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Item 2. Management’s Discussion and Analysis

2021-05-06 compared with 2021-02-09 · 213 added, 201 removed, 269 unchanged (61% 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 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.

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 March 31, 2021 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, 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.

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 ® , 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.

The Company continues to execute the four key pillars of its strategy to:

The Company continues to execute the four key pillars of its strategy:

(1) simplify its portfolio;

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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.

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.

In fiscal 2021, the Company divested Danival ® , along with its U.K.

fruit business ("Fruit"), primarily consisting of the Orchard House ® Foods Limited business and associated brands, and in April 2021, the Company completed the sale of both WestSoy ® and Dream ® .

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 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.

Various policies and initiatives have been implemented by governments, organizations and individuals to reduce the global transmission of COVID-19.

Although there are effective vaccines for COVID-19 that have been approved for use, it is uncertain when the rate of vaccinations will allow a return to a more normal economic activity and business operations.

Access to vaccines and vaccination rates vary greatly by country.

In addition, recent lockdowns in Europe, the presence of new variants and efficacy of existing vaccines against new variants pose additional uncertainty about the duration and extent of the impact from the COVID-19 pandemic.

Employee and Consumer Health and Safety Precautions

From the outset of the pandemic, our first priority has been the well-being of our employees and consumers.

We were early adopters of guidance from global health authorities for preventing the spread of COVID-19, and we have consistently met or exceeded government guidelines for addressing the health and safety of our employees, including global travel restrictions, prohibitions against visitors, social distancing requirements, the use of thermal temperature scanners, and the provision of personal protective equipment to our employees.

We have also enabled the use of new technology to allow many of our office-based employees to work from home effectively.

We continue to consistently meet or exceed government guidelines for addressing the health and safety of our employees, including global travel restrictions, prohibitions against visitors, social distancing requirements, the use of thermal temperature scanners, and the provision of personal protective equipment to our employees.

We have continued the use of certain technology to allow many of our office-based employees to work from home effectively.

Manufacturing Facilities and Supply Chain Challenges

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.

These third parties include our suppliers, contract manufacturers, distributors, logistics providers and other business partners, as well as the retailers that ultimately sell our products to consumers.

We believe our planning has us well positioned to continue to manage these supply chain challenges.

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, 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.

Shelter-in-place and social distancing behaviors, which are being mandated or encouraged by governments and practiced by businesses and individuals, continue to create challenges for our manufacturing employees.

We have safety protocols in place that consistently meet or exceed government guidelines for addressing the health and safety of our employees, and we have successfully implemented contingency plans overseen by crisis management teams to monitor the evolving needs of our business.

To date, there have been some disruptions to our supply chain network, including labor availability and the supply of our ingredients, packaging or other sourced materials.

It is possible that additional disruptions could occur if the COVID-19 pandemic continues to impact markets around the world.

We are also working closely with our contract manufacturers, distributors, and other external business partners to minimize the potential impact on our business.

Additionally, we continue to consolidate product shipping orders to more efficiently meet increased customer and consumer 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 United Kingdom Fruit business we disposed of in January2021, have been adversely impacted due to changed consumer behavior and priorities.

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 have been adversely impacted due to changed consumer behavior and priorities, such as sun care products in the early stages of the pandemic.

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.

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

As of March 31, 2021, we had borrowing capacity of $738.6 million available under the Amended Credit Agreement.

Business Priorities

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Deteriorating economic conditions could jeopardize the viability of some third parties and our business relationships with them and could cause us to incur losses or increased costs in our dealings with those third parties.

We have taken measures to minimize the impact of hardships faced by individual business partners, including by identifying secondary sources of supply and manufacturing capabilities.

We have taken measures to

minimize the impact of hardships faced by individual business partners, including by identifying secondary sources of supply and manufacturing capabilities.

Productivity and Transformation Costs

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These dispositions represented strategic shifts that had a major impact on the Company’s operations and financial results, and therefore, the Company is presenting the operating results and cash flows of the Tilda operating segment and the Hain Pure Protein reportable segment within discontinued operations in the current and prior peri ods.

