: The last few seasonings also grew in fiscal 2014 with low single-digit organic net sales growth, outpacing the category and gaining share.

Speaker Change: We will be launching a new MasterBrain campaign ahead of hot T-season with a focus on taste and continuing to reinforce the sustainability benefits of the plastic over-repear removal from our packaging.

Speaker Change: We expect the campaign and the expansion into black and green tea to contribute to accelerating growth and celestial seasonings in fiscal 2025.

Wendy Davidson: Neural prep delivered low single digit organic net sales growth in fiscal 2024. We saw strong growth in branded soup in the UK, where we outperformed the market and gained share. We expect to build upon our leading number one, number two, and number three position in the UK with distribution gains coming ahead of the next soup season. Within plant-based meat free, the Eves brand in Canada continues to outperform the category and gain share despite significant category headwinds and some supply service challenges in the back half of the year during our plant consolidation. While the Linda McCartney food brand in the UK saw double-digit decline, 60% of the portfolio is gaining or holding share.

Speaker Change: Neal Pratt delivered low-fingled digit, organic net sales growth in fiscal 2024.

Speaker Change: We saw strong growth in branded soup in the UK, where we outperformed the market and gained shares. We expected build upon our leading number one, number two, and number three position in the UK, with distribution gains coming ahead of the next suit season.

Speaker Change: with an plant-based meat-free, the Eve's branding Canada continues to outperform the category and gain share despite significant category headwinds and some supply service challenges in the back half of the year during our plant consolidation.

Speaker Change: While the Linda McCartney Food Brand in the UK saw double-digit declines, 60% of the portfolio is gaining or holding share.

Wendy Davidson: We have made portfolio changes, exiting the refrigerated segment and right sizing our operations capacity to address the software market and improve our overall competitiveness as the category consolidates in the UK. And finally, personal care, our smallest category, said 20% organic net sales decline in fiscal 2024. As outlined last quarter, we are executing our plan to simplify, prioritize, and focus our business around a core set of brands and personal care categories. We remain hyper focused on this shrink to grow plan to stabilize personal care and enable a strategic review of the brands and business for optionality.

Speaker Change: We have made portfolio changes, exiting the refrigerated segment, and right-sizing our operation's capacity to address the softer market and improve our overall competitiveness as the category consolidates in the UK.

Speaker Change: And finally, Personal Care, our smallest category, said 20% organic net sales decline in fiscal 2024. As outlined last quarter, we are executing our plan to simplify, prioritize, and focus our business around a core set of brands and personal care categories.

Speaker Change: We remain hyper-focused on this shrink-to-grow plan, the stabilized personal care and enable us to teach a review of the brands and business for optionality.

Wendy Davidson: Looking ahead, fiscal 2025 will be a critical year as we pivot to growth, continue to drive further margin expansion, and generate significant free cash flow to reduce net debt, improve leverage, and invest in our brands. We will build upon the momentum in the grow and maintain businesses through commercial execution in channel expansion, distribution gains, innovation launch support, and disruptive brand support. The 15% of the business in the stabilized bucket was a significant headwind in fiscal 2024. We have line of sight to full recovery of formula supply, which we expect will drive growth in formula this fiscal year, and we are aggressively working to stabilize personal care and plant-based meat-free.

Speaker Change: Looking ahead, fiscal 2025 will be a critical year as we pivot to growth, continue to drive further margin expansion and generate significant free cash flow to reduce net debt, improve leverage and invest in our brands.

Speaker Change: We will build upon the momentum in the grow and maintain businesses through commercial execution in Channel Expansion, Distribution and Games, Innovation Launch Support, and

Speaker Change: The 15% of the business in the stabilized bucket was a significant headwind in fiscal 2024. We have line-and-sight to full recovery, a formula supply which we expect will drive growth in formula this fiscal year and we are aggressively working to stabilize personal care and plant-based meat free.

Wendy Davidson: Fissel 2025 will also see continued evolution of our global operating model centered on our commercial route to market and into and wiring across the organization to improve speed to shelf and customer focus. And lastly, we'll continue to capitalize on the progress made in our fuel initiatives through revenue growth management, working capital management, and productivity. We remain confident in the Hain Reimagined algorithm and our ability to pivot to growth in fiscal 2025.

Speaker Change: This will 2025 will also see continued evolution of our global operating model centered on our commercial route to market and end-to-end wiring across the organization who improved speed to shelf and customer focus.

Speaker Change: and lastly, we'll continue to capitalize on the progress made in our fuel initiatives through revenue growth management, working capital management and productivity.

Lee: We remain confident in the Henry Imagine algorithm and our ability to pivot to growth in fiscal 2025. With that, I'll turn it over to Lee to discuss our financial results and fiscal 2025 outlook in more detail.

Lee Boyce: With that, I'll turn it over to Lee to discuss our financial results and fiscal 2025 outlook in more detail. Thank you, Wendy, and good morning, everyone. As Wendy discussed, strong progress in the focus and fuel pillars of Hain Reimagined enabled us to deliver upon our updated guidance for the year. In fact, top line results were ahead of our guidance, and adjusted EBITDA results were at the high end. Approximately 85% of the business grew in fiscal 2024, and we have made progress towards and are continuing to focus on stabilizing the balance. Our free cash flow generation drove gross margin expansion, net debt reduction, and improvement in leverage, all while enabling us to invest in developing competencies to pivot to growth.

Lee: Thank you, Wendy, and good morning, everyone.

Lee: As Wendy discussed, strong progress in the focus and fuel pillars of Henry imagined, enabled us to deliver upon our updated guidance for the year. In fact, top line results were ahead of our guidance and adjusted EBITDA results were at the high end.

Lee: Approximately 85% of the business grew in fiscal 2024. And we have made progress towards and are continuing to focus on stabilizing the balance.

Lee: Our free cash flow generation drove gross margin expansion, net debt reduction, and improvement in leverage, all while enabling us to invest in developing competencies to pivot to growth.

Lee Boyce: We're excited to build upon this strong foundation in fiscal 2025. Let's look at the results in more detail.

Lee: We are excited to build upon this strong foundation in fiscal 2025.

Lee Boyce: For the fourth quarter, we saw a negative organic net sales growth of 4% year over year. The decrease was driven by lower sales in both North America and international segments. For the four year, organic net sales growth was ahead of our updated guidance at down 2%, driven by 4% growth in international more than offset by 6% decline in North America. Net sales growth also reflects a 1 percentage point benefit from foreign exchange. We delivered 4th quarter adjusted EBITDA of $40 million compared to $44 million a year ago. Adjusted EBITDA margin was 9.4%, representing a 30 basis point decrease versus the prior year.

Lee: Let's look at results in more detail.

Lee: So the fourth quarter we saw a negative organic net sales growth of 4% year over year.

Lee: The decrease was driven by lower sales in both North America and international segments.

Operator: Fiscal Fourth Quarter, 2024, our earnings conference call. This time, our participants will be in listen only mode. Question and answer session will follow the formal presentation. If anyone today should acquire Alberta Assistance during the conference, please press star zero from your telephone keypad. Please note, this conference is being recorded.

Operator: Fiscal Fourth Quarter, 2024, our earnings conference call. This time, our participants will be in listen only mode. Question and answer session will follow the formal presentation.

Lee: For the full year, organic net sales growth was ahead of our update to guidance at down to percent, driven by 4% growth in international, more than offset by 6% decline in North America.

Operator: If anyone today should acquire Alberta Assistance during the conference, please press star zero from your telephone keypad. Please note, this conference is being recorded.

Lee: Net sales growth also reflects a 1 percentage point benefit from foreign exchange.

Alexis Tessier: At this time, I'll turn the conference over to Alexis Tessier with investor relations.

Alexis Tessier: Alexis, you may now begin. Good morning, and thank you for joining us for a review of our fourth quarter quarter results. I am joined this morning by Wendy Davidson, our president and chief executive officer and Lee Boyce, our chief financial officer.

Wendy Davidson: Alexis, you may now begin. Good morning, and thank you for joining us for a review of our fourth quarter quarter results. I am joined this morning by Wendy Davidson, our president and chief executive officer and Lee Boyce, our chief financial officer.

Lee: We delivered 4-culture adjusted EBITDA of $40 million, compared to $44 million a year ago.

Lee: I just did EBITDA margin was 9.4% representing a 30 basis point decrease versus the prior year.

Lee Boyce: For the full year, adjusted EBITDA was at the high end of our updated guidance at $155 million compared to $167 million in the prior year. Adjusted gross margin was 23.4% in the fourth quarter, increasing approximately 70 basis points year over year. The increase was driven by productivity and pricing on the success of fuel and revenue growth initiatives, partly offset by de-laverage on lower sales volume and cost inflation. For the full year, adjusted gross margin increased 30 basis points year over year to 22.4%. SG&A increased 8% year over year to $72 million, representing 17.3% of net sales for the quarter as compared to 14.9% in the year-ago period.

Alexis Tessier: Slide two shows our forward-looking statements disclaimer. As you are aware, during the course of this call, we may make forward-looking statements within the meeting of federal security laws. These includes 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 pay, quarterly reports on form 10 queue and other reports and files from time to time with the SEC, as well as the press release issued this morning for a detailed discussion of the risk.

Wendy Davidson: Slide two shows our forward-looking statements disclaimer. As you are aware, during the course of this call, we may make forward-looking statements within the meeting of federal security laws. These includes 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 pay, quarterly reports on form 10 queue and other reports and files from time to time with the SEC, as well as the press release issued this morning for a detailed discussion of the risk.

Lee: For the full year, adjusted EBITDA was at the high end of our updated guidance at $165 million. Compared to $167 million in the prior year.

Lee: A just-it-gross margin was 23.4% in the fourth quarter, increasing approximately 70 basis points year over year.

Lee: The increase was driven by productivity and pricing on the success of fuel and revenue growth initiatives, partly offset by de-laborage on lower sales volume and cost inflation.

Alexis Tessier: We have also prepared a presentation inclusive additional supplemental financial information, which is posted on our website at pain.com under the investor's heading. As we discuss our results today, unless noted as reported, our remarks will focus on non-gap or exhausted financial measures. Reconciliation of non-gap financial measures to gap results are available in the earnings release and the slide presentation accompanying the call. This call is being passed and an archive will be made available on the website.

Wendy Davidson: We have also prepared a presentation inclusive additional supplemental financial information, which is posted on our website at pain.com under the investor's heading. As we discuss our results today, unless noted as reported, our remarks will focus on non-gap or exhausted financial measures. Reconciliation of non-gap financial measures to gap results are available in the earnings release and the slide presentation accompanying the call. This call is being passed and an archive will be made available on the website.

Lee: For the full year, adjusted gross margin increased 30 basis points year over year to 22.4%.

Lee: SGA increased 8% year over year to $72 million. Representing 17.3% of net sales for the quarter, as compared to 14.9% in the year ago period.

Lee Boyce: The increase was primarily driven by legal expenses as well as personnel costs due to the timing of bonus accrual release versus the prior year.

Lee: The increase was primarily driven by legal expenses, as well as personnel costs due to the timing of bonus accrual release versus the prior year.

Wendy Davidson: And now I'd like to turn the call over to Wendy. Thank you, Alexis and good morning, everyone. I'll start by reviewing today's key messages, the progress we've made on our hate reimagined strategy and reasons to believe in our pivot to growth in fiscal 2025. I'll then turn the call over to Lee, who will provide additional detail on our fourth quarter and full year results and our outlook for the coming year. We'll close out the call with time for Q&A.

Lee Boyce: For the four year, SGNA was flat year over year at $290 million, representing 16.7% of net sales as compared to 16.1% in the year-ago period.

Lee: For the full year, SGA was flat year over year at $290 million.

Lee: Representing 16.7% of net sales, as compared to 16.1% in the year of Operiet.

Lee Boyce: During the quarter, we took charges totaling $10 million associated with actions under the restructuring program, including contract termination costs, asset write-downs, employee-related costs, and other transformation-related expenses. Of these charges, $3 million were non-cash. For the four year, we took $63 million in charges associated with the transformation program, which is comprised of $60 million of restructuring charges and $3 million of expenses associated with inventory write downs. Of these charges, $27 million were non-cash. As previously discussed, the total transformation program charges are expected to be $115 million to $125 million, inclusive of potential inventory write-downs of approximately $25 million related to brand and category assets.

Lee: During the quarter, we took charge of totaling $10 million, associated with actions under the restructuring program, including contract termination costs, asset write downs, employee related costs, and other transformation related expenses.

Wendy Davidson: Let me start by saying that I'm pleased that we delivered on our updated guidance with organic net sales growth ahead of our guidance and adjusted EBITDA at the upper end of our guidance and continued progress in adjusted growth margin expansion. And importantly, we exceeded our free cash flow expectations based on strong delivery from our fuel initiatives, especially in working capital revenue growth management and operational efficiency. Disenabled us to further pay down debt and improve our leverage position approximately 85% of our business grew in fiscal year 24 with organic net sales growth of plus 3% and we have initiatives in place to stabilize the remaining 15%.

Lee: Of these charges, $3 million were non-cash.

Lee: For the full year, we took 63 million dollars in charges associated with the transformation program. We just comprised of 60 million dollars of restructuring charges and 3 million dollars of expenses associated with inventory right downs.

Lee: Of these charges, $27 million were non-cash.

Lee: [inaudible]

Wendy Davidson: I believe we are well positioned as we head into fiscal year 2025 to pivot to growth. Building upon this solid foundation and momentum, we are pivoting our focus to stronger commercial execution to deliver top and bottom line growth and fiscal 25. We remain committed to the hate reimagined algorithm we outlined last year, so we are now using fiscal 24 as the base for our organic net sales growth. We are confident in the strength of our diversified portfolio and geographic footprint, the benefits of scale and our operating model and our ability to deliver sustainable growth.

Lee Boyce: The balance of the restructuring charges is expected to be $90 to $100 million. Restructuring charges are excluded from adjusted operating results. Interest costs fell 1% year over year to $14 million in the quarter, driven by lower outstanding borrowings, partially offset by the higher variable interest on the unhedged portion of our debt. As a reminder, we have hedged our rate exposure on more than 50% of our loan facility with fixed rates at 5.6%. We continue to prioritize reducing net debt over time. Adjusted net income, which excludes the effect of restructuring charges, amongst other items, was $11 million in the quarter, or $13 per diluted share, versus $10 million, or $11 per diluted share in the prior year period.

Lee: The balance of the restructuring charges is expected to be $90 to $100 million.

Lee: Restructuring charges are excluded from adjusted operating results.

Lee: Interest Costs fell 1% year over year to $14 million in the quarter, driven by lower outstanding borrowings, partially offset by the higher variable interest on the un-hage portion of our

Wendy Davidson: Let me now discuss the progress we've made on the four pillars of our Hain re-imagined strategy starting with focus. In fiscal 24, we made tremendous progress under the focus pillar to drive our five core categories and five core geographies while transforming the company into an integrated enterprise. We consolidated our global manufacturing footprint to reduce complexity within our supply chain and drive synergies and scale. We exited non-strategic categories, geographies and brands including the divestitures of Queen Helene and Sensors, and we are creating a winning portfolio of brands with stronger velocities and growth margins.

Speaker Change: As a reminder, we have hedged our rate exposure on more than 50% of our loan facility, with fixed rates at 5.6%. We continue to prioritise reducing net debt over time.

Speaker Change: Adjusted net income, which excludes the effect of restructuring charges amongst other items, was $11m in the quarter, or $13 per diluted share, versus $10m or $11 per diluted share in the prior year period.

Lee Boyce: Four-year adjusted net income was $30 million, or $33 per diluted share, compared to $45 million, or $50 per diluted share in the prior year.

Speaker Change: 4-year adjusted net income with 30 million dollars or 33 cents per diluted share.

Wendy Davidson: Importantly, we integrated the business globally to operate at scale and establish a clear Hain culture based on performance and values. Our supply chain team is a strong example of the strides we're making and building a performance-driven culture. Across our global Hain manufacturing operations, we've achieved world-class safety levels and the team continue to invent the processes, systems and recognition to ensure we are focused on the safety of our people, our plants and our equipment as we generate fuel and build our brands and our business.

Speaker Change: compared to 45 million dollars or 50 cents per dilute share in the prior year.

Lee Boyce: Now turning to our individual reporting segments. In North America, we delivered negative 5% organic net sales growth year-over-year. The decrease was primarily driven by lower sales in infant formula, which was a 260 basis point drag, and a decline in the personal care business, which represented a 170 basis point drag on North America sales. This was partially offset by growth in snacks. Both 20 basis point decrease versus the prior year, driven by cost inflation and de-leveraging on lower sales volume, partially offset by productivity and pricing, on the success of fuel and revenue growth management initiatives. Adjusted EBITDA in North America was $21 million, as compared to $27 million in the year-ago period, and the adjusted EBITDA margin was 8%, a 150 basis point decrease year over year.

