Thank you for standing by. My name is Eric and I will be your conference operator today. At this time, I would like to welcome everyone to the Haines Celestial Group Incorporated Fiscal Third Quarter 2025 Earnings Call. 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 one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Alexis Tessier, VP of Investor Relations. Please go ahead.

Good morning, and thank you for joining us for a review of our third quarter results. I am joined this morning by Don Zier, Chair of the Hain Board of Directors, Allison Lewis, our Interim 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-Q, quarterly reports on Form 10-Q, 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 risk. We have also prepared a presentation inclusive of additional supplemental financial information, which is posted on our website at haine.com under the investor's 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 the call. The call is being webcast and an archive will be made available on the website. And now I'd like to turn it over to Dawn. Thank you, Alexis.

Good morning, everyone. I'm Dawn Zier, Chair of the Hain Board of Directors, and I'd like to thank everyone who has dialed in this morning. Before we get into the results for the quarter, I wanted to share a couple of updates from the Board of Directors. The Board of Directors has been evaluating the company's performance and leadership to ensure that Hain is positioned to maximize long-term value. As part of this effort, As you may have seen in the press release we issued this morning, we've announced two important actions. One, a leadership transition, and two, the launch of a formal process to review the company's portfolio. Let me begin with the leadership transition. In September 2023, we launched our new strategy, Pain Reimagined, aimed at streamlining our operations, simplifying our product portfolio, and reinvesting in our core Better for You category initiatives. As a result of these efforts, the company has improved its financial health through disciplined cash management and strategic debt reduction. Today, we have a stronger balance sheet and significantly more financial flexibility. Notwithstanding these accomplishments, we are disappointed with the overall performance of our business. After much thought and discussion, the board determined that it would be in the best interest of the company and its shareholders to transition to a new CEO. Accordingly, Wendy Davidson will no longer serve in that role effective this morning. On behalf of the company, I want to thank Wendy for her leadership and the contributions she has made to help advance Haynes' transformation and position the company for long-term success. We wish her the best in her future endeavors. The board has a leadership succession plan in place. We are executing that plan, which aims to seamlessly identify the company's next CEO. In the meantime, one of our board directors, Allison Lewis, will step into the role of interim president and CEO. We are fortunate to be able to benefit from Allison's vast industry and leadership experience. Allison has a track record of driving superior in-market execution, delivering disciplined and profitable revenue growth, and leveraging innovation to create value. She joined the Hain board in September 2024 and has spent the last 30 years working with some of the world's most respected consumer product companies, including Kimberly Clark, Johnson & Johnson Consumer Health, Coca-Cola, and Kraft Heinz. Allison is committed to making further progress on our efforts to improve performance, and the board has full confidence in her ability to lead the organization during this transition. In addition to the leadership transition, we also announced that the board has formally initiated a strategic review of the company's portfolio aimed at maximizing shareholder value. The board has retained Goldman Sachs as its financial advisor, and we will consider a broad range of potential options to enhance value. There is no set timetable for the completion of this evaluation. The company does not intend to provide further updates on this effort unless and until the Board has approved a specific course of action or determines that additional disclosure is appropriate or necessary. With that, I will turn the call over to Allison to say a few remarks and then to Lee to walk through the highlights from the quarter.

Good morning everyone and thank you for joining us today. I also want to thank our employees across the globe for their continued hard work and dedication during what has been a challenging period for the business. Over the past eight months, I've had the opportunity to serve on Hain's board and get to know the business well. When the board asked me to step in as interim CEO, I didn't hesitate because I believe in this company, its purpose, its people, and its long-term potential. As Dawn mentioned, I've spent my career building and scaling consumer brands, And I believe Hain has many of the right ingredients to succeed. Distinctive products, a strong portfolio, and a passionate team. That said, we also need to be realistic about where we are today. Our third quarter results were disappointing and fell short of our expectations. We are not where we need to be, and we cannot afford to stand still. To that end, we are taking a hard look at our strategic plan to leverage what is working and address the areas in which we need to make changes. We must face our challenges directly, and we will. This is a moment that calls for clarity, focus, and action, and that's exactly how we intend to move forward. I look forward to discussing more with you on our next earnings call. Now, I will turn the call over to Lee to walk through our performance for the quarter and outlook.

