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Hain Celestial (HAIN)

Participants
Mary Celeste Anthes Hain Celestial Group, Inc.
Irwin David Simon Hain Celestial Group, Inc.
Gary W. Tickle Hain Celestial Group, Inc.
James M. Langrock Hain Celestial Group, Inc.
Andrew Lazar Barclays Capital, Inc.
Kenneth B. Goldman JPMorgan Securities LLC
Stephanie Benjamin SunTrust Robinson Humphrey, Inc.
Akshay Jagdale Jefferies LLC
Amit Sharma BMO Capital Markets (United States)
Scott A. Mushkin Wolfe Research LLC
Alexia Jane Howard Sanford C. Bernstein & Co. LLC
Andrew Wolf Loop Capital Markets LLC
David Palmer RBC Capital Markets LLC
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to the Hain Celestial Announces First Quarter Fiscal Year 2018 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session, and instructions will follow at that time.

As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Ms. President, Vice Senior Anthes, Corporate Relations. Mary may you begin. Ma'am,

Mary Celeste Anthes

all Good today. us and you morning, thank for joining Skyler,

today. We are to Founder, well Officer, XXXX Executive Langrock, Earnings Hain Chief are Executive Fiscal of Officer; as Officer, Results. with Quarter pleased Executive management and America; Celestial's Irwin several report Hain Hain Vice Celestial members Simon, and Tickle, President as our Gary Chairman, us North and First President team Chief Celestial's James Year Financial Chief

discussion forward-looking do as undertake forward-looking Our include events of today's result any update or current will which are future a today statements to new as date. not statements information, otherwise. of We either obligation

the results what XXXX results materially from cause filed may in these to reconciliation is differ actual SEC. are forward-looking and financial Relations. webcast, in www.hain.com under non-GAAP is the website be GAAP at publicly XX-K This differ call with our which conference available some presentation including to available factors Relations. accompanying the filed an documents, A listed Investor website on release, being archive an may in is our Our reports of which posted under webcast, of other our our Form described statements, Investor measures will and of results and is on and our earnings

after will available one time allows, If be question. we'll call will call to discussion. questions, please brief, be and additional yourself Our for management limit so take further the

over turn Now call the to Irwin let Irwin? Simon. me

Irwin David Simon

environment across pleased this – highly and increased net segments highly which good Pure expectations consumer an for opportunity on the release all progress our rationalization, our we a successfully business. us European In everyone. appreciate joining had We we've our Project Terra and initiatives, and investment to that morning. today. and quarter our hope met first press had morning, retailer Mary, continue dynamic SKU results, in everyone review Hain our sales changeable, say U.K. had good go-to-market by solid We're against a business dynamic We you, of execute strategic business, our focused We've was Canadian released report Thank initiatives. U.S. highly as to our you our – the world also Protein, goods brand against benefits our and execution customer-centric, tremendous I changed packaged initiatives the including profitability

detail, highlights and a James quarter. more take I you to results Gary While to of through few will speak our in the want

business. growth Sun-Pat Earth's Spectrum, our Sensible Live Our and worldwide Portions, Kitchen, growth Cuisine, brand, net double-digit from Soup, Garden our by coming Tilda, and from Ella's Hartley's, also, Alba Clean; Best, Botanica, New FreeBird, Linda sales McCartney Lima Avalon Mills JASONs, increased Arrowhead Imagine, driven X%, Veggie Organics, Covent Terra, our Yves

place Avalon brands, expansion us Our Spectrum, $X.XX in grow benefit made. Arrowhead we've Celestial with mid uniquely net customers XX period, to from sales brands. compared million per our will working talk or category and on. the about all consumer We our gross from strategically from Gary management the solid Mills, Earth's grew to In optimized already our Organics, prior double-digit of assortment Foods, growth Best, investments our timing Live to the are succeed adjusted margin calendar and and their results Hain earlier drive U.S. natural compared where sales strategic products natural with to teams, executed the is Hain later Imagine, a penetration. investment that and our Clean, Sensible investment and In Sprouts adjusted teams grow Whole shelf, the segment natural single-digits and our penetration Celestial reached product planning needs and base. weeks, the customers store combined this even consumer we're and JASONs with opportunity X%, the other the to in positioned prior for the increase an sales prior brand category product quarter, across EBITDA year across conventional should U.S. million net consistently seeing the like products, increases specialty we're the work our brands brand of helped is portfolio we increasingly category organic the drive infrastructure category million to a and diverse more customers diluted growth ago. to scale in last to of the organic household the of Household now households We sales $XX.X Amazon, to have this that of The on our our year versus year. U.S., with believe million channels. basis growth $X.XX opportunities on of to X.X and period, $X.XX $XX.X $X.XX share an continues in being the with of earnings our in seeing drive products. Much in of XX.X in core from increase create growth. greater

there. trends that Those Tilda to profiles margin said I'm are and to growth growth look of as coming Whole were a of tough global I've you for drive from positives Linda a products, in saw from by to and the driven was continue newsletter believe As Covent growth lot sales and Foods, well of bought adjusted in one our other we're the some. UK, acquisition are Hain and of in Mills see divestitures, you our from constant from there six-foot Arrowhead top Ella's we'll plant New McCartney, saw flours the the Kitchen and seeing enhance food full our brand and that UK, Hartley's, Garden Soup, I and our cited our benefits profitability a Foods' Sun-Pat, pleased from of those as brand. to And business in who net and brands to display continuously the efficiencies Whole yesterday you acquisitions In weekend Amazon's up XXXX. before, development already. currency, of fruit our hopefully market, subscribe this stores X% as probably

initiatives the completed business our February This growing the is up for XX% plant-based, quarter. our facility the be relocate from in McCartney our of the chilled Linda exit Fakenham which should to we exit We November. in brand, plan dessert first support One XXXX. starting by capacity identified was of the to demand meat-free

net India, and to Middle continue in by opportunities XXXX, could in and We India Middle believe, East million see represent sales. $XXX the East

I Prime Minister these commitment in in with namely invest Modi IMA attended see the expansion recently also India and express and selling purchasing, our the products the in to Middle I India, opportunities from Asia. We procurement where Africa. more together to to region, region, East on World work Food met efforts

