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Item 2. Management’s Discussion and Analysis

2021-02-09 compared with 2020-11-09 · 249 added, 113 removed, 221 unchanged (62% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Consolidated Financial Statements and the related Notes thereto for the period ended September 30, 2020 contained in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended June 30, 2020.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Consolidated Financial Statements and the related Notes thereto for the period ended December 31, 2020 contained in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended June 30, 2020.

Forward looking statements in this Form 10-Q are qualified by the cautionary statement included in this Form 10-Q under the sub-heading “Cautionary Note Regarding Forward Looking Information” in the introduction of this Form 10-Q.

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Hain Celestial sells its products through specialty and natural food distributors, supermarkets, natural food stores, mass-market and e-commerce retailers, food service channels and club, drug and convenience stores in over 75 countries worldwide.

The Company manufactures, markets, distributes and sells organic and natural products under brand names providing consumers with the opportunity to lead A Healthier Way of Life ® .

Hain Celestial is a leader in many organic and natural products categories, with ma ny recognized brands in the various market categories it serves, including Celestial Seasonings ® , Clarks™, Cully & Sully ® , Dream ® , Earth’s Best ® , Ella’s Kitchen ® , Farmhouse Fare™, Frank Cooper’s ® , GG UniqueFiber ® , Gale's ® , Garden of Eatin' ® , Hain Pure Foods ® , Hartley’s ® , Health Valley ® , Imagine ® , Joya ® , Lima ® , Linda McCartney ® (under license), MaraNatha ® , Natumi ® , New Covent Garden Soup Co.

® , Orchard House ® , Robertson’s ® , Sensible Portions ® , Spectrum ® , Sun-Pat ® , Sunripe ® , Terra ® , The Greek Gods ® , William’s™, Yorkshire Provender ® and Yves Veggie Cuisine ® .

The Company manufactures, markets, distributes and sells organic and natural products under brand names, with ma ny recognized brands in the various market categories it serves, including Celestial Seasonings ® , Clarks™, Cully & Sully ® , Dream ® , Earth’s Best ® , Ella’s Kitchen ® , Farmhouse Fare™, Frank Cooper’s ® , GG UniqueFiber ® , Gale’s ® , Garden of Eatin’ ® , Hain Pure Foods ® , Hartley’s ® , Health Valley ® , Imagine ® , Joya ® , Lima ® , Linda McCartney's ® ™ (under license), MaraNatha ® , Natumi ® , New Covent Garden Soup Co.

® , Robertson’s ® , Sensible Portions ® , Spectrum ® , Sun-Pat ® , Terra ® , The Greek Gods ® , William’s™, Yorkshire Provender ® and Yves Veggie Cuisine ® .

The Company’s personal care products are marketed under the Alba Botanica ® , Avalon Organics ® , Earth’s Best ® , JASON ® , Live Clean ® , One Step ® and Queen Helene ® brands.

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In fiscal 2020, the Company divested its Tilda business and its Arrowhead Mills ® , SunSpire ® , Europe's Best ® , Casbah ® , Rudi’s Gluten-Free Bakery ™ , Rudi’s Organic Bakery ® and Fountain of Truth ™ brands.

More recently, the Company divested its Danival ® business in July 2020.

Additionally, in the first quarter of fiscal 2021, the Company began to actively market the sale of the United Kingdom's fruit business, the Orchard House ® Foods Limited business and associated brands, and thus, its assets and liabilities are classified as held for sale in the Company's Consolidated Balance Sheet as of September 30, 2020.

See Note 4, Assets Held for Sale and Discontinued Operations , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for additional information and discussion of this planned divestiture.

The COVID-19 pandemic continues to create challenging and unprecedented conditions, and we are committed to supporting the global response to the crisis.

During the first quarter of fiscal 2021, the Company divested its Danival ® business.

Additionally, in January 2021, subsequent to the end of the second quarter of fiscal 2021, the Company completed the sale of its U.K.

fruit business, primarily consisting of the Orchard House ® Foods Limited business and associated brands ("Fruit").

Assets and liabilities of this business are classified as held for sale in the Company's Consolidated Balance Sheet as of December 31, 2020.

See Note 4, Assets Held for Sale and Discontinued Operations , for additional information.

The COVID-19 pandemic continues to create challenging and unprecedented conditions, and we continue our commitment to supporting the global response to the crisis.

Although there are effective vaccines for COVID-19 that have been approved for

use, distribution of the vaccines did not begin until late 2020, and a majority of the public will likely not have access to a vaccination until sometime in 2021.

Accordingly, there remains significant uncertainty about the duration and extent of the impact from the COVID-19 pandemic.

We are proud of our employees who are giving extraordinary effort under difficult circumstances to ensure that we can supply the products our consumers depend on.

We have been pleased with our preparation and efforts through the pandemic and believe we are well positioned for the future as we continue to navigate the crisis and prepare for an eventual return to a more normal operating environment.

We have been pleased with our preparation and efforts through the pandemic and believe we remain well positioned for the future as we continue to navigate the crisis and prepare for an eventual return to a more normal operating environment.

To date, we have successfully implemented contingency plans overseen by crisis management teams to monitor the evolving needs of our business.

While we have managed the pandemic well with minimal disruption to our business thus far, the impact of the pandemic on our future consolidated results of operations is uncertain.

Employee and Consumer Health and Safety Precautions

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Manufacturing Facilities and Supply Chain Challenges

We continue to monitor and comply with all applicable government orders, as some of the jurisdictions in which we do business begin to introduce new lockdowns and restrictions.

We may face additional operational challenges in manufacturing our products and making them available to customers and consumers as a result of the COVID-19 pandemic.

As we navigate a new wave of COVID-19 outbreaks with the cooler weather and the resulting increase of indoor gatherings, w e continue to monitor and comply with applicable government orders, as some of the jurisdictions in which we do business re-introduced lockdowns and restrictions.

We may face additional operational challenges as well as increased operating costs in manufacturing our products and making them available to customers and consumers as a result of the COVID-19 pandemic.

Shelter-in-place and social distancing behaviors, which are being mandated or encouraged by governments and practiced by businesses and individuals, create challenges for our manufacturing employees as well as for third parties on which we rely to make our products available to consumers.

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We identified our most important products and secondary sources of supply and manufacturing capabilities for those key products.

We continue to acquire extra raw materials, supplemented our inventory levels and added temporary labor to support our extra manufacturing and health and safety initiatives.

We also consolidated product shipping orders to more efficiently meet the increased customer and consumer demand.