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

Se e Note 4, Dispositions , 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 March 31, 2021 to Three Months Ended March 31, 2020

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 December 31, 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 March 31, 2021 and 2020 (amounts in thousands, other than percentages, which may not add due to rounding):

Three Months Ended Change in

December 31, 2020 December 31, 2019 Dollars Percentage

March 31, 2021 March 31, 2020 Dollars Percentage

Net sales $ 492,604 100.0% $ 553,297 100.0% $ (60,693) (11.0)%

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Productivity and transformation costs 4,553 0.9% 11,514 2.1% (6,961) (60.5)%

Proceeds from insurance claim (592) (0.1)% (400) (0.1)% (192) *

Long-lived asset and intangibles impairment — —% 13,525 2.4% (13,525) (100.0)%

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Interest and other financing expense, net 2,030 0.4% 4,037 0.7% (2,007) (49.7)%

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

Other expense (income), net 1,566 0.3% (260) —% 1,826 *

Income from continuing operations before income taxes and equity in net loss of equity-method investees 45,981 9.3% 15,358 2.8% 30,623 199.4%

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%

Provision (benefit) for income taxes 11,797 2.4% (10,242) (1.9)% 22,039 *

Equity in net (income) loss of equity-method investees (70) —% 564 0.1% (634) *

Net income from continuing operations $ 34,254 7.0% $ 25,036 4.5% $ 9,218 36.8%

Net loss from discontinued operations, net of tax — —% (697) (0.1)% 697 *

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

Net income $ 34,254 7.0% $ 24,339 4.4% $ 9,915 40.7%

Adjusted EBITDA $ 73,752 15.0% $ 60,690 11.0% $ 13,062 21.5%

Diluted net income per common share from continuing operations $ 0.34 $ 0.24 $ 0.10 41.7%

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 *

Diluted net loss per common share from discontinued operations — (0.01) 0.01 *

Diluted net income per common share $ 0.34 $ 0.23 $ 0.11 47.8%

* 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.

Net sales for the three months ended March 31, 2021 were $492.6 million , a decrease of $60.7 million , or 11.0% , as compared to $553.3 million in the three months ended March 31, 2020 .

On a constant currency basis, and adjusted for the impact of divestitures and discontinued brands, net sales decreased approximately 6.0% from the prior year quarter.

Net sales on a constant currency basis, adjusted for the impact of divestitures and discontinued brands, decreased in both the North America and International reportable segments.

Further details of changes in adjusted net sales by segment are provided below in the Segment Results section.

Gross profit for the three months ended March 31, 2021 was $129.9 million, a decrease of $2.5 million, or 1.9%, as compared to the prior year quarter primarily driven by lower sales.

Gross profit margin was 26.4% of net sales, compared to 23.9% 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.

The increase in margin 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.

Selling, general and administrative expenses were $74.2 million for the three months ended March 31, 2021, a decrease of $11.2 million, or 13.1%, from $85.4 million for the prior year quar ter.

The decrease was primarily due to lower marketing and advertising costs, salaries, consulting expense, travel and entertainment expenses, broker trade accruals and corporate expenses.

Some of the decrease drivers were part of our productivity and transformation initiatives.

Selling, general and a dministrative expenses as a percentage of net sales was 15.1% in the three months ended March 31, 2021 compared to 15.4% in the prior year quarter, reflecting a decrease of 30 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.

Amortization of acquired intangibles was $2.1 million for the three months ended March 31, 2021, a decrease of $1.0 million from $3.2 million in the prior year quarter .

The decrease was due to the elimination of the Fruit business intangible amortization during the third quarter of fiscal 2021 and finite-lived intangibles from historical acquisitions becoming fully amortized or impaired during fiscal year 2020, partially offset by amortization from some of the 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.

Productivity and transformation costs were $4.6 million for the three months ended March 31, 2021, a decrease of $7.0 million from $11.5 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.

There were no long-lived asset and intangible impairment charges recorded in the three months ended March 31, 2021.

In comparison, during the three months ended March 31, 2020, the Company recorded pre-tax impairment charges of $13.5 million of which $2.1 million related to certain tradenames within the Company's North America segment, $5.5 million related to certain tradenames within the Company's International segment and $5.9 million related to a write-down of certain machinery and equipment in the United States and Europe used to manufacture certain slow moving or low margin SKUs.