Thank you, Alison, and good morning, everyone. Our third quarter results are far short of expectations, and our full-year results will not be where we expect it to finish. As you saw in the morning's release, we reported a 5% decline in organic net sales and adjusted EBITDA of $34 million dollars over 20 below last year's performance i'll cover the financials in more detail in a few minutes but would first like to provide some color on the key drivers of the performance shortfall as well as aspects of the business we are working on to course correct the shortfall in both third quarter sales and earnings was driven primarily by four factors principally in our north american business under performance and snacks delayed timing in the expected recovery in Earth's best formula, a challenging start to the hot tea season for celestial seasonings and trade investment and inflation impacts ahead of pricing. In snacks, the promotional activity on garden veggie that shifted from the first half of the year into the back half performed below expectations, and our trade investment was less efficient than anticipated. velocities in earth's best formula were slower than we anticipated however we had double digit velocity growth in many key retailers in celestial seasonings the temporary service issues we encountered at the start of the hot tea season in q2 affected volume in the early weeks of the winter tea season well those issues have since been resolved it did impact the quarter finally pricing actions did not keep pace with trade investment and cost inflation across the portfolio. We are addressing this as we move forward. While all results in the quarter were below our expectations, we made progress in certain important areas, including international, which has returned to year-over-year organic net sales growth, having resolved the first-half service level challenges that affected that business. Sequential improvement in year-over-year organic net sales trends overall. A return to consumption growth in Celestial Tea. Productivity and efficiency savings that continue to enable us to partially offset other headwinds in the business. An ongoing reduction of working capital to improve cash generation and reduce net debt. To shift our performance, we are focused on five key drivers, simplifying our business and reducing overhead spending, accelerating renovation and innovation in our brands, implementing strategic revenue growth management and pricing actions, driving operational productivity and working capital reduction, and finally strengthening our digital capabilities. Let me review each in greater detail. First, simplifying our business. We recently announced the shift of our distribution network to move closer to our customers for improved speed to shelf and the consolidation of our office footprint in both Canada and the UK. Since fiscal year 2023, we've reduced our lease expense by over $5 million a year, while also supporting our hub-and-spoke work model. We have reduced our number of co-manufacturers by 23 percent and our raw materials and packaging vendors by 13 percent, enabling us to have fewer, more strategic partners to support our growth. We are also unlocking savings by optimizing our cost structure with significant work around our organizational structure to balance our corporate overhead with our company needs. Actions taken in this fiscal year are expected to generate over $25 million in run rate cost savings by the second half of fiscal 2026. Second, we are driving a step change in the renovation and innovation of our portfolio, including new news and snacks, category expansion in tea, and end-to-end birth-to-backpack solutions for baby and kids all while leveraging our better for you credentials third we have embedded revenue growth management initiatives across the company and are implementing early fiscal year 2026 pricing actions to mitigate inflation impacts we will accelerate our work to drive pricing improve mix and trade effectiveness across multiple brands and are rolling out new packaging to support multi-format and margin expansion across our portfolio. Fourth, delivery of our supply chain productivity is expected to be in line with prior year, which was a record year of delivery for Hain. We expect to have unlocked nearly two-thirds of the total working capital goal of $165 million by year end, and we have a solid productivity pipeline for fiscal 2026. And fifth, we are enhancing our digital capabilities to save time and money while improving our business execution. Among the areas where we are having early success in customer and product level analytics to support brand strategy and revenue growth management, we have also been able to unlock opportunities to eliminate procurement tailspens, consolidate our vendor population, and leverage scale contributing to the productivity I mentioned earlier. and improving our capabilities to drive our e-commerce performance will be a key focus moving forward. Now I will cover our financial results and outlook in greater detail before we wrap up the call. The third quarter year-over-year organic net sales decline of 5% I talked about earlier reflects a three-point decrease in volume mix and a two-point decrease in net pricing, mainly in the North America segment. Please note that we excluded from organic net sales growth trends in our personal care business, as we are exploring strategic alternatives for this business, as previously announced. We only partially offset the impacts of the reduction in net sales and ongoing input cost inflation with productivity and SG&A savings. As a result, adjusted gross margin fell 50 basis points to 21.8% in the third quarter, and adjusted EBITDA fell 23% to $34 million in the third quarter, representing 8.6% of net sales, a 140 basis point decrease from the prior year. SG&A decreased 6% year-over-year to $63 million. supported by the partial benefit from the overhead reduction actions I referenced earlier and a reduction in selling expenses. SG&A represented 16.1% of net sales for the quarter as compared to 15.2% in the year-ago period. During the quarter, we took charges totaling $8 million associated with actions under the restructuring program, including employee-related costs, contract termination costs, asset write-downs, and other transformation-related expenses. To date, we have taken $83 million in charges associated with the transformation program, which is comprised of $80 million of restructuring charges and $3 million of expenses associated with inventory write-downs. Of these charges, $31 million were non-cash. As previously discussed, the total transformation program charges are expected to be between $115 million and $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 16 percent year over year to 12 million dollars in the quarter driven by lower outstanding borrowings and a reduction in interest rates we have hedged our rate exposure on more than 50 percent of our loan facility with fixed rates at 6.1 percent based on the new credit