HAIN CELESTIAL GROUP INC 10-Q

ITEM 1. FINANCIAL STATEMENTS THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) MARCH 31, 2022 AND JUNE 30, 2021 (In thousands, except par values) March 31, June 30, 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 57,808 $ 75,871 Accounts receivable, less allowance for doubtful accounts of $ 1,137 and $ 1,314 , respectively 158,734 174,066 Inventories 294,428 285,410 Prepaid expenses and other current assets 45,308 39,834 Assets held for sale 3,313 1,874 Total current assets 559,591 577,055 Property, plant and equipment, net 312,819 312,777 Goodwill 950,820 871,067 Trademarks and other intangible assets, net 492,939 314,895 Investments and joint ventures 16,056 16,917 Operating lease right-of-use assets, net 88,636 92,010 Other assets 20,619 21,187 Total assets $ 2,441,480 $ 2,205,908 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 176,699 $ 171,947 Accrued expenses and other current liabilities 98,181 117,957 Current portion of long-term debt 7,774 530 Total current liabilities 282,654 290,434 Long-term debt, less current portion 827,771 230,492 Deferred income taxes 86,120 42,639 Operating lease liabilities, noncurrent portion 81,379 85,929 Other noncurrent liabilities 19,512 33,531 Total liabilities 1,297,436 683,025 Commitments and contingencies (Note 17) Stockholders’ equity: Preferred stock - $ .01 par value, authorized 5,000 shares; issued and outstanding: none — — Common stock - $ .01 par value, authorized 150,000 shares; issued: 111,087 and 109,507 shares, respectively; outstanding: 89,800 and 99,069 shares, respectively 1,111 1,096 Additional paid-in capital 1,199,804 1,187,530 Retained earnings 766,056 691,225 Accumulated other comprehensive loss ( 110,350 ) ( 73,011 ) 1,856,621 1,806,840 Less: Treasury stock, at cost, 21,287 and 10,438 shares, respectively ( 712,577 ) ( 283,957 ) Total stockholders’ equity 1,144,044 1,522,883 Total liabilities and stockholders’ equity $ 2,441,480 $ 2,205,908 See notes to consolidated financial statements. 3 Table of Contents THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2022 AND 2021 (In thousands, except per share amounts) Three Months Ended March 31, Nine Months Ended March 31, 2022 2021 2022 2021 Net sales $ 502,939 $ 492,604 $ 1,434,783 $ 1,519,649 Cost of sales 387,236 362,698 1,096,367 1,140,614 Gross profit 115,703 129,906 338,416 379,035 Selling, general and administrative expenses 75,750 74,325 229,875 238,471 Amortization of acquired intangible assets 3,110 2,145 7,254 6,771 Productivity and transformation costs 1,679 4,451 8,448 10,895 Proceeds from insurance claim — ( 592 ) ( 196 ) ( 592 ) Long-lived asset and intangibles impairment — — 303 57,676 Operating income 35,164 49,577 92,732 65,814 Interest and other financing expense, net 3,224 2,030 7,672 6,820 Other (income) expense, net ( 712 ) 1,566 ( 10,570 ) ( 852 ) Income from continuing operations before income taxes and equity in net loss (income) of equity-method investees 32,652 45,981 95,630 59,846 Provision for income taxes 7,738 11,797 19,425 33,197 Equity in net loss (income) of equity-method investees 383 ( 70 ) 1,374 1,025 Net income from continuing operations $ 24,531 $ 34,254 $ 74,831 $ 25,624 Net income from discontinued operations, net of tax — — — 11,255 Net income $ 24,531 $ 34,254 $ 74,831 $ 36,879 Net income per common share: Basic net income per common share from continuing operations $ 0.27 $ 0.34 $ 0.80 $ 0.25 Basic net income per common share from discontinued operations — — — 0.11 Basic net income per common share $ 0.27 $ 0.34 $ 0.80 $ 0.36 Diluted net income per common share from continuing operations $ 0.27 $ 0.34 $ 0.79 $ 0.25 Diluted net income per common share from discontinued operations — — — 0.11 Diluted net income per common share $ 0.27 $ 0.34 $ 0.79 $ 0.36 Shares used in the calculation of net income per common share: Basic 91,139 99,831 94,099 100,502 Diluted 91,310 101,596 94,519 101,385 See notes to consolidated financial statements. 4 Table of Contents THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ( LOSS) (UNAUDITED) FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2022 AND 2021 (In thousands) Three Months Ended March 31, 2022 March 31, 2021 Pre-tax amount Tax (expense) benefit After-tax amount Pre-tax amount Tax (expense) benefit After-tax amount Net income $ 24,531 $ 34,254 Other comprehensive income (loss): Foreign currency translation adjustments before reclassifications $ ( 18,701 ) $ — ( 18,701 ) $ 1,672 $ — 1,672 Reclassification of currency translation adjustment included in net loss from discontinued operations, net of tax — — — 14,725 — 14,725 Change in deferred gains (losses) on cash flow hedging instruments 1,841 ( 387 ) 1,454 322 ( 68 ) 254 Change in deferred gains (losses) on net investment hedging instruments 1,426 ( 299 ) 1,127 3,810 ( 800 ) 3,010 Total other comprehensive (loss) income $ ( 15,434 ) $ ( 686 ) $ ( 16,120 ) $ 20,529 $ ( 868 ) $ 19,661 Total comprehensive income $ 8,411 $ 53,915 Nine Months Ended March 31, 2022 March 31, 2021 Pre-tax amount Tax (expense) benefit After-tax amount Pre-tax amount Tax (expense) benefit After-tax amount Net income $ 74,831 $ 36,879 Other comprehensive income (loss): Foreign currency translation adjustments before reclassifications $ ( 43,649 ) $ — ( 43,649 ) $ 80,491 $ — 80,491 Reclassification of currency translation adjustment included in net income — — — 15,906 — 15,906 Change in deferred gains (losses) on cash flow hedging instruments 2,567 ( 540 ) 2,027 474 ( 100 ) 374 Change in deferred gains (losses) on net investment hedging instruments 5,423 ( 1,140 ) 4,283 ( 3,875 ) 814 ( 3,061 ) Total other comprehensive (loss) income $ ( 35,659 ) $ ( 1,680 ) $ ( 37,339 ) $ 92,996 $ 714 $ 93,710 Total comprehensive income $ 37,492 $ 130,589 See notes to consolidated financial statements. 5 Table of Contents THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED) FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2022 (In thousands, except par values) Common Stock Additional Accumulated Other Amount Paid-in Retained Treasury Stock Comprehensive Shares at $ .01 Capital Earnings Shares Amount Loss Total Balance at June 30, 2021 109,507 $ 1,096 $ 1,187,530 $ 691,225 10,438 $ ( 283,957 ) $ ( 73,011 ) $ 1,522,883 Net income 19,411 19,411 Other comprehensive loss ( 20,963 ) ( 20,963 ) Issuance of common stock pursuant to stock-based compensation plans 61 — — — Employee shares withheld for taxes 29 ( 1,175 ) ( 1,175 ) Repurchases of common stock 4,525 ( 175,687 ) ( 175,687 ) Stock-based compensation expense 4,287 4,287 Balance at September 30, 2021 109,568 $ 1,096 $ 1,191,817 $ 710,636 14,992 $ ( 460,819 ) $ ( 93,974 ) $ 1,348,756 Net income 30,889 30,889 Other comprehensive loss ( 256 ) ( 256 ) Issuance of common stock pursuant to stock-based compensation plans 1,436 14 ( 14 ) — Employee shares withheld for taxes 654 ( 29,858 ) ( 29,858 ) Repurchases of common stock 2,027 ( 89,831 ) ( 89,831 ) Stock-based compensation expense 4,156 4,156 Balance at December 31, 2021 111,004 $ 1,110 $ 1,195,959 $ 741,525 17,673 $ ( 580,508 ) $ ( 94,230 ) $ 1,263,856 Net income 24,531 24,531 Other comprehensive loss $ ( 16,120 ) ( 16,120 ) Issuance of common stock pursuant to stock-based compensation plans 83 1 ( 1 ) — Employee shares withheld for taxes 40 ( 1,597 ) ( 1,597 ) Repurchases of common stock 3,574 ( 130,472 ) ( 130,472 ) Stock-based compensation expense 3,846 3,846 Balance at March 31, 2022 111,087 $ 1,111 $ 1,199,804 $ 766,056 21,287 $ ( 712,577 ) $ ( 110,350 ) $ 1,144,044 See notes to consolidated financial statements. 6 Table of Contents THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED) FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2021 (In thousands, except par values) Common Stock Additional Accumulated Other Amount Paid-in Retained Treasury Stock Comprehensive Shares at $ .01 Capital Earnings Shares Amount Income (Loss) Total Balance at June 30, 2020 109,123 $ 1,092 $ 1,171,875 $ 614,171 7,238 $ ( 172,192 ) $ ( 171,392 ) $ 1,443,554 Net income 485 485 Cumulative effect of adoption of ASU 2016-02 ( 310 ) ( 310 ) Other comprehen sive income 31,005 31,005 Issuance of common stock pursuant to stock-based compensation plans 54 1 ( 1 ) — Employee shares withheld for taxes 20 ( 468 ) ( 468 ) Repurchase of common stock 1,281 ( 42,052 ) ( 42,052 ) Stock-based compensation expense 4,367 4,367 Balance at September 30, 2020 109,177 $ 1,093 $ 1,176,241 $ 614,346 8,539 $ ( 214,712 ) $ ( 140,387 ) $ 1,436,581 Net income 2,140 2,140 Other comprehensive income 43,044 43,044 Issuance of common stock pursuant to stock-based compensation plans 162 2 ( 2 ) — Employee shares withheld for taxes 38 ( 1,255 ) ( 1,255 ) Repurchase of common stock 923 ( 29,684 ) ( 29,684 ) Stock-based compensation expense 3,823 3,823 Balance at December 31, 2020 109,339 $ 1,095 $ 1,180,062 $ 616,486 9,500 $ ( 245,651 ) $ ( 97,343 ) $ 1,454,649 Net income 34,254 34,254 Other comprehensive income 19,661 19,661 Issuance of common stock pursuant to stock-based compensation plans 127 1 ( 1 ) — Employee shares withheld for taxes 49 ( 2,018 ) ( 2,018 ) Repurchase of common stock 204 ( 8,562 ) ( 8,562 ) Stock-based compensation expense 3,698 3,698 Balance at March 31, 2021 109,466 $ 1,096 $ 1,183,759 $ 650,740 9,753 $ ( 256,231 ) $ ( 77,682 ) $ 1,501,682 See notes to consolidated financial statements. 7 Table of Contents THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED MARCH 31, 2022 AND 2021 (In thousands) Nine Months Ended March 31, 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 74,831 $ 36,879 Net income from discontinued operations — 11,255 Net income from continuing operations 74,831 25,624 Adjustments to reconcile net income from continuing operations to net cash provided by operating activities from continuing operations: Depreciation and amortization 34,396 37,768 Deferred income taxes 7,374 3,216 Equity in net loss of equity-method investees 1,374 1,025 Stock-based compensation, net 12,289 11,888 Long-lived asset and intangibles impairment 303 57,676 Gain on sale of assets ( 8,869 ) — Loss on sale of businesses — 1,217 Other non-cash items, net ( 2,155 ) ( 723 ) Increase (decrease) in cash attributable to changes in operating assets and liabilities: Accounts receivable 14,150 ( 20,721 ) Inventories ( 4,371 ) ( 60,304 ) Other current assets ( 10,996 ) 56,487 Other assets and liabilities ( 2,705 ) ( 952 ) Accounts payable and accrued expenses ( 16,435 ) 34,316 Net cash provided by operating activities from continuing operations 99,186 146,517 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment ( 33,939 ) ( 53,062 ) Acquisitions of businesses, net of cash acquired ( 260,474 ) — Investment in joint venture ( 614 ) ( 694 ) Proceeds from sale of assets 10,756 — Proceeds from sale of businesses, net and other — 27,788 Net cash used in investing activities from continuing operations ( 284,271 ) ( 25,968 ) CASH FLOWS FROM FINANCING ACTIVITIES Borrowings under bank revolving credit facility 678,000 206,000 Repayments under bank revolving credit facility ( 370,000 ) ( 231,000 ) Borrowings under term loan 300,000 — Repayments under term loan ( 1,875 ) — Payments of other debt, net ( 3,232 ) ( 1,917 ) Share repurchases ( 397,405 ) ( 80,298 ) Employee shares withheld for taxes ( 32,630 ) ( 3,741 ) Net cash provided by (used in) financing activities from continuing operations 172,858 ( 110,956 ) Effect of exchange rate changes on cash from continuing operations ( 5,836 ) 5,650 Net (decrease) increase in cash and cash equivalents ( 18,063 ) 15,243 Cash and cash equivalents at beginning of period 75,871 37,771 Cash and cash equivalents at end of period $ 57,808 $ 53,014 See notes to consolidated financial statements. 