Hain Celestial (HAIN)

Anna Kate Heller Investor Relations
Mark Schiller President & Chief Executive Officer
Javier Idrovo Executive Vice President & Chief Financial Officer
David Palmer Evercore ISI
Matt Fishbein Jefferies
Anoori Naughton JPMorgan
Jon Andersen William Blair
Eric Larson Seaport Research Partners
Anthony Vendetti Maxim Group
Michael Lavery Piper Sandler
Rebecca Scheuneman Morningstar
Call transcript
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Greetings, and welcome to the Hain Celestial Group Fourth Quarter and Fiscal Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I'll now turn the conference over to your host, Ms. Relations Celestial Investor Heller, Kate for Group. Hain Anna you. Thank

You may begin.

Anna Kate Heller

conference morning Thank and for earnings and joining Good fiscal us XXXX quarter you fourth thank you. Celestial’s on year call. Hain

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

statements reports those our could the remote Exchange regarding management from being in morning report and financial website. measures on today differ course described on to available The non-GAAP XX-K, call. the Form federal has include financial to for information, These actual securities call, forward-looking press respective the the quarterly prepared adjusted release and also based or any Please few the is future implied within materially GAAP of on refer and or Please today supplemental a additional may accompanying these slides Investor are other assumptions our Hain locations. posted are operations with financial that non-GAAP note company we like Celestial’s will company’s presentation also the risks heading. These of that current statements. be and and archive website on slide its webcast are events which that this results conducting this on focus note also During from Securities Relations made involve statements the this actual are the and earnings from management’s to statements performance. filed Hain laws. results Commission release financial and time-to-time call expectations those This I’d call measures. remarks will and make forward-looking expressed Form risks it available the today. a forward-looking presentation from of in under Celestial’s issued Reconciliations could management’s reports expectations discussion to annual meaning and cause detailed in the on and XX-Q, of materially differ and uncertainties

may As I’d other for call thank be or to thoughts and And Mark over now, you turn technical such, during across call. to there the issues brief We in understanding. advance like your this delays patience minor Schiller.

Mark Schiller

filled and Kate results morning. give hope several other as well. you've and many past F Anna to good you, the fourth both I year choppy last our despite COVID companies, challenges, I'll we been the navigate our is overlaps high with Starting pleased On quarter revenue XXXX on EBITDA inflation, doing details Thank headwinds, on were that to adjusted and period the color we from successfully shortages, significant and outlined lockdown from everyone provide guidance a with waters call, and the on that labor some plan. today's the including ago. have heard months QX, able call. I'm these report deliver

was Specifically, in down first, XX.X%. came to topline expected XX% We to XX%. be at

delivered a XXX margin delivered We, with point ahead gross of of EBITDA improvement basis for straight margin XXX adjusted points. margin. marks targeted than year, And the one year of This margin sixth quarter more EBITDA we importantly, Investor the schedule. our in Day margin continued Second, XXX basis would said and deliver continued points least we improvement. margin adjusted at EBITDA in expansion basis improvement adjusted fact, significant in of expansion we

XX of now XX.X%. grew very brands our sales Total divestitures represent profits, years was biggest which ago, our dollar XX% in at growth which we in We you to with results were two revenue almost When the deliver discontinued revenue XX% X% came almost of and our solid. grew and global in growth, again, we'd adjusted Third, pre-pandemic, guidance. compared adjusted EBITDA QX. for our told when XX% QX around and X.X% line businesses,

delivered margin In strength EBITDA with adjusted XX%. of up dollars summary, are EBITDA performance results addition, up were were intended overall we've that adjusted XXX of almost quarter and working portfolio, XXX that In our points, significant the and gross pre-pandemic and respectively, another over margins well. This we as strong strategies our continued momentum to period. the and reflects are basis compared executing

soup, share very and Now and let agenda. up overlap, up in adjusted our Adjusted We flat grew terrific our schedule baby a investment chilled in significant little growth And great results, EBITDA achieved productivity digit were me talk challenges segments. labor gross targets ago points beverage almost and and of a ago. were included marmalade dollars were bit Day ahead basis of nondairy and COVID XX% basis in grew many and Consumption about normal That's brands we food margin business, XXX businesses alternatives, double toddler XX% meat dessert than the basically reporting strength two the Investor Brexit, the Adjusted saw year XXX within versus aided and International, up more by jam, snacks. also a gains, almost strong higher the than points, considering nicely years TDP aggressive inflation. EBITDA quarter. penetration also our results versus marketing and gains. which quarter. margins QX. when sales year a household delivered strong ago That's our performance with in In of versus twoyears net

North we're macro same facing quarter the the clearly, had a in International very challenging by industry. and to Shifting business more entire challenges the navigated strength issues driven seeing America, So well. we our have

throughout affected to goods the As we of manufacturing internal inflation on was distribution and discussed last chain customers. labor call, the sourcing, and significant, supply shortages

impacted result, As quarter. in and overlap these profitability margins the COVID within headwinds a the

delivering, plan basis minus margins QX of results over EBITDA below adjusted to F EBITDA robust points, a the year for North with overall Shifting for adjusted adjusted in up bullish year the versus future entire outlook consistently X%, EBITDA with XXXX North America, we respectively. was of our And growth EBITDA compared on go-forward While been our many we've were points XXX and to these margin margin our XXX XXXX XX% pre-pandemic sales reasons. expansion. XXX up ago, still remain and for very XX% F America and gross on was our up adjusted

taken pricing the to we've First, cover inflation.

