Loading...
01/11 04:07
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary indicates several concerns: a lack of specific guidance on key metrics, ongoing strategic reviews without updates, and expected leverage increases in the short term. Despite initiatives like SKU rationalization and cost reduction, these are offset by distribution losses and restructuring efforts. The Q&A highlights management's avoidance of specifics, contributing to uncertainty. Overall, the sentiment leans negative due to the uncertainties and short-term financial pressures.
Organic Net Sales Declined 11% year-over-year, driven by lower sales in both North America and International segments. The decline reflects an 11-point decrease in volume mix and flat pricing.
Adjusted Gross Margin 20.5% in the fourth quarter, a decrease of approximately 290 basis points year-over-year. The decrease was driven by lower volume mix, cost inflation, and higher trade spend, partially offset by productivity.
SG&A Expenses Decreased 7% year-over-year to $67 million in the fourth quarter, driven by a reduction in employee-related expenses. SG&A represented 18.6% of net sales in the quarter compared to 17.3% in the prior year.
Adjusted Net Loss $2 million in the quarter or $0.02 per diluted share, compared to adjusted net income of $11 million or $0.13 per diluted share in the prior year period. The decline was driven by lower volume mix and higher trade spend.
Adjusted EBITDA $20 million in the fourth quarter compared to $40 million a year ago. The decline was driven by lower volume mix and higher trade spend, partially offset by productivity and a reduction in SG&A expenses. Adjusted EBITDA margin was 5.5%.
North America Organic Net Sales Declined 14% year-over-year, primarily driven by lower sales in snacks and, to a lesser extent, Meal Prep.
North America Adjusted Gross Margin 19.2%, a 340 basis point decrease versus the prior year period, driven by lower volume mix, primarily in snacks, along with higher trade spend, partially offset by productivity.
North America Adjusted EBITDA $10 million as compared to $21 million in the year-ago period. The decline resulted primarily from lower volume mix and higher trade spend, partially offset by productivity and a reduction in SG&A expenses. Adjusted EBITDA margin was 5.1%.
International Organic Net Sales Declined 6% in the quarter, primarily driven by lower sales in Meal Prep and Beverages.
International Adjusted Gross Margin 21.1%, approximately 270 basis points below the prior year period, primarily driven by cost inflation and lower volume mix, partially offset by productivity.
International Adjusted EBITDA $21 million as compared to $27 million in the prior year period. The decrease was primarily driven by lower volume mix partially offset by productivity and net pricing. Adjusted EBITDA margin was 13.3%.
Free Cash Flow Outflow of $9 million in the fourth quarter compared to free cash flow of $31 million in the year-ago period. The decrease was primarily due to a decline in cash earnings.
Days Payable Outstanding Improved to 65 days from 37 days in fiscal year 2023 and 52 days in Q4 fiscal year 2024.
Days Inventory Outstanding 88 days, up from 82 days in fiscal year 2023 and 79 days in Q4 fiscal year 2024.
CapEx $6 million in the quarter and $25 million for the year.
Net Debt $650 million after a reduction of $14 million in the quarter.
Garden Veggie product renovation: Revamped better-for-you credentials with improved flavors, real cheese, real veggies, no artificial colors or flavors, and better-for-you attributes like avocado oil.
Hartley's Juicy Jelly pouches: New on-the-go format launched in the U.K. with real fruit juice, no refined sugar, artificial sweeteners, or colors, supported by a high-reach marketing campaign.
Celestial Seasonings Anytime Wellness teas: Launched four added benefit teas for all-day enjoyment, marking entry into the nonsleep wellness segment.
Greek Gods Yogurt expansion: Expanding into the single-serve segment with more live and active cultures than competitors.
New Covent Garden soup value pack: Launched 1kg value pack in the U.K., targeting larger families, with strong incremental category and brand growth.
E-commerce growth: North America e-commerce grew 10% in fiscal 2025; U.K. soup online share increased from 31% to 34%.
International market share: Gained market share across the U.K. business despite category-wide challenges.
Cost reduction: Committed to a 12% reduction in people-related SG&A costs and simplifying operations by moving to a leaner regional operating model.
Restructuring program: Increased scope of restructuring program with expected charges of $100-$110 million by fiscal 2027.
Productivity savings: Delivered $67 million in productivity savings in fiscal 2025 and targeting $60 million in fiscal 2026.
Working capital improvements: Improved days payable outstanding to 65 days and targeting further inventory reductions.
Portfolio streamlining: Exiting unprofitable SKUs and categories like meat-free products in North America to focus on high-growth, high-margin areas.
Innovation hubs: Established two innovation hubs in North America and International to enhance speed and output.
Revenue growth management: Implemented pricing actions across nearly the entire portfolio to offset inflation and improve margins.
Digital and social marketing: Shifted focus to digital and social-first marketing, achieving 80 million impressions per month internationally.