Veggie broke you of Food As India, expect plant-based The XXXX. taking great XX% Sensible the today. Future Personal group, retailer to Care of know, brands the driven brand; In were capacity we a our with brand, Tilda; offerings we Yves the up growth growth Joya private are from from Yves up West of were team Veggie driven ground this and to the to by products. net by leading net double-digit plant Coast they up and in and Danival of Celestial constant expansion earlier Cuisine. The year currency, constant strategic job Canadian XX% us of sales enable our of and on snacks both sales will East Portions; label our along where fulfill Canada, Seasonings; joint a brands. a in done currency, just our Cuisine, we strong has plant, in Tilda, in needs to announced strong under U.S. brand, in In a which a the growth building new these milk In Europe, the ground venture new May plant Yves open from strong, Canada, with to provide our

Lastly XX%, to like big We new good we of the Health the have plans, Hollywood poultry benefiting out smaller with in in tremendously Cultivate new overall antibiotic-free investing from products At what organic. innovative FreeBird to DeBoles the showed we our acquisitions Cultivate, seeing was for brands, Protein new products. and X%, GG net look launch of this Pure many, as are watch up about coming up that and Valley, brands Hain brand some to we Pure Farms Crackers and business in from to Protein, we like growth. way. quarter, were BluePrint Cultivate, many as and X%. and FreeBird nearly Hain strategically talked facility. grow our in and has some we're converted that these increased Plainville sales you more

to by of holidays. period the already. capacity the chicken of with out sold to completely more attributed Empire $X the declined million are sales due timing Kosher Jewish We prior-year

was turkeys, of in decline Our to Plainville million about us deliver brand weeks. X.X and reduction somewhere two our happens this X.X With at coming challenges now conventional due we turkeys. behind between and holiday and pricing the operational overall season decision excited HPP, Farms we're which up in expect lower this to in turkey a all to million next

Plainville So turkeys. for early your please order your place

worldwide in Project savings this set $X.X to savings in million achieve cost line moving million delivered the we prior initiatives, quarter global what and $XX-point Now this period, productivity (XX:XX) Terra in we versus to out approximately quarter.

invest the to for in used and balance approximately marketing towards costs line. mostly U.S. move $X the in with million our we year, commodity and brand offset the As bottom million $X to million the we higher freight to $XXX falling

live Our count, savings came head HPP COGS, manufacturing various our from and costs, operations.

chilled our of few I of manufacturing year the in as talked in the actions higher productivity A based actions of these early examples recently the as savings Pennsylvania exit on first are West Fakenham the business facility typically half we've which about, of the included in past, January. well closure As our announced just at taken second the the Chester, dessert half.

portfolio years, the assembled one attractive XX Over of we have the of most in assets our space. last

continue with we non-core with loyalty given Board forward, enhance growing including platforms, our made our as value not consumers. Steve build we're some Chief most President opportunities WhiteWave. We'll as the The and remains including recently to enhance a commercial early major overseeing business. We're most Coca-Cola, shareholder strategic Terra board of in what's our tremendous product, all Project at return and recently the leadership. and to to Liedtke us the our but greatest transformation our and aggressively ahead portfolio to businesses, in brands, our business strength our of complexity capital leadership opportunity and our our we've our commitment to group divestitures. believe team our Vice the for Hain, I just people Directors and evaluate our customers of and accretive continue with strategy, be digital innings and further has least, and joined ahead. Senior our Digital margins, us of to joined our of enhance excited changes Looking that eliminate the will upon realized and of to strengths established E-Commerce, line Engagement evaluate enhance strategy development. to from customer throughout brands Information Officer value. operating Bowerman, Julie Last on acquisitions working

thank company. turn to various directors to like you look With industry business. to all who to to over to the provide contributions independent and like through you. forward take I'd Lastly, the new Thank call our I I'd diverse, U.S. Gary working their for valuable now directors that, with the our experience

Gary W. Tickle

first It's quarter U.S. Irwin. the for my present you, business. pleasure Thank results to the

of continuing increase XXX top we strategic the and our SKUs first an We unmeasured quarter, for one generated in million, channels, drive are last top brands. of growth our $XXX execute the measured to XX X% quarter sales from In plan and net to on year.

segment. reminder, Kitchen are been of Spectrum. $XX were of now rationalization, Terra the drivers XXXX, which divestiture basis the XXX Rosetto QX impact commodities with year U.S. XXXX, flat million SKU improvement UK net on year. in Including planned and, sales sales margin freight the on the improved a improvement spend points planned of Ella's are price of XXX projects, excluding partially SKU on FY and efficiencies along and and trade improved FY removed from offset from basis points. Gross inventory rationalization, have realignment of gross reported margin the As and were Major reductions by year in higher year

period. a around engagement change a quarter $XX.X in were operating [$XX.X (XX:XX), sales operating investments XX $X.X income of model first annualized internal XXXX. the planned was with million advance for prior consumer other salaries million] lower quarter and out build million three will the was marketing impacts of starting million $X of $X.X Our capabilities FY around in investment which including million and major (sic) from in the go-to-market savings we remove capabilities, increase versus The to in million which and $X as brokers our model, income

consumption remain focused be measured of proposition number to to brand Turning the we channels, on Hain the unmeasured. product there factors shoppers' in continues right all Celestial, of and and channel. choice a trends, influencing both At providing

more on to of to more consumers our more wherever consumer the focused selling are often We shop. products, chooses

read and SKU e-commerce MULO+ diverse For unmeasured The channel channel rationalization same customers, data the natural of measured on growth date the to context IRI data, other sales Celestial our latest of unmeasured for is minor for impact. due of some use provide Convenience with Foods, the the or Babies"R"Us. X.X% which variations convenience and X.X%, Whole including (sic) XX/X/XX specified. a XX-week negative the I'll about sales is for of which comprised availability. channel [XX/XX/XX] to consumption was XX% the channel, Costco, Amazon for MULO+C our channel, customers Hain the the channel represents balance refer our (XX:XX) XX/XX/XX customers, excluding in performance, business, unless of range this the Sprouts, minus date read To I'll measured otherwise

plus channels, this In the X.X%, performance X% SKU growth X.X%, growth rationalization. X.X% negative significant plus or excluding in XX non-measured as more was was SKU or our even in impact. consumption rationalization While channels the negative gap was measured sales latest weeks, excluding

non-measured the weeks, in or further XX rationalization. latest between in X.X%, top non-measured trends our MULO+C measured minus for X%. To the our growth and X% is XXX at X.X% plus channels XXX non-measured in plus plus diverging was SKU growth excluding channels, while in the are While the top illustrate items