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.

Operating income for the three months ended March 31, 2021 was $49.6 million compared to $19.1 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.

Interest and other financing expense, net totaled $2.0 million for the three months ended March 31, 2021, a decrease of $2.0 million, or 49.7%, from $4.0 million in the prior year quarter.

The decrease resulted primarily from lower interest expense as a result of lower outstanding debt and lower variable interest rates on the portion of the debt not hedged by the 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.

Other Expense (Income), Net

Other expense, net totaled $1.6 million for the three months ended March 31, 2021, compared to income of $0.3 million in the prior year quarter .

The change from income to expense was primarily attributable to a loss on the sale of the Fruit business which occurred in the current year 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.

Income before income taxes and equity in net loss of our equity-method investees for the three months ended March 31, 2021 was $46.0 million compared to $15.4 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.

Provision (Benefit) for Income Taxes

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

Our income tax expense from continuing operations was $11.8 million for the three months ended March 31, 2021 compared to an income tax benefit of $10.2 million in the prior year quarter.

The effective income tax rate from continuing operations was an expense of 25.7% and a benefit of 66.7% for the three months ended March 31, 2021 and March 31, 2020, respectively.

The effective income tax rate from continuing operations for the three months ended March 31, 2021 was impacted by various discrete items including the finalization of fiscal year 2020 income tax returns.

The income tax benefit for the three months ended March 31, 2020 was primarily due to the benefits from the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") tax loss carryback.

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.

Equity in Net (Income) Loss of Equity-Method Investees

Our equity in net (income) loss from our equity-method investments for the three months ended March 31, 2021 was income of $0.1 million compared to a loss of $0.6 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 income from continuing operations for the three months ended March 31, 2021 was $34.3 million, or $0.34 per diluted share, compared to net income of $25.0 million, or $0.24 per diluted share, for the three months ended March 31, 2020.

The increase in net income from continuing operations 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.

There was no net loss from discontinued operations, net of tax, for the three months ended March 31, 2021, compared to a loss of $0.7 million in the three months ended March 31, 2020 .

See Note 4, Dispositions , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for further discussion.

Net income for the three months ended March 31, 2021 was $34.3 million, or $0.34 per diluted share, compared to net income of $24.3 million, or $0.23 per diluted share, in the prior year quarter.

The change 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.

Adjusted EBITDA was $73.8 million and $60.7 million for the three months ended March 31, 2021 and 2020, 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 (loss) by reportable segment for the three months ended December 31, 2020 and 2019:

The following table provides a summary of net sales and operating income (loss) by reportable segment for the three months ended March 31, 2021 and 2020:

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

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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.

Net sales in the North America reportable segment for the three months ended March 31, 2021 were $287.5 million, a decrease of $32.9 million, or 10.3%, from net sales of $320.4 million in the prior year quarter.

On a constant currency basis, adjusted for the impact of divestitures and discontinued brands, net sales decreased by 7.9% from the prior year quarter.

On an adjusted basis, the decrease was primarily driven by a large program with a wholesale club which was not repeated in the current quarter and pantry stocking in the prior year quarter as a result of stay-at-home orders at the beginning of the COVID-19 pandemic.

Operating income in North America for the three months ended March 31, 2021 was $39.5 million, an increase of $10.6 million from $28.9 million in the prior year quarter due to lower trade promotion costs, a favorable product mix, lower selling, general and administrative expenses and supply chain 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.

Net sales in the International reportable segment for the three months ended March 31, 2021 were $205.1 million, a decrease of $27.8 million, or 11.9%, from net sales of $232.9 million in the prior year quarter.

On a constant currency basis, and adjusted for the impact of divestitures and discontinued brands, net sales decreased by 2.6% from the prior year quarter.

On an adjusted basis, the decrease was mainly due to United Kingdom customer inventory reductions that were elevated in three months ended December 31, 2020 in anticipation of potential Brexit supply disruptions as well as pantry stocking in the prior year quarter as a result of stay-at-home orders at the beginning of the COVID-19 pandemic.