8 Table of Contents THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Amounts in thousands, except par values and per share data) 1. BUSINESS 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 operates under two reportable segments: North America and International. Acquisition On December 28, 2021, the Company acquired all outstanding stock of Proven Brands, Inc. (and its subsidiary That's How We Roll LLC) and KTB Foods Inc., collectively doing business as "That's How We Roll" ("THWR"), the producer and marketer of ParmCrisps ® and Thinsters ® . See Note 4, Acquisitions and Dispositions, for details. Discontinued Operations The financial statements separately report discontinued operations and the results of continuing operations (see Note 4, Acquisitions and Dispositions ). All footnotes exclude discontinued operations unless otherwise noted. 2. BASIS OF PRESENTATION The Company’s unaudited consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. Investments in affiliated companies in which the Company exerts significant influence, but which it does not control, are accounted for under the equity method of accounting. As such, consolidated net income includes the Company's equity in the current earnings or losses of such companies. The Company's unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP and should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2021 (the “Form 10-K”). The amounts as of and for the periods ended June 30, 2021 are derived from the Company’s audited annual financial statements. The unaudited consolidated financial statements reflect all normal recurring adjustments which, in management’s opinion, are necessary for a fair presentation for interim periods. Operating results for the nine months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2022. Please refer to the Notes to the Consolidated Financial Statements as of June 30, 2021 and for the fiscal year then ended included in the Form 10-K for information not included in these condensed notes. All amounts in the unaudited consolidated financial statements, notes and tables have been rounded to the nearest thousand, except par values and per share amounts, unless otherwise indicated. Significant Accounting Policies The Company's significant accounting policies are described in Note 2, Summary of Significant Accounting Policies and Practices , in the Notes to the Consolidated Financial Statements in the Form 10-K. Included herein are certain updates to those policies. Transfer of Financial Assets The Company has non-recourse accounts receivable financing arrangements in which eligible receivables are sold to third-party buyers in exchange for cash. The Company transferred accounts receivable in their entirety to the buyers and satisfied all of the conditions to re port the transfer of financial assets in their entirety as a sale. The principal amount of receivables sold under these arrangements was $ 112,607 and $ 59,871 during the nine months ended March 31, 2022 and 2021, respectively. The incremental cost 9 Table of Contents of accounts receivable financing arrangeme nts is included in Other (income) expense, net in the Company’s Consolidated Statements of Operations. The proceeds from the sale of receivables are included in cash provided by operating activities in the accompanying Consolidated Statements of Cash Flows. Recently Adopted Accounting Pronouncements In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination on the acquisition date in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, as if it had originated the contracts. This approach differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value. The Company adopted ASU 2021-08 during the second quarter of fiscal year 2022, and the adoption did not have an impact on the Company's consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform. ASU 2020-04 is currently effective and upon adoption may be applied prospectively to contract modifications made on or before December 31, 2022. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which clarifies certain provisions in Topic 848, if elected by an entity, to apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. During the first quarter of fiscal year 2022, the Company adopted the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. 10 Table of Contents 3. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted net income per share: Three Months Ended March 31, Nine Months Ended March 31, 2022 2021 2022 2021 Numerator: Net income from continuing operations $ 24,531 $ 34,254 $ 74,831 $ 25,624 Net income from discontinued operations — — — 11,255 Net income $ 24,531 $ 34,254 $ 74,831 $ 36,879 Denominator: Basic weighted average shares outstanding 91,139 99,831 94,099 100,502 Effect of dilutive stock options, unvested restricted stock and unvested restricted share units 171 1,765 420 883 Diluted weighted average shares outstanding 91,310 101,596 94,519 101,385 Basic net income per common share: Continuing operations $ 0.27 $ 0.34 $ 0.80 $ 0.25 Discontinued operations — — — 0.11 Basic net income per common share $ 0.27 $ 0.34 $ 0.80 $ 0.36 Diluted net income per common share: Continuing operations $ 0.27 $ 0.34 $ 0.79 $ 0.25 Discontinued operations — — — 0.11 Diluted net income per common share $ 0.27 $ 0.34 $ 0.79 $ 0.36 There were 508 and 4 restricted stock awards excluded from our calculation of diluted net income per sha re for the three months ended March 31, 2022 and 2021, respectively, as such awards were anti-dilutive. There were 275 and 182 restricted stock awards excluded from the calculation of diluted net income per share for the nine months ended March 31, 2022 and 2021, respectively, as such awards were anti-dilutive. Additionally, 231 and 23 stock-based awards outstanding at March 31, 2022 and 2021, respectively, were excluded from the calculation of diluted net income per share for the three months ended March 31, 2022 and 2021, respectively, as such awards were contingently issuable based on market or performance conditions, and such conditions had not been achieved during the respective periods. There were 541 and 957 stock-based awards outstanding at March 31, 2022 and 2021, respectively, that were excluded from the calculation of diluted net income per share for the nine months ended March 31, 2022 and 2021, respectively, as such awards were contingently issuable based on market or performance conditions. Share Repurchase Program In June 2017, August 2021 and January 2022, the Company's Board of Directors authorized the repurchase of up to $ 250,000 , $ 300,000 and $ 200,000 of the Company’s issued and outstanding common stock, respectively. Share repurchases under the 2021 and 2022 authorizations commenced after the previous authorizations were 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. The current 2022 authorization does not have a stated expiration date. The extent to which the Company repurchases its shares and the timing of such repurchases will depend upon market conditions and other corporate considerations. In November 2021, the Company entered into a share repurchase agreement with affiliates of Engaged Capital, LLC (collectively, the “Selling Stockholders”), pursuant to which the Company repurchased 1,700 shares directly from the Selling Stockholders at a price of $ 45.00 per share (see Note 19, Related Party Transactions ). During the nine months ended March 31, 2022, the Company repurchased 10,126 shares under the repurchase program, inclusive of the shares repurchased from the Selling Stockholders, for a total of $ 395,821 , excluding commissions, at an average price of $ 39.09 per share. As of March 31, 2022, the Company had $ 186,579 of remaining authorization under the share repurchase program. During the nine months ended March 31, 2021, the Company repurchased 2,408 shares under the repurchase program for a total of $ 80,255 , excluding commissions, at an average price of $ 33.33 per share. 11 Table of Contents 4. ACQUISITIONS AND DISPOSITIONS That's How We Roll On December 28, 2021, the Company acquired all outstanding stock of THWR, the producer and marketer of ParmCrisps ® and Thinsters ® , deepening the Company's position in the snacking category. Consideration for the transaction consisted of cash, net of cash acquired, totaling $ 260,871 , subject to an adjustment for working capital. Of the total consideration, $ 260,474 was paid with the remaining $ 397 payable as of March 31, 2022. The ac quisition was funded with borrowings under the Credit Agreement (as defined in Note 9, Debt and Borrowings ). The Company incurred $ 5,103 of transaction costs in connection with the acquisition which were expensed as incurred, and are included as a component of Selling, general and administrative expenses in the Company's Consolidated Statements of Operations for the nine months ended March 31, 2022. The following table summarizes the Company's preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on their respective estimated fair values on the acquisition date. The Company expects to finalize the allocation during fiscal 2022. March 31, 2022 Accounts receivable, net $ 5,107 Inventory 9,871 Prepaid expenses and other current assets 542 Property, plant & equipment 9,198 Identifiable intangible assets 193,800 Operating lease right-of-use assets 3,676 Other assets 164 Deferred income taxes ( 42,252 ) Goodwill 94,071 Accounts payable & accrued expenses ( 9,082 ) Operating lease liabilities ( 4,225 ) $ 260,870 The fair values assigned to identifiable intangible assets acquired were based on assumptions and estimates made by management. Of the $ 193,800 of identifiable intangible assets acquired, $ 70,800 was preliminarily assigned to customer relationships with a weighted average estimated useful life of 17 years, and $ 123,000 was preliminarily assigned to tradenames with indefinite lives. The goodwill recorded as a result of this acquisition is not expected to be deductible for tax purposes. Results of THWR are included in the United States operating segment, a component of the North America reportable segment. THWR's net sales included in our consolidated results were 5.0 % and 1.8 % of consolidated net sales for the three and nine months ended March 31, 2022. The following table provides unaudited pro forma results of continuing operations had the acquisition been completed at the beginning of fiscal 2021. The proforma information reflects certain adjustments related to the acquisition but does not reflect any potential operating efficiencies or cost savings that may result from the acquisition. Accordingly, this information has been provided for illustrative purposes only and does not purport to be indicative of the actual results that would have been achieved by the Company for the periods presented or that will be achieved by the combined company in the future. The pro forma information has been adjusted to give effect to items that are directly attributable to the transactions and are expected to have a continuing impact on the combined results. 