Good day, everyone, and welcome to the Hain Celestial Group Incorporated Fiscal Second Quarter 2025 Earnings Call. Today's call is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. And if you would like to withdraw your question, press the star one again. Thank you. At this time, I will now turn the call over to Alexis Tessier. Please proceed.

Good morning, and thank you for joining us for a review of our second quarter results. I am joined this morning by Wendy Davidson, our President and Chief Executive Officer, and Lee Boyce, our Chief Financial Officer. Slide two shows our forward-looking statements disclaimer. As you are aware, during the course of this call, we may make forward-looking statements within the meaning of federal securities laws. These include expectations and assumptions regarding the company's future operations and financial performance. These statements are based on our current expectations and involve risks and uncertainties that could cause actual results to differ materially from our expectations. Please refer to our annual report on Form 10 , quarterly reports on Form 10 , and other reports filed from time to time with the SEC, as well as the press release issued this morning for a detailed discussion of the risks. We have also prepared a presentation inclusive of additional supplemental financial information, which is posted on our website at haine.com under the investors heading. As we discuss our results today, unless noted as reported, our remarks will focus on non-GAAP or adjusted financial measures.

Reconciliations of non-GAAP financial measures to GAAP results are available in the earnings release and the slide presentation accompanying this call this call is being webcast and an archive will be made available on the website and now i'd like to turn the call over to wendy thank you alexis and good morning everyone i'll start the call by walking through today's key messages i'll then review our second quarter results category performance progress on our hay and reimagine strategy and the building blocks to support our pivot to growth in the back half of fiscal 2025. Lee will then provide more detail on our financial results along with our updated outlook. Despite a disappointing revenue quarter, we generated strong operating cash flow and continued our progress to further reduce net debt. We drove sequential improvement in baby and kids, driven by the recovery in infant formula supply and in meal prep led by the continued momentum in our soup brands across both regions and growth in Greek Odds yogurt. However, sales growth in the quarter was hindered by poor in-store performance in snacks, driven by marketing and promotion effectiveness, as well as short-term supply challenges, particularly in our international segment, where demand outpaced our supply in several of our core categories and brands. To address these issues, we have improved in-store marketing activation, added production capacity to rebuild inventory and support growth, and reorganized our customer service supply chain. We are confident that these actions, combined with the previously communicated promotional shifts, fully recovered infant formula supply in North America, brand campaign momentum, and confirmed distribution gains in both regions, will drive organic net sales growth in the second half. Organic net sales declined 7% in the second quarter. While not satisfied with this result, we did generate free cash flow of $25 million and continued to make progress on net debt, reducing it by $12 million in the quarter. Adjusted EBITDA in the quarter was $38 million, and adjusted EBITDA margin increased 350 basis points from the first quarter. We remain confident in the building blocks we have in place to deliver top-line growth in the back half. However, due to the softer-than-expected front half and a more volatile macro environment, we feel it is prudent to approach our guidance with a more cautious outlook for the full year. Lee will provide details shortly. Before I get into the detailed category performance, I want to touch on our positioning, which is particularly relevant in today's environment. Better for You trends continue to outpace traditional categories, with consumers increasingly looking for healthier options without sacrificing taste, convenience, or affordability. We also acknowledge the evolving trend of individuals opting for Better For You products to align with their diverse dietary goals. Our purpose is to inspire healthier living through Better For You brands. It's part of our ethos and something we've been focused on for more than 30 years. We view the consumer demand shift in evolving regulatory space as a tailwind for Hanes. Our positioning and free-from-artificials portfolio is a true differentiator, particularly in the U.S. Today, 100% of Hanes' global portfolio is free from artificial colors. Historically, we've not used red dye number three in our portfolio, and in the U.S., we only use colors from natural sources, such as fruits and vegetables, and we do not use artificial flavors. Internationally, more than 95% of our portfolio is free from artificial flavors, and we don't use any artificial colors. We have partnered with experts to understand the unique nutritional needs of consumers on GLP-1 treatments and assess our portfolio against those needs. We are currently developing our criteria to define what is GLP-1 friendly based on available science, and we have already identified a number of products in the U.S. that are a good fit for these consumers across our beverage, soups, and yogurt brands. We plan to begin marketing certain items within our portfolio to GLP-1 users in the near future. These authentic Better for You credentials position us well to meet increasing consumer demand for Better for You products. Let's now review each of our categories and early signals in our pivot to growth in the back half of fiscal 2025. Sales growth in snacks was hindered by in-store marketing activation and promotion effectiveness. As we mentioned at the start of this fiscal year, snacks were affected by a shift in our promotional activity on the garden veggie brand and by key retailer shelving changes for garden veggie and terra as we discussed last quarter. Garden veggie remains a strong brand with high brand awareness and one of the highest levels of household penetration among better for you snacks. The shift of our promotional activity from the first half of the year to the second half impacted absolute sales volumes in both time periods and had a carry-on effect in overall velocity as a result we have adjusted our in-store activation and shopper marketing for the second half of the year based on these learnings despite these impacts garden veggie delivered mid single digit distribution growth in the quarter and continues to be a top velocity snack brand in convenience stores we continue to expand in this important channel and have confirmed distribution expansion up 17 year on year in the back half of the year era saw strong base unit velocities up 9%, and in the UK, our leading snack brand, Hartley's, also delivered mid-single-digit distribution growth in the quarter. We expect to see accelerated snacks performance in the second half of the year driven by expanded distribution of our brands, including a 5% increase in distribution for snacks at our largest retail partner. We will also have new innovation, including exciting flavors in Garden Veggie Flavor Burst, which was recently named the top new product in the tortilla category by Newsweek. Beginning in this quarter, we have better placement in aisle with key customer resets, as well as increased merchandising and promotional activity across top customers. To support consumers sticking to their healthier living resolutions, we have robust New Year, New You campaigns in place for this quarter, and we have actively shifted our marketing spend to social. This shift enables us to expand reach across a broader set of youth educations and audiences, and leverage influencers with user-generated content to drive engagement. In Baby and Kids, we continue to see sequential improvement in year-over-year organic net sales trends. First Best infant formula supply has fully recovered, with the return of all formulations and sizes at the end of December as planned. As expected, consumption of infant formula pivoted to growth in the quarter, increasing 29% year-on-year, further demonstrating the strength of the Earth's Best brand. Outside of formula, consumption of Earth's Best snacks and cereal were each up double digits in the quarter, and household penetration for Earth's Best has increased. We