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Hain Celestial (HAIN)

Participants
Casey Turner Investor Relations
Mark Schiller President and Chief Executive Officer
Javier Idrovo Executive Vice President and Chief Financial Officer
David Palmer Evercore ISI
Alexia Howard Bernstein
Michael Lavery Piper Sandler
Rebecca Scheuneman Morningstar
Call transcript
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Operator

Good day, and welcome to the Hain Celestial Third Quarter 2020 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Casey Turner, ICR. Please go ahead.

Casey Turner

Thank you. you Year us XXXX thank Third Hain and Fiscal Quarter Earnings morning, for on joining Celestial's Good Conference Call.

today Javier President call Executive the are President Schiller, On and Officer; and Chief Idrovo, and Vice Executive Financial Officer. Mark Chief

of management the this the the and COVID-XX expectations performance, Company's the laws. future course securities Forward-Looking expectations include and of make to including call, operations the Statements may assumptions the During and federal These of within meaning assumptions impact related pandemic. regarding financial

These with cause based and discussion risks to management's differ actual expectations results and XX-Q Commission morning Form reports Exchange in its refer issued current made uncertainties today. could those on time detailed and materially from for those any report press or a filed Please these XX-K that and Form actual statements and materially to from the quarterly risks on Securities other are annual implied release on and in Hain this forward-looking statements. expressed that involve could events forward-looking Celestial's to statements from described the differ time of and report

results management's is A on financial focus Please reconciliation today financial available non-GAAP non-GAAP adjusted of or remarks note in will the release. GAAP to measures measures. earnings

beginning and UK International Corporate, U.S., which and World reminder, year, the been to America, North as Company of of the a in As this segments. reporting had QX on changed its focus segment Rest reported previously

will like being website. heading. be presentation Celestial's is that respective the webcast, from our I under information, are Hain call which are a conducting call note The website of today an on our would Company archive available financial has Relations Investor put also slides also we it and locations. remote and supplemental to few also additional prepared the on This

or cross technical call. the may such to there delay brief other As talks minor be during issues

would I that the over and your like Mark understanding. call And We Schiller. , in patience for advance you to thank with turn

Mark Schiller

Thank And everyone. good you, Katie. morning

and start unprecedented me Let difficult very times. are by saying these

all prayers go out And to health this learn Coronavirus. everyone impacted normal. As have My toward by to new the pandemic. we a we as adapt good and move to safety who negatively been I those thoughts wish and

working appreciate and work day essential products that world employees I want we they the fantastic on healthy to overcome who an to people our They much every all and around to every And have to have navigate products obstacles continued crisis. industry turbulent are needed are to to numerous this in stores doing they rely these this providing with thank that ship and come time. a during day produce job. I

COVID guidance today's our and give I impacted how created including the our for new we talk opportunities, I how future. about business, On as pandemic, raised details performance call, has on how QX setting for up the ourselves the will you we prepared are it how we full-year, in it, and for

it again XXXX. fiscal that with two did the the quarter, year-over-year which margin, profit start I'm in our me growth results was in to outlook. highest Let after growth, and and XX% strong an adjusted proud third since with quarters significant EBITDA, announce EBITDA we with

since sales last were guidance specific as adjusted earnings we all well dollars on fact, all we delivered growth metrics provide delivered didn't as on dollars, percentage, margin QX top-line, the XXXX. the first while discussed key gross time And net against up In we gross significantly. the our fiscal margin we call EBITDA was margin and

our the This promised Yes, working first our quarter and of the strategy to on-track half we behavior. the evidence really and before But performance is a were it pandemic. that and deliver goals pandemic on our the that improvements in guidance. deliver we changed benefited important two current months from note against is we to based continue is to further

we dollars here, quarter and And in Further, adjusted with momentum. significant percentage, forecast as have EBITDA in quarter going margin in gross fourth third we dollars we and growth well. the continue the margin exited as versus to year-ago expect

pleased As considerably. earnings a inform you result, that raised I'm to for guidance have the EPS we and year our

progress Now our let around will on with and color me provide American restore to margins turn transformational made had profitability. on America, both businesses. our embarked North and for international have North a you we journey some Starting to significant improve and performance recall

[Indiscernible] XX% with last gross Continued adjusted compared improving in XX% improving margin over with over QX year. and EBITDA margin

the in grew. first in America top-line time North our Importantly, for last XX also quarters, the

You is are virus probably results. these wondering what the on the impact of

stated I were us in delivering late top-line home before margin COVID-XX, March late is the the our impacted we while and on metrics As adjusted from earlier, quarter. virus Improved EBITDA performance gross benefit in

P&L That the impacting said some there were by and driven negatives positives the virus.

