HLF: Staying the Course

Research evidence excerpt

HLF: Staying the Course

nue Q1 Q2 Q3 Q4

revenues exceeded expectations with +24.8% YoY growth underpinned 2025 268.4A 239.6A 248.6A 270.2A

2026 334.9A 263.2E 261.2E 278.0E by higher pricing (we estimate the average sales price per pound Prev. 303.0E 251.3E 255.1E 271.3E

increased +12.8% as the company passed through cost inflation) and EBITDA, Adj

solid volume performance (+10.6% or +7MM lbs) that management 2025 32.1A 25.1A 15.2A 19.3A

equally attributed to three factors: (1) incremental volumes from the 2026 29.3A 22.3E 19.0E 24.1E

Prev. 30.3E 22.7E 18.7E 23.1E Conagra Brands business acquired on June 30, 2025; (2) an expanded

USDA contract alongside new long-term contract manufacturing Financials are denominated in USD.

business; and (3) the earlier timing of Lent versus 2025. That being AllPricedvaluesas ofin priorCAD unlesstradingotherwiseday's marketnoted.close, EST (unless otherwise noted).

said, management reiterated its expectation of delivering low-single digit

volume growth for 2026 acknowledging: (i) expected demand elasticity

impacts as pricing actions are taken across retail post-Lent; and (ii)

tougher comparisons with the lapping of Lent in Q2/26 and the USDA

contract in Q4/26.

• Priorities are set on margin recovery post-Lent. Despite the strong

revenue performance, Q1/26 adjusted EBITDA declined -9.0% YoY as

gross margins contracted -378bps (versus our estimate of -200bps)

with management attributing: (i) two-thirds of the pressure to higher

raw material costs for key whitefish amid quota constraints; and (ii)

the remaining one-third to elevated promotional intensity and plant

inefficiencies. That being said, management reiterated its expectation

of delivering YoY adjusted EBITDA growth for 2026 with gradual