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Item 2. Management’s Discussion and Analysis

2021-11-09 compared with 2021-05-06 · 173 added, 332 removed, 150 unchanged (77% 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 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.

The Hain Celestial Group, Inc., a Delaware corporation (collectively, along with its subsidiaries, the “Company,” and herein referred to as “Hain Celestial,” “we,” “us” and “our”), was founded in 1993 and is headquartered in Lake Success, New York.

The Company’s mission has continued to evolve since its founding, with health and wellness being the core tenet — To Create and Inspire A Healthier Way of Life TM and be the leading marketer, manufacturer and seller of organic and natural products by anticipating and exceeding consumer expectations in providing quality, innovation, value and convenience.

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, 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, 2021.

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

The Hain Celestial Group, Inc., a Delaware corporation (collectively with its subsidiaries, the “Company,” “Hain Celestial,” “we,” “us” or “our”), was founded in 1993 and is headquartered in Lake Success, New York.

The Company’s mission has continued to evolve since its founding, with health and wellness being the core tenet.

The Company continues to be a leading marketer, manufacturer and seller of organic and natural, “better-for-you” products by anticipating and exceeding consumer expectations in providing quality, innovation, value and convenience.

The Company is committed to growing sustainably while continuing to implement environmentally sound business practices and manufacturing processes.

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 80 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 ® , 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:

(1) simplify its portfolio;

(2) strengthen its capabilities;

(3) expand profit margins and cash flow;

and (4) reinvigorate profitable topline growth.

The Company has executed this strategy, with a focus on discontinuing uneconomic investment, realigning resources to coincide with brand importance, reducing unproductive stock-keeping units (“SKUs”) and brands and reassessing current pricing architecture.

As part of this initiative, the Company reviewed its product portfolio within North America and d ivided it into “Get Bigger” and “Get Better” brand categories.

• The Company’s “Get Bigger” brands represent its strongest brands with higher margins, which compete in categories with strong growth potential.

The Company has concentrated its investment in marketing, innovation and other resources to prioritize spending for these brands, in an effort to reinvigorate profitable topline growth, optimize assortment and increase share of distribution.

• The Company’s “Get Better” brands are the brands in which the Company is primarily focused on simplification and expansion of profit margin.

Some of these brands have historically been low margin, non-strategic brands that added complexity with minimal benefit to the Company’s operations.

In addition, as part of the Company’s overall strategy, the Company may seek to dispose of businesses and brands that are less profitable or are otherwise less of a strategic fit within its core portfolio.

During fiscal 2019, for example, the Company divested its Hain Pure Protein reportable segment and its WestSoy ® tofu, seitan and tempeh businesses.

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.

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.

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 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

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

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.

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

Factors such as increased unemployment, decreases in disposable income and declines in consumer confidence could cause a decrease in demand for our overall product set, particularly higher priced products.

Our Financial Position

The Company operates under two reportable segments:

North America and International.

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 ® , Earth’s Best ® , Ella’s Kitchen ® , Frank Cooper’s ® , 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 ® , Rose's ® (under license), Sensible Portions ® , Spectrum ® , Sun-Pat ® , Terra ® , The Greek Gods ® , Yorkshire Provender ® and Yves Veggie Cuisine ® .

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

Since fiscal 2019, we have been executing the four key pillars of our strategy—(1) simplify our portfolio;

(2) strengthen our capabilities;

(3) expand profit margins and cash flow; and (4) reinvigorate profitable top line growth—which we refer to as Hain 2.0.

This strategy, which is on schedule to be completed ahead of our planned timeline, has laid the foundation for Hain 3.0, our vision and strategy for the next several years, which is about building a global healthy food and beverage company with industry-leading top line growth.

We believe Hain 3.0 positions us as an advantaged and differentiated company, as compared to others in the food industry for several reasons:

• we are singularly focused on health and wellness,

• we are a global company in high-growth categories with opportunities for expansion in existing and new channels and geographies,

• we have unique and advantaged brands with strong points of difference, and

• given our size, small wins can drive material incremental growth.