March, the due in-home sales. which drove costs thereby with out pantry increased loading less travel products in SG&A positive send were to to able We our On more unfilled on and each there lower side, were positions. were reducing trips and trucks costs. eating more distribution occasions open

costs On crisis our and like employees increased running we supply our side, to extra and the frontline sanitation safe keep expedited pay, chain negative incurred freight.

get saw vary better improvements them, within significantly. we brands, get of and categories of but and in groupings the similar bigger terms brands, categories individual In both

portfolio, week. and the one the on for moment Right or Tea bigger at well in improvement. are hectic a about positioned every brands to for is continue it for tea night, relaxing grow XX% Celestial six biggest year-over-year get turbulent in our mini winding down category the brand times. used day Of now growth often a so is and these when

a up with is also this portfolio sales capacity greatly of relatively we part to personal care benefited which in small added environment with sanitizers, our demand. Hand have doubling, growing keep

small and care personal sales sanitizers, in Outside have categories a of overall. soaps seen decrease

it record were off growth. to poised call, significant given the discussed we a not early start, earnings quarter big consumers are traveling. we slow yet have ran but care We As also a program last our that a season isolating and care the in is to created hair sun

baby many stabilized low-single away and portfolio digit better expandable. immediate result, get and And with significant they growth The have well like what in And as temporarily. to gone but stock but food boxes is April, categories April, March options snacks consumption used have dropped as food a consumers up baby snacking lunch did in not occasions orders had saw in parties as considerably bought. March

almost like has snacks increased and also The in some canned sanitizer, seen benefited which loading oil Alcohol categories from almond Get butter, increased our In soup buying hand includes category we significantly Better penetration like and salt remainder tea, things have canned goods. to most home. store improved. goods, cooking every rate from and have pantry brands and center

significant April. saw box surge our big the In business increase terms mid-single in and retailers digit at large grocery growth of strong initial show we during to in chain customers, continues

increase began a significant e-commerce have investing consumers experienced isolating, we we As been years significant many in for where have sales. and

which at in peaked per settled each XX% has Our March XXX% around growth back week late week for over growth year-ago. versus

the e-commerce format In lead material to here. expect to or much we Hain and well do America, is food positioned small and We grow North service. to business don't channel continue

modestly QX from benefited grow businesses have the So have we out the to factoring sales year. when to mostly pandemic accepted that are in our continue expected and this

Better more quarter. Bigger and on segments performed Get a how little Let me color the within them Get give they

to had start America Bigger we brands focused in On we the growth. on to Get trajectory top-line which guided where in improvement were QX show restoring North

Get which that it in the our you important materialized XX%. March, than confidence For Bigger expected brands before Bigger in digits gives surge high-single should before Again, brands Get to that is the our improvement quarter had note were the were growing crisis. more fact the demand

XXX we accomplished six for in quarters. even over five XX% brands we results points year-ago. basis increased versus something more our the impressive Adjustment have Those last of EBITDA Bigger investments margins marketing given are were Get the by

and to Get to the despite in quarter, top more and doubled on versus our the report profitability. that anticipated focus year-ago line. brands than the dollars improved I'm margin pleased On shrinking EBITDA continue Better

productivity on year. skew corresponding the reduction product that Investor profitability improvements low been last are of since a spending, rationalization, in ROI aggressive redesign initiatives, have we declines and working and Day These result sales

about a collectively our million also time chain week margin sales strategic Casbah. supply added Best EBITDA only within had simplification of to These complexity. about share non disproportionate a late $XX businesses the Europe's journey consumed In businesses were business. after in and management they the Rudis low able last and ended, also quarter continued our sell In two million, but quarter, sold and of we $X we

EBITDA to De collected Free of started and including several down addition, Grocery revenue shutting Little brands profitability. have In approximately and in Boles, lack These $X million adjusted scale we annual the and Gluten Bear also had zero. brands

divested direct have XXX our and manufactures, the going to improve XX only delivery our store continuing the business with potential skews, simplify approximately full forward. fits brands, growth discontinued Between manufacturing and we one and system and plan our margins site. This eliminated

to we currency. growth margin in EBITDA constant Turning double-digit solid and had sales, expanding with international quarter a flat gross

While America saw here, most of the are differences. are important two similar North we trends in there

large international One, XX% It a and we zero dropped late to of in foodservice has QX. that component March, those business the fruit approximately the continues and almost trend have a have sales. in sales makes scale up of

costs overhead we while of the input the addition, still business, supplying that further In stranded grocery profit. are side have impacting significant and

XX% about sales of trade have are These their done concerned as finances lower priced private personal business, our businesses items. about consumers the international Excluding quite for are who fruit label. well down

strong It have is management that and two we those out we factors are strong Given somewhat teams and that expansion. sales pleased them. further margin delivered solid flat businesses evidence overall balancing behind we

buy capital important to we point down you On lower to will is that consistent other we paid draw to stock our quarter. we for markedly, in how attention that recall year. the the want utilize We manage to significantly market I undervalued debt March that calls your when previous excess One interest dropped expense were and the shares back with strategy. shares. capital our In believe

deployed at to $XX.XX. our outstanding of $XX price acquire X.X% We million a about of shares approximately

in average impact see count While that you impact and its on purchase share beyond. EPS had and on minimal will QX quarter, the in the

for continues. and a of giving COVID-XX our you explaining that pandemic goal are prepared future we for with well also as results strong spend this outlook, Given the let prepared couple how me we the confidence minutes

that were our a agenda to continuity the could success. that provide leadership they focused regards and of ensure to From employees team our their ensure employees, take care families. our and and we With beginning, safe business continued one, had for

prevent were all spread to adopters the adapted We and actions do in directed recommended government them before many of early cases us the the to of disease, so.

who guidelines or We directly those government all virus. addressing have for also the met exceeded consistently track employees can

program the a safe with established to pay suffered have grants help and their crisis during to frontline workers, that addition we recently from this In help all ensure table. and free hardship food to are Company on families crisis, economic employees for financial who also they severe the

Our that pandemic the and from second European kept priority was disruptions. Company learned supply We would deliver ensure track on plan in to there customer and be that needs. meet early consumer our business, the we

focused the So our we majority skews of quickly up sales on made that supplies ensuring and profits.