MULO+C seen the is latest we channel As we've a for our growth and of channel all in acceleration customers period. top in channel, over show over year, club among in at platforms. as both as growth non-measured strong to which well growth activity with quarter XX% for XXX encompasses in the e-commerce the recent the customers, view, double-digit The performance natural performance, channel with major unmeasured the X% the XX-week combined with stronger for continued the online customers, now year attributable and

SKU FY improvements of the considering with improvement biggest and shelf. also see We focusing investment continued through consumption-driving even rationalization. XXXX out-the-door distributor the Such into reaffirm strategy activities XXXX in trend partner, sales quarter-over-quarter our after FY consumer our impact the of with and at

in to year fiscal expect results. XXXX, our the MULO+C the For growth non-measured customer base outpace we continue channel to

Turning now color key some non-measured of platforms channel detail to each with MULO+C in performance. our for more on

basis at Sensible This and in Primary distribution data Firstly, of in for resulted one points weeks SKU the I XXX points basis negatively major distribution Better-For-You rotation in note impacted of XXX was rationalization. customer, the Hain of basis Chips Terra also for not MULO+C. on Eatin' in basis one club of losses FY of total consumption and XXX resulted which points Garden at drag in Hain points of had XXXX, one drag, MULO+C. and for Terra partial XX XXX is Portions is in quarter latest are drag basis loss of XXXX MULO+C of in FY XXX the X.X% up total Snacking in resulting weeks. XX the drag from repeated down by the X.X% points drivers customer. of

is up measured to at double-digit growing And up and XX% Portions customer. the unmeasured channels, excluding loss the However, in growth non-measured overall in double-digits on Terra Sensible one distribution rotations our Chips partial in velocity snack show and being the business excluding digits club high-single strong is large of growing continues both single-digits. high channel.

Turning one and in the our in brand. position of Spectrum XX%. the of the at is Coconut brand Bakery the share already engagement was XX was first major strengthening and with some we're the of the XX XX revision focus three effort brand new along down well XX% arriving Organic forefront. X.X% in oil event as gaining In Spectrum, weeks, weeks, with and this down to the In is weeks. packaging down actually of the coconut Spectrum decline latest culinary XX%. now bring oil Spectrum oil Marcus Rudi's just in is have digital oils marketing the Chef natural segment of in X.X% activities olive XX% shelf of oils the with Samuelsson. partnership represents the case consumer number the to Pantry, Better-For-You latest Spectrum with which This down a weeks. as the our major Spectrum XX weeks Naturals, XX%, to and down includes Essentials been was advertising, oils, the business. last coconut organic the initiated, a

to rather consumer the purchase for behavior aisle. For organic in Rudi's than offers gluten-free and frozen Bakery, Organic shifted their has the aisle look fresh the

April XX of weeks. were broths, entered support, future a first strong very revised in brand As we MaraNatha more quarter us with We're single-digit the we will in weeks. in XXXX consumers growth some across MULO+C We'll was with that give from last its in units consumption continued calls. double-digit to MaraNatha quarter channels unmeasured to part have low channels, in promotions support strong which and the to cycling to is see started D&C encouraging. up were packaging in for performance future campaigns expanded as in XXXX but X% fresh this one, not new into say benefit and which on recent growth our on and continue commencing essentially in for Northeast an all dollars XXXX. Imagine the the distribution solution partner to in and soups flat in agreement which repeated brand and (XX:XX) growth XX% reach for supply aisle manufacture just have that in the the

units, year and X% growth in Botanica a and of channels. basis platform seeing strong in Hain choices Best baby continues returning in and with both with Care results after was have particularly by continue was branding improved strong doors have by as being offset two unmeasured with seen reduction is customer, X%. the points and decline in by in Clean shift Ella's work, with parents our dollars consumption, in Live we'll in Arrowhead large XX customer We've for see to for Baby generated packaging Mills biggest more of change high with Personal XX a a growth. convenient online channels, to also distribution X% XX% net up Formula Baby up another our weeks today. reduction last Organic quarter behavior by still activity timing difference X%, online, in and for on the and X.X% negative, our mix, with business but has Overall online in We growing The unmeasured two in Kitchen we revised Alba is very Notably, those overall year, up and from removal unmeasured growth strong activities Best continuing good JASON consumption for weeks. units customers We're which continues consumption in to unmeasured business the soups have driven an X.X% by performance XX in brand. to growth. so promotional to in baby accelerating and segment more MULO+C. growth the growth XXXX. see performance channels, channel at in Earth's to double-digit and FY major overall TDP Better-For-You growth retailers gain good This units, on Better-For-You lapping channels single-digit. improved up is Earth's performance momentum the softer Infant a food driven and has in drag a which in

issue growth of While Seriously with Ella's growth dollar Gods MULO+C Indulgent to seeing in planned was other brand of good Indulgent at two Tea MULO+C. The bagged from October and in we're The dollars number expand be ran Greek stronger Yogurt with comparatives volume through Kitchen unit X% is format where and to X% the major the will total we reducing of future XX%, activity the consumers mass hot retailers XXXX, already plus from also is and we in customers out so in will K-Cup plus was to and choosing for a encouraging, consumption distribution also comparatives to early which Greek Tea in online reduction negative performance, the down although cycle Celestial the was and of in earlier. unmeasured XX%, tea first Activity Seasonings with select expanding brand's the lapped retailers, in flat the lapping as launch tea. has net this a been Seriously response customer for in line shop quarter largest Celestial the higher still concept. timing in who MULO+C Seasonings in also wider Early Gods season. with points phasings activity prior and and we're innovation have channels is was format. exit the XXXX with in the segment in yet promotional distribution for still periods.

across channels. all channel seeing accelerate ways all our Across in with our unique consumption highlights, opportunity. have over the provides exploit the Today fastest-growing a platforms, above strategic our and space. from in to our on in We in e-commerce which growth representing view, the In just believe invest summary, XX% a and begun in platforms e-commerce in we we've e-commerce. significant is growth consumer brand with several QX, Finally, and total in the engagement consumption growth. reaffirm in XX% growth only top channel online of digital our consumption quarter, strong and shopper double-digit I the XX% focus SKUs business XXX reviewing our dollars can we're

represents million X% over we portfolio, or remaining XX% around first have consumption for of quarter, declines the this $XX for X,XXX the While significant of in the SKUs.