We have re-segmented the brand portfolio with a more global view to where we have the most growth potential.

As a result, we are migrating from a strategy focused on rejuvenating North America behind a construct of “Get Bigger" and "Get Better” brand categories to one that focuses on growing global brands in categories where we think we have the most potential.

The categories we have identified are called Turbocharge Growth, Targeted Investment, and Fuel:

• The Turbocharge Growth brands are leading-share brands in very high-growth categories.

The Turbocharge Growth brands are made up of plant-based meat and non-dairy beverages as well as snacks.

Our meat and dairy alternatives are concentrated outside the United States, while the snacks businesses include brands both within the United States and in International.

• The Targeted Investment brands are made up of leading-share brands in lower-growth categories.

To date, we have demonstrated our ability to drive market share and reinvigorate these categories, and we expect that we can continue to do this in the future.

The Targeted Investment brands are made up of tea, baby, yogurt, and personal care.

In contrast with Hain 2.0, baby is now one of our growth focus areas, due to its strong brands, scale, profitability, and growth prospects.

• The Fuel brands are stable brands that will be leveraged to fuel investment in the Turbocharge Growth and Targeted Investment categories.

Fuel brands are made up of premium pantry brands with scale, in categories such as soup, cooking oils and nut butters.

Additionally, as part of Hain 3.0, we will continue to simplify our brand portfolio as we continue to identify brands that are declining and have low margins.

The Simplify brands are subscale declining businesses that have limited long-term potential for the Company, and therefore will be managed for profit until they are potentially divested, likely over the course of the next several years.

Acquisitions are expected to play a role in Hain 3.0 and part of our capital allocation strategy is focused on actively looking for targets in the market.

As we continue to simplify and stabilize the organization and consolidate sales into fewer priority categories, we are well-positioned and expect to make targeted acquisitions supported by our borrowing capacity to help us further strengthen our position in those categories.

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

Business Priorities

While the current environment has caused us to delay certain planned innovation and productivity initiatives, our business strategy of simplifying our portfolio and reinvigorating profitable sales growth remains unchanged.

Financial Impact on Third Parties and Equity Investments

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.

Productivity and Transformation Costs

In fiscal 2019, the Company announced a strategy that includes as one of its key pillars identifying areas of cost savings and operating efficiencies to expand profit margins and cash flow.

As part of this overall strategy and the key pillar of realizing savings and efficiencies, during fiscal 2020, the Company began the integration of its United States and Canada operations in alignment with the North America reportable segment structure.

In addition, during fiscal 2021, the Company initiated cost reduction programs for its international businesses in the United Kingdom and Europe.

The Company will carry out additional productivity initiatives under this strategy in fiscal 2021.

Productivity and transformation costs include costs, such as consulting and severance costs, relating to streamlining the Company’s manufacturing plants, co-packers and supply chain, eliminating served categories or brands within those categories, and product rationalization initiatives which are aimed at eliminating slow moving SKUs.

The impact was particularly pronounced during the early stages of the pandemic as consumers reacted to stay-at-home measures and the uncertainty of the pandemic.

In particular, our net sales during the third quarter of fiscal 2020 through the second quarter of fiscal 2021 benefited from pandemic-driven demand.

The pandemic-driven demand for our products has subsided as effective vaccines have become available, governments have eased safety measures and consumer purchasing behaviors have started to return to pre-pandemic norms.

As a result, net sales were lower in the third and fourth quarters of fiscal 2021 compared to the third and fourth quarters of fiscal 2020, respectively.

Further, net sales in the first quarter of fiscal 2022 were lower than our net sales during the first quarter of fiscal 2021 as a result of normalizing consumer demand, among other factors as described more fully below under the heading " Comparison of Three Months Ended September 30, 2021 to Three Months Ended September 30, 2020 ."

The pandemic and the measures being taken by governments, businesses and consumers to limit the spread of COVID-19 have led to operational challenges in our business and may result in broader and longer-term challenges and uncertainty that we will need to manage successfully.