believe in the return to leadership in infant formula led by the strong brand awareness and loyalty in Earth's Best. In fact, 83% of Earth's Best dairy formula shoppers won't substitute for another brand, but will instead seek their preferred formula at another retailer if what they're looking for isn't on shelf. We expect baby and kids trends to continue to improve in the second half of the year, driven by the full recovery of infant formula supply, additional distribution gains, increased marketing, especially in e-commerce, and exciting new innovation with our IRSA self-feeding platform which reinforces our leadership from birth to backpack. We are excited to continue our progress towards regaining leadership in organic infant formula. Our Earth's Best brand has been a pioneer in organic formula and a trusted leader in the growing powdered formula market for more than 35 years. And Earth's Best was recently recognized by Baby Center as Best Organic Baby Formula of 2024. In Ellis Kitchen, the leading baby food brand in the UK, we grew distribution by low single digits and outpaced the category on volumes in the quarter. Fiscal year to date, Ellis has gained share in its core wet baby food category, and we are strengthening our storytelling and partnership with a large retailer with branded in-aisle activations in more than 200 top stores. Early results are promising, with sales up high single digits in the quarter. In the beverage category, non-dairy beverage sales moderated in the quarter with industry shifts to discount channels where we are under-indexed. Despite these category headwinds, natumi continued to grow share in the natural channel celestial seasonings sales in the quarter were impacted by short-term service issues driven by a shortage of a long lead time raw material used in our blends which resulted in fill rate issues at the beginning of the hot tea season this issue has since been resolved and consumption improved throughout the quarter as we moved past these service challenges and our taste our world brand campaign gained momentum celestial seasonings have high brand awareness and our recently launched innovation, Celestial Seasonings Lemon Honey Drop, and the Sleepy Time Biotin Beauty Rest are both performing well. We've seen Continued Strength and Sleepy Time with Melatonin launched last year, which remains a top 100 item in the category. Our efforts to reduce plastic waste led to recognition by Beverage Industry and we were named Best Beverage Packages of 2024. We are leaning into our marketing on taste and wellness through our new master brand campaign, Taste Our World, building strong PCs and programs, and expanding our away-from-home presence to drive greater trial and awareness. Additionally, we will be expanding offerings in the second half with innovations focusing on all-day wellness, women's health, and GLP-1 support. In meal prep, our largest global category, we saw sequential improvement in year-over-year organic net sales growth trends. Greek God's Yogurt is showing healthy velocities at key mass customers and has lacked the impact faced last year from customer shifts. The Greek God's brand remains strong with increased household penetration fiscal year to date. We continue to see strong growth in branded soup in the UK with double-digit dollar sales growth and share gains in each of our three leading brands. We grew distribution by 25%, outpacing the overall category, and our recent launch of Destination Lunch has delivered strong early results in market of 22% in the quarter compared to 9% in the category at the same retailer. Demand was so strong, in fact, that we had to pull back on certain promotions in the quarter to ensure we could service our customers. As we look to the balance of the year, we expect trends to improve in the back half as we fully lap the private label contract loss in our UK spreads and drizzles business. We have increased soup capacity and are expanding our rollout of destination lunch merchandising based on the early success in quarter two. And Greek God's growth in the back half will be supported by a new brand campaign in the third quarter to support gains in incremental distribution in key channels. And finally, personal care, our smallest category. The progress we have made towards stabilizing our personal care business is driving improvement in gross margins sequentially and in sales trends in our core channels of natural and e-commerce. With the goal of further advancing the focus pillar of our hand-reimagined strategy and simplifying our portfolio to concentrate on better-for-you food and beverage, we are exploring strategic options for this business. We believe this is the best path to focus the organization, simplify our business, and create long-term value for shareholders. We continue to make progress in the transformation we outlined in our hand-reimagined strategy to position the company for growth. While our shift to growth has taken longer than initially anticipated, we remain confident in the pivot to growth in the back half and in our ability to execute on our transformation strategy. The progress made to date under our focus pillar has simplified our operations and our portfolio. This includes today's announcement on personal care and last year's portfolio divestitures, footprint consolidations, and SKU simplification initiatives, some of which impacted year-on-year organic net sales in the first half of 2025 as expected. We estimate these actions account for an approximately 1% impact on organic net sales growth year-to-date. In addition, our new North America commercial structure designed to better align our go-to-market model for improved customer focus and consumer engagement was implemented in the first half of this fiscal year. We are seeing notable improvement in our customer engagement with increased distribution at major customers on our largest brands in the second half of the year. Quantitative and qualitative feedback from customers has been positive and we have innovation and collaboration sessions with top retailers scheduled over the next few months, including in our Innovation Experience Center, recently opened in our Hoboken, New Jersey headquarters. We expect this new commercial structure to be a key enabler of our future growth. Underpinning our fuel pillar, we started fiscal 2025 strong, delivering above-target savings in the first half. And for the full year, we expect to outpace the record delivery and savings we achieved in fiscal 2024. We expect to continue to enhance our revenue growth management capabilities, including trade optimization for improved price, volume, and mix, as well as growth margin expansion. Within working capital management, you'll recall we unlocked approximately one-third of the total hand-reimagined target of $165 million from working capital improvement in our first year, and we continue to make progress in fiscal 2025. From our starting point in fiscal 2023, we have extended payables by 19 days and reduced inventory levels by 5 days. In fiscal 2025, we continue to expect fuel to deliver gross margin expansion with further reduction in debt, improvement in leverage, and investments in our brands and our capabilities. We are seeing continued progress under the build pillar in our channel expansion strategy, especially away from home. We have recent distribution wins with strategic convenience store customers, and we'll have at least two snack items in 11 of the top 15 C-Store retail chains by year-end, up from five in fiscal 2024. In the fiscal second quarter, away-from-home net sales grew 38% in North America and 52% in international. Garden Veggie remains strong in convenience stores with dollar volume up over 40% in the quarter, gaining over 200 basis points of better-for-you salty snack share. We have a clear line of sight to growth in the back half of fiscal 2025. We have a number of second-half initiatives in place, including the previously communicated promotional activity shifts, adjustment of our marketing actions, increased promotional activity on brand campaigns, known distribution gains, and a return to full supply of our infant formula business. We remain focused on execution to deliver growth and drive operational improvements across the business, in particular through our enhanced commercial go-to-market model in North America. Our supply chain team over-delivered on our fuel pillar in fiscal 2024, and we are confident in the work being done to address the short-term supply challenges in international. And now I'll turn it over to Lee to discuss our second quarter financial results and updated fiscal 2025 outlook in more detail.