SKUs across thoroughly reviewing the these role are and channels platforms. We of

in the XXX unlock significant potential complexity. the core reducing brands cost priority top is and to and of XX U.S. SKUs goal while clear our Hain Our

that retail necessarily of may these As the SKUs we'll channels not play channels. of evolving, select role is be landscape rapidly the all but mindful some in

Turning in The Seriously Live the relaunch our early Clean per showing for momentum consumption continue launch expanded the Good continued in and EBITDA strong growth. unmeasured continued the for is investment look graphics with Hain consumer Celestial consumer all in launched single-digit our In We're changes with market. And in the this MULO+C SKUs brand growth MaraNatha for mid brand We're and now with of are We'll our building in rates our of $X executing out mentioned, channels Jelly happy results quarter results also Indulgent good channels you portfolio outlook the In to along of business. to we're of positioning of expectations personal our and we've U.S. care campaign range. Too on recent now which forward James. many in first the engagement. ahead in the investment business. and inertia. quarter, Thank with with with growth, in XX back and growth seeing, to Yogurt consumer channels offset communication in response over continuing addressing. channel U.S. XX, with run and solid of brand e-commerce fiscal million also. multichannel against year. XXX financial support across is of and quarter. to through call in-market video, approaching with to XXXX paid I'll strategy top as seeing just September turn you, building impressions garnered plan We're begun of to line continues continue are sales the consumer consumption good a and our over including growth view, quarter as strategic closing, balance media the meeting We're reiterating also the one XXXX we're across weeks finally, and seeing rolled for our the X% investment, digital new more double-digit continued coming social This in as low customers, the distribution our is we by search recapping: come the low Briefly the for of reach XXXX. to effort with with growth has the across to momentum the continuation the and paid market. I updating our million remaining declines weeks unmeasured the Spectrum we at execution performance

James M. Langrock

and everyone. you, morning, good Gary, Thank

We financial are extremely information with tables with on financial We expectations. our quarter you additional press were in reconciliation GAAP pleased that first which and our release for ask non-GAAP our to the results results. refer to line our

income been for in $XXX million Kitchen and previously to solid $XXX XXXX, XXXX. net was for All reportable a point as this in trade As HPP. sales to States, confidence our changes to net was United Kingdom increased Gary basis Irwin year. XXXX. year, in we $XX and compared by X, increased driven increase net to XX% with first momentum profit the even SG&A focus that the in more X.X%. moved constant and operating results the a quarter us the meet through discussed, both gross first of United costs down data our we sales Adjusted structure. business during awareness in segment with advertising more quarter the provide adjusted expectations for effective new realization year. internal to year in our United U.S. over business. was million, in over XXX increase at increased operating for sales to States in percentage almost July XX guidance increased reflect within continue performed Net segments, and points price our line highlights the the achieved year currency segment. was sales segment, Ella's track U.S., management efficiencies investment spend Ella's profitability reporting U.S. has as and basis, United personnel so you I'll to Kitchen operating million The profitability fiscal fiscal efficient margin approximately we In provides represented a the by previously prior financial basis discussed the brand Kingdom, on the while at the XX.X%, from sales primarily the our and each gross of on reportable marketing included prior top X.X% the due more in On underlying are a reporting structure. slightly prior year, year and improved period

engagement build XXXX to the is to beyond. previously, discussed and investing As awareness consumer in and fiscal growth profitability brand U.S. business fuel and

we achieved went in the in the improvement year. almost In due segment a and efficiencies. in within Rest operating within U.S. fiscal XXXX the implemented Canada XX%, realization actions margin Protein, segment. the World of and XXXX. significantly improved Rest income Operating sales increased to our of at in sales by impacted $X.X loss operating business in $X to a this Europe back and to price Daniels drove million operational excellent million efficiencies sales the as increased profitability, the driven segments At Both point we Hain from have by positively results, our and rates. XX%. operational expect income UK, in half the The constant in of We nearly World basis Pure addition profitability profitability improve digits both growing operating with favorable low-double Hain XXX year a currency, growth, in profit operating to last fiscal

XXXX. of EBITDA on million $XX million We first of $XXX expectations, compared adjusted million our for pleased and track line to diluted for share year the $X.XX in XXXX. we're to earned QX $X.XX per report deliver adjusted adjusted are EBITDA $XXX an to quarter, to in on We with basis, fiscal

historically been the rate quarter first XX.X%. The the smallest Hain's quarter fiscal year. reminder, a has effective was of tax As

sheet. turning balance and our cash Now to flow

$XXX XX, for our debt in were advantage in first and For period. deliberately cash holiday. $XX the quarter, inventories free Thanksgiving negative HPP. the the take was free at negative improvement balance which to of as as capital prior favorable was operating and net compared cash HPP, free September $XXX $XXX an attributable The expenditures cash and operating was million million, flow year. pricing. built million is million to rice Tilda million we flow decrease We primarily of at prepare to cash Tilda in increase a increased million from At inventories operating $X was both flow the prior-year At $XX inventory

year the to of from XXXX XXXX. leverage approximately QX including bank we X.XX billion, an at XXXX guidance, X% to QX, the reiterate Building times range fiscal increase of the decreased compared X% times Our $X.XXX in fiscal sales $X.XXX in to QX billion end our at off as X.XX XXXX. of pleased to to ratio net are momentum

to the low an million growth compared to $X.XX XX% efforts are mid with We are an EBITDA of in important while HPP, to $XX to an a investment $XXX of savings, high growth XX% to the and $XX our of per to earnings in of million approximately of million, World U.S. diluted single-digit million grow range U.S. to accelerated expected Adjusted the UK brand in XX%. line $XXX long Rest productivity, of $XXX share to including Adjusted top $X.XX, the expected single-digits. of which XXXX, primarily the the These fiscal and over to year approximately mid in annual term. and expecting are increase tax increase deliver an Project reflects rate to investments Terra million

and approximately $XX million. We expect another interest expense be to

and million. $XX expense approximately depreciation of and compensation amortization stock-based expect We

and the our fiscal $XXX cash million, million. the Now approximately from capital XXXX expenditures turning for cash to be expectations, $XXX flow we we respect XXXX cadence consistent $XX million flow. EBITDA to Based fiscal one operations anticipate on the of outlook to expect EBITDA With fourth to quarter with continue perspective, with and sales EPS to expect improve XXXX. quarter, our throughout each a the third essentially strongest remainder we for and be year, will QX another. fiscal the quarter from fiscal to of

is we any pleased non-GAAP reminder, of As excluding year guidance are In a continue and our adjusted nonrecurring will a in the impact summary, future XXXX. with fiscal future acquisitions solid basis, quarter first we the our other identify which our with financial or items momentum on of experienced results. provided to

you contributions will up call also growth and the And investments business. with enhancement top Thank we from the for making now in significant questions. XXXX fiscal in open expect We that, very line important much. Operator? margin while