material, inventory, ordered suppliers and common extra co-manufactures. labor sanitized quickly backup begin added formula and needed built and Where we continuously. qualifying plants secondary to areas In flexibility create temporary created coverage our we

cost. shipping help demand, distribution in In strong the ensure levels service in well on trucks, prepared have in and as we consolidated meet crisis continued rapid orders the were To resulting more meet the fewer we progresses. performance to short, mid-XXs significantly demand increase and get product reduced to surging

growth situation drive to also As new set unfolded, created and the opportunities the future. up we

grew United key demand hand that small business a to into For capacity States meet have further our example, expand retailers. relationship quickly Canadian the exponentially. strengthening we added sanitizer We and with

in up have ours and others have impact with some for on advertising increase brand, new QX success. market marketing, purchases new coupons to cutting to we from set future been While their repeat been ourselves triers encourage research increasing

scrappy the pipeline on our developed Get brands cooking Bigger innovation quickly also brands. on complement to some We strong

to ways future. the help new resulting in relationships their for them customers issues and with stronger in partnering solve also are We grow

forward, economy shifted its and has quest look we of As our to the for focus a reopening new the normal.

migrate back are While as we to that help open, us economies trends on will continue important several we grow. eating occasions will home anticipate of out focusing some

increased new include relationships, e-commerce of tremendous consumer we home, new triers and and where value. strapped These value, and our cash better many for growth, consumer sentiment products, strengths at have seeking cooking new

assess As will continue appropriate. on Day, discussed recategorize Investor brands and we also our to as portfolio

requiring projects impacted for some While the current has original environment some plan our adjustments.

building, much capability, but control than in front left strategy ever. to pillars, four opportunities have even more intact of now and cost overall work and top-line its simplification, Our new do know remains more We acceleration we us.

to be continues future very Our bright.

you over With it details Javier, that, more me our let turn give on will to who financial performance.

Javier Idrovo

good And employees morning crisis. echo our in navigate Company would who I like Mark. tirelessly these worked you, Mark's have extremely Hain. I to through comments work am thanking Thank proud help to health global everyone. to at our

I from Pure Tilda results is Protein and at continuing financial discontinued period. will results the focus presenting prior discussion our The the Hain year my on the businesses unit operations in current Company and within operations.

Now on to the financials.

sales year-over-year our exceeding million X% increased $XXX Third quarter expectations. to consolidated net

points. Foreign quarter XXX exchange of the on basis was impact headwind a

the period. year adjusting of growth an these of Divestitures, impact. factors skew for increased net a incremental rationalizations were has and versus points. basis tailwind COVID-XX XXX prior When sales X% headwind This the about

guided, From margin expansion. adjusted and year-over-year adjusted QX a as had and expansion we EBITDA delivered dollar gross profit margin and perspective dollar

third resulting Specifically basis profit an $XXX adjusted our gross gross for increase versus expanded XXX adjusted million, XX% of the we by quarter, margin prior of year. in about points,

reductions gross was profit enabled a productivity headwind our cost impact improvements. drove chain $X about Currency initiatives million. by on mainly of Supply

meaningful have terms significant demonstrated as and in the progress quarter margin. the made efficiency, of in In we gross by productivity improvement

North implemented margin. consolidated current been skew initial and benefiting America project is gross has The rationalization

place retailers on skews. As focus high velocity greater

for to to environment. our continue We current for evaluate in position further the portfolio simplification ourselves success

the costs. basis Company by as year. for In points of a the distribution addition, in allows increasing to costs reduction about percent ship The distribution volume warehousing leading sales and to prior versus a XX truckloads improved

XX.X% X% to higher spending versus SG&A percent marketing of accruals increased largely up from our year as sales was incentive by of match period. prior XX%, year prior a net This was compensation in and increased the about guidance. driven

compared roughly about prior million the increased million represents was year $XX.X headwind period. of Currency a to prior EBITDA increase million. a XX% EBITDA $XX.X impact adjusted Adjusted in This versus year. to on $X

EPS impact, margin Adjusted improvements. points XXX representative QX tax last margin compared higher of driven of gross XX% $X.XX on XX.X%, basis XX.X%. with mainly of based of EBITDA the adjusted a an period. tax in $X.XX than tax driven rate reported with of year, improvement over by The effective was year-over-year rate effective guilty an rate to prior We by higher year

the on to segments. provide Now reporting detail some individual

North Let's American with start our business.

year-over-year our increased Third to X.X% quarter exceeding net sales $XXX million expectations.

impact the was quarter exchange on Foreign minimal.

an X% Divestitures these the headwind the net incremental COVID-XX and rationalizations were about of also When the growth basis This tailwinds XXX points. versus year skew adjusting factors for sales had of about period. increase impacts. prior

a EBITDA and/or profit dollar and adjusted gross and QX delivered expansion margin margin perspective, From extension. adjusted year-over-year

given distribution that an prior in of XXX driven North about we the by expanded or productivity America mostly the was adjusted increased for our versus efficiencies third initiatives $XX.X million basis system business experienced. gross resulting by This points, and Specifically improvement quarter, margin gross profit adjusted our increase our in the of XX% year. volumes

$XX.X in impact prior roughly period. was represents EBITDA prior to the versus increase and year. a XX% million, This EBITDA to Currency year adjusted increased Adjusted compared million $XX.X minimal.