Thank you, Wendy, and good morning, everyone. For the second quarter, we saw organic net sales decline 7% year over year. The decline was driven primarily by lower sales in the North American segment. The decline in organic net sales growth reflects a five-point decrease in volume mix and the two-point decrease in price. We delivered adjusted EBITDA of $38 million in the second quarter, compared with $47 million a year ago. Adjusted EBITDA margin was 9.2%, a 350 basis point increase from the first quarter. Adjusted gross margin was 22.9% in the second quarter, a decrease of approximately 60 basis points year-over-year. The decrease was driven by cost inflation and pricing due to higher trade spend on promotional activities and efforts to execute winning portfolio actions, partially offset by productivity. SG&A decreased 5% year-over-year to $70 million, dollars, representing 17 percent of net sales for the quarter, as compared to 16.3 percent in the year-ago period. The decrease was primarily driven by lower employee-related expenses on efficiencies from our integrated operating model. During the quarter, we took charges totaling seven million dollars associated with actions under the restructuring program, including contract termination costs, asset write downs, employee related costs and other transformation related expenses. To date we have taken 75 million dollars in charges associated with the transformation program which is comprised of 72 million dollars of restructuring charges and three million dollars of expenses associated with inventory write downs. Of these charges 29 million dollars were non-cash As previously discussed, the total transformation program charges are expected to be $115 million to $125 million by fiscal 2027, inclusive of potential inventory write-downs of approximately $25 million related to brand and category access. Restructuring charges excluding inventory write-downs are expected to be $90 to $100 million dollars by fiscal 2027 and are excluded from adjusted operating results. Interest costs fell 21 percent year over year to 13 million dollars in the quarter, driven by lower outstanding borrowings and a reduction in interest rates. As a reminder, we have hedged our rate exposure on more than 50 percent of our loan facilities with fixed rates at 5.6 percent. We continue to prioritize reducing net debt over time adjusted net income which excludes the effect of restructuring charges amongst other items was eight million dollars in the quarter or eight cents per diluted share as compared to 11 million dollars or 12 cents per diluted share in the prior year period turning out our individual reporting segments in north america organic net sales declined nine percent year over year the decrease was primarily driven by lower sales and stacks due to in-store activation and promotional timing shifts as well as by lower sales in personal care in part due to skew simplification initiatives we expect north america to return to growth in the back half of the year driven by snacks on the promotion timing shift improved shelf placement and distribution, and execution of marketing. Informed formula on recovered supply, and T on recovery from supply chain issues, innovation, and the new brand building campaign. Second quarter adjusted gross margin in North America was 25.2%, a 40 basis point increase versus a prior year, driven by productivity, partially offset by pricing due to trade spend discussed. Adjusted EBITDA in North America was $25 million, as compared to $31 million in the year-ago period. The year-over-year decline resulted primarily from pricing and deleverage on lower volume, partially offset by productivity. Adjusted EBITDA margin was 11%, A 60 basis point increase year over year. In our international business, organic net sales declined 4% in the quarter, driven primarily by lower sales in meal prep and short-term service challenges. We expect the international segment to return to growth in the back half of the year as we lap the loss of the private label spreads contract, accelerate growth in Hartley Snacks. Ella's Kitchen accelerates on increased TDPs and brand building, and we realized the benefits of innovation and new contracts in non-dairy beverage. International adjusted gross margin was 20%, approximately 160 basis points below the prior year period, driven by inflation and deleverage on lower volume and mix, partially offset by productivity. International adjusted EBITDA was $23 million, a decrease of 13% compared to the prior year period, as the leverage on lower volume and product mix more than offset productivity. Adjusted EBITDA margin was 12.4%, down approximately 160 basis points year over year. Stifting to cash flow and the balance sheet. Free cash flow in the second quarter was $25 million, compared to $15 million in the year-ago period, and an outflow of $17 million in the first quarter. The increase was primarily due to improved cash flow from accounts receivable and accounts payable, partially offset by a reduced benefit from the inventory related to short-term supply challenges. we continue to see the benefit of our days payable outstanding as well as an improvement in our days inventory outstanding in the second quarter days payable outstanding improved to 56 days from 37 days in fiscal 2023 days inventory outstanding improved to 77 days from 82 days in fiscal 2023. We continue to make progress against our Hain reimagined targets of 70-plus days payable outstanding and 55 days inventory outstanding by fiscal year 2027. CapEx of $6 million in the quarter was in line with the prior year period. We now expect expenditures to be less than $40 million for fiscal 2025. Finally, we close the quarter with cash on hand of $56 million and net debt of $672 million. Our net leverage ratio, as calculated under our credit agreement, picked up modestly to 4.1 times. We expect our net leverage to end the year in the high threes. We remain comfortable that we have sufficient headroom under our existing covenants. Paying down debt and strategically investing in the business continue to be our priorities for cash and we reduced net debt by 12 million dollars in the quarter our long-term goal remains to reduce balance sheet leverage to three times adjusted EBITDA or less as calculated under our credit agreement turning now to our outlook while we continue to expect to pivot to growth in the back half of the year given performance year-to-date and a challenging macroeconomic backdrop, we are adjusting our full year outlook. For fiscal 2025, we now expect organic net sales to be down 2% to 4%, adjusted EBITDA to be flat year over year, gross margin to expand by at least 90 basis points year over year, and free cash flow of at least $60 million. Please note that while changes in exchange rates do not impact organic net sales growth, it does impact adjusted EBITDA. The impact on adjusted EBITDA of exchange rate movements since we gave our initial guidance is approximately $2 million unfavorable. In terms of cadence for the balance of the fiscal year, we expect gross margin and adjusted EBITDA to improve sequentially with a material step up in Q4. While we have made significant progress in executing our Hain Reimagined strategy, growth has taken longer to realize, as we have discussed. As such, we want to provide an update to our Hain Reimagined growth algorithm. We expect that organic net sales growth will improve throughout the Hain Reimagined time horizon with a sustainable exit rate of 3% plus by fiscal 2027. We continue to expect gross margin of at least 26% by Fiscal 2027. We continue to expect 12% plus adjusted EBITDA margins by Fiscal 2027. And we also continue to expect to unlock $165 million in working capital improvement by Fiscal 2027. And we continue to expect to achieve leverage between two and three times by 2027. And now I'll hand it back over to Wendy for closing remarks.