Operating income in our International reportable segment for the three months ended March 31, 2021 was $26.8 million, compared to operating income of $18.7 million for the three months ended March 31, 2020, an increase of $8.1 million due to lower trade promotion costs, supply chain cost efficiencies and lower selling, general and administrative expenses.

Corporate and Other

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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.

Our Corporate and Other expenses for the three months ended March 31, 2021 were $16.7 million, a decrease of $11.7 million, from $28.4 million.

Included in the three months ended March 31, 2020 was a tradename impairment charge of $7.6 million compared with no tradename impairment charges in the three months ended March 31, 2021.

In addition, the decrease is due to Productivity and transformation costs included in Corporate and Other, which for the three months ended March 31, 2021 were $2.8 million, a decrease of $2.8 million, from $5.6 million for the three months ended March 31, 2020.

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

Comparison of Nine Months Ended March 31, 2021 to Nine Months Ended March 31, 2020

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

The following table compares our results of operations, including as a percentage of net sales, on a consolidated basis, for the nine months ended March 31, 2021 and 2020 (amounts in thousands, other than percentages, which may not add due to rounding):

Nine Months Ended Change in

March 31, 2021 March 31, 2020 Dollars Percentage

Net sales $ 1,519,649 100.0% $ 1,542,157 100.0% $ (22,508) (1.5)%

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Other (income) expense, net (852) (0.1)% 2,312 0.1% (3,164) *

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

Income from continuing operations before income taxes and equity in net loss of equity-method investees 59,846 3.9% 13,401 0.9% 46,445 346.6%

Provision (benefit) for income taxes 33,197 2.2% (9,753) (0.6)% 42,950 *

Equity in net loss of equity-method investees 1,025 0.1% 1,219 0.1% (194) (15.9)%

Net loss from continuing operations $ (8,630) (0.8)% $ (3,101) (0.3)% $ (5,529) *

Net income from continuing operations $ 25,624 1.7% $ 21,935 1.4% $ 3,689 16.8%

Net income (loss) from discontinued operations, net of tax 11,255 0.7% (105,581) (6.8)% 116,836 *

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Adjusted EBITDA $ 190,838 12.6% $ 137,827 8.9% $ 53,011 38.5%

Diluted net loss per common share from continuing operations $ (0.09) $ (0.03) $ (0.06) *

Diluted net income per common share from continuing operations $ 0.25 $ 0.21 $ 0.04 19.0%

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

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* 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 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.

Net sales for the nine months ended March 31, 2021 were $1,519.6 million , a decrease of $22.5 million , or 1.5% , as compared to $1,542.2 million in the nine months ended March 31, 2020 as a result of a decrease in sales in the North America reportable segments.

On a constant currency basis, adjusted for the impact of divestitures and discontinued brands, net sales increased approximately 1.6% from the prior comparable period.

On an adjusted basis, net sales increased in both North America and International segments.

Further details of changes in adjusted net sales by segment are provided below in the Segment Results section.

Gross profit for the nine months ended March 31, 2021 was $379.0 million, an increase of $43.2 million, or 12.9%, as compared to the prior year comparable period.

Gross profit margin was 24.9% of net sales, compared to 21.8% in the prior year comparable period.

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Selling, General and Administrative Expenses

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.

Selling, general and administrative expenses were $237.0 million for the nine months ended March 31, 2021, a decrease of $8.2 million, or 3.3%, from $245.2 million for the prior year comparable period .

The decrease was due to lower broker trade accruals, salaries, consulting expense, travel and entertainment expenses and corporate expenses.

Selling, general and a dministrative expenses as a percentage of net sales was 15.6% in the nine months ended March 31, 2021 compared to 15.9% in the prior year comparable period, attributable to the aforementioned items.

Amortization of Acquired Intangible Assets

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.

Amortization of acquired intangibles was $6.8 million for the nine months ended March 31, 2021, a decrease of $2.7 million from $9.4 million in the prior year comparable period .