The framework for these supply chain measures remains in place to continue to meet any further surges in demand.

We continue to acquire extra raw materials, supplement our inventory levels and add temporary labor as needed to support our extra manufacturing and health and safety initiatives.

We also continue to consolidate product shipping orders to more efficiently meet the increased customer and consumer demand.

The framework for these supply chain measures will remain in place for as long as necessary to continue to meet any further surges in demand.

Consumer Demand

To date, shelter-in-place and social distancing behaviors have resulted in increased overall demand for our products, most notably in our grocery, snacks, tea and certain personal care product categories.

Other product offerings, such as sun care products and the fruit component of our business in the United Kingdom, have been adversely impacted due to changed consumer behavior and priorities.

While we experienced a net increase in the overall demand for our products during the COVID-19 pandemic, the continued duration of that increased demand environment is uncertain.

Other product offerings, such as sun care products and the United Kingdom Fruit business we disposed of in January2021, have been adversely impacted due to changed consumer behavior and priorities.

While we have experienced a net increase in the overall demand for our products during the COVID-19 pandemic, the continued duration of that increased demand environment is uncertain.

Additionally, deteriorating economic conditions arising from the COVID-19 pandemic could adversely affect future demand for our products.

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Our Financial Position

Overall, the COVID-19 pandemic has resulted in a net increase in overall demand for our products.

The COVID-19 pandemic has resulted in a net increase in overall demand for our products.

Accordingly, to date, our financial position has benefited from the COVID-19 pandemic, albeit to a limited extent.

We finance our operations primarily with the cash flows we generate from our operations and from borrowings available to us under our Third Amended and Restated Credit Agreement (as amended, the “Amended Credit Agreement”).

As of September 30, 2020, we had $702.3 million available under the Amended Credit Agreement.

As of December 31, 2020, we had borrowing capacity of $700.6 million available under the Amended Credit Agreement.

Business Priorities

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On August 27, 2019, the Company and Ebro Foods S.A.

(the “Purchaser”) entered into, and consummated the transactions contemplated by, an agreement relating to the sale and purchase of the Tilda Group Entities and certain other assets.

entered into, and consummated the transactions contemplated by, an agreement relating to the sale and purchase of the Tilda Group Entities and certain other assets.

On February 15, 2019, the Company completed the sale of substantially all of the assets used primarily for the Plainville Farms business, a component of the Company’s Hain Pure Protein Corporation (“HPPC”) operating segment.

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Se e Note 4, Assets Held for Sale and Discontinued Operations , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for additional information on discontinued operations.

Comparison of Three Months Ended September 30, 2020 to Three Months Ended September 30, 2019

Comparison of Three Months Ended December 31, 2020 to Three Months Ended December 31, 2019

Consolidated Results

The following table compares our results of operations, including as a percentage of net sales, on a consolidated basis, for the three months ended September 30, 2020 and 2019 (amounts in thousands, other than percentages, which may not add due to rounding):

The following table compares our results of operations, including as a percentage of net sales, on a consolidated basis, for the three months ended December 31, 2020 and 2019 (amounts in thousands, other than percentages, which may not add due to rounding):

Three Months Ended Change in

September 30, 2020 September 30, 2019 Dollars Percentage

December 31, 2020 December 31, 2019 Dollars Percentage

Net sales $ 528,418 100.0% $ 506,784 100.0% $ 21,634 4.3%

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Productivity and transformation costs 6,016 1.1% 12,260 2.4% (6,244) (50.9)%

Long-lived asset and intangibles impairment 25,179 4.8% 1,889 0.4% 23,290 1,232.9%

Operating income 12,957 2.5% 9,191 1.8% 3,766 41.0%

Interest and other financing expense, net 2,337 0.4% 4,737 0.9% (2,400) (50.7)%

Other (income) expense, net (1,045) (0.2)% 1,244 0.2% (2,289) *

Income from continuing operations before income taxes and equity in net loss of equity-method investees 11,665 2.2% 3,210 0.6% 8,455 263.4%

Provision for income taxes 8,438 1.6% 1,020 0.2% 7,418 727.3%

Equity in net loss of equity-method investees 1,076 —% 338 —% 738 218.3%

Net income from continuing operations $ 2,151 0.4% $ 1,852 0.4% $ 299 16.1%

Net loss from discontinued operations, net of tax (11) —% (2,816) (0.6)% 2,805 *

Net income (loss) $ 2,140 0.4% $ (964) (0.2)% $ 3,104 *

Adjusted EBITDA $ 62,191 11.8% $ 45,047 8.9% $ 17,144 38.1%

Diluted net income per common share from continuing operations $ 0.02 $ 0.02 $ — —%

Diluted net (loss) income per common share from discontinued operations — (0.03) 0.03 *

Diluted net income (loss) per common share $ 0.02 $ (0.01) $ 0.03 *

* Percentage is not meaningful due to one or more numbers being negative.

Net sales for the three months ended December 31, 2020 were $528.4 million, an increase of $21.6 million, or 4.3%, as compared to $506.8 million in the three months ended December 31, 2019.

On a constant currency basis, net sales increased approximately 2.2% from the prior year quarter.

Net sales on a constant currency basis increased in both the North America and International reportable segments.

Further details of changes in net sales by segment and on a constant currency basis are provided below.

Gross profit for the three months ended December 31, 2020 was $130.0 million, an increase of $24.4 million, or 23.1%, as compared to the prior year quarter.

Gross profit margin was 24.6% of net sales, compared to 20.8% in the prior year quarter.

The increase was driven by cost savings from the Company's productivity and transformation initiatives, favorable product mix and lower trade promotion costs in both our North America and International reportable segments.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $83.6 million for the three months ended December 31, 2020, an increase of $4.5 million, or 5.7%, from $79.1 million for the prior year quar ter.

The increase was primarily due to marketing and advertising costs, partially offset by lower selling expenses incurred in fiscal year 2021 due to efficiencies gained from the Company's productivity and transformation initiatives.

Selling, general and a dministrative expenses as a percentage of net sales was 15.8% in the three months ended December 31, 2020 compared to 15.6% in the prior year quarter, reflecting an increase of 20 basis points primarily attributable to the aforementioned items.

Amortization of Acquired Intangible Assets

Amortization of acquired intangibles was $2.2 million for the three months ended December 31, 2020, a decrease of $1.0 million from $3.2 million in the prior year quarter .