Such challenges include but are not limited to:

• manufacturing, supply chain and logistics challenges resulting from health and safety precautions among our employees and the general population as well as macroeconomic factors resulting from the pandemic, including labor market shortages;

• an uncertain future demand environment as a result of changing consumer behaviors amid uncertain economic conditions;

• increased costs of operating our business and managing our supply chain during a global pandemic.

Discontinued Operations

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

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.

On June 28, 2019, the Company completed the sale of the remainder of HPPC and Empire Kosher which included the FreeBird and Empire Kosher businesses.

These dispositions were undertaken to reduce complexity in the Company’s operations and simplify the Company’s brand portfolio, in addition to allowing additional flexibility to focus on opportunities for growth and innovation in the Company’s more profitable and faster growing core businesses.

Collectively, these dispositions were reported in the aggregate as the Hain Pure Protein reportable segment.

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, 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

(the “Purchaser”) entered into, and consummated the transactions contemplated by, an agreement relating to the sale and purchase of the entities comprising the Company’s Tilda operating segment and certain other assets.

The Company's dispositions are described in more detail in Note 5, Dispositions , in the Notes to the Consolidated Financial Statements in the Form 10-K.

Comparison of Three Months Ended September 30, 2021 to Three Months Ended September 30, 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 March 31, 2021 and 2020 (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 September 30, 2021 and 2020 (amounts in thousands, other than percentages, which may not add due to rounding):

Three Months Ended Change in

March 31, 2021 March 31, 2020 Dollars Percentage

September 30, 2021 September 30, 2020 Dollars Percentage

Net sales $ 454,903 100.0% $ 498,627 100.0% $ (43,724) (8.8)%

5 unchanged sentences

Proceeds from insurance claim (196) —% — —% (196) *

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

Long-lived asset impairment — —% 32,497 6.5% (32,497) (100.0)%

Operating income 25,547 5.6% 3,280 0.7% 22,267 678.9%

Interest and other financing expense, net 1,856 0.4% 2,453 0.5% (597) (24.3)%

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

Other income, net (788) (0.2)% (1,373) (0.3)% 585 (42.6)%

Income from continuing operations before income taxes and equity in net loss of equity-method investees 24,479 5.4% 2,200 0.4% 22,279 1,012.7%

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 *

Provision for income taxes 4,542 1.0% 12,962 2.6% (8,420) (65.0)%

Equity in net loss of equity-method investees 526 —% 19 —% 507 2,668.4%

Net income (loss) from continuing operations $ 19,411 4.3% $ (10,781) (2.2)% $ 30,192 *

Net income from discontinued operations, net of tax — —% 11,266 2.3% (11,266) (100.0)%

Net income $ 19,411 4.3% $ 485 0.1% $ 18,926 3,902.3%

Adjusted EBITDA $ 47,316 10.4% $ 54,895 11.0% $ (7,579) (13.8)%

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

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

Diluted net income (loss) per common share from continuing operations $ 0.20 $ (0.11) $ 0.31 *

Diluted net income per common share from discontinued operations — 0.11 (0.11) (100.0)%

Diluted net income per common share $ 0.20 $ — $ 0.20 100.0%

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

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.

* Percentage is not meaningful due to a comparison of a positive figure and a negative figure.

Net sales for the three months ended September 30, 2021 were $454.9 million, a decrease of $43.7 million, or 8.8%, as compared to $498.6 million in the three months ended September 30, 2020.

On a constant currency basis, adjusted for the impact of divestitures and discontinued brands, net sales decreased approximately $0.6 million and 0.1% from the prior year quarter driven by the North America reportable segment.

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

Gross profit for the three months ended September 30, 2021 was $105.4 million, a decrease of $13.7 million, or 11.5%, as comp ared to the prior year quarter.

Gross profit margin was 23.2% of net sales, compared to 23.9% in the prior year quarter.

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.