The decrease was due to the elimination of the Fruit business intangible amortization since the first quarter of fiscal 2021 and finite-lived intangibles from historical acquisitions becoming fully amortized or impaired during fiscal year 2020, partially offset by amortization from some of the 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 $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.

Productivity and transformation costs were $12.4 million for the nine months ended March 31, 2021, a decrease of $25.6 million from $37.9 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 fiscal 2021.

Proceeds from Insurance Claim

In the third quarter of fiscal year 2021, the Company received $0.6 million as payment from an insurance claim related to a litigation described in Note 17, Commitments and Contingencies .

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 $2.6 million recognized in the six months ended December 31, 2019.

Of this amount, $4.5 million was recognized in fiscal 2019 as it related to reimbursement of costs already incurred, with the remaining $2.9 million recognized in the nine months ended March 31, 2020.

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.

During the nine months ended March 31, 2021, the Company recognized a pre-tax impairment charge of $57.7 million, of which $56.1 million related to the reserve recorded against the assets of the Company's Fruit business (see Note 4, Dispositions , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q) and $1.6 million related to impairment of property, plant and equipment and other non-current assets not related to the Fruit business.

During the nine months ended March 31, 2020, the Company recorded a pre-tax impairment charge of $15.4 million, of which $4.0 million related to certain tradenames within the Company's North America segment, $5.5 million related to certain tradenames within the Company's International segment and $5.9 million related to a write-down of certain machinery and equipment in the United States and Europe used to manufacture certain slow moving or low margin SKUs.

Operating Income

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.

Operating income for the nine months ended March 31, 2021 was $65.8 million compared to $30.8 million in the prior year comparable period because of the items described above.

Interest and Other Financing Expense, Net

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.

Interest and other financing expense, net totaled $6.8 million for the nine months ended March 31, 2021, a decrease of $8.2 million, or 54.7%, from $15.1 million in the prior year comparable period.

The decrease resulted primarily from lower interest expense as a result of lower outstanding debt and lower variable interest rates on the portion of the debt not hedged by the 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 $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 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.

Other income, net totaled $0.9 million for the nine months ended March 31, 2021, compared to expense of $2.3 million in the prior year comparable period .

The change from expense to income was primarily attributable to net unrealized foreign currency losses in fiscal 2020 being higher than in fiscal 2021 principally due to foreign currency movements on the remeasurement of foreign currency denominated loans, partially offset by loss on sale of businesses of $1.3 million in fiscal 2021 compared with gain on sale of business of $2.1 million in fiscal 2020.

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

Income from continuing operations before income taxes and equity in net loss of our equity-method investees for the nine months ended March 31, 2021 was $59.8 million compared to $13.4 million in the prior year comparable period.

The increase was due to the items discussed above.

Provision for Income Taxes

Provision (Benefit) for Income Taxes

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

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 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.

Our income tax expense from continuing operations was $33.2 million for the nine months ended March 31, 2021 compared to a tax benefit of $9.8 million in the prior year comparable period.

The effective income tax rate from continuing operations was an expense of 55.5% and benefit of 72.8% for the nine months ended March 31, 2021 and 2020 , respectively.

The effective income tax rate from continuing operations for the period ended March 31, 2021 was impacted by various discrete items including the tax impact of the sale of the Fruit business, 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.

The income tax benefit for the nine months ended March 31, 2020 was mainly due to the benefits from the CARES Act carryback.

Through the nine months ended March 31, 2021 , the Company received $53.8 million including $1.3 million of interest from the CARES Act tax loss carryback refund claims.

Equity in Net Loss of Equity-Method Investees

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.

Our equity in net loss from our equity-method investments for the nine months ended March 31, 2021 was $1.0 million compared to $1.2 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 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 from Continuing Operations

Net income from continuing operations for the nine months ended March 31, 2021 was $25.6 million, or $0.25 per diluted share, compared to $21.9 million, or $0.21 per diluted share, for the nine months ended March 31, 2020.

The increase in net income from continuing operations 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 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 $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) from discontinued operations, net of tax, for the nine months ended March 31, 2021 was income of $11.3 million, or $0.11 per diluted share, compared to a loss of $105.6 million, or $1.01 per diluted share, in the nine months ended March 31, 2020 .