Speaker Change: Now turning to our individual reporting segments.

Speaker Change: In North America, we delivered negative 5% organic net sales growth, year over year.

Speaker Change: The decrease was primarily driven by lower sales in infant formula, which was a 260 basis point drag and a decline in the personal care business, which represented a 170 basis point drag on North America sales.

Speaker Change: This was Partial Set by Grootin Snacks.

Speaker Change: Ballful Tragedy Gross Margin in North America was 22.6%.

Speaker Change: A 20 basis point decrease versus the prior year, driven by cost inflation and de-laboration on lower sales volume, partially offset by productivity and pricing on the success of fuel and revenue growth management initiatives.

Wendy Davidson: Our robust productivity pipeline for fiscal 2025 gives us confidence in our ability to deliver another strong year of fuel. We continue to drive better net price realization and promotional effectiveness to revenue growth management. In fiscal 24, we enhanced RGM capabilities across the organization with a key emphasis on trade spend efficiency, contributing to a 50 basis point improvement year over year and trade rate. These capabilities will enable continued progress and delivery in RGM for net price realization, trade efficiency and mix in fiscal year 25.

Speaker Change: adjusted EBITDA or in North America was $21 million. As compared to $27 million in the year ago period. And adjusted EBITDA margin was 8% a 150 basis point decrease year over year.

Lee Boyce: The year-over-year decline resulted primarily from the leverage on lower volume.

Speaker Change: The year of the year decline resulted primarily from the leverage on lower volume.

Lee Boyce: In our international business, organic net sales declined 4% in the porter. As Wendy mentioned, beverage is demonstrated strong growth in the porter, though this was more than offset by continued softness in plant-based meat free, a stabilized business in our mill prep category, as well as snacks. International adjusted gross margin was 24.8%, up approximately 210 basis points year over year, driven by productivity partially offset by inflation. International adjusted EBITDA was $27 million, consistent with the prior year, as productivity gains offset the impact of inflation. Adjusted EBITDA margin was 17%, up approximately 40 basis points year over year.

Speaker Change: In our international business, organic net sales declined 4% in the porter.

Speaker Change: As Wendy mentioned, beverages demonstrated strong growth in the porter, though this was more than offset by continuous softness in plant-based meat-free, a stabilized business in our mill prep category, as well as snacks.

Wendy Davidson: Within working capital management, investments in digital technology and improved processes enabled improved forecast accuracy to drive inventory levels down by three days. Additionally, we extended days' payable outstanding by 15 as we drive towards our hangry imagined goals. Our successful fuel initiatives in fiscal 24 facilitated material debt paydown, reduction in leverage, investments in the business, adjusted gross margin expansion, offsetting inflation and volume due leverage, and delivery of our updated guidance. As we head into fiscal year 25, we believe that significant opportunities remain in working capital on our path to deliver the $165 million we outlined on investor day.

Wendy: International Adjusted Gross margin was 24.8%. Upper approximately 210 basis points year over year, driven by productivity, partially offset by inflation.

Wendy: International Adjusted EBITDA was $27 million, consistent with the prior year as productivity gains offset the impact of inflation.

Wendy: adjusted EBITDA margin was 17% up approximately 40 basis points year over year.

Lee Boyce: Shifting to cash flow and the balance sheet, we generated $31 million in free cash flow in the porter, compared to $34 million in the year-ago period. For the full year, we generated $83 million in free cash flow, compared to $39 million in the prior year. The increase was driven by working capital initiatives. Our days payable outstanding improved to 52 from 37 into fiscal year 23, and our days inventory outstanding improved to 79 from 82 in fiscal year 23. We are pleased with the progress we are making towards our hate reimagined targets of 70 plus days payable outstanding and 55 days inventory outstanding by fiscal year 2027.

Wendy Davidson: This year, we launched our agile and ant brand building model and rolled out a number of campaigns to drive greater awareness, reach, household penetration and share on key brands such as celestial seasonings, Ellis kitchen and earth best. We will continue to drive brand campaigns that leverage the scale of a larger company with the consumer focus of smaller challenger brands as we strive to outsmall the big and outbick the small. We continue to progress our channel expansion strategy with a particular focus on ensuring our products and brands are available where the shopper is shopping.

Wendy: Shifting to cash flow in the balance sheet.

Wendy: We generated $31 million in free cash flow in the quarter, compared to $34 million in the year ago period.

Wendy: For the four year, we generated $83 million dollars in free cash flow compared to $39 million dollars in the prior year.

Wendy: The increase was driven by working capital initiatives.

Wendy: Our days pair of outstanding improved to 52 from 37 into fiscal year 23 and our days inventory outstanding improved to 79 from 82 in fiscal year 23.

Wendy Davidson: In this first year, we leaned into a way from home many commerce where we have established focus teams to drive reach and growth in these margin of creative channels. Northwest, expanded our route to market with distribution partners and expanded food service in both North America and international. Garden Veggie and Tara in particular saw strong growth in sea stores with garden veggie dollar sales of 49% and Tara of 48% this year. Within ecommerce, we saw growth in North America from key strategic brands, including Garden Veggie, up low single digit for the year and celestial, up mid single digit, as well as double digit growth and snacks and pouches for us best.

Wendy: We are pleased with the progress we are making towards our Henry Imagine targets of 70 plus days perable outstanding and 55 days inventory outstanding by fiscal year 2027.

Lee Boyce: CapEx was $9 million in the quarter and $33 million in fiscal 2024. Looking ahead to fiscal 2025, we expect expenditures to be approximately $50 million. Finally, we close the quarter with cash on hand of $54 million and net debt of $690 million, translating into a net leverage ratio of 3.7 times as calculated under our credit agreement. We drove leverage lower than expected due to better cash flow on the momentum from our fuel initiatives. We continue to expect our net leverage to tick up modestly in the fiscal first quarter, driven by seasonality, before ending fiscal 2025 in the mid to high threes.

Wendy: CapEx was $9 million in the quarter, and $33 million in fiscal 2024.

Wendy: Looking ahead to fiscal 2025, we expect the expenditures to be approximately $50 million.

Wendy: Finally, we close the quarter with cash on hand of $54 million and net debt of $690 million. Translating into a net leverage ratio of 3.7 times as calculated under our credit agreement.

Wendy: We drove leverage lower than expected due to better cash flow on the momentum from our fuel initiatives.

Wendy Davidson: In the UTA, our online branded business grew low single digits and is outperforming the overall market growth. We expect both ecommerce and away from home to be meaningful drivers of growth in fiscal year 25 and beyond.

Wendy: We continue to expect our net leverage to tick up modestly in the fiscal first quarter driven by seasonality before ending fiscal 2025 in the mid to high threes.

Lee Boyce: We are comfortable that we have sufficient headroom under our existing covenants. Paying down debt and strategically investing in the business continues to be our priority for cash, and we have reduced net debt by $86 million since the beginning of the fiscal year. Our long-term goal remains to reduce balance sheet leverage to three times adjusted EBITDA or less, as calculated under our credit agreement.

Wendy Davidson: We enhanced our innovation processes and pipeline with strong performance from celestial seasonings sleepy time with melatonin and throat cooler. In fact, sleepy time with melatonin broke into the top 100 skews in the entire tea category in its first year. We are particularly pleased with the launch of our garden veggie flavor burst, which is the number one new product and the better for you snack category. And we are excited about the upcoming opening of our innovation experience center at our headquarters in Hoboken, where we will be collaborating to develop leading innovation that meets better for you consumer demands. And we look forward to sharing our new fiscal year 25 planned launches at the appropriate time.

Wendy: We are comfortable that we have sufficient headroom under our existing confidence.

Wendy: Paying down debt and strategically investing in the business continues to be our priorities for cash, and we have reduced net debt by $86 million since the beginning of the fiscal year.

Wendy: Our long-term goal remains to reduce balance sheet leverage to three times adjusted EBITDA or less, as calculated under our credit agreement.

Lee Boyce: Turning now to our outlook, we expect to pivot to growth in fiscal 2025. We expect organic net sales growth to be flat or better; adjusted EBITDA to grow by mid-single digits. Gross margin to expand by at least 125 basis points and free cash flow of at least $60 million.

Wendy: Turning now to our outlook, we expect to pivot to growth in fiscal 2025.

Wendy: We expect organic net sales growth to be flat or better.

Wendy Davidson: The final pillar of our Henry imagined strategy is grow where we see the greatest opportunity for improvement as we head into fiscal year 25 and where we are laser focused on commercial execution. While the grow pillar did not progress as much as expected in fiscal year 24, the 85% of the business comprised of our grow and maintain brand did grow in fiscal year 24 with organic net sales of 3%. Double digit declines in the 15% of the business targeted for stabilization more than offset that growth.

Wendy: Adjusting EBITDA to grow by mid-single digits.

Wendy: Ross Margin to expand by at least 125 basis points.

Lee Boyce: And while we don't intend to provide quarterly guidance, we want to share some commentary on the shape of the year. From an organic net sales perspective, we anticipate that year-over-year growth will improve as the year progresses as follows. In the first quarter, we expect negative organic net sales growth at a similar rate of decline year-over-year as in the fourth quarter of fiscal 2024. We expect flat-ish year-over-year growth in the second quarter and accelerating growth in the back half of the year. Backed is contributed into the cadence of the year include promotional activity and snacks that is shifted into the fiscal third quarter from the fiscal first quarter, which will be a headwind in the first quarter but not impact the full year.

Wendy: and free cash flow of at least $60 million.

Wendy: and while we don't intend to provide quality guidance, we want to share some commentary on the shape of the year.

Wendy: From an organic net sales perspective, we anticipate that year over year growth will improve as the year progresses as follows.

Wendy: In the first quarter, we expect negative organic net sales growth at a similar rate of decline in year over year as in the fourth quarter of fiscal 2024.

Wendy Davidson: However, the foundational work we did this year, including portfolio shaping, placing new leaders in key positions and customer and channel prioritization is already making a difference with new distribution and shelf assortment. These changes have positioned us well to deliver sustainable growth going forward as we shift our focus to accelerated commercial execution.

Wendy: We expect flat-ish year-over-year growth in the second quarter and accelerating growth in the back half of the year.

Wendy: factors contribute into the cadence of the year include promotional activity in snacks that is shifted into the fiscal third quarter from the fiscal first quarter, which will be a headwind in the first quarter but not impact the full year.

Wendy Davidson: Let's now review each of our categories, the drivers of improved momentum and more reasons to believe in our pivot to growth in fiscal year 2025. In snacks, our momentum built throughout the year on the success of the Garden Veggie flavor burst innovation as well as improvement in tarot chips. In fact, snacks organic net sales growth was positive in North America in the fourth quarter of low single digits. As I mentioned, flavor burst is the number one innovation launch in the better for use, healthy snack category this year and drove Garden Veggie consumption of mid single digits in the quarter.

Lee Boyce: As we mentioned on our last call, our portfolio simplification initiatives will have a year-on-year impact predominantly in the first half. And as Wendy mentioned, our infant formula supply will be recovering over the first half of the year, with full supply supporting our Earth's Best business growth in the back half. Lastly, adjusted EBITDA growth for the full year will be driven by growth in the back half. Please note that we are updating our definition of organic net sales growth for the fiscal 2025 to exclude the impact of foreign exchange. We do not expect 4x to be a key driver of a variance in 2025.

Wendy: As we mentioned on Alaska, our portfolio simplification initiatives will have a year-on-year impact, predominantly in the first half.

Wendy: and as Wendy mentioned, our infant formula supply will be recovering over the first half of the year. With full supply supporting our Earth Best Business Growth in the Backcast.

Speaker Change: Lastly, adjusted EBITDA growth for the full year will be driven by growth in the back half.

Wendy Davidson: The improvement in terror is being driven by better mix and price-effect architecture, improving service levels, and marketing support. On the last call we mentioned we were launching our first ever national multi-brand snack promotion, Savory Your Summer. We are now in grocery-channel customers and is on track to exceed all of our targets for consumer metrics, with impressions, consideration, and engagement all coming in better than expected. We expect momentum in snacks to accelerate into fiscal 2025.

Speaker Change: Please note that we are updating our definition of organic net sales growth for the fiscal 2025 to exclude the impact of foreign exchange. We do not expect Forex to be a key driver of variants in 2025.

Lee Boyce: And finally, as Wendy mentioned, we remain committed to the algorithm outlined in Hain Reimagined, organic net sales, Kager of 3% plus, 4 to 500 basis points of adjusted gross margin expansion, together to 26% plus. And the just EBITDA margin of 12% plus by fiscal 2027. However, the basin from which we are growing will be adjusted to fiscal 2024 organic net sales.

Speaker Change: And finally as Wendy mentioned, we remain committed to the algorithm outlined in Hayen Reimagined.

Wendy: Organic Net Sales Cagher of 3% Plus.

Wendy: 4 to 500 basis points of adjusting gross margin expansion to get us to 26% plus.

Wendy: and the just EBITDA margin of 12% plus by fiscal 2027.

Wendy Davidson: Building upon the flavorverse success, we'll have new flavors, tax sizes, and have already secured expanded distribution in the coming year. Additionally, our new Garden Veggie Masterbrand campaign, young believably delicious, launched this month and we have additional initiatives in flight to expand snacks distribution across food, drugs, masks, and away from home channels, with key customer events occurring in fiscal 2025. Finally, our channel strategy on Hartley's in the UK positions us for a strong back to school season, where we are looking to double our feature space with an additional 800 shippers, a big one for Hartley's, which is our key better for you snack brand in the market, and the number one jelly brand in the UK.

Speaker Change: However, the Basin from which we are growing will be adjusted to fiscal 2024 organic net fairs.

Wendy Davidson: And now I hand it back over to Wendy. Thank you, Lee. We are one year into Hain Reimagined, and we are making strong progress in the four pillars of the strategy. Our progress in driving focus, resetting our global operating model, kicking off our fuel program, and investing in key capabilities to enable growth position Hain stronger than we were a year ago. And while our pivot to growth in some areas has taken longer and resulted in a reset of our starting point, we are now positioned to deliver on our promise and remain committed to our Hain Reimagined algorithm.

Speaker Change: and now I hand it back over to Wendy.

Wendy: Thank you, Lee.

Wendy: We are one year into Henry Imagine and we're making strong progress in the four pillars of the strategy.

Wendy: Our progress in driving focus, resetting our global operating model, picking off our fuel program and investing in key capabilities to enable growth position-hanging stronger than we were a year ago.

Wendy: and while our television growth in some areas has taken longer and resulted in a reset of our starting point, we are now positioned to deliver on our promise and remain committed to our pain-rambling algorithms.

Wendy Davidson: Our work in the fuel pillar has exceeded expectations. Momentum is building across the business as evidenced by the 85% of the business that is in growth. And we are hyper focused on the commercial execution to deliver top and bottom line growth in fiscal 2025 and beyond. Our strong free cash flow generation has enabled accelerated reduction in net debt, improvement in our leverage ratio, growth margin expansion, and investment in our brand and in key commercial capabilities, all giving us confidence in our ability to deliver on our Hain Reimagined outlook. We are a markedly different company today than we were just one year ago.

Wendy Davidson: Embadiant kids, organic net sales growth, was slightly positive for the year, excluding infant formula, which as we've mentioned previously, was impacted by persistent supply disruption. For infant formula, we delivered on our expectations for the fourth quarter and expect formula to be a key driver of growth in fiscal 2025. We are back in supply, though not yet in full for all formulations and sizes. We expect supply to be fully recovered by the end of the first half and should have significant formula growth in the back half of the fiscal year with healthy supply on all items.

Wendy: Our work in the fuel pillar has exceeded expectations. Momentsum is building across the business as evidenced by the 85% of the business that is in growth, and we are hyper-focused on the commercial execution to deliver top and bottom lines growth in fiscal 2025 and beyond.

Wendy: Our strong free cash flow generation has enabled accelerated reduction in net debt, improvement in our leverage ratio, growth margin expansion, and investment in our brands and in key commercial capabilities. All giving us confidence in our ability to deliver on our hand reimagined outlook.

Wendy Davidson: To support this, we have planned incremental marketing support to recruit new families into the brand. While we have worked to do in order to earn back distribution, loss due to the supply challenges, the earth best brand remains strong, where we have full distribution velocities are back to where they were before the supply disruption. In the balance of the category, we saw strength in earth best snack driven in part by geographic expansion with a successful launch in Canada, where earth best puff snack was named winners of the Canadian Grand Prix new product awards in 2024.