The gross profit decrease was driven primarily by our North America reportable segment, and mostly by the United States operating segment, as a result of lower net sales when compared with the prior year period as well as higher delivery and warehouse expenses.

The decrease in the North America reportable segment was offset in part by an increase in the International reportable segment, due to the performance of the two UK operating segments.

The Ella's Kitchen UK operating segment had higher net sales than the prior year quarter due to COVID-driven consumer demand issues in the prior year period which negatively impacted prior year net sales as well as lower cost of sales in the current year due to cost savings, partially offset by higher delivery and warehouse expense in the current year.

The other UK operating segment, Hain United Kingdom, delivered improved gross margins versus prior year driven by the implementation of productivity initiatives and the divestiture of the low gross margin fruit business.

Selling, General and Administrative Expenses

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.

Selling, general and administrative expenses were $74.0 million for the three months ended September 30, 2021, a decrease of $5.5 million, or 7.0%, from $79.5 million for the prior year quar ter.

The decrease occurred primarily in the United States and Europe operating segments.

The decrease in the United States operating segment was primarily due to lower marketing expenses in the current year.

The decrease in the Europe operating segment was due to lower broker commissions.

Amortization of Acquired Intangible Assets

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.

Amortization of acquired intangibles was $2.1 million for the three months ended September 30, 2021, a decrease of $0.3 million from $2.4 million in the prior year quarter due to prior year dispositions that occurred in the later part of fiscal 2021 .

Productivity and Transformation Costs

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

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.

Productivity and transformation costs were $4.0 million for the three months ended September 30, 2021 , an increase of $2.6 million from $1.4 million in the prior year quarter.

The increase was primarily due to a $1.6 million increase related to costs incurred for consulting fees related to supply chain optimization and other productivity and transformation initiatives.

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, Dispositions , 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, 2021.

Operating Income

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.

Operating income for the three months ended September 30, 2021 was $25.5 million compared to $3.3 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 $2.0 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.

Interest and other financing expense, net totaled $1.9 million for the three months ended September 30, 2021, a decrease of $0.6 million, or 24.3%, from $2.5 million in the prior year quarter.

The decrease resulted primarily from lower variable interest rates applied to borrowings outstanding under our revolving credit facility.

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 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.

Other Income, Net

Other income, net totaled $0.8 million for the three months ended September 30, 2021, compared to $1.4 million in the prior year quarter.

The change was primarily attributable to a lower gain on sale of business and higher realized foreign currency losses in the current year.

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 March 31, 2021 was $46.0 million compared to $15.4 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 September 30, 2021 wa s $24.5 million compared to $2.2 million in the prior year quarter.

The increase was due to the items discussed above.

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.

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 $4.5 million for the three months ended September 30, 2021 compared to an income tax expense of $13.0 million in the prior year quarter.

The effective income tax rate from continuing operations was expense of 18.6% and 589.2% for the three months ended September 30, 2021 and 2020 , respectively.

Lower effective income tax rate relative to our statutory tax rates for the current quarter is mainly due to the reversal of uncertain tax position accruals based on filing and approval of certain elections by the tax authorities.

In addition, t he effective income tax rates from continuing operations for the three months ended September 30, 2021 and 2020 were negatively impacted by provisions in the Tax Cuts and Jobs Act (the "Tax Act"), primarily related to Global Intangible Low Taxed Income ("GILTI") and limitations on the deductibility of executive compensation.

Furthermore, the effective income tax rate from continuing operations for the three months ended September 30, 2020 was negatively impacted by various discrete items including the tax impact of the United Kingdom fruit business reserve, the legal entity reorganization, and the UK rate change .

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

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 (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.

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, 2021 was $0.5 million and less than $0.1 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 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

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 .

Net Income (Loss) from Continuing Operations

Net income from continuing operations for the three months ended September 30, 2021 was $19.4 million, or $0.20 per diluted share, compared to net loss of $10.8 million, or $0.11 per diluted share, for the three months ended September 30, 2020.