During the nine months ended March 31, 2021, 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 nine months ended March 31, 2020 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 $13.5 million for the nine months ended March 31, 2020 was impacted by $15.3 million of tax related to the tax gain on the sale of the Tilda entities.

See Note 4, Dispositions , 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 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.

Net income for the nine months ended March 31, 2021 was $36.9 million, or $0.36 per diluted share, compared to a net loss of $83.6 million, or $0.80 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 $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.

Our Adjusted EBITDA was $190.8 million and $137.8 million for the nine months ended March 31, 2021 and 2020, 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 six months ended December 31, 2020 and 2019:

The following table provides a summary of net sales and operating income by reportable segment for the nine months ended March 31, 2021 and 2020:

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

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

Nine months ended 3/31/21 $ 850,780 $ 668,869 $ — $ 1,519,649

Nine months ended 3/31/20 872,834 669,323 — 1,542,157

$ change $ (22,054) $ (454) n/a $ (22,508)

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Operating income (loss)

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

Nine months ended 3/31/21 $ 105,188 $ 8,144 $ (47,518) $ 65,814

Nine months ended 3/31/20 64,067 40,666 (73,952) 30,781

$ change $ 41,121 $ (32,522) $ 26,434 $ 35,033

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Operating income (loss) margin

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 %

Nine months ended 3/31/21 12.4 % 1.2 % n/a 4.3 %

Nine months ended 3/31/20 7.3 % 6.1 % n/a 2.0 %

* 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 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.

Our net sales in the North America reportable segment for the nine months ended March 31, 2021 were $850.8 million, a decrease of $22.1 million, or 2.5%, from net sales of $872.8 million in the prior year comparable period.

On a constant currency basis, adjusted for the impact of divestitures and discontinued brands, net sales increased by 2.0%.

On an adjusted basis, North America segment sales increased by 2.0% due to higher sales in first two quarters of the current year compared to the prior year 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.

This increase was partially offset by a decrease in the third quarter due to reasons discussed above in the Comparison of Three Months Ended March 31, 2021 to Three Months Ended March 31, 2020 section.

Operating income in North America for the nine months ended March 31, 2021 was $105.2 million, an increase of $41.1 million from $64.1 million in the prior year comparable period.

The increase was driven by lower trade promotion costs, a favorable product mix, lower selling, general and administrative expenses and supply chain cost efficiencies gained with the Company's productivity and transformation initiatives.

I nternational

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.

Our net sales in the International reportable segment for the nine months ended March 31, 2021 were $668.9 million, a decrease of $0.5 million, or 0.1%, from net sales of $669.3 million in the prior year comparable period.

On a constant currency basis, and adjusted for the impact of divestitures and discontinued brands, net sales increased 1.2% 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 income in our International reportable segment for the nine months ended March 31, 2021 was $8.1 million, a decrease of $32.5 million from operating income of $40.7 million for the nine months ended March 31, 2020.

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

Without this charge, operating income would have increased by $23.6 million driven by improvement in gross profit from adjusted net sales growth and the implementation of productivity initiatives.

Corporate and Other

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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.

Our Corporate and Other expenses for the nine months ended March 31, 2021 were $47.5 million, a decrease of $26.4 million, from $74.0 million in the prior year period.

This change was primarily related to a decrease in productivity and transformation costs included in Corporate and Other, which for the nine months ended March 31, 2021 were $6.3 million, a decrease of $19.8 million, from $26.1 million for the nine months ended March 31, 2020.

Included in the nine months ended March 31, 2020 was a tradename impairment charge of $7.6 million compared with no tradename impairment charges in the three months ended March 31, 2021.

The decrease of $26.4 million was related to Corporate and Other expenses was partially offset by lower marketing and advertising expenses.

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

As of March 31, 2021, $738.6 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, 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.

Our cash and cash equivalents balance increased $15.2 million at March 31, 2021 to $53.0 million as compared to $37.8 million at June 30, 2020.

Our working capital from continuing operations was $264.9 million at March 31, 2021, an increase of $4.2 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 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.

As of March 31, 2021, 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 December 31, 2020, all of our investments were expected to mature in less than three months.