Thank you, Lee. With leading brands in Better For You, Hain is well positioned to meet increasing consumer demand for Better For You products. We have made progress against our Hain Reimagined strategy, particularly in the focus and fuel pillars of our transformation. We have simplified our portfolio of brands and SKUs, our geographic footprint, and our operating model. We launched our fuel program, delivering strong cash flow, which we have used to reduce net debt while investing in our brands and capabilities to drive future growth. We are confident in our portfolio of brands in categories that are positioned for growth with ample white space to drive distribution. We have strengthened our relationships with top customers and are partnering to enable them to support consumer trends in Better For You. We are focused on driving improved commercial execution and supply chain reliability to enable our pivot to growth in the back half of fiscal 2025. Before I close, I want to acknowledge our team members, our supply partners, and our customers. We believe that Better For You doesn't have to mean sacrificing taste, convenience, and availability. Together, we can deliver on the promise to inspire healthier living. Operator, please open the line for questions.

Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. We do request for today's session that you please limit to one question and one follow-up. Again, press star one to join the queue. And your first question comes from Jim Solera with Stephen. Please go ahead.

Good morning. Thanks for taking our question. Wendy, you had mentioned, you know, On the SPAC side, just some in-store performance driven by marketing and promotion effectiveness. Can you just give us a little more detail on what you saw specifically and then maybe what gives you confidence that some of the promo you have shifted into the back half of the year will be more effective as we progress through the year?