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

Net Income from Discontinued Operations, Net of Tax

Net income from discontinued operations, net of tax, for the three months ended September 30, 2020 was $11.3 million, or $0.11 per diluted share .

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.

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.

Net income for the three months ended September 30, 2021 was $19.4 million, or $0.20 per diluted share, compared to $0.5 million, or $0.00 per diluted share, in the prior year quarter.

The change was attributable to the factors noted above.

Adjusted EBITDA

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.

Our Adjusted EBITDA was $47.3 million and $54.9 million for the three months ended September 30, 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 March 31, 2021 and 2020:

The following table provides a summary of net sales and operating income by reportable segment for the three months ended September 30, 2021 and 2020:

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

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

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

North America

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

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

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 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 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 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)%

Cost of sales 1,140,614 75.1% 1,206,324 78.2% (65,710) (5.4)%

Gross profit 379,035 24.9% 335,833 21.8% 43,202 12.9%

Selling, general and administrative expenses 236,995 15.6% 245,205 15.9% (8,210) (3.3)%

Amortization of acquired intangible assets 6,771 0.4% 9,446 0.6% (2,675) (28.3)%

Productivity and transformation costs 12,371 0.8% 37,949 2.5% (25,578) (67.4)%

Proceeds from insurance claim (592) —% (2,962) (0.2)% 2,370 *

Long-lived asset and intangibles impairment 57,676 3.8% 15,414 1.0% 42,262 274.2%

Operating income 65,814 4.3% 30,781 2.0% 35,033 113.8%

Interest and other financing expense, net 6,820 0.4% 15,068 1.0% (8,248) (54.7)%

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

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 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 *

Net income (loss) $ 36,879 2.4% $ (83,646) (5.4)% $ 120,525 *

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

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 *

Diluted net income (loss) per common share $ 0.36 $ (0.80) $ 1.16 *

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

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.

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 $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 $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 $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 $2.9 million recognized in the nine months ended March 31, 2020.

Long-lived Asset and Intangibles Impairment

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 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 $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 $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 (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 $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 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 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 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 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 $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.

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 by reportable segment for the nine months ended March 31, 2021 and 2020:

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

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)

% change (2.5) % (0.1) % n/a (1.5) %

Operating income (loss)

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

% change 64.2 % (80.0) % * 113.8 %

Operating income (loss) margin

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.

* Percentage is not meaningful due to a comparison of a positive figure and a negative figure.

North America

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.

Our net sales in the North America reportable segment for the three months ended September 30, 2021 were $265.5 million, a decrease of $15.1 million, or 5.4%, from net sales of $280.7 million in the prior year quarter.

On a constant currency basis, adjusted for the impact of divestitures and discontinued brands, net sales decreased 1.3%.

In the United States operating segment sales decreased due to sales normalization in the current year, given last year's COVID impact which positively impacted prior year sales, offset in part by stronger sales in tea, baby food and certain snack products in the current year.

In the Canada operating segment sales decreased primarily due to lower hand sanitizer sales in the current year.

Operating income in North America for the three months ended September 30, 2021 was $16.8 million, a decrease of $16.4 million from $33.3 million in the prior year quarter.

The decrease was driven by lower sales in the current year when compared with the prior year period and higher cost of goods sold largely because of an increase in delivery and warehouse expenses, partially offset by lower selling, general and administrative expenses.

I nternational

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.

Our net sales in the International reportable segment for the three months ended September 30, 2021 were $189.4 million, a decrease of $28.6 million, or 13.1%, from net sales of $218.0 million in the prior year quarter.

On a constant currency basis, adjusted for the impact of divestitures and discontinued brands, net sales increased 1.6% from the prior year quarter due to the performance of the two UK operating segments.

Ella's Kitchen UK benefited from improved demand given the COVID impact on baby food consumption in the prior year.

Hain United Kingdom benefited from higher soup sales versus prior year.

Operating income in our International reportable segment for the three months ended September 30, 2021 was $24.1 million, an increase of $40.0 million from operating loss of $15.9 million for the three months ended September 30, 2020.