As of March 31, 2021, 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.

Six Months Ended December 31, Change in

Nine Months Ended March 31, Change in

(amounts in thousands) 2021 2020 Dollars

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

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 $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.

Net increase in cash and cash equivalents $ 15,243 $ 2,023 $ 13,220

Cash provided by operating activities from continuing operations was $146.5 million for the nine months ended March 31, 2021, an increase of $82.4 million from cash provided by operating activities from continuing operations of $64.1 million in the prior year period.

This increase resulted primarily from an improvement of $56.2 million in net income adjusted for non-cash

charges in the current period.

The larger non-cash adjustments to net income from continuing operations related to the L ong-lived asset and intangibles impairment charge of $57.7 million during the nine months ended March 31, 2021 compared with $15.4 million in the prior year period as well as a change to deferred tax expense of $3.2 million in the current year period compared with deferred tax benefit of $9.0 million in the prior year period .

The reason for the change to Long-lived asset and intangible impairment charge is discussed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section entitled Comparison of Nine Months Ended March 31, 2021 to Nine Months Ended March 31, 2020 .

Compared to current year deferred tax expense, the prior year deferred tax benefit is primarily due to the CARES Act.

Additionally, the increase in cash provided by operating activities from continuing operations resulted from greater cash generation of $26.3 million from our working capital accounts.

Cash used in investing activities from continuing operations was $26.0 million for the nine months ended March 31, 2021, a decrease of $6.6 million from $32.5 million in the prior year period primarily due to higher proceeds received in the current year period from the sale of businesses.

Cash used in financing activities from continuing operations was $111.0 million for the nine months ended March 31, 2021, an increase in cash used of $92.0 million compared to $18.9 million of cash used in the prior year period.

Cash used in financing activities from continuing operations for the nine months ended March 31, 2021 included $25.0 million of net repayments of our revolving credit facility and $80.3 million of share repurchases.

Cash used in financing activities from continuing operations for the nine months ended March 31, 2020 included $265.3 million of net repayments of our term loan, revolving credit facility and other debt and by $57.4 million for share repurchases, partially offset by $305.2 million related to the proceeds from the sale of Tilda.

Operating Free Cash Flow from Continuing Operations

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.

Our Operating Free Cash Flow from continuing operations was $93.5 million for the nine months ended March 31, 2021, an improvement of $76.3 million compared to $17.1 million in the nine months ended March 31, 2020.

This improvement resulted primarily from an improvement of $56.2 million in net income adjusted for non-cash charges in the current period and greater cash generation of $26.3 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 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.

During the nine months ended March 31, 2021, the Company repurchased 2,408 shares under the program for a total of $80.3 million, excluding commissions, at an average price of $33.33 per share.

As of March 31, 2021, the Company had $109.5 million of remaining authorization under the share repurchase program.

Reconciliation of Non-U.S.

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GAAP Measures

We have included in this report measures of financial performance that are not defined by U.S.

We have included in this report measures of financial performance that are not defined by accounting principles generally accepted in the United States (“U.S.

We believe that these measures provide useful information to investors and include these measures in other communications to investors.

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As a result, the foreign currency impact is equal to the current year results in local currencies multiplied by the change in average foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year.

A reconciliation between reported and constant currency net sales increase (decrease) is as follows:

Divestitures and Discontinued Brands

We also exclude the impact of divestitures and discontinued brands when comparing net sales to prior periods, which results in the presentation of certain non-U.S.

GAAP financial measures.

The Company's management believes that excluding the impact of divestitures and discontinued brands when presenting period-over-period results of net sales aids in comparability.