Wendy Davidson: As we begin to capitalize on our diversified portfolio, our market reach and global scale, and we will be even stronger a year from now. I am excited for the year ahead as we pivot to growth and begin to realize our full potential as one Hain.

Wendy: We are in markedly different company today than we were just one year ago. As we begin to capitalize on our diversified portfolio, our market reach and global scale and we will be even stronger a year from now.

Wendy: I am excited for the year ahead as we pivot to growth and begin to realize our full potential at one hand.

Wendy Davidson: Before we open it up for questions, I want to thank all of our team members for their passion and commitment, which are critical drivers to all that we have accomplished together in this first year. And we'll accelerate our delivery of Hain Reimagined.

Wendy: Before we open it up for questions, I want to thank all of our team members for their passion and commitment which are critical drivers to all that we have accomplished together in this first year and will accelerate our delivery of pain reimagined. Operator, please don't find the line for questions.

Operator: Operator, please open the line for questions. Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star one from your telephone keypad, and a confirmation tone indicate your line is in the question queue. You may press star two if you'd like to withdraw your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. So we may address questions as many participants as possible.

Wendy Davidson: In Canada, it's continuing to build and later this year, we are rolling out our three top flavors of earth best smoothies, which have received strong retailer acceptance. Ellis Kitchen, which was again voted the most loved baby brand in the UK, outperformed the market and volume this year. During the quarter, we continued the rollout of our mono material pouches, which are fully curbscibe recyclable in the UK. Our target is to have over 70% of our entire pouch range converted by the end of this calendar year.

Speaker Change: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please for a star one from your telephone keypad and a confirmation tone indicate your line is in the question

Speaker Change: You may press star 2 if you like to withdraw your question from the queue.

Speaker Change: For resistance that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Operator: We ask you, please themself to one question and one follow question. One more, please. Will we pull for questions?

Speaker Change: So, the major questions for many participants is possible. We ask you please let yourself to one question and one follow a question.

Wendy Davidson: This is a strong point of distinction in the category and a driver of brand preference. Recruitment into the Ellis Kitchen brand continues to accelerate with 53% of all first-time parents in the UK signing up to join the Ellis Kitchen community who are become a friend program, our highest recruitment attainment ever. And we continue to look for opportunities to partner with our customers for brand activation. Ellis recently launched an in-store partnership with Tesco to encourage more little ones to eat their five portions of fruit and vegetable today, and the brand is well positioned for growth in fiscal 2025.

Operator: Thank you, and our first question.

James Salera: We'll be coming from the line of Jim Solera with Stevens. Please proceed with your questions. Hi, good morning, everybody. Thanks for taking our question. I appreciate the color on kind of the shape of 2025. If we think about, you know, what would be an incremental driver from the, you know, flat guidance to the better than flat? Can you maybe just walk through?

Speaker Change: Thank you and our first question. We'll be coming from the line of Jim Solera with Steven's. Please see with your questions.

Jim Solera: Hi, good morning everybody. Thanks for taking our question.

Speaker Change: and I appreciate it.

Jim Solera: Yeah, I appreciate the color on kind of the shape of 2025. If we think about what would be an incremental driver from the, you know, flat guidance to the better than flat.

Lee Boyce: Would incremental performance come from from sales in snacks in the back app from formula in the back after you can maybe just touch on each category and if we were expected to be in the better part of the guidance, where that incremental performance would come from?

Speaker Change: He maybe just walks through, you know, would incremental offer performance come from sales in snacks in the back app, from formula in the back app. If you could maybe just touch on each category, and if we were expected to be in the better part of the guidance, where that incremental offer performance would come from.

Wendy Davidson: The beverage category was our strongest category this year with mid single digit organic net sales growth. This growth was primarily driven by strength in our European non-dairy beverage business. The European non-dairy beverage market continues to grow mid to high single digits led by own label where Hain has a leading role. Premium brand, the to me also saw a strong growth this year. We expect to continue to drive growth in non-dairy beverage in fiscal year 25 with new secured contracts and innovation in the oak category building upon the success of our zero sugar oak launch.

Lee Boyce: Yes, so good question.

Wendy Davidson: So I'll start, and maybe when he can kind of weigh in, but just to kind of give some more color to the second half to the first half. So we've got three drivers in there. You know, the one you just mentioned is formula, and then what we're laughing, we do then anticipate seeing formula build up as we go through the year. The second piece of it, and we mentioned it, you know, actually in as we went through before, is the promotional shift, and it's in garden, veggie snacks. We've got an event shifting from Q1 to Q3.

Speaker Change: So, good question, so I start and maybe when you can kind of weigh in, but just to kind of give some more colour to the second half to the first half. So, we've got three drivers in there, you know, the one you just mentioned is formula. And then what we're laughing we do then anticipating formula build up as we go through the year. The second piece of it, and we mentioned it, you know, actually, as we went through before, is the promotional shift. And it's in Garden Veggie Snacks, we've got an event shifting from 21 to 23.

Wendy Davidson: Celestial seasonings also grew in fiscal 2024 with low single digit organic net sales growth outpacing the category and gaining share. We will be launching a new master brand campaign ahead of hot tea season with a focus on taste and continuing to reinforce the sustainability benefits of the plastic overlap removal from our packaging. We expect a campaign and the expansion into black and green tea to contribute to accelerating growth in celestial seasonings and fiscal 2025.

Wendy Davidson: I'd say the other item is greet gods, where we have pulled a geographic distribution expansion that takes place during the year. So, you know, that's kind of what is weighing in the first quarter. We moved to flat in a second, and then we sing significant growth, you know, as we go through into the balance of the year. Yeah, and I'll just add to that, you know, there's the known headwind that we have in the front half, which is at least a promotional activity that's just timing shift. It's also as we build up our inventories around all formulations and sizes in infant formula.

Speaker Change: I say the other item is Greek gods, where we have border geographic distribution expansion that takes place during the year so that's kind of what is weighing in the first quarter said we moved to flatten the second and then we're seeing significant growth.

Speaker Change: as we go through into the balance of the year.

Wendy Davidson: Neural prep delivered low single digit organic net sales growth in fiscal 2024. We saw strong growth and branded soup in the UK where we outperformed the market and gain share. We expect to build upon our leading number one, number two and number three position in the UK with distribution gains coming ahead of the next soup season. Within plant-based meat free, the eaves brand in Canada continues to outperform the category and gain share despite significant category headwinds and some supply service challenges in the back half of the year during our plant consolidation.

Speaker Change: Yeah, I'll just add to that, you know, there's the known headwind that we have in the front half, which is at least a promotional activity that's just timing shift. It's also as we build up our inventories around all formulations and sizes in infant formula.

Wendy Davidson: There's the unknown opportunities that I think, to your point, become potential overdrivers. We're actually back in inventory in most of our formulations, not all sizes, but most of our formulations. Our team is leaning very heavily into regaining our distribution in infant formula. Happy to say that where we do have distribution, our velocities are back to where they were two years ago. So we know that parents want the brand, and we feel really good that that could be a potential over driver. We also have some incremental distribution that the team have landed in our snack portfolio.

Speaker Change: There's the unknown opportunity that I think to your point become potential overdrivers.

Speaker Change: We're actually back in inventory in most of our formulations, not all sizes, but most of our formulations, our team is leaning very heavily into regaining our distribution in infant formula. Happy to say that where we do have distribution our velocities are back to where they were two years ago. So we know that parents want the brand and we feel really good that that could be a potential overdriver. We also have some incremental distribution that the teams have landed in our snacks portfolio in sea store alone. We have another 48 are with and we have a total store count now, it's 48,000. That's an incremental 13,000 stores that were picked up in the last quarter. So as we begin to...

Wendy Davidson: While the Linda McCartney food brand in the UK saw double digit decline 60% of the portfolio is gaining or holding share. We have made portfolio changes exiting the refrigerated segment and right sizing our operations capacity to address the software market and improve our overall competitiveness as the category consolidates in the UK.

Wendy Davidson: In SeaStore alone, we have another 48th; I think we have a total store count now, 48,000. That's an incremental 13,000 stores that were picked up in the last quarter. So as we begin to have those distribution points realize their velocity, those become additional overdrive as we go into the game.

Wendy Davidson: And finally personal care our smallest category said 20% organic net sales decline in fiscal 2024 as outlined last quarter. We are executing our plan to simplify prioritize and focus our business around a core set of brands and personal care categories. We remain hyper focused on this shrink to grow plan to stabilize personal care and enable a strategic review of the brands and business for optionality.

Speaker Change: I have those distribution points realize their velocity, those become additional overdrive that we go into the year.

Unknown Executive: Blair.

Unknown Executive: Great, and when you're done, you finished on Seastores because I can't follow a question there. Are you able to see, I know, still maybe early days with some of the news stores, but are you able to see incremental purchases in traditional mass channels that are in the areas where you're getting distribution and seastort? And maybe another way to ask that is for the consumers that shop at Seastore. Are those new households that are then buying your portfolio in other channels, or are you just driving incremental purchases with existing households?

Speaker Change: and Wendy Goods, you've finished on Sea Stores because I share a follow-up question there.

Wendy Goods: Are you able to see, I know, still maybe early days with some of the new stores, but...

Wendy Davidson: Looking ahead fiscal 2025 will be a critical year as we pivot to growth continue to drive further margin expansion and generate significant free cash flow to reduce net debt, improve leverage and invest in our brands. We will build upon the momentum in the grow and maintain businesses through commercial execution in channel expansion, distribution and gains, innovation launch support and disruptive brand support. The 15% of the business in the stabilized bucket was a significant headwind and fiscal 2024.

Speaker Change: Are you able to see?

Speaker Change: Incramental purchases in traditional mass channels that are in the areas where you're getting distribution and sea sort. And maybe another way to ask that is for the...

Speaker Change: Consumers that shop at sea store are those new households that are then buying your portfolio in other channels or are you just driving incremental purchases with existing households.

Wendy Davidson: Well, that's a great question. You know, we, one of the reasons why we believe in away from home as an opportunity for us in brand building is, as our team calls it, first to find and first to mind. Having our brands available in more places where the shopper is on their journey raises brand awareness beyond what you're spending and paid advertising. So we know that that's something that's an opportunity; absolutely having our brands in multiple points of distribution. We know generates awareness that then drives trial in the other places where they're shopping. And I would say, you know, I hesitate to not point out that in the last quarter, actually Garden Veggie and Tara were the fastest moving, better-for-you snack products in the Seastore channel in the industry.

Speaker Change: Well, that's a great question. You know, one of the reasons why we believe in a way from home as an opportunity for us in brand building is as our team calls it first to find and first to mind.

Wendy Davidson: We have line of sight to full recovery of formula supply which we expect will drive growth in formula this fiscal year and we are aggressively working to stabilize personal care and plant based meat free. Fiscal 2025 will also see continued evolution of our global operating model centered on our commercial route to market and into and wiring across the organization to improve speed to shelf and customer focus. And lastly, we'll continue to capitalize on the progress made in our fuel initiatives through revenue growth management, working capital management and productivity. We remain confident in the Henry imagined algorithm and our ability to pivot to growth in fiscal 2025.

Speaker Change: Having our brands available in more places where the shopper is on their journey raises brand awareness beyond what you're spending and paid advertising. So we know that that's an opportunity. Absolutely, having our brands in multiple points of distribution, we know generate awareness that then drives trial in the other places where they're shopping. And I would say, you know, I'd hesitate to not point out that in the last quarter actually garden veggie and Tara were the fastest moving better for you snack products in the sea store channel in the industry.

Wendy Davidson: So we feel really good that, as we grow distribution. We have brands that the consumer wants. We're putting them in the places where the consumer wants to find them.

Lee Boyce: With that, I'll turn it over to Lee to discuss our financial results and fiscal 2025 outlook in more detail. Thank you, Wendy and good morning, everyone. As Wendy discussed, strong progress in the focus and fuel pillars of Henry imagined enabled us to deliver upon our updated guidance for the year. In fact, top line results were ahead of our guidance and adjusted EBITDA results were at the high end. Approximately 85% of the business grew in fiscal 2024 and we have made progress towards and are continuing to focus on stabilizing the balance.

Lee Boyce: With that, I'll turn it over to Lee to discuss our financial results and fiscal 2025 outlook in more detail.

Speaker Change: So we feel really good that as we grow distribution, we have brands at the consumer ones, we're putting them in the places where the consumer wants to find them.

Lee Boyce: Thank you, Wendy and good morning, everyone. As Wendy discussed, strong progress in the focus and fuel pillars of Henry imagined enabled us to deliver upon our updated guidance for the year. In fact, top line results were ahead of our guidance and adjusted EBITDA results were at the high end. Approximately 85% of the business grew in fiscal 2024 and we have made progress towards and are continuing to focus on stabilizing the balance. Our free cash flow generation drove gross margin expansion net debt reduction and improvement in leverage all while enabling us to invest in developing competencies to pivot to growth.

Ken Goldman: Our next question to the line of Ken Goldman with JP Morgan, please see with your questions. Hi, thank you. I wanted to poke around a little bit on the path to 2027. I appreciate that you're kind of reiterating that basic path today, maybe moving or definitely moving the base year ahead to 24. When we look back at the Investor Day from a year ago, though, there were some elements underneath. You know, they talked about it 3% top line Kager. There was 10% EBITDA growth. You know, you talked about a gross margin increasing up to maybe 500 basis points.

Speaker Change: Our next question to the line of Ken Goldman with JP Morgan, please just see your

Ken Goldman: Hi, thank you. I wanted to poke around a little bit on

Ken Goldman: The Path of 2027, I appreciate that you're kind of reiterating that basic path today, maybe moving or definitely moving the base year ahead to 24. When we look back at the investor day from a year ago, though, there were some elements underneath.

Lee Boyce: Our free cash flow generation drove gross margin expansion net debt reduction and improvement in leverage all while enabling us to invest in developing competencies to pivot to growth. We're excited to build upon this strong foundation in fiscal 2025. Let's look at the results in more detail. For the fourth quarter, we saw a negative organic net sales growth of 4% year over year. The decrease was driven by lower sales in both North America and international segments.

Speaker Change: You know, you talked about it 3% top line cager, there was 10% EBITDA growth. You know, you talked about a gross margin increasing up to maybe 500 basis points. I was just curious, you know, do you think there's a point, maybe this year we'll hear about.

Lee Boyce: We're excited to build upon this strong foundation in fiscal 2025. Let's look at the results in more detail.

Lee Boyce: I was just curious; you know, do you think there's a point maybe this year we'll hear about those underlying drivers. And whether they're being reiterated as well, because the slide that sort of talked about that path didn't really have a lot of math behind it. So I just kind of wanted to get a sense of what we're looking at or what we're looking at, you know, under the cover, so to speak.

Lee Boyce: For the fourth quarter, we saw a negative organic net sales growth of 4% year over year. The decrease was driven by lower sales in both North America and international segments. For the four year, organic net sales growth was ahead of our updated guidance at down 2%. Driven by 4% growth in international, more than offset by 6% decline in North America. Net sales growth also reflects a one percentage point benefit from foreign exchange.

Speaker Change: those underlying drivers and whether they're being reiterated as well because the slide that sort of talked about that path didn't really have a lot of math behind it so I just kind of wanted to get a sense of what we're looking at, oh we're looking at, you know, under the cover so to speak.

Lee Boyce: For the four year, organic net sales growth was ahead of our updated guidance at down 2%. Driven by 4% growth in international, more than offset by 6% decline in North America. Net sales growth also reflects a one percentage point benefit from foreign exchange. We delivered 4th quarter adjusted EBITDA of $40 million compared to $44 million a year ago. Adjusted EBITDA margin was 9.4%, representing a 30 basis point decrease versus the prior year.

Lee Boyce: Yeah, so maybe I'll kick off, and you know, when they can kind of add any more context, but can to your point. I mean, you know, I'd say the underlying algorithm shape of the PNL. We are, you know, we are committed to, so we committed is to your point to the 400 to 500 basic points of gross margin expansion. We obviously saw some good traction on that thinking Q4. We said 70 basis points. So we see a pathway there EBITDA margin of 12% plus. So committing continuing to commit to that the other piece of it was on the networking capital of 165 million.

Speaker Change: Yeah, so I maybe I'll kick off and Wendy can kind of have any more context but

Kenton: Kenton to your point. I mean, you know, I'd say, I'm delaying algorithm to shape the P&L. We are, you know, we are committed to. So we committed to your point to the 400 to 500 basic points of gross margin expansion. We obviously saw some good traction on that thinking Q4. We said 70 basis points.