North America performance: Velocity challenges and distribution losses in snacks negatively impacted performance.
International performance: Category-wide softness in wet baby food and unusually warm weather affecting soup sales.
Global operating model: The model inflated cost structure and slowed decision-making, making the company less nimble and less profitable.
Pricing actions: Lack of significant pricing actions during high inflation years led to reliance on productivity improvements, which were insufficient to offset higher costs.
Innovation and e-commerce: Underinvestment in innovation and e-commerce resulted in underperformance in key growth areas.
Cost structure: High cost structure due to global infrastructure and complexity in operations.
North America snacks category: Falling behind competitors due to lack of innovation and slower execution.
Meat-free category in North America: Decision to exit the category due to structural disadvantages and declining performance.
Trade spend: Higher trade spend without sufficient returns, impacting profitability.
Debt and leverage: High net debt of $650 million and leverage ratio of 4.7x, with a long-term goal to reduce leverage to 3x adjusted EBITDA.
Inventory management: Days inventory outstanding increased, indicating inefficiencies in inventory management.
Restructuring costs: Increased restructuring charges expected to reach $100-$110 million by fiscal 2027.
Revenue Growth Management: Revenue growth management initiatives are planned across nearly the entire portfolio, including pricing actions in North America and International segments. Strong retailer acceptance of pricing actions in tea, baby, and kids categories has been observed. Premiumization and price pack architecture initiatives for snacks are planned for fiscal 2026.
Cost Reduction and Restructuring: The company is committing to an incremental 12% cost reduction in people-related SG&A. Restructuring charges are expected to be $100 million to $110 million by fiscal 2027. Aggressive cost actions include unwinding global infrastructure and moving to a leaner regional operating model.
Innovation and Product Launches: New products are launching across the portfolio in fiscal 2026, including revamped Garden Veggie snacks, Juicy Jelly pouches in the U.K., Celestial Seasonings Anytime Wellness teas, and Greek Gods Yogurt single-serve products. The company aims to significantly increase its contribution from innovation to growth.
Portfolio Simplification: The company plans to exit unprofitable or low-margin SKUs and businesses where it is structurally disadvantaged. For example, the number of tea blends will be reduced from 91 to less than 55 over the next two years. The Yves product line in the meat-free category in North America will be discontinued.
Digital and E-commerce Growth: The company is accelerating investment in e-commerce and expects to grow at or above category rates in fiscal 2026. Digital and social-first marketing strategies are being emphasized to drive improved ROI and reach.
Productivity and Working Capital Efficiency: The company expects to deliver more than $60 million in gross savings before inflation in fiscal 2026. Material reductions in inventory levels and improvements in accounts payable are planned to generate meaningful cash benefits.
Capital Expenditures: Capital expenditures for fiscal 2026 are expected to be approximately $30 million.
Financial Flexibility and Debt Reduction: The company aims to reduce balance sheet leverage to 3x adjusted EBITDA or less in the long term. Free cash flow for fiscal 2026 is expected to be positive, supported by disciplined inventory management and progress on payables.
The selected topic was not discussed during the call.
The earnings call reflects mixed signals: a decline in net sales and adjusted EBITDA, coupled with cost inflation, negatively impact sentiment. However, the company is implementing cost reductions and restructuring, which may improve future performance. The Q&A indicates some optimism for improvement in the second half of the year and stable pricing elasticities. Despite the financial challenges, there is no strong negative sentiment from analysts. The strategic execution risks and financial challenges temper any positive impact from the restructuring efforts, leading to a neutral sentiment overall.
The earnings call summary indicates several concerns: a lack of specific guidance on key metrics, ongoing strategic reviews without updates, and expected leverage increases in the short term. Despite initiatives like SKU rationalization and cost reduction, these are offset by distribution losses and restructuring efforts. The Q&A highlights management's avoidance of specifics, contributing to uncertainty. Overall, the sentiment leans negative due to the uncertainties and short-term financial pressures.
The earnings call indicates several challenges: declining sales, underperformance in key segments, unresolved execution issues, and leadership transition. Despite some strategic initiatives and debt reduction efforts, the lack of clear guidance and unresolved supply chain and inflation issues weigh negatively. The Q&A reveals further execution weaknesses and management's inability to provide clear future guidance, exacerbating uncertainty. Overall, the negative aspects outweigh any positives, leading to a predicted stock price movement of -2% to -8%.
The earnings call reflects several negative factors: a significant EPS decline, revenue drop, and disappointing performance in key segments like snacks. Despite some positive elements, such as increased free cash flow and reduced debt, the overall sentiment is negative due to missed revenue targets, supply challenges, and cautious guidance. The Q&A reveals management's confidence in certain areas but also highlights ongoing issues in promotional effectiveness and execution. The lack of clarity on savings from the new distribution center further adds to uncertainties, leading to a negative outlook for the stock price.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