Operator

Our first Lazar comes question with Barclays. from Andrew

now line's open. Your

Andrew Lazar

everybody. morning, Good

Irwin David Simon

morning. Good

Gary W. Tickle

Andrew. Morning,

James M. Langrock

Andrew. morning, Good

Andrew Lazar

Hi.

one, the the of you is, you lot we're a went and that mentioned, the in shipments sort if you on as I quick Gary. the as of detail XX-week, measured versus the Thanks one XX-week So talked non-measured. at and of a guess obviously looking and – gap thing the came for between scanner all a consumption lot across about through bit quite widened detail. a

that like and guess, had things we start when sort you very have the to, down it key And to or one data two of helpful. little just look then to If maybe quick got three you that think see would be to for led with a line more just expect widening, to housekeeping should a then the James boil come I what shipments in I've bit

Gary W. Tickle

Okay.

I the channels we that mentioned expect stronger the business the a because the the on dynamics of the unmeasured in the at think earliest, my MULO+C for will it come if we of the full negative year the see some it how be the a side of so I from certainly three, be of MULO+C, cycling. in expect start the driver performing, channels, in call terms just of first to see we'll overall performance may business, to say, overall is in better would will data, We I projection things I'd unmeasured for is, quarter alignment performance stronger at because So slightly that improve. to to do have the start we of we're balance have reads thing growth. year. through But look flat to the simply of year the

think And that the coming brought around time, and obviously won't that online I so to MULO+C with your channels. up Whole it's fast shifting lot traffic fiscal They've us, of To see for that's news in this of seeing quickly. seeing of And the very consumers a definitely Amazon got interesting opportunities XXXX. growing widening, we happened back growth in now. very a category. moving There's turn with new lot Foods question an what's as all I mentioned, is – we're we're

of business And this it's why blurring I expect would to and expect, If we is part don't think I soon, the teams with reason I I channel We're divergence see slow the to the our continue, online all across anything, to So our because accelerate. going good down. to with and it solid anytime out key work also that dividends. big non-measured pay – done our of of we've expect continue. that have to partners I is performance that channel them, platforms seeing really starting done some point

occur So this is to just see I think consumer coming quarters. we're the this channel a of in for going blurring the how function

Irwin David Simon

MULO, if a Amazon think Whole I outside overall X% Andrew, whether at Sprouts, whether you there. it's whether food Whole big important, business it's through of And, Foods Foods, independents. and of it's had it's look always go today, Hain the sales And

So you billion, sales ago $XXX that's that through there there. food it, are of years think five now not about $XX going billion that was

FreshDirect Thrives, tremendous the the where you you think probably the we're rest I it's seeing other are going me the our and think XX%, shift. where that's it's it's it. And it's shift, where XX% look online channels. is as our a once the the seeing whether whether we're And I whether Boxed, business, asked at sales is and So today, and that's MULO business and other

from going channels. onto shift other business big a there's So our

Andrew Lazar

James, own for number quick If the to to the just adjust there we us three for a the think quarters of Ella's sort the about the from EBIT? what gave Great. you sense would wanted next I shift last lot sales Thanks UK, for to the and into our in adjusting we that. a it's from other but of one. And us year on then, full that out the a smaller, give you is could a do way EBIT? year, segment know need for just to U.S.

James M. Langrock

you it give helps. to if QX operating on I'll for Andrew, that So the income,

in their million. was Ella's income So $X.X QX about operating for

Andrew Lazar

Okay. year, of And volatile was usually no reason that necessarily? over to the the think course

James M. Langrock

Andrew. No. consistent, It's pretty

Andrew Lazar

Great. Thank very much. you

Operator

Our next Ken question with from JPMorgan. comes Goldman

open. Your line's now

Kenneth B. Goldman

question so you One Thank me from to much. Hi. start.

color us as little more bit You investors a review. some more what the you are the what what you're maybe a little talked your are, give of looking to portfolio a at, larger thinking Irwin, about can as goals about? to valuable just and variables I'm of be as to you in get terms may sense more what firm. of think really of you key what core what outside the of will trying the think

Irwin David Simon

Thanks, Ken.

of number out is complexity take business you how the things, couple one. a So

contribution big private branded a branded back X% UK is label a our is that label Do the where come is Let's the business mix business there? there's the But private business our do on on or part absorbs from right of but over our you over focus UK, XX%. label have there. there, lot of X%, private In business. EBITDA, overheads you

our at of do streamline they're whether it the look someone's that private you smaller numerous hands so that, category, there's And just protein into business, that more assets, DSD a are a they better paid a price Hormel for it's businesses, label, complexity. in our you business? tremendous and businesses. already you in more hot towards And business, If that's with protein and recently assets, moving are lot is a off saw

– on bigger, up taking drinks business. care with non-dairy in thing the risk are business, snacks Ken, is out new is our higher that's business the How areas? are BluePrint do of the whether categories? commodity an and other focus business, our we where it's acquisition looking personal in there's business, a business, bigger our which our growth we commodities, part business, at, Where risks our where from becoming coming business, plant-based, Yves where are are And standpoint, in So and what complexity. the every

we're brands the we of against a lot brands those of enough putting instead of focus are So we number high of in areas dollars growth businesses, some on have. XX and

on we're So working right that's stuff the now. that some of

Kenneth B. Goldman

it let you, Irwin. there. go I'll Great. Thank

Irwin David Simon

Okay.

