The Hain Celestial Group Inc. (NASDAQ: HAIN) reported weaker-than-expected fiscal fourth-quarter 2026 sales and adjusted earnings on Monday.

But here's the twist: margins and cash generation actually improved as the company kept overhauling its portfolio and strengthening its North American business.

Hain Celestial Q4 Sales, Earnings Miss Estimates

Net sales fell 27.6% year over year to $263.07 million, missing the $268.94 million estimate.

Hain posted an adjusted loss of 5 cents per share, missing the 3-cent loss estimate. That compared with a 2-cent loss a year earlier. GAAP diluted loss narrowed to 68 cents from $3.06.

Organic net sales fell 1.8%, driven by a 2-percentage-point decline in volume and mix. Pricing was flat.

Gross margin expanded 200 basis points to 22.5%. Adjusted gross margin improved 230 basis points to 22.7%. Adjusted EBITDA fell 5.8% to $18.7 million.

North America Profitability Jumps

North America organic sales rose 1.7%, while adjusted gross margin climbed to 31.1% from 19.2%. Adjusted EBITDA increased 55.3% to $16.1 million.

Growth in meal preparation products, led by yogurt, helped offset weaker baby and kids sales.

International organic sales fell 4%. Adjusted gross margin declined to 16.6%, while adjusted EBITDA dropped 41.1% to $12.3 million. Cost inflation and weaker volume and mix weighed on results.

International Sale Targets Debt

Fiscal 2026 operating cash flow rose to $78.3 million from $22.1 million. Free cash flow improved to $57.7 million from a $3.2 million outflow.

Hain ended June with $58.1 million in cash and $499.8 million in net debt.

The company agreed to sell its International business to AURELIUS for an estimated $323 million.

Hain expects net proceeds of $305 million to $310 million. It plans to repay its entire term loan and more than 35% of its revolving credit facility. That would reduce pro forma debt to about $250 million.

The deal is expected to close in the second quarter of fiscal 2027. Closing depends partly on extending Hain's December credit maturity.

Hain also targets about $16 million in annual run-rate cost savings, with most expected by the end of fiscal 2027. Implementation costs are expected to total about $20 million.

Refinancing Clouds 2027 Outlook

Management said its strategic review makes traditional fiscal 2027 guidance difficult. The company also canceled the earnings call's Q&A amid lender discussions and the pending International sale.

Hain reported $186 million of revolver liquidity. More than 70% of its loan exposure is fixed at 7.1%. Fourth-quarter margins also benefited from a $1.9 million tariff refund.

Greek Gods dollar sales grew by a high-teens percentage. Meanwhile, changes to the Earth's Best puree portfolio drove a 30% increase in base velocity.

Hain Celestial Price Action

HAIN Price Action: Hain Celestial shares were up 3.23% at $0.64 at the time of publication Monday, according to market data.