Lee Boyce: We delivered 4th quarter adjusted EBITDA of $40 million compared to $44 million a year ago. Adjusted EBITDA margin was 9.4%, representing a 30 basis point decrease versus the prior year. For the full year, adjusted EBITDA was at the high end of our updated guidance at $165 million compared to $167 million in the prior year. Adjusted gross margin was 23.4% in the fourth quarter, increasing approximately 70 basis points year over year. The increase was driven by productivity and pricing on the success of fuel and revenue growth initiatives, partly offset by de-laverage on lower sales volume and cost inflation.

Kenton: So we see a pathway there, either the margin of 12% plus.

Kenton: Committee, continued to commit to that. The other piece of it was from the networking capital of 165 million. Really good traction on that. We delivered over third of that in this first year. And then, you know, those are the final pieces of it.

Lee Boyce: For the full year, adjusted EBITDA was at the high end of our updated guidance at $165 million compared to $167 million in the prior year. Adjusted gross margin was 23.4% in the fourth quarter, increasing approximately 70 basis points year over year. The increase was driven by productivity and pricing on the success of fuel and revenue growth initiatives, partly offset by de-laverage on lower sales volume and cost inflation. For the full year, adjusted gross margin increased 30 basis points year over year to 22.4%.

Lee Boyce: Really good traction on that. We delivered over a third of that in this first year. And then, you know, the final piece was the 3% K go on organic sale. So we, you know, continue to look to deliver that, deliver that, but it's off of the organic base of 2024 as the starting point.

Kenton: was the 3% cagur on organic sales. We continue to live that, but it's off of the organic base of 2024, as the starting point. I would just say that, you know.

Lee Boyce: You know, and I would just say there, you know, as we looked on the areas were less development, kind of initially anticipated and you know, for the very things we talked about through formula and then personal care. So we made some strategic decisions on personal care on the winning portfolio. But again, using 24 as the base year, still committed to the 3% plus algorithm.

Kenton: as we looked on the areas where less development, kind of initially anticipated, and you know, for the very things we talked about through formula and then personal care, so we made some strategic decisions on personal care on the winning portfolio. But again, using 24 as the base share still committed to the 3% plus algorithm.

Lee Boyce: For the full year, adjusted gross margin increased 30 basis points year over year to 22.4%. SGNA increased 8% year over year to $72 million, representing 17.3% of net sales for the quarter as compared to 14.9% in the year ago period. The increase was primarily driven by legal expenses as well as personnel costs due to the timing of bonus accrual release versus the prior year. For the four year, SGNA was flat year over year at $290 million, representing 16.7% of net sales as compared to 16.1% in the year ago period.

Lee Boyce: Yeah, and I would just add.

Lee Boyce: SGNA increased 8% year over year to $72 million, representing 17.3% of net sales for the quarter as compared to 14.9% in the year ago period. The increase was primarily driven by legal expenses as well as personnel costs due to the timing of bonus accrual release versus the prior year. For the four year, SGNA was flat year over year at $290 million, representing 16.7% of net sales as compared to 16.1% in the year ago period.

Lee Boyce: To that and to your point, can the sub elements of Hain reimagined? We've made great progress against those where we talked about rebase. Is really take into account the business exits that we did in fiscal 24. So our organic revenue starting point is different than what we had a year ago because of the portfolio simplification because of some of the detestitures. So it's just us committing to the three plus it's just off of a new revenue.

Speaker Change: Yeah, and I would just add to that today.

Speaker Change: Ladies and gentlemen, this is the first time I've ever seen a movie that I've ever seen before.

Speaker Change: and to your point, can the sub-elements of pain-reimagined? We've made great progress against those. Where we talked about rebates is really taking into account.

Speaker Change: The business exits that we did in fiscal 24. So our organic revenue starting point is different than what we had a year ago because of the portfolio simplification because of some of the divestitures. So it's just us committing to the three plus, it's just off of a new revenue base.

Lee Boyce: Okay, and then as we just to follow up on that, as we think about kind of, you know, how to get to that, there's 27 numbers. You know, is the idea then that 23 is kind of just a washier in the sense that there were some unusual headwinds that really, you know, don't repeat.

Speaker Change: Tessier.

Speaker Change: Okay, and then as we just follow up on that as we think about kind of.

Lee Boyce: During the quarter, we took charges totaling $10 million, associated with actions under the restructuring program, including contract termination costs, asset write downs, employee related costs, and other transformation related expenses. Of these charges, $3 million were non cash. For the four year, we took $63 million in charges associated with the transformation program, which is comprised of $60 million of restructuring charges and $3 million of expenses associated with inventory write downs. Of these charges, $27 million were non cash.

Tessier: You know, how to get to those 27 numbers, you know, is the idea then that

Tessier: 23 is kind of just a...

Speaker Change: A Washer in the sense that there were some unusual headwinds.

Lee Boyce: And as we get to kind of, I guess then, you know, 20 back half of 24 into 25 and that therefore it's okay to kind of rebase it to 24 because we really shouldn't think of those headwinds as ongoing because I guess the mobile one question I'm getting this morning is how does Hain really see, you know, such a massive acceleration in top line growth in gross margin growth in 26 and 27, you know, which is a compressed timeline now versus what you had previously, so not to be the dead horse here. I just do want to get a little bit of a better sense of where that acceleration really comes from into the next couple of years.

Speaker Change: that really don't repeat.

Speaker Change: and as we get to kind of, I guess, the, you know, 20 back out was 24 and a 25 and that therefore it's okay to kind of rebase it to 24 because...

Speaker Change: who really shouldn't think of those headwinds as ongoing because I guess the mobile one question I'm getting this morning is...

Speaker Change: How does he really see...

Speaker Change: you know, such a massive acceleration in top line growth in gross margin growth in 26 and 27. You know, which is a compressed timeline now versus what you had previously. So not to eat a dead horse here. I just do want to get a little bit of a better sense of where that acceleration really comes from into the next couple of years.

Lee Boyce: As previously discussed, the total transformation program charges are expected to be $115 million to $125 million, inclusive of potential inventory write downs of approximately $25 million related to brand and category assets. The balance of the restructuring charges is expected to be $90 to $100 million. Restructuring charges are excluded from adjusted operating results. Interest costs fell 1% year over year to $14 million in the quarter, driven by lower outstanding borrowings, partially offset by the higher variable interest on the unhedged portion of that.

Lee Boyce: Yeah, I think it's exactly to your point.

Lee Boyce: There are some unique elements around our focus pillar, really the portfolio simplification in fiscal 24, that we fundamentally exited whole categories. Take for example what we said in the last quarter that we were reducing over 60% of the skews in the personal care portfolio that related to about 30% of the overall revenues. The fact of doing that actually rebases your overall revenue. We also had some divestitures with Queen Helene and Fensters. We've pulled that out as well just to get to an equal starting point, but we've not reset each one of the categories. We're essentially taking into account at the total where we've exited whole categories.

Speaker Change: Yeah, I think it's exactly your point. There are some unique elements around our focus pillar, really the portfolio simplification in fiscal 24, that we fundamentally accident whole categories.

Speaker Change: Take, for example, what we said in the last quarter that we were reducing over 60% of the skews in the personal care portfolio that related to about 30% of the overall revenues.

Speaker Change: The fact of doing that actually rebases your overall revenue.

Lee Boyce: As a reminder, we have hedged our rate exposure on more than 50% of our loan facility, with fixed rates at 5.6%. We continue to prioritize reducing net debt over time. Adjusted net income, which excludes the effect of restructuring charges amongst other items, was $11 million in the quarter, or 13 cents per diluted share versus $10 million, or 11 cents per diluted share in the prior year period. Four-year adjusted net income was $30 million or $33 cents per diluted share, compared to $45 million or $50 cents per diluted share in the prior year.

Speaker Change: We also had some divestitures with Queen Haleen and Finsters. We've pulled that out as well, just to get to an equal starting point. But we've not reset each one of the categories. We're essentially taking into account at the total where we've exited whole categories.

Unknown Executive: Okay, thank you.

Matt Smith: Our next questions from the line of Matt Smith with Steve Hull. Please see with your questions. Hi, good morning. Thank you for taking my question. I wanted to follow up on the impact of SKU rationalization and business exits. There's a portion of that that's flowing through sales that's not treated as organic sales when you're completely exiting a business. Can you help me understand with the flat organic sales outlook in the upcoming year? Does that include a headwind of just normal SKU rationalization, not necessarily where you're exiting businesses, but just trimming the SKU count within your current portfolio?

Speaker Change: Okay, thank you.

Speaker Change: Our next questions are in the line of management with default. Please see with your questions.

Speaker Change: Hi, good morning. Thank you for taking my question. I wanted to follow up on the impact of SKU rationalization in business exits.

Lee Boyce: Four-year adjusted net income was $30 million or $33 cents per diluted share, compared to $45 million or $50 cents per diluted share in the prior year.

Speaker Change: There's a portion of that that's flowing through sales that's not treated as organic sales, when you're completely exiting a business. Can you understand what the flat organic sales outlook in...

Lee Boyce: Now turning to our individual reporting segments. In North America, we delivered negative 5% organic net sales growth year over year. The decrease was primarily driven by lower sales in infant formula, which was a 260 basis point drag, and a decline in the personal care business, which represented a 170 basis point drag on North America sales. This was partially offset by growth in snacks. Both quarter adjusted gross margin in North America was 22.6%, a 20 basis point decrease versus the prior year, driven by cost inflation and de-leveraging on lower sales volume, partially offset by productivity and pricing on the success of fuel and revenue growth management initiatives.

Speaker Change: The upcoming year, does that include a headwind of just normal SKU rationalization, not necessarily where you're exiting businesses, but just trimming the SKU count within your current portfolio, there's all of that really flowing outside of organic sales.

Lee Boyce: Or is all of that really flowing outside of organic sales?

Lee Boyce: No, as I'll start now, let me fill in a little bit of the color around that, but you're exactly right. There's a portion of our portfolio simplification that actually comes out because those are whole category exits. So take, for example, we mentioned in the last quarter, we had personal care brands that were in categories, we really didn't, we didn't need to be in. So exiting toothpaste and exiting deodorant, for example, those are category exits, but there is some regular portfolio maintenance that comes out that doesn't get organic treatment. We do still have some of that that plays out in this year, and so some of that were actually acknowledging in the front half of this year, which is why we've given fairly tempered guidance in the front half.

Speaker Change: Now, as I'll start now, let Lee fill in a little bit of the color around that, but you're exactly right. There's a portion of our portfolio simplification that actually comes out because those are whole category exits. So take, for example, we mentioned in the last quarter, we had personal care brands that were in categories, we really didn't, we didn't need to be in. So exiting toothpaste and exiting deodorant, for example, those are category exits.

Speaker Change: but there is some regular portfolio maintenance that comes out that doesn't get organic treatments.

Lee Boyce: Arrested EBITDA in North America was $21 million, as compared to $27 million in the year ago period. And the adjusted EBITDA margin was 8%, a 150 basis point decrease year over year. The year over year declined resulted primarily from the leverage on lower volume. In our international business, organic net sales declined 4% in the porter. As Wendy mentioned, beverages demonstrated strong growth in the porter. Though this was more than offset by continued softness in plant-based meat free, a stabilized business in our meal prep category, as well as snacks.

Speaker Change: We do still have some of that that plays out in this year and so some of that were actually acknowledging in a front half of this year, which is why we've given fairly tempered guidance in the front half.

Lee Boyce: And that history is lapped as we go into the back half, so that becomes less of a headwind. Yeah, so I think you got it.

Wendy Goods: and that history is laughed as we go into the back half, so that becomes less of a headman. Yeah, so I think you got it. I mean, you know, we're obviously coming out in 24, we had thinsters and queens alone. And then to Wendy's point, I mean, you know, what's been treated is really transformational when you portfolio, part of our transformation when portfolio strategy. So whole category is that we shouldn't be in them. And that's why, you know, we actually gave the 2024 number. We want to kind of really make sure we provide clarity. So as you, as you saw in one of the slides, we actually gave that a just in baseline 2024 number.

Lee Boyce: I mean, you know, obviously coming out in 24, we had tenseders and Queen Celine. And then to when this point, I mean, you know, what's being treated is really transformation when you portfolio part of our transformation when a portfolio strategy. So a whole category is that we shouldn't be in, and that's why, you know, we actually gave the 2024 number. We want to kind of really make sure we provide clarity. So you, you know, as you saw on one of the slides, we actually gave that adjusted baseline 2024 number.

Lee Boyce: In our international business, organic net sales declined 4% in the porter. As Wendy mentioned, beverages demonstrated strong growth in the porter. Though this was more than offset by continued softness in plant-based meat free, a stabilized business in our meal prep category, as well as snacks. International adjusted gross margin was 24.8%. Up approximately 210 basis points year over year driven by productivity partially offset by inflation. International adjusted EBITDA was $27 million, consistent with the prior year as productivity gains offset the impact of inflation. Adjusted EBITDA margin was 17%, up approximately 40 basis points year over year.

Lee Boyce: International adjusted gross margin was 24.8%. Up approximately 210 basis points year over year driven by productivity partially offset by inflation. International adjusted EBITDA was $27 million, consistent with the prior year as productivity gains offset the impact of inflation. Adjusted EBITDA margin was 17%, up approximately 40 basis points year over year. Shifting to cash flow and the balance sheet, we generated $31 million in free cash flow in the porter, compared to $34 million in the year ago period.

Lee Boyce: Thank you for that, Lee. And as a follow-up, that fiscal 24 organic sales base number that you gave suggests like a reported sales decline of around 3% if we hold that organic sales flat year over a year. Is that the evidence, or is that directionally the impact of the business exits that flows through the divestiture line?

Speaker Change: Thank you for that, Lee, and as a fellow that fiscal 24 organic sales base number that you gave suggests

Speaker Change: Like a reported sales decline of around 3% if we hold that organic sales flat year over year.

Speaker Change: is that the evidence or is that directionally the impact of

Speaker Change: of the business exits that flows through the divestiture line.

Lee Boyce: Shifting to cash flow and the balance sheet, we generated $31 million in free cash flow in the porter, compared to $34 million in the year ago period. For the full year, we generated $83 million in free cash flow, compared to $39 million in the prior year. The increase was driven by working capital initiatives. Our day's payable outstanding improved to 52 from 37 in fiscal year 23, and our day's inventory outstanding improved to 79 from 82 in fiscal year 23. We are pleased with the progress we are making towards our hate reimagined targets of 70 plus day's payable outstanding and 55 days inventory outstanding by fiscal year 2027.

Lee Boyce: Let us get back to you on that because I want to make sure that we give you an accurate number on that. But there are elements of business exit and divestiture that play into that, but I want to make sure that we give you the exact number. Yeah, because there are, I mean, obviously kind of a number of pieces with what I said, what came out from an organic perspective, you know, this is Queen Helene, and then the PC category exit. So yeah, we'll come back to you.

Speaker Change: Let us, let us get...

Speaker Change: Back to you on that, because I would...

Speaker Change: I want to make sure that we give you an accurate number on that, but there are elements of...

Lee Boyce: For the full year, we generated $83 million in free cash flow, compared to $39 million in the prior year. The increase was driven by working capital initiatives. Our day's payable outstanding improved to 52 from 37 in fiscal year 23, and our day's inventory outstanding improved to 79 from 82 in fiscal year 23. We are pleased with the progress we are making towards our hate reimagined targets of 70 plus day's payable outstanding and 55 days inventory outstanding by fiscal year 2027.

Speaker Change: Business Exit and Investiture that play into that, but I want to make sure that we give you the exact number. Yeah, because our, I mean, obviously kind of a number of pieces with what I said, what came out from a organic perspective, you know,

Matt Smith: Nicky Lee, I'll leave it there.

Alexia Howard: Thanks, Matt. Our next questions are from the line of Alexia Howard with Bernstein. Please just give us your questions. Good morning, everyone. Good morning. Hi there.

Speaker Change: Thank you, Lee. I'll leave it there.

Matt: Thanks Matt.

Speaker Change: Our next questions are going to line over, like, how are it with Bernstein? Please just use your questions.

Speaker Change: Good morning, everyone.

Alexia Howard: So am I right in thinking that as we rotate into fiscal 25, you're going to start breaking out price and volume independently, and if that's still a case, is there any color you can give on how the organic sales growth breakdown for 2025 is going to shape up. I'm assuming pricing will be fairly flat, and then volume will improve through the course of the year as you described. With the organic sales growth, is not a reasonable way to think about it. So you're correct. We will be breaking out. I know that's kind of long promised, but you know, we have put assistance in place.

Speaker Change: Good morning.

Speaker Change: Hi there and so am I right in thinking that as we rotate into fiscal 25, you're going to start breaking out.

Lee Boyce: CapEx was $9 million in the quarter and $33 million in fiscal 2024. Looking ahead to fiscal 2025, we expect the expenditures to be approximately $50 million. Finally, we close the quarter with cash on hand of $54 million and net debt of $690 million, translating into a net leverage ratio of 3.7 times as calculated under our credit agreement. We drove leverage lower than expected due to better cash flow on the momentum from our fuel initiatives.

Christ: Christ and volume independently and it's that pure taste.

Speaker Change: Is there any call you can give on how the organic sales growth breakdowns at 20, 25 is going to shape up. I'm assuming pricing will be fairly flat and then volume will improve through the course of the year as you describe the organic sales growth. Is that a reasonable way to think about it?

Speaker Change: So to our correct, we will be breaking out, I know it's kind of long from us, but we have put the systems in place. So as we get into Q1, we'll break out the price volume next.

Alexia Howard: So, as we get into Q1, we will break out the price volume mix, and you're also right. I mean, there is a piece of pricing, but it is primarily driven by volume mix as we go into 2025. Perfect. Thank you very much. We'll have a little bit of wrap-around pricing from fiscal 24, but not substantial incremental pricing. And then obviously, with the sales of formula and a few other categories, we will see the mix improve as we go into the year as well. Got it. Okay, that's very clear. Thank you.

Lee Boyce: We continue to expect our net leverage to tick up modestly in the fiscal first quarter driven by seasonality before ending fiscal 2025 in the mid to high threes. We are comfortable that we have sufficient headroom under our existing covenants. Paying down debt and strategically investing in the business continues to be our priority for cash, and we have reduced net debt by $86 million since the beginning of the fiscal year. Along term goal remains to reduce balance sheet leverage to three times adjusted EBITDA or less, as calculated under our credit agreement.

Speaker Change: and you're also right. I mean there is a piece of pricing but it is primarily driven by volume mix as we're going to 2025.

Speaker Change: is a little bit of wrap around pricing from fiscal 24, but not substantial incremental pricing. And then obviously with the sales of formula and a few other categories, we will see the mix improve as we go into the year as well.

Wendy Davidson: Could you talk a little bit about the sourcing of the organic lactose that has been dragging on for some time? Are you moving to a dual sourcing strategy? How are you creating resilience in that area? Because I know it's been something that's been with us for a little while here. Thank you, and I'll pass it on. Yeah, absolutely. It's been formula, as you know, it's been a pain point certainly since I joined the company. I feel very good about where we are in supply. We do across our formula. We have multiple supply options in toddler formula, and we've got some location redundancy in our infant formula.

Speaker Change: Got it, okay, that's very clear, thank you.

Speaker Change: Could you tell me a little bit about the um...

Speaker Change: The Sourcing of the Organic Lactose that has been dragging on for some time. Are you moving to a dual Sourcing strategy? How are you creating resilience in that area? Because I know it's been something that's been with us for a little while here. Thank you, and I'll pass it on.

Lee Boyce: Turning now to our outlook, we expect to pivot to growth in fiscal 2025. We expect organic net sales growth to be flat or better, adjusted EBITDA to grow by mid-single digits. Gross margin to expand by at least 125 basis points and free cash flow of at least $60 million. And while we don't intend to provide quarterly guidance, we want to share some commentary on the shape of the year. From an organic net sales perspective, we anticipate that year over year growth will improve as the year progresses as follows.

Speaker Change: Yeah, absolutely infant formula, as you know, has been a pain point certainly since I joined the company, I feel very good about where we are in supply. We do across our formula, we have multiple supply options in toddler formula and we've got some location redundancy in our infant formula. We're also, which you would see play out in a little bit of our days of inventory. We're actually holding a little bit more inventory of our core.

Lee Boyce: In the first quarter, we expect negative organic net sales growth at a similar rate of decline year over year as in the fourth quarter of fiscal 2024. We expect flatish year over year growth in the second quarter and accelerating growth in the back half of the year. Backed is contributed into the cadence of the year include promotional activity and snacks that are shifted into the fiscal third quarter from the fiscal first quarter, which will be a headwind in the first quarter but not impact the full year.

Wendy Davidson: We're also, which you would see play out in a little bit of our Days of Inventory. We're actually holding a little bit more inventory of our core, our core skews in infant formula as they become available, so that we give ourselves a little bit of cushion as we go forward as well. We know that as we rebuild our infant formula business with our retail partners, that assuring them that we can have supply on shelf consistently is paramount. And we also need to make sure that we are investing behind the brand to create awareness with parents.

Speaker Change: Our core skews in infant formula as they become available so that we give ourselves a little bit of cushion as we go forward as well. We know that as we rebuild our infant formula business with our retail partners that assuring them that we can have supply on shelf consistently is paramount.

Lee Boyce: Backed is contributed into the cadence of the year include promotional activity and snacks that are shifted into the fiscal third quarter from the fiscal first quarter, which will be a headwind in the first quarter but not impact the full year. As we mentioned on our last call, our portfolio simplification initiatives will have a year on year impact predominantly in the first half. And as Wendy mentioned, our infant formula supply will be recovering over the first half of the year with full supply supporting our earth's best business growth in the back half. Lastly, adjusted EBITDA growth for the full year will be driven by growth in the back half.

Speaker Change: and we also need to make sure that we are investing behind the brand to create awareness with parents.

Wendy Davidson: So both of those are things that we're taking very seriously as we go into the front half of this year. You'll see some incremental marketing in the back half, but you'll also see us have a step up a little bit of inventory to make sure that we're holding enough to sustain in the event that there's a hit. Scott. Perfect. Thank you very much.

Speaker Change: So, both of those are things that we're taking very seriously as we go into the front half of this year. You'll see some incremental marketing in the back half, but you'll also see us have a step up a little bit of inventory to make sure that we're holding enough to sustain in the event that there's a hiccup.

Lee Boyce: As we mentioned on our last call, our portfolio simplification initiatives will have a year on year impact predominantly in the first half. And as Wendy mentioned, our infant formula supply will be recovering over the first half of the year with full supply supporting our earth's best business growth in the back half. Lastly, adjusted EBITDA growth for the full year will be driven by growth in the back half. Please note that we are updating our definition of organic net sales growth for the fiscal 2025 to exclude the impact of foreign exchange.

Andrew Wolf: I'll pass it on. Are there questions in the line of Andrew Wolf with Seale King? Please excuse your questions.

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

Speaker Change: Our next question is in the line of Andrew Wolff with CLK. Please just see with your questions.

Andrew Wolf: Thank you. I wanted to start with kind of a follow-up on the outlook and the cadence for the year consolidated. Just asking if you can give any commentary by the two segments we might take away just kind of thinking about analytically. Is it probably seems like the between the things you're calling out which are more in the North American market and just how the year went. Most of it's the swing, and the cadence is driven by the North America segment, but I would like to get your sort of commentary on that as well. Yeah, there is obviously some very large buckets that impact North America into front half, and there are tailwinds as we go into the back half.

Andrew Wolff: Thank you. I wanted to start with

Andrew Wolff: kind of a follow-up on the outlook and the cadence for the year consolidated.

Lee Boyce: Please note that we are updating our definition of organic net sales growth for the fiscal 2025 to exclude the impact of foreign exchange. We do not expect 4x to be a key driver of a variance in 2025. And finally, as Wendy mentioned, we remain committed to the algorithm outlined in Hain Reimagined, organic net sales, Kager of 3% plus, 4 to 500 basis points of adjusted gross margin expansion together to 26% plus. And the just EBITDA margin of 12% plus by fiscal 2027. However, the basin from which we are growing will be adjusted to fiscal 2024 organic net sales.

Speaker Change: Just ask if you can give any commentary by the two segments, and we might take away just...

Speaker Change: and it's thinking about analytically as...

Lee Boyce: We do not expect 4x to be a key driver of a variance in 2025. And finally, as Wendy mentioned, we remain committed to the algorithm outlined in Hain Reimagined, organic net sales, Kager of 3% plus, 4 to 500 basis points of adjusted gross margin expansion together to 26% plus. And the just EBITDA margin of 12% plus by fiscal 2027. However, the basin from which we are growing will be adjusted to fiscal 2024 organic net sales.

Speaker Change: It's probably the same between the things you're calling out, which are more in the North American market And just how the year went, most of it's...

Speaker Change: The swing and the cadence is driven by the North America segment, but I would like to get your sort of commentary on that as well.

Speaker Change: Yeah, there is obviously...

Speaker Change: is a very large bucket that impact North America and the front half and their tailwinds as we go into the back half.

Wendy Davidson: International actually has a little bit of that as well. So you will see a little bit suppressed, especially in the Hartley snack business, as we build up in the front half of the year and then some contracts in own label, both in the UK, in spreads and drizzles, and in the European market in non-dairy beverage. Those begin to play out as we go through the back half of the year. Hartley's, for example, is a leading brand in snacking. Singles are snacking, but it is a high impulse purchase, and we've changed our promotional strategy to really support feature and display, which is critical for that brand.

Speaker Change: International entry has a little bit of that as well. So you will see a little bit suppressed, especially in the heartly snack business.

Wendy Davidson: And now I hand it back over to Wendy. Thank you, Lee. We are one year into Hain Reimagined and we're making strong progress in the four pillars of the strategy. Our progress in driving focus, resetting our global operating model, kicking off our fuel program and investing in key capabilities to enable growth position Hain stronger than we were a year ago. And while our pivot to growth in some areas has taken longer and resulted in a reset of our starting point, we are now positioned to deliver on our promise and remain committed to our Hain Reimagined algorithm.

Speaker Change: as we build up in the front half of the year and then some contracts in own label, both in the UK, in spreads and drizzles and in the European market in non-dairy beverage.

Speaker Change: Those begin to play out as we go through the back half of the year.

Speaker Change: Partly, for example, is a leading brand in snacking, single-thirds snacking.

Speaker Change: but it is a high impulse purchase, and we've changed our promotional strategy to really support feature and display, which is critical for that brand, and we've also converted to a more recyclable packaging which retail partners really want.

Wendy Davidson: And we've also converted to a more recyclable packaging, which retail partners really want. The combination of those two things and a high low pricing strategy, we feel really good about, and I think we even mentioned that we've got about 800 shippers in Hartley's that goes out in the front half of this year, getting incremental feature display, and we have another plug of features that comes in the back half of the year as well with additional shippers. So we feel good that both regions have reasons that are driving some of the softness in the front half, which we've appropriately called into our guidance, but we have lots of bright spots as we go into the back half that are actually already known; it's simply a timing.

Wendy Davidson: Our work in the fuel pillar has exceeded expectations momentum is building across the business as evidenced by the 85% of the business that is in growth. And we are hyper focused on the commercial execution to deliver top and bottom line growth in fiscal 2025 and beyond. Our strong free cash flow generation has enabled accelerated reduction in net debt improvement in our leverage ratio, growth margin expansion and investment in our brands and in key commercial capabilities, all giving us confidence in our ability to deliver on our Hain Reimagined outlook.

Speaker Change: The combination of those two things and a high-low pricing strategy, we feel really good about it. And I think we even mentioned that we've got about 800 shippers in heartlies that goes out in the front half of this year, getting incremental feature display and we have another.

Speaker Change: Flog of features that comes in the back half of the year as well with additional shippers. So we feel good that...

Speaker Change: Both Regions.

Speaker Change: have reasons that are driving some of the softness in the front half, which we've appropriately called into our guidance. But we have lots of bright spots as we go into the back half that are actually already known. It's simply a timing.

Wendy Davidson: We are a markedly different company today than we were just one year ago. As we begin to capitalize on our diversified portfolio, our market reach and global scale, and we will be even stronger a year from now. I am excited for the year ahead as we pivot to growth and begin to realize our full potential as one Hain. Before we open it up for questions, I want to thank all of our team members for their passion and commitment, which are critical drivers to all that we have accomplished together in this first year. And we'll accelerate our delivery of Hain reimagined.

Wendy Davidson: And the front end softness in the international, is that more the meat free declines, or is it more some of this private label stuff? No, it's largely in meat free, so you still see the meat free softness in the category. I think we also mentioned that we exited the refrigerated segment in meat free and focused on frozen. So you'll have a little bit of that portfolio simplification that impacts in the front half as well as we really write size to the fighting core of what we want to have in the meat free category.

Speaker Change: and the front end softness in the international. Is that more of the meat free declines?

Speaker Change: or is it more?

Speaker Change: Summit is private label.

Speaker Change: Saps.

Speaker Change: And no, it's largely in meat-free, so you still see the meat-free softness in the category. I think we also mentioned that we acted the refrigerated segment in meat-free and focused on frozen. So you'll have a little bit of that portfolio simplification that impacts in the front half as well as we really right-sized to the fighting core of what we want to have in the meat-free category.

Operator: Operator, please open the line for questions. Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one from your telephone keypad and a confirmation tone indicate your line is in the question queue. You may press star two, if you'd like to withdraw your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. So, we may address questions as many participants as possible. We ask you please them yourself to one question and one follow a question. One more please, will we pull for questions.

Operator: Thank you and our first question.

Operator: So, we may address questions as many participants as possible. We ask you please them yourself to one question and one follow a question. One more please, will we pull for questions. Thank you and our first question.

Wendy Davidson: Got it, thank you.

John Baumgartner: And just wanted to follow up with a strategically focused question on the Southeast Axe portfolio in North America. Can you just sort of give a sense of your feeling how much scale that business has as you address the mass market, with three brands, two of them pretty all of them, Nishi, and different brand equities and grand power, but is that enough to get slotted in the way to optimize your slots or when you, you know, I've seen evidence that, you know, gain some shelf space at least in some regionals, but just wanted to get a sense of, you know, that's a pretty concentrated category on a national basis, how you think about its positioning as a portfolio.

Speaker Change: God, thank you and just wanted to follow up with us for teaching.

Speaker Change: Focus question on the salty snacks portfolio in North America.

Speaker Change: I can need to sort of give a sense of your feeling about.

Speaker Change: House, how much scale that business has as you address the mass market with three brands to have pretty neat, the all of them, they're different, you know, different brand equity and grand power.

Jim Solera: We'll be coming from the line of Jim Solera with Stevens. Please proceed with your questions.

James Salera: We'll be coming from the line of Jim Solera with Stevens. Please proceed with your questions.

Speaker Change: Is that enough to get slotted in the way to optimize your slots or...

Wendy Davidson: All right, good morning, everybody. Thanks for taking our question. One day, I appreciate the color on kind of the shape of 2025. If we think about, you know, what would be an incremental driver from the flat guidance to the better than flat. Can you maybe just walk through, would incremental performance come from from sales in snacks in the back app from formula in the back after you can maybe just touch on each category and if we were expected to be in the better part of the guidance, where that incremental performance would come from.

Ken Goldman: All right, good morning, everybody. Thanks for taking our question. One day, I appreciate the color on kind of the shape of 2025. If we think about, you know, what would be an incremental driver from the flat guidance to the better than flat. Can you maybe just walk through, would incremental performance come from from sales in snacks in the back app from formula in the back after you can maybe just touch on each category and if we were expected to be in the better part of the guidance, where that incremental performance would come from.

Speaker Change: I've seen evidence that you know you gain some shelf space at least at some regionals but just wanted to get a sense of, you know, that's a pretty concentrated category on a national basis how you think about its positioning as a portfolio.

Wendy Davidson: Yeah, we actually feel very good about our snacks portfolio, especially around the three primary brands that we're leaning into. All three have a very unique position in the space, but they're really leading in better-for-you. And for instance, in Garden Veggie, we know that where we have the right shelf assortment, our velocities actually turn better than brands that have a higher ACV. Our teams actually successfully use the data points with our retail partners, and you will see some fairly large incremental ACV with some very large retail partners that begins to chip in September, where we go from I think on Garden Veggie, Cara, and Garden of Eaton from an ACV at a particular retail or somewhere in the mid 20s to somewhere in the mid 70s, picking up about 6600 new stores in the marketplace.

Speaker Change #100: We actually feel very good about our SNACS portfolio, especially around the three primary brands that we're leaning into.

Tara: All three have a very unique position in the space that they're really leading and better for you. For instance, in Garden Veggie, we know that where we have the right shelf assortment, our velocities actually turn better than brands that have a higher ACV. Our teams actually successfully use those data points with our retail partners, and you will see some fairly large incremental ACV with some very large retail partners that begin to ship in September. Where we go from, I think, on Garden Veggie, Tara, and Garden of Eaton from an ACV, a particular retail or somewhere in the mid-20s to somewhere in the mid-70s.

Wendy Davidson: Yeah, so good question. So I'll start and maybe when he can kind of weigh in, but just to kind of give some more color to the second half to the first half. So we've got three drivers in there. You know, the one you just mentioned is formula. And then what we're laughing, we do then anticipate seeing formula build up as we go through the year. The second piece of it, and we mentioned it, you know, actually in as we went through before, is the promotional shift and it's in garden, veggie snacks, we've got an event shifting from Q1 to Q3.

Ken Goldman: Yeah, so good question. So I'll start and maybe when he can kind of weigh in, but just to kind of give some more color to the second half to the first half. So we've got three drivers in there. You know, the one you just mentioned is formula. And then what we're laughing, we do then anticipate seeing formula build up as we go through the year. The second piece of it, and we mentioned it, you know, actually in as we went through before, is the promotional shift and it's in garden, veggie snacks, we've got an event shifting from Q1 to Q3.

Wendy Davidson: I'd say the other item is greet gods, where we have pulled a geographic distribution expansion that takes place during the year. So, you know, that's kind of what is weighing in the first quarter. We moved to flat in a second and then we sing significant growth, you know, as we go through into the balance of the year. Yeah, and I'll just add to that, you know, there's the known headwind that we have in the front half, which is at least a promotional activity that's just timing shift.

Ken Goldman: I'd say the other item is greet gods, where we have pulled a geographic distribution expansion that takes place during the year. So, you know, that's kind of what is weighing in the first quarter. We moved to flat in a second and then we sing significant growth, you know, as we go through into the balance of the year. Yeah, and I'll just add to that, you know, there's the known headwind that we have in the front half, which is at least a promotional activity that's just timing shift.

Wendy Davidson: So what we're finding is the data tells us that the brands do resonate with consumers. They're looking for them to be available more often. So the brands are loved. We just make it kind of hard for you to find it. So we are driving incremental distribution. We're very focused on our promotional spending, supporting velocity because we know that's critical.

Tara: is picking up about 6,600 new stores in the marketplace. So what we're finding is...

Tara: The data tells us that the brands do resonate with consumers. They're looking for them to be available more often, so the brands are loved. We just make it kind of hard for you to find it. So we are driving incremental distribution. We're very focused on our promotional spending supporting velocities because we know that's critical.

Wendy Davidson: And then this year, you'll see, I think we launched it about three weeks ago is the first ever master brand campaign on Garden Veggie. That's the first time we've actually promoted the entire portfolio of Garden Veggie. And so you'll see us really lean into brand support around the snack portfolio. Got it.

Tara: and then this year you'll see, I think we launched it about three weeks ago, is the first ever master brand campaign on Garden Veggie. That's the first time we've actually promoted the entire portfolio of Garden Veggie. So you'll see it's really leaning into brand support around the Snackport Folio.

Wendy Davidson: It's also as we build up our inventories around all formulations and sizes in infant formula. There's the unknown opportunities that I think to your point become potential overdrivers. We're actually back in inventory in most of our formulations, not all sizes, but most of our formulations. So our team is leaning very heavily into regaining our distribution in infant formula. Happy to say that where we do have distribution, our velocities are back to where they were two years ago.

Ken Goldman: It's also as we build up our inventories around all formulations and sizes in infant formula. There's the unknown opportunities that I think to your point become potential overdrivers. We're actually back in inventory in most of our formulations, not all sizes, but most of our formulations. So our team is leaning very heavily into regaining our distribution in infant formula. Happy to say that where we do have distribution, our velocities are back to where they were two years ago.

Unknown Executive: Thank you for me. You bet. Thanks. Thank you.

Tara: David, thank you for today for me.

Operator: As a reminder to ask a question today, you may press star one from your telephone keypad.

David: Good evening, good evening.

Speaker Change #103: Thank you. As your minder to ask a question today, you may press star 1 from your telephone keypad.

David Palmer: Our next question is from the line of David Palmer with Evercore ISI. Let's just use your question. Thank you. And thanks for that commentary about some of the timing for the fiscal year, which certainly plays in some of the data that we're seeing right now. On sensible portions, Garden Veggie. I'm wondering, just as we're looking at new low plus data, do you see that more or less approximating what sort of North America organic sales were going to see from you? It was pretty close on the most recent quarter. I'm wondering if you think that's going to be the case going forward.

Speaker Change #103: Our next question is from the line of David Palmer, with that required ISI. Let's just see you two questions.

David Palmer: Thank you, and thanks for that commentary about some of that timing for the fiscal year, which certainly plays in some of the data that we're seeing right now on sensible portions garden veggie. I'm wondering, just as we're looking at MuleO Plus data.

Wendy Davidson: So we know that parents want the brand and we feel really good that that could be a potential over driver. We also have some incremental distribution that the team have landed in our snack portfolio. In C-store alone, we have another 48th, I think we have a total store count now, 48,000. That's an incremental 13,000 stores that were picked up in the last quarter. So as we begin to have those distribution points realize their velocity, those become additional overdrive as we go into the game.

Ken Goldman: So we know that parents want the brand and we feel really good that that could be a potential over driver. We also have some incremental distribution that the team have landed in our snack portfolio. In C-store alone, we have another 48th, I think we have a total store count now, 48,000. That's an incremental 13,000 stores that were picked up in the last quarter. So as we begin to have those distribution points realize their velocity, those become additional overdrive as we go into the game.

David Palmer: Do you see that more or less approximating what sort of North America organic sales we're going to see from you? It was pretty close on the most recent quarter.

Wendy Davidson: If there's maybe some non-visible portions, obviously Canada is one. But other non-mesure channels that you think might be causing a gap versus the data that we'll see. Yeah, it's a great question, and I know a lot of movement around the data sets that are available. So let me sort of break down the visibility of our business. So if you think of overall Hain, call it 40% of our business is international; 60% is North America. So you can't see the international business in North America; approximately 10% of the business is in Canada, which you also can't see of the remaining piece.

Speaker Change #105: I'm wondering if you think that's going to be the case going forward if there's...

Speaker Change #106: may be some non-dissible portions obviously Canada's one, but other non-Metri channels that you think might be causing a gap versus the data that we'll see.

Wendy Davidson: Fair. Right. And when you're done, you've finished on sea stores, because I can't follow question there. Are you able to see, I know, still maybe early days with some of the news stores, but are you able to see incremental purchases in traditional mass channels that are in the areas where you're getting distribution and sea store. And maybe another way to ask that is for the consumers that shop at sea store are those new households that are then buying your portfolio in other channels or are you just driving incremental purchases with existing households?

Ken Goldman: Fair. Right. And when you're done, you've finished on sea stores, because I can't follow question there. Are you able to see, I know, still maybe early days with some of the news stores, but are you able to see incremental purchases in traditional mass channels that are in the areas where you're getting distribution and sea store. And maybe another way to ask that is for the consumers that shop at sea store are those new households that are then buying your portfolio in other channels or are you just driving incremental purchases with existing households?

Speaker Change #107: Yeah, it's a great question and there's I know a lot of movement around the data sets that are available. So let me sort of break down the visibility of our business. So you think of overall hanging, call it 40% of our business as international 60% is North America. So you can't see the international business in North America.

Speaker Change #107: Approximately 10% of the businesses in Canada, which you also can't see of the remaining piece. There's about 85% in the Newst or Conna, Moulo plus C, that would be visible. So in total hang terms, you can see about 45% of the total businesses in the scanner data.

Wendy Davidson: There's about 85% in the news or Tana Mulo plus C that would be visible. So in total, Hain terms, you can see about 45% of the total businesses in the scanner data. We will have some noise in the scanner data over the next couple of months for a couple of reasons. If you look at total Hain, and it includes personal care and food, and the personal care, because of portfolio access, will be a material drag in the end market data, because those are just categories and skews that we've walked away from. If you look in just food, and we've got some promotion very large promotional activity that took place last year in quarter one that is taking place in this year, but it's moving to quarter three.

Wendy Davidson: Well, that's a great question. You know, we, one of the reasons why we believe in away from home as an opportunity for us in brand building is as our team calls it first to find and first to mind. Having our brands available in more places where the shopper is on their journey raises brand awareness beyond what you're spending and paid advertising. So we know that that's an opportunity. Absolutely having our brands in multiple points of distribution.

Ken Goldman: Well, that's a great question. You know, we, one of the reasons why we believe in away from home as an opportunity for us in brand building is as our team calls it first to find and first to mind. Having our brands available in more places where the shopper is on their journey raises brand awareness beyond what you're spending and paid advertising. So we know that that's an opportunity. Absolutely having our brands in multiple points of distribution.

Wendy Davidson: We know generate awareness that then drives trial in the other places where they're shopping. And I would say, you know, I hesitated to not point out that in the last quarter, actually garden veggie and Tara were the fastest moving better for you snack products in the sea store channel in the industry. So we feel really good that as we grow distribution, we have brands that the consumer wants, we're putting them in the places where the consumer wants to find them. Thank you.

Speaker Change #107: We will have some noise in the scanner data over the next couple of months for a couple of reasons. If you look at total hang in it includes personal care and food and baths.

Speaker Change #107: The personal care because of portfolio access will be a material drag in the in-market data because those are just categories and stews that we've walked away from.

Ken Goldman: We know generate awareness that then drives trial in the other places where they're shopping. And I would say, you know, I hesitated to not point out that in the last quarter, actually garden veggie and Tara were the fastest moving better for you snack products in the sea store channel in the industry. So we feel really good that as we grow distribution, we have brands that the consumer wants, we're putting them in the places where the consumer wants to find them.

unknown: Thank you.

Speaker Change #107: If you look in just food and baths to leave earlier point, we've got some promotion very large promotional activity that took place last year in quarter one that is taking place in this year, but it's moving to quarter three. So one of fact is on the full year basis, but it will be a visible view in quarter one. But as I said, we've also picked up incremental ACV with some very large retail partners, and we've picked up sea store, which will now be able to see in some of this or kind of data that should start to give the year on year comp.

Wendy Davidson: So won't affect us on the full year basis, but it will be a visible view in quarter one. But as I said, we've also picked up incremental ACV with some very large retail partners, and we've picked up C store, which will now be able to see in some of this or kind of data that should start to give the year-on-year comp, improving on a weekly basis as we get farther into quarter one and certainly into quarter two. Thank you for all of that.

Ken Goldman: Our next question to the line of Ken Goldman with JP Morgan, please see with your questions. Hi, thank you. I wanted to poke around a little bit on the path to 2027. I appreciate that you're kind of reiterating that basic path today, maybe moving or definitely moving the base year ahead to 24. When we look back at the investor day from a year ago, though, there were some elements underneath. You know, you talked about it 3% top line Kager, there was 10% EBITDA growth.

Speaker Change #107: is improving on a weekly basis as we get farther into quarter one and certainly into quarter two.

Wendy Davidson: That's very helpful.

Wendy Davidson: Question on baby formula. And right now that is about only 2% of your sales or so. When capacity is where you want it to be, and maybe you can let us know when that'll be, where do you think that mix can go? How much higher do you think that business? How much bigger can that business get when it's not unconstrained? Yeah, so we feel very good about the capacity and capability that we have. It's been running very strong since early June, where we started with a limited number of formulations and limited sizes just to get full run rate.

Speaker Change #107: i

Speaker Change #108: Thank you for all that. That's very helpful. Question on baby formula. Right now, that is about only 2% of your sales or so.

Speaker Change #109: When capacity is where you want it to be and maybe you can let's know when that'll be. Where do you think that mix can go? How much higher?

Ken Goldman: You know, you talked about a gross margin increasing up to maybe 500 basis points. I was just curious, you know, do you think there's a point maybe this year will hear about those underlying drivers. And whether they're being reiterated as well, because the slide that sort of talked about that path didn't really have a lot of math behind it. So I just kind of wanted to get a sense of what we're looking at or what we're looking at, you know, under the cover, so to speak.

Speaker Change #110: Do you think that this is how much bigger can that business get when it's unconstrained?

Speaker Change #111: Yeah, so we feel very good about...

Speaker Change #112: The capacity and capability that we have.

Speaker Change #112: It's been running very strong since early June where we started with a limited number of formulations and limited sizes just to get full run rate.

Wendy Davidson: We're beginning to add the full formulation mix, so gentle, sensitive, dairy, et cetera. And we're beginning to add the full sizes. We will be in all sizes and all formulations that we need as we get into, call it late quarter two. So the back half we feel good about as we look at the size of that business. EarthBets was the number one infant formula in better for you up until two years ago, and we now are number five or number six. Our goal is to get back to that number one position. We have ample supply to do so.

Lee Boyce: Yeah, so maybe I'll kick off and you know, when they can kind of add any more context, but can to your point. I mean, you know, I'd say the underlying algorithm shape of the PNL we are, you know, we are committed to so we committed is to your point to the 400 to 500 basic points of gross margin expansion. We obviously saw some good traction on that thinking Q4 we said 70 basis points.

Speaker Change #112: We're beginning to add the full formulation mix.

Speaker Change #112: So, gentle, sensitive, dairy, et cetera, and we're beginning to add the full sizes. We will be in all sizes and all formulations that we need as we get into college late quarter two, so the back has we feel good about. As we look at the size of that business.

Lee Boyce: So we see a pathway there EBITDA margin of 12% plus. So committing continuing to commit to that the other piece of it was on the networking capital of the 165 million really good traction on that we delivered over a third of that in this in this first year. And then, you know, the final piece was the 3% K go on organic sale. So we continue to look to deliver that, deliver that, but it's off of the organic base of 2024 as the starting point, you know, and I would just say there, you know, as we looked on the areas where less development kind of initially anticipated and you know, for the very things we talked about through formula and then personal care. So we made some strategic decisions on personal care on the winning portfolio, but but again using 24 is the as the base year still committed to the 3% plus algorithm.

Speaker Change #112: 1st bet was the number one infant formula in better for you up until two years ago.

Speaker Change #112: and we now are number five or number six. Our goal is to get back to that number one position. We have ample supply to do so. We're investing behind the brands.

Wendy Davidson: We're investing behind the brand. We were sort of the original, where we are the original organic baby formula, the OG in the space, and we intend to recapture our leadership position in that way. And so we'll be leaning into that. So how big that can be? The category has actually grown in the last couple of years, so it should be bigger than it was for us a couple of years ago, but we're going to be leaning very heavily into that. We'll take a look at that. Thank you.

Speaker Change #112: We were sort of the original, well we are the original organic baby formula, the OG in the space, and we intend to recapture our leadership position in that way, and so we'll be leaning into that. So how big that can be, the category has actually grown in the last couple of years, so it should be bigger than it was for us a couple of years ago, but we're going to be leaning very heavily into that.

Speaker Change #113: We'll take a look at that. Thank you.

John Baumgartner: The next question to the line of John Baumgartner with Mizoho's Curities. Please just see with your question. Good morning. Thanks for the question. Good morning, Wendy. Good morning. It is first off when you sound much more positive on snack distribution for the coming fiscal year. After the phasing, I think disappointed a bit last year. How do you think about the risks and the visibility that the phasing could, you know, sort of underperform again? I mean, is there larger promotion from larger brands that could be an issue? Could there be some volatility in the shelf resets from your outlook that you're entering?

Speaker Change #114: Thank you. The next question to the line of John Baumgartner with Miss Oskirties. Please see you in your question.

Wendy Davidson: Yeah, and I would just add. To that said, and to your point, Ken, the sub elements of Hain reimagined. We've made great progress against those where we talked about rebase is really take into account the business exits that we did in fiscal 24. So our organic revenue starting point is different than what we had a year ago because of the portfolio simplification because of some of the detestitures. So it's just us committing to the three plus.

John Baumgartner: Good morning, thanks for the question.

John Baumgartner: [inaudible]

John Baumgartner: Good morning, Wendy. Good morning. Maybe first off, Wendy, you sound much more positive on snack distribution for the coming fiscal year after the phasing, I think, disappointed it last year. How do you think about the risks in the visibility that the phasing could, you know, sort of underperform again? I mean, is there larger promotion from larger brands that can be an issue? Could there be some volatility in the shelf recess from you out with that you're entering? Just maybe when you think about the ramp, were the potential pressure point that the deviations from plan?

Wendy Davidson: Just maybe when you think about the ramp or the potential pressure point that could cause a deviation from from plan?

Wendy Davidson: It's just off of a new revenue. Okay. And then as we just to follow up on that, as we think about kind of, you know, how to get to that there's 27 numbers, you know, is the idea then that 23 is kind of just a washier in the sense that there were some unusual headwinds that really, you know, don't repeat. And as we get to kind of, I guess then, you know, 20 back half of 24 into 25 and that therefore it's okay to kind of rebase it to 24 because we really shouldn't think of those headwinds as ongoing because I guess the mobile one question I'm getting this morning is how does Hain really see, you know, such a massive acceleration in top line growth in gross margin growth in 26 and 27, you know, which is a compressed timeline now versus what you had previously.

Wendy Davidson: Yeah, I think first you have to look at sort of why our snack portfolio under-delivered to our expectations. And I would tell you that it was 100% our own execution. It wasn't that we didn't have brands that could compete. It isn't that we didn't have the right products or the right sites available. We didn't have distribution of the core assortment in all the places it needed to be. We had things all over the place, which doesn't allow you to promote as effectively or to create marketing campaigns that really help it punch above its weight. We are focused very much on right products in the right place, in the right sizes, because we know when we do that, the velocities are very strong.

Wendy Goods: Yeah, I think first, you have to look at sort of why our snack portfolio under deliver to our expectations. And I would tell you that it was 100% our own execution. It wasn't that we didn't have brands that could compete. It isn't that we didn't have the right product or the right size is available.

Wendy Goods: We didn't have distribution of the core assortment and all the places that needed to be. We had things all over the place, which doesn't allow you to promote as effectively or to create marketing campaigns that really help it punch above its weight.

Wendy Goods: We are focused very much on right products in the right place.

Wendy Davidson: We're very focused on promoting at a level that we need to. We are promoting at the same source; sales on promo is about where it's been. It is below industry average, so we're not having to over promote. But what we also know is promoting our brands isn't about a price discount, because that's not why people buy the products. It's about driving feature and display. So we are 100% focused on using our promotional activity to help our retail partners in putting our products within arm's reach of the consumer, so that they see it. There is a where, and it's available.

Wendy Goods: in the right sizes, because we know when we do that, the velocities are very strong.

Wendy Goods: We're very focused on promoting at a level that we need to. We are promoting at the same source sales on promo is about where it's been. It is below industry average, so we're not having to over-promote.

Wendy Davidson: So not to be the dead horse here. I just do want to get a little bit of a better sense of where that acceleration really comes from into the next couple of years. Yeah, I think it's exactly to your point. There are some unique elements around our focus pillar, really the portfolio simplification in fiscal 24 that we fundamentally exited whole categories. Take, for example, what we said in the last quarter that we were reducing over 60% of the skews in the personal care portfolio that related to about 30 about 30% of the overall revenues.

Wendy Goods: But what we also know is promoting our brands isn't about a price discount because that's not why people buy the products, it's about driving feature and display. So we are 100% focused on using our promotional activities to help our retail partners and putting our products within arms reach of the consumer so that they see it. It's a, it's a, it's a, it's a where and it's available. It's that whole first in mind, first to find.

Wendy Davidson: It's that whole first and mine first to find. And then we know that there's a need for us to continue to promote the portfolio.

Wendy Davidson: This summer is the first time we've ever done a multi-brand program. We did favor your summer, which is our all three of our brands in better for you during the core snacking season. We know that a better-for-you consumer wants to buy things; they want the options. And so we were helping our retail partners and having it available. Our sales of the of those shippers, I think we had 13,000 shippers that went out and the sales during the saver your summer exceeded our expectations. So we feel very good that right products in the right place at the right price point that we invest and promote behind, but not over promote, and that we partner with our retailers to create awareness.

Wendy Goods: And then we know that there's a need for us to continue to promote the portfolio. This summer is the first time we've ever done a multi-brand program. We did Sabre your summer, which is our all three of our brands in better for you. During the core snacking season, we know that a better for you consumer wants to buy things. They want the options. And so we were helping our retail partners in having it available.

Wendy Davidson: The fact of doing that actually rebases your overall revenue. We also had some divestitures with Queen Helene and Fensters. We've pulled that out as well just to get to an equal starting point. But we've not reset each one of the categories. We're essentially taking into account at the total where we've exited whole categories. Okay, thank you.

Wendy Goods: are sales of those shippers, I think we had 13,000 shippers that went out and the sales during the saver of your summer exceeded our expectations so we feel very good that.

Matt Smith: Our next question is from the line of Matt Smith with Steve Hall. Please see you with your questions. Hi, good morning. Thank you for taking my question. I wanted to follow up on the impact of SKU rationalization and business exits. There's a portion of that that's flowing through sales that's not treated as organic sales as when you're completely exiting a business. Can you help me understand with the flat organic sales outlook in the upcoming year?

Matthew Smith: Our next question is from the line of Matt Smith with Steve Hall.

Matthew Smith: Please see you with your questions. Hi, good morning. Thank you for taking my question. I wanted to follow up on the impact of SKU rationalization and business exits. There's a portion of that that's flowing through sales that's not treated as organic sales as when you're completely exiting a business. Can you help me understand with the flat organic sales outlook in the upcoming year? Does that include a headwind of just normal SKU rationalization, not necessarily where you're exiting businesses, but just trimming the SKU count within your current portfolio?

Speaker Change #116: Wright products in the right place at the right place point.

Speaker Change #116: that we invest in promote behind, but not overpromote, and that we partner with our retailers to create awareness. We've got the right brands to compete there, but our biggest issue with ourselves, it wasn't necessarily that competitors were creating challenges for us.

Wendy Davidson: We've got the right brands to compete there. But our biggest issue was ourselves. It wasn't necessarily that competitors were creating challenges for us.

Wendy Davidson: Okay, and then on the tea business, that's been an area of material innovation for you. And looking at the Neilson data, at least, the baseline volumes have been softer there, both in Q4 and in Q1 through mid-August. I know it's sort of offseason, but have there been any other factors in marketing or merchandising having an impact? I'm just curious; can you elaborate on the retail takeaway there and any kind of merchandising for FY25, what you'd be thinking about. Yeah, we feel very good about Celestial Seasons, but I would tell you there's a couple of things playing into it.

Speaker Change #116: Okay, and then I'm on the TV business.

Speaker Change #117: That's been an area of material innovation for you and looking at the meal for the baseline volumes have been solved through there both in Q4 and in Q1 through mid-August I know it's sort of off-season but have there been any other factors in marketing or merchandising having an impact? Just curious you can elaborate on the retail takeaway there and any kind of merchandising for FY25 which you'd be thinking about.

Matt Smith: Does that include a headwind of just normal SKU rationalization, not necessarily where you're exiting businesses, but just trimming the SKU count within your current portfolio? Or is all of that really flowing outside of organic sales? No, as I'll start now, let me fill in a little bit of the color around that, but you're exactly right. There's a portion of our portfolio simplification that actually comes out because those are whole category exits.

Matthew Smith: Or is all of that really flowing outside of organic sales? No, as I'll start now, let me fill in a little bit of the color around that, but you're exactly right. There's a portion of our portfolio simplification that actually comes out because those are whole category exits. So take, for example, we mentioned in the last quarter, we had personal care brands that were in categories, we really didn't, we didn't need to be in.

Matthew Smith: So exiting toothpaste and exiting deodorant, for example, those are category exits, but there is some regular portfolio maintenance that comes out that doesn't get organic treatment. We do still have some of that that plays out in this year, and so some of that were actually acknowledging in the front half of this year, which is why we've given fairly tempered guidance in the front half. And that history is lapped as we go into the back half so that becomes less of a headwind.

Speaker Change #118: Yeah, we feel very good about celestial season, but I will tell you there's a couple things playing into it. We converted all of our packaging to remove the overwrap on the boxes, and so as we've been facing in the non-overwrap packaging on shelf, it's caused some challenges in shelf assortment, but also some availability as we're driving that course, sort of involved a non-overwrap. We also pulled back promotions, spend, and marketing, spending quarter-four.

Wendy Davidson: We converted all of our packaging to remove the overwrap on the boxes. And so, as we've been phasing in the non-overwrap packaging on shelves, it's caused some challenges in shelf assortment, but also some availability as we're driving that poor assortment of all the non-overwrap. We also pulled back promotion spend and marketing spending quarter four in anticipation of two things. We have a first master big master brand campaign around Celestial Seasons that will launch in early October. We also had new innovation that's coming, and we wanted to spend those dollars going into hot tea season rather than over promoting or marketing off season.

Matt Smith: So take, for example, we mentioned in the last quarter, we had personal care brands that were in categories, we really didn't, we didn't need to be in. So exiting toothpaste and exiting deodorant, for example, those are category exits, but there is some regular portfolio maintenance that comes out that doesn't get organic treatment. We do still have some of that that plays out in this year, and so some of that were actually acknowledging in the front half of this year, which is why we've given fairly tempered guidance in the front half.

Speaker Change #118: in anticipation of two things. We have a first master big master brand campaign around celestial season that will launch in early October.

Matt Smith: And that history is lapped as we go into the back half so that becomes less of a headwind. Yeah, so I think you got it. I mean, you know, obviously coming out in 24, we had tenseders and queen Celine. And then to when this point, I mean, you know, what's being treated is really transformation when you portfolio part of our transformation when a portfolio strategy. So a whole category is that we shouldn't be in, and that's why, you know, we actually gave the 2024 number.

Speaker Change #118: We also had new innovation that's coming and we wanted to spend those dollars going into hot T-season, rather than over-promoting or marketing off season. So we think these are short-term and nature. We feel good about the assortment that we have coming. We've got two new innovation coming. So we have a beauty wellness tea with Biotin and we've got a lemon tea as well and both of those are new innovations we go into fiscal 25. But Master Brain Campaign, Clear Shelf Assortment, going into hot T-season, we feel good as we go into the back half of the year.

Wendy Davidson: So we think these are short-term in nature. We feel good about the assortments that we have coming. We've got two new innovations coming. So we have a beauty wellness tea with biotin, and we've got a lemon tea as well. And both of those are new innovations. We go into fiscal 25, but master brand campaign, clear shelf assortment going into hot tea season. We feel good as we go into the back cavity here. Thanks, Wendy. You bet. Thank you.

Matthew Smith: Yeah, so I think you got it. I mean, you know, obviously coming out in 24, we had tenseders and queen Celine. And then to when this point, I mean, you know, what's being treated is really transformation when you portfolio part of our transformation when a portfolio strategy. So a whole category is that we shouldn't be in, and that's why, you know, we actually gave the 2024 number. We want to kind of really make sure we provide clarity.

Matt Smith: We want to kind of really make sure we provide clarity. So as you, you know, as you saw on one of the slides, we actually gave that adjusted baseline 2024 number. Thank you for that Lee, and as a follow up, that fiscal 24 organic sales base number that you gave suggests, like a reported sales decline of around 3% if we hold that organic sales flat year over year. Is that the evidence or is that directionally the impact of the business exits that flows through the divest the divest at your line?

Matthew Smith: So as you, you know, as you saw on one of the slides, we actually gave that adjusted baseline 2024 number. Thank you for that Lee, and as a follow up, that fiscal 24 organic sales base number that you gave suggests, like a reported sales decline of around 3% if we hold that organic sales flat year over year. Is that the evidence or is that directionally the impact of the business exits that flows through the divest the divest at your line?

Wendy Goods: Thank you, Wendy.

Wendy Davidson: At this time, we've reached the end of the question-and-answer session.

Wendy Goods: Lee Boyce, Lee Boyce, Lee Boyce, Lee Boyce,

Wendy Davidson: I'll turn the call over to Wendy Davidson for closing remarks. Yeah, I want to reiterate what I said earlier and really thank our teams. I especially want to thank the group that we have in finance and supply chain for the incredible work that they did in delivering fuel in this first year. That has really positioned us to make the investments we want around the business, but also to be able to pay down debt. I want to really thank everybody as we're going to this first year and especially for the time this morning and look forward to further conversations.

Wendy Goods: Thank you. At this time, we've reached the end of the question answer session. I'll turn the call over to Wendy Davidson for closing remarks.

Wendy Davidson: Yeah, I want to reiterate what I said earlier and really thank our teams. I especially want to thank the group that we have in finance and supply chain for the incredible work that they did in delivering fuel in this first year that has really positioned us to make the investments we want around the business but also to be able to pay down debt.

Wendy Davidson: I want to really thank everybody as we're going to this first year and especially for the time this morning and look forward to further conversations.

Matt Smith: Let us get back to you on that because I want to make sure that we give you an accurate number on that, but there are elements of business exit and divestiture that play into that, but I want to make sure that we give you the exact number. Yeah, because there are, I mean, obviously kind of a number of pieces with what I said, what came out from a organic perspective, you know, this is Queen Helene, and then the PC category exit. So yeah, we'll come back to you. Thank you Lee, I'll leave it there. Thanks Matt.

Matthew Smith: Let us get back to you on that because I want to make sure that we give you an accurate number on that, but there are elements of business exit and divestiture that play into that, but I want to make sure that we give you the exact number. Yeah, because there are, I mean, obviously kind of a number of pieces with what I said, what came out from a organic perspective, you know, this is Queen Helene, and then the PC category exit. So yeah, we'll come back to you.

Operator: This will conclude today's conference. Thank you for your participation. You may have disconnected your lines.

Speaker Change #120: This will conclude today's conference. Thank you for your participation. You may have disconnect your lines this time.

Lee Boyce: Thank you Lee, I'll leave it there. Thanks Matt.

Alexia Howard: Our next questions are in the line of Alexia Howard with Bernstein. Please just hear your questions.

Alexia Howard: Good morning everyone. Good morning. Hi there. So am I right in thinking that as we rotate into fiscal 25, you're going to start breaking out price and volume independently? And if that's still a case, is there any color you can give on how the organic sales growth breakdown for 2025 is going to shape up our receiving pricing will be fairly flat. And then volume will improve through the course of the year, as you described with the organic sales growth is not a reasonable way to think about it.

Alexia Howard: So you are correct. We will be breaking out. I know it's kind of long promised, but you know, we have put the systems in place. So as we get into Q1, we will break out the price volume mix. And you're also right. I mean, there is a piece of pricing, but it is, you know, primarily driven by volume mix as we go into 2025. Perfect. Thank you very much. There's a little bit of wrap around pricing from fiscal 24, but not substantial incremental pricing. And then obviously with the sales of formula and a few other categories, we will see the mix improve as we go into the year as well. Got it. Okay. That's very clear. Thank you.

Wendy Davidson: I feel very good about where we are in supply. We do across our formula. We have multiple supply options in toddler formula and we've got some location redundancy in our infant formula. We're also, which you would see, play out in a little bit of our days of inventory. We're actually holding a little bit more inventory of our core our core skews in infant formula as they become available so that we give ourselves a little bit of cushion as we go forward as well.

Wendy Davidson: We know that as we rebuild our infant formula business with our retail partners that is sharing them that we can have supply on shelf consistently is paramount. And we also need to make sure that we are investing behind the brand to create awareness with parents. So both of those are things that we're taking very seriously as we go into the front half of this year. You'll see some incremental marketing in the back half, but you'll also see us have a step up a little bit of inventory to make sure that we're holding enough to sustain in the event that there's a hit. Scott, perfect. Thank you very much. I'll pass it on.

Andrew Wolf: Are there questions in the line of Andrew Wolf with Seal King? Please just see with your questions.

Andrew Wolf: Are there questions in the line of Andrew Wolf with Seal King?

Andrew Wolf: Please just see with your questions. Thank you. I wanted to start with kind of a follow up on the outlook and the cadence for the year consolidated. Just asking if you can give any commentary by the two segments we might take away just kind of thinking about analytically is it probably seems like the between the things you're calling out which are more in the North American market and just the you know how the year went.

Andrew Wolf: Thank you. I wanted to start with kind of a follow up on the outlook and the cadence for the year consolidated. Just asking if you can give any commentary by the two segments we might take away just kind of thinking about analytically is it probably seems like the between the things you're calling out which are more in the North American market and just the you know how the year went. Most of it's the swing and the cadence is driven by the North American segment but I would like to get that you know you're sort of commentary on that as well.

Andrew Wolf: Most of it's the swing and the cadence is driven by the North American segment but I would like to get that you know you're sort of commentary on that as well. Yeah there is obviously some very large buckets that impact North America in the front half and there are tailwinds as we go into the back half. International actually has a little bit of that as well so you will see a little bit suppressed especially in the Hartley snack business as we build up in the front half of the year and then some contracts in own label both in the UK and spreads and drizzles and in the European market and non-dairy beverage those begin to play out as we go through the back half of the year.

Andrew Wolf: Yeah there is obviously some very large buckets that impact North America in the front half and there are tailwinds as we go into the back half. International actually has a little bit of that as well so you will see a little bit suppressed especially in the Hartley snack business as we build up in the front half of the year and then some contracts in own label both in the UK and spreads and drizzles and in the European market and non-dairy beverage those begin to play out as we go through the back half of the year.

Andrew Wolf: Hartley's for example is is a leading brand and snacking single serve snacking but it is a high impulse purchase and we've changed our promotional strategy to really support feature and display which is critical for that brand and we've also converted to a more recyclable packaging which retail partners really want. The combination of those two things and a high low pricing strategy we feel really good about and I think we even mentioned that we've got about 800 shippers in Hartley's that goes out in the front half of this year getting incremental feature display and we have another slug of features that comes in the back half of the year as well with additional shippers so we feel good that both regions have reasons that are driving some of the softness in the front half which we've appropriately called into our guidance but we have lots of bright spots as we go into the back half that are actually already known it's simply a timing.

Andrew Wolf: And the front end softness in the international is that more the meat free declines or is it more some of this private label stuff? No it's largely in meat free so you still see the meat free softness in the category. I think we also mentioned that we exited the refrigerated segment in meat free and focused on frozen so you'll have a little bit of that portfolio simplification that impacts in the front half as well as we really write size to the fighting core of what we want to have in the meat free category.

John Baumgartner: Got it, thank you. And just wanted to follow up with a strategic focused question on the Southeastax portfolio in North America. Can you just sort of give a sense of your feeling about How much scale that business has as you address the mass market with three brands, two of them, all of them, Nishi, and different brand equities and grand power. But, is that enough to get slotted in the way to optimize your slots, or, you know, when you, you know, I've seen evidence that, you know, gain some shelf space at least in some regionals, but, you know, I've seen evidence that, you know, gain some shelf space at least in some regionals.

Wendy Davidson: Got it, thank you. And just wanted to follow up with a strategic focused question on the Southeastax portfolio in North America. Can you just sort of give a sense of your feeling about How much scale that business has as you address the mass market with three brands, two of them, all of them, Nishi, and different brand equities and grand power. But, is that enough to get slotted in the way to optimize your slots, or, you know, when you, you know, I've seen evidence that, you know, gain some shelf space at least in some regionals, but, you know, I've seen evidence that, you know, gain some shelf space at least in some regionals.

John Baumgartner: But, I just wanted to get a sense of, you know, that's a pretty concentrated category on a national basis, how you think about its positioning as a portfolio. Yeah, we actually feel very good about our snack portfolio, especially around the three primary brands that we're leaning into. All three have a very unique position in the space, but they're really leading in better for you. And for instance, in Garden Veggie, we know that where we have the right shelf assortment, our velocities actually turn better than brands that have a higher ACV.

Wendy Davidson: But, I just wanted to get a sense of, you know, that's a pretty concentrated category on a national basis, how you think about its positioning as a portfolio. Yeah, we actually feel very good about our snack portfolio, especially around the three primary brands that we're leaning into. All three have a very unique position in the space, but they're really leading in better for you. And for instance, in Garden Veggie, we know that where we have the right shelf assortment, our velocities actually turn better than brands that have a higher ACV.

John Baumgartner: Our teams actually successfully use the data points with our retail partners, and you will see some fairly large incremental ACV with some very large retail partners that begins to chip in September. Where we go from I think on Garden Veggie, Cara and Garden of Eaton from an ACV at a particular retail or somewhere in the mid 20s to somewhere in the mid 70s, picking up about 6600 new stores in the marketplace.

Wendy Davidson: Our teams actually successfully use the data points with our retail partners, and you will see some fairly large incremental ACV with some very large retail partners that begins to chip in September. Where we go from I think on Garden Veggie, Cara and Garden of Eaton from an ACV at a particular retail or somewhere in the mid 20s to somewhere in the mid 70s, picking up about 6600 new stores in the marketplace.

John Baumgartner: So what we're finding is the data tells us that the brands do resonate with consumers. They're looking for them to be available more often. And so the brands are loved. We just make it kind of hard for you to find it. So we are driving incremental distribution. We're very focused on our promotional spending supporting velocity because we know that's critical. And then this year you'll see I think we launched it about three weeks ago is the first ever master brand campaign on Garden Veggie. That's the first time we've actually promoted the entire portfolio of Garden Veggie. And so you'll see us really lean into brand support around the snack portfolio.

Wendy Davidson: So what we're finding is the data tells us that the brands do resonate with consumers. They're looking for them to be available more often. And so the brands are loved. We just make it kind of hard for you to find it. So we are driving incremental distribution. We're very focused on our promotional spending supporting velocity because we know that's critical. And then this year you'll see I think we launched it about three weeks ago is the first ever master brand campaign on Garden Veggie. That's the first time we've actually promoted the entire portfolio of Garden Veggie. And so you'll see us really lean into brand support around the snack portfolio.

Wendy Davidson: Got it.

Wendy Davidson: Got it. Thank you for me. You bet. Thanks. Thank you.

Operator: Thank you for me. You bet. Thanks. Thank you.

Operator: As a reminder to ask a question today, you may press star one from your telephone keypad.

David Palmer: Our next question is from the line of David Palmer with Evercore ISI. Let's just use your question. Thank you. And thanks for that commentary about some of the timing for the fiscal year, which certainly plays in some of the data that we're seeing right now on sensible portions, Garden Veggie. I'm wondering, just as we're looking at new low plus data, do you see that more or less approximating what sort of North America organic sales we're going to see from you.

David Palmer: It was pretty close on the most recent quarter. I'm wondering if you think that's going to be the case going forward. If there's maybe some non visible portions, obviously Canada is one. But other non measure channels that you think might be causing a gap versus the data that we'll see. Yeah, it's a great question and there's I know a lot of movement around the data sets that are available.

Wendy Davidson: So let me sort of break down the visibility of our business. So if you think of overall Hain, call it 40% of our business is international 60% is North America. So you can't see the international business in North America, approximately 10% of the business is in Canada, which you also can't see of the remaining piece. There's about 85% in the news or kind of Mulo plus C that would be visible. So in total, Hain terms, you can see about 45% of the total businesses in the scanner data.

David Palmer: So if you think of overall Hain, call it 40% of our business is international 60% is North America. So you can't see the international business in North America, approximately 10% of the business is in Canada, which you also can't see of the remaining piece. There's about 85% in the news or kind of Mulo plus C that would be visible. So in total, Hain terms, you can see about 45% of the total businesses in the scanner data.

Wendy Davidson: We will have some noise in the scanner data over the next couple of months for a couple of reasons. If you look at total Hain, and it includes personal care and food and the personal care because of portfolio access will be a material drag in the end market data, because those are just categories and skews that we walked away from. If you look in just food and above to Lee's earlier point, we've got some promotion, very large promotional activity that took place last year in quarter one that is taking place in this year, but it's moving to quarter three.

David Palmer: We will have some noise in the scanner data over the next couple of months for a couple of reasons. If you look at total Hain, and it includes personal care and food and the personal care because of portfolio access will be a material drag in the end market data, because those are just categories and skews that we walked away from. If you look in just food and above to Lee's earlier point, we've got some promotion, very large promotional activity that took place last year in quarter one that is taking place in this year, but it's moving to quarter three.

Wendy Davidson: So won't affect us on the full year basis, but it will be a visible view in quarter one. But as I said, we've also picked up incremental ACV with some very large retail partners and we've picked up C store, which will now be able to see in some of this or kind of data that should start to give the year on year comp, improving on a weekly basis as we get farther into quarter one and certainly into quarter two. Thank you for all of that. That's very helpful.

David Palmer: So won't affect us on the full year basis, but it will be a visible view in quarter one. But as I said, we've also picked up incremental ACV with some very large retail partners and we've picked up C store, which will now be able to see in some of this or kind of data that should start to give the year on year comp, improving on a weekly basis as we get farther into quarter one and certainly into quarter two.

Wendy Davidson: Thank you for all of that. That's very helpful. Question on baby formula, and right now that is about only 2% of your sales or so. When capacity is where you want it to be, and maybe you can let us know when that will be, where do you think that mix can go? How much higher do you think that that business, how much bigger can that business get when it's not unconstrained? Yeah, so we feel very good about the capacity and capability that we have.

Wendy Davidson: Question on baby formula, and right now that is about only 2% of your sales or so. When capacity is where you want it to be, and maybe you can let us know when that will be, where do you think that mix can go? How much higher do you think that that business, how much bigger can that business get when it's not unconstrained? Yeah, so we feel very good about the capacity and capability that we have.

Wendy Davidson: It's been running very strong since early June where we started with a limited number of formulations and limited sizes just to get full run rate. We're beginning to add the full formulation mix, so gentle, sensitive, dairy, et cetera, and we're beginning to add the full sizes. We will be in all sizes and all formulations that we need as we get into call it late quarter to so the back half we feel good about.

Wendy Davidson: As we look at the size of that business, earth best was the number one infant formula and better for you up until two years ago, and we now are number five or number six. Our goal is to get back to that number one position. We have ample supply to do so. We're investing behind the brand. We were sort of the original, well, we are the original organic baby formula, the OG in the space, and we intend to recapture our leadership position in that way, and so we'll be leaning into that.

Wendy Davidson: So how big that can be the category has actually grown in the last couple of years, so it should be bigger than it was for us a couple of years ago, but we're going to be leaning very heavily into that. We'll take a look at that. Thank you.

John Baumgartner: The next question is in the line of John Baumgartner with Mizoho Securities. Please just see with your question. Good morning. Thanks for the question. Good morning. Wendy, good morning. It is first off when you sound much more positive on snack distribution for the coming fiscal year after the phasing. I think disappointed a bit last year. How do you think about the risks and the visibility that the phasing could, you know, sort of underperform again?

Wendy Davidson: Thank you.

Wendy Davidson: It is first off when you sound much more positive on snack distribution for the coming fiscal year after the phasing. I think disappointed a bit last year. How do you think about the risks and the visibility that the phasing could, you know, sort of underperform again? I mean, is there larger promotion from larger brands that could be an issue? Could there be some volatility in the shelf resets from your outlook that you're entering?

John Baumgartner: I mean, is there larger promotion from larger brands that could be an issue? Could there be some volatility in the shelf resets from your outlook that you're entering? Just maybe when you think about the ramp or the potential pressure point that could cause a deviation from from plan. Yeah, I think first you have to look at sort of why our snack portfolio under delivered to our expectations. And I would tell you that it was 100% our own execution.

Wendy Davidson: Just maybe when you think about the ramp or the potential pressure point that could cause a deviation from from plan. Yeah, I think first you have to look at sort of why our snack portfolio under delivered to our expectations. And I would tell you that it was 100% our own execution. It wasn't that we didn't have brands that could compete. It isn't that we didn't have the right products or the right sites is available.

John Baumgartner: It wasn't that we didn't have brands that could compete. It isn't that we didn't have the right products or the right sites is available. We didn't have distribution of the core assortment in all the places it needed to be. We had things all over the place, which doesn't allow you to promote as effectively or to create marketing campaigns that really help it punch above its weight. We are focused very much on right products in the right place, in the right sizes, because we know when we do that, the velocities are very strong.

Wendy Davidson: We didn't have distribution of the core assortment in all the places it needed to be. We had things all over the place, which doesn't allow you to promote as effectively or to create marketing campaigns that really help it punch above its weight. We are focused very much on right products in the right place, in the right sizes, because we know when we do that, the velocities are very strong. We're very focused on promoting at a level that we need to.

John Baumgartner: We're very focused on promoting at a level that we need to. We are promoting at the same source sales on promo is about where it's been. It is below industry average, so we're not having to over promote. But what we also know is promoting our brands isn't about a price discount, because that's not why people buy the products. It's about driving feature and display. So we are 100% focused on using our promotional activity to help our retail partners and putting our products within arms reach of the consumer so that they see it.

Wendy Davidson: We are promoting at the same source sales on promo is about where it's been. It is below industry average, so we're not having to over promote. But what we also know is promoting our brands isn't about a price discount, because that's not why people buy the products. It's about driving feature and display. So we are 100% focused on using our promotional activity to help our retail partners and putting our products within arms reach of the consumer so that they see it. There is a where and it's available. It's that whole first and mind first to find. And then we know that there's a need for us to continue to promote the portfolio.

John Baumgartner: There is a where and it's available. It's that whole first and mind first to find. And then we know that there's a need for us to continue to promote the portfolio. This summer is the first time we've ever done a multi brand program. We did favor your summer, which is our all three of our brands in better for you. During the core snacking season, we know that a better for you consumer wants to buy things that they want the options.

Wendy Davidson: This summer is the first time we've ever done a multi brand program. We did favor your summer, which is our all three of our brands in better for you. During the core snacking season, we know that a better for you consumer wants to buy things that they want the options. And so we were helping our retail partners and having it available. Our sales of the of those shippers. I think we had 13,000 shippers that went out and the sales during the saver your summer exceeded our expectations.

John Baumgartner: And so we were helping our retail partners and having it available. Our sales of the of those shippers. I think we had 13,000 shippers that went out and the sales during the saver your summer exceeded our expectations. So we feel very good that right products in the right place at the right price point that we invest and promote behind, but not over promote, and that we partner with our retailers to create awareness.

Wendy Davidson: So we feel very good that right products in the right place at the right price point that we invest and promote behind, but not over promote, and that we partner with our retailers to create awareness. We've got the right brands to compete there. But our biggest issue was ourselves. It wasn't necessarily that competitors were creating challenges for us. Okay.

John Baumgartner: We've got the right brands to compete there. But our biggest issue was ourselves. It wasn't necessarily that competitors were creating challenges for us. Okay. And then on the tea business, that's been an area of material innovation for you. And looking at the Neilson data, at least, the baseline volumes have been have been softer there, both in Q4 and in Q1 through mid August. I know it's sort of off season, but have there been any other factors in marketing or merchandising having an impact?

Wendy Davidson: And then on the tea business, that's been an area of material innovation for you. And looking at the Neilson data, at least, the baseline volumes have been have been softer there, both in Q4 and in Q1 through mid August. I know it's sort of off season, but have there been any other factors in marketing or merchandising having an impact? Just curious you can elaborate on the retail take away there and any kind of merchandising for FY 25, what you'd be thinking about.

John Baumgartner: Just curious you can elaborate on the retail take away there and any kind of merchandising for FY 25, what you'd be thinking about. Yeah, we feel very good about Celestial Seasons, but I will tell you there's a couple of things playing into it. We converted all of our packaging to remove the overwrap on the boxes. And so as we've been phasing in the non-overwrap packaging on shelves, it's caused some challenges in shelf assortment, but also some availability as we're driving that poor assortment of all the non-overwrap.

Wendy Davidson: Yeah, we feel very good about Celestial Seasons, but I will tell you there's a couple of things playing into it. We converted all of our packaging to remove the overwrap on the boxes. And so as we've been phasing in the non-overwrap packaging on shelves, it's caused some challenges in shelf assortment, but also some availability as we're driving that poor assortment of all the non-overwrap. And marketing spending quarter four in anticipation of two things.

John Baumgartner: And marketing spending quarter four in anticipation of two things. We have a first master big master brand campaign around Celestial Seasons that will launch in early October. We also had new innovation that's coming and we wanted to spend those dollars going into hot tea season rather than over promoting or marketing off season. So we think these are short term in nature. We feel good about the assortments that we have coming. We've got two new innovation coming.

Wendy Davidson: We have a first master big master brand campaign around Celestial Seasons that will launch in early October. We also had new innovation that's coming and we wanted to spend those dollars going into hot tea season rather than over promoting or marketing off season. So we think these are short term in nature. We feel good about the assortments that we have coming. We've got two new innovation coming. So we have a beauty wellness tea with biotin.

Wendy Davidson: And we've got a lemon tea as well. And both of those are new innovations. We go into fiscal 25, but master brain campaign, clear shelf assortment, going into hot tea season. We feel good as we go into the back cavity here. Thanks, Wendy. You bet. Thank you.

John Baumgartner: So we have a beauty wellness tea with biotin. And we've got a lemon tea as well. And both of those are new innovations. We go into fiscal 25, but master brain campaign, clear shelf assortment, going into hot tea season. We feel good as we go into the back cavity here. Thanks, Wendy. You bet. Thank you.

Wendy Davidson: At this time, we've reached the end of the question and answer session.

Operator: This will conclude today's conference. Thank you for your participation. You might disconnect your lines.

Q4 2024 The Hain Celestial Group Inc Earnings Call

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