agreement. We continue to prioritize reducing net debt over time. Adjusted net income, which excludes the effect of restructuring charges, amongst other items, was $6 million in the quarter or $0.07 per diluted share as compared to $11 million or $0.13 per diluted share in the prior year period. Turning now to the individual reporting segments. In North America, organic net sales declined 10% year over year. The decrease was primarily driven by lower sales in snacks and baby and kids. We expect North America organic net sales trends to improve sequentially in the fourth quarter, primarily driven by baby and kids on improvement in formula velocity and distribution, innovation, and the lap of skew rationalization initiatives. Third quarter adjusted gross margin in North America was 22.4%, a 20 basis point increase versus the prior year period, driven by productivity partially offset by higher trade spend and inflation. Adjusted EBITDA in North America was $17 million, as compared to $28 million in the year-ago period. The year-over-year decline resulted primarily from lower volume mix and higher trade spend, partially offset by productivity. Adjusted EBITDA margin was 7.8% as compared to 10.4% in the prior year period. In our international business, organic net sales grew up 0.5% in the quarter, led by growth in meal prep and baby and kids, and supply chain recovery from the service issues we discussed last quarter. This was partially offset by declines in beverages and snacks. We expect the international segments to improve sequentially in the fourth quarter as we realize the benefits of pricing actions already taken, new innovation, and new contracts in non-dairy beverage. International adjusted gross margin was 21.1%, approximately 130 basis points below the prior year period, driven by inflation, partially offset by productivity. International adjusted EBITDA was $22 million, a decrease of 10% compared to the prior year period, primarily driven by inflation and net pricing inclusives of our own label contracts partially offset by favorable volume mix. Adjusting EBITDA margin was 13.2 percent down approximately 120 basis points year over year. Now turning to category performance organic net sales growth in snacks was down 13 percent year over year driven primarily by garden veggie as well as continued category softness so we did see improvement in distribution in the quarter up mid single digits across snacks in baby and kids organic net sales growth was down six percent year over year driven by lapping formula sales last year at a key retailer that was lost in the spring of 2024, softness in pouches, and our SKU simplification efforts. However, excluding the lost customer, Earth's Best Formula is showing double-digit consumption growth, and Ella's Kitchen gained from share in both value and volume in its core wet baby food category. And we saw continued strong growth in Earth's Best snacks and cereal, with high single-digit and high-teen dollar sales growth, respectively. In the beverage category, organic net sales growth was down 7% year-over-year, driven by non-dairy beverage and tea. Despite the category headwinds, our non-dairy beverage brand, Joya, is growing consumption high single digits and gaining share. Celestial Seasoning's organic net sales growth in the quarter was impacted by a challenging start to the hot tea season. but consumption returned to growth in the quarter, with bagged tea up low single digits. Our largest global category, meal prep, returned to growth in the quarter, up 1% year over year. We continue to see strong growth in branded soup in the UK, with Hain Brands growing pound sales by over 20% and gaining 450 basis points of share. And Greek God's Yogurt grew dollar sales high single digits in the quarter, supported by a brand new campaign that drove increased household penetration. Shifting to cash flow in the balance sheet, free cash flow in the third quarter was an outflow of $2 million, compared to free cash flow of $30 million in the prior year ago period. The decrease was primarily due to lower EBITDA and an increase in inventory to support service level recovery, as well as, to some extent, a pull forward of certain SKUs to mitigate tariff exposure. We continue to see the benefit of our days payable outstanding, as well as the improvement in our days inventory outstanding in the third quarter. Days payable outstanding improved to 61 days from 37 days in fiscal year 23 and from 46 days in Q3 fiscal year 24. Days inventory outstanding improved to 79 days from 82 in fiscal year 23 and up from 77 days in Q3 fiscal year 24. We continue to make progress towards our targets of 70-plus days payable outstanding and 55 days inventory outstanding by fiscal year 2027. CapEx was $7 million in the quarter, with down from $12 million in the prior year period. We have ample capital spending planned to enable both our productivity delivery and capacity-building projects, and expect total spending to be less than $40 million for fiscal year 2025. Finally, we closed the quarter with cash on hand of $44 million and net debt of $665 million. Our net leverage ratio, as calculated under our credit agreement, ticked up slightly to 4.2 times. We have proactively amended our credit agreement to afford ourselves more flexibility as we navigate the next several quarters. The amended agreement provides for a maximum net secured leverage ratio of 4.75 times for the quarter ended June 30, 2025, through and including the quarter ending March 31, 2026. Paying down debt and strategically investing in the business continues to be our priorities for cash, and we reduce net debt by $8 million 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. Looking ahead, I'd like to touch briefly upon the macro environment, specifically regulatory developments. While there is material uncertainty related to timing, level, and potential impact of tariff proposals, What we do know is that most of our products are produced and sold in the same region, making us less subject to tariff impact on finished goods and cross-border shipping. We have some exposure in raw materials that cannot be grown or sourced in the U.S. However, based on what we know today, we do not expect any material cost impact in fiscal 2025, and we are actively working to mitigate any impact going forward. This includes pre-building inventory ahead of tariffs and reallocating resources within supply chain and R&D to accelerate work to reformulate and shift manufacturing. We will continue to monitor these developments, as well as the customer landscape and consumer behaviors, as we refine our execution strategy for fiscal 2026 and beyond. regarding near-term performance expectations we are adjusting our financial outlook for the year based on slower than previously anticipated volume recovery for the full year fiscal 2025 we now expect organic net sales growth to be down approximately five to six percent adjusted EBITDA of approximately 125 million dollars gross margin to be approximately 21.5