Operator

Our next question comes from Bill SunTrust. Chappell with

open. line's Your now

Stephanie Benjamin

then of unmeasured it like and single-digits mid on really question during was This it, only a U.S. but wrong, actually quarter down, And reported channels Stephanie up gapping this X%. segment, Bill. consumption, Hi. call were measured have for I on just just unless is much the Gary. the Good performed the I in kind sales heard growth it better, morning. sounded

of color I'm a the X% on get between a but obviously and more difference little how growth. drivers kind looking there's just – Thanks. So I the know to consumption, shipments of bit

Gary W. Tickle

Yes.

So of the inventory flat you were realignment we exit from the the you essentially – in this the on and out line Rosetto, – thank was if as SKU impact I the also actualization, the year. mentioned take from prior top the for quarter, question of cycling that

data, channels course is scan So and in flat. is us balance And getting what balances between where non-measured of also unmeasured obviously negative, of measured customers online. significantly seeing in to with trajectory of is channels, all our stronger of see we're the performance, channel the course, the the which is back non-measured which you that the the and both in major

So how out. balance that's essentially the two

Stephanie Benjamin

we for need as Thanks. Thanks, to And kind are of that's we big then the of of forward? there items any just me. for quarters for remainder the be and or really year, that's realignments look the other that helpful. And going one-time inventory it modeling aware

James M. Langrock

Yes, so James. this is

de three But still an to similar So four, in QX. a minimis. have you'll in QX in and and realignment similar impact inventory have QX, impact is they'll then (XX:XX)

Stephanie Benjamin

Thanks so much.

Operator

next comes with Jagdale from Akshay question Jefferies. Our

Your is now line open.

Akshay Jagdale

you morning. hear Good me? Can

James M. Langrock

Yes, we hear can you.

Gary W. Tickle

morning. Good

Irwin David Simon

Good morning.

Akshay Jagdale

Perfect. Hey. Good morning.

think again mentioned First of excluding was growth it you growth. sales flat forward, for – cetera, rationalization, one's flattish all going the the cadence growth again the Gary, as we but so SKU for color, so et thanks or for the

is growth. to guidance mid single-digits Your low line for, I think, top

we similar growth in sales the slightly, it, performance margin cadence which the inventory like many moving pretty with going to so in you period EBIT is going see think XQ, massive help the going I accelerate And et of then us model through there how as down year. a go to cetera, the forward, mean, year to a over back just to reported let's we can if color, because the you're to growth, then the have year have So realignment you're basis? year, cadence expansion. call the ago half, should us it's because on this of going parts EBIT in give of some assuming right,

have So with us And that? can just I help one follow-up. you

Gary W. Tickle

Okay.

in is go how the and model the factors was terms had in much with balances and was and plan the our how by quarters, from that's pieces transformation and up. why of the of be first we for but half-weighted a developed There is investment that very can into business and of are are a on as relatively the plan So, out, to a business flat built. lot that's very following half-weighted. category And see expectation lot I we out there, one back the improvement detail we the questions EBIT a back brand the built see by quarter improvement and first built. just front there's picks but Obviously, the That's growth that's up. two level. as two the that cadence quarters we so was expect high at that's the how those to growth, this the in half-weighed, where knew of front is think but cadence, We quarter of in growth why the but that plan why the was investment number case, basically was

Akshay Jagdale

on line, basis excluding a or SKU reported is And the top that the growth acceleration the both? on or rationalization

Gary W. Tickle

talk always reported here. I through basis

Akshay Jagdale

fiscal In quarter first seems all going the guidance business to that XXXX missing in been the to you're Thank just be or second you of expectation I $XX we have little And below Are to expectations. EBIT. there's on that to the quarter, up made first make to second that the the second weeks, in in bit am of a next the couple going you. something? quarter quarter? Is but and a back Perfect. know implies money Okay. million, your basically made one get HPP, lot XXXX levels I quarter, million; $XX.X fiscal on in

Irwin David Simon

there Well, first before just the what on of Empire, all, timing HPP, I on and said holidays. you during heard

there's chicken Thanksgiving, about chicken talked part big reliance a to The and yes, up a is we've second our one of continues is XX% XX%, in process business, for but products. HPP And other the big things of their was grow. and between up which thing on into business our our Empire's total turkey in our growth between protein business, how we're moving But deli being ground. more growth, and more growth

out the of savings are in protein half the that about cost making business. moves coming of of we good HPP, some some And back feel our good

Akshay Jagdale

Thank queue. in back get you. I'll Perfect.

Operator

comes Capital Amit Our Sharma next with question BMO Markets. from

Your line's now open.

Amit Sharma

everyone. Hi. Good morning,

Gary W. Tickle

morning. Good

Amit Sharma

Gary, a that for to are the growth comparing question you. in the in very flat quarter? in you to When growth low you or the mid growth comparing you to quick that U.S., the single-digit X.X% talk are about quarter

Gary W. Tickle

it's it's X.X%. the growth, so to no, No, to always reported

Amit Sharma

or about Perfect. mean has those maybe channels margin Got channels? channels, businesses, the profitability right? then increased thought greater Okay. the or your compared lower about it. to as in measured, those we still generalizing I in you've less the case think Historically, just it, that as non-tracked non-tracked margin is growth And

Gary W. Tickle

online, players have club we specialty and stated now as up a you got is come you changed between, I non-measured to like, changing, between resurged, unmeasured well. in so and other whatever the because, channels think space, in historically Yeah, natural may been have the you've we've players may who've understand strong mix have and the have of couple course, of if got in a mix

choice in of of seeing virtue the margin dilution products XXX So our in for by those part and I'm channel, being we of as to the measured and moving just it as It on the of work of channels, top how those being measured we're by channels. that's our in dilution you doing on unmeasured, curation no. it our focus but not depend don't a a margin obviously mix I massive ultimately does sell think it on

Amit Sharma

cachet. are other space on in order any their been pricing anything hold talk demands those bit for pricing brands retail of dilution So their little not changes more lots more in around some retail and you Irwin, not customers, your Whole a but When in but to has losing to from business Amazon overall just and conversation and just to just for or how of Foods you done concessions then shelf maybe be modest hearing may And how the channels? one in massive. Irwin.

Irwin David Simon

on I'm dollars the for to what I brands your think you important what's what dollars, what's think and is it's your within about and anymore, And or important connection want it's today, price, our and household there invest And And today, think good penetration seen products, organic in brands that promotional supporting products, brands. you focused content more products, our changed price, and out to is Hain, with consumer. retailers, price good retailers and asked being trade our awareness data I'm is, think content. will and driving support your not not you've I where It's two out things: I dollars think I bring the natural there commodity tremendously, sales. spending brands. get brands is dollars it hearing, but but – your from everybody and on items, and good you we're drive not Amit, I

I've brands, and every And to your premium, them that important, levels, a stronger. higher the consumer and our that but of we than brands, their in brand may label other should brand. their you lot of because label let's Now, are price companies we a retailer innovating with investing they're saying know not conventional, at go why price got packaged is in pay not XX% then consumers feel the a can't is XX%, reasons out do goods be met private moving private a one they're they to senior

Amit Sharma

it. you so Thank Got much.

Operator

Our next Wolfe Research. from Scott with question comes Mushkin

open. now line's Your

Scott A. Mushkin

taking for Thanks question. my guys. Hey,

to sure I had of growth to what actually make So I rates I want was then back question. a kind the go understood just to said, and

U.S. what correct? guys I in the quarter think So the that's business grew roughly, X% that reported. Is you

Gary W. Tickle

Yes. That's right.

Scott A. Mushkin

said channel X.X%, ended fell up channel got which was right take I then XX-week retailers, in the I also and And away from XX/XX, think Okay. number then I you is unmeasured this – the measured the period X.X%? think –

Gary W. Tickle

there, Scott, across XXX top channels. up the was around all X% about talking We're

Scott A. Mushkin

Yeah.

Okay.

a Okay the so guess and trying growth the mismatch take I offline. if take trying versus there X% understand guess just I'm maybe away I'll – I'm I just understand there's the (XX:XX) to ship-in, to it square

Gary W. Tickle

Yeah.

line, was, said we we all in the impacts quarter basically of are referred Scott, flat top what on the I to. that So net

the unmeasured that seeing channels the this performance. is treat very channel measured you simply, X.X% if you're So offset in by

Scott A. Mushkin

Okay.

it. offline. I I more I'm waste I up that, want to think don't know to lot time a we about follow going on talked

product I the and and is So Arrowhead Whole an did vis-à-vis think you Mills incredible Foods, too. display Irwin there, the called brand in and just my I the – such building think product – the it's question incredible and second out display looks

X% you you to like where number? the is was you So also brands. talk be interesting, know and at building to having Then Do commitment the just right I about how how much also seems about, Whole you think a want portfolio Walmart wanted built that it's I moving go wondering those think vis-à-vis understand Foods-Amazon perspective your if success was Arrowhead could of about given lot than that. Mills how to platform. brand into revenue Ella's A, from put is UK still I in brand? for kind the the a know less you

Thanks. guys could if philosophy. So building you and was talk wondering your I to brand your

Gary W. Tickle

brands household focuses is and They're Yeah, space The not consumers, so a a natural awareness don't to our familiar obviously good interesting for them crossing improving for for sure, brands. the and our conventional and They with is are it's one world is this them. many those penetration over of of know them. question, well. brands, and key of here the whole certainly new who from and organic

of driving work brand on So consumer the awareness. is initial big our really part a engagement just and

of first has going just the of has gone that awareness work aided give Imagine, first have just are This read on how The Now brands purchase some for round are intent initial some to well-known read this valuable started of to already there's for can weeks the and extremely out, for six-week work brand our important we're worked by a is that's done come. number done. of example did round has a results, type Spectrum. both doing up XX%, work of in We've understand the We've And is gone that we that's to of not for that up the We research and for to the we we've consumers. work here MaraNatha. six see live product. work brands the necessarily from MaraNatha. because more just

what for do. build has consumer brands initial ultimately the and from out there, a of a know richer story point understanding ultimately for of that care buy something this, is can they're our truly this ultimately loyal. brand, because lot who tell, the and for. And these history their we're Hain that's is to consumers the ambition really that the the them us, about. consumers start makes for Hain we story that's do we brands build about way And this and of in the So day. tell of these try is back passionate understand is these supports and us, us the them. find deeper is stand something It the space about. company so provenance, unaided every these to and have this what unique you a of beauty and to is more to brands raise in awareness, we rich we stories meaningful aided is This the what that's The is then passionate awareness for this all stories This

typical So build. it's brand funnel the

world years five this in from Share is we're get, the it In engage changing consumers important is the ago, and today in to how terms that's very get you think of mind I even changing something them thing of most is and mobile you interesting investment, how different a on them and rather interrupt they're because than a that's to it's and you listening online of a done interested, a on is relevant in something billboard frankly, ad. them screen, lot, they're lot television place or how a a tell where today.

to the you So the when levels were print I brand going different And are think But by very fine put native traditional search were you're very brand, trying on of of reviews, thinking very turn about you're magic a much look I'll because TV now being you metrics Amazon. about on one talking give what part space. I up you're in spend achieve. content, base terms, those brands part the being figure and nature our by ratings depending interruption. of when anymore on you're strongly page or depending can cost be and don't Today, to the a different example. percentage

every to rating an look is which the what – And is for often average is for position product. brand. X.X over Our and brands; effectively shoppers, of out media to in here is day stars, advertising for rating for our our the that a an we because endorsement they even go know it's X be bricks-and-mortar excellent single on

silent every that's of you solution, the don't the for it brand, for you long-term like, necessarily benefit a pay day. So if

to have about think So mix the we traditionally. than differently

Irwin David Simon

Scott, what's And a of bought natural brands, our brands, percentage natural than brands online look think I important, bought when is you bigger brick-and-mortar. organic at organic are there

not the the instance, sales sales Ella's online Ella's, in to to is where consumers are versus purchasing bought in Europe, where we're and and is of – shows we brands sync. ranking, know of what moved tremendous. in and at online, you have if but about brands our need your where we're was and But it the UK where seeing and kind for the brick-and-mortar as going, future So got and talking to we're is and that look brick-and-mortar,

Scott A. Mushkin

Thanks, it. guys. Appreciate

Irwin David Simon

Thank you.

question? Next

Operator

one or have two do questions. for time We more

comes question with Alexia from Howard Bernstein. Our next

line's Your open. now

Alexia Jane Howard

Good morning, everyone.

Irwin David Simon

Good morning.