Our report effect the key next impact and we've seen far. minimal We've well, hit and in will market, and already month. the also volume has pricing our other be to increases accepted thus as category every have I'm in virtually starting pleased increases that pricing customers taken

our headwinds next months. over us and few we've terrific progress Second, to fully manufacturing made be distribution sourcing, behind the on these and of most expect

week, the best had shipment years. one improved of quarter-to-date. weeks last over we had the past As evidence we've of our progress, several our services And

two-year the in growth consumption. accelerated rate gains their These Third, increases strong a our extremely channels, expected Bigger continued well Get in all full buying strength and brands reinforcing in from on gains, share improvement driving XXXX. and the pre-pandemic. Bigger XX% velocity QX, stacked brands in Fourth, versus market QX. categories the versus momentum. we have with also Consumption penetration Get up the quarter innovation That's grew a four measured materialized, rate on in recent four-point delivered point continued was almost our distribution to perform quarter household

Seasonings be SKUs sales, compared Get eliminated proactively the Get stronger were setting up a with X% in up Earth's years coming other our and top us Alba were brands up Eden Maranatha lower Portions household some years suggesting in penetration ago in Garden we grew trends the Sensible in quarter, Get noteworthy, Bigger to we brands the number up gains pre-pandemic, a tea the up need quarter. the pandemic. total replenished X% X shipments Bigger ago, buying Better of by versus quarter versus and of our Celestial we year lastly, brands, distribution Best, two are Get velocity, X% where a the XX% Sixth largest up versus XX% line total inventories the and year many like; Best quarter, as to and points of versus The year brands up Better also were customer larger For in TDPs, on distribution will a ago velocities in quarters. points brand, Also ago. and brands consumption normal, exceeded significant Get than lap slow-moving XX% and XX%. ago. US for were rate Earth's Better QX, and Terra, the Many across like; Fifth,

and So, in health North and conclusion, macro despite nod give environment, we as Shifting 'XX America gears, the challenged year. underlying significant move the brief to Investor Day. a F business into momentum the let's now exited our has

high single environment. on single expansion net adjusted 'XX for will algorithm with are few even robust sales strong and continued year you a the this Javier low another While challenging mid minutes, more in growing EBITDA to give in digits we with total adjusted details expecting growing margin digit fiscal

Our assumptions. plan X on is F 'XX built key

decrease increase our If we're First, If spend accordingly it tools it some revenue forecasting nor management it the it does at considerably or the of price bottom back not increase, we'll we take to drops, using to will whether disposal. to from inflation stabilize evaluate and here. line.

robust both expect resulting in productivity and Second, pricing margin more and growth. our algorithm inflation, that marketing an we investment in has to offset than

have As our every into taken conservative pricing stated, built we've category relatively and in assumptions almost plan. elasticity

improvement addition, which over gross XXX basis a has since points program, delivered we margin have robust productivity of In XXXX.

momentum our North America active many International. projects have in We and continue both to

to COVID to is the our half much we assumption occasions softer is categories. end gain a innovation by that short-term of continue our in-home space basis pre-pandemic robust expect the a plan, growth we've assumed year. and and out-of-home society core plan Our of calendar to from minimal the regard mix With in relative back gravitates third successful, and a that of and on lastly, gradually more absolute the first the half. phasing and second key we'll meeting both impact variant Delta And

on adjusted below basis. be are a ago drivers on X-year high expected absolute digits an basis, to flat year up the ago up versus First There profits will on the a year sales but X of HX half are mid an expectations. performance basis X first single to considerably and half and a versus be but in adjusted ago, year

the year, EBITDA COVID overlapping Remember the growth of in plus that we XX% periods the half peak fiscal delivered in half. we're first last first First, the year. of

continue will be comparison pre-pandemic growth So, will while top line line the bottom strong. to muted, be versus and

us the International Second, the hit inflation offset it, and now end taken fully early pricing won't until North in place QX. to of pricing American be the market hitting high is we've while QX won't until

discussed. Third, we challenges steady supply in previously expect to deliver improvement gradual labor and and

As basis. line accelerate high single-digit second half, the an to to on we growth see mid to get you'll adjusted top

customers with continued the volume for continues confirmed that significant generating America assumes innovation the distribution in and our terrific QX that COVID overlaps hit this performance plan on strengthening easier incremental to softer trial and Several robust are Our North programs gains and market. already quarter.

growth. lot So to quarter. delivers in and the unlock that macro algorithm going in Javier, and color of line year company. further solid provide performance a team we QX and in significant it a momentum, will our who turn plan and the momentum you accelerate me categories said, F really On we to the forward exceptional We at September look the our are expectations XXXX over Day, plan line we exited to about positioned of QX challenges, well financial We a believe have high-growth strategic here. XX, With from that with forward. performance top face of brands more right and and robust to let conclusion, an terrific potential had Investor on good a elaborating and showing this bottom

Javier Idrovo

morning, and you, Thank Mark, good everyone.

continued execution four our strong aspects by Let of plan. that highlighting transformation performance the of key demonstrate quarter fourth from me start our results

results expansion First, delivered and other in guidance, industry profit solid face again continued with headwinds. of including we in the operating line inflation margin

American excellent a performance, North operations environment. managed through Second, our challenging macro business delivered International our while

into discussion well Third, I with excellent sheet with results, strong our strong top aspects. fiscal of our XXXX. to each finally, will business a our and of then balance drill allocation remains And will these start year flexibility. line I positioned capital is deliver a

XX%. fourth sales net XX% negative consolidated our within As from guidance we to year-over-year volumes overlap well last COVID to quarter year, of the range surge negative $XXX decreased million, XX%

exchange compared movements, decreased When sales on XXXX for basis currency by growth X%. our by divestitures QX sales basis Foreign pre-COVID net versus adjusting This the of the as by by for we versus XXXX, XXXX, also net higher sales discontinuations, in proactively while labor after X%. SKU fourth factors, exited, points. net period, comparing sales two divestitures quarter supply in discontinuations our QX X%. part year-over-year. in was productivity our When increased Adjusted relative brand brand points our program and year prior of a X% by the net with partially to XXX higher basis growth expenses volume, points, started benefited quarter improvement around by to our was sale underlying reduced rationalization consistent gross improved chain offset our the and for adjusting delivery US. driven factoring performance fruit warehouse the about by XXX When net sequential these margin of QX further initiatives inflation the our sales and business, XX and guidance and