The decrease was due to no amortization of Fruit business intangibles during the second quarter of fiscal 2021 (which were presented instead as part of assets held for sale) and finite-lived intangibles from historical acquisitions becoming fully amortized or impaired during fiscal year 2020, partially offset by indefinite-lived intangibles being changed to finite-lived intangibles during the first quarter of fiscal 2021.

Productivity and Transformation Costs

Productivity and transformation costs were $6.0 million for the three months ended December 31, 2020, a decrease of $6.2 million from $12.3 million in the prior year quarter.

The decrease was primarily due to higher consulting fees and severance costs incurred in connection with the Company’s productivity and transformation initiatives in the prior year quarter and fewer comparable costs incurred in the current year quarter.

Long-lived Asset and Intangibles Impairment

During the three months ended December 31, 2020, the Company recognized a pre-tax impairment charge of $23.6 million related to the impairment recorded against the assets of the Company's U.K.

Fruit business (see Note 4, Assets Held for Sale and Discontinued Operations , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q).

There was no impairment charge recorded in the corresponding period for the three months ended December 31, 2019.

Operating Income

Operating income for the three months ended December 31, 2020 was $13.0 million compared to $9.2 million in the prior year quarter as a result of the items described above.

Interest and Other Financing Expense, Net

Interest and other financing expense, net totaled $2.3 million for the three months ended December 31, 2020, a decrease of $2.4 million, or 50.7%, from $4.7 million in the prior year quarter.

The decrease resulted primarily from lower interest expense related to our revolving credit facility as a result of lower outstanding debt and lower variable interest rates on the portion of the debt not hedged by the derivatives, partially offset by the amount of the debt impacted by the related derivatives.

See Note 9, Debt and Borrowings , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Other (Income) Expense, Net

Other income, net totaled $1.0 million for the three months ended December 31, 2020, compared to expense of $1.2 million in the prior year quarter .

The change from expense to income was primarily attributable to a loss on the sale of a business which occurred in the prior year quarter and did not occur in the current quarter.

Income from Continuing Operations Before Income Taxes and Equity in Net Loss of Equity-Method Investees

Income before income taxes and equity in net loss of our equity-method investees for the three months ended December 31, 2020 was income of $11.7 million compared to income of $3.2 million in the prior year quarter.

The increase was due to the items discussed above.

Provision for Income Taxes

The provision for income taxes includes federal, foreign, state and local income taxes.

Our income tax expense from continuing operations was $8.4 million for the three months ended December 31, 2020 compared to an income tax expense of $1.0 million in the prior year quarter.

The effective income tax rate from continuing operations was an expense of 72.3% and 31.8% for the three months ended December 31, 2020 and December 31, 2019, respectively.

The effective income tax rate from continuing operations for the three months ended December 31, 2020 was impacted by the tax impact of the U.K.

Fruit business impairment.

In addition, the effective income tax rates from continuing operations for the three months ended December 31, 2020 and 2019 were impacted by provisions in the Tax Cuts and Jobs Act, primarily related to Global Intangible Low Taxed Income and limitations on the deductibility of executive compensation.

The effective income tax rates in each period were also impacted by the geographical mix of earnings and state valuation allowance.

In December 2020, the Company received $28.8 million including $0.1 million of interest from the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") refund claim filed in July 2020.

Our effective tax rate may change from period-to-period based on recurring and non-recurring factors including the geographical mix of earnings, enacted tax legislation, state and local income taxes and tax audit settlements.

Equity in Net Loss of Equity-Method Investees

Our equity in net loss from our equity-method investments for the three months ended December 31, 2020 was $1.1 million and $0.3 million in the prior year quarter.

See Note 13, Investments , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Net Income from Continuing Operations

Net income from continuing operations for the three months ended December 31, 2020 was $2.2 million, or $0.02 per diluted share, compared to net income of $1.9 million, or $0.02 per diluted share, for the three months ended December 31, 2019.

The increase in net income was attributable to the factors noted above.

Net Loss from Discontinued Operations, Net of Tax

Net loss from discontinued operations, net of tax, for the three months ended December 31, 2020 was $11 thousand, compared to a loss of $2.8 million in the three months ended December 31, 2019 .

During the three months ended December 31, 2019, the Company recognized a $3.8 million adjustment to the sale of Tilda entries relating to post-closing adjustments.

See Note 4, Assets Held for Sale and Discontinued Operations , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for further discussion.

Net Income (Loss)

Net income for the three months ended December 31, 2020 was $2.1 million, or $0.02 per diluted share, compared to a net loss of $1.0 million, or $0.01 per diluted share, in the prior year quarter.

The change from net loss to net income was attributable to the factors noted above.

Adjusted EBITDA

Our Adjusted EBITDA was $62.2 million and $45.0 million for the three months ended December 31, 2020 and 2019, respectively, as a result of the factors discussed above and the adjustments described in the Reconciliation of Non-U.S.

GAAP Financial Measures to U.S.

GAAP Measures presented following the discussion of our results of operations.

Segment Results

The following table provides a summary of net sales and operating income (loss) by reportable segment for the three months ended December 31, 2020 and 2019:

(dollars in thousands) North America International Corporate and Other Consolidated

Three months ended 12/31/20 $ 282,612 $ 245,806 $ — $ 528,418

Three months ended 12/31/19 280,693 226,091 — 506,784

$ change $ 1,919 $ 19,715 n/a $ 21,634

% change 0.7 % 8.7 % n/a 4.3 %

Operating income (loss)

Three months ended 12/31/20 $ 32,440 $ (2,741) $ (16,742) $ 12,957

Three months ended 12/31/19 20,062 12,899 (23,770) 9,191

$ change $ 12,378 $ (15,640) $ 7,028 $ 3,766

% change 61.7 % * * 41.0 %

Operating income (loss) margin

Three months ended 12/31/20 11.5 % (1.1) % n/a 2.5 %

Three months ended 12/31/19 7.1 % 5.7 % n/a 1.8 %

* Percentage is not meaningful due to one or more numbers being negative.

North America

Our net sales in the North America reportable segment for the three months ended December 31, 2020 were $282.6 million, an increase of $1.9 million, or 0.7%, from net sales of $280.7 million in the prior year quarter.

The increase in net sales was primarily driven by an increase in overall demand for our products as a result of increased at-home food consumption, most notably in our snacks, tea, yogurt and certain personal care product categories, partially offset by brand divestitures and the strategic decision to no longer support certain lower margin SKUs in order to reduce complexity and increase gross margins.