percent and free cash flow of approximately 40 million dollars with that let me turn the call back to allison to wrap up thanks lee looking beyond this fiscal year we remain optimistic about the future and potential for haynes celestial we are a pure play better for your company at a time when the marketplace desire for better for you products continues to grow We have strong brands that play in attractive categories, and we have a material distribution white space opportunity as we work to make better-for-you options more available and accessible to all consumers. Our business foundations are solid with a culture of driving strong operational productivity, a positive free cash flow profile, and a proven ability to reduce debt. We are committed to evolving our strategy with an eye on continuous improvement in margins, innovation, and top-line growth. We believe the external environment presents a unique opportunity for Hain and that the challenges we face are largely within our control. We are prioritizing simplifying the business, step-changing renovation and innovation in our brands, accelerating revenue growth management and pricing actions, generating productivity and overhead cost savings, and investing in digital capabilities. We believe this focus will enable us to drive improved financial performance and deliver value for our shareholders. We appreciate your time today and look forward to answering your questions.

At this time I would like to remind everyone in order to ask a question please press star followed by the number one on your telephone keypad. Participants will be allowed one question and one follow-up question. Your first question comes from the line of David Palmer with Evercore ISI. Please go ahead.

Great, thank you. I wanted to ask about, you know, the two big category snacks in infant nutrition and, you know, obviously Earth's Best and Garden Veggie. I know those are, you know, probably key growth areas in the minds of the board. And I'm wondering, in some of the rhetoric from the management that Hain could be the best of both worlds. It could have the better functionality versus smaller brands, smaller companies out there, but be more nimble than large companies. You mentioned some things about pricing not keeping up with trade investments, and it looks like we're having some surprising results here in the second half with Garden Veggie. I'm just wondering what is it about the execution and the insides of Hain that you think need to be fixed to get to that ideal world that you want to be in? And then maybe, you know, complimenting that is, you know, in what ways has the category competitive environment or the consumer kind of changed in ways that are impairing the growth of these two key growth areas of the company? Thank you.

Hi, David. Maybe I'll kick off here in terms of snacks. As you look at kind of the underperformance overall, you're right. That was one of the key areas. I mean, from a top line perspective versus what we were anticipating, 80% of our top line shortfall came in North America and two thirds of it being in snacks. um i would say a couple of things i mean and it ties into kind of our execution our promotional events did underperform expectations across club and mass um and then we are seeing and you're probably seeing this we are seeing category softness um with only a few better few brands driving growth during the quarter um you know we still feel really good overall um around kind of the brand health, specifically with garden veggie. Just looking more recently, we've had resets happening across major customers. But for those that we have executed, we did see improvement, but not to the level that we expect. So I think we have a lot more work to do to rebuild velocities. Part of this is continuing to drive marketing. It's driving the things that we outlined you know really accelerating brand renovation and innovation so um from a garden veggie perspective you know our marketing efforts should um should start to show benefits in q4 we do have new flavor innovations um the second one and you mentioned was was around baby and kids you know if we kind of peel that back a little bit um market trends remain strong on on snacks and cereal within baby and kids and i'd say formula is performing well but we're lapping a large year ago uh volume that we had that muted the performance so um you know we feel good about that overall um we we did have some uh headwind from our exit from uh earth's best jars um but again i'll tie back to the the five key drivers we talked about that allison talked about which is really accelerating brand innovation and renovation.

And just with maybe – I don't think we need to talk too specifically about what one retailer or another has done, but where you are having issues with reshelving, does it really come down to as simple as velocities, maybe not keeping up with key competitors, or maybe give us a sense of the competitive environment on shelf for your key snack brands, and I'll pass it on.

Yeah, I mean, I think part of it is we talked about placement when we did the reset. So again, I think some of that gets down to execution. On our side, we have had some execution challenges. So I think it's done. It's that we've talked a little bit about, you know, we have rebuilt the North American commercial team. That will be a focus moving forward that we have to drive that execution. Thank you.

Your next question comes from the line of Jim Solera with Stevens Inc. Please go ahead.

Good morning, Allison Lee. Thanks for taking our question. Maybe starting off with a high-level question about visibility just for both the remainder of this year and then as we on a kind of a go-forward basis. It sounds like the underperformance in the quarter were all events that popped up as the quarter progressed, and if I can characterize it, correct me if I'm wrong, but weren't really on your radar at the end of the second quarter. And so is there anything, whether it's an investment in, you know, corporate assets or talent internally that you guys can invest in that you'll have maybe better forecasting or better visibility to address some of these headwinds as they pop up in real time?

