Good afternoon, and hello from day two of the Evercore ISI Consumer and Retail Conference. I'm David Palmer, the food and restaurant analyst, and happy to be here speaking with the Hain Celestial team. We're joined by Wendy Davidson, President and CEO, Lee Boyce, EVP and CFO. Wendy joined the company, January of 2023, with a strong background in the CPG space, having previously worked at Glanbia and Kellogg, now known as Kellanova. And Lee joins Hain from Hearthside Food Solutions. Thanks, and welcome, guys. Great to be here. Thank you. And just a programming note for everybody, if you see a button to ask a question there, feel free to ask, and we'll try to get to that towards the end of this and work that in. But just a kickoff question for both of you. You know, you're talking about fiscal 2024 as being the first year of a transformation with a reset of the foundation. You know, could you give us a sense, maybe this is more for you, Wendy, what you saw when you joined the company in January 2023? It's been an interesting time in this space, and a lot of things have changed even since then. They would've been changing anyway. So, you know, what did you see day one? How in this volatile environment did you see the issues and opportunities evolve as you got through essentially that first year plus? Yeah, I appreciate it. You know, first I'd start with at least a little bit of background for folks who may not have a lot of history on Hain. Hain's been around about 30 years, but the first 25 years were all through acquisition, some 60+ acquisitions, but very little integration of those acquisitions. And then 5 years ago, when my predecessor joined, Mark did a lot of work to really clean up the portfolio of the business and divest of categories that the company really didn't need to be in, that weren't distinctive and unique, and to get it down to sort of a fighting core of brands. But still, very little integration of the business across either the two regions, the two biggest geographic regions, or across the businesses. And I think it left the marketplace with a view that Hain maybe didn't have brands that could scale. Maybe there wasn't a lot of synergies between the international and the North America business. Maybe there wasn't an opportunity either for growth or for margin expansion. And I think there was also a mindset of, does this mean that better for you has seen its day? Because now you have all of these other large CPGs that have gone into elements of better for you as options in the portfolio. So I walked into a company, I think both internally and externally, that had some of those storylines percolating around. But here's what I saw coming in, and what has become even more clear: we actually have a portfolio of very strong brands that do have points of uniqueness and distinctiveness. There's actually quite a bit of synergy in the back office as we integrate the business, but we really didn't have a business that had invested in the kinds of capabilities that would allow us to do so. So what we've been doing over the last year and a half is clarifying who we are as a company. We are a leader in better for you, and a pure play better for you. It's not just options in the portfolio, it's everything we do. While we have multiple brands, we're actually only in five categories, and those categories are repertoire, routine categories for the consumer, who's either looking for better for you on the go or better for you cooking at home, and we can be a key part of their lifestyle every day. Our back office synergies is probably where we've seen the best benefit in this last year. 50% of our spend as a company in procurement is actually global, but we actually didn't leverage any sort of center function to leverage that spend. So in some cases, we were buying the same ingredient from the same supplier, but we had five different prices and five different payment terms. We weren't leveraging our own natural scale and the leverage across the businesses to be able to go to market. So that's been what we call year one is foundational work. That's been the biggest part of our foundational work, is clarify who we are, clarify where we play, streamline the portfolio, streamline the footprint, and then integrate the functions so that we can get out stranded costs and drive a fighting core that can leverage where we have synergies across the business. That's great. I definitely wanna dig into this, the detail, and provide, you know, as much of the detail to the audience as possible about what's going on behind the scenes there. I mean, maybe we can take this in parts. You know, maybe the supply chain side and operations we'll take second, but maybe first, let's talk about the internal functions. That would be largely in selling and overhead, the capabilities, revenue management, insights, innovation, marketing. You know, what were those capabilities like? And that might not be an exhaustive list, but what were those capabilities like, or the key capabilities as you see it for your company, then, where are they now, and where would you like them to be? So if you think about the, you know, traditional CPG and how you go to market, you think about your end-to-end, there's how you do ideation and innovation, your route to market, and your selling, overall organizational structure and design, and then things like revenue