Absolutely. Good morning, Jim. When we look at the three brands in the portfolio, you would have heard us talking about the strength of those brands in their awareness and that our biggest challenge was actually driving distribution. While they were beloved brands, we made it very hard for you to find them. The shift in promotional activity from quarter one into the back half of the year didn't just have an absolute dollar. It also impacted the awareness just broadly with consumers because those feature and display in our brands. And that was learning that we got in quarter one. We identified that we had strong awareness and what we needed was conversion-driven marketing activation. And we did a master brand campaign on Garden Veggie. What we really needed to be doing, so we've done a pretty dramatic shift in the overall Snacks portfolio. We have the known distribution gains and the known promotional activity that moves from front half into back half. We have incremental distribution that comes in the back half. In C-stores alone, we will go from 11 of the 50% in our largest retail partner, and we've added the value channel with 20,000 stores beginning in March. So we have some really good incremental distribution and incremental availability.

What we've done to shift our marketing is to actually drive it in lower funnel activity so much more on social which you should start seeing actually be seen in the last couple of weeks to really drive awareness and consumer cohort great and then maybe a follow-up on that i know in december in particular there's a little bit of softness in salty snacks is that something that also impacted this or is it really just what you guys saw from the you know the in-store effectiveness trying to parse out you know category impact relative to kind of pain specific impact yeah the you know there is overall in the

snacking category there was softness in um in the december time period what's interesting though is better for you snacking continues to perform and we think actually those are tailwinds overall for better for you, but also for Haines. So we don't see a lot of transfer between conventional snacking and our brands. So for us, it really was about availability in all the right places, promotion, effectiveness. I think I've told you before, our brands don't respond to deeper discounts. They do respond to feature and display. So more frequency, available more often, and that's what you'll see us driving in the back I appreciate it, Taylor.

I'll hop back in the queue.

Your next question comes from the line of Andrew Lazar with Barclays. Please go ahead.

Thanks so much. Wendy, in the last several quarters, you've talked a lot about the executional issues in various segments, and certainly I can appreciate some of the wins you have in distribution coming up and having put some of the supply issues in the rear view. I guess I'm curious if you're building in some flexibility in your back-end guidance for, you know, any other potential unforeseen challenges that may arise, particularly in light of what is, as you've noted, a still very dynamic sort of packaged food environment.

Yeah, to be quite honest, and as we said in the prepared remarks, we've built in some caution in the back half, both given the history we have on some of the execution challenges, but also in, and I think we've appropriately guided for, What I would also say, though, is that each one of the challenges we faced really since we launched Pain Reimagined, the team have addressed those. We were ahead in our commercial execution turnaround in international. The impact in international in quarter two, North America was about a year, but given the ages, it gives me a lot of confidence.

You talked about the cadence in the back half of the year on gross margin and adjusted EBITDA. I was hoping you could put some perspective around the cadence when it comes to organic sales growth. Thanks so much.

Yeah, so, I mean, you know, as we look through the second half versus the first half, I mean, we did say we'd actually pivot to growth. From an EBITDA perspective, I think that was the first part of the question, EBITDA perspective, I mean, we expect to see that sequentially improve as we go through the balance of the year. We'll see that also just from a – I think it's consistent with prior calls. You know, we said that we'd have a – as we go through the – what you'll see is sequential improvement, a step up, and particularly as we get into the – So it sounds like organic, though, should pivot to growth.

It sounds like your expectation there would be even starting in the third quarter, if I'm hearing you right.

Yeah, yeah, we should be pivoting to growth. Okay, thank you so much.

Your next question comes from the line of Kamil Gajrala with Jeffries. Please go ahead.

I guess a couple of things on snacks and I guess this pivot to more on the conversion How much flexibility do you have in managing the P&L and the margins with this shift in promo activity? It looks like, you know, when you go top of funnel, we can certainly understand how you would get an increase in volume, but at the same time, you're managing a balance sheet and margin. So can you just talk about the calculus there?

Yeah, we've said before that we felt good about the amount of money that we have allocated for marketing spend, that we needed to shift to more effectiveness. So what you're seeing us do is actually shift activities, but inside the envelope of our normal spend within marketing. So just driving effectiveness first.

Okay, understood. And is this, when we think about some of the, I guess, some of that slowdown or some of that pivot, sort of what was maybe the logic on having sort of the pendulum more on the awareness side and now moving it to the conversion side? Maybe the logic for the awareness piece initially.

Yeah, I would say that a year ago, the belief was that we needed to drive greater brand biggest challenge that we had, driving both distribution and awareness. We've had a really good run on picking up distribution. In quarter two, we picked up distribution mid-single digits. And as I mentioned earlier, we have substantial distribution gains coming in the back. Own distribution gains, shifts in promotional activity, known innovation lines. What we learned, though, last summer when we did, remember, that was the first multi-brand promotion that we did, the Savor Your Summer promotion. What we found from that was that we were driving awareness where we already had high brand awareness. And in Garden Veggie, we actually have the top household penetration of better-for-you snack brands. So our issue isn't that consumers know the brand. It isn't that consumers are regularly buying the brand. And it's the frequency they're buying it, and are they buying it for a whole family, or are they buying it just for their kids? So we needed to drive more occasion-based marketing and more conversion marketing and really lean into social. Especially in Better for You is much more effective than traditional media, and we really needed to pivot more quickly. So what you're seeing is, I think, the team leaning into that kind of strategic agility.