12 Table of Contents Unaudited supplemental pro forma information Three Months Ended March 31, Nine Months Ended March 31, 2022 2021 2022 2021 Net sales $ 502,939 $ 514,867 $ 1,488,483 $ 1,584,194 Net income from continuing operations (1) $ 26,970 $ 30,927 $ 81,415 $ 26,929 Diluted net income per common share from continuing operations $ 0.30 $ 0.30 $ 0.86 $ 0.27 (1) The pro forma adjustments include the elimination of transaction costs totaling $ 5,103 from the nine months ended March 31, 2022 and recognition of those costs in the nine months ended March 31, 2021. Additionally, the pro forma adjustments include the elimination of integration costs and a fair value inventory adjustment totaling $ 1,500 and $ 1,800 , respectively, for the three and nine months ended March 31, 2022 and recognition of those costs in the three and nine months ended March 31, 2021. Dispositions GG UniqueFiber ® On June 28, 2021, the Company completed the divestiture of its crispbread crackers business, GG UniqueFiber ® (“GG”) for total cash consideration of $ 336 . The sale of GG is consistent with the Company’s transformation and portfolio simplification process. GG operated in Norway and was part of the Company’s International reportable segment. The Company deconsolidated the net assets of GG during the twelve months ended June 30, 2021, recognizing a pre-tax loss on sale of $ 3,753 in the fourth quarter of fiscal 2021. Dream ® and WestSoy ® On April 15, 2021, the Company completed the divestiture of its North America non-dairy beverages business, consisting of the Dream ® and WestSoy ® brands, for total cash consideration of $ 33,000 , subject to customary post-closing adjustments. The final purchase price was $ 31,320 . The non-dairy beverage business was considered to be non-core within our broader North American business, and the sale aligns with the Company’s portfolio simplification process. The business operated out of the United States and Canada and was part of the Company’s North America reportable segment. The Company deconsolidated the net assets of the North American non-dairy beverage business during the twelve months ended June 30, 2021, recognizing a pre-tax gain on sale o f $ 7,519 in the fourth quarter of fiscal 2021 . Fruit In August 2020, the Company's Board of Directors approved a plan to sell its prepared fresh fruit, fresh fruit drinks and fresh fruit desserts division ("Fruit"), primarily consisting of the Orchard House ® Foods Limited business and associated brands. This decision supported the Company's overall strategy as the Fruit business did not align, and had limited synergies, with the rest of the Company's businesses. The Fruit business operated in the U.K. and was part of the Company’s International reportable segment. The Compan y determined that the held for sale criteria was met and classified the assets and liabilities of the Fruit business as held for sale as of September 30, 2020 and December 31, 2020, recognizing a pre-tax non-cash loss to reduce the carrying value to its estimated fair value less costs to sell of $ 56,093 during the nine months ended March 31, 2021. The sale was completed on January 13, 2021 for a total cash consideration of $ 38,547 , recognizing a pre-tax loss on sale of $ 1,904 during the third quarter of fiscal 2021. Danival The Company entered into a definitive stock purchase agreement on June 30, 2020 for the sale of its Danival business, a component of the International reportable segment, and the transaction closed on July 21, 2 020. The Company deconsolidated th e net assets of the Danival business upon closing of the sale during the quarter ended September 30, 2020, recognizing a pre-tax gain on sale of $ 611 during the first quarter of fiscal 2021. 13 Table of Contents Discontinued Operations Sale of Tilda Business On August 27, 2019, the Company sold the entities comprising the Tilda Group Entities and certain other assets of the Tilda business for an aggregate price of $ 342,000 in cash, subject to customary post-closing adjustments based on the balance sheets of the Tilda business. The disposition of the Tilda operating segment represented a strategic shift that had a major impact on the Company’s operations and financial results and has been accounted for as discontinued operations. Net income from discontinued operations, net of tax in our Consolidated Statements of Operations was nil for the three months ended March 31, 2022 and 2021 as well as for the nine months ended March 31, 2022. The following table presents the major classes of Tilda’s results within Net income from discontinued operations, net of tax in our Consolidated Statements of Operations for the nine months ended March 31, 2021: Nine Months Ended March 31, 2021 Net sales $ — Cost of sales — Gross profit — Other expense 75 Net loss from discontinued operations before income taxes ( 75 ) Benefit for income taxes (1) ( 11,320 ) Net income from discontinued operations, net of tax $ 11,245 (1) Includes $ 11,320 of tax benefit related to the legal entity reorganization for the nine months ended March 31, 2021. There wer e no asse ts or liabilities from discontinued operations associated with Tilda as of March 31, 2022 or June 30, 2021. 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. 5. INVENTORIES Inventories consisted of the following: March 31, 2022 June 30, 2021 Finished goods $ 189,288 $ 187,884 Raw materials, work-in-progress and packaging 105,140 97,526 $ 294,428 $ 285,410 At each period end, inventory is reviewed to ensure that it is recorded at the lower of cost or net realizable value. 14 Table of Contents 6. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following: March 31, 2022 June 30, 2021 Land $ 11,675 $ 13,666 Buildings and improvements 54,317 58,143 Machinery and equipment 313,795 306,811 Computer hardware and software 66,279 65,132 Furniture and fixtures 24,597 23,546 Leasehold improvements 58,929 54,360 Construction in progress 26,745 21,633 556,337 543,291 Less: Accumulated depreciation and amortization 243,518 230,514 $ 312,819 $ 312,777 Depreciation and amortization expense for the three months ended March 31, 2022 and 2021 was $ 8,292 and $ 9,118 , respectively. Depreciation and amortization expense for the nine months ended March 31, 2022 and 2021 was $ 22,944 and $ 26,302 , respectively. During the nine months ended March 31, 2022, the Company completed the sale of undeveloped land plots in Boulder, Colorado in the United States for total cash proceeds of $ 10,005 , net of brokerage and other fees, resulting in a gain in the amount of $ 8,656 , which is included as a component of Other (income) expense, net in our Consolidated Statement of Operations. The Compan y recognized an impairment charge of $ 303 during the nine months ended March 31, 2022 relating to a facility in the United Kingdom. The facility was held for sale as of March 31, 2022 and June 30, 2021 with a net carrying amount of $ 1,545 and $ 1,874 , respectively. Further, a facility in the United States was held for sale as of March 31, 2022 with a net carrying amount of $ 1,768 . During the nine months ended March 31, 2021, the Company recorded a non-cash impairment charge of $ 1,333 related to the write-down of building improvements. 7. LEASES The Company leases office space, warehouse and distribution facilities, manufacturing equipment and vehicles primarily in North America and Europe. The Company determines if an arrangement is or contains a lease at inception. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company’s lease agreements generally do not contain residual value guarantees or material restrictive covenants. Some of the Company’s leases contain variable lease payments, which are expensed as incurred unless those payments are based on an index or rate. Variable lease payments based on an index or rate are initially measured using the index or rate in effect at lease commencement and included in the measurement of the lease liability; thereafter, changes to lease payments due to rate or index changes are recorded as variable lease expense in the period incurred. The Company does not have any related party leases, and sublease transactions are de minimis. 15 Table of Contents The components of lease expenses for the three and nine months ended March 31, 2022 and 2021 were as follows: Three Months Ended Nine Months Ended March 31, 2022 March 31, 2021 March 31, 2022 March 31, 2021 Operating lease expenses $ 4,155 $ 4,129 $ 11,572 $ 12,290 Finance lease expenses 50 72 187 319 Variable lease expenses 129 247 838 1,204 Short-term lease expenses 813 458 2,855 1,701 Total lease expenses $ 5,147 $ 4,906 $ 15,452 $ 15,514 Supplemental balance sheet information related to leases was as follows: Leases Classification March 31, 2022 June 30, 2021 Assets Operating lease ROU assets, net Operating lease right-of-use assets, net $ 88,636 $ 92,010 Finance lease ROU assets, net Property, plant and equipment, net 466 547 Total leased assets $ 89,102 $ 92,557 Liabilities Current Operating Accrued expenses and other current liabilities $ 13,097 $ 10,870 Finance Current portion of long-term debt 182 229 Non-current Operating Operating lease liabilities, noncurrent portion 81,379 85,929 Finance Long-term debt, less current portion 296 326 Total lease liabilities $ 94,954 $ 97,354 16 Table of Contents Additional information related to leases is as follows: Nine Months Ended March 31, 2022 March 31, 2021 Supplemental cash flow information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 11,632 $ 12,954 Operating cash flows from finance leases $ 16 $ 13 Financing cash flows from finance leases $ 182 $ 285 ROU assets obtained in exchange for lease obligations: Operating leases $ 4,100 $ 18,349 Finance leases $ 251 $ 671 ROU assets obtained in connection with an acquisition (See Note 4): Operating leases $ 4,098 $ — Weighted average remaining lease term: Operating leases 9.0 years 10.0 years Finance leases 4.2 years 4.1 years Weighted average discount rate: Operating leases 3.3 % 3.2 % Finance leases 4.0 % 3.9 % Maturities of lease liabilities as of March 31, 2022 were as follows: Fiscal Year Operating leases Finance leases Total 2022 (remainder of year) $ 3,427 $ 56 $ 3,483 2023 16,144 162 16,306 2024 14,498 80 14,578 2025 12,270 80 12,350 2026 11,581 67 11,648 Thereafter 53,640 78 53,718 Total lease payments 111,560 523 112,083 Less: Imputed interest 17,084 45 17,129 Total lease liabilities $ 94,476 $ 478 $ 94,954 On December 17, 2021, the Company entered into an operating lease in the United States that has not yet commenced. Obligations under this lease are approximately $ 41,638 , and the lease is expected to commence during the fourth quarter of fiscal year ending June 30, 2022 with a lease term of 10.5 years, excluding one renewal option. 