Operating income in North America for the three months ended December 31, 2020 was $32.4 million, an increase of $12.4 million from $20.1 million in the prior year quarter due to a favorable product mix, lower selling expenses and cost efficiencies gained as a result of the Company's productivity and transformation initiatives.

I nternational

Our net sales in the International reportable segment for the three months ended December 31, 2020 were $245.8 million, an increase of $19.7 million, or 8.7%, from net sales of $226.1 million in the prior year quarter.

On a constant currency basis, net sales increased 4.4% from the prior year quarter primarily due to an increase in overall demand for our products including the growth in our plant based food and beverage products coupled with the overall trend of increased stay-at-home consumption partially offset by a decline in the Fruit business.

Operating loss in our International reportable segment for the three months ended December 31, 2020 was $2.7 million, compared to operating income of $12.9 million for the three months ended December 31, 2019.

The current quarter loss was primarily due to a reserve of $23.6 million recorded against the U.K.

Fruit business, partially offset by the increase in net sales described above.

Corporate and Other

Our Corporate and Other category consists of expenses related to the Company’s centralized administrative functions, which do not specifically relate to an operating segment.

Such Corporate and Other expenses are comprised mainly of compensation and related expenses of certain of the Company’s senior executive officers and other employees who perform duties related to our entire enterprise as well as expenses for certain professional fees, facilities, and other items which benefit the Company as a whole.

Our Corporate and Other expenses for the three months ended December 31, 2020 were $16.7 million, a decrease of $7.0 million, from $23.8 million.

This change was primarily related to productivity and transformation costs included in Corporate and Other, which for the three months ended December 31, 2020 were $2.7 million, a decrease of $7.1 million, from $9.8 million for the three months ended December 31, 2019.

Refer to Note 18, Segment Information , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Comparison of Six Months Ended December 31, 2020 to Six Months Ended December 31, 2019

Consolidated Results

The following table compares our results of operations, including as a percentage of net sales, on a consolidated basis, for the six months ended December 31, 2020 and 2019 (amounts in thousands, other than percentages, which may not add due to rounding):

Six Months Ended Change in

December 31, 2020 December 31, 2019 Dollars Percentage

Net sales $ 1,027,045 100.0% $ 988,860 100.0% $ 38,185 3.9%

Cost of sales 777,916 75.7% 785,422 79.4% (7,506) (1.0)%

Gross profit 249,129 24.3% 203,438 20.6% 45,691 22.5%

Selling, general and administrative expenses 162,772 15.8% 159,758 16.2% 3,014 1.9%

Amortization of acquired intangible assets 4,626 0.5% 6,272 0.6% (1,646) (26.2)%

Productivity and transformation costs 7,818 0.8% 26,435 2.7% (18,617) (70.4)%

Proceeds from insurance claim — —% (2,562) (0.3)% 2,562 *

Long-lived asset impairment 32,497 6.5% — —% 32,497 *

Long-lived asset and intangibles impairment 57,676 5.6% 1,889 0.2% 55,787 2,953.3%

Operating income 16,237 1.6% 11,646 1.2% 4,591 39.4%

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Income (loss) from continuing operations before income taxes and equity in net loss of equity-method investees 13,865 1.3% (1,957) (0.2)% 15,822 *

Provision (benefit) for income taxes 12,962 2.6% (531) (0.1)% 13,493 *

Provision for income taxes 21,400 2.1% 489 —% 20,911 4,276.3%

Equity in net loss of equity-method investees 1,095 —% 655 —% 440 67.2%

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Diluted net income (loss) per common share from discontinued operations 0.11 (1.01) 1.12 *

Diluted net loss per common share $ — $ (1.03) $ 1.03 *

* Percentage is not meaningful due to one or two numbers being negative.

Net sales for the three months ended September 30, 2020 were $498.6 million, an increase of $16.6 million, or 3.4%, as compared to $482.1 million in the three months ended September 30, 2019.

On a constant currency basis, net sales increased approximately 1.5% from the prior year quarter .

Net sales on a constant currency basis increased in the North America reportable segment, partially offset by a decrease in the International reportable segment.

Diluted net income (loss) per common share $ 0.02 $ (1.04) $ 1.06 *

* Percentage is not meaningful due to one or more numbers being negative.

Net sales for the six months ended December 31, 2020 were $1,027.0 million, an increase of $38.2 million, or 3.9%, as compared to $988.9 million in the six months ended December 31, 2019 as a result of an increase in sales in both the North America and International reportable segments.

On a constant currency basis, net sales increased approximately 1.9% from the prior comparable period.

Net sales on a constant currency basis increased in both the North America and International reportable segments.

Further details of changes in net sales by segment and on a constant currency basis are provided below.

Gross profit for the three months ended September 30, 2020 was $119.2 million, an increase of $21.3 million, or 21.8%, as compared to the prior year quarter.

Gross profit margin was 23.9% of net sales, compared to 20.3% in the prior year quarter.

The increase was driven by cost savings from the Company's productivity and transformation initiatives as well as favorable product mix in both our North America and International reportable segments.

Gross profit for the six months ended December 31, 2020 was $249.1 million, an increase of $45.7 million, or 22.5%, as compared to the prior year comparable period.

Gross profit margin was 24.3% of net sales, compared to 20.6% in the prior year comparable period.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $79.2 million for the three months ended September 30, 2020, a decrease of $1.5 million, or 1.9%, from $80.7 million for the prior year quar ter.

The decrease was due to lower selling expenses incurred in fiscal year 2021 due to efficiencies gained from the Company's productivity and transformation initiatives, partially offset by an increase in marketing and advertising costs.

Selling, general and a dministrative expenses as a percentage of net sales was 15.9% in the three months ended September 30, 2020 compared to 16.7% in the prior year quarter, reflecting a decrease of 80 basis points primarily attributable to the aforementioned items.

Selling, general and administrative expenses were $162.8 million for the six months ended December 31, 2020, an increase of $3.0 million, or 1.9%, from $159.8 million for the prior year comparable period .

The increase was due to higher selling expenses incurred in fiscal year 2021 due to an increase in marketing and advertising costs.

Selling, general and a dministrative expenses as a percentage of net sales was 15.8% in the six months ended December 31, 2020 compared to 16.2% in the prior year comparable period, attributable to the aforementioned items described in net sales.

Amortization of Acquired Intangible Assets

Amortization of acquired intangibles was $2.4 million for the three months ended September 30, 2020, a decrease of $0.7 million from $3.1 million in the prior year quarter .

The decrease was due to finite-lived intangibles from historical acquisitions becoming fully amortized or impaired subsequent to the first quarter of fiscal 2020.