Got it. Thank you.

Your next question comes from the line of Matt Smith with Stiefel. Please go ahead.

Hi, good morning, Wendy and Lee. Thank you for taking my question.

Good morning. Good morning.

When it comes to the second half organic sales pivot, you called out initiatives across the major product categories. If we look at just the U.S. business, would you expect growth, organic top-line growth in the second half to be broad-based as you benefit from formula distribution, snacks distribution, and the promotion shift? and you have the recovery in the beverage supply chain are there are there categories or some of those categories where you call out more confidence in that pivot to growth or more risk around them i think there is uh i'll start and i'll let lee add a little bit of color behind it but we've talked before about full recovery in infant formula as in distribution and we've said before that our velocities are back where they were prior to the supply disruption so

So you have a very meaningful pivot in Earth's Best in the back half. We've talked before, the promotional activity that shifted from quarter one into quarter. So that is also a very meaningful shift in just the, I think with beverage and in the U.S. business, there's incremental activity, promotional activity, innovation, and then the branding work that you'll see drive some growth. And then we have the continued success in our soups. It's all three brands in international and then our U.S. brands that continue to grow. So I would say those are probably the biggest drivers. And then the last I would say is Greek Odds Yogurt. We had a shift in customer distribution earlier last year. Distribution we've seen are very strong.

We talked about an increased marketing environment. Into the marketing on taste and wellness through the new master. And then as Wendy mentioned on meal prep, I mean, we're seeing really good trends, increased household penetration on Greek gods, good momentum on the international side as well.

Thank you. And as a follow-up, the initiatives you've taken on the personal care business have gotten that business to a place where you're now able to undergo a strategic review there. I'm curious if the learnings through that process, if you're at a point where you can look across your portfolio and see opportunities for similar actions across other product categories or geographies and if that's part of the shift in the Hain reimagined organic sales target where you're now moving to more of an exit rate rather than a sales growth rate across the period.

I would say from what you had identified and determined where in the portfolio. And you've seen us do that over the last week. Leverage into our maintained categories. infant formula up until this quarter we had in stabilized because we have our personal care brains and then we divested of those and now the personal margin expansion is actually ahead of where we expect it to be and significant work as you would see in the earnings lives that the team have done to tighten up the footprint picture of that will allow me in better for you and evaluate parts of the portfolio that are below top line or in margin and decide shape of those businesses, whether that's in our...

And I guess just, Bill, just as a tiny piece, I mean, you know, and we've said this before, I mean, we believe we're in the right geographies and in the right category platform. So we'll continue just to look, just to continue to optimize, you know, and then in terms of stabilize right now, I mean, it's about, we continue to assess it.

Your next question comes from the line of Michael Lavery with Piper Sandler. Please go ahead.

Thank you. You've touched a lot on distribution gains and how important that is, but then in SNACs in the second quarter, you already had mid-single-digit gains, and so maybe can you just help us understand a little more clearly what's different about the expected gains versus what you already had in hand, because obviously the sales declines accelerated despite that in the quarter. yeah the issues we had in snacks in quarter two were less about distribution absolute points of distribution because we continue to grow those it was the velocity on shelf where the real driver

was and that's where marketing activation and effectiveness and promotional activity play such a key role the continued growth and distribution is a good thing but even more important is the promotion, distribution, and driving purchase activity will be that much more important in driving the turnaround in snacks.

And then just to maybe unpack that a tiny bit further, obviously the promotional activity usually has a pretty quick consumer response where some of the marketing execution can build more over time. How should we think about, as you mentioned, some of the ways you want to kind of pivot the marketing approach How quickly do you expect to get to see results there? Does social media have a quicker response time than kind of historically, you know, other marketing approaches? Or is that really kind of a little bit of a longer-term build, too, so that we shouldn't expect anything too quickly?

You will see some improvement in quarter three. The distribution gains will be a benefit. And to your point around social, we will see that continue to build, especially as we haven't always seen that build. Distribution gains and the absolute promotional activity will be a bigger driver for us in quarter three and quarter four.

And maybe just lastly, a quick follow-up on the distribution center you had the press release on, I think, a week or so ago. Any sense of the magnitude of savings that might generate for you?

I don't think we've quantified it. I would say we had about an 800 basis. I would tell you I think the bigger benefit is the fact that it allows us to be putting our products closer to the market, feed-to-shelf, have peak promotional periods, lee-wurr, distribution, nodes.

Okay, thanks so much.

Your next question comes from the line of Alexia Howard with Bernstein. Please go ahead. Good morning, everyone.

Good morning. So the first question is really about what indications you're perhaps already seeing in the marketplace to show that this pivot in promotional and marketing spending in snacks is working. We're already about five or six weeks into the third quarter. Are you seeing evidence that the new pivot is actually working on the top line?

We are seeing improved consumption trends in market.

Okay. And then secondly, on the distribution announcement that you put out a few days ago, that sounds like a fairly significant reduction in delivery route mileage of 66%, and it seems as though it's opening fairly quickly. Is that going to have a material impact on productivity improvement, cost savings in the back half, and are there other benefits in terms of service levels and so on that that new distribution center could bring? Thank you, and I'll pass it on.