17 Table of Contents 8. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill The following table provides the changes in the carrying value of goodwill by reportable segment: North America International Total Balance as of June 30, 2021 $ 600,812 $ 270,255 $ 871,067 Acquisition activity (See Note 4) 94,071 — 94,071 Translation and other adjustments, net ( 9 ) ( 14,308 ) ( 14,318 ) Balance as of March 31, 2022 $ 694,874 $ 255,947 $ 950,820 Other Intangible Assets The following table includes the gross carrying amount and accumulated amortization, where applicable, for intangible assets, excluding goodwill: March 31, 2022 June 30, 2021 Non-amortized intangible assets: Trademarks and tradenames $ 390,002 $ 273,471 Amortized intangible assets: Other intangibles 211,747 146,856 Less: Accumulated amortization ( 108,810 ) ( 105,432 ) Net amortized intangible assets 102,937 41,424 Net other intangible assets $ 492,939 $ 314,895 There were no events or circumstances that warranted an interim impairment test for indefinite-lived intangible assets during the three and nine months ended March 31, 2022 or 2021. See Note 4, Acquisitions and Dispositions , for details surrounding the acquisition of THWR, including $ 193,800 of identifiable intangible assets acquired on December 28, 2021. Amortized intangible assets, which are deemed to have a finite life, primarily consist of customer relationships and trademarks and tradenames and are amortized over their estimated useful lives of 5 to 25 years. Amortization expense included in continuing operations was as follows: Three Months Ended March 31, Nine Months Ended March 31, 2022 2021 2022 2021 Amortization of acquired intangibles $ 3,110 $ 2,145 $ 7,255 $ 6,771 Expected amortization expense over the next five fiscal years is as follows: Fiscal Year Ending June 30, 2022 (remainder of year) 2023 2024 2025 2026 Estimated amortization expense $ 2,973 $ 11,611 $ 9,008 $ 8,005 $ 7,565 The weighted average remaining amortization period of amortized intangible assets is 13.7 years. 18 Table of Contents 9. DEBT AND BORROWINGS Debt and borrowings consisted of the following: March 31, 2022 June 30, 2021 Revolving credit facility $ 538,000 $ 230,000 Term loans 298,125 — Less: Unamortized issuance costs ( 1,167 ) — Other borrowings 587 1,022 835,545 231,022 Short-term borrowings and current portion of long-term debt 7,774 530 Long-term debt, less current portion $ 827,771 $ 230,492 Amended and Restated Credit Agreement On December 22, 2021, the Company refinanced its revolving credit facility by entering into a Fourth Amended and Restated Credit Agreement (the “Credit Agreement”). The Credit Agreement provides for senior secured financing of $ 1,100,000 in the aggregate, consisting of (1) $ 300,000 in aggregate principal amount of term loans (the "Term Loans") and (2) an $ 800,000 senior secured revolving credit facility (which includes borrowing capacity available for letters of credit, and is comprised of a $ 440,000 U.S. revolving credit facility and $ 360,000 global revolving credit facility) (the "Revolver"). Both the Revolver and the Term Loans mature on December 22, 2026. As of March 31, 2022 , there were $ 538,000 of loans under the Revolver, $ 298,125 of Term Loans, and $ 8,919 letters of credit outstanding under the Credit Agreement. The Credit Agreement provides that loans will bear interest at rates based on (a) the Eurodollar Rate plus a rate ranging from 0.875 % to 1.75 % per annum or (b) the Base Rate plus a rate ranging from 0.00 % to 0.75 % per annum, the relevant rate being the Applicable Rate. The Applicable Rate will be determined in accordance with a leverage-based pricing grid, as set forth in the Credit Agreement. Swing Line Loans and Global Swing Line Loans denominated in U.S. Dollars will bear interest at the Base Rate plus the Applicable Rate, and Global Swing Line Loans denominated in foreign currencies shall bear interest based on (a) the Euro Short Term Rate, or €STR, in the case of such loans denominated in Euros plus the Applicable Rate, (b) the Sterling Overnight Index Average Reference Rate, or SONIA, in the case of such loans denominated in Sterling plus the Applicable Rate or (c) the Canadian Prime Rate plus the Applicable Rate. The weighted average interest rate on outstanding borrowings under the Credit Agreement at March 31, 2022 was 1.67 %. Add itionally, the Credit Agreement contains a Commitment Fee on the amount unused under the Credit Agreement ranging from 0.15 % to 0.25 % per annum, and such Commitment Fee is determined in accordance with a leverage-based pricing grid. The Credit Agreement includes maintenance covenants that will require compliance with a consolidated interest coverage ratio, a consolidated secured leverage ratio and a consolidated leverage ratio. As of March 31, 2022 , $ 253,081 was available under the Credit Agreement, and the Company was in compliance with all associated covenants. In connection with the Credit Agreement, the Company and its material domestic subsidiaries entered into an Amended and Restated Security and Pledge Agreement (the “Security Agreement”), pursuant to which all of the obligations under the Credit Agreement will be secured by liens on assets of the Company and its material domestic subsidiaries, including the equity interests in each of their direct subsidiaries and intellectual property, subject to agreed-upon exceptions. Credit Agreement Issuance Costs Based on the Company's evaluation of the borrowing capacity associated with the creditors participating in the previous facility compared to those in the Credit Agreement, $ 1,762 of the $ 2,036 of unamortized deferred financing costs at December 22, 2021 were deferred and the remaining $ 274 were expensed as a component of Interest and other financing expense, net on our Consolidated Statement of Operations. Additionally, the Company incurred debt issuance costs of approximately $ 2,764 in connection with the Credit Agreement. Of the total $ 4,526 of deferred debt issuance costs, $ 3,292 were associated with the Revolver and are being amortized on a straight-line basis within Other assets on our Consolidated Balance Sheet, and $ 1,234 are being amortized on a straight-line basis, which approximates the effective interest method, as an adjustment to the carrying amount of the Term Loans as a component of Interest and other financing expense, net on our Consolidated Statement of Operations over the term of the Credit Agreement. 19 Table of Contents 10. INCOME TAXES In general, the Company uses an estimated annual effective tax rate, which is based on expected annual income and statutory tax rates in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability on the effective tax rates from quarter to quarter. The Company’s 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. The effective income tax rate from continuing operations was an expense of 23.7 % and 25.7 % for the three months ended March 31, 2022 and 2021, respectively. The effective income tax rate from continuing operations was an expense of 20.3 % and 55.5 % for the nine months ended March 31, 2022 and 2021, respectively. The effective income tax rate from continuing operations for the nine months ended March 31, 2022 was impacted by the reversal of uncertain tax position accruals based on filing and approval of certain elections by taxing authorities, deductions related to stock-based compensation, non-deductible transaction costs related to the acquisition of THWR (see Note 4, Acquisitions and Dispositions ), the reversal of a valuation allowance due to the utilization of a capital loss carryover and the finalization of fiscal year 2021 U.S. income tax returns. The effective income tax rate from continuing operations for the nine months ended March 31, 2021 was negatively impacted by various discrete items including the tax impact of the United Kingdom Fruit business reserve, the legal entity reorganization, and the U.K. rate change. The effective income tax rates in each period were also impacted by the geographical mix of earnings and state valuation allowance. T he income tax benefit from d iscon tinued operations was nil for the three and nine months ended March 31, 2022 , while the income tax from discontinued operations was nil and a benefit of $ 11,320 for the three and nine months ended March 31, 2021, respectively. The benefit for income tax for the nine months ended March 31, 2021 was impacted by a legal entity reorganization. 20 Table of Contents 11. ACCUMULATED OTHER COMPREHENSIVE LOSS The following table presents the changes in accumulated other comprehensive loss (AOCL): Three Months Ended March 31, Nine Months Ended March 31, 2022 2021 2022 2021 Foreign currency translation adjustments: Other comprehensive (loss) income before reclassifications $ ( 18,701 ) $ 1,672 $ ( 43,649 ) $ 80,491 Amounts reclassified into income (1) — 14,725 — 15,906 Deferred gains (losses) on cash flow hedging instruments: Amount of gain (loss) recognized in AOCL on derivatives (2) 2,007 1,168 3,544 ( 621 ) Amount of (loss) gain reclassified from AOCL into (expense) income (2) ( 553 ) ( 914 ) ( 1,517 ) 995 Deferred gains (losses) on net investment hedging instruments: Amount of gain (loss) recognized in AOCL on derivatives (2) 1,240 3,107 4,610 ( 2,763 ) Amount of loss reclassified from AOCL into expense (2) ( 113 ) ( 97 ) ( 327 ) ( 298 ) Net change in AOCL $ ( 16,120 ) $ 19,661 $ ( 37,339 ) $ 93,710 (1) Foreign currency translation gains or losses of foreign subsidiaries related to divested businesses are reclassified into income once the liquidation of the respective foreign subsidiaries is substantially c omplete. During the three and nine months ended March 31, 2021, the Company reclassified $ 14,725 and $ 15,906 of translatio n losses, respectively, from AOCL to Other income, net on the Consolidated Statements of Operations. (2) See Note 15, Derivatives and Hedging Activities, for the amounts reclassified into income for deferred gains (losses) on cash flow and net investment hedging instruments recorded in the Consolidated Statements of Operations in the three and nine months ended March 31, 2022 and 2021. 