growth management, so you're driving better trade management, you're driving better mix management, promotional effectiveness. And then your marketing is driving great brand awareness that generates household penetration, share on shelf, and really tells a story. So you think about those as sort of your end-to-end capabilities. I would say that within Hain it was either nonexistent because we had never made investments in those kinds of capabilities, or it was periodic and episodic. So it might be on one brand, but it wasn't equally that capability wasn't equal across the business. Or we had it in silos geographically, but we really weren't leveraging it more broadly. So part of it started for us in laying out the expectations of what does really good look like. And then you've heard us talk about out-bigging the small and out-smalling the big. It, when we do this right, what we want is to have the expectations and the capabilities of big CPG. How do you build brands? How do you go to market against the entire marketplace? How do you body up against the right customers? How do you drive really good mix management, promotional effectiveness? But we need to be able to also do that and be small, and disruptive, and be a challenger because we've got brands that really play in that role in their categories. So we want the best of both of those. So laying out those expectations, we've made investments in innovation. Historically, the company had maybe 5% of revenues. Revenue growth was coming from new products born in the last three years. Our innovation engine, how we do concept design, how we do development work, how we do consumer testing, dramatically improved, and now almost 7% of our growth is coming from products that are new innovation. But we've also got innovation that's breaking through. We see that in Celestial Seasonings Tea, with Sleepytime Melatonin, with Throat Cooler. We see it with Garden Veggie in the Flavor Burst launch this year, which is the number one new product launch in better-for-you snacking in the industry. We see it in some of the things we're doing in baby and kids, with immunity built into some of the baby kid purees, you know, baby foods. So we're really driving better innovation that can break through. Our route to market, we made a lot of investments in the capabilities we have in how our teams go to market, but not just calling on natural and organic or specialty retail or food, but we also need to have great capabilities to go to e-commerce and as, and away from home. You've heard me talk about, I think away from home is a tremendous growth potential for us. We have brands that should be available in C-stores, that should be available when you go to the airport, that should be available when you're having tea in the hotel room. Those are places that historically Hain's not called on. Our route to market, we've made investments in as well. Then we think about our RGM capabilities really didn't exist as a company, but we've established centers of excellence in both regions that are sharing the same RGM capability, expectations, and training, and we've actually improved our trade efficiency by 70 basis points this last year. We're driving better mix management, better promotional effectiveness. In fact, some of our categories in the Circana data, same level of promotional spend as industry peers, but we're getting a better lift than industry peers, so much better, more productive promotions. Then when we think about marketing, you heard me say a year ago, I knew I wanted to spend more as a% of revenues in marketing, but I wanted to spend it better before I just spent more. We were somewhere in that 3%-4% revenue rate, but our mix of working to non-working was upside down. So we've been focused this last year on getting a better mix of working marketing, as well as getting more effective marketing that's driving awareness, driving household pen, and driving share in marketplace, and then measuring the mix as we go forward. You should expect to see on the branded businesses, especially where we're driving growth, snacks, better for you baby and kids, and beverage, those will get a disproportionate investment of marketing, and we're seeing that play out this year. The rest of the categories also shouldn't get starved, but they should have an appropriate level of investment that can help them break through where they can be distinctive. So think things like Greek Gods yogurt or Spectrum oils in the U.S. Our soup categories in the UK were the number 1, number 2, and number 3 brands in soups, and we were the leader that actually entered the refrigerated soup category and market. Those are our brands that we've invested in, but we're actually driving better than category growth and share gain across all three brands, which clearly is getting the marketing muscle working better for us. So I'd say those are probably from a commercial go-to-market. We've made investments in capabilities, investments in route to market, and investments in how we measure through the KPIs, the effectiveness of our spend. But, maybe a fair follow-up on that is, do you feel like those functions, the investments in them, are largely done, aside from some, you know, just growing with the business from here? Or is there some more... You know, are we not quite there yet on the investment phase in terms of internal