Thanks. It absolutely has a two-fold impact. It is a part of our... The team have a very good track record as we go into the back part of that as well, so it ties into that pipeline. Resupply within one or two days of our...

I'll pass it on.

If you would like to ask a question, please press star 1 on your telephone keypad. Your next question comes from the line of Andrew Wolf with CLK. Please go ahead.

Thanks. Good morning. I just want to continue on. The North American stats weakness in the quarter. Could you discuss to what extent, if any, the category captain issues that you discussed that occurred last quarter, I'm not sure if they're resolved yet, impacted the sales there? I think that was at your largest customer. Has the category been reset, or when would that be reset?

It absolutely had a material. Those will be resolved.

Now, the vendor who ran the camp, who was responsible for the category captaincy, has that vendor or anyone else kind of done a copycat type of product to the Flavor Burst? Out of curiosity.

We have not actually seen anyone try to replicate Flavor Burst. We actually have two new flavors. One is an exclusive with one customer that launches this quarter. We have another...

Okay, and just last thing is on Celestial, the ingredient shortage. Could you have a little more background on that and why it's fixing? Was that in the market, or could you maybe go to single source there? And just sort of what occurred and why that's – is there any prophylactic issue with it? Do you have to go to double source or something, or is it more just something happened in the market with a certain ingredient?

It actually wasn't in market. I would tell you that it was actually an internal execution mistake. It's a long lead time ingredient that enough wasn't purchased to have on hand. And as demand picked up at the start of peace season, we were unable to source the ingredients back the end of December.

Okay, thank you. Appreciate it.

Your next question comes from the line of John Anderson with William Blair. Please go ahead.

Yeah, good morning, everybody. Good morning. Wendy, you talked at the top of your prepared comments about Better For You as a tailwind overall in food and referenced the kind of ingredient profile of your products. And I think for the first time, really called out also GLP-1s. I'm just wondering if you could tell us a little bit more about how you view, you know, how you're defining kind of better for you within the context of your portfolio and what that's doing or not doing perhaps to shape your perspectives on innovation and messaging, importantly, to the consumer. Also throwing the GLP-1 angle in there as well.

Yeah, absolutely. This is one that I think we've mentioned before that we started a piece of work about a year ago with consumer research to really understand what consumers are looking for and better for you. Because we continue to say that we're a leader and better for you. We believe in healthier living, but we wanted to make sure that we had real science and real consumer insight to back that up. We learned from that very clear attributes the consumer was looking for. They don't want to sacrifice taste. They don't want to sacrifice convenience. They don't want to sacrifice availability and affordability. They don't want pure, but they do want healthy nudges. So it is really re-looking at our portfolio through that lens to ensure that our product has been what option to items that consumers would want in their pantry and regular part of their diet routine. So we think that we have products for consumers without having them have to set a good ingredient profile. 100% of our North American portfolio has an absence of any artificial sweeteners. We really are going to lean in, do better for you, the consumer, without sacrifice. As it relates to GLP-1, it's almost like every other diet. Keto-free, dairy-free, et cetera, consumers have particular needs, and we want to make sure that it is easier to shop our portfolio to make it easier for them to eat without sacrifice for whatever diet they're on. As we've worked with our experts to look at our portfolio through the lens of a GLP-1 diet, what products do we have that are ideal for that first three months of GLP-1? What are the products we have that are really good for in the middle? And then what are those products that are ideal for maintaining? And we will message openly to the marketplace to make it, again, easier for consumers to be able to be on whatever diet they're on. And HAME will be there to help support their healthier lives.

Great. Thanks. I guess, you know, I think you've done a good job of explaining, you know, a lot of the execution-related matters, both external and internal, that are leading you to kind of revise your outlook on the top line for the current fiscal. But, you know, what are we to make of the revision to kind of the long-term algo on the top line? what are you maybe trying baking in there um and and what are what are you trying to kind of maybe communicate uh from an expectation standpoint that you know we may not get that kind of three percent plus run rate until you know we're exiting fiscal 27. yeah i would say and and you've been really good as well as um what have you learned what's working what's not working how is that adapting as you go.

And as we've looked at both the changes we've made in the portfolio, but also execution challenges, and then importantly, the macro environment, we have tweaked some expectations around parts of the portfolio based on that. We still believe very strongly in our fuel delivery. We feel very strongly in the focus initiatives we've announced to date and the focus initiatives that we are exploring. We also feel very good about the margin expansion in the future. I would say we are ahead in productivity pipeline in supply chain, particularly in procurement and in our operations. We are behind where I would have expected us to be in revenue growth management, and you'll see us aggressively leaning into that around price pack architecture, pricing, trade effectiveness, and trade promotion. We're doing well in overall marketing awareness of our what we call our hero brands. I would say we're doing improvements based on learning to drive real execution of marketing into conversion and purchase. And we are doing a fantastic job on the commercial side and building an improved relationship with our top cut. Confident will lead to better outcomes as we go forward. But I think we've tried to then build an outlook that is acknowledging the areas that are taking longer to turn, while at the same time, the areas that are continuing to deliver. While, as Lee said, our exit rate at three plus doesn't mean that we won't get there before then. It's just us trying to set an expectation at a rate basis on an annualized number rather than a CAGR over the life of pain reimagined. So I would view it through that lens.