12. STOCK-BASED COMPENSATION AND INCENTIVE PERFORMANCE PLANS The Company has a stockholder-approved plan, the Amended and Restated 2002 Long-Term Incentive and Stock Award Plan (the "2002 Plan"), under which the Company’s officers, senior management, other key employees, consultants and directors may be granted equity-based awards. The Company also grants shares under its 2019 Equity Inducement Award Program (the "2019 Inducement Program") to induce selected individuals to become employees of the Company. The 2002 Plan and 2019 Inducement Program are collectively referred to as the "Stock Award Plans." In conjunction with the Stock Award Plans, the Company maintains a long-term incentive program (the “LTI Program” or "LTIP") that provides for equity awards, including performance and market-based equity awards that can be earned over defined performance periods. The Company's plans are described in Note 14, Stock-Based Compensation and Incentive Performance Plans , in the Notes to the Consolidated Financial Statements in the Form 10-K. Compensation cost and related income tax benefits recognized in the Consolidated Statements of Operations for stock-based compensation plans were as follows: Three Months Ended March 31, Nine Months Ended March 31, 2022 2021 2022 2021 Selling, general and administrative expense $ 3,846 $ 3,698 $ 12,289 $ 11,888 Related income tax benefit $ 438 $ 441 $ 1,145 $ 1,447 21 Table of Contents Restricted Stock Awards of restricted stock are either restricted stock awards ("RSAs") or restricted stock units ("RSUs") that are issued at no cost to the recipient. Performance-based or market-based RSUs are issued in the form of performance share units ("PSUs"). A summary of the restricted stock activity (including all RSAs, RSUs and PSUs) for the nine months ended March 31, 2022 is as follows: Number of Shares and Units Weighted Average Grant Date Fair Value (per share) Non-vested RSAs, RSUs and PSUs outstanding at June 30, 2021 1,780 $ 16.55 Granted 828 $ 44.70 Vested ( 1,579 ) $ 15.58 Forfeited ( 158 ) $ 25.26 Non-vested RSAs, RSUs and PSUs outstanding at March 31, 2022 871 $ 43.54 The table above includes a total of 190 shares granted during the nine months ended March 31, 2022 that represent the target number of shares that may be earned based on pre-defined market conditions that are eligible to vest ranging from zero to 200 % of target. All such shares relate to the 2022-2024 LTIP as further described below. Granted shares also include 56 shares that may be earned based on certain performance-based metrics being met. Vested shares during the nine months ended March 31, 2022 include a total of 1,299 shares under the 2019-2021 LTIP that vested at 100 % of target based on achievement of target absolute total shareholder return ("TSR") levels, and a total of 13 shares granted in a previous period that vested based on certain performance-based metrics being met. The fair value of RSAs, RSUs and PSUs granted and of shares vested, and the tax benefit recognized from restricted shares vesting was as follows: Nine Months Ended March 31, 2022 2021 Fair value of RSAs, RSUs and PSUs granted $ 37,005 $ 7,298 Fair value of shares vested $ 71,285 $ 12,266 Tax benefit recognized from restricted shares vesting $ 3,643 $ 1,786 At March 31, 2022, there was $ 29,787 of unrecognized stock-based compensation expense related to non-vested restricted stock awards which is expected to be recognized over a weighted average period of 2.2 years. 2022-2024 LTIP During the nine months ended March 31, 2022, the Company granted market-based PSU awards under the LTI Program with a total target payout of 190 shares of common stock. At March 31, 2022, 175 of such shares were outstanding. Vesting is pursuant to a defined calculation of either relative TSR or absolute TSR (as defined) over the period from November 18, 2021 through the earlier of (i) November 17, 2024; (ii) the date the participant’s employment is terminated due to death or Disability (as defined); or (iii) the effective date of a Change in Control (as defined) (the “TSR Performance Period”). Vesting of 117 target shares of the outstanding PSU awards is pursuant to a defined calculation of relative TSR over the TSR Performance Period (the “Relative TSR PSUs”). Vesting of 58 target shares of the outstanding PSU awards is pursuant to the achievement of pre-established three-year compound annual TSR targets over the TSR Performance Period (the “Absolute TSR PSUs”). Total shares eligible to vest for both the Relative TSR PSUs and Absolute TSR PSUs range from zero to 200 % of the target amount. Grant date fair values are calculated using a Monte-Carlo simulation model with grant date fair values per target share and related valuation assumptions as follows: 22 Table of Contents Absolute TSR PSUs Relative TSR PSUs Grant date fair value (per target share) $ 39.51 $ 60.99 Risk-free interest rate 0.84 % 0.84 % Expected dividend yield — — Expected volatility 36.90 % 24.20 % Expected term 3.00 years 3.00 years 13. INVESTMENTS On October 27, 2015, the Company acquired a minority equity interest in Chop’t Creative Salad Company LLC, predecessor to Founders Table Restaurant Group, LLC (“Founders Table”). Founders Table owns and operates the fast-casual restaurant chains Chop't Creative Salad Co. and Dos Toros Taqueria. The investment is being accounted for as an equity method investment due to the Company’s representation on the Board of Directors of Founders Table. At March 31, 2022 and June 30, 2021, the carrying value of the Company’s investment in Founders Table was $ 9,808 a nd $ 10,699 , respectively, and is included in the Consolidated Balance Sheets as a component of Investments and joint ventures. The Company also holds the following investments: (a) Hutchison Hain Organic Holdings Limited, a joint venture with HUTCHMED (China) Limited, accounted for under the equity method of accounting, (b) Hain Future Natural Products Private Ltd., a joint venture with Future Consumer Ltd, accounted for under the equity method of accounting, and (c) Yeo Hiap Seng Limited, in whi ch the Company holds a less than 1 % equity ownership interest. The carrying value of these combined investments was $ 6,248 and $ 6,218 as of March 31, 2022 and June 30, 2021, respectively, and is included in the Consolidated Balance Sheets a s a component of Investments and joint ventures. 14. FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE The Company’s financial assets and liabilities measured at fair value are required to be grouped in one of three levels. The levels prioritize the inputs used to measure the fair value of the assets or liabilities. These levels are: • Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; • Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and • Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). The following table presents assets and liabilities measured at fair value on a recurring basis as of March 31, 2022: Total Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Assets: Derivative financial instruments $ 2,698 $ — $ 2,698 $ — Equity investment 603 603 — — Total $ 3,301 $ 603 $ 2,698 $ — Liabilities: Derivative financial instruments $ 3,841 — $ 3,841 — Total $ 3,841 $ — $ 3,841 $ — 23 Table of Contents The following table presents assets and liabilities measured at fair value on a recurring basis as of June 30, 2021: Total Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Assets: Derivative financial instruments $ 699 $ — $ 699 $ — Equity investment 646 646 — — Total $ 1,345 $ 646 $ 699 $ — Liabilities: Derivative financial instruments 11,968 — 11,968 — Total $ 11,968 $ — $ 11,968 $ — The equity investment consists of the Company’s less than 1 % investment in Yeo Hiap Seng Limited, a food and beverage manufacturer and distributor based in Singapore. Fair value is measured using the market approach based on quoted prices. The Company utilizes the income approach to measure fair value for its foreign currency forward contracts. The income approach uses pricing models that rely on market observable inputs such as yield curves, currency exchange rates and forward prices. There were no transfers of financial instruments between the three levels of fair value hierarchy during the nine months ended March 31, 2022 or 2021. The carrying amount of cash and cash equivalents, accounts receivable, net, accounts payable and certain accrued expenses and other current liabilities approximate fair value due to the short-term maturities of these financial instruments. The Company’s debt approximates fair value due to the debt bearing fluctuating market interest rates (see Note 9, Debt and Borrowings ). In addition to the instruments named above, the Company makes fair value measurements in connection with its interim and annual goodwill and tradename impairment testing and accounting for acquisitions. These measurements fall into Level 3 of the fair value hierarchy (See Note 8, Goodwill and Other Intangible Assets ). Derivative Instruments The Company uses interest rate swaps to manage its interest rate risk and cross-currency swaps and foreign currency exchange contracts to manage its exposure to fluctuations in foreign currency exchange rates. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. In accordance with the provisions of ASC 820, Fair Value Measurements , the Company incorporates credit valuation adjustments to appropriately reflect both the Company’s nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of the Company’s derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. The Company has determined that the significance of the impact of the credit valuation adjustments made to its derivative contracts, which determination was based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of the derivatives held as of March 31, 2022 and June 30, 2021 were classified as Level 2 of the fair value hierarchy. 24 Table of Contents The fair value estimates presented in the fair value hierarchy tables above are based on information available to management as of March 31, 2022 and June 30, 2021. These estimates are not necessarily indicative of the amounts we could ultimately realize. 