Yeah, I think it's a great question. And I think we talked before we have some made some investments, but we're falling far short in terms of kind of some of our forecasting. I think the other thing and the thing I would just tie back to is, you know, our investment in our commercial team will drive, you know, much more. I think we said, you know, now eight of our top nine, we've got top to top linkage with our key customers that would drive much more visibility. The other thing is, you know, investing, continuing to invest in some of our digital capabilities, getting this information, you know, far more real time. So I think those things, you know, will will help us move forward. But we do have to make it kind of a step change there.

OK, and then following up on David's questions on the snack side of the business, if you could maybe just give us if you have any detail on, you know, particularly the underperformance on the promo, because I know it's something that you guys were excited about. And I believe you had some distribution gains in the quarter as well. So if my numbers are right, I think sequentially snacks were basically flat from 2Q to 3Q in terms of the rate of decline. But obviously in 3Q, you had a lot more support in market and I think distribution gains alongside that. So just any incremental color there about why those might have not had the same uplift as you anticipated earlier in the year.

Yeah, so a couple of things. And you kind of hit it on the head. We did have an underperformance in terms of the list that we thought we were getting with the promo. I mean, we were about 80% of expectations. You know, I would say also, you know, it was more challenging if we look at club. There was more competition from both Betterview and conventional than in any prior year. So there was a challenge of, you know, share of wallet amongst members. you know mass was was really the poor in-store execution by retail partners so and I think we talked a little about that before but we you know we missed some key foot traffic in the first week there so again you know really gets down to you know we have to kind of strengthen our overall execution there but and you've seen this I mean the overall snacks category itself I mean it's both better for you um and then the broadest next category you know has really softened so um you know again we're driving and the key thing is focusing in then on driving continues to drive

that kind of uh innovation got it thank you uh back in the queue your next question comes from the line of komil gajrawala uh with jefferies please go ahead yeah uh hey everybody good morning Can we maybe just talk a bit more about the strategic review?

What specifically is the mandate? Is it portfolio related? Is it something bigger? Maybe if you could just dig into – provide us maybe some more details other than what we see, obviously, in the press release.

Thank you for your question. This is Dawn. As we said in the press release, in light of the recent performance, the Board decided that a thorough evaluation of the strategy and portfolio was warranted to determine the best approach to maximize our shareholder value. We are early on in that process. The review will consider a broad range of strategic options to enhance value, but it really is too early to comment on any specifics says we're early in the valuation.

Okay, got it. And then when you, as it relates to some of the decisions that gets made today is, you know, obviously we've gone into sort of a difficult macro environment and a particularly difficult macro environment for Max. And so, you know, to what degree is it sort of company specific versus the fact that it's just a harder sort of environment than it was before.

Yeah, I think it's a mix. I mean, you know, the categories, I kind of sound a bit like a broken record, but the categories are definitely softer. You know, there are challenges, you know, but then the piece of this is kind of the execution and why we focus on kind of the five key drivers to shift our performance. So it is a mix. But as I said, you know, our biggest top line shortfall was in snacks. That's the category that, you know, seems to be most pressured right now.

Okay, got it.

Your next question comes from the line of Ken Goldman with J.P. Morgan. Please go ahead.

Hi, thanks. You talked about the key drivers to shift performance, simplification, innovation, productivity, and so forth. I think one of the questions we're getting this morning is sort of what's different this time, right? These are a lot of areas that we've heard from the past from a variety of Hain management teams that the company will lean into. So I guess, you know, the question I would ask is what can you discuss today in terms of, you know, what actually is being done differently and what can be implemented in the next year in a way that really can make a difference in near-term shareholder value? Because I think what we're hearing some feedback on is, yeah, this sounds great, but we've heard all of it before a few times.

Hi, it's Alison. Let me jump in here and I'll give you a little bit more of a philosophical point of view, given that I'm brand new in the role and I need some time to assess exactly what's going on. But on a broad basis, what I would say is, you know, throughout my career, I've seen in consumer packaged goods that, you know, great marketing, today that's digital first, great innovation, superior execution, both in bricks and clicks, as well as strong revenue growth management, inclusive of pricing are really the levers that drive growth on the business. That combined with, you know, strength in terms of how you manage your P&L and all the activities against margin accretion both at the gross margin level and then obviously at the EBITDA level are the things that you know make the machine tick so to speak. That being said what I would say with regard to HANE is that we haven't executed all of those things as well as we need to. I can't give any specifics today but what I can tell you is my plan is to go in to quickly assess and to really create focus against the things that are going to drive the greatest return most quickly. And again, my experience would say when you do that, you can make a difference. And again, I look forward to talking to you in the next earnings call about some of the areas of focus and what we're doing there.