capabilities? I think in the structural capabilities, we've made those investments. The training and especially the expectations of how the, the overall playbook, things like our marketing model is called Agile and Amped, that training we've made the investment in, so I feel good about that. I think where we still have some opportunity is in that shift in marketing. The marketing mix isn't exactly where I want it to be. It should be down the road, somewhere more like a 70/30, working to non-working in marketing, and we should be inching up closer to 5% of revenue as a spend in marketing. But I'd rather, again, continue to focus on the mix of that before I simply put more dollars there. ... and David, sorry, this is Lee, just to kind of interject as well a little bit there. You know, from a SG&A perspective, one thing I think we laid out in Hain Reimagined is the total envelope of costs, you know, as a% of revenue, was appropriate if we look at it versus peer. It is kind of where we've invested in those capabilities. So, you know, one thing that we've looked at is the operating model, kind of across the globe. You know, and there are areas where we can be more efficient. Some of it, and, and Wendy, I hope, you know, you'd probably agree with this, is some of it's really foundational to what we had. We did not have a digital collaboration platform, so our teams across the globe couldn't talk to each other, just... And those are not huge investments, but they pay off significantly when you invest in that. So those are the types of things that we're doing. We have some of the kind of best-in-class systems in some areas, but they weren't universal across. You know, one area in supply chain, for example, is improving our integrated business planning, so we've made an investment there. So again, you know, not huge, but really distortion of how we are investing in some of our functions. I wanna shift over to the manufacturing side. You've done some consolidation, some rationalization of the co-packer network as well, some SKU reduction, got more aggressive, particularly in personal care lately. Could you talk about these changes? You know, how has your perspective on that evolved? Where are you on the journey? And then what has been the operational and gross margin impact from what you've done? So I'll- Yeah ... start with some of the broader things we did, and I'll let Lee speak specifically- Yeah ... to what we're doing relative to personal care. In the, you know, in the four pillars of Hain Reimagined: focus, fuel, build and grow, were our four reimagining of Hain overall. And we said in this first foundational year, focus and fuel were gonna be our primary drivers. One, so that we could really clarify our business footprint, but also our portfolio, as well as generate the fuel, because we didn't really have a balance sheet that was gonna allow us to take a giant step backwards in the investments that we wanted, and that we would throttle our investments in those building of capabilities, all of that, to allow us to pivot to growth. In that focus pillar, we've divested of some non-core assets. So we sold Thinsters in April. We sold the Queen Helene brand in personal care, about a week, two weeks ago. Super small, but those are, those are things that when we talk about shaping the portfolio, they were just non-core to our focus. When we look at our footprint, we've also exited non-core geographies. So we got out of our non-strategic joint venture in India. We consolidated our footprint of some of our manufacturing in meat-free in Canada from two plants to one. We consolidated our personal care manufacturing from two Hain-owned facilities to one, and reduced 60% of our co-manufacturers on the personal care business. We also reduced a number of SKUs in just getting out of whole categories that we shouldn't be in. So the brand is good, but we took it into lots of subcategories that just created a lot of complexity and distraction, but didn't allow us to also win on shelf. Then we did work around optimizing our footprint of even our offices. So we moved our office, our headquarters location, from Lake Success, where we had substantial headquarters or square footage. We're now in Hoboken, a much smaller footprint that everybody would argue is a much better fit-for-purpose office, but also easier for our teams to get in and out of, and it's 50% of the cost of what we were spending in Lake Success. So it's an improved space, but it's also a more efficient use of our time and money. And so all of those things combined is allowing us to get to a core categories, core brands, core portfolio of SKUs, and even a core route to market, that we can then more simplify how we're running the business and spend more time driving growth in market and less time managing all of the bits and bobs across the portfolio. Yeah, and I guess just building on that, you know, as Wendy said, I mean, really being focused in the winning portfolio. So we've removed SKUs representing about 6% of the items in our global year to date. You know, as Wendy mentioned, Thinsters was one of those items. Streamlining plant-based meat-free, you know, additional refinements in baby and kids. And then as we talked about, I mean, the biggest reduction was in personal care. It's about 62% of the items, about 30% of the revenue of personal care. And just as a