15. DERIVATIVES AND HEDGING ACTIVITIES Risk Management Objective of Using Derivatives The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s receivables and borrowings. Certain of the Company’s foreign operations expose the Company to fluctuations of foreign exchange rates. These fluctuations may impact the value of the Company’s cash receipts and payments in terms of the Company’s functional currency. The Company enters into derivative financial instruments to protect the value or fix the amount of certain assets and liabilities in terms of its functional currency, the U.S. Dollar. Accordingly, the Company uses derivative financial instruments to manage and mitigate such risks. The Company does not use derivatives for speculative or trading purposes. Cash Flow Hedges of Interest Rate Risk The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. During the three and nine months ended March 31, 2022 and 2021, such derivatives were used to hedge the variable cash flows associated with existing variable rate debt. For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in AOCL and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. Amounts reported in AOCL related to derivatives will be reclassified to interest expense as interest payments are made on the Compan y’s variable rate debt. During the remaining three months of fiscal 2022, the Company estimates that an additional $ 301 will be reclassified as an increase to interest expense. As of March 31, 2022, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk: Interest Rate Derivative Number of Instruments Notional Amount Interest Rate Swap 4 $ 230,000 Cash Flow Hedges of Foreign Exchange Risk The Company is exposed to fluctuations in various foreign currencies against its functional currency, the U.S. Dollar. The Company uses foreign currency derivatives including cross-currency swaps to manage its exposure to fluctuations in the USD-EUR exchange rates. Cross-currency swaps involve exchanging fixed-rate interest payments for fixed-rate interest receipts, both of which will occur at the USD-EUR forward exchange rates in effect upon entering into the instr ument. The Company, at times, also uses forward contracts to manage its exposure to fluctuations in the GBP-EUR exchange rates. The Company designates these derivatives as cash flow hedges of foreign exchange risk. For derivatives designated and that qualify as cash flow hedges of foreign exchange risk, the gain or loss on the derivative is recorded in AOCL and subsequently reclassified in the period(s) during which the hedged transaction affects earnings within 25 Table of Contents the same income statement line item as the earnings effect of the hedged transaction . During the remaining three months of fiscal 2022, the Company estimates that an additional $ 47 relating to cross-currency swaps will be reclassified as a decrease to interest expense. As of March 31, 2022, the Company had the following outstanding foreign currency derivatives that were used to hedge its foreign exchange risk: Foreign Currency Derivative Number of Instruments Notional Sold Notional Purchased Cross-currency swap 1 € 24,700 $ 26,775 Foreign currency forward contract 3 £ 2,515 € 3,000 Net Investment Hedges The Company is exposed to fluctuations in foreign exchange rates on investments it holds in its European foreign entities and their exposure to the Euro. The Company uses fixed-to-fixed cross-currency swaps to hedge its exposure to changes in the foreign exchange rate on its foreign investment in Europe. Currency forward agreements involve fixing the USD-EUR exchange rate for delivery of a specified amount of foreign currency on a specified date. The currency forward agreements are typically cash settled in U.S. Dollars for their fair value at or close to their settlement date. Cross-currency swaps involve the receipt of functional-currency-fixed-rate amounts from a counterparty in exchange for the Company making foreign-currency fixed-rate payments over the life of the agreement. For derivatives designated as net investment hedges, the gain or loss on the derivative is reported in AOCL as part of the cumulative translation adjustment. Amounts are reclassified out of AOCL into earnings when the hedged net investment is either sold or substantially liquidated. As of March 31, 2022, the Company had the following outstanding foreign currency derivatives that were used to hedge its net investments in foreign operations: Foreign Currency Derivative Number of Instruments Notional Sold Notional Purchased Cross-currency swap 2 € 76,969 $ 83,225 Non-Designated Hedges Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements and/or the Company has not elected to apply hedge accounting. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings. As of March 31, 2022, the Company had no outstanding derivatives that were not designated as hedges in qualifying hedging relationships. 26 Table of Contents The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheet as of March 31, 2022: Asset Derivatives Liability Derivatives Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Interest rate swaps Prepaid expenses and other current assets $ 2,683 Accrued expenses and other current liabilities / Other noncurrent liabilities $ — Cross-currency swaps Prepaid expenses and other current assets — Other noncurrent liabilities 3,841 Foreign currency forward contracts Prepaid expenses and other current assets 15 Other noncurrent liabilities — Total derivatives designated as hedging instruments $ 2,698 $ 3,841 The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheet as of June 30, 2021: Asset Derivatives Liability Derivatives Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Interest rate swaps Prepaid expenses and other current assets $ 43 Accrued expenses and other current liabilities / Other noncurrent liabilities $ 312 Cross-currency swaps Prepaid expenses and other current assets 656 Other noncurrent liabilities 11,656 Total derivatives designated as hedging instruments $ 699 $ 11,968 27 Table of Contents The following table presents the pre-tax effect of cash flow hedge accounting on AOCL and Consolidated Statements of Operations as of the three months ended March 31, 2022 and 2021: Derivatives in Cash Flow Hedging Relationships Amount of Gain (Loss) Recognized in AOCL on Derivatives Location of Gain (Loss) Reclassified from AOCL into Income (Expense) Amount of Gain (Loss) Reclassified from AOCL into Income (Expense) Three Months Ended March 31, Three Months Ended March 31, 2022 2021 2022 2021 Interest rate swaps $ 2,023 $ 217 Interest and other financing expense, net $ ( 64 ) $ ( 82 ) Cross-currency swaps 503 1,262 Interest and other financing expense, net / Other (income) expense, net 683 1,239 Foreign currency forward contracts 15 — Cost of sales 81 — Total $ 2,541 $ 1,479 $ 700 $ 1,157 The following table presents the pre-tax effect of cash flow hedge accounting on AOCL and Consolidated Statements of Operations for the nine months ended March 31, 2022 and 2021: Derivatives in Cash Flow Hedging Relationships Amount of Gain (Loss) Recognized in AOCL on Derivatives Location of Gain (Loss) Reclassified from AOCL into Income (Expense) Amount of Gain (Loss) Reclassified from AOCL into Income (Expense) Nine Months Ended March 31, Nine Months Ended March 31, 2022 2021 2022 2021 Interest rate swaps $ 2,678 $ 341 Interest and other financing expense, net $ ( 273 ) $ ( 212 ) Cross-currency swaps 1,872 ( 1,124 ) Interest and other financing expense, net / Other (income) expense, net 2,085 ( 1,120 ) Foreign currency forward contracts ( 64 ) ( 2 ) Cost of sales 107 73 Total $ 4,486 $ ( 785 ) $ 1,919 $ ( 1,259 ) 28 Table of Contents The following table presents the pre-tax effect of the Company’s derivative financial instruments electing cash flow hedge accounting on the Consolidated Statements of Operations for the three months ended of March 31, 2022 and 2021: Location and Amount of Gain (Loss) Recognized in the Consolidated Statements of Operations on Cash Flow Hedging Relationships Three Months Ended March 31, 2022 Three Months Ended March 31, 2021 Cost of sales Interest and other financing expense, net Other expense/income, net Cost of sales Interest and other financing expense, net Other expense/income, net The effects of cash flow hedging: (Loss) Gain on cash flow hedging relationships Interest rate swaps Amount of loss reclassified from AOCL into income $ — $ ( 64 ) $ — $ — $ ( 82 ) $ — Cross-currency swaps Amount of gain reclassified from AOCL into income $ — $ 46 $ 637 $ — $ 39 $ 1,200 Foreign currency forward contracts Amount of gain reclassified from AOCL into income $ 81 $ — $ — $ — $ — $ — The following table presents the pre-tax effect of the Company’s derivative financial instruments electing cash flow hedge accounting on the Consolidated Statements of Operations for the nine months ended March 31, 2022 and 2021: Location and Amount of Gain (Loss) Recognized in the Consolidated Statements of Operations on Cash Flow Hedging Relationships Nine Months Ended March 31, 2022 Nine Months Ended March 31, 2021 Cost of sales Interest and other financing expense, net Other expense (income), net Cost of sales Interest and other financing expense, net Other expense (income), net The effects of cash flow hedging: (Loss) Gain on cash flow hedging relationships Interest rate swaps Amount of loss reclassified from AOCL into income $ — $ ( 273 ) $ — $ — $ ( 212 ) $ — Cross-currency swaps Amount of gain (loss) reclassified from AOCL into income $ — $ 131 $ 1,954 $ — $ 120 $ ( 1,240 ) Foreign currency forward contracts Amount of gain reclassified from AOCL into income $ 107 $ — $ — $ 73 $ — $ — 29 Table of Contents The following table presents the pre-tax effect of the Company’s net investment hedges on AOCL and the Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021: Derivatives in Net Investment Hedging Relationships Amount of Gain (Loss) Recognized in AOCL on Derivatives Location of Gain (Loss) Recognized in Income (Expense) on Derivatives Amount of Gain (Loss) Recognized in Income (Expense) on Derivatives Three Months Ended March 31, Three Months Ended March 31, 2022 2021 2022 2021 Cross-currency swaps $ 1,569 $ 3,933 Interest and other financing expense, net $ 143 $ 123 The following table presents the pre-tax effect of the Company’s net investment hedges on AOCL and the Consolidated Statements of Operations for the nine months ended March 31, 2022 and 2021: Derivatives in Net Investment Hedging Relationships Amount of Gain (Loss) Recognized in AOCL on Derivatives Location of Gain (Loss) Recognized in Income (Expense) on Derivatives Amount of Gain (Loss) Recognized in Income (Expense) on Derivatives Nine Months Ended March 31, Nine Months Ended March 31, 2022 2021 2022 2021 Cross-currency swaps $ 5,836 $ ( 3,498 ) Interest and other financing expense, net $ 413 $ 377 The following table presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments on the Consolidated Statements Operations for the nine months ended March 31, 2022 and 2021: Derivatives Not Designated as Hedging Instruments Location of Gain (Loss) Recognized in Income on Derivative Amount of Gain (Loss) Recognized in Income (Expense) on Derivatives Nine Months Ended March 31, 2022 2021 Foreign currency forward contracts Other (income) expense, net $ — $ ( 399 ) Credit-Risk-Related Contingent Features The Company has agreements with each of its derivative counterparties that contain a provision providing that upon certain defaults by the Company on any of its indebtedness, the Company could also be declared in default on its derivative obligations. 