Loading...
01/11 04:04
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Net Sales $368 million, a 6% decline year-over-year. The decline was driven by a 7-point decrease in volume mix and a 1-point increase in price.
Adjusted EBITDA $20 million, a decrease from $22 million a year ago. The decline was driven by a decline in volume mix and cost inflation, partially offset by productivity, a reduction in SG&A, and pricing and trade efficiencies.
Adjusted Gross Margin 19.5%, a decrease of approximately 120 basis points year-over-year. The decrease was driven by lower volume mix and cost inflation, partially offset by productivity and pricing and trade efficiencies.
SG&A Expenses $66 million, an 8% decrease year-over-year. The reduction was driven by a decrease in employee-related and non-people cost discipline.
Interest Expense $15 million, a 13% increase year-over-year. The increase was primarily due to higher financing fees related to the amendment of the credit agreement.
Adjusted Net Loss $7 million or $0.08 per diluted share, compared to an adjusted net loss of $4 million or $0.04 per diluted share in the prior year period. The increase in loss was due to restructuring charges and other factors.
North America Organic Net Sales Declined 7% year-over-year, primarily driven by lower volume in Snacks, partially offset by growth in Beverages, Baby and Kids, and Meal Prep.
North America Adjusted Gross Margin 22.7%, a 200 basis point increase versus the prior year period. The improvement was driven by productivity savings and pricing and trade efficiencies, partially offset by lower volume mix and cost inflation.
North America Adjusted EBITDA $17 million, an increase of 37% from the year-ago period. The increase resulted from productivity savings, a reduction in SG&A expenses, and pricing and trade efficiencies, partially offset by lower volume mix and cost inflation.
International Organic Net Sales Declined 4% year-over-year, primarily driven by lower sales in Baby and Kids, partially offset by growth in Meal Prep.
International Adjusted Gross Margin 15.7%, approximately 530 basis points below the prior year period. The decrease was driven by lower volume mix and cost inflation, partially offset by productivity savings and pricing and trade efficiencies.
International Adjusted EBITDA $13 million or 7.7% of net sales, reflecting a decrease of 38% compared to the prior year period. The decrease was driven by lower volume mix and cost inflation, partially offset by productivity savings and pricing and trade efficiencies.
Free Cash Flow Outflow of $14 million, compared to an outflow of $17 million in the year-ago period. The improvement was driven by improved inventory delivery, partially offset by lower recovery of accounts receivable and a decline in cash earnings.
Net Debt $668 million, an increase from $650 million at the beginning of the fiscal year. The increase was driven by seasonal funding of working capital and capital expenditures.
Garden Veggie Snacks relaunch: Revamped with avocado oil, sweet potato straws, and real cheese cheddar recipes. New packaging launched in September at a key national retailer, with expansion planned.
Greek Gods yogurt: Expanded regional availability of 48-ounce format and launched single-serve offerings supported by digital advertising.
Earth's Best big kids snacks: Launching in the second half with organic power bites, veggie waves, and crispy sticks for high-density nutrition.
Ella's Kitchen Nutty Blends: Launching a range of fruit and vegetable blends with nuts for children 6 months and up.
Ella's Kitchen Kids: Introducing a 10-SKU range of snacks for kids 18 months and up, including Oaty Bars and Crispy Sticks.
Joya Protein beverages: Upgrading existing protein range and launching ready-to-drink protein beverages in two flavors.
North America Snacks: Relaunch of Garden Veggie Snacks aims to restore growth and profitability.
International Baby Food: Ella's Kitchen remains the #1 baby food brand in the UK, despite industry-wide softness.
Digital-first marketing: Shift to digital marketing with programs like Earth's Besties and partnerships like Ibotta to drive sales.
Cost reduction: Achieved 12% reduction in people-related SG&A expenses and streamlined global infrastructure.
Inventory management: Reduced North America inventory by nearly 10% from Q4, improving forecast accuracy.
Trade spending optimization: Reduced trade spend as a percentage of gross revenue by 40 basis points year-over-year.
Productivity savings: Targeting over $60 million in operational productivity savings for fiscal 2026.
Portfolio streamlining: Exited meat-free category in North America and targeting 30% SKU reduction by fiscal 2027.
Revenue growth management: Accelerated pricing and premiumization efforts across categories to cover inflation.
Strategic review: Ongoing review with Goldman Sachs to streamline portfolio and focus on high-value brands.
Market Conditions: Continued industry-wide softness in wet baby food, particularly in the U.K., driven by recent media coverage, impacting sales and category momentum.
Competitive Pressures: Velocity challenges and distribution losses in the Snacks category in North America, leading to a 17% decline in organic net sales year-over-year.
Regulatory and Strategic Execution Risks: Restructuring charges totaling $14 million in the quarter, with expected total charges of $100-$110 million by fiscal 2027, indicating ongoing financial and operational adjustments.
Supply Chain Disruptions: Efforts to reduce inventory and improve supply chain efficiency, including a 10% reduction in North America inventory, highlight ongoing challenges in managing supply chain complexities.
Economic Uncertainties: Higher interest expenses due to increased financing fees and hedged rates at 7.1%, impacting financial flexibility and increasing debt servicing costs.
Strategic Execution Risks: Challenges in executing turnaround strategies, including the need to streamline the portfolio by eliminating approximately 30% of SKUs in North America by fiscal 2027, which could disrupt operations and market presence.
Revenue and Margin Expectations: The company expects stronger top and bottom-line performance in the second half of fiscal 2026, driven by aggressive cost-cutting and execution of strategic initiatives. Benefits from SG&A reductions and pricing actions are expected to build throughout the year.
Marketing Investments: Marketing investments will increase in the second quarter of fiscal 2026, with approximately $2 million more allocated compared to the prior year. This will support accelerated innovation across the portfolio.
Ella's Kitchen Performance: Ella's Kitchen, a high-margin business, is expected to improve in the second half of fiscal 2026 due to accelerated marketing efforts and innovation.
Free Cash Flow: The company expects free cash flow to be positive for fiscal 2026.
Debt Reduction: The company aims to reduce balance sheet leverage to 3x adjusted EBITDA or less in the long term.
Innovation and Product Launches: The company plans to launch new products across all categories, including revamped Garden Veggie Snacks, Greek Gods single-serve offerings, and Ella's Kitchen Nutty Blends and Kids ranges. Innovation will be supported by marketing funded through margin improvements.
Pricing and Revenue Growth Management: Pricing actions are planned across every category in the portfolio, with benefits expected to ramp up throughout fiscal 2026. Revenue growth management activities include pricing, price pack architecture, and premiumization.
Operational Productivity: The company targets operational productivity savings of more than $60 million in fiscal 2026, with additional cost savings expected from the realignment of the overhead structure.
Inventory Management: The company is focused on inventory reduction, targeting improved internal forecast accuracy and resetting weeks of coverage for raw and finished goods.
Digital Marketing and E-commerce: The company is shifting to a digital-first marketing model and expects e-commerce sales growth at or above category rates in fiscal 2026.
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.