Amortization of acquired intangibles was $4.6 million for the six months ended December 31, 2020, a decrease of $1.6 million from $6.3 million in the prior year comparable period .

The decrease was due to no amortization of Fruit business intangibles during the first half of fiscal 2021 (which were presented instead as part of assets held for sale) and finite-lived intangibles from historical acquisitions becoming fully amortized or impaired during fiscal year 2020.

Productivity and Transformation Costs

Productivity and transformation costs were $1.8 million for the three months ended September 30, 2020, a decrease of $12.4 million from $14.2 million in the prior year quarter.

The decrease was primarily due to higher consulting fees incurred in connection with the Company’s productivity and transformation initiatives and higher severance costs in the prior year quarter and fewer comparable costs incurred in the current year quarter.

Productivity and transformation costs were $7.8 million for the six months ended December 31, 2020, a decrease of $18.6 million from $26.4 million in the prior year comparable period.

The decrease was primarily due to higher consulting fees and severance costs incurred in connection with the Company’s productivity and transformation initiatives in the prior year period and fewer comparable costs incurred in the first half of fiscal 2021.

Proceeds from Insurance Claim

In July of 2019, the Company received $7.0 million as partial payment from an insurance claim relating to business disruption costs associated with a co-packer.

Of this amount, $4.5 million was recognized in fiscal 2019 as it related to reimbursement of costs already incurred, with the remaining $2.5 million recognized in the three months ended September 30, 2019.

Long-lived Asset Impairment

During the three months ended September 30, 2020, the Company recognized a pre-tax impairment charge of $32.5 million related to the reserve recorded against the assets of the Company's United Kingdom fruit business (see Note 4, Assets Held for Sale and Discontinued Operations , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q).

There was no impairment charge recorded in the corresponding period in the three months ended September 30, 2019.

Of this amount, $4.5 million was recognized in fiscal 2019 as it related to reimbursement of costs already incurred, with the remaining $2.6 million recognized in the six months ended December 31, 2019.

Long-lived Asset and Intangibles Impairment

During the six months ended December 31, 2020, the Company recognized a pre-tax impairment charge of $57.7 million.

Included in this amount is $56.1 million related to the reserve recorded against the assets of the Company's U.K.

Fruit business (see Note 4, Assets Held for Sale and Discontinued Operations , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q).

The remaining amount of $1.6 million related to impairment of property, plant and equipment and other non-current assets.

There was no impairment charge recorded in the corresponding period in the six months ended December 31, 2019.

Operating Income

Operating income for the three months ended September 30, 2020 was $3.3 million compared to $2.5 million in the prior year quarter as a result of the items described above.

Operating income for the six months ended December 31, 2020 was $16.2 million compared to $11.6 million in the prior year comparable period as a result of the items described above.

Interest and Other Financing Expense, Net

Interest and other financing expense, net totaled $2.5 million for the three months ended September 30, 2020, a decrease of $3.8 million, or 61.0%, from $6.3 million in the prior year quarter.

The decrease resulted primarily from lower interest expense related to our revolving credit facility as a result of lower outstanding debt and lower variable interest rates.

Interest and other financing expense, net totaled $4.8 million for the six months ended December 31, 2020, a decrease of $6.2 million, or 56.6%, from $11.0 million in the prior year comparable period.

See Note 9, Debt and Borrowings , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Other (Income) Expense, Net

Other income, net totaled $1.4 million for the three months ended September 30, 2020, compared to expense of $1.3 million in the prior year quarter .

The change from expense to income was primarily attributable to net unrealized foreign currency gains in the first quarter of fiscal 2021 principally due to the effect of foreign currency movements on the remeasurement of foreign currency denominated loans compared to net unrealized foreign currency losses incurred in the prior year quarter.

Other income, net totaled $2.4 million for the six months ended December 31, 2020, compared to expense of $2.6 million in the prior year comparable period .

The change from expense to income was primarily attributable to a loss on the sale of a business of $1.8 million which occurred in the prior year comparable period and did not occur in the current year to date period.

The remainder of the change from expense to income is a result of net unrealized foreign currency gains in fiscal 2021 principally due to the effect of foreign currency movements on the remeasurement of foreign currency denominated loans compared to net unrealized foreign currency losses incurred in the prior year comparable period.

Income (Loss) from Continuing Operations Before Income Taxes and Equity in Net Loss of Equity-Method Investees

Income (loss) before income taxes and equity in net loss of our equity-method investees for the three months ended September 30, 2020 was income of $2.2 million compared to a loss of $5.2 million in the prior year quarter.

Income (loss) before income taxes and equity in net loss of our equity-method investees for the six months ended December 31, 2020 was income of $13.9 million compared to a loss of $2.0 million in the prior year comparable period.

The increase was due to the items discussed above.

Provision (Benefit) for Income Taxes

Provision for Income Taxes

The provision for income taxes includes federal, foreign, state and local income taxes.

Our income tax expense from continuing operations was $13.0 million for the three months ended September 30, 2020 compared to an income tax benefit of $0.5 million in the prior year quarter.

The effective income tax rate from continuing operations was an expense of 589.2% and a benefit of 10.3% for the three months ended September 30, 2020 and September 30, 2019, respectively.

The effective income tax rate from continuing operations for the period ended September 30, 2020 was impacted by various discrete items including the tax impact of the United Kingdom fruit business reserve, the enacted change in the United Kingdom's corporate income tax rate to 19% and a legal entity reorganization completed during the quarter ended September 30, 2020.

In addition, the effective income tax rates from continuing operations for the three months ended September 30, 2020 and 2019 were impacted by provisions in the Tax Cuts and Jobs Act, primarily related to Global Intangible Low Taxed Income and limitations on the deductibility of executive compensation.

Our income tax expense from continuing operations was $21.4 million for the six months ended December 31, 2020 compared to $0.5 million in the prior year comparable period.

The effective income tax rate from continuing operations was an expense of 154.3% and 25.0% for the six months ended December 31, 2020 and 2019 , respectively.

The effective income tax rate from continuing operations for the period ended December 31, 2020 was impacted by various discrete items including the tax impact of the United Kingdom Fruit business reserve, the enacted change in the United Kingdom's corporate income tax rate to 19% and a legal entity reorganization completed during the quarter ended September 30, 2020.

In addition, the effective income tax rates from continuing operations for the six months ended December 31, 2020 and 2019 were impacted by provisions in the Tax Cuts and Jobs Act, primarily related to Global Intangible Low Taxed Income and limitations on the deductibility of executive compensation.