The increase reflects lower costs in the current year from productivity initiatives and non-recurring impairment charges associated with the fruit business impairment that was recognized in the prior year.

Corporate and Other

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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.

Our operating loss in Corporate and Other for the three months ended September 30, 2021 was $15.4 million, an increase of $1.3 million, from operating loss of $14.1 million for the three months ended September 30, 2020.

This change was primarily related to productivity and transformation costs included in Corporate and Other of $2.1 million for the three months ended September 30, 2021, an increase of $1.3 million from $0.8 million for the three months ended September 30, 2020 primarily due to higher consulting costs.

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 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 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.

Our cash and cash equivalents balance decreased $46.9 million at September 30, 2021 to $29.0 million as co mpared to $75.9 million at June 30, 2021.

Our working capital from continuing operations was $232.3 million at September 30, 2021, a decrease of $52.4 million from $284.7 million at the end of fiscal 2021 as we continued to reduce product inventories.

Additionally, our long-term debt increased $114.9 million at September 30, 2021 to $345.4 million as compared to $230.5 million at June 30, 2021 as a result of $120.0 million of additional borrowings to support the share repurchases carried out in the quarter offset by $5.0 million of repayments.

As of September 30, 2021, $648.6 million was available under the Amended Credit Agreement as compared with $763.6 million as of June 30, 2021, and the Company was in compliance with all associated covenants.

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 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.

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

As of September 30, 2021, substantially all of the total cash balance from continuing operations was held outside of the United States.

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

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

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

As of September 30, 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.

Nine Months Ended March 31, Change in

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

Three Months Ended September 30, Change in

(amounts in thousands) 2021 2020 Dollars

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Effect of exchange rate changes on cash from continuing operations (2,926) 2,500 (5,426)

Increase in cash from continuing operations 15,243 10,532 4,711

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

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.

Net decrease in cash and cash equivalents $ (46,909) $ (518) $ (46,391)

Ca sh provided by operating activities from continuing operations was $37.6 million for the three months ended September 30, 2021, a decrease of $3.1 million from cash provided by operating activities from continuing operations of $40.7 million in the prior year period.

This decrease versus the prior period resulted primarily f rom a reduction of $5.7 million in lower net income adjusted for non-cash charges netted by higher cash generation of $2.6 million from our working capital accounts.

Cas h used in investing activities from continuing operations was $18.1 million for the three months ended September 30, 2021, an increase of $10.3 million from $7.7 million in the prior year period primarily due to increased capital expenditures.

Cas h used in fi nancing activities from continuing operations was $63.5 million for the three months ended September 30, 2021, an increase of $27.6 million compared to $36.0 million of cash used in the prior year period and the increase is primarily due to share repurchases.

Operating Free Cash Flow from Continuing Operations

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.

Our operating free cash flow from continuing operations was $19.8 million f or the three months ended September 30, 2021, a decrease of $8.7 million from $28.5 million in the three months ended September 30, 2020.

This decrease versus prior year resulted from a decrease in cash flow from operations of $3.1 million driven by the reasons explained above and higher capital expenditures of $5.7 million.

See the Reconciliation of Non-U.S.

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Share Repurchase Program

On June 21, 2017, the Company’s Board of Directors authorized the repurchase of up to $250 million of the Company’s issued and outstanding common stock.

In June 2017 and August 2021, the Company's Board of Directors authorized the repurchase of up to $250 million and $300 million of the Company’s issued and outstanding common stock, respectively.

Share repurchases under the 2021 authorization commenced in August 2021, after the 2017 authorization was fully utilized.

Repurchases may be made from time to time in the open market, pursuant to pre-set trading plans, in private transactions or otherwise.

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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 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.

During the three months ended September 30, 2021, the Company repurchased 4.525 million shares under the repurchase program for a total of $175.6 million, excluding commissions, at an average price of $38.80 per share.

As of September 30, 2021, the Company had $206.8 million of remaining authorization under the share repurchase program.