16. TERMINATION BENEFITS RELATED TO PRODUCTIVITY AND TRANSFORMATION INITIATIVES As a part of the ongoing productivity and transformation initiatives related to the Company’s strategic objective to expand profit margins and cash flow, the Company initiated a reduction in workforce at targeted locations in the United States as well as at certain locations internationally. The reduction in workforce associated with these initiatives are expected to result in charges throughout fiscal 2022. The following table displays the termination benefits and personnel realignment activities and liability balances relating to the reduction in workforce for the period ended as of March 31, 2022: 30 Table of Contents Balance at June 30, 2021 Charges (Reversals) Amounts Paid Foreign Currency Translation & Other Adjustments Balance at March 31, 2022 Termination benefits and personnel realignment $ 4,448 $ 1,912 $ ( 5,126 ) $ ( 18 ) $ 1,216 The liability balance as of March 31, 2022 and June 30, 2021 is included within Accrued expenses and other current liabilities on the Company’s Consolidated Balance Sheets. 17. COMMITMENTS AND CONTINGENCIES Securities Class Actions Filed in Federal Court On August 17, 2016, three securities class action complaints were filed in the Eastern District of New York (the "District Court") against the Company alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The three complaints are: (1) Flora v. The Hain Celestial Group, Inc., et al. (the “Flora Complaint”); (2) Lynn v. The Hain Celestial Group, Inc., et al. (the “Lynn Complaint”); and (3) Spadola v. The Hain Celestial Group, Inc., et al. (the “Spadola Complaint” and, together with the Flora and Lynn Complaints, the “Securities Complaints”). On June 5, 2017, the District Court issued an order for consolidation, appointment of Co-Lead Plaintiffs and approval of selection of co-lead counsel. Pursuant to this order, the Securities Complaints were consolidated under the caption In re The Hain Celestial Group, Inc. Securities Litigation (the “Consolidated Securities Action”), and Rosewood Funeral Home and Salamon Gimpel were appointed as Co-Lead Plaintiffs. On June 21, 2017, the Company received notice that plaintiff Spadola voluntarily dismissed his claims without prejudice to his ability to participate in the Consolidated Securities Action as an absent class member. The Co-Lead Plaintiffs in the Consolidated Securities Action filed a Consolidated Amended Complaint on August 4, 2017 and a Corrected Consolidated Amended Complaint on September 7, 2017 on behalf of a purported class consisting of all persons who purchased or otherwise acquired Hain Celestial securities between November 5, 2013 and February 10, 2017 (the “Amended Complaint”). The Amended Complaint named as defendants the Company and certain of its former officers (collectively, “Defendants”) and asserted violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on allegedly materially false or misleading statements and omissions in public statements, press releases and SEC filings regarding the Company’s business, prospects, financial results and internal controls. Defendants filed a motion to dismiss the Amended Complaint on October 3, 2017 which the District Court granted on March 29, 2019, dismissing the case in its entirety, without prejudice to replead. Co-Lead Plaintiffs filed a Second Amended Consolidated Class Action Complaint on May 6, 2019 (the “Second Amended Complaint”). The Second Amended Complaint again named as defendants the Company and certain of its former officers and asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on allegations similar to those in the Amended Complaint, including materially false or misleading statements and omissions in public statements, press releases and SEC filings regarding the Company’s business, prospects, financial results and internal controls. Defendants filed a motion to dismiss the Second Amended Complaint on June 20, 2019. On April 6, 2020, the District Court granted Defendants' motion to dismiss the Second Amended Complaint in its entirety, with prejudice. Co-Lead Plaintiffs appealed the District Court’s decision dismissing the Second Amended Complaint to the United States Court of Appeals for the Second Circuit (the "Second Circuit"). By decision dated December 17, 2021, the Second Circuit vacated the District Court’s judgment and remanded the case for further proceedings. On April 6, 2022, the District Court issued an order directing the parties to submit position papers outlining their views regarding: (a) the scope of the Court's reconsideration of Defendants’ Motion to Dismiss the Second Amended Complaint; and (b) the appropriate procedure the Court should follow in light of the Second Circuit's opinion. On April 14, 2022, the District Court entered an order setting the schedule for, and determining the scope of, supplemental briefing on Defendants’ Motion to Dismiss the Second Amended Complaint, which is due to be fully briefed on or before June 23, 2022. Additional Stockholder Class Action and Derivative Complaints Filed in Federal Court On April 19, 2017 and April 26, 2017, two class action and stockholder derivative complaints were filed in the Eastern District of New York against the former Board of Directors and certain former officers of the Company under the captions Silva v. Simon, et al. (the “Silva Complaint”) and Barnes v. Simon, et al. (the “Barnes Complaint”), respectively. Both the Silva Complaint and the Barnes Complaint allege violation of securities law, breach of fiduciary duty, waste of corporate assets and unjust enrichment. 31 Table of Contents On May 23, 2017, an additional stockholder filed a complaint under seal in the Eastern District of New York against the former Board of Directors and certain former officers of the Company. The complaint alleged that the Company’s former directors and certain former officers made materially false and misleading statements in press releases and SEC filings regarding the Company’s business, prospects and financial results. The complaint also alleged that the Company violated its by-laws and Delaware law by failing to hold its 2016 Annual Stockholders Meeting and includes claims for breach of fiduciary duty, unjust enrichment and corporate waste. On August 9, 2017, the District Court granted an order to unseal this case and reveal Gary Merenstein as the plaintiff (the “Merenstein Complaint”). On August 10, 2017, the District Court granted the parties' stipulation to consolidate the Barnes Complaint, the Silva Complaint and the Merenstein Complaint under the caption In re The Hain Celestial Group, Inc. Stockholder Class and Derivative Litigation (the “Consolidated Stockholder Class and Derivative Action”) and to appoint Robbins Arroyo LLP and Scott+Scott as Co-Lead Counsel, with the Law Offices of Thomas G. Amon as Liaison Counsel for Plaintiffs. On September 14, 2017, a related complaint was filed under the caption Oliver v. Berke, et al. (the “Oliver Complaint”), and on October 6, 2017, the Oliver Complaint was consolidated with the Consolidated Stockholder Class and Derivative Action. The Plaintiffs filed their consolidated amended complaint under seal on October 26, 2017. On December 20, 2017, the parties agreed to stay Defendants’ time to answer, move, or otherwise respond to the consolidated amended complaint through and including 30 days after a decision was rendered on the motion to dismiss the Amended Complaint in the Consolidated Securities Action, described above. On March 29, 2019, the District Court in the Consolidated Securities Action granted Defendants’ motion, dismissing the Amended Complaint in its entirety, without prejudice to replead. Co-Lead Plaintiffs in the Consolidated Securities Action filed the Second Amended Complaint on May 6, 2019. The parties to the Consolidated Stockholder Class and Derivative Action agreed to continue the stay of Defendants’ time to answer, move, or otherwise respond to the consolidated amended complaint through 30 days after a decision on Defendants' motion to dismiss the Second Amended Complaint in the Consolidated Securities Action. On April 6, 2020, the District Court granted Defendants’ motion to dismiss the Second Amended Complaint in the Consolidated Securities Action, with prejudice. Pursuant to the terms of the stay, Defendants in the Consolidated Stockholder Class and Derivative Action had until May 6, 2020 to answer, move, or otherwise respond to the complaint in this matter. This deadline was extended, and Defendants moved to dismiss the Consolidated Stockholder Class and Derivative Action Complaint on June 23, 2020, with Plaintiffs’ opposition due August 7, 2020. On July 24, 2020, Plaintiffs made a stockholder litigation demand on the current Board containing overlapping factual allegations to those set forth in the Consolidated Stockholder Class and Derivative Action. On August 10, 2020, the District Court vacated the briefing schedule on Defendants’ pending motion to dismiss in order to give the Board of Directors time to consider the demand. On each of September 8 and October 8, 2020, the District Court extended its stay of any applicable deadlines for 30 days to give the Board of Directors additional time to complete its evaluation of the demand. On November 3, 2020, Plaintiffs were informed that the Board of Directors had finished investigating and resolved, among other things, that the demand should be rejected. On November 6, 2020, Plaintiffs and Defendants notified the District Court that Plaintiffs were evaluating the rejection of the demand, sought certain additional information and were assessing next steps, and requested that the District Court extend the stay for an additional 30 days, to on or around December 7, 2020. The Parties then filed a number of additional joint status reports, requesting that the District Court continue the stay of applicable deadlines through December 30, 2021. In light of the Second Circuit vacating the District Court’s judgment in the Consolidated Securities Action referenced above and remanding the case for further proceedings, the Parties submitted a joint status report on December 29, 2021 requesting that the District C ourt continue the temporary stay pending the District Court’s reconsideration of the Defendants’ motion to dismiss the Second Amended Complaint in the Consolidated Securities Action. The District Court has extended the temporary stay through December 30, 2022. Baby Food Litigation Since February 2021, a large number of consumer class actions have been brought against the Company alleging that the Company’s Earth’s Best baby food products (the “Products”) contain unsafe and undisclosed levels of various naturally