about freight we margin shipping more Day, prior versus and Fourth expansion labor service. the versus ago adjusted limited improvement Despite productivity labor from XX% several points Adjusted margin in faced and savings at a disrupted and to commissions, international year. deliver XX% ahead with than and of and broker basis warehouse points labor, in US reductions services costs availability, margin other points. cost lower SG&A drove these half to $XX quarter our XXX our including delivered the business by QX, of improvement. versus end initiatives travel. quarter in We and pay, gross EBITDA fiscal costs represents spending came EBITDA SG&A able and sales, warehouses second period year XXX year higher XX% increases QX third-party a lower reduced the increased of represented EBITDA we delivered challenges, XXXX adjusted strong across we basis million. our of adjusted at gave XXXX. manufacturing that were schedule. XX% Combined significant an industry-wide gross basis Investor than the business carrier year the XXX categories, and wage increased While in of in in margin by the a margin range This from driven net guidance last still resulting expansion, high of capacity shortage resulted year year-over-year, overtime our

EPS adjusted effective The Our year period. compared in quarter tax fourth XX.X%. rate for to by was of quarter $X.XX adjusted the the XX% prior $X.XX increased

period business, individual on reported where strong X% decreased some provide fourth delivered to on with sales reporting versus the year Now, Starting we detail prior overall segment. a for basis. Net the international results. quarter our the

brands, up compared our the the After by sales X%, adjusting sales increased prior exchange divestitures movement, to Foreign behind XX% of quarter our soup fourth year meat-free the sales for were by quarter period. flat reduced close sales net chilled while And and divestitures beverage for currency McCartney close businesses. to growth XXXX, non-dairy fourth discontinued to and Linda and the of XX%. were versus brand

by XX% the American gross the During versus Gains the as divestiture of generated prior XXX adjusted the by business. implementation business Investor quarter, of We well the basis of two growth XXX low-margin expansion. to were international exceeds year points EBITDA level period on grew accelerated, the we ago. target by profitability profit than from and basis XX% announced to driven for the quarters points the two the more Day last adjusted of XX%. adjusted This North during XX% playbook, margin fruit EBITDA years as long-term margin productivity

North Now, let me to American the business. shift

mainly million, prior XX% of the sales quarter to COVID-XX. in reported to period comparing prior performance by XXX line, period fourth the our divestitures of brand for year basis sales brand hand top and X%. food $XXX.X movements, consumption due movements, After represented XX% year and currency after net in XXXX, year-over-year versus than decreased divestitures at-home discontinuations, versus strong elevated adjusting lapping the North the currency a due the On discontinuations, decreased more headwind for adjusting for net decreased to When less the sales sanitizer note, period. points. American To QX year our than overlapping the of sales prior

was up North underlying for XXX around perspective, of XXXX before adjusted American gross From our Excluding business growth profitability the efforts, the rationalization XXXX our points, a versus volume by reduction the the versus but QX American North still business SKU pandemic. basis X%. QX decreased from margin was

driven mentioned U.S. the fiscal basis performance, was gross XXX in program Notably, Adjusted margin with America the year revenue of largely had XX quarter year EBITDA As North EBITDA to shortages management. pre-pandemic recent points to solid points QX XXXX, EBITDA fourth margins EBITDA driven represented improving adjusted prior by points labor challenges, a XX.X% decrease versus by earlier, of of XXXX margins in these still a the strong in Despite by versus our productivity XX% decreased XX% expansion. strong over full of adjusted Adjusted up decrease $XX million. was XXX margin adjusted basis basis and compared

North increased represented net adjusted from net and North our Bigger further by discontinuations, the X%. When with versus American continue our role, movements, versus Bigger reduction of Get after margin SKU the consistent the X% XXXX quarter brand into growth robust around underlying XX% Bigger to X%. comparing adjusting fourth which If portfolio profit brands, brands Looking year. improvement. American performance divestitures, decrease components the showed the a brand for QX effort, was we The sales Better currency brands, XXXX, show versus sales, of Get volume QX portfolio, prior Get Get sales exclude our rationalization the our

increase EBITDA was flow full Shifting adjusted QX versus initiatives. with brands. consistent flow year the target year, decrease period, spending consistent million, increased prior growth $XXX million, prior end adjusted $XXX in This XXXX, stood At about for operating given gross the was full $XX $XX close the on annual balance the sheet. net of margin Better of annual $XX.X and XXXX flow fourth XX% the Specifically, QX, QX $XX management. million year, Get versus of was about our quarter of was $XXX resulting full end productivity a cash times. $XX from the long-term was XXX million, million, our cash XXXX net of XX%. by of to of inventory annual with level Capital quarter basis the cash only was by debt profitability EBITDA enabled and million for X.X of sales. the points was million for XX% leverage at year the year of improved to debt while spending about the XX% end inventory and of an at of Cash million X.X% to QX our XX% operating hand of and

Our balance allocation remains and incredibly we strong a capital have flexibility. sheet as result, significant

the of repurchase on a leaving Board XXXX, an or investing authorization of quarter. dividends. distributing through well our continue capital Consistent in remaining our benchmarked as We, healthy million and we our the share end create pursuant value conjunction philosophy opportunities use. through cash back the allocation the in reinvest us value risk-adjusted $XX evaluate company to to well with to deploy fourth well-positioned during and our average each The about Given against the we company's highest at whether our repurchases shareholders. or principles basis are return its internal balance against free sheet and $XX.X Board, with our continue capital XXXX the allocation other capital with by sheet quarter, additional the all to balance strong program as repurchase best our and to authorized All of opportunities, $XX.XX, capacity. our to to as to of cash in of price under both program shares external, generate value million capital flow, is expectations as remain to investment bought business with in at

outstanding stock During or million price the at per fiscal we $XXX.X common million, year excluding a X.X repurchased X% shares an average total for of of commissions. $XX.XX XXXX, of share