This is Dawn. I'd just like to jump in again from the board perspective. We believe that Allison has a track record of really driving superior in market execution and delivering disciplined and profitable revenue growth and leveraging innovation to create value. There's more that we think we can do on that in all those areas. We heard Lee talk about simplifying the business and overhead and um we've taken actions over the last six months that will will the haine reset actions that we've taken in terms of those overheads we believe there's significant opportunity on rgm and pricing actions that we still can take and strengthening our digital capabilities and growing e-commerce so there are things that can be done differently and will be done differently as we move forward okay thank you for all of that i'd like to ask a quick follow-up if I can.

Are there actions you can take to clean up the balance sheet, right? The leverage ratio keeps rising and you just amended your credit agreement to remain compliant, but what can you do? Are there other creative ways that you're thinking about now to kind of make the stock a little more investable from that perspective as well?

So just one thing, yeah, we didn't amend it to be compliant. We were compliant as we closed the quarter. What we did amend it to do was just to give us flexibility moving forward. So I think what we have to continue to do, and we've had a really good track record of this, we have to continue to drive the working capital reduction. We still see some opportunity there, specifically kind of in the inventory area. We actually inventories were higher a bit in Q3, and I think we'd mention that. But so continuing to drive that, continuing just to look at our portfolio overall, and this is the whole thing with focus. So we are going to be kind of doing all of those things. At the end of the day, we have to then just drive overall business results. Obviously, deleveraging is us delivering on EBITDA. So it's all of those factors.

I guess just the last thing I would say is, you know, we talked a bit about it before is, you know, we have some tail assets out there we are continuing to clean up the portfolio on those as well your next question comes from the line of michael lavery with piper sandler please go ahead thank you good morning i would look to get your perspective on on the brands and i guess in the past Hain has characterized some of the positioning as sort of a gateway premium or approachable premium, but it can suggest neither the best value or lowest price for the consumer and also neither maybe the pricing power of a real super premium or truly premium brand. In that middle ground, it's proven tough for a lot of companies the last few years. Is that the right place to be? How do you think about the brand attributes that are the most appealing as you go into this portfolio review?

Let me jump in here. It's Alison. I think that the way we have to think about brands is our role is to create value in the brand, value in the brands through the innovation, value in the brands through the marketing, value in the brands through the packaging mix. the channels that we distribute in and when you do create that value in the brand you can actually you know charge an appropriate price that the consumer is willing to pay so when lee talks about the five areas of focus and we talk about revenue growth management a big part of revenue growth management is understanding where those value creation levers lie and then pricing for those value creation levers. So I wouldn't put us in a place where we say, this is the price space we live in. Our role is going to be to continue to trade consumers up and really drive them against paying for our brands, what our brands are worth. And, you know, if you look today to, I think the point that you raised, some of our brands are not as premium as maybe they should be in the marketplace. That's some of the data that we're seeing. And so that's our opportunity to bring more value to those brands so we can charge more and drive that margin accretion and that value overall for our business.

That's helpful to color. Maybe a related follow-up, kind of similarly, a little bit higher level.

As you look across the portfolio, obviously a fair number of brands and categories and that'll evolve a bit further but is there a right to win that you would say you have as a company and and how do you think about what that might be yeah i mean we we obviously definitely have a right to win as a company um you know i again i i think um you know for us um what we have to do and again i would tie us back to the five drivers that we said, I mean, we have to accelerate our brand renovation and innovation. I think that really supports kind of our right to win. We've talked about some things from a commercial execution standpoint that we've invested in right now that will also support our right to win. So I think both of those things, you know, driving the productivity so that we can continue to invest back into our brands as well.

And I would just add that, you know, when you think about right to win, I mean, first of all, we are in very attractive categories. The better for you categories continue to outpace the mainstream categories, even in snacks that has slowed. So we are in a very attractive place from that standpoint. In terms of our specific right to win, what's critical is ensuring that we're giving consumers reasons to buy. And that is where, you know, the marketing and the innovation comes in. And that is an area that will continue to double down our focus on. As Lee has noted, we have some more work to do in specific categories. But there are some bright spots when you look at international returning to growth this quarter. When you look at our tea business in North America returning to a positive consumption growth space. Some of the baby segments, if you actually break down total baby and kids, are growing double digits. That's extremely positive. So we've got to build on our strengths and where we have the bright spots. And then what we have to do is clearly double down our focus on snacks. And so that's part of, as Don spoke about, the strategic review and how do we maximize the value overall for our business. But I do believe, given the categories that we participate in, that there is opportunity for us, and my plan is to double down and focus on that opportunity.

And just to build on that a little bit, we said, Snacks, we've talked about this before. We've got incredible awareness. We have an opportunity, though, to elevate our messaging with consumers around the benefits and the claims. You know, and we are focused. We do have a strong pipeline of new coming from the SNACS portfolio in 2026 that will bring some of that renovation and innovation. So, again, the continued focus, you know, and execution of that.