an of XXX XX.X% Adjusted points driven basis EBITDA margin of year-over-year, represented by gross improvements. margin improvement

are very far, we We has not North that the with our America accomplished progress finished. pleased are thus region but

return we our conditions. execute We to to have plan continue structure, and margin to to one we multiple begin operating normal improve to opportunities identified more

portfolio, the Mark Get growing in was single-digits into of these Looking components stated brands of tailwind, clear American experienced high COVID-XX a a earlier. the the mid-March North sales XX.X%.While net as growth a before brands Bigger were

several product This growth from lines. primarily came

[One into in care U.S. name. the brand brand under which Clean (Ph), Step] we Alba hand personal Live introduced and Canadian our April Our also sanitizer by driven line

and line margin versus yielding portions, as EBITDA Our points snacks brands well for product XX.X%. The sensible improved these our by as vary tea lines. prior basis margin of a yogurt adjusted year, XX

to and guidance XXX an This brands versus managed of XX% XX% which our Day providing the of margin Better and basis prior points respectively. Get improvement XX% with on short for basis of EBITDA year points, is brands yielding margins profit, improvement being of from long-term margin in-line gross are XX% XX% last of EBITDA XXX Better down margin winter. Get primarily Investor

our business very with our expectation. near consistent shift and let results quarter to up were Now, sales to were for me by constant currency. where X.X% international the prior flat Net in

represented exchange Foreign $X million of headwind.

impact The COVID-XX performance on was of mixed.

quarter. continental Our each non-dairy through benefited European business demand throughout continued the high line product from

business experienced UK Our mixed results.

such parts Kitchen, and UK growth. one the Linda healthy McCartney as of portfolio our Ella's business hand, soup the experience On

in and to gross were dollars. results decreases year. our exposure These On adjusted all dollars quarter food Nonetheless, the experienced large with channel margin were hand, the margin food revenue. versus our other and in plan. service up the business in-line EBITDA with prior and

let and transition flow cash sheet. Now, our to balance me

operating flow operating as quarter by million $XX working capital. These by period. cash the improved and million $XX improved to Third operating about improvements cash million and defined less from free resulted $XX in primarily prior flow $XX earnings versus cash year million using to decrease stronger CapEx flow a cash

Our the high entry lower the at than demand locations driven the business, end inventory of and million in our levels by place from loading of shipping in the network of $XX sale XXXX, March. the the district June in number reduction [Indiscernible] mainly

levels to is XX below XX-days cash cycles quarter. compared just decrease our mentioned. Our quarter the prior conversion driven by during inventory in of to target the days, the decreased XX-days This in

April million compared today's earnings $XX as prior XXXX. in $XX and to comments, company expenditures to the for million in the and shares in release Mark's million used Capital were in Also, quarter highlighted the $XX periods. March repurchase year

of share authorization. authorized us repurchase our with leaves XXXX That repurchases additional under $XXX million

of of in March gross cash with X.X of a XXst balance times. $XXX debt debt million, net we million So, leverage on $XX the closed quarter

outlook. turn let's to Now, the full-year

As million Tilda a guidance approximately $XXX which reminder, $XX in XXXX. million fiscal and in adjusted sales, our contributed excludes for EBITDA net

profit home expect higher metrics and strong to the fundamentals ranges ending We the XXXX June business full-year XX, we at by for now higher our than all consumption. previously provided, food be driven

a the with maintain to raising we And of demand. to are we supply our now that of chain is fiscal As ability with disruption remains face minimal that are of there range a needed guidance. for magnitude increased result, the Outlook we duration the increased XXXX. full-year of that supply operate note to demand uncertain. and It keep providing assumes to level our are important up challenge continues remainder

we We million in $XXX $XXX range now expect XX% as an adjusted EBITDA be increase the to of XX% the guidance. to to to range million. is million XXXX. adjusted in the currency $XXX improvement low in to a adjusted constant $XX In expect EBITDA million to million the be $XXX end EBITDA An fiscal of of compared million of of range earlier $XXX versus

be $X.XX to currency to a is a Adjusted XX%. compared XXXX. to EPS This constant expected forecast to adjusted $X.XX benefit An $X.XX. $X.XX EPS tax repurchase. an of adjusted share EPS as with increase rate to XX% is expected of of In XX% of about $X.XX fiscal to effective for be

assumes full-year rates. lower to a to interest million the exchange decrease be $X XXXX. at approximately and for about compared to is driven $X annual prior about Euro fiscal and $X.XX year, QX. an British expected foreign mostly $XX million of The Our on headwind per guidance by are pounds million EBITDA $X.XX of expense Interest rate other compared exchange per estimated

in existing April lower rate added swaps These sought XXXX rates of the rates dollars in addition, prior year swaps the rates. company to had cross floating than several given and currency. U.S. variable in benefit and than into interest rate fixed enter interest to reduce In future lower volatility

million are $XX stock expense $XX between expected in and $XX amortization to million and based million compensation to compared fiscal XXXX. Depreciation and range

cash flow previous be prior expect from from with This We $XX consistent improvement million to million year. guidance. represents operations around $XXX the a the

surges and exceeded from expect an to in XX-days create some existing were to again XX-day now inventories our levels as conversion to case demand We result, three. cash we replenish XX-days. in we in the contingency targeting increase quarter. We a cycle And targeting a as in reduction seek

expect guidance. our capital million we of expenditures addition, with consistent In $XX earlier

the that COVID-XX As we for of long-term look our how will food ahead, believe growth even we models business well consumption. influence home long at uncertainty with positioned

come ability the we quarter. and of further to confident plan And together to remainder team our are and has ability more become to The throughout conditions XXXX and progress in adapt than this changing beyond. evident of our fiscal ever

now I turn will the call to Mark. back

Mark Schiller

had how our risen positive us have this for they we and to a see, how the during this have the want transformation to team thank pandemic, for entire can during continued outlook doing have I the around performed they you future. thrive Hain what have world success. help quarter terrific As journey to and they are ensure a and