this Directors existing after authorization million XXXX repurchases have In the fully additional will commence XXXX $XXX repurchase Share Board authorization. authorization addition, of utilized. our share is under an approved

our to outlook. Now let's turn

basis we margin basis with compared XXXX single-digit fiscal adjusted most reflecting growth, brand single-digit discontinuations, respectively. we recent single-digit gross year high XX% from high full pre-pandemic and year headwind fiscal from least EBITDA sales sales dollars basis For low growth Relative growth expect a of and to currency point XXXX, XX mid and XXXX, adjusted EBITDA adjusted adjusted points, point the divestitures to and period, continued net a at margin benefit XXX year and expect expansion growth. net XXX to adjusted

cost higher which of part of expenditures and have continued pricing digits, year the productivity also around the margin X.X% effective second flow of flow adjusted growth, mid actions than and cash of initiatives, net goods our offset half between in capital XX% sales, resulting the following; As inflation minus in XX%, as operating generation cash free been operating single-digit expansion, versus flow outlook, half. rate we full more CapEx assumed an and first tax has mid-single defined by in cash about the the with

single up expected up of mid half. to year fiscal mid year high in of EBITDA profits price by than the second are the in volume and half Given to Also, the half. by and in digits to high close adjusted lower from XXXX digits hitting timing of compared year fiscal we to of XXXX, elevated to events first half second during the low be sales first pandemic fiscal to XXXX double be confirmed fiscal second the flat of single year COVID-XX market adjusted by the single down first sales first be year to and digits year demand because to low half, expect XXXX, fiscal in net in generating the half fiscal incremental XXXX, the half digits the half of and XXXX, the in increases second and the the

basis to fiscal digits but and first XXXX, an on fiscal expansion fiscal single expect sales be year mid than sales of due most year were gross to teens adjusted are in highly basis up declines reported timing the down year decrease the and of pre-pandemic XXXX basis, lower XX% compared on quarter fiscal mid digits adjusted year, a of double up high of to to the mid-single but from XXXX, quarter to of due to quarter by low last inflationary margin divestitures, pricing low on year quarter an driven of adjusted down a our on and we still adjusted first first XXXX. overlap XX% face the net we the period, EBITDA fiscal compared In environment to compared to we recent high growth year-over-year to a strong a execute of by net For the XXXX, from to be year, quarter first to compared EBITDA first digits XXXX more the adjusted the guidance to sales The actions. summary, fiscal able the deliver even challenges. the outlined significant previously, last

will back fiscal look now we strong the expansion. to growth momentum turn robust I Mark. ahead XXXX, and we margin call line deliver to believe and EBITDA have and we to that As well-positioned top are

Mark Schiller

Thank you, Javier.

now another team it turn a the of results have terrific years a challenging for of very let very quarter, this are and As and Celestial. strong and me questions. transforming you thank delivered in one our XXXX can keeping been over business the has and operating ahead. entire Board yet global operator F it I'd see, and of while was team behalf The environment. With at optimistic the like to On few plan our job excited team, we challenging, done Directors management last road that, Hain our safe, exceptional to another about


question Evercore you. question-and-answer be the a proceed time, your comes this of Our first with Instructions] question. ISI. Thank Please At from conducting Palmer session. line with we’ll [Operator David

David Palmer

in and and inflation that of in what inflation? the see side about benefit you Question morning. Good comparing do productivity 'XX. second fiscal the fourth half year-over-year you have the quarter, half And fiscal How Thanks. follow-up. and I cost productivity the a first cost of experienced to

Mark Schiller


– on the morning. good So

filling automation On a stream the and productivity combination That's about and calls, and as redesigning are overengineered, steady talked a that of productivity. plants. previous we consolidating of pretty up in products trucks side, we've have

continue stream that's at pace have So that's a historically. seen pretty to we similar what steady going to a

the change than into on of as you don't off we year be think contracts those other went than them go fiscal in materially well inflationary, advance a that quarter saw quarter inflation we second July. effect year and year, expect the our inflation, up. in contracts new the there. much what to expect you should have to don't to is commodity first in regard of in had I I So inflation different With fourth as imagine bunch going roll quarter are went can because end costs at And last and lock the we the or

we between the pricing that that generating, have we will and we're we than expansion. still fiscal saw guidance, in we've we been see productivity But that quarter. taken you 'XX fourth margin and expect inflation the previous So, in That's we've that importantly, higher robust be told our the in it will will digit. around mid-single

David Palmer

us acute which we're particular. And obviously would pass When at shortages point, commodities for when realized of would and just your labor difficult the it in some shortages this fiscal about 'XX, impact guidance halves it is comes forecast. And I of guess to thinking to labor thing. I to costs, your some on big have you obviously – a dynamic gave you sense be I'll how net And how that talked X you're a imagine you reaction you and about consumer about too. much to be how the taking retailers pricing, of on. thinking pricing, you're taking, to impact be pricing give that there's will going the Could but pricing

Mark Schiller


time meaning level specific at environment, productivity got all net given did not a cover the whole will pricing of us But but for and we by on you've regard think we hit that the gross robust it. there's more given of so shortages, on number than in top pricing, then the quickly that stick. competitive – and haven't that, I should So on in but plan, which taken a in surprise, consumer our of reaction, we're With the our of the elasticities, it. control that get more got the expecting the pricing industry we've to labor to pricing, than inflation,

centers, our in of becomes benefit some whether the as was get So, well. where, higher that our as consumption consolidation, of We've shipments. in comes issues that the then productivity sourcing we're actual those And had centers of actually points inhibited the rectified some than place supply that manufacturers that the some or our of situation. got got regard. place elongated continues there's from we've to orders facilities. labor that we fourth robust supply other there and sources of for ability really it's make And But part labor progress our plenty further of manufacturing sure upstream, distribution on is flow. distribution remember labor well. product agenda again, manufacturing to shortages the in made has is backup our out, good middle to why are having Doing ingredient home obviously, backup finding suppliers, where quarter we X all which upstream have challenges crisis that of out labor And in facilities, Within of well. we've labor that been consolidation. sources productivity that that that operating We've that in consolidating our the our in they're

the totally pick drivers who and woods. the see are to We've shipping. challenges getting you'll -- so much It's up having a we're got customers them still shortage. done have labor not job to we of first we've -- flipping So orders, in we are better of out that quarter the the managing not

much in was dynamic So the it better the now of August situation, quarter. than here there's -- pretty sitting a it's last is middle at of end it but sitting