reminder, in personal care as a part of your total portfolio is 5%-6%, so a smaller part of entire portfolio. But what that's allowed us to do is drive, you know, greater velocities in the core assortment. We've reduced the complexity, as Wendy mentioned, and then it gives us the opportunity for margin expansion. So for personal care alone, that reduction will allow us to drive 11 percentage points of gross margin expansion, you know, once we've gotten that kind of fully up and running as we go into 2025. The last part, the 11, is that specific to that business? Is that what you're saying? Yeah, that's- Yeah ... specific to that business. So, so again, remember, personal care, 5%-6% of the portfolio. Yeah. You know, we're 30%, and then it's 11 percentage points on that piece of the portfolio. Maybe I'll wrap this into a two-parter. Will there be more of this to come? I mean, is it... That sounds like a nice success story. Obviously, not without a drag to the top line, but are there more rationalization opportunities that you would foresee over the next couple of years? ... So maybe Wendy, I mean, I would say as we look at our portfolio, there's always gonna be some shaping around the edges, you know, as we look to optimize. So Wendy just talked about, I think she just mentioned Queen Helene was one that we've just announced, but very, very small. Thinsters was small as well. So as part of kind of good brand hygiene, it's something that we will continue, you know, continue to evaluate. I would say nothing as, obviously, of the magnitude of what we've seen kind of in the personal care consolidation. So it's gonna be kind of that normal, ongoing hygiene of our portfolio. And just as a reminder- Yeah, and we've... Oh, I was gonna say- Sorry ... And And we've said in the past, you know, M&A would be an enabler of the strategy, but it wouldn't be the strategy. Yeah. I would say the same is true of SKU rationalization, is that it should be just a regular part of how we do good portfolio maintenance. As we're driving innovation and packaging unlock to be able to put our brands in more places, at the same time we're launching things, we should also be looking at the underperforming parts of the portfolio and cleaning up those edges as just a regular part of maintenance. My goal would be that going forward, SKU rationalization isn't a large initiative, it's just something that's regularly happening. Portfolio optimization should just be a regular part of how we run the business, and isn't something that's a unique event. That's great. And looking ahead to fiscal 2025 and 2026, you characterize those as being years of investing for growth. But, you know, where will Hain reinvest? I mean, you touched on the marketing, that you'd like to see that migrate up a little bit more as a% of sales, but where else will Hain be reinvesting in ways that it's not already investing? So we, when we started the Hain Reimagined journey, we said, you know, our SG&A as a% of revenues was close to industry peer set. So it was about where we would expect to be from a benchmark standpoint, but it wasn't being spent in all the places that it needed to be. So I would say where you'll see the biggest investments for us, part of it will be in this marketing investment, where we'll increase the spend in some of our key growth categories, but we'll also rebalance this mix of marketing and non... or working and non-working. Channel expansion is gonna be probably one of our bigger areas of investment, and I would call it less of an absolute dollar investment than it is a trade route to market. So how do we make sure that we are driving points of distribution in all the places that we would wanna see our brands? And we've seen early success with that. So the C-s tore initiative we began in the latter part of the summer last year, as we started to build out the Away from Home team. Starting in January, we picked up over 10,000 distribution points for our snacks portfolio in C-stores, and we've continued to see that ramping up. Now, those are small dollars per point of distribution, but in a retail environment, you've got, call it 30,000, just U.S., 30,000 points of distribution, but a lot of dollars per point of distribution. Away from Home has almost 2 million points of distribution. They're smaller dollar sales per point of distribution, but both of those matter, because Away from Home is gonna also drive physical brand awareness, 'cause it's on that shopper's journey as they're out and about in the marketplace. So we want both. So you'll see us making investments to ensure, are we showing our products at the right industry trade events? Are we partnered with the right customers? Are we creating shippers, like we are for this summer? We have our first ever multi-branded snack promotion, and it's a Savor Your Summer shipper program. We've got 13,000 multi-branded, better-for-you snack shippers going out to the marketplace. Now, that's an investment that we're making, but it's driving distribution and helping us drive channel expansion. And then lastly, as we think about innovation, we'll be making investments around the innovation model to ensure that we're doing the right testing before things launch. Hain historically was a bit of a fast follower. They would take the best sellers in a category and create a better-for-you option of those, and roll