The effective income tax rates in each period were also impacted by the geographical mix of earnings and state valuation allowance.

In August 2020, the Company received $25.0 million including $1.2 million of interest from the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") refund claim filed in July 2020.

The remaining receivable balance of $28.7 million is included in Prepaid expenses and other current assets as of September 30, 2020.

In August 2020, the Company received $25.0 million including $1.2 million of interest from the CARES Act refund claim filed in July 2020.

In December 2020, the Company received $28.8 million including $0.1 million of interest from the CARES Act refund claim filed in July 2020.

Equity in Net Loss of Equity-Method Investees

Our equity in net loss from our equity-method investments for the three months ended September 30, 2020 was $19 thousand and $0.3 million in the prior year quarter.

Our equity in net loss from our equity-method investments for the six months ended December 31, 2020 was $1.1 million and $0.7 million in the prior year comparable period.

See Note 13, Investments , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Net Loss from Continuing Operations

Net loss from continuing operations for the three months ended September 30, 2020 was $10.8 million, or $0.11 per diluted share, compared to $5.0 million, or $0.05 per diluted share, for the three months ended September 30, 2019.

Net loss from continuing operations for the six months ended December 31, 2020 was $8.6 million, or $0.09 per diluted share, compared to $3.1 million, or $0.03 per diluted share, for the six months ended December 31, 2019.

The increase in net loss was attributable to the factors noted above.

Net Income (Loss) from Discontinued Operations, Net of Tax

Net income (loss) from discontinued operations, net of tax, for the three months ended September 30, 2020 was income of $11.3 million, or $0.11 per diluted share, compared to a loss of $102.1 million, or $0.98 per diluted share, in the three months ended September 30, 2019 .

During the three months ended September 30, 2020, the Company recognized a $11.3 million adjustment to the Tilda business primarily related to the recognition of a deferred tax benefit.

Net loss from discontinued operations, net of tax, for the three months ended September 30, 2019 included a reclassification of $95.1 million of cumulative translation losses from accumulated other comprehensive loss to the Company's results of the Tilda business' discontinued operations.

Net income (loss) from discontinued operations, net of tax, for the six months ended December 31, 2020 was income of $11.3 million, or $0.11 per diluted share, compared to a loss of $104.9 million, or $1.01 per diluted share, in the six months ended December 31, 2019 .

During the six months ended December 31, 2020, the Company recognized a $11.3 million adjustment to the Tilda business primarily related to the recognition of a deferred tax benefit.

Net loss from discontinued operations, net of tax, for the six months ended December 31, 2019 included a reclassification of $95.1 million of cumulative translation losses from accumulated other comprehensive loss to the Company's results of the Tilda business' discontinued operations.

The income tax

expense from discontinued operations of $15.3 million for the three months ended September 30, 2019 was impacted by $16.5 million of tax related to the tax gain on the sale of the Tilda entities.

expense from discontinued operations of $13.5 million for the six months ended December 31, 2019 was impacted by $15.3 million of tax related to the tax gain on the sale of the Tilda entities.

See Note 4, Assets Held for Sale and Discontinued Operations , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for further discussion.

Net Income (Loss)

Net income for the three months ended September 30, 2020 was $0.5 million, or $0.00 per diluted share, compared to a net loss of $107.0 million, or $1.03 per diluted share, in the prior year quarter.

Net income for the six months ended December 31, 2020 was $2.6 million, or $0.02 per diluted share, compared to a net loss of $108.0 million, or $1.04 per diluted share, in the prior year comparable period.

The change from net loss to net income was attributable to the factors noted above.

Adjusted EBITDA

Our Adjusted EBITDA was $54.9 million and $32.1 million for the three months ended September 30, 2020 and 2019, respectively, as a result of the factors discussed above and the adjustments described in the Reconciliation of Non-U.S.

Our Adjusted EBITDA was $117.1 million and $77.1 million for the six months ended December 31, 2020 and 2019, respectively, as a result of the factors discussed above and the adjustments described in the Reconciliation of Non-U.S.

GAAP Financial Measures to U.S.

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Segment Results

The following table provides a summary of net sales and operating income by reportable segment for the three months ended September 30, 2020 and 2019:

The following table provides a summary of net sales and operating income by reportable segment for the six months ended December 31, 2020 and 2019:

(dollars in thousands) North America International Corporate and Other Consolidated

Three months ended 9/30/20 $ 280,668 $ 217,959 $ — $ 498,627

Three months ended 9/30/19 271,701 210,375 — 482,076

Six months ended 12/31/20 $ 563,280 $ 463,765 $ — $ 1,027,045

Six months ended 12/31/19 552,394 436,466 — 988,860

$ change $ 10,886 $ 27,299 n/a $ 38,185

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Operating income (loss)

Three months ended 9/30/20 $ 33,256 $ (15,889) $ (14,087) $ 3,280

Three months ended 9/30/19 15,132 9,107 (21,784) 2,455

Six months ended 12/31/20 $ 65,696 $ (18,630) $ (30,829) $ 16,237

Six months ended 12/31/19 35,194 22,006 (45,554) 11,646

$ change $ 30,502 $ (40,636) $ 14,725 $ 4,591

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Operating income (loss) margin

Three months ended 9/30/20 11.8 % (7.3) % n/a 0.7 %

Three months ended 9/30/19 5.6 % 4.3 % n/a 0.5 %

Six months ended 12/31/20 11.7 % (4.0) % n/a 1.6 %

Six months ended 12/31/19 6.4 % 5.0 % n/a 1.2 %

* Percentage is not meaningful due to one or more numbers being negative.

North America

Our net sales in the North America reportable segment for the three months ended September 30, 2020 were $280.7 million, an increase of $9.0 million, or 3.3%, from net sales of $271.7 million in the prior year quarter.

The increase in net sales was primarily driven by an increase in overall demand for our products as a result of increased at-home food consumption, most notably in our snacks, tea and certain personal care product categories, partially offset by brand divestitures and the strategic decision to no longer support certain lower margin SKUs in order to reduce complexity and increase gross margins.

Operating income in North America for the three months ended September 30, 2020 was $33.3 million, an increase of $18.1 million from $15.1 million in the prior year quarter.

Our net sales in the North America reportable segment for the six months ended December 31, 2020 were $563.3 million, an increase of $10.9 million, or 2.0%, from net sales of $552.4 million in the prior year comparable period.