David Palmer

you. Thank


you. Thank

with your question. line with Our question comes next Please Rob proceed of Dickerson from Jefferies. the

Matt Fishbein

on Hey, the good morning. Thanks for It's Matt Fishbein question. Rob. for

that distributors is Just ruining expected looks first your are said know health here. And has categories view, point the rates much situation on And capacity rates just stabilized if how labor experiencing follow right I now. internal sounds for distribution from to -- supplier you your of still I it from you fill if that The retailers of know up, curious what are any, the to guess. but an like fill overall pretty chain, constraints? that to the to and supply improve

Mark Schiller

what to scheduled been trucks. don't show is similar up pick brands from and where again get and transportation appointed and side, the very specific on up distribution our into inflationary, we're now want has are I which standpoint, struggling. a will say trucks is, challenge biggest orders having getting the our say that are that challenges side. The to But Yes. categories pickup partners transportation it's to I hard on would time, right on been go I'd to suggest

ship to the So products and the truck which on staged costs. flip we product at spot market truck we've the show doesn't door, have that to dock up, to got adds a buy then them,

We're place to they and in plan a that the is energy got that solution the to to find scheduled we've going not lot where shortages the backup to in time, a show show facing. everybody able that sure industry to a in going If to on make trucks be that's So that focus time. the getting economic has of more are up they're ahead been. further up are the

We're to be QX things So challenges, over completely QX, get not as it's may the But the in but it's was definitely the stimulus contributing that the environment labor away going better. hope some of some go in level see to that will and shortages. my labor checks of better continue yet. is to than it

Matt Fishbein

with I in Thanks. of feel expecting heading the the trucks too, let's trucks for stabilized outpace low still retail? fair. of for frequency, retailers centers, terms consumption, bit Obviously, is would related And but kind question can say, And out, forward? squeeze pandemic QX area a to maybe clarification, up you inventories the pandemic? to sending out I or work pushed are those was there, fill pandemic was do it That's kind How that supply distribution situation. less the need margin in those there given fuller to at some shipments But that labor prior opportunity of way, Okay. rates becomes changed an of about trucks of the your consumption been and a more, the if by fullness chain be to just you going one that is beyond, an to situation that know you are to little of the out opportunity issue there. for improvement there account current opportunity normalizing,

Mark Schiller


the we trucks, we truckloads. pallets when full two averaging this -- actually, are on more where the journey than truck. a were started filling of So per in place we're now at XXXX, of shipments XX% Remember, our

go the retailers less the the is quite have orders, the consolidate 'Let's that so have to the thing. good tight, many frankly, us now can fact the trucks and shortage full fuller say, And we trucks are, don't because market half is to So trouble trucks are a to road. the having is If that that helping your and on we as labor be schedule getting trucks they're the trucks.' of

an incentive and enabler, those trucks actually place sell it bracket So to it's now that's in an pricing our gives -- everybody up.

labor catalyst will a So the And continued happening. there. more progress I shortage urgency think to we create see is that around frankly,

your of part again, Second me? remind question

Matt Fishbein

QX was consumption? outpace expected shipments, they just to It are

Mark Schiller


in we interesting prices manufacturers lower pricing, advance in demand. what's buying many extra is, So right the inventory dynamic go get pent-up pricing, definitely price as retailers What's now the so before are of taking have an up. -- the they are interesting

are So retailers' full. warehouses pretty

we in inventory low so, And terms in actually at warehouses. of are point a customer

others, it that work after the bounces whether exactly At we're -- those -- it that, the inventory expect quarter all in quarter can't some their first Whether some I the warehouses, or hasn't back. customers, yet. in do bounce retailers at seeing will will happens orders the but you starting second we when, so, tell it we're back that way happened It's exceed down to of And in see shipments. happen.


Thank you.

Our of your comes next proceed question. with question Anoori Naughton JPMorgan. the from Please line with

Anoori Naughton

guys. Hey. Good morning,

Mark Schiller


Anoori Naughton

sales year-over-year first timing mentioned, of some do headwinds you the slight of wondering clarify still be if something. and be up. will will in help be appreciate first the divestitures divestitures, the don't namely so EBITDA the I you margins second will the inflation to they said you much were And punitive I'm in I quarter. gross But the down XXXX, unless think lag, why can I'm more pricing the pricing of half in cost. than quarter versus your missing much

better to build the EBITDA possible. trying just I'm if bridge, So

Mark Schiller


lapping growth challenged. So how gross of the be acceleration and lower We're seeing its remember innovation will seeing we're lower that's reason into the translates But well. XX% mean, be profit that margin seeing be lower, And revenue, business last it EBITDA health dollars I lower. means it be will Revenue performing gross is that while terrific. year. underlying That's We're in growth. consumption. up, EBITDA. which will will the we're TDP our primary

elements are And It's depress are strength overlap, we have a going so, all there. underlying the and we massive have overlap, the line. of of to top just COVID which

Javier Idrovo

we Anoori, spend the marketing. do is thing other more expect that, to in

marketing line. So an embedded impacting growth also there's growth spending marketing that it's -- the EBITDA

Anoori Naughton

Okay, or the Have spending year? -- the you'll for in quantify be marketing much great. quarter any you you of how given can terms

Mark Schiller

and in have And but to turnaround QX, momentum number, a America in term, we We in of we've frankly, business. our in the are haven't underinvested the and where we in short the terrific International fund QX international both we're business, -- quite specific brands. given investing North

North It's into America give more that business. International. is it the investment two teens the business, starting And the we're business significantly put in International. of I ago transformation, investment when seeing you growing in is back behind the to terrific shape is the high an wonderful generating a because business, example and some back put better than that started was would years in brands that we we're the the results that's now Ella's Now, we

Anoori Naughton

Thank great. you. Okay,


Thank you.

of Please from with question. your Andersen proceed with line comes William Jon the question next Our Blair.