Together, results Company. we this delivering is great they And I have are culture appreciate created entrepreneurial exceptional all transform really oriented results. that doing a scrappy to

me that, for With let the turn question. operator it over Operator. to

Operator

Thank We first [Operator take now from you. from question Instructions] Evercore ISI. you David the sir. Palmer Thank

David Palmer

what that and you this prepare that contemplate for margin a wanted the reinvestment fiscal then bit you progression little about congrats the of saw follow-up? good nature that the on I as fourth quarter. a here. Very does off fiscal impressive. does implied have ask I from it guidance that Thanks, what's you a you shows XXXX. reinvestment EBITDA for just And and Obviously, pulling less and perspective, are to And growth. morning

Mark Schiller

Yes.

we don't that are thing and are start to gravitate as out. toward communities, Home means, moving I going the is these some times In What first I exactly So know. volatile will and our tell of occasions you reopening obviously back reentering consumption

last to be we up weeks. But the of is rate we the But terms there. been That implied experiencing the six in overall. eight there will in expect do will what some slowdown that be sales in growth have versus in quarter

is regard to marketing. there investment and there investment, yes, in With

us the to to of and opportunity in prepared lean see As I aggressive what sit versus we wait happens. kind great in be said believe for back a remarks, this and is

if new because will it take innovation we fees campaigns, out, we have we slotting have some it. with ad coming have retailers So

there an investment So numbers. those is implied in

David Palmer

fiscal And conceptually then, for just XXXX.

As SKU those can on and to divestitures. drags those environment to go you your I current rationalization about you thinking of that the imagine the two might allow things. are pedal revenue from metal

find you for you the tailwinds, find things more might cover SKU giving You to And air aggressive for rationalization. might sell. better might want prices you

So I'm just from wondering increase about Thanks. see things? you innovation how those thinking actually they drags before really aside are those we the start decreasing list. Could

Mark Schiller

are we rationalization, so for although will it this be a that we in part out a additional this and SKU because that of we looking doing than you brands years less while. the We much. improving Yes, couple lot at of company have have were what this the we been for have at skews amount been last huge unproductive better get of why particularly taken And add the margins, of so see on complexity. a is doing

remarks. I regard the in work prepared continue With as to on shedding divestitures, retail, to said we

we change that and are may the things perspective situation to in the in on may of surge We sell, this demand situation. some have evaluating our we looking been given

that think million that brands million. of of pretty of has is sold The But of $XXX $XX that collective about year, which I was compelling, out something is point a dozen revenue. would since last revenue we $XXX million January EBITDA I

EBITDA margin X.X% about was million times it a those million. sold We XX of assets $XXX $XX for EBITDA. So

that getting, them. losing have many for selling. and have we we been we In So things cash obviously prices money for cases, selling getting been have are robust what been very

looking So job I value been think of a fair divest. for are the good getting extremely have to we we things that doing pretty

sell, demand most are of willing And to on choiceful your thoughtful point this about accept environment, we much given up to that items sell? the we how will in we what we and that is be

David Palmer

Great, you. thank

Operator

now Thank take We you. question [Indiscernible]. from

Unidentified Analyst

been And Thanks. on bit pandemic? market in on this them? you innovation just you the more these is new just products a as new get to able then opened slowing pandemic to during to customers wanted how of this up Exactly still do pay the this specifically, during customers able products? little opportunity as is focus purpose. it And pipeline, with think Yes. market the to follow forward were I or up know you a about talk to

Mark Schiller

Yes, good question.

not is thing first have would in several increasing row tell quarters So I marketing we for a now. you been

So for part brands the around of growth. we have turning of the been as Get Bigger

We start. before have investing trials we bring been to in

good news were there. hit, are obviously given switching a going is, there they issues of minds in of lot people that many one seated used wasn't the people's the are brands, were where and when trying because lot brand messages to those supply the potentially a new So from on pandemic people,

So we have by brands as XX%. much household had some that had have penetration as increased

is in significant some it So pretty cases.

now What those people is we are specifically. doing to marketing

of some products So do coupons in we easy put it repeat where our is for to us that.

have an back come So and if you time, incentive try it first repeat. you to for the

data after are likely and to go mobile marketing the people digital card in this purchasers environment. that be using are to most shopper social We

messaging We are relevant have in. that we the be changed some to environment and of more sensitive our to

recruit sure relationship we that to delighted we to make to have with are So start we they and for a form continue aggressively people trying people that them. are to and

Innovation. With regard to

me how heard we about Hot on last been Straws a have times repeat pipeline. few Flaming were innovations high. Well the bigger Tea talk portions. we several Tea sensible exceptionally launched the calls You've And on rate Celestial had building The and on that is the two and the Well of

the little trial pandemic. before lower like than the a is But we had bit

those to do bit repeat an trial, some was a price are at more rate downsizing of for get barrier try to would was So to little of It point. opening going actually price we high. very but a high

And one. very to half one's already is the top as that in of on well. terms a are going winner velocity, performing in it we Flaming the in confident so that So the category of be Hot,

some a additional onto on would of innovation a because or get the are retailers the expectation a My ACV have have the yogurt, right bit with they ton the shelf. be had We that coming reset. right And may on reset postpone tea. innovation either lower hoped, and And that of to coming for not than we out resetting may partner to delay we out little year initially customers now. are we now trying

also is now competitors. to it themselves an differentiate trying But opportunity from retailers for other who right their are

excited we are to are want else, are a And so the they new there innovation quite to that and and to they it exciting about their consumers that finding form market. very show few are use retailers everybody bringing different that things are

our with And innovation we So ever growth we we be of is believe important that forward had. best are forward. stuff going It of going continue plan. have part our the to to going is an some

Unidentified Analyst

you helpful. Thank very

Operator

you. now Bernstein. the Howard question take from Thank we Alexia next from

Alexia Howard

Great. Good everyone. morning,

Mark Schiller

morning. Good

Javier Idrovo

Good morning.

Alexia Howard

So have is are the problem are may those terms be. talk challenges looking challenges what is bit I are you might a question about you know, that my first of in going. products Could which or keeping mentioning little what in the the potential the problems supply everything's most that now. fine you acute

might able And do that promotional you supplies price happens? ramp challenges is up being to realize efficiently, points? to what on And my then If extent consider you pulling activities to run you. net across into would follow-up on Thank back higher

Mark Schiller

Yes.

ever global you a be government are a business. tell this is So the thing because is saw will coming the first to This before pandemic way We pandemic. I we said. going

that so alternative. of something in happen building we that so immediately started have factories to sources and our inventory And would if of were backup creating we one supply an

to couple And business been a have you for years remember of declining a year. we have a that also

we capacity, capacity So we have have of don't issue. plenty a

up And the the We our have top there. well are sales positioned call skews that of of on backup majority supply profit. XX% make and we at vast

suppliers have obviously the the not And flexing have supply time. being an ingredients chain with certain backup have very to for time. outbreak been again, doesn't able to And on a happen the is get you supply could finding become hard require could of us you What to that in where formulas etcetera. ingredients case aggressive period shut in in challenges sources, plant virus could down of we

capacity where is very we tight. good the and of co-manufacturers with couple we in there's industry would I of are shape use say the exception a categories

tetra lot tetra out our pack capacity some are So there's of products there. of packs, packaging, not packing a

manufacturers is a the where built there's say to term if And or have baby we But the the weather said, short example formula enough shutdown plant Those outage there a on have risk. inventory so most of short-term that another that food I inventory also number probably side, are very baby that have got limited is we of two we storm. their

So others I mid-XXs. think levels to our the experiencing. relative in been what Very far have are high service

levels have lower. been Our stock retail much at

the I so good supply. ability And pretty feel to about

part of promotional a number the which around all promotional With regard question their activity, our competitors fair spending, the this retailers. pulled of of to alienated

We have not that done as yet.

use would If really to look opportunity where demand hard promote to fast are don't trying and change we we partner this something to to at they their in are with to If meet like a we we retailers than to supply, situation certainly shelf to have If But more promote get have us an needs. that. as we want fine. the resources they promote. then want going don't for the

happy are to promote. We not

a of are for in whether to tailoring programs. this What's become is at needs stores about specifically is it versus great whether And specific centers. a choice. innovation distracting their talked their distribution supplier our or dropping So is trucks us I it opportunity

flexible trying We our are to being cements incredibly relationship. and here further

in depending will we think are Alexia. good what on malleable we And think I I be shape, require. circumstances the So

Alexia Howard

on. very you I pass thank Great, much. will it

Operator

Sandler. question you. Lavery take the We Mr. Thank now from Piper Mike next from

Michael Lavery

you. Thank Good morning.

Mark Schiller

morning. Good

Javier Idrovo

morning. Good

Michael Lavery

over Day of little XX% steady XX% around future growth spend X% at you and your top-line state to year-ago X% that a You a profile margins. to mentioned Investors see now

that planned your Or Just us far differently any picking think gone moves And that thinking? the you differently have be? some that is then, as still think portfolio current might how progress than about be environment or anything up you do that may now? there away since is in

Mark Schiller

Yes.

would digit will top-line you digit range. declines we around and Bigger Better Bigger the it XX% XX the Get XX remember be margins said brands Get in the growth we we the brands. Get distinguish to EBITDA single and would on Better mid-single between the So said and The high brands top-line, it on with brands Get

EBITDA Get this brands Better had In quarter the margins. XX%

continue they we the we within there. already And of to also described. what top-line are they grew in are Bigger already marketing. but Get brands The So invest

So marketing we haven't the quite keep to we get to XX% equation. adding EBITDA because

brands XX% margin steady in the EBITDA those well. done plus very are we But as on

to So way be in America. North our would where well on we we said are we

by a have that label given We little business given of bit the the about in different our XX% have our business, international talked circumstance business. that there fruit business we this I

lower margins trial there from XX% short COVID-XX. is seeing. some or seeing, confident will are benefit the the given But a we coming And into But we little The the are margin given than response margins really from strategy that be they materializing. are huge those that is bit range. the term we seeing, more the retailer are there are expansion we given top-line numbers yes, are

in And middle honestly, P&L. we of room more have the the a lot

still can XX% go the are We see shipped have plus some that numbers But it things trucks we don't amazing probably that in out. have doing you we we and got. our of

up fill what placing structure. part in in we can can If doing the bracket we a a which more are this can we road is lot efficiency on if our trucks fewer in cost pandemic, trucks, of place, lot standard get with get we

made So we there's lot runway. a have But more improvements. huge

on line, I the on the P&L. and get middle the And so I'm we bullish of confident bullish will top there. And I'm feel

terms Day, of there in three timeline Investor are time. we was original halfway Our years from

journey. about are We into XX-months the

will I early. think is we year intact. the And there journey a hopefully get little three

Michael Lavery

be what adapt the might necessary. seen and and in your typically just follow-up what some And how consumer able your of of thinking helpful. the behaves past is on the about you've stress to ways if adjust is and really there any That economic you some just

Mark Schiller

the recession? over Adapt you. to how behaving Got the consumers

I tell etcetera. free, tend would products, consumer. So appeal We afterwards thing first many gluten the organic more to to type you we because is non-GMO, have

be are of massive workers unemployment target. our and So when less that hear income tend we lower you the to experiencing, Those about

are little think I a So we bit insulated in that regard.

the people market's future. secure And affluent more long about okay. are As they the their income their feel too like stock not worried to as doing

one So, insulated. I are we hand, on the relatively think

at least we in Europe, private say label. of would our have in I businesses thing XX% second The

of will of down. the beneficiary it our lower income is a actually consumers trade we business a there. Because be So significant part who

say price is I we have all exhaustive will. our done The where of U.S. that if we have that of third to point a And thing you the premium is an review would we think products here in

price at and sizes point. looking are We alternatives

Eatin' example Garden we considerably Tortilla that business I than call this on Chips points products more at everybody for said our So opening offer of higher before, a price else.

If get So more more pay going $X pay more $X strapped, four ounces, would rather cash they are five ounces for you can the to or consumers it. but you less.

that in point. getting already we competitive a are of price process So more opening downsizing to the and offering

We places. already work we in underway are doing the pandemic the issue saw before That opportunity. that in was a because of number the

relatively be of And I be feel compete we well to should and well. in weather so, we we pretty recession that the like able are positioned position will in all categories to

Michael Lavery

Thank you. Very helpful.

Operator

Rob question now We Dickerson from the take from you. Thank next Jefferies.

Unidentified Analyst

to improvement COVID-XX. on margin good I that quarter you was in for said to had the in many it morning, Rob. place the [Indiscernible] question. for Hi, initiatives you is you a the majority prior attributed believe of Thank

give COVID-XX by co-manufacturing because have you some quarter peers. of much in the a was leverage. as the partially impacted public mix only attributed to pandemic? not different maybe that your So maybe related company And Is that operating you also

more the COVID-XX given that? contribution probably which of quarters, of perhaps leverage fragmented full And that margin overtime build about play trying be manufacturing up into split does Overall, the how for to operating sense improvement was more benefits. I over of get print, next the think history how companies a for we should more couple seem a

are Give on follow household in change for categories XX% were how households than much. some related in a just it market of Perhaps category. for then or sense comment. of pre-COVID different is us brand household brands a the you or for penetration like buying some penetration very they much Thank And add up consumers mostly that a quick thing? new increase consumption new on

Mark Schiller

Yes.

take second the So first. let me one

category So brand to into of brands, with combination buyers category a buyers. the Brands. think new in regard is In categories, our new it penetration, particularly people brand Tortilla snacks, Chips the Sensible and and come household is interesting, of some I which Fortune through the

in We category, they users a to have the stay into then they the category. good attract new tends experience and

seeing a buyers existing around. of So is more more in it it but cases, bit on buyer we cases in little depends the category existing some are we are some switching

the With question, regard on first manufacturing to part of remind the me side. the

going robust well before have initiatives had we a So of set COVID. productivity

So in significant P&L the improvement beforehand. of were making we the middle

P&L, making the are operating in locations that leverage You right benefit that the the those products half you producing shipping the QX. of because are products stuff really significantly you of are in are in the wasn't were more for absorption second they our in seen manufacturing warehouse the and in QX QX

overhead see will we in absorption So fixed benefit QX. that

the are just the Because of are are here you P&L. products. the some of helping customers would and middle relaxing, in this some they that in related fines that to want timers There environment tell service. are one I candid be

certainly That say onetime is a benefit, I obsolescence. would

able are sell to through We everything.

they down that we before that is aging aged might being obsolescence little had of are So bit a were things COVID. some to out because sold our if have

efficient being have we So look the as And more things something trucks vast everybody majority of journey get. operator. the on bracket filling a pricing up been like standard a that have else. don't is benefit like We to

there's a incentive So fill up no to for truck. people

are that. We on working

one to centers. many in for say, to this our of an product so going distribution are But look, us was needed opportunity days F'XX. change in We only people each we where make that have

We consolidate to got orders your and truck so have send got because to a have fuller we you all many orders. got

very will minimum least will that it a to that And change a benefit was whatever or as be a buy were of we the will the to us. the a beneficial of number half the change now behavior to allowed truck this. at a was is that raised before us It be permanent make whatever will tell they result order a them and to have side and we change on catalyst been what permanent it So is manufacturers. that