A reconciliation between reported and constant currency net sales adjusted for divestitures and discontinued brands increase (decrease) is as follows:

(amounts in thousands) North America International Hain Consolidated

Net sales - Three Months Ended December 31, 2020

Net sales - Three Months Ended March 31, 2021

$ 287,500 $ 205,104 $ 492,604

Divestitures and discontinued brands (320) (4,144) (4,464)

Impact of foreign currency exchange (2,042) (15,428) (17,470)

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

Net sales on a constant currency basis adjusted for divestitures and discontinued brands - Three Months Ended March 31, 2021

$ 285,138 $ 185,532 $ 470,670

Net sales - Three Months Ended December 31, 2019

Net sales - Three Months Ended March 31, 2020

$ 320,440 $ 232,857 $ 553,297

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

Net sales - Six Months Ended December 31, 2020

Divestitures and discontinued brands (10,717) (42,462) (53,179)

Net sales adjusted for divestitures and discontinued brands - Three Months Ended March 31, 2020

$ 309,723 $ 190,395 $ 500,118

Net sales decline (10.3) % (11.9) % (11.0) %

Impact of divestitures and discontinued brands 3.0 % 15.9 % 8.2 %

Impact of foreign currency exchange (0.6) % (6.6) % (3.2) %

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

Net sales decline on a constant currency basis adjusted for divestitures and discontinued brands (7.9) % (2.6) % (6.0) %

Net sales - Nine Months Ended March 31, 2021

$ 850,780 $ 668,869 $ 1,519,649

Net sales - Six Months Ended December 31, 2019

Divestitures and discontinued brands (4,105) (5,052) (9,157)

Impact of foreign currency exchange (2,144) (35,133) (37,277)

Net sales on a constant currency basis adjusted for divestitures and discontinued brands - Nine Months Ended March 31, 2021

$ 844,531 $ 628,684 $ 1,473,215

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

Net sales - Nine Months Ended March 31, 2020

$ 872,834 $ 669,323 $ 1,542,157

Divestitures and discontinued brands (44,120) (48,122) (92,242)

Net sales adjusted for divestitures and discontinued brands - Nine Months Ended March 31, 2020

$ 828,714 $ 621,201 $ 1,449,915

Net sales decline (2.5) % (0.1) % (1.5) %

Impact of divestitures and discontinued brands 4.7 % 6.5 % 5.5 %

Impact of foreign currency exchange (0.2) % (5.2) % (2.4) %

Net sales growth on a constant currency basis adjusted for divestitures and discontinued brands 2.0 % 1.2 % 1.6 %

Adjusted EBITDA

Adjusted EBITDA is defined as net income (loss) before income taxes, net interest expense, depreciation and amortization, impairment of long-lived assets, equity in net loss of equity-method investees, stock-based compensation, net, productivity and transformation costs, SKU rationalization and certain inventory write-downs, unrealized currency gains and losses and other adjustments.

Adjusted EBITDA is defined as net income (loss) before income taxes, net interest expense, depreciation and amortization, impairment of long-lived assets and intangibles, equity in net (income) loss of equity-method investees, stock-based compensation, net, productivity and transformation costs, SKU rationalization and certain inventory write-downs, unrealized currency gains and losses and other adjustments.

The Company’s management believes that this presentation provides useful information to management, analysts and investors regarding certain additional financial and business trends relating to its results of operations and financial condition.

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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 December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(amounts in thousands) 2021 2020 2021 2020

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Net (loss) income from discontinued operations, net of tax — (697) 11,255 (105,581)

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

Net income from continuing operations 34,254 25,036 25,624 21,935

Provision (benefit) for income taxes 11,797 (10,242) 33,197 (9,753)

Interest expense, net 1,327 3,332 4,781 11,884

Depreciation and amortization 12,814 12,927 37,768 40,069

Equity in net loss of equity-method investees 1,076 338 1,095 655

Equity in net (income) loss of equity-method investees (70) 564 1,025 1,219

Stock-based compensation, net 3,698 3,761 11,888 9,581

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Warehouse/manufacturing consolidation and other costs 3,598 537 7,313 3,055

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

Loss on sale of businesses 1,904 332 1,293 2,115

Litigation and related expenses 644 — 644 48

Plant closure related costs 21 — 17 2,354

SKU rationalization and inventory write-down — 1,362 311 5,278

Adjusted EBITDA $ 73,752 $ 60,690 $ 190,838 $ 137,827

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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:

Six Months Ended December 31,

Nine Months Ended March 31,

(amounts in thousands) 2021 2020

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Off Balance Sheet Arrangements

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.

At March 31, 2021, 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