Gary W. Tickle

Alexia. morning, Good

Alexia Jane Howard

the phrasing So of How segment with Thank assume of to progression and was on. quarter you do it And profit or on profit that U.S.? investment year up marketing given the that some continue? long that the was I decline, marketing due to you the in this the you in pass business, to the operating side of line? adjusted growth back it, expect mentioned spending. to the you U.S. And it expect in year on I was increased When guess, – I'll the segment? do within in get growth is. actually U.S. SG&A the pricing the that

Gary W. Tickle

Yeah.

front-weighted. earlier quarter our prior we'll business mentioned around with essentially I an Alexia, earlier be year, again So, flat as because is question, two on

four which So we the just three and to is how growth, quarters price... we'll built a around question the in plan. essentially profit see And return investment

Irwin David Simon

(XX:XX) to profit growth. Return

Gary W. Tickle

right. That's Yeah.

on not So question you'll end $XXX,XXX the reduction then up for impact, profit a pricing, for with impact a so growth around significant $XXX,XXX was year. from price price last this had we with Spectrum, or the minimal It year. planned which around started small net year. pricing, And

have minor pricing will higher the some through costs have quality in upside We a later COGS related small will But to coming it net capture it's tea. tea, adjustments the neutral. we standards the impact, primarily for essentially, have year, on for our the to really in

Alexia Jane Howard

Thank it you pass very I'll much. on.

Irwin David Simon

Thank you.

question. Next

Operator

Wolf comes And from Capital next with our Loop question Markets. Andrew

Your line's now open.

Andrew Wolf

Thanks. to business. and just online Good one morning. on Hi. wanted I question with on follow e-commerce

kind a think mentioned think good historically, pretty that consumables categories pretty broadly, I Hain, just the I in actually but on has about of category one So kind while. it a delivery? just where saying categories, seeing you're concentrated growth, narrow leading that's still of it's online at Could but the for Is – some baby online in the going growth the business? just not Hain talk consumers few seeing I think online selling categories? guys generally for time? a not for broadening well-known is really a for speak and you really been leading in for Are what what's that one Is to of sort business broadening, been penetration's you're you been you one it Amazon's Thanks. what's broad good home you to of website through

Gary W. Tickle

I in a I unmeasured it's terms referred what's in happening part inflection to No, this the good of think earlier Yes. is channels. of And question.

our broad-based are seeing platforms. We growth across

over personal care up is snacking, be pantry, very whether strongly. So the it babies, quarter, growing XX% for obviously

online our is strong trading know very this shop, a know that feedback increasingly we from is to the where term. with not and broad have is this organic because based. our choose it's shoppers quite we And natural partners So really search we

happens So as continue the an unlocks what say, happens some think players. to online that this in the, area will between what let's bricks-and-mortar and is we of model with mix major accelerate the

consistently it's expect broad-based, we continue. that It's to just us, for and broad-based. So

Irwin David Simon

turkey along the of fresh U.S., just with that it's we're it's And seeing too, AmazonFresh, Ella's so FreshDirect. and we're In Tilda not the the also this world. UK, line around Andy, of chicken, sitting for lot it's a in the whether course online, seeing whether UK, we're this retailers, products

Andrew Wolf

Thank color. the Okay. for you

Operator

last Palmer Markets. our with question David And comes from RBC Capital

now Your open. line's

David Palmer

Thanks.

in up a XX that a Are quarter. out? mid trends. rate single-digits that or consumption so maybe data looks decline seeing you're is to XX% see, business sort down accelerating commensurately such in said weeks of channels playing in down your scanner non-measured dynamic And is In we you X% on weeks, accelerated flat I the follow of staying that that last like Just you measured The X%. the seeing recent Are a that follow-up. consumption? roughly have little bit the you it

Gary W. Tickle

Yeah. Sure.

So is you're of this versus by is program of is factors. last. have which One significant starts year right, we when a our couple a measured for of that business driven Celestial terms that a Part promotional key had in business, in our timing recent we issue acceleration Tea a for the have us, channels.

itself program that quarter had is this our which impact. from was So of And as in in had Sensible customers, disproportionate Portions this will last said one read also in we as I before, a one Chip not this had of renewed that well. period. so a by drag, the the partial they're club Terra address impact the that distribution big off loss quarter, We've a

to business customers So more that continue we other as solid with said, there's the in of most couple the acceleration recent see channels, a well. numbers. I've an online things customers, drove the the of In as unmeasured

lot the all this the activities by that that periods. balance major coming more to to going bit programs our sight it that have MULO pretty of a is that we positive a but, I the in you the channel When expectation forward detail a information drive MULO+C take fall. results. shifting timing-related a when certainly the So through see ultimately, line slightly we we get the program time, is clear our to we space of of of look is year, rebalancing but when there's are somewhat for to we're in the happening can that are in of

David Palmer

in the brands Thank then we in heavy And are acceleration non-measured, envision what related that doing much to the very most when and getting that, lifting how channels acceleration? you. really you're

Gary W. Tickle

Whole piece by key club we've of big strongly, resurgence lot good is seen Amazon but my driving And, core Yeah, work of encouraged that also have something A the our large certainly performance all closely of the say online a the we're course, the more XXX extremely team to Whole Foods was customers of our I by performance to with category tie-up. actually, are of that group top seeing we're predated, there and performance it business. and performing well. being in the done works Foods on which

So that's also part of the drive.

David Palmer

Thank you.

Irwin David Simon

Thank spending create life. us, Better-For-You top to inspire healthier to on What's confident natural mission on position team, well our strategic and awareness. execute rat, for on that our our SKU SKUs us initiatives working leading a you, everybody. our strong way organic our our of and We enhance consumer the focus our and brands, out remain brand

our drive Board of resources contributions Together, to employees team the continue to we Directors Celestial's of growth their like and shareholder sales we core long-term sustainable improvement value. strategic year further expect our drive our to in margin as support. our our improvement incremental and X,XXX growth next to Project results thank for throughout We over will fiscal on further I'd of and on success. execute Terra, strength deliver and and initiatives, Hain capitalize chapter

Plainville Bone Lastly, Mills very as you for happy, Thank Imagine along with I and said many, Thanksgiving. other and your numerous a Gravy, your many listening healthy, Arrowhead everybody Thank buy stuffing, earlier, turkey, and safe don't Terra your Broth products. you. products much to Hain forget have

Operator

the Ladies does participation you for This today's your program. conference. thank in and conclude gentlemen,

disconnect. a great day. Everyone, have You may now