During the three months ended September 30, 2020, the Company repurchased 1.281 million shares under the repurchase program for a total of $42.0 million, excluding commissions, at an average price of $32.81 per share.

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 accounting principles generally accepted in the United States (“U.S.

We have included in this report measures of financial performance that are not defined by 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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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:

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

(amounts in thousands) North America International Hain Consolidated

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 adjusted for divestitures and discontinued brands - Three Months Ended March 31, 2021

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

Net sales - Three Months Ended March 31, 2020

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

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 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 - Three months ended September 30, 2021 $ 265,525 $ 189,378 $ 454,903

Divestitures and discontinued brands (178) — (178)

Impact of foreign currency exchange (1,719) (8,269) (9,988)

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 - Nine Months Ended March 31, 2020

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

Net sales on a constant currency basis adjusted for divestitures and discontinued brands - Three months ended September 30, 2021 $ 263,628 $ 181,109 $ 444,737

Net sales - Three months ended September 30, 2020 $ 280,668 $ 217,959 $ 498,627

Divestitures and discontinued brands (13,621) (39,630) (53,251)

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

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

Net sales adjusted for divestitures and discontinued brands $ 267,047 $ 178,329 $ 445,376

Net sales decline (5.4) % (13.1) % (8.8) %

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Impact of foreign currency exchange (0.6) % (3.8) % (2.0) %

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

Net sales (decline) growth on a constant currency basis adjusted for divestitures and discontinued brands (1.3) % 1.6 % (0.1) %

Adjusted EBITDA

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.

Adjusted EBITDA is defined as net income (loss) before income taxes, net interest expense, depreciation and amortization, impairment charges, equity in net loss of equity-method investees, stock-based compensation, restructuring activities, litigation and related expenses, acquisitions and divestitures, 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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A reconciliation of net income (loss) to Adjusted EBITDA is as follows:

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

Three Months Ended September 30,

(amounts in thousands) 2021 2020

Net income (loss) $ 34,254 $ 24,339 $ 36,879 $ (83,646)

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

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

Net income $ 19,411 $ 485

Net income from discontinued operations — 11,266

Net income (loss) from continuing operations 19,411 (10,781)

Depreciation and amortization 10,855 13,761

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

Unrealized currency losses (gains) 442 (1,011) (535) 188

Productivity and transformation costs 3,915 10,967 10,428 37,402

Equity in net loss of equity-method investees 526 19

Interest expense, net 1,146 2,154

Provision for income taxes 4,542 12,962

Stock-based compensation 4,287 4,367

Unrealized currency gains (1,023) (1,202)

Litigation & related costs

Litigation expenses 1,956 —

Proceeds from insurance claim (196) —

Long-lived asset and intangibles impairment — 13,525 57,676 15,414

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

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

Litigation and related expenses 644 — 644 48

Restructuring activities

Plant closure related costs 996 (6)

Productivity and transformation costs 3,204 781

Warehouse/manufacturing consolidation and other costs 2,289 390

Acquisitions & divestitures

Acquisitions & divestitures transaction costs, net (231) 369

Gain on sale of assets (446) —

Gain on sale of businesses — (620)

Impairment charges

SKU rationalization and inventory write-down — 204

Long-lived asset impairment — 32,497

Adjusted EBITDA $ 47,316 $ 54,895

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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:

Nine Months Ended March 31,

Three Months Ended September 30,

(amounts in thousands) 2021 2020

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Off Balance Sheet Arrangements

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.

At September 30, 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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Certain of our product lines have seasonal fluctuations.

Hot tea, hot-eating desserts and soup sales are stronger in colder months, while sales of snack foods, sunscreen and certain of our prepared food and personal care products are stronger in the warmer months.

Hot tea, hot-eating desserts and soup sales are stronger in colder months, while sales of snack foods, sunscreen and certain of our personal care products are stronger in the warmer months.

As such, our results of operations and our cash flows for any particular quarter are not indicative of the results we expect for the full year, and our historical seasonality may not be indicative of future quarterly results of operations.

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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