Thanks for all the color. Thank you.

As a reminder, if you'd like to ask a question, please press start, followed by the number one on your telephone keypad. Your next question comes from the line of Anthony Vantetti with Maxim Group. Please go ahead.

Yes, thank you. So, you know, just getting back to the higher level question, you know, in terms of, you know, strategy, I guess we go back to when Engage Capital was involved and the transition from, you know, founder or co-founder Erwin Simon to Mark Schiller. It seemed like, you know, the business was being reviewed and the focus was being narrowed onto businesses and categories that made sense. And the feeling was, at least the time the stock responded, was that that was happening. And engaged, was on the board, and Mark had called a number of products and streamlined a lot of the business, you know, got rid of a lot of excess capacity, businesses that were not profitable, so forth. And the stock went up into the 30s and then engaged, exited. But then Mark exited, Wendy came in. And again, there was this, you know, Hain reimagined, there was a new strategy. And it just imploded. And the stock has cratered now to change. I guess, what was Mark doing wrong that needed to be changed? And then what exactly did Wendy do that was clearly not working that got us to this point?

I'll take that question. I'm sure you can appreciate that the dynamics, the business is very dynamic. And certainly as we look over the past five or six years, there's been a dramatic change in the macro situation and in the dynamics of the business. So the board and the management team are constantly reassessing and looking at different options to move forward. I'm not going to go back and comment on what Mark did, what Wendy did. They both did a lot of things, right? It's just we are in a very dynamic environment. We are responding to that environment, and we are moving forward in a way that makes the best sense for the company and our shareholders. And as we do our strategic review, we will report back at the appropriate time if and when we take any action.

So one of the things, just to follow on the pricing right in this environment uh consumers are probably price sensitive is is taking pricing working in this environment um is that also under review is everything under review um i'm just trying to figure out and then how long do you think this review will take in terms of the business to get back on track what's your best estimate yeah so just on the pricing, that is definitely under review.

We have probably, you know, missed the ball a little bit on the pricing execution. So, you know, and investing, and I think we mentioned this, you know, as one of the key focus areas is, you know, strategic revenue growth management. We've talked about that before, but we've really kind of turbocharged that and kind of standing up the capabilities on that. So, yes, pricing is under review. I mean, we are taking pricing in both North America and international. And again, we're going to be really focused heavily on revenue growth management.

The other thing that I'll just add in here, I think it's very important that we focus in on where the challenges lie. If you look at the results for the third quarter, what you see is 80% of that shortfall is North America. And within North America, the majority of that shortfall is snacks. So again, as I come in and look at where do we need to double down, it's actually some pretty clear areas. And in other parts of the business, we are seeing some bright spots. And I think that's important to keep elevating those bright spots and focus in on the isolated challenge areas and really make a difference against those. And And that will make a difference on the business as well.

Okay. Thank you so much for the call. I appreciate it.

Your next question comes from the line of Andrew Wolf with CL King. Please go ahead. Thank you.

I also wanted to ask about pricing. And I know you've answered it a couple of ways, but I just wanted to ask, you know, one of it, I think Alison mentioned is more structural, getting the value equation right for, you know, either pre-animizing brands if that's the case or what have you. I wanted to ask more of a process question. And I think, you know, you kind of touched on it, but is it a lack of a centralized approach or standardization? You know, other companies did, you know, in the space also had a tough quarter on pricing because I think, you know, commodities kind of zoom pretty rapidly. And, you know, talk about a dynamic market, you know, there's a lot going on. But for Hain specifically, is this a process thing or more structural to get, you know, to get the pricing to where it should be versus, you know, cost inflation?

No, I mean, a couple of things. I think we have centralized the approach a lot more. I mean, obviously, it's driven by kind of analytics are really stepping up that piece of it. But it centralized more, more accountability. So, you know, within RGM, we have, you know, stood up revenue growth management accountability into both regions that's linked across and, you know, really being pushed then by the finance organization to make sure that we're getting exactly out of it and it's reflected and coming through in the P&L. So that's something that we really stood up. We had before, but we needed to put a lot more discipline around it.

Yeah, and I'll just build on pricing and revenue growth management, which is really one of the levers with pricing, one of the levers within revenue growth management. You know, I was at Coca-Cola 20 years ago when we started rolling out revenue growth management in North America. And what I will tell you is it is a capability that is very, very important. But at the same time, it does take some time. We have clearly missed the opportunity there in totality. But But we have put the capability in place, and now we just need to double down with focus on some of the key levers, pricing being one of the biggest ones, and then mix probably the second biggest one. So again, you should be seeing more on that, but that is a key area of focus, as Lee has highlighted a number of times, in terms of the five areas that we are going to be putting our attention against.