those out into the marketplace. This year, we're actually an innovator in the space, rather than a fast follower. So Flavor Burst is actually the first better-for-you tortilla chip to disrupt in the snacking category, and we see the results of what's happening in that category. We think there's an opportunity for us to take our better-for-you consumer insights, and ensure that we're driving relevant, timely execution and innovation for the consumer in the right places, under the right brands. That's gonna require us to do a little bit of investment around the innovation model and a little investment around research, all within our SG&A model. Not something that's a substantial increase, but it is a shift in where it's been spent in the past. Yeah, and again, just kind of adding to that, I mean, you know, we will be. You know, we've invested in Revenue Growth Management, so making sure that those investments are going against the highest ROIs. We're also, you know, we will be sequencing our investment over the plan to drive profitability, generate cash, and then, you know, drive down debt as well. I mean, that's obviously one of our key focus areas. So, you know, with pay, and I know Wendy's talked about pay as you go or fueling it, that's something that we will continue to keep an eye on as we move forward. You know, obviously investing for growth is easier and more fun when the investment's working and getting that flywheel going. And what sort of revenue growth do you see as necessary in fiscal 2025 and 2026 to see that targeted long-term targeted EBITDA growth of 10%+? ... we, we're not at the point where we're giving real color on 2025 and 2026, but I would say that we are very confident in what we laid out in Hain Reimagined. So the algorithm that we laid out in September, we're very confident in what that, that looks like, which called for a 3+ on the top, a 10+ in EBITDA growth, and gets us to a 12+ EBITDA margin on the exit rate. And you would recall on Investor Day, we said that that is our commitment, not our aspiration, so you should expect us to continue leaning into that algorithm. That's great. And gross margins, in the past, the company would talk about aspirational gross margins, maybe another era. But what... And obviously, gross margins depend on a lot of things, product mix, maybe co-packer mix, and a whole bit. But what sort of gross margin do you think Hain Celestial should have long term? So, Wendy, maybe I'll just touch upon this a little bit. Mm. I mean, you know, we've said versus kind of the peer benchmark, we're at 800 basis points disadvantaged. You know, mainly driven by how the business grew historically through acquisition. We talked about, you know, kind of geographically, functionally siloed, not really leveraging our global scale and driving efficiency. We're seeing really good progress on that as we've invested in our integrated supply chain, in those capabilities, really looking across the globe. You know, we have vendors who kind of come to us and look at us market by market, and we're not leveraging that holistically across the globe. So one thing that we did lay out in Hain Reimagined is, you know, we expect to deliver 400-500 basis points of gross margin expansion by 2027. We still feel very confident on that aspiration as you know, or commitment as we, as we look to drive it. You know, you presented that global brand and category framework, the Big Five. It's a good framework. Could you talk about the growth rates of those Big Five categories and the major focus areas for the company across these? Yeah, so in the latest quarter, we disclosed actually and provided the size of each of those five, and the growth rates in that particular quarter, and we will continue to provide that level of disclosure going forward, 'cause I think it does help dimensionalize the company, and it's much more simple. So our business, the largest category we have is in meal prep. The second largest is in our better for you snacks category, and then beverage and baby and kids are about equal. Personal care, as Lee said earlier, is the smallest part of the portfolio. It's somewhere around 6% of our total revenues globally. Personal care will be a shrink to grow, so we're doing all of this optimization work so that we improve the margin profile and the brand distinctiveness in personal care to then move forward. Our growth categories will be snacks, baby and kids, and beverage. In this last year, the 85% of the business that's really in those three grew over 3%, so it's on the algorithm. In meal prep, it gets a little bit confusing because in that are our meat-free categories. It also includes what we've got in our soups categories across both businesses, nut butters, and then also what we have in yogurt. This year, year to date, each one of those brands has opportunities for growth, but there's also some opportunities to stabilize. Meat-free, as an industry, has seen lots of noise from lots of brands out there, and given the inflation market or the inflationary impacts, the consumer's willingness to pay for meat-free versus animal proteins, especially if they're a flexitarian, has been a bit challenged. So I would say that our view on meat-free, we feel very good that we're number 1 in Canada, and we're number 2 in the UK, but that's gonna be a category that's got some structural challenges. We