Jon Andersen

everybody. morning Good

Mark Schiller

Hi Jon.

Javier Idrovo

Jon. morning Good

Jon Andersen

to that shelf happen delayed Because a are coming in ask seeing retailer in year the you general gains a you us kind innovation. acceptance? Can to distribution on first more according you've wanted the of just little that innovation COVID. detail distribution have your I Are resets a strong bit know that plan? or give got and with around of lot happened ago, Have about I to of that level achieved? going

move there So, just update into fiscal seeing on you're relative to an XXXX. expectations what as your we

Mark Schiller


America. our the X% a was quarter, look was think our So, is in our years last I X% at if good of was In year, sales. was sales news innovation sales. In few North ago, pretty third of you quarter, of non-existent it it fourth X% that it

a our role is innovation playing important So, very in growth.

the up versus year quarter, Our up ago. TDPs a they were fourth In considerably. were X%

the year, when versus On at XXXX they of that. into even And look the XX% Get than it's most data Bigger fiscal were more up then quarter up brands, four-week pre-pandemic. first recent this we the

mouthwash and for remind Care starting The the continued of in You've sun weather. hodgepodge the is tea seeing category the we're categories, XX reset got on you, shelf a yogurt a colder it's like. because to and to right? spring, bit care And the Personal and category the So, body little reset different gains. snacks now. baby want the distribution really lotions items and To is is category the get People all tea the category resetting now.

innovation Jason, straws another year. seeing ACV, That's traction. continue launched Personal incrementality to build. set have XX%-plus which about, at that that this very men's need the for all we for and and one a getting great continue are And off innovation, high repeat to and the times puffs. of just is of launched launches. getting line and good a launched to the that is green And format ACV just on actually we We're and some Bigger XX% K-Cups well, and brands the Earth's But momentum. innovation in the which the toddler different neighborhood which innovation and trial particularly generate sitting expect of XX% a we're tea snacks protein some terrific good doing Best, hot us straws, talked the Tea products veggie obviously, will with the getting benefits. with that's Energy within and and to the we Care. pouches between incremental, both very rates the we've stream with in ones we Sensible bad start. total, but in on the our so that, Celestial innovation puff got they're We're we've the on immunity of in to We Portions we black isn't had

a the distribution game lot to The so expect build with less appears than flavor we there's got more innovation, goes that category we're But as lot of velocities innovation. of We're performing well. going this expanding retail we're a pleased to we've to It very And the seeing. good. changing So, excitement innovation. very all we're continue obviously, be the behind The are community. year -- what from innovation. on,

Jon Andersen

Two points of That's clarification. quick helpful. Thanks.

programs are make sight line and might some sure more perspective on volume still mentioned the then kind good comparisons rationalization SKU the Is is times the understand of to to in XXXX, locked to of want in provide I And I of referenced what's you overall comments. programs or SKU second that half second also Just the of, there of because the several rationalization question they Could is kind prepared of incremental that? and status year. what the that? be, those You Thanks. loaded? have you going on,

Mark Schiller


and in remember to on no XXXX, we important fiscal to rationalization; proactively money that in an its strategy. was because with losing simplify Investor of right our Day, eliminated X,XXX company SKU put place part that innovation the the SKUs were So these SKUs that after underperforming were

there's on it back the So rationalization last significant is behind look it's But when going SKU in four basis, minimal or when two-year that's a at overall three rate been our a drag growth stack a in XXXX, on compare basis. versus on and one-year -- you quarters. us, that and look stack rationalization you

refine continuing portfolio. our are to always We

it underperforming, drag on in it overall will are and that are we things the that are we a new rotate things worse But think won't look with that things innovation, as versus new algorithm out performing we'll we at XXXX. be So was perform bring better. and like proactively

programs in fiscal to had in Hair XXXX second for again incremental. is this pandemic. that and million didn't get the we It's On the half, loaded. locked in Care we because of year. XXXX about Program million club $XX before That incremental the that the It's we in talked $XX confirmed about

Sun is gains significant got we've where on place other The Care.

about data. have many to agent. heard manufacturers that sun is proud we Care. all have to recently I'm cancer-causing provide any was required a Benzene and testing no our say may of have there Retailers benzene You in Sun analytics benzene reports sunscreens. in

confirmed sun as and so are with result, programs have space. care, incremental that And they consolidating we're many significant a be the That, going is to in and again, retailers number of vendors big very of recipient retail a customers.

in I the things business of themselves year the on the said, as than generate we So have. we've QX those better back and with two by versus growth significant to And QX. half the momentum going better normally the would are trajectory rest QX forward of got that than consumption

growth talked half, time we line top mid second expect, we to about we on with you're the what business, Investor to to single-digit Day. very this high get so see And going consistent on the by

Jon Andersen

Thanks so much.


you. Thank

live. question from the Larson question. proceed Please Mr. line Seaport Eric next Research of your Larson, with comes line Partners. with your is Our