The increase in net sales was primarily driven by an increase in overall demand for our products as a result of increased at-home food consumption, most notably in our snacks, tea, yogurt, and certain personal care product categories, partially offset by brand divestitures and the strategic decision to no longer support certain lower margin SKUs in order to reduce complexity and increase gross margins.

Operating income in North America for the six months ended December 31, 2020 was $65.7 million, an increase of $30.5 million from $35.2 million in the prior year comparable period.

The increase was driven by a favorable product mix, lower selling expenses and cost efficiencies gained with the Company's productivity and transformation initiatives.

I nternational

Our net sales in the International reportable segment for the three months ended September 30, 2020 were $218.0 million, an increase of $7.6 million, or 3.6%, from net sales of $210.4 million in the prior year quarter.

On a constant currency basis, net sales decreased 1.1% from the prior year quarter primarily due to decline in the fruit business, partially offset by an increase in overall demand for our products including the growth in our plant based food and beverage products.

Operating loss in our International reportable segment for the three months ended September 30, 2020 was $15.9 million, a decrease of $25.0 million from operating income of $9.1 million for the three months ended September 30, 2019.

The decrease was primarily associated with long-lived asset impairment charges relating to a $32.5 million reserve recorded on the United Kingdom's fruit business, partially offset by the increase in net sales as discussed above.

Our net sales in the International reportable segment for the six months ended December 31, 2020 were $463.8 million, an increase of $27.3 million, or 6.3%, from net sales of $436.5 million in the prior year comparable period.

On a constant currency basis, net sales increased 1.7% from the prior year comparable period primarily due to an increase in overall demand for our products including the growth in our plant based food and beverage products.

Operating loss in our International reportable segment for the six months ended December 31, 2020 was $18.6 million, a decrease of $40.6 million from operating income of $22.0 million for the six months ended December 31, 2019.

The decrease was primarily due to a reserve of $56.1 million recorded against the United Kingdom's Fruit business.

Corporate and Other

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Our operating loss in Corporate and Other for the three months ended September 30, 2020 was $14.1 million, a decrease in loss of $7.7 million, from $21.8 million.

This change was primarily related to productivity and transformation costs included in Corporate and Other, which for the three months ended September 30, 2020 were $0.8 million, a decrease of $9.9 million, from $10.7 million for the three months ended September 30, 2019.

Additionally, our improvement to operating loss was offset by proceeds from insurance claim included within Corporate and Other expenses that was a benefit of $2.6 million in the three months ended September 30, 2019, with no corresponding benefit in the current quarter.

Our Corporate and Other expenses for the six months ended December 31, 2020 were $30.8 million, a decrease of $14.7 million, from $45.6 million in the prior year period.

This change was primarily related to productivity and transformation costs included in Corporate and Other, which for the six months ended December 31, 2020 were $3.5 million, a decrease of $17.0 million, from $20.6 million for the six months ended December 31, 2019.

Refer to Note 18, Segment Information , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

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We finance our operations and growth primarily with the cash flows we generate from our operations and from borrowings available to us under our Amended Credit Agreement.

As of September 30, 2020, $702.3 million was available under the Amended Credit Agreement, and the Company was in compliance with all associated covenants.

As of December 31, 2020, $700.6 million was available under the Amended Credit Agreement, and the Company was in compliance with all associated covenants.

We believe that our cash flows from operations and borrowing capacity under our Amended Credit Agreement will be adequate to meet anticipated operating and other expenditures for the foreseeable future.

Our cash and cash equivalents balance, including those balances classified as held for sale, decreased $0.5 million at September 30, 2020 to $37.3 million as compared to $37.8 million at June 30, 2020.

Our working capital from continuing operations was $283.7 million at September 30, 2020, an increase of $23.1 million from $260.7 million at the end of fiscal 2020.

Our cash and cash equivalents balance, including those balances classified as held for sale, increased $22.9 million at December 31, 2020 to $60.6 million as compared to $37.8 million at June 30, 2020.

Our working capital from continuing operations was $270.8 million at December 31, 2020, an increase of $10.1 million from $260.7 million at the end of fiscal 2020.

Liquidity is affected by many factors, some of which are based on normal ongoing operations of the Company’s business and some of which arise from fluctuations related to global economics and markets.

Our cash balances are held in the United States, United Kingdom, Canada, Europe and India.

As of September 30, 2020, substantially all of the total cash balance from continuing operations was held outside of the United States due to debt repayments made towards our revolving credit facility at the end of the period by the United States operating segment.

It is our current intent to indefinitely reinvest our remaining foreign earnings outside the United States.

As of December 31, 2020, substantially all of the total cash balance from continuing operations was held outside of the United States due to debt repayments made towards our revolving credit facility at the end of the period by the United States operating segment.

We maintain our cash and cash equivalents primarily in money market funds or their equivalent.

As of September 30, 2020, all of our investments were expected to mature in less than three months.

As of December 31, 2020, all of our investments were expected to mature in less than three months.

Accordingly, we do not believe that our investments have significant exposure to interest rate risk.

Cash provided by (used in) operating, investing and financing activities is summarized below.

Three Months Ended September 30, Change in

Six Months Ended December 31, Change in

(amounts in thousands) 2020 2019 Dollars

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Effect of exchange rate changes on cash from continuing operations 5,734 1,382 4,352

Decrease in cash from continuing operations (518) (10,495) 9,977

Increase in cash from continuing operations 22,850 6,007 16,843

Decrease in cash from discontinued operations — (8,509) 8,509

Net decrease in cash and cash equivalents $ (518) $ (19,004) $ 18,486

Cash provided by operating activities from continuing operations was $40.7 million for the three months ended September 30, 2020, an increase of $44.3 million from cash used in operating activities from continuing operations of $3.6 million in the prior year period.

Net increase (decrease) in cash and cash equivalents $ 22,850 $ (2,502) $ 25,352

Cash provided by operating activities from continuing operations was $104.5 million for the six months ended December 31, 2020, an increase of $87.4 million from cash provided by operating activities from continuing operations of $17.1 million in the prior year period.

This increase resulted primarily from an improvement of $51.7 million in net income adjusted for non-cash charges in the current period and greater cash generation of $35.7 million from our working capital accounts.

Cash used in investing activities from continuing operations was $7.7 million for the three months ended September 30, 2020, a decrease of $5.4 million from $13.2 million in the prior year period primarily due to proceeds from sale of businesses and decreased capital expenditures.

Cash used in financing activities from continuing operations was $36.0 million for the three months ended September 30, 2020, a decrease of $43.1 million compared to $7.1 million of cash provided in the prior year period.