will expect our growth, disproportionate growth to come from better-for-you snacking with brands like Garden Veggie and Terra and Garden of Eatin'. Our baby and kids, where we have both the number 1 brand in North America with Earth's Best, and the number 1 brand with Ella's Kitchen in our international business. And beverage has been a wonderful growth category for us, growing high single digits, and that's both Celestial Seasonings Tea in North America, which is outpaced category growth and picking up share. But also, as I talked about earlier, the innovation model is working very well in Celestial. And non-dairy beverage in Europe, which was a stabilized business, and the team's done a fantastic job of improving that business end to end. Supply chain effectiveness, our contract mix with our customers, our brands' performance, and innovation, and the combination of all of that has gotten that business growing nicely, profitably, and with nice diversification that we feel very comfortable moving that into the maintain category. So of the five categories, you should expect growth in snacks, growth in baby kids, growth in beverages. You should expect lower growth in maintain or in meal prep, because there's gonna be some mix of those brands that fall in there, and personal care is gonna go backwards before it goes forwards. Got it. You know, you laid out the 85% and the 15%, so clearly, the 15% that's been a problem, you intend to improve those, you know, the Earth's Best due to supply constraints, plant-based, and personal care. But among the rest, what would you say would get maybe over the next, let's say, over the next six to 12 months, what do you think will get the most improved award, just from a growth rate perspective? ... I like that description, the most improved award. I would say, our baby kids category is definitely gonna be a most improved, because the supply situation will allow us to move back into growth on, infant formula. The balance of baby kids with baby food, and especially toddler snacks, has done really well, but it's been overshadowed by infant formula, availability. I would say, the other sort of star performer in the portfolio is gonna be better for you snacking. And you should start to see that playing out in some of the syndicated data that you see, but also as we start to see really the run rate of Garden Veggie Flavor Burst as it expands across more channels, and this summer snacking promotion. I think the combination of those things you will see start to really generate some momentum, and then continued performance among the tea category. And then I would say that the other category or the brand I feel good about is Greek Gods yogurt. It has some nuances in the back half of this year that we should see... You'll see this in the syndicated data, that it starts to come back around for us in Greek Gods. Oh, that's great. Let me—I'm gonna squeeze in two real quick ones. Are there any ways, if at all, that the slower revenue start in this fiscal year that we're wrapping up here, that changed in any way how you look at the opportunity into fiscal 2027? It didn't change my view of the overall algorithm. So Hain Reimagined, we still see the line of sight to everything that we laid out. I would say that we've got more aggressive on the stabilization strategy in personal care, and that was really because we were better off in free cash flow and EBITDA delivery in fiscal 2024, so it allowed us to pull forward some things that had already been anticipated in Hain Reimagined, but we actually didn't think we would do those until fiscal 2025. So I would say we pulled forward some of the rationalization work. My goal would be that that allows us to get an improvement in the speed of recovery, but also the pivot to growth in some of the other parts of the business. You mentioned Garden Veggie Flavor Burst. Strong early consumer acceptance. Distribution is obviously gonna be building for that. Where, where is that—where could that go, and how quickly can that go? I mean, in other words, how long of a ramp are we looking at for that brand? So we were in very limited distribution on display only starting in February, but we saw really good POS data in those limited points of distribution. It began to get into its broader distribution as we went into this quarter that we're in now. We're still seeing north of 80% of the sales are incremental to the brand, which is really unusual in innovation. You'd normally expect it to cannibalize a fair amount of your core brand, but it's incremental to Garden Veggie overall. We have high aspirations for Flavor Burst. We like what we're seeing, and we're hearing really great feedback from retailers. I think we've had almost 100% acceptance thus far among retailers to... But it, you know, flows in over the next few months. We've got some retailers that are keeping it on display, as well as moving it into the core assortment with their store resets. So, you know, I feel good about the potential of that and hopefully new flavors to come. Yeah, no, that's an exciting new extension and platform. We have to end it there. Best of luck with the changes. Thanks so much for joining us at the conference. Thank you. Thanks, everybody. Thank you, David. I always appreciate the... always appreciate chatting, and I always appreciate the, the questions. Yeah. Thank you, Wendy.