Eric Larson

sorry. on mute. Thanks the Yeah. I was question. for I'm

So question. this very a is specific

too. up issues, I were other number, were you be that mistaken think said Tea think there, Celestial maybe sell-in maybe but think points I already but digits. I and that your some might that double seasonal up distribution on points I for is related here to distribution strongly

the a tea talk you business? can So little about bit

Mark Schiller


launched innovation, We Tea Black Green So launched Brute we're business Energy years, Tea, and TeaWell. properties; immunity the where with with with X last melatonin, remember, in tea probiotics. Old tea and K-Cups, we've the –

of We of of year. them with in year X of So, the kind ton a worth really didn't reset we've launched we've -- because X innovation. had last many innovation years' retailer

this that upset before a picking category can in So, the again, coffee, of sleepy And caffeine in didn't distribution the pretty bring a much think that we're with fact tea consumers, this highly the into different lot to bring at stomach coffee as that's And cup the the benefits, category flavor bring like because are bringing new our been competitors fact things incremental energy exist this has historically, up to without expense significant now about innovation. drinkers that of that category. get we're that or category you don't of tea the going as who coffee. a of

reaction, done other the well. on TDPs. and I up picking of up things up between distribution a I and getting we're puffs we're we've the we're Sensible a Sensible. on most screaming And really say categories, as picked picked distribution mentioned that and great would other the prepared the then there in Portions and many remarks. the hot we modest up a ton the the as where We customer lot places of certainly across some And picking So, Tea are as of

Eric Larson

to when Okay. a talk is And you as generally, opposed generally grabbing sprint. about a distribution journey

to that is distribution? I out think gaining how years? available should we it Is mean for far So think that? you you to several runway your about

Mark Schiller


Number years XX% at front ubiquitous. worked bigger CPGs, have of ACV. X So distribution say none many of in portfolio brands are of I we potential XX%, I'm with these in this brands one, used us, for and to I that When reasons. having

biggest ACV. have Our brands XX% only

fastest-growing So have that brands yet. don't in there's the ubiquity we $XXX that biggest, sales, have million on retail we are still even opportunities

opportunity. one that's So

you're penetrated We're us the way. with then third with starting we're businesses, big drug in We're big in gas channel in not not haven't with for convenience the opportunity for our snacks. obviously many because each We're any with TDPs get we Care innovation is really Dollar businesses. channel opportunity on us is that more channels. these expansion Personal way And items not in any which store and to our Second in to the per gaining. of see

the innovation significant distribution now as bit always Investor But nobody thesis on significant and expanding. shelves to got Day. are to we're resetting bringing retailers the derailed They've was shelves. of set The was starting as got pandemic So, recipients got space. momentum. those brands. with We've there's where great starting anticipated, a little we're It of again, is we had part that potential be here, terrific category

in it we will into we year that remarks, and will be go through and the said as And prepared continued expect – of we the so this gainers future. I that space be we

Eric Larson

right. you All the detail. it. very much Thank additional for Appreciate


you. Thank

Group. Our next question. with question Vendetti comes Maxim Anthony proceed Please your from the line with of

Anthony Vendetti

couple Mark, you about? that product that Is you're traction? had quarters. looking that last then in the of there And of in growth to that in gained terms products pipeline mentioned just innovations is there excited any introduce, the particular the specific nice have anything product has new really you're of here

Mark Schiller

about telegraph our into don't has -- before from Celestial Sensible market, future started, well. part competitors retailers. done question, not going the has That's are into approaching too And much K-Cups spring. that to The answering has Portions what's But remember, The I exceptionally hits terrifically. I puffs pipeline. give market launched just and don't want launched gotten very, this again, fully straws the continues Screamin' now was, your coming the in but because That we well. across ACV past Veggie of XX% knowledge first that had want the hitting to that's the the before build. to launched distribution and very we we've on puff we my the right you'll Seasonings pandemic done Hot Straws it excited done

formats as was versions the terms but So is a of blockbuster had there we're very pandemic. just have And in Sanitizer, have now we taken the then we've we've with a continuing I to launched some ramp that that of -- and Obviously, snacks, that successful up win last blockbuster in them. of headwind, innovation mentioned for we we toddler a distribution. we innovation and the which earlier, year,

Earth's the very there So and very, Street a of now are that straws well. also is veggie of puffs Sesame Best performing version

things launched. got pretty darn And across performance a we've so good the we've

I'd The because on seeing that trials. we're yet, performed more of these rates things outstanding. terrific. are got haven't modestly, say because others the have many We to We but have get we it's trial the more just items not generated aren't repeat

make more And black their up, continue things momentum mouths. have year. launched. we we're rates, got the teas, pick to the in where, on them we've throughout things But and to again, very the them very repeat people of pick seeing optimistic that data, the see TDPs into the aware So we again, we're you And expect up, velocity high the just which and get green that up. pick the like it

Anthony Vendetti

just that resets drag Okay. resets. like from quickly those real are you on all Is could there the then then just sounds on It COVID? talk itself And having. Great. than Or couple about the other And or months? shortage you that product happening. over is of that any still out insurance work if impacts COVID of or the are labor other stimulus any next unemployment to expecting the

Mark Schiller

we're we're not itself but that certainly it out, not -- Well, strategy. is hoping works hope a

we are be issues to go when issue that there's I'd sick. getting sure everything doing make COVID to the because even power shortage. So away, people say a checks our labor address the that is still in comes with going incremental we labor stimulus

that and had COVID, continue with are COVID. have we people being with because were have in are have that they people to contact out So quarantined that people

and labor magnifies labor you shortage people take And getting so exacerbate with you the sick, that a shortage. it the

through as less this have the And chain. I further will that shortages. under we expect labor So the to Delta as people pandemic supply filling of the positions open and vaccinated, Again, get within down just variant more we get all we it get COVID-related exist comes control,

ingredients extended packaging may taking to distribution sources for time very backup labor locations long progress We source as period an labor our made again, we a various mentioned, control, time. the we've from finding of at of for situation. I or our within a very impacted things internal containers our We're sourcing and be been supply inflated found of feel where, the over fixed price. China material, supply it's we impacted great facilities. has get on that alternate where problems Within manufacturing centers, We've

not around waiting go for on, lot working of, progress. it working to the away. and kind problem, terrific will. made activity on, you we're a going of we've if So There's We're

Anthony Vendetti

Thank Okay, you. queue. great. to back I’ll turn the


Thank you.

comes from Sandler. of line Michael question. Piper your with question proceed Our next Please the Lavery with

Michael Lavery

Thank you. morning. Good

Mark Schiller

morning. Good

Javier Idrovo

Good morning, Michael.