Right. And the structural question is, you know, I don't know how much you can answer this given you're under a board review, but when I look at the categories that are, you know, meal prep turning up and, you know, snacks being at the other end, you know, the knock on hand as a entity was, you know, was too diverse, you know, too much stuff. and you know and uh to manage uh yet meal prep probably is the most you know fragmented management uh conundrum and it's doing the best and maybe and you know snacks is doing you know not as well even though you seemingly are well positioned um so i kind of think maybe there's a competitive intensity issue uh within the brands and maybe that's you know where the company um might want I know you've got a review coming in, but it's just kind of an interesting thing where it does seem in meal prep where perhaps things are a little less intense on the competitive side, and yet the company is pretty fragmented and has a lot of different brands.

It's interesting that that's where things are doing well.

I don't know if you have any – the board has already thought about this or management internally that you might want to comment on.

Yeah, this is Dawn. you can be assured that we're looking at a broad range of strategic options to enhance value we're looking across the entire portfolio as we warranted it's time to do a thorough evaluation of both the strategy and the portfolio and we'll report back as appropriate when we have more information your next question comes from the line of john baumgartner with mizuho please go ahead good morning thanks for the question i wanted to come back to the vision of the portfolio you know we've seen multiple teams speak to the perceived brand strengths and you know growth through

distribution has been the strategy for 25 30 years but the stickiness of distribution and the velocities have been recurring challenges and i'm curious as part of this review process assessing the external variables whether it's private label making larger inroads in health and wellness regulatory changes that might result in mainstream brands, improving their health credentials. Is it possible that Hain can add more value through the supply chain, you know, producing for a private label, becoming a co-manufacturer in some cases? I'm curious, you know, what specific guardrails or actions are you sort of ruling out at this point in terms of the vision for the business going forward?

I can't speak to what, I mean, I think everything will be kind of on the table for the review. so i can't speak to any specifics of what is and out at this point you know to be fair allison has just come on so um we kind of need to go through and and look at all kind of the value level leavers out there thank you your next question comes from the line of john anderson with william blair please go ahead good morning thanks um you know this may not be a fair question lee at this point but i'll ask it anyways um you know as you as you look ahead and kind of given what you know

now about the five you know focus areas that you're really looking to um to lean into to try and drive some improved uh performance and you've seen you know diagnosed you know where the uh majority of the current challenges are. How would you have us think about fiscal 2026 at this point since all of us asking questions here are going to have to establish a view on fiscal 2026? Are there some boundaries or guardrails you could put around how you're thinking about the possible performance of the business as you exit fiscal 25 here in a month, month and a half. Thanks.

So, John, thanks for the question. I think right now we're not giving guidance or perspective on 2026. We're kind of working through that, you know, working through the kind of the five drivers, but also kind of, as we've talked around, kind of strategic portfolio review.

So it's too early for us to have a perspective on 2026 at this point and that would be done during our normal cadence cycle which as you know would not be on this call for 2026. okay and i guess a question for allison um you know given giving your background you know a number of um large kind of cpg businesses whether it be you know kmb or johnson johnson consumer coca-cola i mean I mean, this is a, you know, a different kind of situation, I suspect, than the most larger, you know, more stable businesses. Are there experiences that you've had in the past at those companies or in other situations that you think, you know, bring, you know, will allow you to kind of add some value as you step in as interim here during this process?

Absolutely. So you're right. My experience reads large company, but within those large companies, I've had many experiences working and leading much more smaller, agile brands. You know, I was a general manager and president of Odwalla at Coca-Cola, which was the, you know, natural food and beverage brand at Coke. In my other companies like Johnson & Johnson, I was there and we acquired a number of different companies which were small, agile, fast-moving organizations. So I read big, but I have equal experience on small. I've worked on businesses that are, you know, declining, that we've needed to turn around, that are more steady state, that are also fast-growing. And, you know, there's not a lot of experiences I haven't had in my career, which I think brings a breadth and an insight that I believe will be of value in my role as interim president and CEO.

And the board has asked Allison to step in because she is a ROLA Purse Please operator with an extraordinary track record, and she will get into the details of the business as we go forward and make sure that we're executing against the five key levers that Lee and her have both talked about.

Okay, one more follow-up. Again, I don't know to what extent you'll be able to answer this but um you know when when we we roll around to the the fourth quarter or the fiscal uh 25 call you know at that point would you expect to have you know a material update on the strategic portfolio review it's as i said earlier this is dawn it's too early to comment on that we will update um at the appropriate time when when we have information to share can't commit to any timeline at this point but appreciate your question okay thanks i will now turn the call back over to allison lewis for closing remarks please go ahead well thank you everyone for

joining today and your continued support um i i i think we'll look forward to speaking with you next quarter where i'll have a little more insight on the business and be able to better answer some of your questions but look forward to that next call and most importantly i very much look forward to digging in ladies and gentlemen this concludes the call thank you all for joining and you may now