occurring heavy metals, namely lead, arsenic, cadmium and mercury. There are currently 29 active lawsuits, which generally allege that the Company violated various state consumer protection laws and make other state and common law warranty and unjust enrichment claims related to the alleged failure to disclose the presence of these metals and that consumers would have allegedly either not purchased the Products or would have paid less for them had the Company made adequate disclosures. These putative class actions seek to certify a nationwide class of consumers as well as various state subclasses. One of the consumer class actions ( Kathryn Gavula, et al. v. Beech-Nut Nutrition Co., et al. ) filed in the U.S. District Court for the District of Oregon alleges that the Company violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”) by conspiring 32 Table of Contents with other baby food manufacturers to conceal the presence of these heavy metals in our respective products. These actions have been filed against all of the major baby food manufacturers in federal courts across the country. The U.S. Judicial Panel on Multidistrict Litigation (“JPML”) declined a request to centralize all of the consumer class action lawsuits against all of the baby food manufacturers into a single multidistrict proceeding, and all but one of these cases against the Company have now been transferred and consolidated in the U.S. District Court for the Eastern District of New York into a proceeding captioned In re Hain Celestial Heavy Metals Baby Food Litigation, Case No. 2:21-cv-678 (the "Consolidated Proceeding"). The Court appointed interim class counsel for Plaintiffs in the Consolidated Proceeding, and Plaintiffs filed a Consolidated Amended Class Action Complaint on March 18, 2022. The Company intends to file a motion to dismiss the Consolidated Amended Class Action Complaint, but no briefing schedule has been set. One consumer class action is pending in New York Supreme Court, Nassau County. The Company has moved to stay or transfer this case to the Consolidated Proceeding and that motion is pending. The Company denies the allegations in these lawsuits and contends that its baby foods are safe and properly labeled. The claims raised in these lawsuits were brought in the wake of a highly publicized report issued by the U.S. House of Representatives Subcommittee on Economic and Consumer Policy on Oversight and Reform, dated February 4, 2021 (the “House Report”), addressing the presence of heavy metals in baby foods made by certain manufacturers, including the Company. Since the publishing of the House Report, the Company has also received information requests with respect to the advertising and quality of its baby foods from certain governmental authorities, as such authorities investigate the claims made in the House Report. The Company is fully cooperating with these requests and is providing documents and other requested information. The Company has been named in one civil government enforcement action, State of New Mexico ex rel. Balderas v. Nurture, Inc., et al. , which was filed by the New Mexico Attorney General against the Company and several other manufacturers based on the alleged presence of heavy metals in their baby food products. The Company and several other manufacturers moved to dismiss the New Mexico Attorney General’s lawsuit, which motion the Court denied. The Company filed its answer to the New Mexico Attorney General’s amended complaint on April 23, 2022. The Company denies the New Mexico Attorney General’s allegations and maintains that its baby foods are safe, properly labeled, and compliant with New Mexico law. In addition to the consumer class actions discussed above, the Company is currently named in five lawsuits in state and federal courts alleging some form of personal injury from the ingestion of the Company’s Products, purportedly due to unsafe and undisclosed levels of various naturally occurring heavy metals. Three of these lawsuits name multiple plaintiffs alleging claims of physical injuries. These lawsuits generally allege injuries related to neurological development disorders such as autism and attention deficit hyperactivity disorder. The Company denies that its Products led to any of these injuries and will defend the cases vigorously. Other In addition to the litigation described above, the Company is and may be a defendant in lawsuits from time to time in the normal course of business. With respect to all litigation and related matters, the Company records a liability when the Company believes it is probable that a liability has been incurred and the amount can be reasonably estimated. For the matters disclosed in this note, if the Company determines that a liability is probable and the loss can be reasonably estimated, the Company discloses the liability recorded. As of the end of the period covered by this report, the Company has not recorded a liability for any of the matters disclosed in this note. It is possible that some matters could require the Company to pay damages, incur other costs or establish accruals in amounts that could not be reasonably estimated as of the end of the period covered by this report. 18. SEGMENT INFORMATION Our organization structure consists of two geographic based reportable segments: North America and International. Our North America reportable segment consists of the United States and Canada as operating segments. Our International reportable segment is comprised of three operating segments: United Kingdom, Ella’s Kitchen UK and Europe. This structure is in line with how our Chief Operating Decision Maker (“CODM”) assesses our performance and allocates resources. We use segment net sales and operating income to evaluate performance and to allocate resources. We believe these measures are most relevant in order to analyze segment results and trends. Segment operating income excludes certain general corporate expenses (which are a component of selling, general and administrative expenses), impairment and acquisition related expenses, restructuring, integration and other charges. 33 Table of Contents The following tables set forth financial information about each of the Company’s reportable segments. Transactions between reportable segments were insignificant for all periods presented. Three Months Ended March 31, Nine Months Ended March 31, 2022 2021 2022 2021 Net Sales: North America $ 325,742 $ 287,500 $ 866,281 $ 850,780 International 177,197 205,104 568,502 668,869 $ 502,939 $ 492,604 $ 1,434,783 $ 1,519,649 Operating Income (Loss): North America $ 28,526 $ 39,492 $ 72,530 $ 105,188 International 18,303 26,774 69,740 8,144 46,829 66,266 142,270 113,332 Corporate and Other (a) ( 11,665 ) ( 16,689 ) ( 49,538 ) ( 47,518 ) $ 35,164 $ 49,577 $ 92,732 $ 65,814 (a) In addition to general Corporate and Other expenses as described above, for the three and nine months ended March 31, 2022, Corporate and Other included $ 218 and $ 3,228 of Productivity and transformation costs, respectively. For the three and nine months ended March 31, 2021, Corporate and Other included $ 2,804 and $ 6,343 of Productivity and transformation costs, respectively. The Company's net sales by product category (1) are as follows: Three Months Ended March 31, Nine Months Ended March 31, 2022 2021 2022 2021 Turbocharge $ 194,526 $ 183,877 $ 544,084 $ 535,455 Targeted Investment 182,050 173,380 508,615 507,809 Fuel 99,322 100,467 303,898 311,013 Simplify 27,041 34,880 78,186 165,372 Total $ 502,939 $ 492,604 $ 1,434,783 $ 1,519,649 (1) The Turbocharge brands are made up of plant-based meat and non-dairy beverages as well as snacks. The Targeted Investment brands are made up of tea, baby, yogurt, and personal care. The Fuel brands are made up of pantry brands in categories such as soup, cooking oils and nut butters. The Simplify brands include all other brands. The Company’s net sales by geographic region, which are generally based on the location of the Company’s subsidiaries, were as follows: Three Months Ended March 31, Nine Months Ended March 31, 2022 2021 2022 2021 United States $ 295,152 $ 251,887 $ 772,548 $ 735,948 United Kingdom 124,029 139,094 387,129 475,738 All Other 83,758 101,623 275,106 307,963 Total $ 502,939 $ 492,604 $ 1,434,783 $ 1,519,649 34 Table of Contents The Company’s long-lived assets, which represent net property, plant and equipment and operating lease right-of-use assets, were as follows by geographic area: March 31, 2022 June 30, 2021 United States $ 153,569 $ 148,950 United Kingdom 144,279 142,973 All Other 103,607 112,864 Total $ 401,455 $ 404,787 19. RELATED PARTY TRANSACTIONS On April 15, 2021, the Company completed the divestiture of its North America non-dairy beverages brands, Dream ® and WestSoy ® , for $ 31,320 . The purchaser in this transaction was SunOpta Inc. (“SunOpta”). The non-employee chair of the Company's Board of Directors is also the chair of the board of SunOpta. SunOpta is also one of the Company’s suppliers, for which the Company incurred expenses in the ordinary course of business. The Company incurred expenses of $ 247 and $ 3,649 in the three months ended March 31, 2022 and 2021, respectively, to SunOpta and affiliated entities. For the nine months ended March 31, 2022 and 2021, the Company incurred expenses of $ 467 and $ 12,806 , respectively, to SunOpta and affiliated entities. On November 9, 2021, the Company entered into a share repurchase agreement with Engaged Capital Co-Invest VI, LP, Engaged Capital Co-Invest VI-B, LP, Engaged Capital Co-Invest VI-C, LP, Engaged Capital Co-Invest VI-D, LP and Engaged Capital Co-Invest VI-E, LP (collectively, the “Selling Stockholders”), which are affiliates of Engaged Capital, LLC, pursuant to which the Company agreed to repurchase, directly from the Selling Stockholders, 1,700 shares of the Company’s common stock for $ 45.00 per share (the "Share Repurchase") , which equals the price at which the Underwriter (as defined below) purchased shares from the Selling Stockholders, net of underwriting commissions and discounts, in an underwritten public offering that launched on November 10, 2021, whereby the Selling Stockholders sold certain other shares of common stock (the “Offering”). In connection with the Offering, on November 10, 2021, the Company entered into an underwriting agreement with Morgan Stanley & Co. LLC, as underwriter (the “Underwriter”), and the Selling Stockholders. The Share Repurchase and the Offering were completed on November 15, 2021. The aggregate price paid by the Company for the Share Repurchase was $ 76,500 (see Note 3, Earnings per Share ), which the Company funded with borrowings under the Credit Agreement. The Company did not receive any proceeds from the Offering. The Founder and Chief Investment Officer of Engaged Capital, LLC is a member of the Company's Board of Directors. 35 Table of Contents