Michael Lavery

magnitude give this us Just And finding that that on may you trouble any if have indication the might a is acquisition expect? you the attractive sense buybacks. Can targets? you of

Mark Schiller


the the acquisition I'll first Javier, let target. buybacks, you discuss So, discuss let me but

So looking we in acquisitions. the for actively are market

it, previous organization I calls, acquisitions. to simplified As stabilized mentioned in well with we've positioned and we're make now We're people. on that very active the conversations

with reshaping thing getting our parts the a the to tail tail. was now money, us brand And half of you'll note so going portfolio bigger every have in certain and categories shed part is, of the losing whereas the that, be to I But strategy that certain forward, continued profitable. the expect, is on of that will Day, tail see of on important Investor we continuing

of businesses, the And those along. opportunity we right why our buybacks? capital to want that, With comes But and so, about fine don't we're is We're businesses. allocation be focused strategy if keeping fine those there. the part Javier, divesting acquirers, you talk

Javier Idrovo

Michael. Yeah,

get where look company highest of does the of risk-adjusted all we returns. the its lens opportunities investment through at So our

evaluating said, share whether investing buybacks a it external return. our opportunities. company shares opportunities, yielding includes through internal includes good Like that also Mark So are in the

when through priced. attractively share the And see the think we because, in marketplace is be you prices that so, us repurchases share active are

you that in the seen so, have fourth And happen quarter.

As to it signaling to, low to going other, versus one say, a trading debt. very little a one relates we is no, a have of this would -- I as bit you're the what

X. less closed is X.X than Our the year. with net debt we how actually It's

do the we do flexibility to lot buybacks if present of do a actually to So themselves. opportunities and have M&A

use. our don't take can good opportunities to -- being we a that you capital that should as put that I think have don't signal of we So a investment sort where that

Michael Lavery

with but follow-up know inflation specifically to great certainly, And the I really it That's clear, the there's in quarter, Would that help on could pricing maybe divestiture the absolute, the a margin to the Okay. you. hear Thank just that like us by International accretion sequentially, color. segment? business probably differentiates business business, still that margin pressure And you how can little is also segments be margins. the is from you sounds declines, it both the a your first rid what -- but of have up is to coming base? in be it International given fruit right but later. it just side lift on maybe that get bit understand a fruit the

Mark Schiller


expect don't So, we margin declines.

significant the expansion expect that and margin are the are because are We the crop and the The crops inflation is is in expansion. coming we pricing some in of the inflation, on of of come reaction short some Part the in long, is we're and obviously rate the of the to of hit in, International. that had later that crops of some as crops going that pricing from dependent be some coming coming shortages reason pricing. to taking International the amount

we take takes It as information, pricing. have us it a we that accept bit the the So, present and of time little got to retailer for it.

hit. in in The So, we in taken already I said, the quarter. related was fourth as inflation before that America we the to will QX. pricing tea. hit And of saw already pricing And North took this the we're Baby on pricing we've of on that taking inflation that all fact, beginning at

you'll see same as you significant what's at growth almost improvements look XX% at pricing, and pricing the Baby driving that on XX% we've a consumption got in of our velocity is about time. part If increase which business the data,

September, relatively the elasticity are only that So, in see hits see up, that modest is the and guy pricing price to has going rest as the changed because going we're optimistic people will of relative significantly. if you're it's that up if everybody we going than who's different your

from we're be will pricing So, nominal. that impact the optimistic the

who's with and a We to much consumer anyway. much less also, premium have higher price begin of income very elastic a wellness, in set and products health

of and but relatively we've to gets is, that all pretty what pricing see And optimistic of out. when as elasticity so conservative falloff, settles been volume I'm mentioned terms to market I in remarks, the this going prepared in in our low of terms assumption we're everything

Michael Lavery

right? you sure I declines high-teens you with to on That's has right? what be helpful there, You full EBITDA That's think to I year, some said said declines. mid- would make quarter the Can color. first I -- just margin The expect margin don't correctly? decline the there there recall

Mark Schiller


Javier Idrovo

decline to. yes, gross level some margin -- level. EBITDA Mark margin gross the The There the what be margin referring was is at at will

Michael Lavery

Makes sense.

very you much. Thank Okay.


Thank you.

proceed question last from question. of Morningstar. with with morning comes line this Please your Our Scheuneman the Rebecca

Rebecca Scheuneman

squeezing Good for in. morning. Thanks me

on trial. So, can had call, Thank on elaborate And And still a need few in-store if kind if plans sampling? COVID to you you I just are restrictions what prohibiting the are times wondering there. you. mentioned of this drive was your

Mark Schiller

are events sampling, people we the programs tea, shopper to as a working it's all is just which us trial So, social as cetera. so digital, marketing with merchandising card samples mentioned, with have that some we like activity, around in our we tea display store. And of well see herbal lot ability our in we or on But I geo but typically like no things targeting can in-store on that have mobile data, impact generation then and have other of the outside the of portfolio. customers of -- brands combination do in around tea, do getting in-store a the restrictions store, there don't et their

most be going inbox the shopper the sampling customer. that's But activities, mobile social and is marketing digital, in-store some occurring. marketing there's with So of to

Rebecca Scheuneman

you so Thank great. Okay, much.


concludes to Schiller the Thank our any gentlemen, I'll final you. Mr. and question-and-answer Ladies back session. comments. this floor turn for

Mark Schiller

health business the and I you. very left term, we industry short think some and of challenging the business headwinds that facing with folks. over everybody's and forward appreciate optimistic. you with is look Well, Thank time conversations underlying coming and I for to and we're this our enthusiasm optimism fact later the hope the is outstanding, the we this we today in days while

to So look later. talking thanks care. for all your Take to you time, forward and I


concludes Thank conference. you. today's This

disconnect Thank this for you at participation. may lines time. your You your