Cash used in financing activities from continuing operations for the three months ended September 30, 2020 included $8.0 million of net borrowings of our revolving credit facility and $42.1 million of share repurchases.

Cash provided by financing activities from continuing operations for the three months ended September 30, 2019 included $312.2 million primarily related to the proceeds from the sale of Tilda, partially offset by $304.7 million of net repayments of our term loan and revolving credit facility.

Cash used in investing activities from continuing operations was $25.2 million for the six months ended December 31, 2020, an increase of $9.0 million from $16.2 million in the prior year period primarily due to lower proceeds received in the prior year period from the sale of businesses.

Cash used in financing activities from continuing operations was $62.2 million for the six months ended December 31, 2020, a decrease in cash provided of $65.9 million compared to $3.7 million of cash provided in the prior year period.

Cash used in financing activities from continuing operations for the six months ended December 31, 2020 included $13.0 million of net borrowings of our revolving credit facility and $71.7 million of share repurchases.

Cash provided by financing activities from continuing operations for the six months ended December 31, 2019 included $309.9 million related to the proceeds from the sale of Tilda, partially offset by $305.3 million of net repayments of our term loan, revolving credit facility and other debt.

Operating Free Cash Flow from Continuing Operations

Our operating free cash flow from continuing operations was $28.5 million for the three months ended September 30, 2020, an improvement of $45.3 million from negative $16.7 million in the three months ended September 30, 2019.

Our operating free cash flow from continuing operations was $74.9 million for the six months ended December 31, 2020, an improvement of $87.0 million from negative $12.2 million in the six months ended December 31, 2019.

This improvement resulted primarily from an improvement of $51.7 million in net income adjusted for non-cash charges in the current period and greater cash generation of $35.7 million from our working capital accounts.

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The extent to which the Company repurchases its shares and the timing of such repurchases will depend upon market conditions and other corporate considerations.

During the three months ended September 30, 2020, the Company repurchased 1,281 shares under the program for a total of $42.0 million, excluding commissions, at an average price of $32.81 per share.

As of September 30, 2020, the Company had $147.8 million of remaining authorization under the share repurchase program.

During the six months ended December 31, 2020, the Company repurchased 2,204 shares under the program for a total of $71.7 million, excluding commissions, at an average price of $32.53 per share.

As of December 31, 2020, the Company had $118.1 million of remaining authorization under the share repurchase program.

Reconciliation of Non-U.S.

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(amounts in thousands) North America International Hain Consolidated

Net sales - Three months ended 9/30/20 $ 280,668 $ 217,959 $ 498,627

Net sales - Three Months Ended December 31, 2020

$ 282,612 $ 245,806 $ 528,418

Impact of foreign currency exchange (465) (9,819) (10,284)

Net sales on a constant currency basis - Three months ended 9/30/20 $ 281,031 $ 208,073 $ 489,104

Net sales - Three months ended 9/30/19 $ 271,701 $ 210,375 $ 482,076

Net sales on a constant currency basis - Three Months Ended December 31, 2020

$ 282,147 $ 235,987 $ 518,134

Net sales - Three Months Ended December 31, 2019

$ 280,693 $ 226,091 $ 506,784

Net sales growth on a constant currency basis 0.5 % 4.4 % 2.2 %

Net sales - Six Months Ended December 31, 2020

$ 563,280 $ 463,765 $ 1,027,045

Impact of foreign currency exchange (101) (19,705) (19,806)

Net sales on a constant currency basis - Six Months Ended December 31, 2020

$ 563,179 $ 444,060 $ 1,007,239

Net sales - Six Months Ended December 31, 2019

$ 552,394 $ 436,466 $ 988,860

Net sales growth on a constant currency basis 2.0 % 1.7 % 1.9 %

Adjusted EBITDA

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GAAP to be recorded in our consolidated financial statements.

In addition, Adjusted EBITDA is subject to inherent limitations as this metric reflects the exercise of judgment by management about which expenses and income are excluded or included in determining Adjusted EBITDA.

In addition, Adjusted EBITDA is subject to inherent limitations as this metric reflects the exercise of judgment by management about which expenses and income are excluded or

included in determining Adjusted EBITDA.

In order to compensate for these limitations, management presents Adjusted EBITDA in connection with U.S.

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A reconciliation of net income (loss) to Adjusted EBITDA is as follows:

Three Months Ended September 30,

Three Months Ended December 31, Six Months Ended December 31,

(amounts in thousands) 2020 2019 2020 2019

Net income (loss) $ 2,140 $ (964) $ 2,625 $ (107,985)

Net income (loss) from discontinued operations 11,266 (102,068)

Net loss from continuing operations (10,781) (4,953)

Provision (benefit) for income taxes 12,962 (531)

Net (loss) income from discontinued operations, net of tax (11) (2,816) 11,255 (104,884)

Net income (loss) from continuing operations 2,151 1,852 (8,630) (3,101)

Provision for income taxes 8,438 1,020 21,400 489

Interest expense, net 1,300 4,000 3,454 8,552

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Stock-based compensation, net 3,823 3,083 8,190 5,820

Long-lived asset impairment 32,497 —

Unrealized currency (gains) losses (1,202) 1,684

Unrealized currency losses (gains) 225 (485) (977) 1,199

Productivity and transformation costs 5,363 12,260 6,513 26,435

Proceeds from insurance claim — — — (2,562)

Long-lived asset and intangibles impairment 25,179 1,889 57,676 1,889

Warehouse/manufacturing consolidation and other costs 3,325 639 3,715 2,518

Gain on sale of businesses (620) —

SKU rationalization and inventory write-down 107 3,927 311 3,916

Loss (gain) on sale of businesses 9 1,783 (611) 1,783

Plant closure related costs 2 1,522 (4) 2,354

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A reconciliation from cash flow provided by operating activities from continuing operations to Operating Free Cash flow from continuing operations is as follows:

Three Months Ended September 30,

Six Months Ended December 31,

(amounts in thousands) 2020 2019

Cash flow provided by (used in) operating activities from continuing operations $ 40,669 $ (3,581)

Cash flow provided by operating activities from continuing operations $ 104,530 $ 17,148

Purchases of property, plant and equipment (29,671) (29,337)

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Off Balance Sheet Arrangements

At September 30, 2020, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K that have had, or are likely to have, a material current or future effect on our consolidated financial statements.

At December 31, 2020, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K that have had, or are likely to have, a material current or future effect on our consolidated financial statements.

Critical Accounting Estimates

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis