The Hain Celestial Group (NASDAQ:HAIN) reported a 6.7% decline in organic net sales for its fiscal first quarter of 2027 as the food company worked to address upcoming debt maturities and a condition that had not been met for the proposed sale of its international business.
Adjusted EBITDA fell to approximately $18 million from $20 million a year earlier, while adjusted gross margin improved to 22.8% from 19.6%, primarily reflecting the sale of the North American snacks business. Management said lower sales volume and inflation weighed on results.
International sale and debt talks
President and CEO Alison Lewis said the company received the final required regulatory approvals for its agreement to sell the international business to private equity firm AURELIUS. However, a condition requiring an amendment to Hain’s credit agreement by October 12, 2026, was not satisfied.
Lewis said Hain remains in discussions with AURELIUS and is pursuing a path to complete the transaction. If completed, the sale would leave the company focused on North America and allow it to use proceeds to reduce debt, she said.
Hain is also in discussions with lenders about its capital structure. Lewis identified the December maturity of the company’s credit facilities as an immediate priority.
Cash at quarter-end was $63 million, while net debt rose $23 million from the beginning of the fiscal year to $523 million, CFO Lee Boyce said. Net leverage was 5.3 times, and the company remained in compliance with its credit agreement covenants.
Lower sales offset margin gains
Boyce said the companywide organic sales decline reflected an approximately 7% decrease in volume mix, partly offset by higher pricing. Adjusted EBITDA margin rose 140 basis points to 6.8%, despite the decline in adjusted EBITDA dollars.
First-quarter selling, general and administrative expenses fell 6% to $62 million, primarily due to lower employee-related expenses. Adjusted net loss was approximately $7 million, or $0.07 per diluted share, compared with a loss of $7 million, or $0.08 per share, a year earlier.
North American organic net sales declined 6%, with lower sales in baby and kids, beverages and meal prep. The segment’s adjusted gross margin rose 1,080 basis points to 33.5%, driven by the snacks divestiture and partly offset by lower volume mix. Adjusted EBITDA was $17 million, or 15.6% of net sales, compared with 8.3% of sales a year earlier.
International organic net sales fell 7%, primarily because of lower meal prep sales. Adjusted gross margin declined 80 basis points to 14.9%, while adjusted EBITDA fell 29% to $9 million, or 6% of net sales. Boyce attributed the decline in part to lower volume mix and cost inflation.
Brands and cost reductions
Lewis said North American results were affected by a temporary yogurt supply disruption, warmer weather that hurt hot tea sales, and comparisons with prior-year tea pricing and customer inventory builds. Despite the disruption, The Greek Gods yogurt grew by a mid-single-digit percentage and gained market share. Lewis said the supply constraints are now behind the company.
In international markets, Ella’s Kitchen returned to growth, with net sales increasing by a high-single-digit percentage. Lewis credited innovation, new distribution and improved performance in wet food and finger foods.
Hain has implemented $8 million of its targeted $16 million in annual run-rate SG&A improvements, Boyce said, incurring $1.5 million in one-time charges. The company expects most actions to be completed during fiscal 2027, with the full benefit realized by the first half of fiscal 2028. It also completed actions to remove the full $25 million in stranded overhead costs associated with the North American snacks sale.
Boyce said Hain decided to wind down its personal care business, which had become too small to support the investment needed for attractive growth. He also said the company would not host a question-and-answer session because of the lender discussions and pending international sale.
About The Hain Celestial Group (NASDAQ:HAIN)
The Hain Celestial Group, Inc is a natural and organic products company that develops, markets and distributes food, beverage and personal-care products. Its portfolio includes plant-based foods, snacks, pantry staples, beverages, baby and children’s products, and personal-care items sold through grocery stores, mass retailers, specialty retailers, e-commerce channels and other outlets.
The company’s brands have included Celestial Seasonings, Earth’s Best, Terra, Garden of Eatin’, Sensible Portions, Imagine, Alba Botanica, Avalon Organics and JASON.