(Ph) that been a a the are huge rid you part the But So agenda. is I that is been and Getting [B&W] resulting we big of part which in in margin cost benefits and are big getting getting mentioned that some less Automation a skews just benefit. from naturally, COVID. want know, been agenda. it has of complexity low there's balance our we productivity. plant benefits has the I to has of just of a changeovers some

hard is work. windfall this of is from a a It So lot our COVID. not just

Unidentified Analyst

much the for detail. Thank very you

Operator

We question form you. SunTrust. Chappell our next from take now Thank Bill

Unidentified Analyst

the actually Hope is for for staying Thanks questions. it well. Bill. [Indiscernible] taking Hi, everyone on

a had the business. on quick European Just one

you as Thank that starting you restrictions. lockdown look you you in seeing of service U.S. there, early noted back may trends saw guys able to prepare shipping on saw come out as of you've early trends, business. anything kind in early food part of You Any wondering to business. that some to U.S. Europe on I if Europe. to the was use destock social consumers reads Anything be you. the starts

Mark Schiller

open sticking They same this doing about so interesting like the kind Europe telling society. the countries with are But what's is thing. is so here of many stances it there. so and different water it early is many different to us Yes, that on

seeing are opening is But they doing we where are what gradually. they are

consumers We of seeing still going have public. out in fear are

a doesn't the opens restaurant the all everybody's walking because restaurant. to mean sudden, just So of

outside. seeing think people we are want that get to I

from park. it people those has the It eating like whether in So first a is to migrated their is comfortable are beaches, step it the still it leaving not eating for their rapidly they is old is behaviors point. the factor homes, is but away occasions whether homes. and in whether But get mountains flock home just

week, and revamp opening and a offices. can regard adjust. with they open. They try I and out We social they see figure closed starts can for they fits to think they distancing,

So I error a think and it is trial process.

think I slowly. doing it everybody's

theaters see malls I and U.S. hear are are in and opening thing the and the here some like. to think states movie same I see going you when

out there. And there's the think I have take in is social here. back in changed needing terms changed. aggressive up Europe, it and they virus too if that has I there's figured step changed will end get psyche still be It consumer a lot catching they to Because a distancing. feeling a of is of to fear

to steady is. going slow to I kind whatever normal is think so a progression of new be it And back the

Europe The got that and say we UK Austria of and is is Whereas, Germany other business. The I would ahead a much I us, UK you also thing as interesting think have know, here Europe. of huge behind is and us. is

So, lockdown. of bent we in have are ways They the they got and curve where midst They the trying the got the to business a pretty in go. in have big deaths. are to have They we UK bend got XX,XXX curve.

So think I a it UK. normal the to in will be bit returned slower little

Operator

from from the next Morningstar. take Rebecca now we Scheuneman question Okay,

Rebecca Scheuneman

Good morning. you the question. for Thank

pantry contributed us all, of get before sense of first love stacking with growth just much the the was the how mid-March quarter's before tracking began? surge to to where growth. So share a you Can I'd

Mark Schiller

Yes.

in opening double before as first were digits So a the the brands the afterwards. and quarter my specific happened. growing in in months But are guidance in top-line. say give half very ended we don't what we on did digits up Bigger we I the remarks two of high-single Get the low this over And

brands. Get the improves that of sense trend can put And virus you the some Better much similar math brands. how So to and a saw a we the on get general Bigger Get

direction. certainly weeks already was some right volumes So quarter three the the what that of moving the to added last a was in business

remember we trend to and have and were the we were very going brands on clear will the we end a tracking robust high-single Get Bigger call, the you last that earnings to quarter And are growth. in digit going on

So doing were we that.

other places mixed demand. places drop like private of huge we more mission an the increase a label, again some And case In like saw of in saw Europe, demand. bag in in in a we fruit,

basis was there. aggregate and definitely points unfavorable, here the So was favorable more it no in a but in improvement it Europe mixed a in on there say because some hundred would almost few total is bag were top-line. bit benefit a of little I were some of

go as though, add important April, would ahead that one in consumption to thing was into shipments I of note March. What we is

an in have surge such added consumption, because happened fourth we a there's was behavior couldn't so when to loading short And shelves. product period benefit so demand pantry up the on that, keep in time the catching massive that of quarter of shipments retailers

third-party goes little of to our because a distributors. much And we tend through longer bit supply chain volume have

robot So April is a month.

consumption was at off much quarter and We steady to it the continues before our than start virus. be a a are level in higher the to good

Rebecca Scheuneman

you. have suggest a to this environment be some second that Okay, initial benefits but data great that current any lasting. realized this obviously will And And to question opportunity great. do is early my Thank increase provides you this of or anything trial. purchase repeat I

Mark Schiller

is it data. early a give Yes, too repeat to you

tend oil purchase XX-days be spectrum in to Our cycles purchases. it be the something six XX-days like case could of months between

tell. So it is too early to

have What on of I has seen spectrum would increase oils tell the snacks Imagine most on in trial our soup. you as business soup we trial exceptional on cheese been robust business.

early. weather. mean soup the is I out cold And it of something coming we were like so take

is be So point. the yet. summer. just too in repeat don't will repeat the the long But It this evident very data be cycle purchases for fast we to have at

Rebecca Scheuneman

much. so thank Okay, you

Operator

questions there time. further looks this It you. Thank like at no are

call you. would over like I to turn So the to back

Mark Schiller

Yes.

work. all thanking employees the has hard by, end quite their of Let been again for me successful. just This here

quality of a think and the assess its organization I a ability to way respond. is good to crisis the

proud We are have very about of able been future. the we what I'm accomplish. optimistic to very

well are positioned We we playing are offense.

versus being We reacting. And very proactive. are thinking ahead

the think is bright. I very future So

And will I Thank later. all. appreciate you to everybody's talk support. And we you

Operator

does participation. for Thanks you. your concludes today's call. This conference Thank

You may now lines. disconnect your