That's helpful. I know you asked for two questions. I'm going to try and squeeze in a third if I could. I'm just back of the envelope, Matt. It looks like, again, and we may be off on this, but the guidance for fiscal 25 on the top line almost calls for flattish kind of organic in the second half of the fiscal, I guess, depending on where you come amount of the range. So I guess what I just question is on the pivot to growth in the second half, you know, what that really means. Does that mean on a full second half basis? Does it mean you pivot somewhere in the quarter or in the second half, meaning maybe the third quarter is flatter down and the fourth quarter is up? Just some more help with the cadence of this, I think, from a modeling perspective is really important at this point.

Yeah, I'll let Lee, looking at it, And the range is pretty wide, as you can tell, because we're acknowledging the challenges in the front half and the macro environment. We're not assuming that we will just in the front half of the share.

Yeah, and I mean, you know, we're looking to pivot, as I said. So you can kind of, you know, we wanted to give guidance again on to pivot to the growth in Q3 timeframe.

Great. Okay. Thanks.

Your next question comes from the line of John Barmgartner with Mizuho Securities. please go ahead.

Good morning. Thanks for the question.

Good morning.

I wanted to come back, Wendy, to the macro environment and some clarification there. It sounds as though Better For You continues to outperform. And one of Haynes' merits is to skew towards higher income households. So are you seeing some incremental headwinds for this higher income group at the shopper level? Or is the macro commentary directed more at sort of like the retail category competition at the shelf?

I think it's more acknowledging that in general, there's a lot of volatility right now, consumer sentiment in general. What we are seeing, and probably the same thing you are, is this real bifurcation at the consumer, that at the high end, we're seeing premium and super premium continue to grow. And then we're seeing on the low end, value and middle, that's really gotten squeezed in general. And that's more of a general comment, not just specific to the Hain portfolio. And so as we look at our portfolio, we tend to play at that entry price point to premium, which we think is an ideal position. We think the consumer tailwinds as it relates to better for you and health. And as we've leaned into making our products more accessible and available to more people, you'll see our distribution gains in the discount channel and in the value channel, as well as driving distribution and growth online will continue to help us meet the needs of both consumers.

And for my follow-up, I wanted to come back to the comments on ingredients. And I understand Haynes' point of differentiation for clean ingredients, the red number three, and so on. But in an environment with a regulatory backdrop, let's say Titans, and you have larger companies required to eliminate more of these artificials, either by government directly or by consumers indirectly, I think that would sort of narrow the playing field a bit and dilute Haynes' differentiation on the shelf for quality. How do you think about the playing field potentially changing on the ingredient side? And how would it maybe require Hain to pivot or adjust in terms of how to differentiate in the future?

Well, I would hope that more companies are leaning into those ingredient claims. So I'm not viewing free from as I'd like everybody to move in that direction leads and inspiring healthier living. But we are ahead. And we think that we have inconvenience. Consumers are leaning in. But I think a focus against...

Thanks, Wendy.

Your last question comes from the line of Anthony Vendetti with Maxim Group. Please go ahead.

Thank you. I know it's been like a little over an hour. So I'll just, just a very high level question, I guess, related to an earlier question, Wendy, As you move into the second half, and I know we've talked about that a little bit, but if you had to talk about, and there's lots of variables, your level of confidence, are you highly confident that with these reduced expectations, you can hit sort of the guidance you have out there for the second half? And if you are highly confident, what are the, I guess, if you could foresee or, you know, sort of look at the second half challenges, what would be the one thing or a couple things that could, you know, make the second half not as strong as you think it could be?

I believe that we have set, we've given the appropriate confidence about kitchen, so the confidence in the beverage category as we go into the back half. And I feel good about the momentum that we have in Greek-Ogurts and the meal prep category in the international business. Fusion gains and assortment gains in the back half, but we definitely need to see the improvement in the productivity of our marketing actions play out. And I think we've built that into our outlook for the back half.

And then just a quick question on personal care. Obviously, that was very weak this quarter. When did you decide or, you know, make a decision? You're looking for strategic alternatives. And how far along is that? Is that process just starting? And do you think that will take six months, a year, or are you aggressively trying to figure out what to do with that segment? Thank you.

Yeah. Well, first I would want to say, remember in quarter two, some of the impacts in personal care relate to the SKU simplification, but for SKUs, there is a disproportionate impact of optics because of some of that SKU cleanup that doesn't get reversed in a better shape. You know how those things go, so we'll see how that plays continuing to run that care of those brands.

Okay. Thanks very much. I appreciate it.

You bet.

We have no further questions at this time. I will now turn the conference back over to Wendy Davidson, CEO, for closing remarks.

Yeah, I really want to reiterate my thanks and appreciation to our HAME team, to our supply partners, and to our customers. As we've said, we don't believe that better for you means you have to sacrifice labor, convenience, availability, or affordability, and we look forward to working together to inspire healthier living.

Ladies and gentlemen, that does conclude today's conference call. Thank you for your participation, and you may now disconnect.